Cellectis S.A. Q3 FY2022 Earnings Call

Greetings, and welcome to the Cellectis Third Quarter 2022 Earnings Conference Call. It is now my pleasure to introduce your host, Arthur Stril, Chief Business Officer. Thank you, sir. You may begin.

Good morning, and welcome, everyone, to Cellectis' Third Quarter 2022 Corporate Update and Financial Results Conference Call. Joining me on the call today with prepared remarks are Dr. Andre Choulika, our Chief Executive Officer; Dr. Bing Wang, our Chief Financial Officer; and Dr. Mark Frattini, our Chief Medical Officer. Yesterday evening, Cellectis filed its interim report and issued a press release reporting its financial results for the third quarter and nine-month period ended September 30th, 2022. The report and press release are available on our website at cellectis.com. As a reminder, we will make statements regarding Cellectis' financial outlook in addition to its manufacturing, regulatory and product development status and plans and product development of its license partners. These forward statements, which are based on our management's current expectations and assumptions and on information currently available to management, including information provided or otherwise publicly reported by our licensed partners, 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 filed with the SEC and the financial report, including the management report for the year ending on December 31st, 2021, 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 Andre.

Thank you, Arthur. Good morning, and thank you, everyone, for joining us today. 2022 has been a productive year thus far for Cellectis. We have made progress on all fronts that we're thrilled to share with you today. Yesterday, we announced that our UCART123 abstract was accepted for an oral presentation at the American Society of Hematology's Annual Meeting. We're excited to share preliminary data from the AMELI-01 trial, which is a dose escalation and dose expansion study evaluating the safety, expansion, persistence and clinical activity of UCART123 in patients with relapsed or refractory acute myeloid leukemia. Acute myeloid leukemia is a huge unmet medical need with a lack of cell therapy options. And these encouraging clinical data are a great step forward for patients. We're also proud that the Amsterdam University Medical Center will present preclinical data at ASH on our product candidate, UCARTCS1, which reinforces the validation of CS1 as the relevant target for relapsed and refractory multiple myeloma patients. Cellectis continues to make progress enrolling patients in its four sponsored allogeneic CAR-T trial. We will initiate dosing patients with our product candidate, UCART22, and new CAR-T that have been fully manufactured in-house. This will be a significant milestone for Cellectis, highlighting how our investment in building our GMP manufacturing facilities has now provided the company with independence and control over our gene and cell therapy processes. We believe that bringing manufacturing fully in-house could contribute to eliminating some of the barriers competitors are facing. Our goal is to provide consistency and safety in our production and ensure lead times are met and adaptability. Importantly, having our manufacturing in-house means that we can rapidly optimize promising therapeutic candidates as we monitor clinical responses, leading to the best possible product at registration, not just filing. This quarter, our partnerships continued to be a highlight for Cellectis, as several of our partners disclosed exciting milestones. Allogene announced that it was starting the first allogeneic CAR-T potentially pivotal Phase II trial for patients with large B-cell lymphoma. We share Allogene's excitement for this accomplishment as it paves the road for both ALLO-501A and our broader pipeline of allogeneic candidate products to greatly increase patient access to cell therapy. Our licensed partner, Iovance, announced that the first patient was dosed and completed the safety observation period in the IOV-GM1-201 clinical trial for Iovance's genetically modified tumor-infiltrating lymphocyte therapy for treating previously treated metastatic non-small cell lung cancer and advanced melanoma. Finally, our partner Cytovia announced that it will present new preclinical data on gene-edited induced pluripotent stem cell-derived natural killer cells at the Society of Immunotherapy of Cancer's Annual Meeting that will take place in November. These achievements showcase once more that Cellectis, along with its gene editing technologies, such as TALEN, is a partner of choice for cell and gene therapy applications across a wide range of cell types and that we're continuing to deliver on our promise of constant innovation in order to advance the efforts of both our and our partners' clinical trials. With that, I'd like to turn the call over to Mark Frattini, our newly appointed Chief Medical Officer. Most of you know Mark as he has been serving as a core member of the senior clinical team over the past two years. Previously, as the Senior Vice President of Clinical Science, Mark will give an overview of our sponsored clinical trials and preclinical product pipeline. Mark, please go ahead.

Thank you, Andre, and good morning, everyone. As Andre mentioned, 2022 has been a busy and productive year for Cellectis, with our proprietary clinical and preclinical programs making progress, and we are specifically excited to share additional preliminary clinical data from our AMELI-01 trial in an oral presentation at the ASH Annual Meeting next month. The abstract for AMELI-01 includes preliminary clinical data from the Phase I open-label dose escalation study in patients with relapsed or refractory acute myeloid leukemia, showing that adding alemtuzumab to the fludarabine cyclophosphamide lymphodepletion regimen or FC regimen was associated with improved lymphodepletion and significantly higher UCART123 cell expansion, which correlated with improved clinical activity. These data are encouraging and support the continued enrollment into the study. The abstract for UCARTCS1 presented by the Amsterdam University Medical Center includes preclinical data demonstrating antitumor activity in vitro and in vivo and supports the initiation of the first-in-human study of UCARTCS1, Cellectis’ MELANI-01 clinical study. Cellectis continues to progress in its Phase I clinical trial evaluating its four proprietary allogeneic CAR T cell therapies in hematologic malignancies: PALY01 evaluating UCART22 in patients with relapsed or refractory B-cell acute lymphoblastic leukemia, AMALI-01 evaluating UCART123 in patients with relapsed or refractory acute myeloid leukemia, and MELANI-01 evaluating UCARTCS1 in patients with relapsed or refractory multiple myeloma. Last quarter, we were pleased to announce the FDA IND clearance for our product candidate, UCAR20x22, Cellectis' first allogeneic dual CAR T cell product candidate being developed for patients with relapsed or refractory non-Hodgkin lymphoma. UCART22 is Cellectis' first product candidate fully designed, developed and manufactured in-house, showcasing the company's transformation into a true end-to-end cell and gene therapy company. In addition to the exciting clinical updates, we have several additional preclinical updates. In October, Cellectis presented data on two TALEN-based gene therapy preclinical programs for patients with sickle cell disease and mucopolysaccharidosis type 1 at the European Society for Gene & Cell Therapies Annual Congress. The preclinical data further demonstrated our ability to leverage TALEN gene editing technology to potentially address genetic diseases, namely sickle cell disease and lysosomal storage diseases. By correcting a mutation or inserting a corrected gene at the hematopoietic stem cell level, Cellectis aims to provide a lifelong supply of healthy cells from a single intervention. Lastly, Cellectis announced that two posters showcasing preclinical data on TALEN-edited smart CAR T cells for solid tumors will be presented at the Society for Immunotherapy of Cancer's Annual Meeting on November 10. The first poster will be on TALEN-edited smart CAR T cells targeting MUC1-expressing solid tumors. MUC1 is a tumor-associated antigen that is overexpressed in triple-negative breast cancer and other solid tumor malignancies. The second poster will be on innovative T-cell engineering strategies designed to increase the activity of CAR T cells for solid tumors while mitigating toxicity risks. With that, I would like to hand the call over to Bing Wang, Cellectis' Chief Financial Officer, for an overview of our financials for the third quarter of 2022. Bing, please go ahead.

Thank you, Mark. I will provide a brief overview of our financials for the third quarter of 2022. I would like to highlight that our financials, the cash, cash equivalents, current financial assets and restricted cash position of Cellectis, excluding Calix, as of September 30, 2022, was $95 million compared to $177 million as of December 31, 2021. This difference mainly reflects $81 million of net cash flow used in operating, investing and lease financing activities and $10 million of negative foreign exchange impact, partially offset by $6 million of cash received related to research tax credit prefinancing and $3 million cash received from milestones and licenses. Based on the current operating plan and financial projections, this cash position is expected to be sufficient to fund Cellectis' stand-alone operations into early 2024. The consolidated cash, cash equivalents, current financial assets and restricted cash position of Cellectis, including Calix, was $103 million as of September 30, 2022, compared to $191 million as of December 31, 2021. The net cash flow used in operating capital expenditure and leases was $81 million at Cellectis and $17 million at Calix in the first nine months of 2022, partially offset by a $10 million capital raise at Calix, $6 million of cash received related to research tax credit prefinancing at Cellectis and $3 million cash received from milestones and licenses. The net attributable loss to shareholders of Cellectis, excluding Calix, was $73 million in the first nine months of 2022 compared to a loss of $75 million in the first nine months of 2021. This $2 million decrease in net loss between 2022 and 2021 was primarily driven by a decrease of R&D expense of $12 million, an increase in net financial gain of $7 million, partially offset by a decrease in revenues and other income of $18 million. The consolidated net loss attributable to shareholders of Cellectis, including Calix, was $79 million or $1.74 per share in the first nine months of 2022 compared to a loss of $89 million or $2 per share in 2021. The consolidated adjusted net loss attributable to shareholders of Cellectis, excluding Calix, excluding noncash stock-based compensation expenses, was $67 million or $1.48 per share in the first nine months of 2022 compared to a loss of $66 million or $1.49 per share in 2021. We are laser-focused on spending our cash on developing our deep pipeline of wholly-owned product candidates in the clinic and operating our state-of-the-art manufacturing facilities in Paris and in Raleigh. On the other hand, our focus on maintaining an efficient corporate infrastructure should enable more limited growth in G&A spend going forward.

Thank you, Bing. We're excited about all clinical and preclinical data Cellectis has generated and will continue to generate. We're also excited by the progress with our partners. Cellectis continues to make progress with our pipeline, highlighting our ongoing clinical trials in hematological malignancies this quarter as we move closer to becoming a true end-to-end cell and gene therapy company. These updates clearly show our potential and ability to advance the field of allogeneic CAR T cell therapy. With that, I would like to open the call for question and answers. Thank you.

Our first question comes from Gena Wang with Barclays.

Congratulations on all the progress, and we look forward to the data update in the coming weeks. We noticed the abstract from the ASH meeting yesterday regarding the UCART123 program. Could you share your thoughts on your objectives related to activity? We observed that 1 out of 8 in the FCA arm demonstrated a complete response that was very durable. What goal do you hope to achieve to ensure competitiveness? Additionally, considering the clear benefits seen with alemtuzumab, how do you plan to apply this broadly to your other programs?

Gena, thank you so much for the question. Both great questions. I will hand it over to Mark.

Gena, thank you for the question. So I think I'll answer the second one first. So regarding alemtuzumab, I think the data that we're presenting about the effect of alemtuzumab in terms of prolonging the lymphodepletion and allowing for UCART expansion and clinical activity that we're going to present for 123 echoes what we've seen for UCART22 and was presented at ASH last year. Overall, it points out the importance of alemtuzumab in our UCART programs for the products that have the CD52 gene knocked out using our TALEN technology. So as we move forward, it's definitely really important to proceed with the alemtuzumab in the regimen. As for the data for UCART123, we're incredibly excited by what we've seen. These are heavily pretreated patients who have essentially failed everything. As you can see from the abstract data, over 50% of the patients have also failed allogeneic transplant. For patients like this who have very few other treatment options, the fact that we are able to achieve a long-term MRD-negative CR is incredibly exciting, especially in the dose escalation part of the study. The other responder in the FCA regimen, albeit stable disease, was a patient that had over 90% blast reduction on day 28, so again, a very encouraging response.

Our next question comes from Jack Allen with Baird.

Congratulations to the team on the progress over the course of the quarter. I wanted to ask you about some of the milestone payments that you're expecting to receive from Iovance and potentially from Iovance and Allogene for initiating the pivotal study. Given that those milestones have been hit at this point, I was hoping you can provide some more color on the size of those milestone payments. Additionally, any comments you can provide as it relates to the Servier relationship and your path forward there would be great.

Thank you, Jack. Great question. Maybe Bing can address the milestone aspect, and then probably Andre can discuss the Servier relationship.

Yes. So for the purpose of this call, we're going to focus on Q3, which ended on September 30. Any progress that happens since then, we'll withhold comment for now. Regarding the Servier and Allogene situation, we see good possibilities that this should be resolved and the situation is progressing. We're expecting some milestones to be reached on the Allogene side and the development of ALLO-501A, as stated in their Q3 press release and their call. We are very optimistic that a great product like this should find a path forward.

Our next question comes from Yigal Nochomovitz with Citigroup.

I just had a quick question regarding your manufacturing. Is the long-term plan also to have the UCART123 and UCARTCS1 being manufactured in your facilities?

Yes, great question. The plan is to leverage the fully internal manufacturing capabilities of Cellectis. We're extremely proud to now have the entire CAR T value chain in-house, ranging from starting material, plasmid, mRNA, viral vectors, all the way to the allogeneic CAR-T. The plan is definitely to transition all our programs to this internal platform in the long run.

Got it. And you announced the deal targeting CD20 and CD22. Should we expect more of these dual antigen-type products coming forward, or is the CD20, CD22 more of a one-off for a dual antigen?

Okay. Also a great question. Andre, do you want to take this one?

Thank you, Yigal, for the question. The dual targeting is extremely interesting for numerous reasons. It is the first allogeneic CAR-T that will be tested for dual targeting, and the big advantage of having CARs expressed in the same T cell gives you more chances to be able to target tumor-associated antigens on the surface of the cancer cell. That could result in better potency for killing. That's the hypothesis behind the development we're doing. The killing that we see so far in preclinical settings is very encouraging, and the data that we have is solid. The cells can kill CD20 non-expressing CD22 or CD22 non-expressing CD20 cells and, of course, both expressing these antigens. However, if a patient has wobbles on both targets, it means the expression or density of CD20 and CD22 can derive. Thus, single-targeting CAR-T can sometimes have escapes due to the lack of good formation of synapse. Therefore, if both targets are expressed on the cell, the synapse is better formed, resulting in better killing. We are going to test this at first, but we do plan to move forward with this strategy as we analyze the data from the NATALEE trial that is about to start.

Our next question comes from Salveen Richter with Goldman Sachs.

This is Mason on for Salveen. Could you please remind us of the status of the UCART2022 program and whether it's still on track for the second half of '22? Could you also give us a review of which key catalysts we should look for by mid-'23?

Thanks for the question. I will hand it over to Mark.

So for the UCART2022, absolutely, we're on track. We received the FDA IND clearance on August 1. We are in the process of opening sites and plan to begin enrollment in Q4 of this year.

Andre, do you want to take the broader question on key catalysts?

Sure, thank you very much for the question. We believe that Cellectis has four ongoing clinical trials involving CD22, CD123, CS1, and the dual-targeting CD22 by CD20. We anticipate numerous data points. The first is the oral presentation at ASH, as Mark mentioned, where we will provide an update on the acute myeloid leukemia trial for UCART123. We're also accumulating data in the other trials and will definitely start, as Mark just said, for the dual-targeting CAR UCART2022 enrollment this year, before year-end. 2023 is going to be rich in events starting now from the end of this year and extending through 2023. We expect also significant data points from our partners, Iovance, Cytovia, and Allogene, as well as Servier.

Our next question comes from David Dai with SMBC.

Great. Also, congrats on the progress. First of all, just on the IND clearance of CD22, I'm wondering if you can share some high-level thoughts on clinical trial design so far.

Thank you, David. Mark, I think this is for you.

Thanks. I can't share much right now regarding what's happening. However, as we discussed in the previous question from Gena, the use of alemtuzumab will be important in the lymphodepletion regimen for this study.

Got it. That's helpful. Just another question on the response from the UCART123 patients seen so far in both the FC and FCA arms, especially interested in the durable MRD-negative patient who has shown a response for about 8 months so far. Could you share some context on the patient's characteristics? Does this patient have high-risk? Any thoughts would be helpful here.

What I can share is that this patient, in particular, was an older patient who failed five prior lines of therapy, including an allogeneic stem cell transplant. In this patient population, this represents the worst-case scenario, so a great response.

Our next question is from Hartaj Singh with Oppenheimer & Company.

I just got a couple of questions. One is can you talk a bit about UCART123 and CS1? What dose levels are you there? If you can you remind us what line of patients you're seeing there for 123 and CS1 specifically? And there seems to be other companies interested in this post-CD19 CAR-T treatment area. Aside from the clinical design, can you talk about the market size from a patient perspective? How large is it getting with all the current therapies available?

Thank you for both questions. The first one would be for Mark and then probably Bing can give some color on the market sizing question.

Thanks, Hartaj, for the question. For the 123 trial, these are very advanced and highly refractory patients. The average patient has had four prior lines of therapy, up to nine for the 123 study. For patients with UCART123, they've failed everything, including allo transplant in over 50% of the patients. For CS1, we are continuing in the dose escalation part of that study. The eligibility criteria includes failing BCMA-directed therapy—both antibody and prior CAR-T. Regarding the dose levels for 123, we are currently at dose level 2, and we will provide more details in the abstract.

Sure. Thank you for the question, Hartaj. This is a critical question at this point. Many of the indications we pursue for primary cell therapy solutions are still autologous. The total capacity for autologous treatment in the U.S. is capped by the number of transplant centers, which is approximately 150. If each center treated optimistic estimates of six patients a month, that results in only about 10,000 patients treated per year for all autologous therapies. Once both ourselves and our partners launch commercially viable allogeneic cell therapies, we will significantly expand the market, allowing patients access to treatment options closer to home.

Our next question comes from Yanan Zhu with Wells Fargo.

About the CR patient in the ASH abstract, it was quite durable 8 months as of the cutoff date of July 2022. Just wondering if you can comment if that patient is still in response currently? Also, does this suggest a depth of response for this indication could be important and persistence may not be as critical? Also, could you talk about the dose going forward for the FCA arm?

Thank you for these good set of questions about 123. So Mark, over to you.

Yes, regarding the patient's response, the duration was over 8 months at the cutoff in the abstract. Unfortunately, I cannot disclose additional details as the information is embargoed until the time of presentation. Regarding depth of response, it's notable that given the acute nature of this patient population, we're not necessarily aiming for long-term persistence. The fact that we achieve an MRD-negative CR early in therapy is important, especially considering the patient population's lifespans are measured in weeks. Regarding dose levels for the FCA arm, this will be addressed in the presentation, but I can't go into more details right now.

Our next question comes from Raju Prasad with William Blair.

This is Brooke on for Raj. So regarding 123 again, I was wondering if you've seen any correlation of patient baseline characteristics that correlate with better responses to the therapy.

Thank you for the question. Mark, your thoughts on this?

Yes, thank you for the question. The data shows that these patients have extremely high-risk disease, with multiple cytogenetic and high-risk mutations—over 80% were classified as poor risk per the ELN criteria. This suggests that there may be significant opportunities for responses given their advanced state; however, more information will be provided during the presentation.

Our next question comes from Ingrid Gafanhao with Kempen.

Thank you for the update. I wanted to ask a few things. First, regarding Allogene and the Servier agreement, what are the exact hurdles in this agreement, and what are the risks for the 501 program in terms of development?

Thank you for the question, Ingrid. This is an ongoing matter, so we won't comment further as this is being resolved, but we don't anticipate any issues on the development of the 501A program. We're particularly excited that Allogene announced a few weeks ago that this program was entering Phase II pivotal trials, which bodes well for the future of the program and our allogeneic CAR-T franchise as a whole.

Clear. And on your manufacturing facility, could you provide more details on whether it's fully operational and if it will be used for products outside of Cellectis?

Yes, great question. The facility is definitely up and running, and it has already manufactured and released product. We have manufactured UCAR20x22 for which we received IND approval, as well as the P2 version of UCART22. We have been transitioning UCART22 previously manufactured by our CDMO to products now manufactured in-house. The plan is to cover our entire pipeline in the future. There is potential for spare capacity for partnerships, but we do not aim to become a CDMO.

There are no further questions at this time. I would now like to turn the floor back over to Arthur Stril for closing comments.

Thank you very much, everyone. We're very excited about the progress moving forward. As Andre mentioned, there will be a number of exciting catalysts on our clinical trials moving forward. We're particularly excited to have the full end-to-end platform for allogeneic cell therapy activities ranging from discovery, manufacturing, product development and all the way to clinical development. The future is very exciting, and we are looking forward to the next update, including the ones on UCART123 and CS1 at ASH in December. Thank you very much, everyone, for connecting today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.