Cellectis S.A. Q1 FY2023 Earnings Call

Good morning, everyone, and welcome to Cellectis First quarter 2023 Earnings Call. Please be aware that today's conference call is being recorded. I'd now like to introduce the first speaker, Arthur Stril, Chief Business Officer. Please go ahead, sir.

Good morning, and welcome, everyone, to Cellectis' First Quarter 2023 Corporate Updates 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 issued a press release reporting its financial results for the 3-month period ended March 31, 2023. The report and press release are available on our website at www.cellectis.com. As a reminder, we will make statements regarding Cellectis' financial outlook in addition to its manufacturing, regulatory and product development standards 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 license 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 Securities and Exchange Commission, SEC, and the financial report, including the management reports for the year ended on December 31, 2022, and subsequent filings Cellectis makes with the SEC 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. Cellectis made significant progress with its pipeline this quarter. We took a notable step forward with the first patient being dosed in France with our in-house manufactured product candidate, UCART22, which is being evaluated in the BALLI-01 clinical study. This is an important advancement for the Cellectis team who has worked tirelessly to expand the BALLI-01 clinical study to Europe. UCART22 is currently the most advanced allogeneic CAR-T cell product in development for relapsed or refractory B-cell acute lymphoblastic leukemia. We believe that our off-the-shelf treatment approach, coupled with our ability to manufacture the UCART-T product candidate completely in-house, gives us a competitive advantage in the market. It potentially maximizes the chances for eligible patients to be treated without delay. On the business development front, our partnerships proved to be an exciting highlight for Cellectis. Last month, we announced that we have implemented the use of Sanofi's alemtuzumab as the only selective investigational medicinal product coded as CLLS52 as part of the lymphodepletion regimen for UCART22 in the BALLI-01 clinical trial, for UCART12 in the AMELI-01 clinical trial, and for UCART20X22 in the NATHALI clinical trial. This follows the partnership and supplies agreement that we entered with Sanofi regarding alemtuzumab. This quarter, we were proud to present encouraging preclinical data at the American Association for Cancer Research Annual Meeting on TALEN edited MUC1 CART-T cell to enhance efficacy in targeting triple-negative breast cancer. The data showed the capability of armored allogenic MUC1 CART-T cells with sophisticated gene edits to excel in the immunosuppressive tumor microenvironment, suggesting that there could be an effective option in treating patients with limited therapeutic options. We're proud of these results that reinforce the performance of our technologies and our commitment to treat cancer patients. We also announced that two abstracts have been accepted at the upcoming American Society of Cell and Gene Therapy Annual Meeting. Cellectis will present clinical data on the AMELI-01 clinical trial in evaluating UCART123, which were already showcased in an oral presentation at the ASH Annual Meeting, as well as preclinical data on multiplex engineering for superior generation of CART-T cells. Those presentations will take place on May 17 in Los Angeles. This quarter, Cellectis announced the closing of the global offering of $25 million of its depository shares launched in February. The net proceeds of the global offering are approximately $22.8 million. Finally, in April, we announced the drop-down of the first tranche of the €20 million under the finance contract for up to €40 million credit facility made with the European Investment Bank in December 2022. Cellectis plans to use the net proceeds of the funds to focus on the development of its pipeline of allogeneic CART-T cell product candidates, UCART22, UCART20x22, and UCART123, and decided to stop enrollment of treatment of patients with UCARTCS1. To accelerate the speed of enrollment of patients in the MELANI-01 study evaluating UCARTCS1, the company would have had to invest a meaningful amount of resources. Therefore, to optimize its resources, Cellectis decided to focus its development efforts under BALLI-01, AMELI-01, and NATHALI-01 studying and stop MELANI-01. Lastly, based on our current plan, we anticipate our cash runway will take us into the third quarter of 2024. We're excited about the drive in our clinical trials, building on the momentum of our lead product candidates in our pipeline, and the upcoming milestones for 2023. With that, I would like to turn the call over to Dr. Mark Frattini, our Chief Medical Officer, who will give us an overview of the clinical trials. Mark, please go ahead.

Thank you, Andre. As Andre mentioned, we have made progress in our BALLI-01 clinical trial with the dosing of our first patient in Europe with our in-house manufactured product candidate, UCART22. UCART22 is an allogeneic CAR T-cell product candidate that targets CD22 and is being evaluated in the BALLI-01 clinical study, a Phase I/IIa open-label study designed to evaluate the safety and clinical activity of the product candidate in patients with relapsed/refractory B-cell acute lymphoblastic leukemia. The last preliminary data presented in the live webcast last December support the continued administration of UCART22 after FCA lymphodepletion in patients with relapsed/refractory B-cell ALL and are very encouraging for patients who have limited, if any, treatment options, especially for those who have failed prior CD19 directed CART-T cell therapy and allogeneic stem cell transplant. The BALLI-01 study is actively enrolling patients after FCA lymphodepletion. Our AMELI-01 study evaluating UCART123 in patients with relapsed/refractory AML continues to progress and enroll patients in the FCA 2-dose regimen arm. We look forward to sharing clinical data from this program when it becomes available. Next, I'll move on to our MELANI-01 clinical trial, our CS1-directed TALEN gene-edited allogeneic CAR T-cell product candidate being evaluated in patients with relapsed or refractory multiple myeloma. As Andre previously mentioned, in order to focus on the development of our pipeline of allogeneic CAR T-cell product candidates, UCART22, UCART20x22, and UCART123, we decided to stop enrollment and treatment of patients in the MELANI-01 study evaluating UCARTCS1. Lastly, I will speak about our NATHALI-01 study evaluating UCART20x22. UCART20x22 is Cellectis' first allogeneic duo CART-T cell product candidate being developed for patients with relapsed or refractory B-cell non-Hodgkin lymphoma. UCART20x22 is also the first product candidate Cellectis has designed, developed, and manufactured completely in-house. Additionally, the advantage of UCART20x22 is that it goes beyond the highly competitive CD19 antigen directed therapy space by providing a dual antigen CD20 and CD22 targeted allogeneic alternative. Cellectis is now enrolling patients in the NATHALI-01 trial. Lastly, as Andre mentioned, Cellectis announced that we have implemented the use of Sanofi's alemtuzumab as a selective investigational medicinal product coded as CLLS52 as part of the lymphodepletion regimen in the BALLI-01, AMELI-01, and the MELANI-01 clinical trials. As previously reported, the importance of alemtuzumab in the lymphodepletion regimen was demonstrated in our BALLI-01 and AMELI-01 studies, where the addition of this lymphodepletion agent to the fludarabine and cyclophosphamide regimen was associated with sustained lymphodepletion and significantly higher UCART-T cell expansion, allowing for greater clinical activity. We believe these encouraging outcomes are a meaningful step forward to a safe, effective, and controllable therapeutic window for our allogeneic CAR-T cell product candidates. With that, I would like to hand the call over to Dr. Bing Wang, Cellectis' Chief Financial Officer, for an overview of our financials for the first quarter of 2023. Bing, please go ahead.

Thank you, Mark. I will provide a brief overview of our financials for the first quarter of 2023. I would like to highlight that the cash, cash equivalents, and restricted cash position of Cellectis, excluding Calyxt, as of March 31, 2023, was $88 million compared to $95 million as of December 31, 2022. This difference mainly reflects $30 million of cash out, which includes $6 million of payments for R&D expenses, $4 million for SG&A suppliers, $15 million for staff costs, $4 million for our rent and taxes, $1 million of reimbursement of the PGE loan, and a $23 million net cash inflow from the capital raise closed in February. This cash position is expected to be sufficient to fund selective stand-alone operations into the third quarter of 2024. On January 13, 2023, Calyxt, Cibus, and certain other parties entered into a merger agreement pursuant to which Calyxt and Cibus will merge in an all-stock transaction. Following the closing of the proposed Calyxt merger, Cellectis S.A. is expected to own approximately 2.4% of the equity interest of the combined company. Accordingly, if the proposed Calyxt merger is consumed, it will result in a loss of control over Calyxt, and Calyxt will no longer be a consolidated subsidiary. The closing of the proposed Calyxt merger is expected in the second quarter of 2023. In this context, Calyxt is presented as discontinued operations in the financial statement for the year, 3-month period ended March 31. The net loss, excluding Calyxt, was $20 million in the 3 months of 2023 compared to a loss of $28 million in the 3 months of 2022. The $0.5 million decrease in net loss between 2023 and 2022 was primarily due to a decrease of $4 million in purchases and external expenses as a result of quality and manufacturing internalization, a decrease of $3 million in personnel expenses due to headcount rationalization, and almost fully offset by an increase of net financial loss of $5 million due to Cytovia's convertible note loss in fair value and an increase of other operating expenses of $1 million. The net loss attributable to shareholders of Cellectis, including Calyxt, was $30 million, or $0.58 per share in the 3 months of 2023 compared to a loss of $32 million, or $0.70 per share in the 3 months of 2022. This $2 million decrease in net loss between 2023 and 2022 was primarily driven by a decrease of net income from discontinued operations attributable to shareholders of Cellectis of $1 million. The adjusted net loss attributable to shareholders of Cellectis, including Calyxt, which excludes non-cash stock-based compensation expenses, was $28 million, or $0.55 per share in the 3 months of 2023 compared to a loss of $29 million, or $0.64 per share in 2022. The tranche A of €20 million of the credit facility we got from the European Investment Bank was received in April. We are laser-focused on spending our cash on developing our clinical candidates and operating our state-of-the-art manufacturing facility in Paris and in Raleigh. In addition, our focus on maintaining an efficient corporate infrastructure should also enable a more limited growth in G&A spend. Back to you, Andre.

Thank you, Bing. To close out this call, I would like to reiterate how excited we are about the continued progress of our clinical trials and the upcoming milestones for 2023. Pioneering this field, Cellectis continuously leverages gene editing and a series of breakthrough innovations into clinical development in order to transform the lives of patients with cancer and rare genetic diseases, and we look forward to continuing this effort in the second quarter of 2023 and beyond. With that, I would like to open the call for Q&A.

Our first question comes from Gena Wang with Barclays.

I have three very quick ones. First one is UCART123. You will present data at the ASGCT. The abstract looks similar versus last ASH. So I'm wondering what kind of new data we will see at the ASGCT. The second question is the UCART22 since you completed the first patient, complete 28-day dose-limiting toxicity period. Any additional waiting period for you in order to dose the next patient? And what will be the plan for next steps? And lastly, very quickly for Bing. According to the cash guidance, should we expect largely flat quarter-over-quarter burn?

Gena, thank you so much for these great questions. So we'll start with Mark for the first two on 123 and 22, and then Bing for the financial question.

Thank you, Gena, for your questions. Regarding your first question about 123, there will be an oral presentation at ASGCT in a couple of weeks, which will be a repeat of the earlier ASH presentation. As we discussed in December, we are moving forward with enrollment in the 2-dose regimen arm, and we will share that data when it's available. For your second question about 22, there is a full 28-day waiting period for dose-limiting toxicity between the first and second patient, but we can enroll additional patients at the same time, and we will provide an update on the 22 data later this year as well.

Gena, regarding the cash burn question, yes, quarter-over-quarter burn should be flat for the rest of this year.

Our next question comes from Yanan Zhu with Wells Fargo.

This is Juan for Yanan. So back to UCART22, can you comment on how your in-house product performed compared to the previous product so far?

Great question. That would be for Mark as well.

For the question. So yes, as you know, we are currently enrolling both in the EU and the US with our completely in-house manufactured UCART22 product. And as I said from the previous question, we will be updating that data later this year.

Got it. And another question on alemtuzumab, I wonder if you can comment on how adding alemtuzumab may affect overall safety.

Sure. So as we've already presented at ASH prior twice with the 22 product and last December with the 123 product, the alemtuzumab component of lymphodepletion is very important for allowing for sustained lymphodepletion and optimal UCART expansion and, therefore, clinical activity. And what we did show looking at the AEs that were presented for both products was that there was no significant difference in terms of safety with the use either with or without the use of alemtuzumab. Those are very equivalent.

Got it. And last question, very quick, for the 2-dose regimen, given that some literature suggests patients' disease burden may affect the grade of CRS. Is it the company's plan that you would adjust the dose level based on the patient's disease burden?

Yes, great question. So with the 2-dose regimen, as we discussed in December, we began enrollment with dose level 2, which was a dose that was cleared for safety as a single-dose regimen by the Data Safety Monitoring Board for the study. And so the regimen consists of 2 doses of dose level 2 that are given during the study. The hypothesis going in, obviously, is that with the second dose that will be given in a state where there is a much lower disease burden and therefore, it has been shown before a much lower level of potential CRS in that situation.

Our next question comes from Yigal Nochomovitz from Citigroup.

Just a few questions. Could you just comment on the level of enthusiasm for enrolling the UCART20x22 program, please?

Mark?

Sure. Thanks, Yigal, for the question. So there is extreme enthusiasm for this study from all the investigators that have the study opened so far. They're very excited to proceed with this dual allogeneic CART-T cell, particularly because it does not involve CD19, so it's out of the 19 space.

Okay. And then you mentioned for UCART22, you completed the 28-day TLC period. Can you comment any further on the safety that was observed in that initial period?

Yes. As we mentioned, there will be a data update later this year regarding the patients enrolled in the Phase 2 study, which we will share at that time.

Okay. And then with regard to MELANI-01, is the reason for that because you just had difficulty competing with the BCMA bispecifics, is that right? Or is there a different...

Yes. Thanks, Yigal. Andre, do you want to take this one first?

Yes, the competition among all the CAR-T therapies currently approved or in clinical development is making our enrollment very challenging. We are enrolling patients who have undergone multiple lines of treatment, as we have indicated previously. We need to remanufacture the product, as the one we were using was essentially produced elsewhere, and we believe it's crucial for us to manufacture it ourselves. We have seen significant results with 22 and 20x22. The options we have now are either to open more sites, likely outside the United States, to expedite the process, or to concentrate our efforts, and focusing has been our choice under the current circumstances, especially given our commitment to 22, 20x22, and 123.

Our next question comes from Salveen Richter with Goldman Sachs.

This is Anoumid on for Salveen. I have a question about the CS1 program. Do you see an opportunity to reintroduce it at some point, especially with a focus on non-BCMA-targeted CAR-T in the multiple myeloma area? Also, have any patients been dosed from this program, and will we get data from those patients? Additionally, I would like a quick follow-up on CD20x22. Are you primarily targeting CD19 naive patients or those with CD19 relapse? In that context, what clinical profile are you aiming for compared to the approved CD19 therapies or the ALLO CD19 program?

Anoumid. Thank you very much for the question. I'll leave the first question on CS1 to Andre and then Mark for 20x22.

Thank you for the question. We are quite interested in the target CS1 and see it as a compelling alternative to BCMA. Previously, we presented data indicating that UCARTCS1 can lead to significant tumor reduction, with some patients achieving a very good partial response. While it's not a complete response due to the M-protein remaining elevated, we view this target positively. The evaluation process we undertook was necessary and beneficial for the company. If we have the opportunity and resources to enhance this project, we would certainly consider revisiting it, as CS1 offers a substantial alternative to BCMA and various myeloma products in development. It's a validated target, particularly with alemtuzumab, and boasts self-lymphodepletion, making it advantageous in its category. There are numerous appealing features, but we must stay focused on our current products, specifically 22, 20x22, and 123. Mark?

Thank you, Andre. Regarding the 20x22 question, patients who have previously undergone any type of CD19-directed therapy are eligible for this study. Additionally, patients who are unable to receive CD19-directed therapy for various reasons are also eligible.

And just a follow-up, what target profile are you hoping to achieve with this program?

Right now, it would be considered an additional line past CD19-directed therapy.

Our next question comes from Kelly Shi with Jefferies.

This is Dev on for Kelly Shi. I have a couple of questions. One is, you mentioned runway into the third quarter of '24. I just wanted to make sure, does it include any milestone payments? Also, any thoughts on doing a 2-dose regimen for UCART22?

Thank you for the question. So Bing for the runway and then Mark, for the 2-dose regimen on 22.

Yes, we've included some probability adjusted, I would say, pretty conservatively on our part on the milestone to provide that runway guidance to the third quarter of 2024.

And then for the second question about 22. So right now, the trial is structured obviously as a single-dose regimen, which we will continue to evaluate as we move forward.

Our next question comes from Hartaj Singh with Oppenheimer.

Good to hear everyone's voice. I would like to ask a broader question. You mentioned earlier that for BALLI-01, the patients would be post-autologous CAR-T and stem cell therapy. Can you clarify this for BALLI, and I believe you mentioned it for AMELI and then for NAtHaLI? What patient population are you currently recruiting for these studies? Additionally, I assume you are in discussions with regulators. If you arrive at a recommended Phase II dose, could you briefly outline what dose expansion trials we might expect? I understand this could involve some hypotheticals, but I would appreciate any insight you can provide.

Thank you, Hartaj, for the questions, and I'll give them to Mark.

Thank you, Hartaj. It's great to connect with you. Regarding your first question about the studies, the patients involved are all heavily pretreated. As we disclosed for study 22 before ASH, many of these patients have failed at least one prior therapy, including blinatumomab, CD19 autologous CAR T cells, inotuzumab, and allogeneic stem cell transplants. Consequently, a lot of these patients have no other treatment options left. Study 123 presents a similar situation since AML is very aggressive and refractory in patients after relapse, with many failing multiple chemotherapy regimens and around two-thirds to three-quarters having failed an allogeneic stem cell transplant. Those who haven’t undergone a transplant have typically been resistant and didn’t respond sufficiently to qualify for it. Therefore, both studies involve heavily pretreated patients, as we previously mentioned. Regarding study 22 and 20x22, they will also involve patients who are heavily pretreated, representing an additional line of therapy after their first CD19-directed treatment. Concerning your second question, we are currently in discussions with regulatory authorities. The ALL study will include young adults and older patients, starting from age 12, once we expand into the pediatric area. For study 123, the focus is on adults aged 18 to 65, while study 20x22 targets adults aged 18 to 80. As we've noted, the logical first expansion cohort will be in the large B-cell lymphoma area due to its high incidence.

Our next question comes from Jack Allen with Baird.

Congratulations on the progress in the quarter. I guess the first question, I just wanted to confirm, you mentioned the ASGCT presentation of the AML data will be an encore presentation. Will there be any additional follow-up of patients in that presentation? Or will it just be more of an encore as it relates to ASH? And then as it relates to 20x22, you've made a few comments that you're enrolling patients in the study, but I was wondering if you could provide some additional thoughts around the dose levels that you've reached and what we should think about as it relates to data readouts as we move through the year from the 22 program.

Jack, thank you so much, and these are great questions for Mark.

Thanks for your question. So yes, in terms of the ASGCT, oral for 123, it will be an encore of the ASH presentation with the data cutoff used for ASH. For 20x22, as we've discussed before, we expect to disclose first-in-human data for this study later this year. So we'll go through the first patients that have been treated.

Our next question comes from Silvan Tuerkcan with JMP Securities.

I have a question about your manufacturing capabilities. It seems you have the capacity to manufacture fully in-house in the U.S. and Europe at this time. Are there any excess capacities that you could possibly monetize in the short term, or do you intend to use all of that capacity for your own purposes?

Sean, great question. And I think the one would be for Andre.

Well, first of all, we're extremely proud of our manufacturing capacities. And I think that it was a blessing that the strategy that we did took initially, it was like before COVID to integrate all the chain of manufacturing means like from buffers to DNA to RLDs to the final product even for commercial that has been internalized, and the manufacturing is continuing to internalize things. I don't know in which position we would be if we hadn't taken this decision previously. The second thing that we're excited about this year, as Mark is saying since the beginning of the call, is to present you the data with the total that has been manufactured internally in the performance of our manufacturing. Now if this manufacturing is essentially for internal use, we're always open to manufacture for our partners. But Cellectis is not positioning itself as a potential CMO, and this is not our business, and there is an offer that is driven by a series of CMOs outside. Now if there's a potential to monetize this, this option is always open, but we don't think that it's something that must be discussed today because the opportunity of this, but it's definitely an asset that Cellectis has and it's a very strong asset that we would like to keep internal so far. I think that makes a big difference, and there are two categories of cellular and gene therapy companies, those that know how to manufacture and the others, and Cellectis is among the first capability that I think would distinguish themselves.

Our next question comes from Ingrid Gafanhao with Kempen.

I have two questions, if I may. First, you mentioned that you changed the trade name of alemtuzumab without discussing your trials. Could you clarify how the regulatory landscape looks? Is having alemtuzumab approved sufficient for the agencies, or is there additional action needed to get it approved as a lymphodepletion regimen with your products? My second question is about the next EIB tranche. When do you expect to have access to that?

Okay. Thank you, Ingrid. And maybe I can speak a little bit about the alemtuzumab given the partnership that we have with Sanofi and then hand it over to Bing for the EIB. So you're absolutely right. And in 2021, we signed a strong partnership with Sanofi on the supply of alemtuzumab. As you know, alemtuzumab is already an approved product in other indications. So we definitely expect to leverage that and the agency's familiarity with that product. Of course, we'll have to demonstrate the importance of alemtuzumab in our CAR-T trials, which, as Mark has highlighted, we have already done and disclosed data for UCART123 and UCART22. But we definitely expect that through our partnership with Sanofi and the agency's prior familiarity with alemtuzumab, the approach will be streamlined as opposed to a completely novel agent. And Bing for the EIB.

Great. Thank you, Ingrid, for the question. So first of all, I also want to highlight, and there was a question earlier on the cash runway, is the cash balance that we reported for Q1 does not include the €20 million tranche A of the EIB cash that came in because that came in April. So that €20 million is not reflected in the Q1 cash balance, and that's in tranche A. Your question regarding tranche B, we have already satisfied the financial precedent conditions for tranche B, which is as a result of our equity raise in February and also as a result of the €50 million milestone payment that came in December of 2022. Now when we plan to draw on that depends on when we plan to issue the warrants for the necessary drawdown of the tranche B, which is €15 million. And that we have not made a decision at this point, but I just want to highlight that we have satisfied the present condition to draw on this €15 million.

Great. And if I may ask a follow-up. So your current cash guidance somewhat risk-adjusted, are you taking into account what you have acquisitions in exchange or is that not in your current plan?

So our cash guidance for the third quarter of 2024 assumes that we will draw down on Tranche B of the European Investment Bank loan.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Mr. Choulika for closing comments.

Well, thank you, everyone, for attending this earnings call. We're extremely proud of what has been achieved so far; we think that 2023 and the next 12 to 18 months are going to be extremely rich, as described in this presentation, with an event range for the company, and we're very excited about the products we're developing. We think that the company is focused more than ever on its resources and great products that we're developing, and we'll look forward to the next update. Thank you very much, and wish you a great day.

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