Earnings Call Transcript - AUTL Q2 2020

Operator, Operator

Hello, ladies and gentlemen, and welcome to the Autolus Therapeutics Second Quarter 2020 Financial Results Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Dr. Lucinda Crabtree, Vice President, Investor Relations. Please go ahead.

Lucinda Crabtree, Vice President, Investor Relations

Thank you, Crystal. Good morning or good afternoon, everyone, and thank you for taking part in today's call on the financial results and operational highlights for the second quarter 2020. I am Lucinda Crabtree, Vice President, Investor Relations. With me today are Dr. Christian Itin, our Chairman and Chief Executive Officer; and Andrew Oakley, our Chief Financial Officer. Before we begin, I would like to remind you that during this call, we will be making forward-looking statements. All statements other than statements of historical facts contained in this presentation are forward-looking statements. Our actual results, performance or achievements may be materially different from those expressed or implied by the forward-looking statements. For a discussion of the risks and uncertainties relating to our business and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, please see the section entitled Risk Factors in our annual report on Form 20-F filed on March 3, 2020, as amended, as well as discussions of potential risks, uncertainties and other important factors in our other periodic filings with the SEC. The forward-looking statements contained in this presentation reflect the company's views as of the date of this presentation regarding future events, and the company does not assume any obligation to update any forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing the company's views as of any date subsequent to the date of this presentation. On Slide 3, agenda, you'll see the agenda for today, and it is as follows: Christian will provide a brief introduction, and that would be followed by our operational highlights for the second quarter of 2020. Andrew will next discuss the company's financial results, and then Christian will conclude with upcoming milestones and other concluding comments. And of course, we will welcome your questions following our remarks. So with that, I'd like to turn the call over to Christian.

Christian Itin, Chairman and CEO

All right. Well, thank you very much, Lucinda. This is probably the most thorough forward-looking statements that I think we had. So with that, good morning to everyone, and thank you for joining us. I'm pleased to review our progress for the second quarter 2020. First, on Slide 5, I would like to update you on the current and potential future impact of the COVID-19 pandemic on our business. At our last financial update call in May, we were at the height of the first peak of the COVID-19 infection in the New York City metropolitan area, the U.K. and Spain. The patients, while, and for some weeks, patients could not be enrolled into clinical trials in those areas. In contrast, sites in the south of the U.S. continued to operate normally during that period and continued to enroll AUTO3 patients. In parallel, the start-up of our AUTO1 pivotal study in Q2 has been progressing to plan. While we are now in a more stable situation in the first-hit areas and patient enrollment has resumed, we are monitoring with some concern the developments in the south and the west of the U.S. While we continue to enroll patients in those areas, we're closely monitoring the situation. Our key focus is on patient safety and ensuring data integrity in our trials. Most of our suppliers have been coping well through the first stretch of the pandemic, while some have experienced issues. We are working closely with all our suppliers to ensure uninterrupted supply of essential goods and services for our operations. Finally, we've been working closely with our logistics partners to ensure uninterrupted and timely continental and transatlantic deliveries of leukapheresed cells and final products. To date, our lead programs, AUTO1 and AUTO3, have not been significantly impacted by the COVID-19 outbreak. However, depending on the development of the pandemic in the second half of 2020 and into 2021, our trials could become impacted. For AUTO4, we experienced a delay in patient enrollment for our ongoing Phase I clinical trial. This trial is conducted in the U.K. and in Spain, and the healthcare systems in both countries have been heavily impacted, leading to a stop of enrollment in the second quarter. The return to normal activity in both countries has been slower than expected, and we now expect first data from this Phase I study to be available in the first half of 2021 instead of the fourth quarter of 2020. With respect to our preclinical programs, these have been minimally impacted, and we continue to expect AUTO5, AUTO6NG, AUTO7 to enter clinical development in 2021. Our first clinical studies with AUTO1NG in pediatric ALL and AUTO8 in multiple myeloma remain on track to begin in the second half of 2020. So moving on to our corporate highlights and starting with our clinical programs on Slide 6. We've had a busy quarter across our portfolio, with positive data presentations at key medical conferences. Both our later-stage clinical programs, AUTO1 and AUTO3, continue to show very encouraging clinical activity with tolerable safety profiles as highlighted in 2 separate presentations at ASCO and EHA. We also followed both these presentations with analyst events. I will touch on these clinical updates a little later. However, focusing on the operational aspects and starting with AUTO1, we have now commenced enrollment of patients with relapsing-remitting adult acute lymphoblastic leukemia in our pivotal Phase Ib/II AUTO1 program, and we're targeting to have data by the end of 2021. With regard to our lead product candidate for the treatment of DLBCL, AUTO3, we have now selected the recommended Phase II range of 150 million to 450 million cells, with the single dose of pembrolizumab included in preconditioning. In addition, the company has also commenced a 20-patient outpatient cohort as an extension to its ongoing Phase I/II ALEXANDER study, with results expected by the end of 2020. The data from this outpatient cohort will provide important insights that will be used to refine the design of the potential pivotal Phase II part of the ALEXANDER study. Finally, we are also pleased to have been invited to present a mini oral presentation at ESMO on September 18, 2020, where we'll give a further clinical update from the ALEXANDER study. On that note, we plan to host an analyst event on this same day. Finally, the last item I would like to mention on this slide is the forthcoming clinical data updates expected through the second half of 2020. For AUTO1 in adult ALL, we plan to present longer-term follow-up data towards the end of 2020, likely at ASH. For AUTO3, as I've mentioned, we will look to update with additional patients from our ongoing ALEXANDER study as well as longer-term follow-up data at ESMO. We would also look to provide a further update by the end of 2020, again, likely at ASH, by which time we would also look to update you on the data from the outpatient cohort. Moving to Slide 7. At AACR, we updated on 3 of our earlier-stage pipeline programs: AUTO5, AUTO6NG and an oral presentation on AUTO7. The preclinical data presented reinforced the strength of our binder discovery capabilities with our ability to selectively target 2 separate populations of T cells in T-cell lymphoma as defined by the mutually exclusive expression of T cell receptor beta chain constant domains 1 and 2. We're excited about the profile of AUTO5, our anti-TRBC2 chimeric antigen receptor, which is the complementary program to our clinical asset, AUTO4, which targets TRBC1-positive T cells. In addition, we also demonstrated the utility of our broad technology toolkit, whereby we showed how our modular approaches in AUTO6NG and AUTO7 can address the hostile solid tumor microenvironment in models of small cell lung cancer and prostate cancer, respectively. The new data suggests that AUTO6NG can overcome key immunosuppressive mechanisms in the tumor microenvironment. Furthermore, the AUTO7 program builds on a novel and optimized CAR to PSMA designed to be highly active even with low PSMA target expression and also in an acidic environment, often characteristic of solid tumors. AUTO7 then combines modules introduced in AUTO6NG with a novel module, leading to a low-level secretion of interleukin 12 to change the prostate tumor from an immunologically hostile to an immunologically supportive environment. We have guided that all 3 programs presented at AACR, AUTO5, AUTO6NG and AUTO7, are expected to enter the clinic in 2021. Moving to Slide #8. Given the maturing of our clinical programs, we are excited to announce earlier this week Dr. Jay Backstrom's appointment to the Board of Directors. Jay brings a wealth of oncology development, regulatory and portfolio strategy experience to the Board. Under his leadership, Celgene has developed a broad range of therapeutics, including small molecules, biologicals and CAR-T programs in one of the industry's most significant hemato-oncology pipelines. Furthermore, we also announced Dr. Nushmia Khokhar's promotion to Senior Vice President, Clinical Development, taking over full responsibility for all our clinical development activities. Nushmia has been instrumental in the development of our clinical programs at Autolus, and we very much look forward to her continued strong leadership. Finally, we announced that Dr. Vijay Peddareddigari will be leaving the company, moving with his young family back to the U.S. Over the past 4 years, Vijay has played a key leadership role in establishing and executing the clinical development strategy to advance our T cell therapies, and we wish him well in his future endeavors. As well as the Board and management update, it is worth mentioning that we're also extending our manufacturing capacity at the Cell and Gene Therapy Catapult to secure initial commercial launch capability. Moving to Slide #9. I wanted to spend a brief moment recapping our lead program, AUTO1 in adult ALL. Adult ALL is a challenging disease and typically a disease of elderly patients. A lot of these patients have significant comorbidities, making them a more fragile patient group than pediatric ALL. The indication is approximately 3 times the size of pediatric ALL, which represents an attractive market opportunity. Within the U.S. and the top 5 European countries, approximately 3,000 patients every year are at the end stage of their treatment, having failed chemotherapy and stem cell transplant, and therefore, require other options. At this point, there is no CAR-T therapy approved for adult ALL. When we created AUTO1, we designed a product that has the ability to have a very high level of antileukemic activity to cope with the rapid growth of leukemic cells in the bone marrow, a very long persistence to put long-term pressure on the leukemia and get to a transformational outcome, combined with a tolerable safety profile, which is particularly important for elderly patients with acute leukemia. Now turning to Slide #10. To recap on the update we provided at EHA in June on the ALLCAR19 study with AUTO1, our data suggest that AUTO1 has a superior efficacy profile with a comparable safety profile to standard of care. The overall response rate and MRD-negative CR rate we presented at EHA was 84% for all 19 patients treated in this study. Responses appear durable, and notably, first patients are beyond 18 months in molecular complete remission without receiving a second transplant. In fact, for all the patients treated, only 2 patients have been consolidated with the transplant. Overall, 11 of the 19 patients continue to be disease-free, with a median follow-up of 12.2 months, with the range ongoing up to 24.4 months. Now putting this data in context with some of the other standard of care therapies that are available, the overall response rate we see is approximately double that of blinatumomab and looking at event-free survival or median PFS, this also compares very favorably to blinatumomab or inotuzumab, where approximately half of the patients are consolidated with transplant. Furthermore, AUTO1 event-free survival at 6 months is high at 62% for all patients and 76% for patients treated with the close manufacturing process, which we're using going forward in the pivotal study. With the absence of post CAR-T consolidation with transplants, the treatment effect is that of AUTO1 as a stand-alone therapy. So based on this data, turning to Slide 11, we have started enrollment into the pivotal program, AUTO1-AL1, in adult ALL. As a reminder, the CTA was filed in the U.K. in Q1 and cleared earlier this year, and the U.S. IND was accepted by the FDA in the second quarter. We have now sites open and running and enrolling patients. As a reminder, the study has a Phase Ib running, and the pivotal program comprises a single-arm, 100-patient study with relapsed/refractory patients. The primary endpoint is complete remission rate. Secondary endpoints include molecular CRs, event-free survival, and duration of response. We remain on track to report full data by the end of '21. Let's now turn to Slide 12, where I would like to switch gears and talk about AUTO3, a program that is designed for the treatment of patients with diffuse large B-cell lymphoma. As you all know, DLBCL is a much bigger indication than adult ALL in a setting where there are already 2 approved CAR-T therapies with Yescarta and Kymriah, plus liso-cel or otherwise known as JCAR-17 pending approval. We know this is a large opportunity with approximately 10,000 patients on the back end of the disease, which is a sizable population with a very significant medical need. The aim in DLBCL is to achieve durable complete remissions. Approved CAR-T products, Yescarta and Kymriah, have a high objective response rate, between 70% and 80%, but only 29% to 37% of the patients achieve durable complete remissions. The 2 main drivers for relapses post remission are loss of antigen and expression of PD-L1 on lymphoma cells. AUTO3 is designed to achieve a high level of sustained complete remissions. To counteract loss of antigen as innovation mechanism, we engineered 2 chimeric antigen receptors, one targeting CD19, the other, CD22, into each CAR T cell. The rationale is that the lymphoma cell would have to lose both antigens simultaneously to avoid recognition by the CAR T cell, a much less likely event to occur than a single antigen loss. The molecular composition of ALLCARs is different from any other CAR-T product, even from AUTO1, with different binders targeting the antigens, a different costimulatory domain for the CD19 CAR and a novel CAR architecture for the CD22 CAR. In addition to the unique molecular design of AUTO3, we're also using pembrolizumab during preconditioning to counteract PD-L1-mediated checkpoint inhibition. As reported at ASCO and EHA, AUTO3 shows a high level of complete remissions, with about 60% CRs at the recommended Phase II dose. Moving to Slide 13. Encouragingly, to date, there have been no early relapses observed from patients who achieved CRs, which bodes well for sustained high levels of CRs. Larger patient numbers and more follow-up will provide further clarity towards the end of this year. Slide 14. Importantly, patients responding to AUTO3 therapy showed limited CAR T-related toxicities, supporting treatment of patients outside of academic centers and also in an outpatient setting. This is particularly important in DLBCL as 80% of third-line patients are treated outside academic centers in the U.S. Currently approved products are only tapping into significantly less than 20% of the market, which is managed by the academic centers. It's very little to no penetration of the remaining 80% of the market, which comprises settings that cannot deal with the intensity of management required for the current CAR-T products. We believe this creates a highly attractive opportunity for the profile of product that we are seeing with AUTO3. As I've mentioned, we expect to provide an update on patients treated in our outpatient expansion cohort by the end of 2020. So let's turn to Slide 15. As we have discussed, we've developed the first-in-class CD19 and CD22 CAR, with novel signaling domains designed to provide best-in-class efficacy with high rates of durable complete responses. Given the differentiated clinical and safety profile we have reported on so far, we see a really attractive opportunity for AUTO3 as an outpatient solution for patients with DLBCL, maximizing the commercial potential of a CAR-T product across all settings of care. Finally, on Slide 16, I wanted to remind you of the broad and exciting next-generation pipeline we are proud to be developing at Autolus. AUTO1NG, our next-generation program in ALL, retains the fast off-rate CD19 CAR we use in AUTO1 and as a CD22 CAR, a novel one. We will look to progress this program into a Phase I clinical study in the pediatric setting in the second half of this year. CD19-negative relapse appears to be a greater issue in pediatric patients compared to adult patients with ALL, and hence, the focus with this program first in pediatric patients. AUTO3NG is a life cycle management program in DLBCL and is representative of the ongoing innovation at Autolus. I also wanted to mention AUTO8, which is our next-generation program in multiple myeloma due to enter the clinic in the second half of 2020 as well. Lastly, the suite of next-generation programs showcased at AACR a few weeks ago will look to move into the clinic in 2021, including our first solid tumor programs for both prostate cancer and small cell lung cancer, which we're exhibiting. We're very excited to be progressing. With that, I will turn over to Andrew for his second call 2020 financial update. Andrew?

Andrew Oakley, CFO

Thanks, Christian, and good morning or good afternoon to everyone. If we move to the next slide, it's my pleasure to review our financial results for the second quarter, that's for June 30, 2020, starting with our cash position. Cash and cash equivalents at the 30th of June totaled $212 million, and that compared with $243 million at the end of the previous quarter. Net total operating expenses for the 3 months ended 30th of June 2020 were $39.5 million. That's net of grant income of $0.3 million, and that compared to net operating expenses of $37.2 million, net of grant income of the same amount for the same period in 2019. Research and development expenses increased to $31.3 million for the 3 months ended 30th of June from $26.2 million for the 3 months ended 30th of June 2019. Cash costs, which exclude depreciation and amortization as well as share-based compensation, increased to $26.5 million from $20.2 million. The increase in research and development cash costs of $6.3 million consisted primarily of: one, an increase in compensation and employment-related costs, net though of lower travel cost as a result of the ongoing pandemic of $1.8 million, and that's due to an increase in employee headcount to support the advancement of our product candidates in clinical development; secondly, an increase of $3 million in project expenses as a consequence of the advancement of our clinical portfolio, which includes all of the research process development and manufacturing activities necessary to prepare, activate and monitor the clinical trial programs; thirdly, an increase of $1.3 million in facility costs related to the commencement of the lease for an additional manufacturing suite and the continued scaling of operations in the manufacturing facility; and lastly, an increase in IT and telecoms general office expense and professional fees of $0.6 million, which is offset by a decrease in materials purchases of $400,000. Noncash costs decreased to $4.8 million for the 3 months ending 30th of June from $6 million for the 3 months ended 30th of June 2019. This decrease is primarily related to share-based compensation expense that's included in research and development expenses, which decreased by $1.3 million as a result of a lower fair value of stock options recognized in the period, and this was offset by a small increase in depreciation. General and administrative expenses decreased to $8.5 million for the 3 months ended 30th of June 2020, from $11.4 million for the 3 months ending 30th of June 2019. Cash costs, which, as I've explained, exclude depreciation as well as share-based expense compensation, decreased to $6.7 million from $7.3 million for the corresponding quarter last year. Compensation-related expenses decreased by $100,000, aided by lower travel costs as described above. Further, there was a decrease of $0.7 million in commercial activities, and these decreases were offset by a marginal increase in legal and professional fees of $100,000. Noncash costs decreased to $1.8 million for the 3 months ended 30th of June 2020, from $3.9 million for the 3 months ended 30th of June 2019. The decrease is attributed to share-based compensation expense as a result of the lower fair value of stock options being recognized during the period. Interest income decreased by $1.1 million for the 3 months due to lower interest rates. Other income decreased to $0.5 million for the 3 months ended 30th of June 2020, from other income of $4.4 million for the 3 months primarily related to a decrease of the exchange rate between the U.K. and the pound for the 3 months ending 30th of June 2020, as compared to the 3 months ending 30th of June 2019. Income tax benefit increased to $7 million for the 3 months ending 30th of June 2020, from $3.3 million for the corresponding period last year, and that's due to increased R&D expenses, which led to a higher effective tax rate. Research and development credits are obtained at a maximum rate of 33.35% for our qualifying research and development expenses, and the increase in the net credit was primarily attributable to an increase in that eligible expense. So overall, net loss attributable to ordinary shareholders was $32 million for the 3 months ending 30th of June 2020, and that compared to $28.5 million for the corresponding period last year. This resulted in a basic and diluted net loss per ordinary share for the 3 months ending 30th of June of $0.62 compared to a basic and diluted net loss per ordinary share for the corresponding period last year of $0.65. And consistent with the previous guidance, the company anticipates that cash on hand provides us with a runway into 2022. And with that, I'll now hand the call back to Christian to give you a brief outlook on expected milestones. Christian?

Christian Itin, Chairman and CEO

Thanks, Andrew. Let me conclude this part of the management discussion with a review of the upcoming milestones and news flow through 2020. Let's move to Slide 20. The upcoming 6 months will yet be another eventful period for us with multiple clinical milestones and opportunities for value creation. Our chief and most imminent operational focus will be on continuing enrollment and dosing of patients in the pivotal Phase Ib/II trial for AUTO1 in adult ALL and completing the outpatient cohort for AUTO3 in DLBCL. We also expect to report clinical data on the AUTO3 ALEXANDER trial at the forthcoming ESMO meeting and a further update planned for ASH, and an updated AUTO1 ALLCAR19 data also planned for ASH. In the second half of 2020, we'll look to progress AUTO1NG, our next-generation program for ALL, into a Phase I clinical study in the pediatric setting. In the same period, we also expect our next-generation multiple myeloma program, AUTO8, to enter the clinic. Towards the end of the year, we expect to progress our first allogeneic program into clinical development as well. As we move through to the end of the year and into next year, we will look to progress a number of our other preclinical candidates to a point of Phase I readiness, including AUTO5, AUTO6NG, and AUTO7, which are the programs we updated you about at AACR. We plan for these programs to enter into the clinic in 2021. Finally, in the first half of '21, we look forward to providing an interim update on AUTO4 in T-cell lymphoma, and we expect to present on a small number of additional patients. In conclusion, on Slide 21, I'd like to recap the major messages from today's call. AUTO1, our first pivotal program, has started in Q2 as planned. Given the positive safety and efficacy profile to date, we believe that AUTO1 has the potential to be a best-in-class CD19 CAR-T program in adult ALL, a disease setting with very high unmet need. Second, AUTO3 in DLBCL will have additional clinical data updates at ESMO and possibly ASH. In Q2, we have initiated the outpatient cohort with a planned data update on that cohort by year-end. The company is in a good position, and combined with cash on hand of $212 million, we feel well poised for success. We're now happy to take questions. Operator, please take the call.

Operator, Operator

Our first question is from Mara Goldstein, Mizuho Securities USA.

Mara Goldstein, Analyst

This is Mara. Can you hear me?

Christian Itin, Chairman and CEO

Yes, Mara.

Mara Goldstein, Analyst

Just a couple of questions. First of all, can you provide some more color regarding the data updates expected at ESMO, such as additional patients and durability and the like? And then I had a question on AUTO8 and really more around the environment for enrolling patients in multiple myeloma trials given the number of cell therapy trials currently underway and the competing late-line therapeutics for that disease, particularly under the umbrella of where we are now with COVID. And talk a little bit about that.

Christian Itin, Chairman and CEO

Sure. Regarding the second question, I believe we are currently observing an environment where several new therapeutics are becoming available. Our main focus for the first approval is primarily on the U.S., and we anticipate some delays for approvals in Europe. Our initial work will take place in Europe, and from that standpoint, we don't expect to feel an impact from the new programs coming in. Also, could you please repeat the first question? I apologize for not catching that.

Mara Goldstein, Analyst

Right. Just regarding data updates at ESMO. Would you be able to give us some additional color on what we can expect in terms of additional patients, durability and the like?

Christian Itin, Chairman and CEO

Thanks, Mara. Yes, the data updates we had at ASCO was based on a data cut in early part of the second quarter. It included, at that point, 8 patients that were at the recommended Phase II dose. We've completed that cohort, which is a total of about 15 patients. We'll have additional follow-up on these patients, not only response data but also follow-up on these patients. So it will be sort of round out the recommended Phase II dose experience for the program. That will be some of the key focus for the ESMO presentation. And then as we go towards ASH, we expect to be able to add the patient experience from the outpatient cohort for the end.

Mara Goldstein, Analyst

I would like to ask another question about the AUTO3 outpatient program. In the context of the outpatient protocol, what criteria would define success from this perspective? Specifically, if patients experience an emergent event that requires hospitalization after being treated, would that situation be classified as an outpatient failure?

Christian Itin, Chairman and CEO

No. I mean the key purpose of the outpatient cohort is actually to familiarize the centers with the product and gain experience with the patients in an outpatient setting, understanding handling as well as the overall management. We have to also understand that, obviously, the patients, particularly at the very late stage of the disease, often require hospitalization to manage the disease itself. So this is a lot about gaining experience, understanding the profile, and understanding the management. And that is what the key purpose of the outpatient cohort is and is really laying the foundation to then include patients in an outpatient setting in a pivotal study as well.

Operator, Operator

Our next question comes from Biren Amin from Jefferies.

Biren Amin, Analyst

Christian, just on the outpatient cohort, are patients dosed with a prophylaxis regimen of IL-6 inhibitors and/or steroids?

Christian Itin, Chairman and CEO

The answer is no. They will not be managed with IL-6 monoclonal antibodies or steroids. Patients will not be managed that way, as I don't believe that would be a good approach.

Biren Amin, Analyst

And just to clarify, on this outpatient cohort, will the data at the end of the year inform you on its utility for use in the pivotal trial next year in DLBCL?

Christian Itin, Chairman and CEO

We believe it will. And as I pointed out, a lot of this is really about gaining experience. And I think in that sense, it's going to be important for the centers to actually gain this experience in that setting, and that is important to lay the foundation to include these patients as well.

Biren Amin, Analyst

Got it. And then maybe just one last question. On the AUTO8 program, what learnings did you take from AUTO2 and apply to the development of AUTO8?

Christian Itin, Chairman and CEO

So one of the key focuses that we were putting on or putting into the design of the AUTO8 program is really to drive for the ability to make very deep cuts and be active at very low levels of target antigen. Both of those elements, we believe, are important to actually induce a profile or create a profile that can lead to a high level of molecular remissions, which is really what we need to aim for, which are very stringent molecular remissions in that setting. So that is what that program is designed to do, and there are also additional elements that we built in that we haven't yet disclosed.

Operator, Operator

Our next question comes from Eric Joseph with JPMorgan.

Eric Joseph, Analyst

I also just had a follow-up on the outpatient cohort and just talk about how to think about the data toward year-end when you describe patient experience. Can you just sort of help us with expectations on sort of the duration of follow-up there? Do you expect to be reporting efficacy at that point or primarily safety? And maybe just an update on enrollment to date in that cohort.

Christian Itin, Chairman and CEO

I'm not sure whether the entire question was fully audible on the reporting. I think the key question is what is the type of data we expect by year-end for AUTO3 in terms of follow-up, safety, etc. So I think with regards to the cohort that defined the recommended Phase II dose, obviously, that cohort has been fully enrolled, and patients have been treated before the middle of the year. And so we'll have a very good follow-up in that patient group of 3 months and more, which gives us a very good view in terms of not only the CR rate at 1 month but also starting to get a feel for how these patients are faring. We've already obviously had patients that we have now observed for 18 months or longer. And obviously, that gives us a very good view in terms of the totality of the CRs that we have induced and gives us a very good view over an extended period of time on how these patients are faring. I think with that, we'll get a very good understanding of what the durable complete remission rate will look like with AUTO3. So I think that is a very important part of the data. The second part, obviously, is in a larger patient group, obviously a corroboration of the overall safety profile of the product, which is an important feature of AUTO3. And so I think we're going to have a substantive addition in terms of the additional 20 patients that we're enrolling to give us a very robust dataset, both on the safety overall but also from an overall CR rate perspective. And with regards to durability of effect, obviously, all the patients we've treated until now will have at least 3 months of follow-up, and that gives us a very good view of the ability of those CRs to sustain over time.

Eric Joseph, Analyst

Okay. Great. Aside from needing to observe similar safety in the outpatient cohort, are there any logistical challenges or issues with managing patients in that setting that would discourage you from moving forward with a pivotal study?

Christian Itin, Chairman and CEO

I think it is really about corroborating the data we have in this setting and, as I indicated, an ability for the centers to gain experience. The current experience with CAR-T is to use the CAR-Ts predominantly in an inpatient setting. That is what all the guidelines are directed to. This is pretty much what the safety management, etc. is really focused on. And so it does take experience. I think this is what the patient cohort allows us to start to build, and I think will be important as we're looking forward in this program. But it is on the pure safety data side, I think corroborating the data is important, getting a better understanding of duration of adverse events, and information as well, I think, will be very helpful in understanding the overall profile and preparing ourselves to include those patients going forward as well.

Operator, Operator

Our next question comes from Jim Birchenough from Wells Fargo.

James Birchenough, Analyst

Congrats on all the progress. A few questions for me. I guess first, just on the outpatient cohort, could you remind us again what the triggers are for patients to be readmitted if they were dosed in the outpatient setting? And around fever, the time course of fever that would require readmission? And are you seeing anything early in the outpatient cohort that's giving you confidence that you've got a viable profile for that setting?

Christian Itin, Chairman and CEO

Thank you for joining, Jim. Those are excellent questions. In the CAR-T field and particularly for late-stage DLBCL patients, it is essential to rule out any infectious disease when a patient develops a fever. Typically, these patients are admitted to the hospital, given antibiotics, and monitored. If they are stable and the fever resolves quickly, they can be discharged soon after. The timing around these events is crucial. Many patients, regardless of whether they are on therapy, will need to go to the hospital whenever they have a fever to check for possible infections and the risk of sepsis. It's vital to manage this risk carefully from a fever standpoint. This situation applies equally to patients undergoing CAR-T as to those being treated for the disease in other ways. The management guidelines are consistent at that stage of the disease. Therefore, this aspect is a crucial point of focus for us. Regarding our early experience, we currently don’t have enough patients to accurately predict how the trial will progress. We'll need to observe the entire cohort to gain a clearer understanding as we consider all 20 patients.

James Birchenough, Analyst

And then Christian, maybe a broader question on the ability to navigate the pandemic. You referenced the Southern U.S. states and the West Coast. What's your exposure to sites in those areas? And is there a way to adapt the study to enroll in sites that are less hot spot?

Christian Itin, Chairman and CEO

We have a significant number of study centers across the U.S., which enables us to focus our enrollment on sites that are less affected. This approach has been effective so far, though we need to remain vigilant and monitor the situation closely. For instance, we've observed notable surges in areas like Miami and Houston in July, which we would have hoped to avoid. While these centers continue to operate, public health officials indicate that some are nearing maximum ICU capacity, which poses a risk that could potentially affect cancer centers as well. Therefore, we are closely scrutinizing this situation. From a geographic standpoint, our centers are well-distributed throughout the U.S., and we also have operations in the U.K. for AUTO3, which provides us some balance. Despite being heavily impacted in New York City during late April, we have since enrolled numerous patients there. We are managing patient enrollment as the pandemic shifts across the country, concentrating on centers that are less affected to avoid putting patients at risk. This will remain a key consideration as we navigate the second half of the year, particularly with the potential for flu alongside COVID-19. Public sentiment is beginning to wane, and frustration is rising, which presents a significant risk we all must address to maintain community discipline.

James Birchenough, Analyst

Could you discuss the strategy of moving your cell therapies like AUTO1, AUTO1NG, AUTO3, or AUTO3NG to earlier treatment lines, particularly in relation to treating more vulnerable patients in the salvage setting?

Christian Itin, Chairman and CEO

I believe this is a very important point. We are examining ways to identify earlier therapy settings for AUTO3 and DLBCL, which we view as crucial. We are also exploring opportunities in the ALL setting, where we have seen from the blinatumomab experience that transitioning to an earlier therapy line significantly increased the molecular complete response rate. This provides a compelling rationale for advancing to earlier settings and presents a substantial opportunity for improved patient outcomes. Patients in these earlier stages are typically less affected by the disease and tend to have conditions that progress more slowly than those at later stages. This allows for the potential to make a more significant impact on their treatment.

Operator, Operator

Our next question comes from Asthika Goonewardene from Truist.

Asthika Goonewardene, Analyst

I was wondering about AUTO4. Could you maybe talk to us a little bit about what we would expect in the data in the first half of 2021 and what kind of follow-up? Additionally, T-cell lymphoma is a very diverse set of diseases. I was wondering if there's potential for you to get a broad indication across all T-cell lymphomas by focusing on the 3 subtypes that you're looking at in the Phase I study?

Christian Itin, Chairman and CEO

First of all, thanks for joining, Asthika. The AUTO4 obviously is still in dose escalation. It's going to be a smaller number of patients with dose escalation information, and we'll see where we are at that point in time in terms of the dose levels. But the information will predominantly be on the activity of the product at certain dose levels in a small number of patients. In terms of the disease setting, you're right, T-cell lymphomas are quite heterogeneous in terms of a population. However, when you look at outcomes, the large settings actually have a very similar rather homogeneous outcome. You can actually include the larger settings in a single trial and run it as a single trial. That actually has the same outlook in terms of timeline with regards to relapses, duration of responses, etc., where they behave very similarly. And that is what we're doing. We are allowing the major indications in T-cell lymphoma to be recruited into the study, and have an indication like PTCL as a separate entity that would have to be developed as a separate label.

Operator, Operator

Our next question comes from Robert Andrew with William Blair.

Robert Andrew, Analyst

This is Rob Andrew on for Matt Phipps. Just a couple from me. I noticed in the press release here that the manufacturing capacity has been increased at the cash flow side. Is that just in general to support the pivot of AUTO1 and the potential launch there? Or is that kind of also taking into consideration potential AUTO3 launch as well? And then I guess, given the number of candidates that are entering the clinic in the next kind of 6 to 12 months, is the capacity there now able to support all those studies without strain? Or does there have to be prioritization?

Christian Itin, Chairman and CEO

That's a great question. We're increasing capacity at the Cell Therapy Catapult to support the launch of AUTO1. We also anticipate that launching AUTO3 will require additional capacity, which is why we're working on the Rockville facility that we mentioned earlier. Currently, we have sufficient capacity to conduct clinical studies and, with the additional capacity being built for commercial launch, we expect to have ample access to cell manufacturing capacity that won't hinder our clinical programs. It's also important to note that we are collaborating with academic centers on some of our programs, including AUTO1NG and AUTO8. The same processes used for our AUTO1 and AUTO3 programs are being performed at GMP facilities with our academic partners, creating a broad network of capacity, especially for the earlier translational studies.

Robert Andrew, Analyst

Okay. Great. And then if I could just follow up on maybe an earlier question on the AUTO8 program. Seeing that we're still on track for initiation in the second half of the year, any kind of additional information on where we might hear some more about the design of the new CARs that are in there? Maybe any preclinical data that kind of supported this advancement?

Christian Itin, Chairman and CEO

I think for now, we're obviously working on publishing quite a bit of our data across our programs. In AUTO8, we're probably going to hold back a bit. We want to see how the product behaves in the clinic and then actually, we'll make the determination of when and how to present. This program is obviously in a very competitive space, and it also has to hit a very significant biological hurdle that we set for the program. We want to run it out and see where we get to, and we'll update in due time.

Operator, Operator

Our next question comes from Graig Suvannavejh from Goldman Sachs.

Graig Suvannavejh, Analyst

Congrats on the progress that you're making. I had 2 questions, if I could. The first is just on the competitive landscape; we recently saw approvals for Monjuvi, which is in a second-line setting for DLBCL, and BLENREP, which is a BCMA-targeting asset and perhaps in a fifth-line setting for multiple myeloma. So just with that in mind, could you just remind us how you're thinking about AUTO3 and AUTO8, respectively, and how they are going to be positioned relative to those products? And then my second question is actually maybe best for Andrew. I'm just thinking about as you advance, particularly AUTO1, and you're getting closer to potential filing and, hopefully, commercialization. Just trying to get a better sense of when, as a company, you guys are thinking about increasing investment around precommercialization activities or commercial infrastructure ahead of that.

Christian Itin, Chairman and CEO

Thank you for joining, Graig, and for your questions. Regarding the competitive landscape in the DLBCL segment, there are several active programs. Recently, MorphoSys and Xencor received approval for a CD19 monoclonal antibody. There is also a variety of bispecific antibodies, ADCs, and CAR T approaches in development, making it a competitive environment. The CD19 monoclonal antibody program stands out because it addresses patients who often struggle with severe side effects and are not eligible for organ transplants. For these patients, we need a well-tolerated treatment that can lead to longer-lasting remissions. This program has achieved that while incorporating a mild chemotherapy component, crucial for offering therapeutic options without excessive toxicity. In the last-line setting, we’ve seen significant drops in complete response rates, possibly around 20%. The sustainability of these responses is still uncertain, but they resemble other last-line therapies. CAR T treatments have distinct advantages, such as the Yescarta data showing a 37% long-term response rate in DLBCL patients, which is higher than other current therapies. Current data suggests that AUTO3 may exceed Yescarta in terms of long-term remissions, although we will need more data and follow-up to confirm this. The current findings are promising and indicate we may achieve a superior profile. The treatment landscape remains largely unchanged, with an added focus on patients who have limited tolerance for toxicity. It’s also likely that CAR T therapies will be highly effective in this context, based on data from various lines of therapy in DLBCL. In terms of AUTO8, the BCMA-ADC does provide some time but not significantly. The CAR T data we observe, especially from the J&J program, indicates very deep molecular complete remissions and shows a strong dataset, likely outperforming current therapeutic modalities. We will need to evaluate how ADCs and other therapies will be positioned in the treatment spectrum and their potential for combination therapy. Overall, we perceive a solid and unchanged opportunity for CAR T therapies with unique profiles in DLBCL and multiple myeloma.

Andrew Oakley, CFO

Graig, in terms of where we are talking about commercial ramp-up, etc., that will be a question, I think, we'll be addressing in '22. There's not a huge need at the moment for that. We're very fortunate that we have a very experienced commercial group. It's a very small commercial group but a very experienced commercial group. They are providing all of the thinking and the input that we need at this point. The physical sort of boots on the ground side of things is certainly a question that I'd be happy to talk to you about when we get to 2022.

Operator, Operator

Thank you. So it looks like that's all the time that we have for questions. The company will be happy to take any follow-up questions directly. And I'll now turn you back over to Dr. Christian Itin.

Christian Itin, Chairman and CEO

All right. Well, thank you all for joining us today. It's great to actually be able to give you an update. Great to see many of you joining the call in the middle of August or the beginning of August here. We're looking forward to the end of the quarter and update you on AUTO3. Obviously, at the end of the year at ASH for additional updates on both our hemo-on programs in B-cell malignancies. With that, thanks a lot for your continued support, and we're looking forward to also being in touch and keeping you updated. Thanks a lot. Bye.