Cellectis S.A. Q2 FY2023 Earnings Call

Good morning, and everyone, welcome to Cellectis Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. 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. You may begin.

Good morning, and welcome, everyone to Cellectis second quarter 2023 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 issued a press release reporting a corporate and business update for the second quarter 2023 and its non-audited financial results for the six-month period ended June 30, 2023. As disclosed in our press release published yesterday, the report, including our non-audited financial statements for Q2 will be released in the coming days. As a reminder, we will make statements regarding Cellectis financial outlook, including the sufficiency of cash to fund operations, in addition to its manufacturing, regulatory and product development status and plans, and product development of its licensed 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 Securities and Exchange Commission, SEC, and the financial report, including the management report 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. The second quarter of 2023 was marked by strong execution. Our last clinical data presented for UCART22 at the European Hematology Association Annual Meeting are encouraging for patients with relapsed or refractory B-cell acute lymphoblastic leukemia who have failed multiple lines of treatment options, including chemoimmunotherapy, CD19 directed CAR-T cell therapy and allogeneic stem cell transplant. We are looking forward to releasing our new data later this year on UCART22 manufactured in-house. Cellectis also presented an encore of the clinical data of the AMELI-01 clinical trial evaluating UCART123 at the American Society of Gene and Cell Therapy Annual Meeting. These preliminary data support the continued administration of UCART123 after fludarabine, cyclophosphamide and alemtuzumab lymphodepletion in patients with relapsed or refractory acute myeloid leukemia. In addition, this quarter, Cellectis' innovation team was proud to present strong preclinical data on the gene editing process to develop bona fide HBB gene correction of the sickle mutation. In addition, we have presented a comprehensive analysis to better design efficient TALEN Base Editors at the International Society of Cell and Gene Therapy Annual Meeting. These achievements showcase more the power of our gene editing platform, both as TALEN for therapeutic gene editing and that we are continuing to deliver constant breakthrough innovation to treat diseases with unmet medical needs. Cellectis announced that during this annual shareholder meeting, Dr. Cecile Chartier has been appointed as the Director of the company's Board of Directors. At the end of this meeting, the terms of the office of Mr. Hoppenot and Mr. Schwebig ended. I'm very pleased to welcome Dr. Chartier to Cellectis' Board. Her extensive experience in the development of next-generation cell and gene therapies, coupled with her deep knowledge of the U.S. biotechnology industry, will be a huge asset to Cellectis. We look forward to her contribution and insights as we continue advancing the development of our product candidates. In 2023, we made substantial progress with our pipeline. Despite an unprecedented challenging market environment for cell and gene therapy companies, Cellectis remains deeply focused on its core clinical trials, BALLI-01 evaluating UCART22, NATHALI-01 evaluating UCART20x22 and AMELI-01 evaluating UCART123, and on its mission to develop innovative cancer therapy product candidates. With that, I would like to turn the call over to Dr. Frattini, our Chief Medical Officer, who will give an overview of these clinical trials.

Thank you, Andre. As Andre mentioned, we have made progress in our BALLI-01 clinical trial with the presentation of updated clinical and translational data at the European Hematology Association Annual Meeting that support the preliminary safety and efficacy of UCART22 in a heavily pretreated relapsed/refractory B-cell ALL population. The poster presentation reviewed clinical and translational data from patients who received UCART22 after lymphodepletion with fludarabine and cyclophosphamide or FC, or fludarabine, cyclophosphamide and alemtuzumab or FCA in patients with relapsed/refractory B-cell ALL. Compared to the clinical update on BALLI-01 at ASH 2021, the poster presented data from six additional patients who received UCART22 at dose level 3 as of December 31, 2022 data cutoff. UCART22 administered after our FC or FCA lymphodepletion regimen was well tolerated. No dose-limiting toxicities or immune effector cell-associated neurotoxicity syndrome were observed. For FCA dose level 3, 5 million cells per kilogram, 50% of the six patients responded. Host lymphocytes remain suppressed through day 28 for all patients who received FCA lymphodepletion. Peak ferritin levels correlated with UCART22 cell expansion and cytokine secretion. UCART22 continues to be safe and tolerable with no treatment emergent serious adverse events or DLTs recorded. UCART22 cell expansion was detected in nine of 13 patients in the FCA lymphodepletion arm and associated with clinical activity. The BALLI-01 study is currently enrolling patients after FCA lymphodepletion with Cellectis in-house manufactured products. The next data set is expected to be released later this year. 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. On May 17, Cellectis presented an encore of the clinical data that were unveiled at the ASH 2022 Annual Meeting at the American Society of Gene and Cell Therapy Annual Meeting. These preliminary data support the continued administration of UCART123 after FCA lymphodepletion in patients with relapsed/refractory AML. The oral presentation reviewed preliminary data from patients who received UCART123 at one of the following dose levels, dose level 1, 2.5x 10 to 5 cells per kilogram, dose level 2, 6.25x 10 to the 5 cells per kilogram, dose level 2 intermediate, 1.5x 10 to the 6 cells per kilogram or dose level 3, 3.3x 10 to the 6 cells per kilogram after lymphodepletion with FC or FCA. The data presented showed that adding alemtuzumab to the FC lymphodepletion regimen was associated with sustained host lymphodepletion and significantly higher UCART123 cell expansion that correlated with improved anti-leukemia activity. Two of eight, or 25% of patients at dose level 2 in the FCA arm achieved meaningful responses, including one patient who failed five prior lines of therapy, including allogeneic stem cell transplant, who experienced a durable minimal residual disease negative complete response that continued beyond 12 months as of December 2022. Lastly, I will speak about our NATHALI-01 study evaluating UCART20x22. UCART20x22 is Cellectis' first dual allogeneic CAR T-cell product candidate targeting both CD20 and CD22 and is being evaluated in patients with relapsed/refractory B-cell non-Hodgkin lymphoma. The NATHALI-01 clinical study is ongoing and Cellectis expects to provide first-in-human data later this year. Cellectis also continues to advance our preclinical programs and provided preclinical proof-of-concept data for UCART20x22 to overcome current mechanisms of resistance to CAR-T cell therapies in B-cell NHL, while providing a potential therapeutic alternative to CD19 targeting and allowing a reduction in the time from treatment decision to cell infusion. We demonstrated that UCART20x22 displays robust activity both in-vitro and in-vivo against targets expressing heterogeneous levels of CD22 and CD20. In-vitro cytotoxicity assays against different tumor cell lines showed strong activity whether these cells express the single antigen CD20 or CD22 or both antigens simultaneously. These preclinical data were presented in June at the International Society of Cell and Gene Therapy Annual Meeting. 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 second quarter of 2023. Bing, please go ahead.

Thank you, Mark. I would like to highlight that in our financials, the cash, cash equivalents and restricted cash position of Cellectis excluding Calyxt as of June 30, 2023 was $89 million compared to $95 million as of December 31, 2022. This difference mainly reflects $55 million of cash out, which includes $15 million of payments for R&D expenses, $7 million for SG&A suppliers, $23 million for staff costs, $7 million for rents and taxes, $3 million of reimbursement of the PGE loan, a $21 million net cash inflow from the EIB loan, a $1 million of refundable advance from BPI, $2 million of financial investments, capital gain and interest, a $1 million reimbursement of social charges on stock options, a $1 million cash inflow from customers and a $23 million net cash inflow from the capital raise closed in February. This cash position is expected to be sufficient to fund Cellectis stand-alone operations into the third quarter of 2024. The closing of the proposed Calyxt merger was finalized on May 31, 2023. Consequently, Calyxt was deconsolidated and presented as discontinued operations in the financial statements only until May 31, 2023. The net loss was $46 million in the six month period of 2023 compared to a loss of $54 million in the six month period of 2022. This $8 million decrease in net loss between 2023 and 2022 was primarily driven by a decrease of $6 million in purchases and external expenses because of quality and manufacturing internalization, a decrease of $4 million in personnel expenses due to headcount rationalization and an increase of $2 million of net financial gain almost fully offset by an increase of $3.5 million in net loss of discontinued operations. The net loss attributable to shareholders of Cellectis was $41 million or $0.76 per share in the six month period of 2023 compared to a loss of $51 million or $1.12 per share in the six month period of 2022. This $10 million decrease in net loss between 2023 and 2022 was primarily driven by a decrease of $11 million of R&D and SG&A expenses, an increase of $2 million from the financial gain, partially offset by the $3.5 million decrease of net loss from discontinued operations attributable to shareholders of Cellectis. The adjusted net loss attributable to shareholders of Cellectis, which excludes non-cash stock-based compensation expenses was $37 million or $0.68 per share in the six month period of 2023 compared to a loss of $46 million or $1 per share in 2022. The tranche A of EUR20 million of the credit facility we received from the European Investment Bank was received in April. The initial payment from BPI related to our grant and refundable advance of $1.1 million was received in June for $0.9 million and $0.2 million in July. We are laser-focused on spending our cash on developing our clinical candidates and operating our state-of-the-art manufacturing facilities in Paris and Raleigh. In addition, our focus on maintaining an efficient corporate infrastructure should also enable more limited growth in G&A spend in the future.

Thank you, Bing. To close out this call, I would like to reiterate how confident we are about the continued progress of our three ongoing clinical trials in hematological malignancies as well as our continued development of our preclinical programs. At Cellectis, we strongly believe that our product candidates, our technologies, and our in-house manufacturing capabilities will lead us to a paradigm shift for patients with hard-to-treat cancers, positioning us at the forefront of this promising medical and scientific field. With that, I would like to open the call for the Q&A.

Thank you. We will now conduct a question-and-answer session. Our first question comes from Yigal Nochomovitz with Citigroup. Please proceed with your question.

Yeah. Hi. I had a question about the BALLI-01 study in ALL. So you said you had six additional patients with dose level 3, 50% ORR, and now you're continuing with the study with the in-house product. Are you going to be going with the same dose with the in-house product or will the in-house product move to a higher dose above DL3? Thanks.

Thank you, Yigal. Great question. I'll hand this one over to Mark.

Hi, Yigal. Thanks for your question. So yeah, that presentation was DL3 with the CDMO manufactured product. I think as we've discussed previously, the in-vitro comparability tests that were done between the CDMO manufactured product and the product that was manufactured at Cellectis showed that the Cellectis product was significantly more potent than the CDMO manufactured product. And therefore, we elected to bring the Cellectis product into the clinic at a reduced dose level at dose level 2. So it started in patients at 1 million cells per kilo due to the significant increased potency of the product.

Okay. Thank you. Could you discuss the expectations for when we might see the first data from the in-house product?

Yeah. So we will discuss the first patients dosed with the in-house product later this year, it will be disclosed.

Okay. Thank you.

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

Thank you for taking my questions. I have two. The first one is regarding clinical data, the UCART22. You did show very promising response at the EHA update. Just wondering how long do you think of post-treatment could give us a definitive durability profile? And this question applies to UCART22, but also plays to other programs in general for ALL CAR-T approach? My second question is regarding your Base Editor. And you also demonstrate your gene editing platform capability with Base Editor. So any plan to maximize your potential in a value proposition with this tool?

Thank you, Gena. These are two great questions. I will give the first one to Mark and then on base editing, maybe, Andre.

Okay. Great. Thanks, Gena for your question. So yeah, agreed. In terms of durability of response, this is, obviously, once we get to an RP2D dose that we want to move forward with I think in similar fashion that's been shown in the autologous space, we're looking at a six-month duration, I think, would be appropriate.

Hi, Gena. Thank you for your question on base editing. We're very excited about this technology due to its precision in minimizing potential genotoxicity since it doesn't cut DNA like nucleases do. We are considering various applications, such as combinations for knock-ins and knock-outs. With the base editor, you can edit a base to disable a gene or restore its function by changing a base that could cause a mutation. However, you cannot insert or replace DNA. This technology could be useful, especially for multiplexing. To minimize DNA cuts, we recommend combining the base editor, which does not cut DNA, with a nuclease for a knock-in, waiting, and then making a second edit. For example, our developed product MUC1 includes two knock-ins and three knockouts, which can be beneficial for triple-negative breast cancer and ovarian cancer. Additionally, base editing may be applicable for in-vivo delivery for certain genetic diseases because it does not require a repair matrix. It can induce mutations through knockouts or by fixing mutations and has potential applications in genetics. We believe this will greatly enhance our CAR-T design as we advance the sophistication of gene editing and multiplex modifications in B-cells. We want to avoid excessive DNA cuts, as this can lead to unacceptable translocations. I hope this answers your question.

Yeah. It’s very helpful. Thank you, both.

Thanks.

Our next question comes from Yanan Zhu with Wells Fargo. Please proceed with your question.

Hi. Thanks for taking the questions. I was wondering about the UCART20x22 data readout later this year. What could we expect from the readout in terms of how many patients and what duration of follow-up? And also, will the patients be mostly in a setting of post-autologous CD19 CAR-T? And what would be considered a successful outcome from this readout from the company's perspective? Thank you.

Thank you very much, Yanan for the spotlight on UCART20x22. Over to you, Mark.

Yeah. Great. Thanks for the question. So obviously, we're all very excited about 20x22. And as you know, the trial just recently started accruing earlier this year. So we expect to reveal the first-in-human data for this very interesting dual allogeneic CAR-T cell product in patients with relapsed/refractory B-cell non-Hodgkin lymphoma. As part of the inclusion criteria for this study, the patients will have to have failed some form of CD19 directed therapy including autologous CD19 CAR-T if they're eligible to get them, but patients are also eligible for this study if for some reason they are not able to generate an autologous product. And in terms of the response, these are early days in escalation. So we'll reveal that response rate later this year with the first-in-human group.

Got it. And in terms of the dose level, could you talk about the designed dose levels and at which dose level we might see data?

Yeah. So the initial dose level that we started enrolling patients is a flat dose of 50 million cells. So it's a flat dosing like most of the NHL CAR-T cell studies.

Got it. And lastly, I was wondering if you could talk about options to extend the cash runway and whether there could be consideration, for example, the monetization of the royalty stream from Allogene?

Yeah, Stril. I'll take this one.

Bing. Go ahead.

Sure. I mean from our cash perspective, I will also highlight we have multiple other options. I'll give you an example, the European Investment Bank loan that we signed at the end of last year, for example. We haven't drawn on tranche B yet, even though we fulfill all the present conditions for Tranche B as an example. As opposed to monetization of royalty, we're not obviously in a position to discuss that right now in this format. Thank you very much, Yanan.

Great. Thank you.

Our next question comes from Anoumid Vaziri with Goldman Sachs. Please proceed with your question.

Yes. This is Anoumid on for Salveen. Thank you for taking the question. Just jumping on the back of the previous question, if you could just provide an update on how enrollment is going in the trial, whether you've experienced any bottlenecks there? And then just what has the physician feedback been with respect to that asset? Thank you so much.

Thank you. These are great questions. I'll hand them over to Mark.

Yes. Thanks for the question. So yes, enrollment is continuing. And what I can say is that the investigators are incredibly excited about the potential to use an alternative to CD19 in this disease space and particularly dual CAR-T cells and one that's allogeneic coming off the shelf to provide rapid access to these patients with this product. So there's intense excitement around this protocol.

Thank you.

Our next question comes from Kelly Shi with Jefferies. Please proceed with your question.

Hi. This is Dev on for Kelly Shi at Jefferies. Thank you for taking our questions. So continuing on UCART22, a quick question. How many patient data should we expect at year-end? And if the baseline will be similar to what we saw with the previous product? Also, just wondering if you can add how many sites are active in the U.S. and EU? And maybe if you can remind if you have initiated dosing in the U.S. sites or not? Thank you.

That will be for you, Mark as well.

Yeah. Thanks for the question. So as we discussed previously, we will be revealing the first patient data with the new in-house manufactured product. And as we discussed prior, we did bring that into the clinic at dose level 2. So that's what we will be discussing later this year. In terms of enrollment, this trial is enrolling both in the U.S. and in the EU with the in-house manufactured product.

Thank you for taking our question.

Our next question comes from Hartaj Singh with Oppenheimer. Please proceed with your question.

Great. Thank you and thanks for the question after a very busy week this Friday. Just had a quick question on UCART22, maybe you could just talk a little bit about the unmet need in that post CD19 patients. It seems that a few years ago, that was a small, maybe for lack of better wording, niche population, but it seems to be increasing the patient population there. And the unmet need is fairly high, too. Can you just talk a little bit about that? And I imagine that's where UCART22 slots in? And then with just UCART123, you've indicated previously this target can be unstable and it's a difficult patient population. With the addition of FCA, how is that changing your view and your ability to treat patients? Thank you for the questions.

Thank you, Hartaj. And I think both questions would definitely go for Mark.

Thanks, Hartaj, for the question. So I think in the 22 space, UCART22 right now is the only allogeneic CAR-T cell that's being developed in the ALL space. As you point out, there was the initial success of 19, which is a great target. However, there are a significant number of relapses that have been seen and this is seen in terms of the duration in the ALL space as well. And so this clearly opens up a very significant window for UCART22 in this space. Also in the fact that in terms of being able to give this product to patients that have been so heavily pretreated, chemo transplant, prior CD19 CAR-T, a lot of times, these patients come in with limited marrow reserve. So obviously, an allogeneic CAR-T cell is, in fact, a great option for them at that point where they may not be able to mobilize anything for an additional autologous product. I think for 123, I don't know about it being unstable. I think the issue is more that we needed alemtuzumab to allow for significant host lympho suppression throughout the DLT period and beyond. So at least 28 to 30-plus days of having the host lymphocytes down so that we could achieve significant expansion of the UCART123 and therefore, clinical activity. So I think that's really the major focus for the addition of the alemtuzumab. It's very similar to what we've shown in the 22 study for why we need alemtuzumab to allow for better UCART expansion and clinical activity. This is also the reason why we just proceeded with UCART20x22 going in with FCA lymphodepletion for that reason. I hope that answers your question.

Okay, no, that’s great. Thank you, Mark. Appreciate the update.

Our next question comes from Jack Allen with Baird. Please proceed with your question.

Great. Thank you so much for taking our questions. Just two quick ones from us. Maybe starting on the clinical side with UCART20x22, it's great to see that product getting a lot of focus on the call today. A number of questions have already been asked here, but the one I had was what are the expression requirements for CD20 and 22 in the patients as it relates to enrollment criteria? Are there any expression requirements or are you taking all comers in that post-CAR-T or post-CD19 setting? And then on the financial side, I was hoping, Bing, maybe you could speak just briefly about any comments around the Servier disputes. I know it's more an Allogene-Servier thing, but I'd love to hear any updates you have on that perspective as well. Thanks so much.

Thanks, Jack, for the questions and the continued focus on UCART20x22. I will start with Mark on this one.

Hi, Jack. Thanks for the question. So yes, for the UCART20x22 study, there is no requirement for both antigens. They only have to express one or the other. So either 20 or 22 or both. So that's in terms of expression.

Okay. Thanks. And for the question on Servier, I'll hand it over to Andre.

Hi, Jack. Thank you very much for the questions. Really appreciate it. Last year, like in September 2022, Allogene and us issued some information that Servier was not helping that much on these trials. Since then, there was limited communication. Given the situation, I'm going to abstain from saying anything in order not to complicate the situation. Therefore, you'll have to wait until the situation clarifies. And today, I hope that there will be clarity in the future.

No problem. Completely understand. There's so much and kind of...

Thank you very much for the question. But I know it's frustrating, but this is it, like these types of situations.

Our next question comes from Silvan Tuerkcan with JMP Securities. Please proceed with your question.

Good morning and thank you for taking my question. I have a quick question about your SAP CAR-T. Could you provide some details about the target and the initial population? Additionally, when do you anticipate moving this into the clinic? Or are you currently focused on your three assets that are already in the clinic? Thank you.

Thanks, Silvan. Great question on UCART SAP. That one would be for Andre.

We are very enthusiastic about this product. SAP is a significant target for various types of cancers and may have potential applications beyond that as well. We can pursue it either as a standalone treatment or in combination with other therapies. Although we haven't provided specific guidance on its use, it is certainly one of the standout products in our preclinical pipeline that we plan to advance. Additionally, we have some information about this product in a publication in Frontiers. Keep an eye on the company; if our cash position changes soon, this product will definitely be a focus in our current pipeline.

Yeah. Thank you.

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

Thank you very much, everyone, for attending this Q&A session and the earnings call. We're very excited by the first half of this year and extremely proud of what happened. We're really looking forward to the second half of this year because there are strong events that will mark the company for the second half, up to the end of the year. Definitely watch Cellectis and the execution that is happening today and also the innovation that we're bringing to the clinic. It will be very interesting. Thank you very much, everyone.

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