Earnings Call Transcript - AUTL Q2 2023

Operator, Operator

Hello, ladies and gentlemen, and welcome to the Autolus Therapeutics Second Quarter 2023 Financial Results Conference. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your host, Julia Wilson, Communications Consultant. Please go ahead.

Julia Wilson, Communications Consultant

Thank you, Corey. Good morning or good afternoon, everyone, and thank you for joining us to take part in today's call for Autolus' second quarter 2023 financial results and operational highlights. I'm Julia Wilson, Communications Consultant for Autolus. With me today are Dr. Christian Itin, our Chief Executive Officer, and Dr. Lucinda Crabtree, our Chief Financial Officer. Before we begin, I would like to remind you that during today's call, we will make statements related to our business that are forward-looking under federal securities laws and safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These may include, but are not limited to, statements regarding the status of clinical trials and development and regulatory timelines for our product candidates, and our expectations regarding our cash runway. 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, both available on the Investors section of our website. On Slide 3, you will see the agenda for today's call, which is as follows; Christian will provide an overview of our operational highlights for the second quarter of 2023. Lucinda will then discuss the company's second quarter 2023 financial results, before Christian will conclude with upcoming milestones and any other concluding comments. Finally, we will, of course, welcome your questions. Over to you, Christian.

Dr. Christian Itin, CEO

Thank you, Julia. Good morning to you all. Thank you for joining us. It's my pleasure to review our progress for the second quarter of 2023. Moving to Slide 4, we had a very productive second quarter with the ASCO and EHA data presentation of our pivotal FELIX study as the highlight. Obe-cel has shown an excellent profile in adult patients with relapsed/refractory acute lymphoblastic leukemia. The ORR, based on complete remissions with either complete or incomplete hematological recovery was 76%, up from the interim analysis, which came in at 70%. The safety profile was remarkable with low levels of high-grade cytokine release syndrome in ICANS, and the data tracked very well on persistence and duration of response with our prior ALLCAR19 study where we have seen 35% of treated patients achieving long-term remissions without any need for additional anti-leukemia therapies. The next follow-up is planned for ASH with several obe-cel related abstracts submitted to the organizers this week. Critical for the successful outcome of the FELIX study was our robust product delivery platform with high manufacturing success rates, short vein to delivery time, and high percentage of patients dosed with obe-cel. Our key focus now is the completion of the validation of the commercial manufacturing facility, which we call the Nucleus. We're on track for a filing of a biologics license application with the FDA at the end of 2023 and a market authorization application with EMA in the first quarter of 2024. As the program is progressing towards regulatory review, we're also actively preparing obe-cel for launch, with critical activities underway in medical affairs, completion of value dossiers, and onboarding of clinical centers. On Slide 5, we have a short overview of the key pipeline progress. First, we continue to expand the obe-cel opportunity. In non-Hodgkin's lymphoma, in our ALLCAR19 study, we demonstrated very high levels of metabolic complete remission rates in patients across B non-Hodgkin's lymphoma indications, with an attractive high level of sustained CRS in DLBCL patients. We have also notably taken the decision to develop obe-cel in autoimmune disease, starting with a small Phase 1 dose confirmation study in SLE patients, which we expect to start early in 2024. We believe the excellent safety and efficacy profile we have seen for obe-cel in ALL and non-Hodgkin's lymphoma patients will translate well into B-cell-mediated autoimmune diseases, and together with our established commercial manufacturing and delivery base, plus attractive COGS, will drive a well-differentiated expansion of the obe-cel opportunity. Looking into the obe-cel lifecycle, the pediatric ALLCARPALL study with AUTO1/22 was updated at the EBMT meeting in the second quarter and continues to show an impressive level of clinical activity and a very favorable safety profile. Also, in the second quarter, we presented longer follow-up of the peripheral T-cell lymphoma patients treated with AUTO4 showing complete remissions sustained beyond one year. Lastly, in collaboration with UCL, AUTO8 is progressing well in the Phase 1 multiple myeloma MCARTY study, with the first data planned for the end of the year. Finally, the AUTO6NG Phase 1 study in neuroblastoma is expected to start in the third quarter. Moving to Slide 10, this is the overall response rate. As you can see, we had an overall response rate of 76%. 54% of the patients achieved CR and 21% at Cri, and we have seen a very high level of patients achieving not just complete remission, but also an MRD negative status with a sensitivity of 10 to the minus four. Now, when we look at duration of response, obviously this is still early in terms of follow-up, with a median follow-up of 9.5 months. You can see that the overall curve tracks very nicely with what we expected and seen prior. You can also see there's still a significant number of patients in the earlier part and the upper part of the curve, which tells you that there is quite a bit of observation that we need for this study to actually fully stabilize. At this point, 61% of the responders are in ongoing remission. Now, when we look on Slide 12 into sort of the a bit more into sub-analysis of kind of what's driving or impacting the overall response rate, we do see obvious key drivers here. Patients with Extramedullary disease tend to have a poor outcome, as do patients with very high levels of disease in the marrow. In fact, if you have patients with more than 75% tumor burden in the marrow, you see a reduction of the overall response rate to the range of about 60%, whereas patients with disease burdens below 75% in the marrow, and actually any level below, were in that range of somewhere between 80% and 85%. A worthwhile point to note is that if you have patients that had a very significant number of prior lines of therapy, they tend to do less well than patients that’ve been less exposed to therapy before. Overall, some limited impact we can see on either prior Ino or prior blinatumomab therapy. However, those are also overlapping. So, from a confidence interval, not clearly differentiated. Moving to Slide 18, I want to briefly talk about what some critical success factors on product supply are. The first is, when you are dealing with patients with acute leukemia, you start with a very challenging starting material, because many of these patients do not only have disease in their bone marrow, but also actually have disease that gets into the blood, leading to very high tumor burden in the blood. When you’re collecting cells from the blood in a leukapheresis, you have patients where the predominant cells you collect can be up to 95% leukemic cells. This starting material is incredibly difficult because you have to first eliminate those cells before you can even think about manufacturing, which means your manufacturing process must be able to handle a wide range of complex and challenging starting materials. We spend a lot of time optimizing the manufacturing product process to achieve the robustness required for reliable product delivery here.

Dr. Lucinda Crabtree, CFO

Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the second quarter ended June 30, 2023. Cash and cash equivalents and restricted cash at June 30, 2023, totaled $307.8 million. This compares to cash and cash equivalents and restricted cash of $382.8 million at December 31, 2022. Total net operating expenses for the three months ended June 30, 2023, were $47.9 million compared to total net operating expenses of $46.5 million for the same period in 2022. Research and development expenses decreased by $1.5 million to $36.7 million for the three months ended June 30, 2023, from $38.2 million for the three months ended June 30, 2022, primarily due to a decrease of $5.9 million in clinical costs and manufacturing costs, primarily related to our obe-cel clinical product candidate, a decrease of $0.6 million in legal fees and professional consulting fees in relation to our R&D activities, a decrease of $0.5 million in depreciation and amortization related to property, plant, and equipment and intangible assets, and a decrease of $0.1 million in material transportation costs. These were offset by an increase of $3 million in salaries and other employment-related costs, including share-based compensation expense, which was mainly driven by an increase in the number of employees engaged in R&D activities, an increase of $1.7 million in facilities costs related to our new manufacturing facility, the Nucleus, which is based in Stevenage, UK, as well as increases in cost related to maintaining our current leased properties, and an increase of $0.9 million related to IT infrastructure and support for information systems related to the conduct of clinical trials and manufacturing operations. General and administrative expenses increased by $2.8 million to $11.1 million for the three months ended June 30, 2023, from $8.3 million for the same period in 2022. This was primarily due to an increase of $1.5 million in commercial readiness costs due to increased commercial readiness activities being undertaken, an increase of $1.2 million in salaries and other employment-related costs, including share-based compensation expenses, which was mainly driven by an increase in the number of employees engaged in G&A activities, an increase of $0.2 million related to IT infrastructure and support for corporate and commercial operations, an increase of $0.1 million in depreciation and amortization related to property and equipment and intangible assets. These were offset by a decrease of $0.2 million, primarily related to reduction in directors and officers liability insurance premiums and legal and professional fees. Other income or expense net increased to an income of $0.5 million for the three months ended June 30, 2023, from an expense of $1.3 million for the same prior period in 2022, respectively. The increase of $1.8 million is primarily due to the strengthening of the pound sterling exchange rate relative to US dollars for the three months ended June 30, 2023, versus the same period in 2022. Interest income increased to $3.4 million for the three months ended June 30, 2023, compared to $0.1 million for the same period in 2022. The increase in interest income of $3.3 million primarily relates to increased account balances and yield associated with our cash and cash equivalents during the three months ended June 30, 2023. Interest expense increased to $5 million for the three months ended June 30, 2023, compared to $1.8 million for the three months ended June 30, 2022. Interest expenses primarily related to the liability for future royalties and sales milestones associated with our strategic collaboration agreement. Income tax benefit decreased by $4 million to $3.5 million for the three months ended June 30, 2023, from $7.5 million for the three months ended June 30, 2022, due to a decrease in qualifying R&D expenditures, and a reduction in the effective tax rate related to the UK research and development tax credit regime under the scheme for SMEs. Net loss attributable to ordinary shareholders was $45.6 million for the three months ended June 30, 2023, compared to $42.1 million for the same period in 2022. The basic and diluted net loss per ordinary share for the three months ended June 30, 2023, totaled $0.26 compared to a basic and diluted net loss per ordinary share of $0.46 for the three months ended June 30, 2022. Autolus estimates that its current cash and cash equivalents on hand and anticipated future milestone payment from Blackstone will extend the company's runway into 2025.

Dr. Christian Itin, CEO

Well, thanks, Lucinda, and thanks in particular for all your contributions over the last few years. You will definitely be missed and wish you success with your next steps. Welcome, Rob. We're in a fantastic situation that with Rob Dolski, we have a great successor to Lucinda in the role of CFO. I would just like to briefly introduce Rob, and then also ask him to introduce himself. Rob joins us from Checkmate Pharmaceuticals, having gone through an interesting phase of the company, including the sale to Regeneron, which gives him a nicely rounded set of experiences. He brings a very unusual combination of financial experience, but also operational experience, including a deep understanding of manufacturing and commercial aspects, which are really important in where we are now. I think he will set us up well for the next steps that we're going to take with the company, driving the strategy, planning, execution, as well as expansion.

Rob Dolski, CFO

Thank you, Christian, and good morning, or afternoon to everyone. I'm delighted to be joining Autolus at such an important time. With the upcoming obe-cel BLA filing and the expansion of the manufacturing and commercial efforts, it's going to be a very busy time, and I certainly look forward to interacting with our analysts and investors over the coming months. I'll now hand things back to Christian to wrap up with a brief outlook on expected milestones.

Dr. Christian Itin, CEO

Thanks, Rob. To summarize, we're moving to Slide 36. We think we have an exciting time ahead of us. Key focus is getting obe-cel into the regulatory process and review, which is really the primary focus of the organization. We expect the BLA filing towards the end of the year, followed by a filing in Europe in the early part of next year. Next up, are the planned FELIX data presentations at ASH. We submitted, as indicated, a few abstracts and also look forward to providing an update and more insights in the study. In addition, we are preparing for commercial product supply and launch readiness as a very significant workstream associated with that. We expect to provide updates on the pipeline programs with additional data and follow-up during the year with our key programs, which at this point, are on patent, and also open up opportunities for conversations on that side.

Operator, Operator

Our first question comes from Matt Phipps at William Blair. Matt, you can go ahead.

Matt Phipps, Analyst

Hello, thanks for taking my questions and all the updates. Christian, on the SLE study, just curious if you can say at this point if you'll test multiple dose levels, how the dose might compare to the FELIX indication. Do you think there's any reason to look at different lymphodepletion regimens? And just real quick, any update on the FELIX MRD cohort just given some real-world data that CARs has shown a lot of use in patients who are MRD negative. Thank you.

Dr. Christian Itin, CEO

Thanks, Matt. Excellent question. So, first on SLE, clearly we believe that for the SLE indication, the dose that we need is substantially lower than what we need for acute lymphatic leukemia patients, because the amount of cells that has to be removed is very different. We expect to confirm a dose that is substantially lower in this indication. We do not expect to run a dose escalation but we want to have that confirmed in a small number of patients for conversations with regulators for design of future studies. We don't think there's a change we want to play around with lymphodepletion. There is significant work that has gone into conditioning the marrow to accept cells. A lot of that comes from the original work in stem cell transplants that was adapted for cell therapies, particularly CAR T therapies. This is an area where we do not believe the benefits warrant that type of high investment. With regards to MRD, that’s an area we’ve also been very active in. We’ll provide updates on low disease burden patients and MRD patients, as patients with lower disease burden have less work factor for the CAR T-cells to accomplish.

Asthika Goonewardene, Analyst

Hi, guys, good morning, and thanks for taking my questions. I want to build on Matt's previous question on SLE. Can you tell us how long the DLT monitoring will be required on this Phase 1 in SLE? I'm just trying to get an idea of how quickly you will be able to get this study recruited in 2024. And if we just think back on the data presented from the FELIX study at ASCO, you showed that tumor burden is quite associated with the incidence of ICANS, and that's very predictive and probably useful in the physician's hands. We also know adult ALL is a rapidly progressing disease. So, I'm wondering what shaving off that five days from the vein to delivery time on FELIX versus what you expect to go into commercial mode would allow you to get more patients before they've reached that 20% bone marrow blast threshold.

Dr. Christian Itin, CEO

Really good question, Asthika. First off, regarding the Phase 1 study design and the DLT period, the work done by Andreas and that group indicates that you could consider a compact DLT period of about 10 days for the patients. We also have a lot of safety experience with the product. The question then related to tumor burden aspects and the potential impact of vein to delivery time is significant. A shorter vein to delivery time is always beneficial because the disease can be quite explosive in growth. Anytime you can shorten the time between identifying and treating the patient is helpful.

Kelly Shi, Analyst

Thank you for taking my questions. I have two quick ones. The first is regarding the subgroup analysis at ASH of this year. What kind of patient stratification are you going to use for this analysis? Also, what is the reason for 30% of the patients receiving a transplant while still in remission? Thank you.

Dr. Christian Itin, CEO

Hi, Kelly. Thanks for the questions. With regards to the subgroup analysis, there’s a very rich data set to analyze as this one of the larger studies conducted in relapsed/refractory patients. We will focus on aspects such as tumor burden and risk parameters on both efficacy and safety outcomes. The patients that we had in the study, 30% received stem cell transplants. This is the range you expect based on clinical practice. Physicians need to consider whether patients are fit enough to tolerate a stem cell transplant, and they might decide whether to follow the patient or transplant based on the situation.

Kelly Shi, Analyst

Super helpful, thank you. And I also have one quick one regarding the lupus trial. So, does the manufacturing process require additional steps to increase purity compared to oncology CAR T product? Thanks.

Dr. Christian Itin, CEO

That's a really good question, Kelly. The answer is, the lupus patients are a lot simpler to manufacture because you do not have the contamination from higher levels of leukemia cells in the blood. The starting material we collect from these patients is much better and more homogeneous. We believe this will allow us to shorten the manufacturing process, as we need fewer cells and work with a better initial material.

Noah Burhance, Analyst

Hi guys, this is Noah on for Eric. Thanks for taking our question. We were wondering regarding the SLE trial what clinical parameters will inform an optimal dose selection. Thanks.

Dr. Christian Itin, CEO

Hi, Noah, thanks for joining. You want to see parameters that show therapy at the level you dose provides profound B-cell aplasia and a rapid decline of autoreactive antibodies, and that the lupus-related composite scores track down to baseline. You also want to see that clinical activity can be induced without significant toxicity. This involves both pharmacodynamic parameters as well as disease parameters to inform the dose and activity relationship. Thank you for joining today. There were many updates in this quarter. We are moving flat out across the organization to deliver a BLA by the end of the year, which includes completing work on the manufacturing facility and clinical data analysis from the FELIX study. It’s an exciting and intense time, but we feel confident working with a product that possesses a very unusual profile and has the potential to greatly impact patients' lives going forward. We look forward to keeping you updated as we navigate the second half of the year.

Operator, Operator

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.