Cabaletta Bio, Inc. (CABA) September 2026 Conference Transcript

All right. Hello, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Goltz, one of the biotech analysts here, and it's my pleasure to introduce the team from Cabaleta Bio. On the far left is Stephen Nickberger. He's the CEO. Next to him is Stephen Gavill, CCO, and then on my immediate left is David Chang, CMO. Just a reminder for today, it's a fireside chat, but if anyone in the audience has a question, please feel free to raise your hand and we'll get your question looped into the discussion here. But before we get started, I just need to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com backslash research disclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. And with that, Stephen, David, and Steve, thanks for sharing your time with us today. And maybe we can start with the first question here is, can you just talk about the approach to autologous CAR T-cell therapy, specifically RezaCell, and why it's so promising in autoimmune Yeah, thanks.

Thanks, Mike, for having us, and thanks for investing the time with us today. So, listen, patients who have autoimmune disease simply want to get rid of their symptoms, get rid of their medicines, and just be normal people. They don't want to have the patient label. And there's really only one category of treatment that has delivered on that promise to date, despite a lot of people trying. And that category is the autologous CAR-T category of treatments. Within that category, ResiCell, we believe, is the only product that was designed specifically for patients with autoimmune disease. And by that, I mean that it uses a standard nine-day manufacturing process. It is using a 4-1BB COSTEM domain and is weight-based in its dosing, which we think is a unique constellation for any product being developed for these patients. And using the approach of a standard, well-characterized nine-day manufacturing process and weight-adjusted dosing with our product design, we've been able to deliver on the promise with differentiating safety. So the majority of the nearly 100 patients that we have now dosed are demonstrating, the vast majority, are demonstrating compelling clinical outcomes on the efficacy side, largely delivering on the aspiration of these patients. And on safety, you'll hear more about it from our chief medical officer, but there we are differentiating in a highly meaningful way from the other autologous CAR-T products. What that has allowed us to do is begin to use ResiCell for dosing patients in an outpatient setting. And from our chief commercial officer, you'll hear a bit about why that is not only exciting, but really important. And it all is based upon the emerging differentiation on our safety profile. And it also allows us to think about ResiCell as a portfolio and a product. and specifically in the next 12 months, we'll have the initiation of our second pivotal program for scleroderma this time added to the ongoing study in myositis for adults and juvenile patients. We're really excited about both of these programs, but in the near term, the myositis program has the promise and the potential of delivering not only a really transformative product for patients, adults, and children, but for delivering a PRV, a priority review voucher, for Cabaletta. So we expect to report out in the second or third quarter next year, the middle of next year, something we've been saying for quite a long time, the clinical data from our pivotal myositis program, and by the end of the year to file our initial BLA for RezaCell in adult and juvenile myositis. And then finally, on the innovation side, because we are safe enough with our side effect profile when added to a preconditioning regimen, it opened the door for us to evaluate RezaCell without preconditioning. And here, it's only possible because you're killing so many more B cells when you don't use preconditioning. You have to be very safe with preconditioning to even begin to think about using your drug without preconditioning. That's true for other autologous products. That's true for allogeneic products. And that's true for in vivo products. If you don't have a very safe and clean profile in the preconditioned patient, there's no way that you're going to safely get to a great outcome in patients without preconditioning. So really excited about that program, its prospects, and we'll be revealing data as warranted over the coming months and years from that program. So really excited about the overall constellation that we're working on.

So a lot to cover there, but maybe, Stephen, you touched on this, some differentiation versus other CD19-targeted cell therapies in development and one that has started to come up more recently is FATE Therapeutics. So maybe just talk about some of the differentiation there or positioning.

Yeah, I could take that one. And FATE Therapeutics is a company that's been developing a CAR-T-like therapy with their stem cell-like product. I think there's this limited amount of data that we're seeing from FATE, right? They present that ULAR, and only a handful of patients beyond six months' worth of data regarding their lupus patients they treated either with lupus nephritis or those without lupus nephritis. So I think it's too early to say whether that type of technology is something that would be a challenge to Cavaletta, but I think we have to wait and see what the data is.

Yep, makes sense. Steven, you also kind of touched on the profile, but maybe we can dig in a little bit, you know, the profile of RezaCell and characterize what you're seeing in terms of efficacy and why it's so promising, and then also, you know, on the safety side, which is obviously an important concern here, just given it's, you know, for an autoimmune indication.

Yeah, so for overall efficacy, I think we've seen across the entire reset program remarkable responses without continued use of immunomodulatory agents and on a low dose or off of steroids altogether. So these are patients who have severe refractory disease who are now stopping all their medications and replacing it with a one-time dose of a weight-based ResoCell. And they're still getting remarkable responses, responses very similar to what Chet had seen with his patients in Germany. And these are remarkable responses. Some are going to remission. Some are going to major responses. And we would say characterize that over 80%, 85% of our patients are achieving these types of endpoints off of therapy on a low dose of steroids. So I think from an efficacy perspective, we are replicating the type of data that has been seen by Erlang and University.

Can you talk about this idea of this immune reset and kind of what it means and how that sort of plays out?

Yeah, I mean, I think that's really the key here is that I know that we've talked about, how people talk about how long is the B cells depleted or how high is your level of persistence or how long is the persistence. The real key here is, is there depth of B cell depletion that is complete and deep enough that now you're resetting the immune system so that only naive or transitional B cells are coming back and the pathogenic B cells have now been fully eliminated, not just in the periphery, but also in the secondary lymphoid targets such that now you only have, we'll call, quote, healthy, naive, or transitional B cells that are repopulated and no longer causing the disease. So I think that's really key. And within our patient population, we've looked at our data from translational data, confirming that that's, in fact, what we're seeing is a reset of the immune system. You asked about safety. Did you want me to come up? Yeah, so obviously the big elephant in the room that's been going around is regarding the IEC-HS. We can say that we have not seen a single case.

Can you talk a little bit about more of where that's coming from in case people aren't aware?

So there were reports that were unearthed that Novartis had three deaths associated with its immune-infector cell HLH-like syndrome in their clinical program for autoimmunity. So we don't have much more information other than that. This broke in August 31st. So we know that three deaths with this particular syndrome was reported in the OVARS program. We don't know which patient population. We don't know where. We don't know what the denominator is. We don't know the numerator. But that's what was reported. This paused their program, and they publicly say that they paused their program. In addition, in that same report, BMS also indicates they had voluntarily paused their entire autoimmune program because of a transient hyper-inflammatory event, and they have not fully disclosed what that is. There's some speculation what it might be, but there are these two large companies that are now reporting safety events, which have caused them to pause their studies so in light of that we took a look at our program and we said have we seen any case of IECHS we've now verbally indicated we've treated over 90 dose over 90 patients we have not seen a single case of IECHS the three deaths that were reported with Novartis secondly we looked at the entirety of the safety of our program which we hope to be able to present at ACR in November, and the totality shows that 94% of patients, and this is so far what we present at ULAR, we have not updated our numbers with the 90-plus patients, but the 62 patients that we reported at ULAR, 94% of them had no CRS or just a grade 1 CRS, and 97% of patients had no ICANs. So I think looking at the safety profile, with regards to CRS and ICANs and IEC-HS, we believe that we have a very favorable safety profile for autologous CD19 CAR T therapy.

Can you talk about some of the key differences that might explain why you're seeing something very different on the safety side?

Yeah, so the main thing that we've noted, and we cannot conclusively say this is the reason, but we have a standard, well-characterized nine-day manufacturing process. So this is the same process that was used by Shett in Erlogan University. He also used a nine-day process. What we noted, and this is publicly available in the publication, is that BMS is using a five- to six-day reduced manufacturing process in terms of time, and Novartis is using a two-day process. When you use a shortened process, you produce CAR T cells that are more stem-like or actually more likely to induce pro-inflammatory cytokines when they engage with their target. So when you have CAR T cells that are inducing more pro-inflammatory cytokines, you are now putting patients at risk for higher events of inflammatory events, such as CRS, ICANN, and IESHC. So, knowing what we know, I think that us sticking with the standard nine-day process was a decision we made years ago because we knew that safety was paramount for patients. And now, in retrospect, it was a very good decision that we stuck with the standard process that allows for now patients to be able to treat it, so far, very safely.

You know, it's interesting because in the Novartis discussions with at least one analyst based on their report, what the analyst was told as they reported it was that Novartis was on hold for all of the autoimmune uses of their fast, I don't know what they call it, but their fast manufacturing for autoimmunity. but that the same decision has not been taken in oncology. And I think that's really important. And, again, we don't know what we don't know, but based on what is known, the fast manufacturing seems to be the problem. David has described how fast-manufactured cells reproduce much more aggressively or expand much more aggressively, not reproduce, expand much more aggressively. and cause there to be a substantial increase in interferon gamma, which triggers macrophages to then secrete IL-6 and IL-8. Those are the cytokines that cause the bad things to happen. It's bad enough that the cells are going to demonstrate a much more aggressive posture on pro-inflammatory interferon gamma secretion when they are used, when they engage with B cells. but they're doing it in the presence of an autoimmune macrophage. And it turns out, something that we were very focused on years ago and we remain focused on over time, is that the macrophage of an autoimmune patient is far more hyper-responsive to interleukin-6 and interleukin-8, to cytokines, than the macrophage in normal patients and presumably in oncology patients as well. And so it's two things happening here. One is faster manufactured products seem to be producing more interferon gamma. And by the way, we don't know whether the events reported by analysts about Novartis and Bristol products are, you know, we just don't know enough about it. But what we do know is what's published. And Novartis published a paper showing that Kimraya with nine-day manufacturing versus Kimraya with two-day manufacturing, you dramatically increase the reproducibility of those cells and the interferon gamma secretion and the IL-6 and IL-8 secretion. So we know that's why they developed it. For cancer, it's the perfect product. It's great. For autoimmunity, it's exactly what you don't want. You need a gentle profile. You need a profile that can tolerate the already activated condition that the macrophages are in in an autoimmune patient. RezaCell delivers on that promise, both with our translational data, which has been exhaustively presented, as well as the clinical data, which equally will continue to be exhaustively presented. And that's the reason why we feel encouraged about our own data, is the linkage between the product design and development choices we've made, the patient situation with these activated immune system macrophages, and the clinical data that shows that our safety profile is emerging to be one that seems like it might be very differentiated at the end of the day.

Yeah, makes a lot of sense.

I guess just given the profile you've seen so far, where do you see it fitting into sort of the treatment paradigm? you know this is another question that comes up quite a bit you know it's really interesting there are many pharmaceutical products that are being developed now for myositis right a couple of recent high profile products I think there's a few things to pay attention one is the efficacy and how it's achieved these products are being added on top of existing therapies and they are achieving let's say moderate TIS response as the modal response, the most common response of the patient. Let's look at the safety. In addition to the black box warning of some of the drugs indicating risks that go as far as death and as little as heart attacks and strokes, there's a black box warning associated with that. Let's look at the financial cost. They're pricing, in some cases, $300,000 to $500,000 per year. in order to add that drug to existing standard of care in order to get a moderate TIS response. Let's look at what we do. Very hard to manufacture. There's no history of any success in autologous CAR-T land for anybody investing in the space. We claim that we will have a far more efficient, lower cost of goods. We will be able to scale unlike anybody has scaled. And our safety data looks remarkably different from the history of CAR-T. So what's our efficacy? Our efficacy is most of the patients reported by us with dermatomyositis have major TIS responses that look like a single infusion, whatever its cost will be. A single infusion provides a durable, reliable outcome off of all medicines. The market is going to have to figure out the labels that exist with the other products and the chronic therapy required at the cost and with the side effects versus a drug that is a one-time infusion with the cost, with the side effects, and with the efficacy. And, you know, honestly, as a patient, as a physician, I think there's a real choice that's going to have to be made, especially for payers. They're going to have to figure out, you know, which tools they want to push or hold back for use with patients and with payers and with providers. At the end of the day, we don't know where we're going to fit until we have our data. But I like our prospects based on our phase one, two data.

Just maybe a follow-up question there. Just the question on durability, right? Your single dose, very dramatic impact, safe, and patients have been, I don't know, one year, two years? How far have your patients been out?

We've reported publicly one and a half, but we're now two years and so forth, yeah. And about 100 patients' dose.

And where do you think that durability sort of needs to go? So, like, what's the threshold?

Yeah, so I'll let Steve answer a little bit more about the commercial and the durability of what's required, but I do want to say that what Professor Schett has done in Germany, if you look now, there's a body of evidence on ResoCell. We have replicated perhaps a bit better safety in some ways, but we have replicated that exciting experience that he reported. He's now on four and five years of durability.

Yeah, so the threshold, We've done a lot of research in this area, as you can imagine. So there's a very clear two-year threshold requirement from the private insurers. We'll be well beyond that once we launch. The one thing, though, I do want to say, we haven't really got into this, but it's very clear in this space. It's kind of been a quiet drug-related space compared to some of the places I've come from, from myeloma and things like that. What needs to change, and I think this is going to change, is it's been an additive cost model up to now. So you have standard of care, next thing comes along, they add to it, next thing comes along, they add to it. And before you know, when you're looking at adding drugs that are 400,000 plus on an annual basis, all of a sudden you cannot manage that class any longer for the private insurers. We're starting to hear that very clearly in the research we are having today, where you could have a one and done. I can't stress that loud enough where you are giving a single product and you are off of all medications. That is a very, very much of a paradigm shifter in terms of the cost model for the space. So as you can imagine, insurers are very attracted by that because they're saying, wait a second, a lot of new drug launches coming here, they seem very costly. In this case, you're basically shifting the old paradigm, so to speak, very rapidly. So we were, you know, talking about this to see if you see a shift in terms of does private insurance, and by the way, you know, Private insurers for CAR-T is almost what you've never seen before. The glotches that I've been involved with are always the Medicare populations, right? For private insurers, they are looking at managing this class possibly, but also does the class shift in a sense where you're stepping through CAR-T therapies first as opposed to getting on to these additive additives indefinitely as maintenance therapy. So it's a lot of work to be done there, but I did want to point that out because it is a big shift not only clinically but also financially. And I want to highlight, all of this depends on our data.

And we don't have our full body of data yet, right? But if and when we do have data that replicates our Phase I-II experience in myositis and scleroderma, I think there's going to be a lot of discussion about where the QART-T product should fit.

That makes a lot of sense. And, you know, you're shifting things, you know, commercially potentially, but you're also shifting things with self-therapy without preconditioning. and Stephen, you've kind of brought this up earlier, so maybe we can talk a little bit more about that. Why is that such an important development and how could that really change things?

Yeah, I'll turn it over to David after only saying that the most important thing we can do in the autologous CAR-T space, and remember, autologous CAR-T is the only one that has delivered on the promise so far. ResiCell looks like it stands alone and is emerging to be a differentiated safety profile where all drugs in the category of autologous CAR-T look to be comparably effective. So the next step is how do we do even better? And the market research teaches us that the number one thing that they would like to see disappear in order to use it in even more of their population would be to get rid of the preconditioning. To do that, you have to be extremely safe with preconditioning. So David, do you want to talk a little bit about our path and our plans, what we've been doing?

Yeah, so we've already reported on preliminary data or initial data in PC-free, so preconditioning-free, in the pentagous vulgaris population, as well as, I think, reported on the first lupus patient that was treated. But all these patients, not all of them, but the limited number of patients we treated were dosed at the exact same dose that the entire reset program is being treated, which is 1 million cells per kilogram. But the only thing that we did differently is we removed the flubarabian cyclophosphamide. And we're soon showing, we had shown some pretty good initial responses, biological responses, as well as clinical responses. But we feel that we're probably right at the threshold dose. We need to go maybe a little bit higher to get a more consistent response and more durable responses. So we are now exploring the second dose, the higher dose, in the pentagons vulgaris population. and we'll do the same thing in the lupus patient population as well. And it's PC-free. Obviously, there are advantages, right? One is at least perception of safety because you're not giving chemotherapeutic agents which cause neutropenia, lymphopenia, et cetera. There's convenience for the patients. There's more compliance. And so all these are important. And I think for certain patient populations, the young patient population, especially women of childbearing potential, where there's concerns about cyclophosphamide causing infertility, I think there's an advantage there. But also, I mean, really more than anything else, you reduce three days of inpatient or outpatient treatment for fludarabine and cyclophosphamide, which could be eliminated. So there's that factor. I think this is certainly an area that a lot of people are very interested in hearing about. Every single investigator said this would be a game-changer for us.

Yeah, no, for sure. Can you talk a little bit about the dosing? You mentioned you're kind of at this threshold dose. You're going to go higher. How high have you gone in the past? Is there risk around going higher or just how to think about that?

Yeah, we haven't disclosed what dose we're going up to, but we looked at our data on the initial dose, and I think one thing we really value is patient safety. So we want to be cautious knowing what we know about safety issues that have now emerged. So instead of rapidly going to a much higher dose, so typically one may go three, four, or five-fold higher, we may be looking at a dose level not quite really as much higher, but a little bit higher than what we were doing before. The risk is there's one risk here that we know is a potential risk, is that if you don't get the lymphed-depleting chemotherapy, you don't reduce the B cell load as much. So now your target B cell antigen is higher than you would be if you had actually given lymphed depletion. So we know that that is actually one of the factors that can increase the level of activity of your CAR T cells and increase the potential cytokine levels. So that is a risk, and I think Stephen had talked about this earlier, that that's why if you're not safe with lymphed depleting pre-conditioning, you probably don't want to explore this because you don't know. I mean, on the flip side, you could say it could be safer because you don't do the cosopenias, but also you're creating more space and allowing your CAR T cells to work. So we don't know for sure until we do the dosing, but we know that there is that potential risk.

There are competitor and industry implications to the data that we are generating. We have a really robust body of evidence with preconditioning across multiple different autoimmune diseases. And as we will publish in the coming months and years, it'll be clear how each of them differentiates from the other. It'll also be clear how consistent the resi-cell impact is across the portfolio of indications. Because you need to be very safe in a PC-free environment because of that increased B-cell population, I think it's first important to recognize that it will be difficult for any autologous product that doesn't have an outstanding profile of safety with preconditioning, one that is, we would argue, at least as good as ResoCell, it's going to be hard to try to get to an effective dose without preconditioning. The second point I would make is no matter what modality of therapy you are developing, if you are doing it without preconditioning, you run the same risks. And that may partly explain why many of the in vivo transactions have centered on oncology, not on autoimmunity. The patients are different. The risks are real. The evidence comes from Novartis and Bristol-Myers that they can be, and I think it is going to matter when scientists and physicians and investigators begin to think about evaluating advanced modalities in autoimmunity, I think the warning signal, the flare, has now gone up that this is not the same as oncology. And I think over time we will see what the data show. But we ourselves are being very cautious in our efforts to pursue higher doses without preconditioning.

Makes sense. I also wanted to touch on manufacturing. You brought this up earlier as well, but you're doing some innovation there. So maybe talk us through that and when that might get rolled out or the current status.

Yeah, so we've always had a multiple supplier mindset. Sure, it would be cheaper to have a single supplier and just use one and be done. It probably gets the job done, but you can't really reliably scale, and you don't have redundancy that can cover you in case your supplier goes sideways. So we have always had a multiple supplier mindset. Our strategy has always been multiple suppliers. And by that, I mean, we have Lanza as a standard partner supplier at launch, we expect. We expect that they will be joined by Elevate Bio, another CDMO that has developed an excellent relationship with the company. And, you know, we're confident that those two can tolerate and can supply the first year, year and a half of our needs in the initial indications of myositis, adult and pediatric. We also have announced that after launch, you can picture within a year after launch, we expect to have the scalability and the flexibility that can be afforded by a fully automated manufacturing platform, which is what Solaris uses. And so we have dosed a couple of patients with RezaCell manufactured in the fully automated Solaris system, and the results from those patients have been reported to be both the product and the translational data the same as any other. In fact, every unit operation as well as the overall operation of manufacture of our product at Lanza and at Solaris has been identically comparable. They have passed the test of comparability that FDA would require. In fact, FDA allowed that Solaris is nothing more than another manufacturer for us. The business questions around Solaris, as I think those who would be listening to our discussion today would be familiar, Bristol-Myers and Solaris have had their own sort of kerfuffle, and that relationship has been terminated. After it was terminated, but before it was publicly announced, the folks at Solaris, with whom we've had an exceptionally strong relationship for many years now, called us up, informed us, and then flew out to see us to be sure that their reorganization was going to meet all of our needs. By the time they left, they had substantially changed their thinking on their reorganization, and they have now publicly implemented the reorganization that we believe is going to allow us to continue to not only remain highly confident in the data, which I do say we are confident in the data at this point, but at this point being we were in the past, we remain equally confident in our data with them and in their ability to deliver for us. Now, like all young companies, they'll have to continue to finance over time and we have to play the mitigation of risk game by having two other manufacturers who can more than sufficiently meet our needs. So we're really excited about both the profile of ResoCell with preconditioning in the near term, the myositis program, the scleroderma coming up and running in a pivotal program this year. The juvenile indication in dermatomyositis could earn us a PRV within the next year and a half, two years. and that will be followed by a scleroderma indication where, similar to the juvenile myositis, not only are there patients without acceptable therapies of any sort available, but there's an urgency to treat. If you're in third grade and you can't bend your fingers because your knuckles are not able to function and you can't type or you can't interact with the computer or whatever it is you need to do in fourth grade, your parents are going to be very, our experience, your parents are going to be pretty aggressive about getting you the best therapy as soon as possible. In scleroderma, I think there's a similar paradigm where the risk of death at 12 years for a 30- or 40-year-old typical diagnosed patient with scleroderma, the risk of being alive in 12 years from diagnosis is 50-50. It's a 50-50 shot that you make it to be 10 years, 12 years from now. and there's a real urgency as a result to treat there. So really excited about not only the clinical programs but the commercial prospects that follow.

Okay, great. Looks like we're just out of time. So Stephen, Steve, and David, thank you so much for your time. Really appreciate it. Thank you.

Appreciate it.