This is day one of Jeffrey's Global Healthcare Conference. My name is Fiona. I cover SMICAP, biotech companies at Jeffrey's. And it is my greatest pleasure to welcome to this fireside chat with me from Atalus Therapeutics CEO, Christian Aitem. Welcome.

Now, before I start growing you with more detailed questions, how about you give the audience some highlights on, you know, how the business is going I know you have some interesting updates at the most recent earning just give us some color on that yeah happy to do that thanks for having us thanks for for taking the time everyone in the room we're at an interesting point we're now 18 months into the launch of a castle in the US we had a really successful first year of launch as you remember our lead product is a CD-19 targeting autologous CAR-T product that got approved at the end of 2024. We had in relapsed refractory at ALT-ALL, with the indication of the label we have for the product at this point, had $74 million in revenue in 2025. We're guiding to $120 to $135 this year. We had a good first quarter with 26 million, and we see good dynamic in the launch process. We also had kind of the fortune that alongside our launch, the ROCA consortium was actually collecting real-world data, which was quite unusual to see your own product perform in real time, and was presenting that data at the ASTCT meeting in February. And what was nice to see is that there was a nice confirmation of our clinical outcomes, and if anything, the data looked somewhat better than what we had in the clinical trial that led to approval, reflective of the fact that not only was the, you know, did we have very good safety with no high-grade CRS, and only 3 percent of the patients with high-grade neurological toxicities, and overall less than 20 percent with any form of neurological toxicity, which is a remarkable profile in that space, but also see that translated also on the efficacy side where the team reported more than 90 percent complete remission rate for the product in the real-world setting. What it also did show is that, in fact, the physicians start to use the product in places and in situations where they were not considering CAR T therapy before, and we're seeing them go into patients that were older, patients with more comorbidities, but also about a third of the patients were treated with very low disease burden, which certainly the physicians who are part of the clinical development program have been able to demonstrate in our prior work that those are the patients that have the highest chance for long-term benefit. And we see actually that already branch out in every one of these directions. And so the dynamic we're seeing, I think, is extremely positive. And we're building, obviously, on that now as we're sort of building through the second year of launch. We're at currently about 76 centers that are licensed to deliver the product in the U.S., and we expect to be probably in the mid-80s by the end of this year. From beyond the relapsed refractory setting and adult setting, we're having actually first trials that have already started investigator-sponsored studies for frontline consolidation and frontline use of the product. And all of that actually focused on getting away from a 36-month high-dose chemotherapy regimen, which is quite horrific in that disease setting, and actually go to a compressed upfront regimen that may be just four to six months. And that obviously could be potentially a very big step forward in the field, and that's being sort of explored in two ISTs in the U.S. and one that's currently under preparation in Europe. Beyond that, we have a pivotal study ongoing in pediatric patients. We have shown at ASH at the end of last year that we had above 90% complete remission rate in that population, good safety profile. Based on that data, the agency agreed that we could actually increase the size of the study by an additional 30 patients, and with that, have an ability to go in for a full approval, obviously assuming a positive outcome of the study. Now, in addition to those activities on the oncology side, we've also been very active on the autoimmune side. What we do know about our product is it has a remarkable safety profile. It's exceptionally potent. And it has an ability to obviously very efficiently cross the blood-brain barrier, getting too difficult to treat areas in the body. And so on the autoimmune setting, the initial work we've done is called the Carlyle study, where we looked at very severe forms of SLE patients. Most of those patients were lupus nephritis patients, so they had very significant impact already in their kidney. And what we did see is a massive improvement in all of these patients that were treated, very good safety profile, no neurological toxicities, and we were able to see a very nice rebound of the B cells after the CAR T cells stopped persisting. and the cells that were coming up, the B cells that were coming back, actually had a normal composition and did not actually carry autoreactivity. So it looks like, based on that data with the amount of follow-up we had at the end of last year, that indeed we do get to a reset. We will have quite more substantial data at the ACR later this year, and that gives us then more patients, but also substantial amount of follow-up in that indication. And then building on that, running a lupus nephritis pivotal study, which is the Lumina study, that's up and running, with an agreement for the agency and the refractory population to move forward. We're very excited about that study. And mechanistically, where we're probably, I think the most interesting study from that perspective is the study we're conducting in progressive MS patients, the Bobcat study, where we really leveraged the unique properties of the product to be able to get into the CNS and obviously having a high level of activity, something we know from CNS leukemia and CNS lymphoma where in both cases we actually have data from our oncology experience. That study is enrolling, and we expect an early view at the end of the year and then I think a much more robust data set during the course of next year. That's kind of in a nutshell, I think, kind of where we are with the business.

That's a great summary, definitely a lot to unpack there. Let's start with the commercial, the UEL Council in Adult AOL. So you're still in the relatively early stage of launch, but the revenue, the U.S. revenue has been doing great and growing steadily. How should we think about the near-term and long-term growth drivers? You know, we understand there's, you know, important dynamics with the centers, the physicians, and patients. Just give us some color on that.

Yeah, happy to do that. Obviously, what's unique about CAR-T therapy is it's a one-time intervention. And so when you think about your business and building your business and growing market share, it's not really, it's not kind of that repetitiveness or that growth really doesn't come from a repeat business with a given patient, but it's a repeat business with a given physician. So where you need to build the confidence and the experience is with the physicians and to grow the physician base in every single institution so that whenever a patient actually gets to a given institution, the patient has access to the CAR-T therapy and the physician is aware of the therapy and the opportunity that it represents. That is actually kind of the key work that we need to do to grow market share. It's much less on the adding more centers. It's much more focused on really penetrating the current centers that we're in. What we do in terms of actually increasing sort of the presence from a center perspective, it's more around filling in geographic gaps, as well as making sure that centers that have larger sort of feeding centers that actually drive patient flow into them, that in those centers that have on their own a relatively high level of patient flow that we actually established a therapy already at the center so that we're getting closer to the actual patients as well and minimize kind of the need for patients for excessive travel. So that's kind of a key driver there. What we find is with the physicians is there's sort of three categories of physicians that you can sort of think of. You've got the older physicians, kind of my age, that would be, have grown up with stem cell transplant. That's the primary experience that they do have. And for them to actually start adopting a new therapy, obviously that takes time, and it takes opportunity to gain experience. The key opportunity for them to gain experience is really in the transplant ineligible patients. Those patients, they cannot offer what they think normally would work in their hands. So that's typically where it starts. Experienced and with the patient, the safety profile, the activity level that they can observe at that, then tends to actually get them to start actually using the product in patients they would actually have considered for transplant, but are actually starting evaluating and using a CAR-T in there and then gradually use the product across the entire range. That's not a theoretical comment I'm making. This is a practical observation that we're making. One of the best examples here is one of the first, actually the physician who did the first patient, treated the first patient in a pivotal study, was exactly one of those older transplanters, and he did treat the patient where he knew there was just nothing else he could possibly give. An 80-year-old patient, very, very significant comorbidities, neuropathies, and lots of other damage from the high-dose chemotherapy. So there was virtually nothing you could give that patient without actually risking, frankly, that the patient would get worse as a consequence of the therapy. So that's the first patient he treated. That patient did remarkably well. A patient actually lived for several years. Eventually, in his mid-80s, passed away unrelated to leukemia, was free of leukemia. But based on that experience, started to use the product actually then in patients that were younger where he thought he had actually options, started to use it, gained more experience. So I met that physician at the ASTCT meeting in February, and he told me and said, look, you know, I've treated around 10 patients at that point in time. None of them I've transplanted, okay? So that's the transition, and that's the adoption that we're seeing. So that's the transplanted. The second category of patients at the other end of the age spectrum, which are the younger physicians that actually have grown up with CAR-T therapy and have sort of been the technology that they sort of actually were familiar with, they actually look for a better product to use and a safer product to use. They actually transition very, very quickly, and they tend to transition fully. And then there's an intermediate group of physicians that neither transplant nor do CAR-T, and they're the ones that mostly are treating the frontline patients. So the familiar and typically use high-dose chemotherapy, maybe blinitumab, maybe inotuzumab as part of the overall first-line therapy. but not yet familiar with and comfortable not comfortable stem cell transplant not yet familiar with CAR T that's the third category and so we're really making sure we're addressing each one of these physicians with kind of an opportunity to get involved and then actually build that that experience and when we look at sort of we're tracking um obviously all the physicians that we have that actually are delivering product obviously have to be registered they're on you know have to be trained, they're sort of visible to us and visible in the system. So we can actually track how we see the growth of physicians that are actually using the product, how many of them actually are reusing the product as well, which gives you then the information that, yep, it starts to stick and they start to move on, and we see a very nice dynamic on those parameters. Those are lead indicators that give you a sense for market share development much early before you see it in the actual numbers.

That's very helpful, Carlos, and it makes a lot of sense, this physician satisfaction and also loyalty is a very critical component to the revenue growth. Just follow up on that. You talked about those three buckets of physicians. Just in ballpark, what percentage of physicians have you seen that reused the product?

Oh, well in the majority.

Okay, okay.

And this is more a question of time because we're onboarding centers, so you have a leading edge. But we see them all actually reuse the product. And, you know, it's sort of reflective of the fact, when you think about it, from a physician perspective, the fact that the product is very safe and can be well managed, that's incredibly important because, on the one hand, it gives you confidence to use it across the board. And it's a challenge when you think about these patients. They're not static. Those patients actually, if you see the patient initially diagnosed, determined there's a need for therapy, well, by the time you treat the patient, the patient could be in a very different state. Knowing that you're actually okay to treat the patient across this entire range of possible outcomes, whether very high disease burden or maybe have responded to bridging therapy, which is a huge variability in terms of where the patient might be, you need a lot of conviction that you can manage that. And so the safety is incredibly important from that perspective. And it also obviously allows the centers to minimize, frankly, their own resource use. So, you know, if you have your staff, that's a certain number of people you have. Well, if you have severe neurological toxicity, well, your team is in the ICU managing that patient because you need to make sure the patient's getting through. So that absorbs a lot of attention and a lot of effort within the center and distracts from other patients that actually need the attention. And so that becomes really important. So it's important for the physician. But the other aspect, which we shouldn't forget, is it's also very important for the hospital administrators and the financial folks at the hospitals. So actually not having patients go into high-grade toxicity situations has a huge impact on the profitability of the product. This is literally tens of thousands of dollars. This is not a joke. So it actually has the health economic aspect here is an important one to actually also keep in mind. And when we're engaging with centers, our audience is, on the one hand, the administrators, the economic part of the hospital, but it's also, of course, the treating physicians, the nurses, and practitioners.

That's very helpful. It's certainly the cohesiveness of the product that speaks for itself. Now let's turn to ex-US. Now, understanding, you know, this is still early, but we see some encouraging signal from the UK side. Just tell us about, like, in long term, how do you see the US and ex-US dynamic? When do you expect to break out the ex-US sales?

So we started our launch in the UK at the beginning of the year. So we're in the fortunate situation that NICE, when they did the assessment of the product, concluded that the product was cost-efficient for the NHS and actually was taken up, had adequate level of data to be taken up directly into routine commissioning. So no further need for data generation to actually prove the value of the product. So that was important because it gives us immediate access in the system. What's interesting about the system is that the decision-making, whether a patient gets on CAR-T or not, is taken by a panel of eight physicians. So every ALL patient actually goes through, the case will be looked at, the decision will be made, what's the right kind of treatment pattern here, and then the treating physician can choose what type of product they're going to use. But the decision is taken centrally for CAR-T. The consequence of that is that adoption in the U.K. is faster than the U.S., because in the U.S., we have to convince literally every individual physician. In the U.K., we have to convince eight physicians, and they're making the decisions alongside. What it also led to, which is probably not underappreciated or not really known widely, is that actually the percentage of CAR-T patients or patients accessing CAR-T in the U.K. per capita is higher than in the U.S. That's not what we normally would think of. But the benefit, obviously, we have is that the UK, you can look at the health economic benefit across the entirety of the system, and actually treatment that can get patients to cures, long-term outcomes, is a huge reduction of burden on the system overall and can be valued. That's not true in many other systems that are kind of organized differently and do the calculations differently. I would assume that in the UK, we're probably going to get to a point where we probably will have to break out numbers. I would assume second year of launch is my current estimate, but we'll need to see what the development looks like. It may be a bit earlier than that. We also have approval in Europe, and Europe, the situation is that you also get a centralized approval for the product. The tension you have in Europe is that the health economic models in Europe and the basis for approval in particular when it comes to small indications and high treatment effects is sort of kind of dissociated from each other. The approval, like in the U.S. or the U.K., is based on a single-arm study with high treatment effect. Very clear, approvable, no questions asked, really from a type of data perspective. But on the other hand, you have the health economic models in Europe that actually are built to use data from randomized controlled studies. And the problem that that creates is that the model, the actual financial model, does not work with single-arm data sets. And what you get in Germany and other places is then the statement that it's a non-quantifiable benefit. The emphasis is everybody agrees it's a benefit. It cannot, but it cannot be computed. So that's what that says, which is obviously an oxymoron in English, but it's kind of what it actually is. So that's one of the issues. So the models that are used there are actually not really designed to reflect the benefit that these types of therapies can actually provide to their system. So that's one issue. The second challenge you have is that the way that health care is paid for across European countries is basically in two buckets. There is an infrastructure piece, hospital, staffing, base equipment, running costs. That's an infrastructure cost that actually is paid through taxes in most countries and is not actually broken out and not visible. What's paid by the quote-unquote payers, then, is what's left, and that's drug acquisition cost, certain diagnostics, certain aspects of treatment. But what it does, it actually skews the view in terms of benefit in a remarkable way because it excludes any benefit on resource utilization. And that creates the tension in pricing, and that's where you see differences in pricing between the U.S. and Europe. A lot of that is driven by these very fundamental different principles that are being applied. That creates issues. So that gets us to MFN. Now, MFN is interesting in the sense that what we're seeing develop at this point is that cell and gene therapies are actually excluded in the current pilot. So they're not part of MFN. There are certain countries, if they have made agreements with the U.S., may be excluded. That would be true for the U.K. The U.K. is excluded from MFN. And then there is obviously a threshold that you have to cross in terms of amount of sales to the particular part of CMS that actually is calculated for. And that's another hurdle you have to get. Only if you're beyond that, that is when MFN actually kicks in. Now, for an indication as acute lymphoblastic leukemia, we believe there's no way, even if cell and gene would be included, it would ever actually trigger that hurdle. So we're looking currently for options in Europe, and we're evaluating that, but that's a country-by-country process. So we haven't actually guided yet on any European sales at this point in time. That's still premature.

Yeah, awesome. Thanks for the color. Hopefully, we see some nice ramping up in the ex-US revenue there. I want to touch on the business side. So you mentioned you were going to turn margin positive in 2026, but you actually delivered that in the first quarter. So what measures have you done to achieve that? And then moving forward, how can you keep driving the improvement?

Right. So the first year of launch in a cell therapy tends to be gross margin negative. And the reason for that is you need a lot of infrastructure that you have to operate and you have a very limited number of products that are running through. And so when we look from 2025 to 2026, we are going to double the amount of products that we're actually manufacturing. We're going to do that with the same or slightly less staff than we had last year. So in very simple ways, what that does is that your fixed cost contribution year over year gets halved because you run twice as many products. And your staffing is the same, but you'd have twice the product. It means your labor and the time you spend per product gets halved. So those are the key drivers where we're going from a gross margin that was negative last year to a gross margin that is positive this year. The reason why we could do this on the labor side has a lot to do with the fact that we've learned a lot in the first year of manufacture. And what that allowed us to do is really look very systematically at the operating model and, frankly, any unit of operation and actually keep improving on that. And so our current projection is that as we're looking at where we are with the business, that we should be able to serve even the peak U.S. market with our current level of infrastructure and staff. And that tells you how the COX ultimately will go down and why the gross margin starts to build. And with the gross margin, you eventually cross the line and become actually a profitable ALL business. So those are the key drivers.

Awesome. That's very helpful. I think you're in a very good position now as the core business doing well and keeps growing. And you have certain layers of potential expansion that you can do with the front line and also the pediatrics. Just give us more color on those fronts and how you can keep driving the business.

Right. So for the ALL side, clearly the objective is to really get the broad adoption across the physician group across the U.S. and the U.K. That's the primary focus that drives market share. We can then add, obviously, the pediatric population on top. That's a smaller number of patients, but it is meaningful from where we are. Ultimately, where I would like to see the product be positioned is in the frontline setting. And what we're currently obviously seeing is we're seeing this interest for investigator-sponsored studies. That's obviously active and ongoing. What we have seen in the past in the space is that these types of studies for other products, including products like BlinCyto, actually resulted in the inclusion of frontline use into the NCCN guidelines. There's different levels of evidence, et cetera, you have, et cetera. But what that actually does is it creates an opportunity within the U.S. that, in fact, treatment in the frontline can be reimbursed. Obviously, in that setting and that scenario, we cannot market to that. That's clear. It's not a label. but it becomes a part of a standard of care and a recommended treatment, and that's reimbursable. So that's one trajectory we're on. We're looking into ways to potentially run a frontline study. That's something that we're still looking at and evaluating. The tradeoff there is that obviously these studies tend to be very long because you need observation time. And so we need to look at that versus the other investment opportunities we have in indications like in progressive MS or in other forms of autoimmune indications. And we're going to make a relocation accordingly.

That's a perfect segue to my next question, not to take away from the autoimmune side of the story. The Bobcat data is upcoming. What should we expect from that? And also maybe just to take a step back, What's the rationale behind treating progressive MS with CAR-T versus, you know, the other modalities?

Yeah, progressive MS or MS in general is very interesting because when I think back 20 years ago, anybody I would talk to about MS would have basically talked about MS as a T-cell mediated disease. That's kind of where the focus was. It was specific T-cells and was a huge amount of focus also on the R&D side. What we basically see today that we can probably think of MS as primarily driven by B cells. And that's a huge shift in the perception in the field. And it's true across, obviously, a wide range of autoimmune diseases. What is quite unique about progressive MS or MS in general is that there is a correlation between the onset of MS and EBV infection. EBB actually is hosted in B cells, and there is clearly part of B cell biology that has a link there that may actually be the reason for the initial creation of all the reactive antibodies. So there seems to be a link. There's a lot of pretty interesting data. Part of it is published. Part of it is about to come out and in the field more broadly. But it's very clear that the B cells are the drivers. Now, we have started to work on the B-cell side for quite a while using CD20 monoclonals, and there is clearly a benefit giving CD20 monoclonals. The problem, though, is that the location of the B-cells that the CD20 monoclonal can actually get to is obviously in the periphery. What the CD20 monoclonal or small molecules, for the largest part, cannot get to is actually the CNS. What we do know is that there is a substantial proportion of B cells present in the CNS itself. And what we've learned through the work that was done by Georg Schett's team and Erlangen is that that was the surprising part in the biology was that the cells that were producing the autoantibodies were not mature plasma cells. They're actually plasma blasts. They were CD19 positive. And that created this opportunity for this remarkable outcome, as we've seen it in our data, Georg's seen it in his data, to basically be able to see you can basically get a complete reset of the compartment. When the T cells, the CAR T cells are gone, the compartment can actually, you know, rebuild from the marrow and actually give you a healthy B cell compartment. While all of this happens, you still have your plasma cells giving you coverage for humoral response. And that's obviously important because it gives you all the protection that you need also from your vaccinations. So the challenge we have in progressive MS is that's a disease that clearly continuously deteriorates over time. It doesn't go in bursts as we have with remitting, but it literally just moves. The patients we're including are patients that have at least been on six months on CD20 monoclonal, have been on S1P inhibitors and continue to progress. They're called Pira. And that's a sort of different way of thinking about MS as being patients that have basically ongoing inflammation in the absence of relapse. Now, this population has actually, when you look in their CSF, you see presence of antibody light chains. You see oligoclonal bands. So there's indication of antibodies in the CSF. And there is also indication of actually inflammatory activity. And so the idea is that with a product with OB cell or Ocacil, that you have a product that can very efficiently cross the blood-brain barrier, clear out the cells that you cannot actually get to with normal therapeutic approaches, and with that actually get the drivers of that ongoing inflammation in the brain under control and removed. That's the basic hypothesis behind of what we're looking to do. And it's not hypothetical in terms of the activity for our product. We have been able to show that we can actually treat patients that have CNS presence of leukemia. We have treated patients with CNS lymphoma and have very profound activity there. And we had a recent example that Lori Muffley from Stanford talked about at a recent recorded event that you can go and listen to on the website where she talked about a patient that had so much infiltration in the brain, leukemia infiltration, that the spinal cord got compressed and she became a paraplegic. She treated that patient. The patient was in MRD-negative state at day 28. She also had full systemic disease. The CNS was cleared, and she regained control over her body. So this product goes exactly where it needs to go, has exceptional activity in the brain, and it has a very good safety profile. That's why we're in a mess.

Awesome. That's very helpful. Looks like we're at the hour. I want to thank you, Christian, and thanks everybody for joining. Yeah, this is an exciting time for Otalis.

Very good. Thank you very much. Thanks for your time.