Earnings Call Transcript - AUTL Q3 2024

Operator, Operator

Hello, ladies and gentlemen, and welcome to the Autolus Therapeutics Call to discuss its Third Quarter 2024 Financial Results and Business Updates. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn this conference over to your host, Olivia Manser. Please go ahead.

Olivia Manser, Host

Thanks, Jacinda. Good morning or good afternoon, everyone, and thanks for joining us on our Q3 2024 call today. With me today are Dr. Christian Itin, our Chief Executive Officer; Rob Dolski, our Chief Financial Officer; and Chris Vann, our Chief Operating Officer. And so on to slide 2 our disclaimers. As a reminder, during today's call we will make statements related to our business that are forward-looking under federal securities laws and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These may include, but are not limited to statements regarding the expected timing for the commercial launch of AUCATZYL, Autolus manufacturing sales and marketing plans for AUCATZYL, including potential refinements at The Nucleus, the market potential for AUCATZYL, and the status of clinical trials and development and/or regulatory timelines for obe-cel and our other product candidates. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and our SEC filings, which are available on the Investor section of our website. On slide 3, we have the agenda. As usual, Christian is going to give you an overview of our operational highlights, Rob will discuss the financial results, and we will then conclude with upcoming milestones and closing remarks and move on to Q&A. As I mentioned we have Chris Vann, our Chief Operating Officer also available for Q&A today. So with that I will hand over to Christian.

Christian Itin, CEO

Welcome everybody to our Q3 update. Obviously, the big news has been the approval of AUCATZYL, which came in at the end of business day last week on Friday. Obviously, a huge step for the company but I think also a very important step within the ALL field, providing patients with an additional option in the relapsed or refractory setting. What was very interesting to see, and I think important with regards to AUCATZYL is that this is the first CAR-T program that was actually approved without a requirement for a REMS program by the FDA. I believe this is linked to the unusual mechanism of action that we have to combine the high level of activity together with a low level of immunological toxicity and together with the tumor burden guidance dosing that we have implemented for the program, really provides a program that puts the physician in control of the therapy. We believe that's going to be very important to expand the CAR-T use in the ALL indication. So very excited about where we are. Obviously this has been a long journey and fantastic to be here and as you can imagine, a lot of activity at the company to really get the program off and running and the product into the hands of physicians as we go through the next few weeks. So with that, I'd like to move to slide number 5 and just talk about some of the key elements that really drive the launch and are critical for the success of the launch. The first part is to actually deliver these types of therapies, the CAR-T therapies, you require actually quite a number of elements that have to be in place. The first one is that the centers have to be ready and authorized to be able to deliver this type of therapy and that process is very involved. It takes a substantial amount of time. In fact, we started the onboarding process of the centers more than a year ago. We currently have about 60 centers at various stages of the onboarding process and 30 of those centers are ready to be activated now. This gives us an opportunity to really launch from a broad base. Those 30 centers actually reach about 60% of the patients in the US with relapsed or refractory ALL. As we go through the course of 2025 then, we're going to add the additional 30 centers and with that should be able to reach approximately 90% of the target population. So very involved process and obviously an area that requires a lot of interaction, training and support, but also a series of systems that have to be put in place to be able to deliver the product and support the centers appropriately. Now the other aspect, which is very important, of course, for CAR-T therapies is that we have a personalized therapy. And so the manufacturing process, the reliability around it, the robustness of that manufacturing as well as the turnaround time are critical. And as you know, we have decided to build our own commercial manufacturing facility, which we call the Nucleus located here in Stevenage in the UK. This facility allows us to actually support the patients in this indication. The capacity that we have earmarked for the ALL patients is approximately 2,000 products a year. That will correspond to about two-thirds of the patients that are in the relapsed or refractory stage of their disease in the US or in Europe. We also target an attractive release time of 16 days, which will obviously be improved over time, but it gives us a very robust platform to work from. As we had conducted the pivotal study through the pandemic, we have been able to pressure test pretty much every aspect of the product delivery route that we're going through, whether this is logistics, cell handling, or the actual manufacturing process itself. Now what's important to make this happen is that you have a very strong, experienced, dedicated team to have a successful launch. The experience comes from several sides. On one hand, on the commercial team side, we have many team members who have launched CAR-T products in the past. We also have team members with prior experience in the ALL field, which gives us both CAR-T experience and an understanding of the indication and relationships with the centers, which are very important. We're building on strong scientific communication. You've seen us present at a series of medical conferences over the last 18 months, and more data will come at the ASH meeting coming up within a few weeks' time. We're gearing up to present and publish the results in a peer-reviewed journal, which will be the next important step in sharing the information from this important trial. We also focus on ensuring that the way the centers can engage with us is as simple and straightforward as possible, moving as much work away from the centers to our side to allow them to focus on treating patients while we take responsibility to support both the centers and the reimbursement process. We've set the price for the product at $525,000. This is based on extensive work on the value of the product, the clinical evidence, the differentiated safety profile, and ensuring that it is a price level to achieve broad coverage and access for patients. With that, I'd like to go to Slide number 6. On Slide number 6, just a few points of additional updates from the third quarter. Obviously, the primary focus in the third quarter was really to get launch ready, and that has been where the vast majority of the organization was focused. While we were doing that, with a focus to launching in the U.S., we were also heavily engaged in the interactions with the regulatory authorities in Europe and with the MHRA in the UK as we work through the submissions for obe-cel. We've also published or presented additional data from the FELIX study. One dataset was presented at the Society of Hematologic Oncology in August, where we looked at the rationale and the impact of tumor burden-guided dosing. Then in October, after the Q3 period, we presented at the Lymphoma Leukemia Myeloma Congress, focusing on the impact of stem cell transplant after obe-cel use and the effect of reducing tumor burden prior to lymphodepletion on outcomes. Importantly, on the operational side, we had an excellent new team member join us, Matthias Will, as the Chief Development Officer. We continue to expand both the commercial team and drive the onboarding of the treatment centers. With that, we're moving to slide number 7. This is just a brief outlook on what we plan to present at ASH. There are four abstracts selected for either poster or oral presentation. The first looks at the impact of the depth of remission on outcome, following our previous analysis at ASCO 2023 on persistence. This examines the key aspect of achieving deep remissions, which is relevant for long-term outcomes in this challenging patient population. The second question is about the impact of bridging therapies on both the performance of obe-cel and patient outcomes. The third area looks at essential practical aspects from a clinical perspective, namely healthcare resource utilization and costs associated with managing cytokine release syndrome and ICANS. These events require significant care and oversight, tying up resources for extended periods. Finally, we will analyze the factors impacting outcomes for patients receiving obe-cel therapy. We have discussed the importance of tumor burden at lymphodepletion, and we will explore upfront parameters at the time of patient screening that may correlate with how they respond to obe-cel treatment. This wraps up my update for the quarter. I'll now provide a quick outlook on activities with obe-cel, moving to slide number 9. We are developing obe-cel not in isolation, but also looking to explore its broader utility. We're conducting a study in pediatric patients with ALL and another in patients with systemic lupus. We're looking to broaden these activities as we move through next year. Building on the properties we've seen with obe-cel, we devised two additional programs: AUTO1/22, designed for deep targeting of B cells, minimizing the chance of leukemic or lymphoma cells escaping recognition by having a second receptor, and AUTO8, focusing on both CD19 and BCMA, with initial data presented in multiple myeloma patients. We'll update you further in the first half of next year. Finally, on slide number 10, as we approach the upcoming ACR meeting, we look forward to updates in understanding the impact of targeting the B-cell compartment and CD19 on disease outcomes. We are keen on this approach and think the product has a unique position in the space, especially now with the approval and commercial manufacturing available, building on the excellent safety profile we've seen in this challenging ALL population. We look forward to sharing updates on the Phase 1 trial regarding systemic lupus by the end of Q1 and providing a longer-term update in the second half of next year. We're really excited about the approval and the launch process, aiming to have a tangible impact on the lives of ALL patients. With that, I am handing over to Rob.

Rob Dolski, CFO

Thanks, Christian and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the third quarter of 2024. Moving on to slide 12, our cash and cash equivalents at September 30, 2024, totaled $657.1 million, compared to $239.6 million at the end of December 2023. Total net operating expenses for the three months ending September 30, 2024, were $67.9 million, compared to $42.9 million for the same period in 2023. Breaking down our research and development expenses, these rose from $32.3 million to $40.3 million for the three months ending September 30, 2024. This increase was primarily driven by higher R&D employee salaries and related costs, as well as obe-cel clinical trial and manufacturing costs. These were partially offset by a decrease in professional fees and general facility costs. Moving on to general and administrative expenses, these increased from $10.6 million to $27.3 million for the same period. This increase was primarily due to salaries and other employment-related costs driven by increased headcounts supporting pre-commercialization and launch readiness activities. Finally, net loss was $82.1 million for the three months ending September 30, 2024, compared to $45.8 million for the same period in 2023. With the recent approval of AUCATZYL in the US, I'd like to note two financial milestones that will be triggered in Q4. As a result of the FDA approval, Autolus will receive a $30 million milestone payment from Blackstone based on the terms of the Blackstone collaboration agreement. In addition, the company will make a regulatory milestone payment of £10 million in accordance with our UCLB license agreement. These are detailed in our subsequent events section of Form 10-Q for the third quarter. Autolus estimates that with its current cash and cash equivalents, we are well-capitalized to drive the full launch and commercialization of obe-cel in relapsed refractory adult ALL, as well as advance its pipeline plans, including providing runway and data into the first pivotal study of obe-cel in autoimmune diseases. I'll now hand back to Christian to wrap up with a brief outlook on expected milestones.

Christian Itin, CEO

Thanks, Rob. As already discussed, the next key event is going to be the ASH annual meeting at the beginning of December. We look forward to updating you on the four presentations I mentioned earlier. We're then looking for initial data from the Phase 1 SLE trial by the end of the first quarter, with additional data from both pediatric ALL and longer-term observations of the Phase 1 patients in the second half of the year. We're excited about adding further clinical activity as we go through the year and will update you in separate communications. With that, we are happy to take questions. Jacinda, please start the Q&A.

Operator, Operator

Thank you. At this time we will conduct a question-and-answer session. Our first question comes from James Shin of Deutsche Bank. Your line is open.

James Shin, Analyst

Hey, good morning, guys. Just a couple of questions. Is obe-cel's EU approval still on track for mid-25 or could this be slightly pulled forward? And then secondly, looking ahead there's some real-world data showing, Tecartus can be administered in the outpatient setting and I noticed obe-cel has a longer CRS onset. It's like day nine versus Tecartus is day five. So wouldn't it be more favorable to outpatient administration? Thank you.

Christian Itin, CEO

Hi, James. First of all, thanks for joining. On the EU process, we're on track and we expect the timeline to reach the middle of next year. Regarding the UK timing, we expect it will be similar in terms of the overall time frame for approval in both jurisdictions. Fundamentally, the safety profile of obe-cel allows management with much less effort than many other products generated in the past. One opportunity exists for patients with a low disease burden to consider administering this product in a hospital outpatient setting. This, of course, will require experience as it did with previous therapies. However, as physicians and healthcare providers gain experience with the product, we expect to see increased outpatient administration opportunities for these therapies, especially given the advantageous safety profile of obe-cel.

Operator, Operator

Our next question comes from Asthika Goonewardene at Truist. Your line is open.

Unidentified Analyst, Analyst

Hi, this is Karina for Asthika. I have two questions. First, the FDA focused the label's efficacy on patients with higher blast count. Could you expand on the baseline characteristics that might suggest obe-cel's superior efficacy? Also, it appears that patients in the FELIX study were a decade older with higher incidences of extramedullary disease. How would you account for these differences? Second, with your team achieving one of the highest reduction efficiencies in the industry at 72%, how are you maintaining a low out-of-spec rate in a commercial setting? How confident are you in this? Thank you.

Christian Itin, CEO

Thanks for joining, Karina. The first question is related to activity, particularly in patients with higher disease burden. We previously discussed that patients below the 75% tumor burden at lymphodepletion reached an ORR in the range of 85-86%, indicating very high activity at that level. The outcome drops to the 60% range in patients with more than 75% tumor burden, indicating insensitivity to previous treatments. Our study incorporated a minimal residual disease cohort and patients with isolated extramedullary disease, typically excluded from clinical trials but we believe they performed well in this study. This diverse population, including older patients, adds valuable insight into the robustness of our outcomes. The second question about maintaining low out-of-spec rates emphasizes that specifications were set based on clinical experience and performance. Given that these metrics closely track our clinical data, we have high confidence in our ability to maintain low out-of-spec rates.

Operator, Operator

Our next question comes from Matthew Phipps at William Blair. Your line is open.

Matthew Phipps, Analyst

Hi Chris. Thanks for taking my call. I was wondering if you had any general timelines or thoughts around opening up baskets for additional autoimmune indications. I know you've talked about progressive and mass, but maybe just anything else that you're thinking in general timing there.

Christian Itin, CEO

We are actively looking into expanding our activities and expect additional trials to commence as we move through next year. We'll update you as we go through the first quarter on the trials we're activating and their timelines. This is a priority for our development organization.

Matthew Phipps, Analyst

Thanks. And just one quick follow-up, as you're looking to enroll this as a lead trial, do you feel that the biggest gating factor is patient identification or finding capacity at the centers to conduct the procedure?

Christian Itin, CEO

We don't see a capacity issue at the centers. We did experience a slowdown in enrollment during the summer months, which is typical in Europe. However, as we entered September, enrollment rates improved significantly, and we do not anticipate restrictions in capacity at these centers.

Operator, Operator

Our next question comes from Sebastiaan van der Schoot at VLK.

Sebastiaan van der Schoot, Analyst

Hi team. Thank you for taking my questions. First, on the 30 centers that are already onboarded and ready to be activated, can you clarify whether this onboarding also includes the centers' internal processes and that they can now directly order AUCATZYL? Additionally, how many of these centers have been involved in the FELIX study? Finally, on the SLE data, can you provide insight into how many patients were enrolled over the past year?

Christian Itin, CEO

Regarding the centers, the onboarding is a two-stage process. Much activity occurs before the product receives its label. The onboarding for these 30 centers was completed ahead of the approval date. After receiving approval, centers go through final training from the company, enabling them to integrate the product into their administrative processes. The 30 centers are currently completing those activation steps. Once finalized, they can begin enrolling patients. Regarding the SLE study, we commenced enrollment in the first half of the year, with the first patient dosed in the second quarter and additional patients enrolled in the latter half, aiming for complete enrollment in early Q1.

Operator, Operator

Our next question comes from Kelly Shi at Jefferies.

Hanze Zu, Analyst

Hi. This is Hanze Zu on for Kelly. I have two questions. One, can you discuss feedback from physicians regarding Tecartus versus obe-cel and its implications for your launch projections? And I have a follow-up. Thanks.

Christian Itin, CEO

The feedback from physicians has been positive and emphasizes the differentiation of obe-cel's profile. Physicians appreciate its easier management, lower toxicity, and enhanced integration into clinical practice, which we believe will optimize uptake and support wider adoption of CAR-T therapies for ALL patients.

Hanze Zu, Analyst

Thank you. My next question is a follow-up on SLE. Can you provide more details on patient numbers, dose levels, and the data you plan to disclose in the first quarter versus the second half? Also, what are the read-throughs to SLE trials in terms of safety data from adult ALL, especially concerning neurotoxicity?

Christian Itin, CEO

The SLE trial is designed to confirm a fixed-dose level of 50 million cells for six patients initially, with more patients potentially enrolled later. The focus is on the inflammatory response. Initial data will be available in Q1, showing the product's early behavior. Later data will focus on longer-term follow-up. Safety data indicates our product has a very low neurological toxicity rate in both adult ALL and in non-Hodgkin's lymphoma, giving us confidence in its safety profile.

Operator, Operator

Our next question comes from Gil Blum at Needham & Company.

Gil Blum, Analyst

Hey, good morning, and congrats again on the approval. Just a quick one from us. Can you remind us of your strategy in Europe regarding the commercial rollout?

Christian Itin, CEO

In Europe, the regulatory process is centralized and involves negotiating reimbursement in each country separately post-approval. Typically, Germany is among the first countries in which we launch, but this will be a step-by-step process across various jurisdictions. We'll keep you updated on our progress.

Operator, Operator

Our last question comes from Jacob Mekhael at KBC Securities.

Jacob Mekhael, Analyst

Hi there, and thanks for taking my question. I had a question about the Phase 1 trial for obe-cel in the pediatric ALL setting. I'm curious about your differentiation compared to what's been done prior and how it integrates with your plans for AUTO1/22, which you previously tested in the same setting. I also have a follow-up on the 16-day vein-to-release time. Could you quantify how low it could potentially go?

Christian Itin, CEO

Thank you for joining, Jacob. Regarding the pediatric Phase 1 study, there's a regulatory obligation to develop treatments for children if you aim for adult approvals. This allows us to evaluate any potential competitive advantage for obe-cel based on safety and efficacy data, particularly since there is currently one approved product for children. The product has shown consistent positive results, so we will continue assessing its viability in the pediatric setting as data becomes available. Regarding the 16-day vein-to-release time, we aim to significantly reduce this. The longest aspect currently involves the sterility testing, and we’re exploring technology that could shorten this by around two to five days depending on various factors. Ultimately, we need to ensure we can prove a negative outcome, which is crucial for maintaining safety and reliability.

Rob Dolski, CFO

Hi Jacob. We haven't given formal guidance regarding expenses and runway into 2025. But you can see from current quarter-over-quarter changes that the ramp especially on the SG&A side is driven by building the commercial team and getting ready for launch. As we enter Q4, that team in the US is well established, though we will see some modest growth as we expand from 30 to 60 centers next year.

Operator, Operator

This concludes the question-and-answer session. I would now like to turn it back to Christian for closing remarks.

Christian Itin, CEO

Thanks a lot, Jacinda. First of all, thanks for joining everyone. We appreciate your continued support. We look forward to seeing you at ASH at the upcoming conference. I can only say that we are hugely excited about where we are, and we aim to drive the launch with enthusiasm and energy. We're looking ahead to an interesting end of the year and 2025. Thanks again for participating, and hopefully, see you soon.

Operator, Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.