Cellectis S.A. Q3 FY2024 Earnings Call

Good morning, everyone, and welcome to the Cellectis Third Quarter 2024 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 would now like to introduce the first speaker, Arthur Stril, Chief Financial Officer. You may begin.

Good morning, and welcome, everyone, to the Cellectis Third Quarter 2024 Business Update and Financial Results Conference Call. Joining me on the call today are Dr. Andre Choulika, our Chief Executive Officer; and Dr. Adrian Kilcoyne, our Chief Medical Officer. Yesterday evening, Cellectis issued a 6-K and press release reporting our financial statements for the nine months period ended September 30th, 2024, and a business update. The report and press release are available on our website at cellectis.com. 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 as well as product development status 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 report, for the year ended on December 31st, 2023, 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. This quarter, we're excited to announce that research and development activities have started for three programs developed under our collaboration and research agreement with AstraZeneca: one allogeneic CAR T for hematological malignancies, one allogeneic CAR T for solid tumors and one in vivo gene therapy for genetic disorder. Cellectis is thrilled to have this strategic collaboration with one of the most impressive pharmaceutical companies of the past decade, AstraZeneca. Together, we continue to advance our ambition in cell and gene therapy, bringing potentially life-saving therapies to patients with unmet medical needs. In the coming months, we will continue to focus on the enrollment of patients in our core clinical trials. We expect to present Phase I dataset and large-stage development strategy in 2025. These programs are key for the company. And in order to focus our resources towards success, we decided to de-prioritize the development of UCART123 evaluated in relapsed/refractory acute myeloid leukemia. We strongly believe that gene-edited cells and gene therapies are revolutionizing medicine across a number of therapeutic areas and will become a large part of molecular medicine in the future. With that, I'd like to turn the call over to Adrian Kilcoyne, our newly appointed Chief Medical Officer. We're thrilled to welcome Adrian to Cellectis. He's a strategic forward-thinking drug developer who is passionate about delivering life-saving therapies to patients. He joined us at a pivotal time, bringing extensive experience in drug development as we're progressing in our core clinical programs. Adrian will give an overview of our clinical trials. Adrian, please go ahead.

Thank you, Andre. As Andre mentioned, Cellectis continues to focus its development efforts on the BALLI-01 and NATHALI-01 studies. While we will de-prioritize the AMELI-01 trial assessing UCART123 in relapsed/refractory acute myeloid leukemia. This study has provided important insights into the role of CD123-targeted allogeneic CAR-T therapy in the treatment of AML and will inform the future development of our allogeneic CAR-T platform. Recruitment in BALLI-01, a study evaluating UCART22 in relapsed/refractory B-cell acute lymphoblastic leukemia, has progressed well. We have now completed patient identification for all remaining open slots in the BALLI-01 study to reach a total of 40 subjects treated. As there is no longer a requirement for subject staggering, the remaining patients are being dosed concurrently. Therefore, we expect the Phase I dataset to be available in 2025. We are currently planning our regulatory interactions in support of our potential Phase II strategy. We also continue to enroll in the NATHALI-01 study of our dual CAR-T asset, UCART20x22, in relapsed/refractory non-Hodgkin lymphoma. This study is addressing an important unmet need for patients who have relapsed following multiple lines of therapy including, when available, an autologous CD19 CAR T. As Andre mentioned previously, we will endeavor to share the data for the Phase I program in 2025. With that, I would like to hand the call over to Arthur Stril, Cellectis' Interim Chief Financial Officer, for an overview of our financials for the third quarter of 2024. Arthur, please go ahead.

Thank you, Adrian and Andre. We are excited about the progress of our partnerships, which are positively impacting our financial position. In particular, $47 million have been triggered so far under the AstraZeneca joint research and collaboration agreement, of which $25 million was upfront and $22 million reached development milestones in addition to reimbursement of research costs incurred. In our financials, the cash, cash equivalents, restricted cash and fixed-term deposits classified as current financial assets as of September 30th, 2024, amount to $264 million compared to $156 million as of December 31st, 2023. This $108 million increase is mainly due to $140 million cash received from AstraZeneca as part of the second tranche of its equity investment in Cellectis. $16 million cash received from the European Investment Bank, EIB, pursuant to the disbursement of the EUR15 million Tranche B under the finance contract with EIB. $8 million of cash-in from our financial investments, $27 million of cash-in from our revenue, partially offset by cash payments from Cellectis to suppliers of $42 million, including $30 million to R&D suppliers and $12 million to SG&A suppliers. Cellectis wages, bonuses and social expenses paid of $32 million, the payments of lease debt of $8 million and the repayment of the PGE loan of $4 million. You're invited to refer to our press release for figures related to consolidated net loss attributable to shareholders of Cellectis for the nine months ended September 30th, 2024. The company believes that its cash, cash equivalents and short-term deposits as of September 30th, 2024, will be sufficient to fund its operations into 2027. We have been able to extend our cash runway through a combination of milestones received from the progress of our partnerships as well as prudent cash management for our wholly owned R&D pipeline and controlled SG&A expenses. We are focusing our spend on developing our clinical product candidates, UCART22 and UCART20x22, potential new product candidates and operating our end-to-end cell and gene therapy manufacturing facilities in Paris and Raleigh. Research costs under the AstraZeneca collaborations are funded by AstraZeneca. And now I would like to turn the call over to Andre for closing remarks.

Thank you, Arthur. To close out this call, I'd like to reiterate that we are confident about the continued progress of our ongoing clinical trials in hematological malignancies as well as how excited we are about our strategic collaboration with AstraZeneca. At Cellectis, we strongly believe that our product candidates, our technologies and our in-house manufacturing capabilities will lead us and our partners to a paradigm shift for patients with hard-to-treat cancers and genetic disorders, positioning us at the forefront of this promising medical and scientific field. Moving forward, we have important information to share for the future. The company has decided to hold calls only when there is significant information to discuss or if there is a key update or business activities. We invite you to refer to our press releases for quarterly earnings and remain available to address any questions you may have. In the meantime, Cellectis will participate or organize calls or in-person events outside quarterly calls to update you about our progress. With that, I would like to open the call for Q&A.

We'll take our first question from Gena Wang with Barclays. Please go ahead. Your line is open.

Thank you for taking my questions, Andre and also Adrian. Welcome on board. So two questions from me. First one is the UCART22 BALLI-01 Phase I data next year; could you give a little bit more color regarding the patient numbers and the follow-up and what kind of datasets you will be sharing and in what kind of format? And the second question is regarding the deprioritized UCART123 in AML. In the past, you did show some encouraging or promising data. Can you give us the reason why you deprioritized? Is that because of the enrollment speed or the patient population indication-wise or you haven't seen the previous activity was able to hold?

Yes, thank you for the question. I will start with the UCART22 inquiry. We are on pace to have 40 patients enrolled in the dose escalation phase of the study, and we aim to share this data in 2025. We are currently at a point where staggering is no longer necessary, so we expect to complete the enrollment of the remaining patients more quickly, which is typical in the CAR-T field. Again, we are looking at 40 patients by 2025. Regarding UCART123, you are right that we have observed some promising signals with this target in AML. However, we need to ensure that we use our resources wisely and focus on our key assets. Therefore, we are concentrating on those opportunities we believe have the highest likelihood of success, particularly NATHALI and BALLI. This does not mean we dismiss the potential of this therapy in the AML context; we simply need to prioritize based on our available resources.

Okay. Thank you.

Thank you. Our next question comes from Jack Allen with Baird. Please go ahead. Your line is open.

Great. Thanks so much for taking the questions and congratulations to the team on the progress and Adrian for the new role. A couple from us. I guess first on UCART22, Adrian, you mentioned that you're now enrolling patients in parallel. How should we think about the durability as it relates to the upcoming update in 2025? Is there a mark at which you'd like to see as it relates to follow-up before announcing that data? And then similarly, for UCART20x22, how should we think about the breadth and depth of that dataset as we look out on 2025?

So great question. We know that with any allogeneic therapy, we do question persistence a lot, durability a lot. And that's where our ongoing conversations with the regulatory authorities are focused. What is the right indication? What is the right patient group? So absolutely, when we announce this data, we'll be announcing it in terms of durability response and our regulatory approach, which hopefully will make a lot of sense when you hear that later on in 2025. I missed the second question. Sorry, could you repeat it?

Yes. Thanks so much for that color. And then just on 20x22, how should we think about the breadth and depth of that dataset as we look out on 2025?

Yes, we aren't as advanced in 20x22 as we are with 22. We've still got fewer patients. We are, however, we're in a position where there's a lot of demand. I would say, across 22 and 20x22, there's a lot of demand for patients in this study. So we would anticipate relatively brisk recruitment. We know that this is a far more common disease, but we do have waiting lists for slots in both of these studies. So I would anticipate we will have a pretty robust dataset by 2025 to share with you.

Got it. Thank you so much. And then maybe just one more, if I could, on the financial side. Arthur, I was hoping you could talk a little bit about the evolution of revenues from the AstraZeneca deal. Forgive me, I believe the number is about $34 million in revenues to date. Is that primarily from AstraZeneca? And how should we think about the fourth quarter with the disclosure of a number in the 40s of accrued revenues realized as it relates to milestones from AstraZeneca?

Yes. Thank you so much, Jack. Great questions. So just by way of reminder, the AstraZeneca collaboration allows for up to 10 cell and gene therapy programs. We're very happy to have already initiated three. And so I think what we wanted to report is really the number of milestones and upfront that have been triggered, which have a direct impact on our cash position, which, by the way, is one of the reasons why we're now able to give cash guidance to 2027 as opposed to 2026 previously. The reason why the revenue numbers differ is through the accounting treatment of revenue. Some of this revenue is capitalized and recognized over time as opposed to recognized as a one-off item. And so you will always see some slight discrepancies between the revenue numbers and the actual milestones that are triggered. This is why in the press release, we want to focus more on the milestones that have been hit. And if you want more details, I invite you to refer to our 6-K, which gives a bit more detail as to the accounting treatment of revenue.

Thanks so much for the color and congrats on the progress.

Thanks.

Thank you. Our next question comes from Yigal Nochomovitz with Citi. Please go ahead.

Hi, team. This is Ashiq Mubarack on for Yigal. Thanks for taking my questions. For BALLI-01, you alluded to 40 subjects being in the dose escalation phase, if that's the dataset we'll see. I'm just wondering where you are in thinking about dose expansion and dose selection. Is that pending sort of Phase II regulatory interaction? And for that regulatory interaction, what are some of the key questions you're hoping to get some clarity on? Thanks.

Yes, you're correct in your assumption. We are looking at the right approach to our Phase II expansion study right through to our complete regulatory path. So we're being very careful in terms of our choice of endpoints because we believe that allogeneic therapies are unique. And therefore they require a very thoughtful approach in collaboration with the regulatory authorities as to what the right endpoint is for these patients. We believe we know the position we're going in now. But again we look forward to sharing more information with you in 2025.

Got it. Thank you very much.

Thank you. Our next question comes from Yanan Zhu with Wells Fargo. Please go ahead.

Hi. This is Kuan-Hung for Yanan. Thanks for taking our questions. So I have a question on BALLI, sorry, NATHALI-01. So do you, sorry, BALLI-01, do you continue to see your in-house products performing better than the CMO products? And any safety signal you have seen in the study? Thank you.

We've seen earlier data that has suggested that our in-house product is actually superior to P1, as we call it, the previous product. So, yes, we're no longer dosing with P1. So we're not able to say on a patient-by-patient basis if there is a difference. What was the second part of that question, sorry?

Have you seen any more, yes, safety signal. Thank you.

Yes. We haven't seen any dose-limiting toxicities thus far. So we're very encouraged across all our programs with the safety profile we've seen across 123, 22 and 20x22.

Like P1 and P2 are not comparable really in terms of expansion. And we definitely see great results with P1, but like P2 in terms of translational data that we get in terms of expansion is unmatched. And we definitely think that it's like really a product that has great power, but like P1 is not dosed at one.

Got it. Thank you so much for that color. And one last question from us. So for the Phase II studies for both 20 and 20x22, do you need active controls? And if so, what could be the controls? Thank you.

We don't believe that we will need active controls. But again, we don't want to second guess what the final guidance from the regulatory authorities are. We would anticipate those single-arm studies.

Got it. Thank you so much for the color.

Thank you. Our next question comes from Luisa Morgado with Kempen. Please go ahead. Your line is open.

Hi, team. Thank you for taking my questions. I wanted to firstly ask in terms of the three programs that have been initiated under the AstraZeneca partnership, do you already have any idea when you plan to provide more updates here or is that totally under AstraZeneca guidance, let's say?

Yes, thank you. The programs are definitely underway, with daily activities and discussions happening between the two teams who are closely collaborating. It's worth noting that these three programs focus on distinct therapeutic areas and modalities: we are addressing hematological malignancies, solid tumors, and in vivo gene therapy. We are leveraging both the breadth and depth of the Cellectis platform and AstraZeneca's expertise in therapeutic areas. We aim to provide an update next year on the progress of the programs when we believe the updates will be meaningful. So please stay tuned for this.

Okay. Perfect. And in terms of costs for the remainder of the year, what can we expect in terms of R&D and also SG&A?

Yes, great question. I think we'll be trending in the same vein as the beginning of the year. So I think we're not expecting any bolus at the end of the year. And we're in the process of and we will be providing more update at the next update on the future years. But the most important point is really that we were able to extend the cash runway into 2027, both through a combination of prudent cash management as well as increased revenue from our collaboration partners.

Okay, perfect. Thank you for the additional color and that's all from my side.

Thank you.

Thank you. Our next question comes from Salveen Richter with Goldman Sachs. Please go ahead. Your line is open.

This is Tommy on for Salveen. Thanks for taking our question. Congrats on the progress. I think that the previously disclosed expectation for BALLI-01 was to have data by year-end. Can you speak to what contributed to the shift to 2025? And as a follow-up, can you speak to the factors that you're thinking of towards establishing the Phase II dose? Thank you.

The primary driver and thanks for the question. The primary driver was actually to increase patient numbers within the later cohorts. So we have expanded up to the maximum number of allowed patients. We wanted to make sure we had enough data to inform a very thoughtful Phase II development. So we thought it prudent to actually get the extra data in order to support both us and the regulatory authorities in making the final decision. So hopefully, that answers the question, but we believe it was the most strategic path forward.

Thank you.

Thank you. Our next question comes from Silvan Tuerkcan with Citizens JMP. Please go ahead. Your line is open.

Thank you. Thanks for taking my question and congrats on the progress. Just maybe welcome, Adrian, to Cellectis. Could you please tell us a little bit at a high level, if you're making and what they could be, any changes to the medical research organization at Cellectis as you take over from Dr. Frattini? And then could you also remind us if there are any royalties from Iovance? Thank you so much.

Thanks for the question. I'll take the first bit. So yes, of course, we believe that as we're embarking now towards Phase II, we do need to build the capabilities in the organization. We have just recruited another hematologist oncologist into the team with extensive experience across multiple cell therapy companies, including Autolus. So we believe that that's really helped our capabilities moving forward. We will continue to expand our clinical operations team as well. And again, we anticipate in 2025, we will have to expand further to support our Phase II activities. So we believe we are building the capabilities within the team now to support us moving forward.

And I can take. Hi, Silvan. This is Arthur. I can take the question on Iovance. So just by way of reminder, Iovance is leveraging our TALEN gene-editing platform to inactivate tumor-infiltrating lymphocytes. And I think the recent BLA approval for non-edited TIL therapy is kind of testimony that we picked the right partner in the TIL space, which is now the only company that has an approved TIL therapy on the market, which is very exciting. So we have one program with them already in the clinic. It's a PD-1 inactivated TIL therapy, IOV-4001, which is currently in Phase I evaluated in melanoma and non-small cell lung cancer. And we do have economics attached to that, but they have not been disclosed.

Thank you.

Thank you. And this does conclude our Q&A session as well as our conference call. Thank you all for your participation and you may disconnect at any time.