Cellectis S.A. Q1 FY2020 Earnings Call

Good morning, everyone, and welcome to the Cellectis’ First Quarter 2020 Results Conference Call. Please be aware that today’s conference call is being recorded. I’d now like to introduce the first speaker, Simon Harnest, Cellectis’ Vice President of Corporate Strategy and Finance. You may begin.

Thank you, and welcome, everyone, to Cellectis’ First Quarter 2020 Corporate Update and Financial Results Conference Call. Joining me on the call today with prepared remarks are Dr. André Choulika, our Chairman and Chief Executive Officer; Dr. Carrie Brownstein, Chief Medical Officer; Bill Monteith, Executive Vice President, Technical Operations; and Eric Dutang, our Chief Financial Officer. Yesterday evening, Cellectis issued a press release reporting our financial results for the first quarter ended March 31, 2020. The press release is available on our website at cellectis.com. As a reminder, we will make forward-looking statements regarding financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Form 20-F on file with the SEC and in the financial report, including the management report, for the year ended December 31, 2019, and subsequent filings Cellectis makes with the Securities and Exchange Commission from time to time. I would now like to turn the call over to André. André, please go ahead.

Thank you, Simon. Good morning, and thank you, everyone, for joining us today. Before we begin with our corporate update for the first quarter 2020, I would like to extend my heartfelt gratitude to everyone on the phone for your continued support of the entire healthcare space during these exceptional times. I would especially like to extend my highest appreciation to all healthcare workers, from the doctors to nurses who never gave up and are battling cancer on the frontline, to our colleagues in the biotech industry and academic institutions, who are working day and night on the cure for all cancer patients. We at Cellectis keep our focus and never give up a niche during these times. I’m proud to say that we are carrying a strong momentum from the start of 2020 through these recent weeks as all three of our proprietary allogenic CAR-T cell product candidates are progressing in clinical development and continuing to recruit patients. This would not be possible without the commitment and passion from each of our principal investigators, our clinical partners, as well as our team at Cellectis. In parallel to our clinical progress, we have not stopped our R&D operations in New York and in Paris as well as the construction of our in-house manufacturing sites in Raleigh and Paris. It is now my great pleasure to introduce my esteemed colleague, Dr. Carrie Brownstein, our newly appointed Chief Medical Officer. Carrie brings to Cellectis her strong industry expertise and an impressive track record in clinical development across all phases of the product life cycle, including successful regulatory filing in the U.S. and the EU for novel products. Dr. Brownstein joined us from Celgene, where she served as Vice President, Global Clinical Research and Development, Therapeutic Area Head of myeloid diseases. Prior to Celgene, Dr. Brownstein served as Executive Director, Clinical Science Oncology at Regeneron, where she led the team investigating multiple early development programs and assets, including T-cell engaging bispecific antibodies. Dr. Brownstein started her industry career at Roche as Senior Medical Director, supporting the development approval of a number of hematology and oncology therapies. Prior to her industry career, Carrie practiced medicine as a pediatric oncologist at the New York Presbyterian at Columbia University and Mount Sinai Medical Center. I would now like to hand the call over to Carrie for an overview of our clinical programs, then Bill will review our manufacturing update, and Eric will give an update on financials. Carrie, please go ahead.

Thank you, André. We are currently enrolling and treating patients with our proprietary UCART allogeneic CAR-T cell product candidates in three selective sponsors Phase 1 dose escalation studies: the B-ALL trial investigating UCART22 and relapsed/refractory B-cell ALL; the MELANI trial investigating UCARTCS1 in relapsed/refractory multiple myeloma; and the AMELI trial, investigating UCART123 and relapsed/refractory AML. As a reminder, each trial is planned to evaluate three to four dose levels of UCART cells in sequential cohorts of patients with the duration of each cohort expected to be approximately three months due to the mandatory safety evaluation periods required by regulatory agencies. The primary objective of each Phase 1 dose escalation study is to evaluate the safety and determine the optimal UCART dose and corresponding lymphodepletion regimen that demonstrates safety. In addition to safety, we will explore CAR-T cell expansion, window of persistence, and antitumor activity at different dose levels. Further, we will also evaluate the addition of alemtuzumab to standard cyclophosphamide/fludarabine lymphodepletion regimens, where applicable. At the time of this update, all three Phase 1 trials, AMELI-01, BALLI-01, and MELANI-01, remain on track. We plan to share interim clinical data from these studies by the end of this year at or around relevant scientific conferences, provided new enrollment and the ability to conduct protocol assessment is not significantly impacted by the COVID-19 pandemic. Our partner, Allogene, in collaboration with Servier, is developing our licensed lead development program, UCART19, also called ALLO-501 in the U.S. for non-Hodgkin lymphoma patients. Allogene Therapeutics, in collaboration with Servier, recently announced they will present initial results from its Phase 1 ALPHA study of ALLO-501 in relapsed/refractory non-Hodgkin’s lymphoma at the American Society of Clinical Oncology, or ASCO, at the end of May. This oral presentation is the first data readout from this dose escalation study of ALLO-501. This Phase 1 study continues enrollment to optimize lymphodepletion. Our next licensed program to Allogene, UCARTBCMA, also called ALLO-715, is recruiting patients in the Phase 1 study called the UNIVERSAL trial, and Allogene announced they plan to share an interim data update by year-end 2020. Our partner, Servier, has made the decision to temporarily halt recruitment in the UCART19 clinical trials during the peak of the COVID-19 pandemic. We are excited to see this study reopen shortly and progress into Phase 2 based on the highly promising data that has been presented to date. With that, I would like to hand the call over to Bill Monteith for an overview of our cell manufacturing program. Bill?

Thank you, Carrie. Regarding the supply of our UCART clinical product, we were able to successfully complete a series of manufacturing runs for all three clinical programs and ship to our clinical centers in the second half of 2019. This will provide the necessary vials to cover at least the dose escalation portion of our three ongoing Phase 1 studies. In parallel to our work with our contract manufacturing organizations for clinical development, we are continuing the construction of our in-house GMP manufacturing facilities in Paris and in Raleigh, and both remain on track for their anticipated go-live dates in 2020 and 2021, respectively. The Paris site is a 14,000 square foot manufacturing facility in Paris, France. This facility has been designed and is being constructed to produce critical raw and starting material supplies for our UCART clinical studies and potential commercial products. It is targeted to go live in 2020. The Raleigh facility is an 82,000 square foot commercial scale manufacturing facility in Raleigh, North Carolina. This site has been designed and is being constructed to provide GMP manufacturing for clinical supplies and commercial manufacturing upon regulatory approval. It is targeted to go live in 2021. In the near future, Cellectis will be able to provide a robust supply chain for its clinical and commercial manufacturing needs through these in-house manufacturing capabilities, in partnership with the existing CMOs. With that, I would like to hand over the call to our Chief Financial Officer, Eric Dutang, for an overview of our first quarter 2020 financials. Eric?

Thank you, Bill. Cellectis’ first quarter 2020 was driven by strong financials. The cash, cash equivalents, current financial assets, and restricted cash position of Cellectis stand-alone without Calyxt as of March 31, 2020, remained the same at $304 million compared to December 31, 2019. That reflects $28 million of proceeds and EUR5 million VAT received from Servier, which was offset by $29 million of net cash flows used in operating, investing, and lease activities and $4 million of unfavorable Forex impact. This cash position will be sufficient to fund selective stand-alone operations into 2022. The consolidated cash, cash equivalents, current financial assets, and restricted cash position of Cellectis, including Calyxt, was $351 million as of March 31, 2020, compared to $364 million as of December 31, 2019. The change notably reflects $13 million of net cash flows used in operating and capital expenditures activities of Calyxt. As announced in our year-end financial update in March 2020, we entered into an amendment to our license development and commercialization agreement with Servier. Under this amendment, we granted to Servier an expanded exclusive worldwide license to develop and commercialize all next-generation allogeneic CAR T-cell products targeting CD19. That includes rights to UCART19, ALLO-501, and ALLO-501A, either directly or through its U.S. sublicensee, Allogene Therapeutics. With this amendment taking effect, we received and booked an upfront payment of $28 million, excluding VAT, in Q1 2020. In addition, we regained exclusive control over the five undisclosed allogenic CAR T-cell targets previously covered by the initial agreement and recognized $19 million of upfront and milestone payments received in the past related to these targets in our Q1 2020 revenue. The selective stand-alone net income attributable to shareholders of Cellectis was $27 million in Q1 2020, compared to a net loss of $10 million in Q1 2019. This $37 million increase in net results between 2020 and 2019 was primarily driven by a significant increase in revenues and other income of $46 million, which was partially offset by an increase in operating expenses of $6 million and a decrease in financial gains of $3 million. The consolidated net income attributable to shareholders of Cellectis, including Calyxt, was $20 million or $0.47 income per share in Q1 2020, compared to a loss of $15 million or $0.36 loss per share in Q1 2019. The consolidated adjusted net income attributable to shareholders of Cellectis, excluding noncash stock-based compensation expenses, was $24 million or $0.57 income per share in Q1 2020 compared to a loss of $11 million or $0.26 loss per share in Q1 2019. Even more importantly, during this COVID-19 context, we are laser-focused on spending our cash to develop our deep pipeline of product candidates in the clinic and completing the construction of our state-of-the-art manufacturing facilities in Paris and in Raleigh in 2020. I will now turn the presentation back over to André for closing remarks. André?

Thank you, Eric. 2020 is a pivotal year for Cellectis as we progress through the clinical development of our wholly controlled and partner product candidates. We are on track with our schedule and clinical development and are planning to provide an interim update on our clinical trials at a scientific conference by the end of the year 2020. Hand-in-hand with our clinical advancements, we are also on track with the construction of our in-house manufacturing sites which are designed to deliver full independence and internal know-how at the forefront of science in gene editing and cell therapy. In addition to our lead clinical programs, we have made significant advances on the R&D side to further strengthen Cellectis’ position as a leader in the gene-edited cell therapy field. The Cellectis innovation team is constantly developing next-generation therapeutic product candidates that will be, as always, at the cutting edge of gene editing and cell therapies. We are planning to advance next-generation products into clinical development in the coming years and will demonstrate the outstanding innovation power with our out-of-the-box thinking at Cellectis that has revolutionized medicine over the past 20 years. We’re thrilled to see our programs come to fruition as every day gives us new hopes for patients in critical medical needs. With this, I would like to open the call to any questions you may have. Operator, please go ahead.

Thank you. Our first question comes from Hartaj Singh with Oppenheimer. Please proceed with your question.

Great. Thank you for the question. André, everyone, and welcome to the new team members. I really appreciate the update there also. Can you just talk a little bit about how, once you get through dose escalation, how you will evaluate the dose you’ll be carrying into dose expansion? So how sort of NTV being evaluated? What are the criteria that will go into it? And then secondly, you’ve also mentioned a little bit about qualitative studies, you look at T-cell expansion, window persistence, and tumor activity. Can you just talk a little bit about what we should expect to see in that regards when the data is revealed?

Well, thank you very much, Hartaj, for the question. I think it’s a great question by the way, for you, Carrie, because, like you’re developing this. So Carrie, please, could you?

Yes, sure. Thank you for that question. I think it’s very – at this point, we’re not providing too much detail around what the exact parameters are going to be for making determinations. I think at this stage of development, we’re really looking for optimal safety, optimal translational data, and optimal activity of the cells. I think we will be looking at all those parameters together to come up with an answer. So I’m not sure I can give any specifics to what that would look like when we choose what we’re going to move forward with for expansions in Phase 2 and 3.

Great. Thank you, Carrie. On just the persistence, do you think that some of the data you’re going to get through the end of the year will give you some insights as to the potential for redosing? Or that’s still to be evaluated in the long run, not something in the short run?

Yes, sure. I think that’s a very important question. And again, I think by – we’ll have some data, including all those parameters I just mentioned towards the end of the year, and we will be able to figure out if we need to adjust lymphodepletion, whether it be the medications, whether it be the schedule to determine how we would move forward with redosing. But we’ll have some information, I think, in terms of what the window of persistence looks like by the – hopefully, by the time we are presenting our interim data.

Great. Thank you so much. Thank you for the question.

Thank you. Our next question comes from Biren Amin with Jefferies. Please proceed with your question.

Yes. Hi, thanks for taking my questions. So maybe if I could just start with the BALLI and AMELI studies. What are the criteria for each of those studies in order for you to move into dose expansion? Can you just maybe talk about the cell ranges that you’re dosing in the trial? And I guess, what would you want to see from both of those studies? Especially UCART22, given, I think you’re also enrolling patients there with prior CD19 CAR.

Sure. I guess this is another question for me. So in the three different trials, I know you’re specifically speaking about the two leukemia studies, the doses are different of the CAR T-cells. So in the – if we want to start with the BALLI trial, the dose level one is 100,000 cells per kilo; dose level two, 1 million; and dose level three is 5 million at this point. Again, I think the data that we’re going to be looking at, as I mentioned earlier, is the activity, safety, and all of the combined translational data, so we can pick an optimal dose to move forward. I think that what’s interesting about both leukemia studies is the regulatory bar, so to speak, for approvals in these areas are not terribly high. So we really just need to see what we see and determine if we can move forward. These are both in – right now in relapsed/refractory patients who have no alternative therapies that typically, these diseases are only cured right now with transplant. Achieving complete responses that are durable is critical, and that’s what we’d be mainly looking at for activity. I’m not sure if that answers your question.

It does. Thank you.

Thank you. Our next question comes from Gena Wang with Barclays. Please proceed with your question.

Thank you. So I have two questions. One is regarding the ALLO-501A study readout at ASCO and then second is regarding the manufacturing. So for the first one, we are now – we are waiting for the data in non-Hodgkin lymphoma, trying to run more of the anti-CD52 regimen. So just wondering maybe two parts of the question. Any differences between ALLO-647 versus alemtuzumab? And also regarding the dose, when we look at the UCART19 study versus ALLO-501, UCART19 study is usually 1 milligram per kg for alemtuzumab, that translates to maybe 60 to 70 milligrams for adult patients. And for ALLO-647, ALLO-501 study is basically 39 to 90 milligrams. So it seems like the dosing is not much huge differences between ALLO-647 versus alemtuzumab. So just wondering what kind of data you provide to design for your alemtuzumab cohort for CD22?

Yes. Gena, I can answer this, it’s Carrie. So I think it’s a really good question, the first part, for Allogene to comment on in terms of how they’re determining how to use their proprietary anti-CD52 antibody versus alemtuzumab. I agree with you that it’s unlikely that the doses would be terribly different because it’s a similar molecule. That said, I think, as you pointed out, learning from their study and the doses that they’re using and what they see, and we’re all looking forward to seeing that data would be very helpful in determining the appropriate way to move forward in our programs as well. But I don’t have any further insight into how or why Allogene is choosing the doses and choices that they had. In terms of our studies, I could say that we’re looking at adding in alemtuzumab. We are also looking at it without alemtuzumab because we want to find the most appropriate optimal lymphodepletion regimen to use with our UCART cells.

So for your profile? Sorry. Go ahead.

Okay. Just to add to that, this is Simon. If I may. So we’ve invented the CD52 knockout with alemtuzumab co-injection as the first measure to increase the window of persistence, and we strongly believe in that tool to use where applicable in certain patients. I think where we are looking at is really an exceptional point in this CAR-T space because I think we’re the only company that actually makes that direct comparison of using alemtuzumab with Cy/Flu versus using Cy/Flu alone. I think this year, a lot of the companies in our space are working on the correct lymphodepletion regimen. There are a lot of different tools available. But I would say that, at Cellectis, I think we’ll have one of the most insightful data sets coming out where we actually can use the site-by-site comparison. It may be a good thing to have a longer window of persistence in certain indications, but it may be a better approach to have a shorter window of persistence in other indications. This is what you’re trying to figure out in the dose escalation, and this will definitely give insight by the end of the year, and we will share much more detail around this in our upcoming presentations. But at this point, I think we’re keeping it mostly under wraps just because there are some moving parts, and the data will be very insightful.

Yes. Thank you, Simon. Actually, I think that there is no actual study that has a comprehensive analysis of – with or without alemtuzumab or preconditioning or biosimilar preconditioning. I think that the study we’re preparing and that will start initiating in the second half of this year will give you a pretty clear understanding of the role or not of alemtuzumab with or without. This is something that is very important to us. I think the guarantee of this type of therapy, both allogeneic therapies and also autologous therapies, is most of the time in the quality of the preconditioning and the consistency of the preconditioning. So it’s something that we’ll provide answers for. I hope that there will be interesting results to share.

That’s very helpful. And my follow-up – second question is regarding the manufacturing. So the Paris and U.S. sides, just wondering, once they complete, what kind of capacity of the dose, if you can give a – of course, that depends on how many AL cells per dose. But if you can give a little bit of a rough idea of how many doses of patients you can basically supply?

Yes. Thanks, Gena. This is Bill Monteith. So both of the facilities, as you said, how much the capacity is and what we can provide for and will need to provide for is going to be dependent upon once the final dose is determined. What we have done is built both facilities to be able to provide the starting materials in Paris for UCART production, and the UCART manufacturing capacity in the Raleigh facility to be flexible in terms of what they can produce, too. In conjunction with our current CMO network, we feel we will have more than adequate capacity to meet any final commercial requirement once we get to that approval state.

Okay. Thank you.

Thank you. Our next question comes from Christopher Marai with Nomura. Please proceed with your question.

Hey, good morning. Thank you for taking the questions. I think, obviously, you’ll have a lot of data this year from you and your partners, and there’s an interesting perhaps, cross-trial comparison going on. So I’d like to understand a little bit about some of your perspectives on comparing some of the data out of the CS1 UCART trial and the BCMA trial with your partner there at Allogene and the kind of data you might be looking for to understand the applicability of each of those approaches in multiple myeloma patients and sort of different lines of multiple myeloma therapy. And then I have a follow-up.

Thank you for your question, Chris. I appreciate it. It's going to be interesting to look at the significant differences between targets like BCMA and CS1. First, CS1 has a lower level of soluble protein in the blood compared to BCMA. This difference will affect the behavior of the CAR, as CS1 has less volume of protein and is expressed on various immune cells, including NK cells, B-cells, and T-cells, particularly on macrophages. It will be important to monitor how deeply lymphodepletion is induced. We cannot use alemtuzumab with CS1 due to two knockouts: TCR alpha and CS1. We decided not to include a third knockout, CD52, since we believe CS1 may provide a similar effect in enhancing lymphodepletion by targeting T-cells, particularly CD8, and to some extent CD4. This could also promote the expansion of CS1 in the patient. The quality and method of lymphodepleting the patient will likely influence this expansion. This scenario is quite different from BCMA, where the product is hindered by the soluble protein, requiring different dosing to facilitate expansion. Another interesting point is the level of CS1 expression on multiple myeloma cells, where we observe a response with alemtuzumab, whereas we do not have an active monoclonal antibody for BCMA. We are eager to see how it performs without alemtuzumab, especially regarding the depth of the response. Currently, we are still at initial dose levels, and it will be intriguing to see how things progress as we move to higher doses in the future.

Okay. And then it sounds like, obviously, lymphodepletion is going to be the biggest component of the comparison, at least upfront. I suppose the other component would be the response rate between the two trial settings. How much do you expect to be able to read through to sort of durability of response? And then I guess, piggybacking on that question and applying that to all of your ongoing studies. As you move to your expansion phase, I was wondering if you could elaborate on any contemplation to extend these expansion phases of the trial to include redosing? And what might the criteria for redosing look like in, call it, dose expansion phases?

All right. So I hope I remember the first part of the question. I think let me start with the first part of the question about the design of the trials and versus in myeloma for CS1. I think it’s really important to recognize, however, that this is a different situation than in the autologous space. So we don’t know yet, even for durability purposes, if we even want durability, right? So I think the really important question in my mind is to understand what lymphodepletion and of the level of T-cells that we want to deplete in order to get a strong acute attack on the cancer cells. The piece that’s really special about our technology and about the ALLO technology is the fact, as was brought up earlier, that we could redose if we need to. This idea of needing to have a very long durable lymphodepletion is not necessarily applicable to the ALLO space. However, you want enough so you can have an acute attack. I think also, it will depend on the disease. As I said earlier, in some diseases like AML, you may not want to have a very long lymphodepletion because these patients may end up significantly myelosuppressed and lymphodepleted, and we already know they’re at higher risk, which was also alluded to for resurgence of viral infections and other things that they’ve had in the past. It’s really going to be dependent. What’s beautiful about the technology and our approach is that we’re going to try to learn as much as we can about all these methods, then tailor the approach later appropriately for individual indications as well. I think we’re going to learn a lot about what other programs are doing in other companies in terms of their regimens and what their window is of lymphodepletion, and we’re also going to learn from our own, and you take all that together to make the appropriate decisions for individual indications and studies. Then, André, maybe you can speak to the memory CAR T-cell piece that was requested.

It’s a very good question. It’s like really central, central memory. The fact is that we monitor very closely the composition of every vial we produce in terms of memory cell, central T memory, etc., the gamma, delta, everything that is in there. This is something that we consider as the most important in terms of QC. People often wonder why we take so much time to cure treated cells. It takes close to four months just to correct me if I’m wrong, to cure treated cells. We take our time to cure treated cells until we’re sure that we have reproducible production from batch to batch. After this, there’s a very deep translational work that is done to understand the cells we inject in patients, how they behave, how they expand, etc., to have a clear understanding of what is working and what is not working in the vials we produce, knowing that all the data we get from autologous therapies is quite confusing sometimes because the raw material, which are the T-cells, always come from the patient, and the quality is not reproducible from patient to patient. Here, our goal is to try to have consistency in the production. And we have to know exactly what we have in our vial before we get started, once this is injected. You appreciate the way the cell behaves in the patient, what expanded, what did not expand, etc. Then you can have real feedback to improve after the production, and the consistency is often the most important, allowing us to give the same chance to every patient that receives the vial produced.

Thank you. It appears we have no additional questions at this time, so I’d like to pass the floor back over to Mr. Harnest for any additional concluding comments.

Thanks, Betty, and thank you everyone, for being on the call today. We really appreciate your attentiveness to our story. This is going to be an extremely exciting year for us and for the cell therapy space, in general. Again, we’re really thankful for all your support of the healthcare space in these special times. We’re excited to make progress and really serve patients in need. If you have any further questions, feel free to e-mail me at [email protected] and reach out anytime. Thank you very much.

Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation, and you may disconnect your lines at this time.