Autolus Therapeutics plc (AUTL) Q2 2019 Earnings Report, Transcript and Summary

Good morning ladies and gentlemen and welcome to the Autolus Therapeutics' Second Quarter 2019 Financial Results Conference 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. [Operator Instructions] As a reminder, this conference call is being recorded. And now I would like to turn the conference over to Silvia Taylor, Vice President Corporate Affairs and Communication. Ma'am you may begin.

Thank you, Lance. Good morning or good afternoon everyone and thank you for taking part in today's call. With me today are Dr. Christian Itin, Chairman and Chief Executive Officer; and Andrew Oakley, Chief Financial Officer of Autolus. Before we begin, I would like to remind you that during this call, we will be making forward-looking statements. All statements other than statements of historical facts contained in this presentation are forward-looking statements. Our actual results, performance, or achievements may be materially different from those expressed or implied by the forward-looking statements. For a discussion of the risks and uncertainties relating to our business and other important factors any of which could cause our actual results to differ from those contained in the forward-looking statements, please see the section titled Risk Factors in our Annual Report on Form 20-F filed on November 23rd, 2018 as well as discussions of potential risks, uncertainties, and other important factors in our other periodic filings with the Securities and Exchange Commission. The forward-looking statements contained in this presentation reflect the company's views as of the date of this presentation regarding future events and the company does not assume any obligation to update any forward-looking statements. You should therefore not rely on these forward-looking statements as representing the company's views as of any date subsequent to the date of this presentation. On Slide 3, you will see the agenda for today which is as follows; Christian will provide a brief introduction followed by our operational highlights of the second quarter of 2019. Andrew will next discuss the company's financial results, and then Christian will conclude with upcoming milestones and our upcoming news flow. We welcome your questions following our remarks. With that I will now turn the call over to Christian. Christian?

Thank you Silvia and good morning to all of you and thank you for joining us. I'm pleased to review our progress for the second quarter of 2019 as well as some recent company highlights. First on Slide 5, I'd like to start discussion of our Q2 operational highlights with our highest priority program AUTO1 in adult ALL. Relapsed/refractory B cell acute lymphoblastic leukemia in adult patients is a disease with significant unmet clinical need. Worldwide approximately 8,400 patients are diagnosed every year with about 6,000 of those patients coming from the U.S. and EU5 countries. While most patient responds to initial combination chemotherapy regimens, long-term remission rates are around 30% to 40% and approximately 50% of all adult ALL patients will relapse. While Kymriah a CD19-targeting CAR T therapy was approved for pediatric ALL patients in 2017, no CAR T therapy has been approved for adult ALL patients to-date. The only redirected T cell therapy approved for adult ALL is blinatumomab or BLINCYTO, a bispecific CD19-directed CD3 T cell engager. Blinatumomab has a 42% response rate but only modest durability of response as event-free survival is only 31% at six months. On Slide 6, adult ALL is a very challenging disease to treat. Compared to children, adult patients with ALL are more fragile, have more comorbidities, and are much less likely to tolerate toxicity. Their treatment intensity may need to be lowered to manage adverse events resulting in a higher tumor burden in the bone marrow. From a CAR T perspective, high tumor burden in the marrow makes the patient more susceptible to cytokine release syndrome or CRS. Standard CD19 CAR T therapies that are currently in clinical trials in adult ALL bind to CD19 with high affinity leading to high levels of CAR T activation and resulting in considerable levels of severe cytokine release syndrome or CRS and severe neurotoxicity. AUTO1 has been specifically designed to address these challenges and to maintain a high level of activity without the severe toxicities observed in other CAR T therapies currently in development. AUTO1 uses an optimized CD19 binder that allows the CAR T cells to disengage rapidly after target cell encounter and kill. AUTO1 CAR T cells do not get over-activated and as a result are more potent less exhausted and produce less cytokine for TLS leukemia cell. With AUTO1, we are -- we're aiming to create a CD19-targeting CAR T product that will behave similar to a normal T cell. In contrast, conventional CD19 CAR T products tend to get stuck to target cells and cannot disengage rapidly like a normal T cell would do. As you can see from the pre-clinical data shown on Slide 7 the AUTO1 binder to CD19 binds with comparable kinetics as FMC63 the CD19 binder used in commercial products like Kymriah and Yescarta. However, the CD19 binder used in AUTO1 disengages rapidly from CD19 whereas FMC63 takes approximately a hundredfold longer to disengage. As a result, AUTO1 shows higher levels of cytotoxicity that is cell killing and higher levels of proliferation compared to a product containing an FMC63 CAR like Kymriah. Slide 8 shows data from pediatric patients with ALL treated in the CARPALL study. In these patients, AUTO1 shows enhanced expansion and persistence compared to the expansion and persistence profile reported for Kymriah. AUTO1's peak expansion is approximately three times higher than that reported for Kymriah and the area under the curve is approximately five times higher than reported for Kymriah. In addition, we have observed excellent persistence suggesting approximately two times the persistence reported for Kymriah, which is an important driver for response duration. But importantly, despite the substantially higher expansion and persistence, AUTO1 does not trigger high-grade CRS in these patients. I'd now like to turn to deeper dive on the ALLCAR19 study our Phase 1 trial of AUTO1 in adult ALL for which Dr. Claire Roddie from the Cancer Institute at University College London presented initial data at the American Association for Cancer Research, AACR Annual Meeting in April. Slide 9 illustrates the design of the study. With regards to safety on slide 10 half of the patients enrolled are very high risk with 50% or higher blast in the bone marrow. Even with this patient population included in the study, none of the patients experienced severe CRS equal to or greater than Grade 3 and none of the patients were admitted to intensive care due to CRS. One patient developed delayed Grade 3 neurotoxicity following high levels of CAR T expansion, which was quickly reversed with steroids. Let's move to slide 11. Of 10 patients in the chart shown nine were evaluable for response at month one. Eight of these nine patients achieved a molecular complete response. One patient died of sepsis before the one-month evaluation point. At AACR we reported that with immediate follow-up of five months, six out of 10 patients were alive and disease-free. We will present updated data at ASH later this year. On slide 12, I'd like to provide some context on how this data fits into the landscape of ALL therapy. As you can see, in both adult and pediatric ALL AUTO1 is differentiated. Our initial data for both adults and children show no high-grade CRS and no patient requiring admission to ICU for treatment of high-grade CRS. Also the level of high-grade neurotoxicity appears low and is at similar levels to blinatumomab. I'd also like to highlight the consistency between the pediatric and adult data sets for AUTO1. Both data sets show a high molecular complete remission rate without inducing Grade 3 or higher CRS. This is especially significant for the adult population who cannot tolerate high levels of toxicity. Moving to slide 13. In summary, we believe that AUTO1 has the potential to be a best-in-class CAR T therapy in ALL. It has a favorable safety profile and a high level of clinical activity and data suggest AUTO1 may be twice as active as blinatumomab the current standard of care for adult patients with a comparable safety profile. We plan to move AUTO1 into Phase 2 registration trial by the end of this year. This is pending feedback from our ongoing discussions with the FDA. The Phase 2 trial will enroll adult ALL patients in morphological relapse. It will be a single-arm study with approximately 70 patients enrolled in sites in the U.S. and Europe. The primary endpoint is expected to be overall response rate with secondary endpoints to include MRD-negative complete response and event-free survival at six months. We're targeting the second half of 2021 for a BLA filing. Moving on to pediatric ALL, which I've already touched on a bit earlier and now we're on slide 14. Pediatric ALL is the most common cancer diagnosed in children with about 3,400 new cases diagnosed in the U.S. every year. Pediatric patients respond well to first-line treatment. However, 10% to 20% relapsed or are relapsed or are refractory to treatment. Kymriah is approved in this patient population. Moving to slide 15. In Q1, we provided a data update from the ongoing AMELIA Phase 1/2 study of AUTO3 in pediatric ALL. This data demonstrated that six out of six patients treated at the highest dose of three million or more cells per kilogram achieved molecular complete remissions that were ongoing in four out of six patients with a duration of up to 10 months and this is a data count as of February 2019. This level of clinical activity and the safety seen with AUTO3 is comparable to AUTO1. Also with AUTO3, no patient experienced high-grade CRS or had to be managed in ICU for CRS. Pediatric patients relapsing under AUTO1 therapy typically have lost CD19 antigen in the first six months after start of therapy. AUTO3 as a dual-targeting CAR is designed to reduce the frequency of relapses due to antigen loss. To date, we have only seen one CD19-negative loss at month 12 out of 14 patients treated consistent with the design premise for AUTO3. Ultimately, in pediatric ALL, long-term remissions require excellent CAR T persistence to drive continued pressure on the leukemia. As we continue to track AUTO3, the durability of effect may be inferior to AUTO1, possibly due to lower persistence. We're planning to show these data at ASH in December. As a result of our early read on AUTO3 and the encouraging data we are seeing in AUTO1, we're transitioning our focus in pediatric ALL to AUTO1 and AUTO1 next generation or AUTO1NG in the context of a pediatric investigational plan or PIP for AUTO1. We're also planning to have initial clinical data in the second half of 2020 for AUTO1NG, which will use the CD19 CAR from AUTO1 and a novel CD22 CAR. The hypothesis for this next-generation version is to combine the favorable persistent prophecies observed in AUTO1 with the promising effect of dual targeting observed in AUTO3. In addition, we have further optimized the CD22 CAR and expect to share preclinical data on that novel CD22 CAR at ASH. We're also expecting a publication of the AUTO1 pediatric ALL data in the journal Nature Medicine soon. I'd now like to shift to discussing our diffuse large B cell lymphoma program. On slide 16, you can see that DLBCL, an aggressive and rapidly progressing cancer, which is the most common type of non-Hodgkin lymphoma is a large market opportunity. Approximately 24,000 patients are diagnosed every year in the U.S. alone. High-dose chemotherapy combined with a monoclonal antibody beat the remission in about 50% to 60% of patients and we expect the addressable population to be approximately 10,000 patients in the U.S. and EU5 combined. Two CAR T products are currently approved for DLBCL, Yescarta and Kymriah both long-term benefit in a subset of patients. On slide 17, last quarter we announced that our clinical trial manufacturing site was licensed in March at the Cell Therapy catapult. However, overall qualification of the Cell Therapy Catapult was delayed by five months. While we have been able to make up for some of that time, that delay has impacted our time lines for patient recruitment. As a result, our recording of AUTO3 Phase 1 data in DLBCL and thus the decision for triggering Phase 2 trial initiation is now expected to occur in Q2 2020 with a Phase 2 start in Q3. We're planning to provide an interim update on AUTO3 in DLBCL at ASH, but we will not present data at the upcoming ESMO meeting. We also expect to initiate our next-generation AUTO3 NG clinical program in DLBCL in the first half of next year. Finally, I want to briefly update you on our remaining clinical programs on slide 18. We'll start with multiple myeloma. Our clinical data show that AUTO2 may not be differentiated for more advanced competitor programs. We expect to present Phase 1 data at ASH and our focus in multi-myeloma is on moving the next-generation version of AUTO2 into the clinic in the first half of next year. In T cell lymphoma as with our AUTO3 program patient enrollment in our Phase 1 study with AUTO4 was impacted by the delay in regulatory licensure of our clinical manufacturing site. As a result, we now expect to present initial Phase 1 data in the second half of 2020 and to commence our Phase 1 trial of AUTO5 also in the second half of 2020. Development of a companion diagnostic is on track. Finally for our solid tumor programs at our R&D Day in March we focused on the heterogeneity of the solid tumor microenvironment and how the complexity and dynamic nature of these tumors pose particular challenges for effective therapies. T cell therapies can be tailored to combat tumor complexity and programming modules can be added to enhance activities in solid tumors. At SITC in November we're planning to present preclinical data on our AUTO6 NG program designed to target GD2+ tumors. Start of the Phase 1 trial of AUTO6 NG is planned for the second half of next year. With that, I will turn the call over to Andrew for our second quarter financial update. Andrew?

Thanks, Christian and good morning or good afternoon to everyone. It is my pleasure to review our financial results for the three-month period April to June 2019. And we're on slide 20. Net total operating expenses for the three months ended 30th of June were $37.2 million net of grant income of $0.3 million. This compares to net operating expenses of $16.5 million net of grant income of $0.4 million for the same period in 2018. The decrease in grant income of one $0.1 million was related to a decrease in reversible reimbursable expenditures submitted in the three months ended June 30. Research and development expenses increased to $26.2 million from -- for the three months ended 30th of June from $8.9 million for the three months ended 30th of June 2018. Cash costs which exclude depreciation as well as share-based compensation increased to $20.2 million from $7.1 million. The increase in research and development cash costs of $13.1 million consisted primarily of an increase of compensation-related costs of $5.6 million primarily due to an increase in headcount to support the advancement of our product candidates in clinical development; an increase of $2.3 million in facilities costs supporting the expansion of our research and translational science capability and investment in manufacturing facilities and equipment; an increase of $3.3 million in research and development program expenses related to the activities necessary to prepare, activate and monitor clinical trial programs; and an increase of $0.8 million in professional fees and an increase of $0.5 million in software costs and other costs as well. General and administrative expenses increased to $11.4 million for the three months ended 30th of June 2019 from $8.1 million for the three months ended 30th of June 2018. Cash costs which exclude depreciation as well as share-based compensation increased to $7.3 million from $6.9 million. The increase of $0.4 million consisted primarily of an increase in commercial costs of $1.2 million compensation-related expense of $0.5 million due to an increase overall increase in headcount that was offset by a decrease of $1.3 million related to public company reorganization costs that were incurred in the three months ended 30th of June 2018. Net loss attributable to ordinary shareholders was $28.5 million for the three months ended 30 of June and that compares to $7.7 million for the same period in 2018. The basic and diluted net loss per ordinary share for the three months ended 30 of June 2019 was a loss of $0.65 per share compared to a basic and diluted net loss per ordinary share of $0.26 for the three months ended 30 of June 2018. In April, we announced the closing of our previously announced underwritten public offering in the U.S. of ADSs, representing 4.83 million ordinary shares at a public offering price of $24 per ADS, which included an additional 630,000 ADSs issued upon exercise in full of the underwriter's option to purchase additional ADSs. Aggregate net proceeds to Autolus after the underwriting discounts but before estimated offering expenses was $108.8 million. All of the ADSs were offered by Autolus. Cash and cash equivalents at 30 of June 2019, totaled $266.2 million and that compares with $217.5 million as of the end of the financial year December 31 2018. And we anticipate that cash on hand provides us a runway into the second half of 2021. And with that, I will now hand the call back to Christian to give you a brief outlook of our expected upcoming milestones. Christian?

Thank you, Andrew. Let me conclude this part of the management discussion with a review of upcoming milestones. The second half of 2019 will be an elemental for us with multiple clinical milestones and opportunities for value creation. Our chief focus is on moving AUTO1 in adult ALL into registration trial by the end of this year. As seen in our news flow chart on slide 22, we also expect to report data on a number of our clinical programs at ASH. Looking ahead to 2020, our next focus is on moving into Phase 2 in DLBCL with AUTO3 present clinical data on AUTO4 and bring in three next-generation programs: AUTO2 NG, AUTO3 NG and AUTO6 NG as well as our twin program in T cell lymphoma AUTO5 into the clinic. In conclusion, on slide 23 I'd like to recap the major messages from today's call. First, AUTO1 is the first of Autolus programs that we'll make to -- we'll take into registration study. It has the opportunity to be a best-in-class CD19 CAR T in ALL. Our focus for AUTO3 is on DLBCL. We expect to present data at ASH in December. Third, in pediatric ALL, we transitioned focus on AUTO1 -- on to AUTO1 AUTO1NG while deprioritizing AUTO3. AUTO3 data confirmed dual-targeting hypothesis, but excellent persistency with AUTO1 is likely to drive long-term remissions. Fourth, looking ahead to 2020 we see opportunity for additional value steps for multi-myeloma T cell lymphoma and GD2+ tumor programs. Fifth, the company has a strong balance sheet with $266 million in cash, which provides a runway to the second half of 2021. And finally, we're looking forward to key data releases at ASH in December of this year. We would now like to take your questions. Operator, please open the line.

[Operator Instructions] Your first question comes from the line of Biren Amin from Jefferies. Your line is open.

Yeah. Hi, guys. Thanks for taking my question. Christian, AUTO1NG program that you're planning to take forward in pediatric ALL, why would you not move forward that in DLBCL as well given there's a CD22 CAR component in this program? Thanks.

Hi, Biren. Thanks for joining the call. What we do have with AUTO3 is obviously a program that has very high levels of activity. As you've seen at the higher dose levels, each one of the patients actually achieved molecular complete remissions. What we do see is that the long-term persistence maybe inferior to AUTO1 and AUTO1 is quite extreme in that regard. As mentioned, it's about twice as long in terms of persistence as Kymriah. So when we look at what we need in DLBCL, DLBCL needs to actually -- requires a product that can make a deep cut relatively quickly and we believe actually that AUTO3 is well positioned to do that. So we're moving ahead with AUTO3. And of course there is -- as we think about life cycle management there is obviously an opportunity to consider downstream to look at AUTO1NG also in indications outside of pediatric ALL. But that is in a life cycle mode, not in a simultaneous activity.

And then as it relates to the manufacturing at Catapult, you disclosed that you had a five-month delay, because of in-site qualification. So I wanted to ask if the site's up and running? And whether you've processed patient samples through that site? And second, whether you would rely on that site for the AUTO1 adult ALL registration study?

Right. So the Cell Therapy Catapult site is a brand-new facility and the challenge that we're seeing with the facility is a delay on the construction and qualification of the main facility. We are one of the parties that actually manufactures within that facility and that actually basically resulted in a situation where the delay in the build-up and the construction of facility had a knock-on effect on our own ability to get our own suite that we're operating fully licensed and operational. The licensure for that suite was in March, as we had indicated in our Q1 financial update. And, yes, we are supplying actually clinical trials from the Catapult site since the March time frame. But when you look at the ramp-up, our expectation was that we could actually ramp up more quickly into the Catapult facility. And we couldn't fully recuperate the time lost on the construction of the facility that was lost during that process. But the site is fully operational and we are supplying clinical trials. And we will supply the AUTO1 registration trial from the Catapult.

And when does the --

These are basically --

Sorry. I was going to ask when does the Maryland manufacturing facility come online.

Right. So the Maryland manufacturing facility is designed for commercial supply. So this is not designed to support the clinical trial conduct and will be online in the launch process for the product.

Great. Thank you.

Thanks, Biren.

Your next question comes from the line of Debjit Chattopadhyay from H.C. Wainwright. Your line is open.

Hey, guys. Good morning. This is Aaron Welch on for Debjit. So I just have a couple of questions. So you mentioned going into multiple myeloma -- well, pursuing other opportunities in multiple myeloma. So considering bluebird and J&J's exceptionally high objective response rates and lower rates at CRS, where do you see the opportunity in multiple myeloma trials?

Hi, Aaron and thanks for joining. The opportunity in multi-myeloma is, when you look at the current data that is available for the programs that are most advanced in the space is that we do see, obviously, high response rates, but we do see limited durability of effect. The PFS is in the range of about 10 months. And that -- when you look at the multi-myeloma as a disease setting, which is obviously a disease that progresses relatively slowly the 10 months are relevant for client therapy. But if you'd like to actually move the therapy into early lines you actually have to be able to get to 20 months of PFS or even 36 months of PFS in second and third line respectively. That is a tall order with the current profile that we're seeing. And we believe that what we need to see with the products, the next generation of the product in the space, is an ability to make deeper cuts into the compartment so much more stringent molecular responses that have been reported compared to what's been reported so far, better persistence of the products and also an ability to deal with the hostile microenvironment that is quite hallmark for multiple myeloma as a disease. So there's good level of activity in the initial programs. We believe significant upside, particularly if you want to create therapies that can move up the line and compete against other treatment modalities, including BCMA-ADCs and BCMA-BiTEs as well.

Okay. Great. Thank you. And I also wanted to ask, so you're introducing these -- I assume several of the next gen are going to incorporate the dominant negative SHP2 and TGF-beta. So, what gives you confidence that -- or are you worried about any lymphoproliferative disorders arising from these or that they may proliferate uncontrollably? Thanks.

Actually we don't. When you look at the corollaries here is obviously, there's a lot of work that's been done using pembrolizumab in combination with T-cell therapies as well as TGF-beta monoclonals in combination with T-cell therapies. None of those combinations were there observations of proliferative disease or that that would be induced. So I think, from that perspective, I think that particular concern has been clinically addressed and shown not to be an issue.

Okay. Great. Thank you, guys.

Thanks, Aaron.

Your next question comes from the line of Graig Suvannavejh from Goldman Sachs. Your line is open.

Great. Good afternoon and thank you for taking my questions and congrats on the progress. I have two questions Christian, one, kind of a higher-order level type of question which just has to do with the competitive nature in CAR T and cell therapy. Clearly, the strategy that Autolus is taking right now is to focus on the autologous approach. And I'm just wondering, as the space continues to evolve, is there any consideration whatsoever of perhaps adding on the ability to go after allogeneic approaches and maybe what your current thoughts are around allogeneic approach is? That's my first question. And then I've got a follow-up. Thank you.

Well, great to hear your voice Graig. Regarding the type of cells that we're working with obviously as you've pointed out at this point, we're working with autologous cells which gives us the advantage that we know a lot about those particular cells. We know a lot about the properties and we can get this exceptional on persistence that we've seen and we're just talking about in the context of AUTO1. I think one of the challenges I think for quite some time to come still with the allogeneic products is to actually get to a significant level of persistence which requires actually the cells that we infuse these allogeneic cells to not being recognized by the patient's immune system. And so far, we can see in the early approaches in the space that use aggressive forms of bone marrow depletion in the case of -- as an example with Campath. But as soon as Campath wears off, also the cells are gone. Though it is a significant challenge still in the space and we're monitoring that very carefully, we're also looking at a number of avenues in this space as well. But for now and for the short to midterm opportunities from a commercial perspective, we're going to be working with the autologous approach knowing that we can get very significant clinical benefits that way.

Okay. Thank you for that. And then my second question is on a different topic altogether and perhaps it's a difficult one perhaps for the company to address. But it really has to do with what I consider kind of the 800-pound gorilla in the room which is kind of the uncertainty that exists with what's happening with a significant shareholder of yours. And I'm wondering if -- what your current thoughts are and what impact do you think that's having on your stock and if there are any next steps that you can do to kind of mitigate that risk. Thanks.

Thanks for the question. What you're referring to is the quite publicly known fact that one of our shareholders had to close redemptions of a fund that he's invested in from and he has got under significant pressure which has garnered a lot of focus and interest in the U.K., but also in the U.S. press. We're working closely with them. They are working through the challenges that they're having at the fund and we're looking to be supportive in that situation. But ultimately, this is a shareholder. We do not control shareholders. It's the other way around. And what we can do is support the process, support the fund in its next steps. But I think that's all I can comment at this point in time.

Okay. Thank you so much, Christian. Congrats on the progress and good luck.

All right. Thanks, Graig.

Your next question comes from the line of Matt Phipps from William Blair. Your line is open.

Thanks for taking my questions, guys. A lot of updates here so I have a few, but one on the next generation of AUTO1. Are you only going to be adding the CD22 CAR or it is going to look at things such as the shift to dominant negative, the TGFb dominant negative or maybe the JAK STAT module and these other kind of modules you've talked about at your R&D day?

Great. Nice to hear you, Matt. Thanks for joining. So when you look at the -- so the key things you're looking to achieve in ALL in particular is you need a product with a very, very long persistence to continue to put pressure on the tumor over an extended period of time. And secondly, what we do know from the AUTO1 pediatric data is that for those kids that relapsed -- most of the kids relapsed because of loss of CD19 antigen. We do not have any significant level of evidence that there are other mechanisms of defense that are a key that are -- or the mechanism of defense as a key driver for relapse outside of antigen loss. And so what we're planning to do with this product is to sort of build on the excellent persistence that we've seen with the AUTO1 product and add a novel CD22 CAR to that, but not at this point adding additional modules to the program because frankly we don't think that is necessary in that particular -- in this particular indication. And also obviously as you increase payload it may also -- could have an impact on persistence downstream. That is a possibility which we don't -- just don't know enough about at this point. And clearly when you look at what's the key driver for success in that disease setting it is persistence. And that is something that we probably don't want to disturb or perturb with too many modules at this point in time.

Got it. And then for that -- in the novel CD22 CAR, I realize preclinical data coming later this year so you can't talk about it too much. But the CD22 CAR and AUTO3 is pretty unique level of CFEs. It's got the “linker”. Can you just give any insight into how this novel CAR different for AUTO1? Does it also use a fast off-rate as CFE?

I don't think I want to disclose too much quite yet but it is -- what we do -- what we basically designed here is a different chimeric antigen receptor with a way of engaging the CD22 molecule than we do in our current version that we're using in AUTO3. And -- but we'll probably have to wait until ASH to sort of disclose more of the properties of the product.

Okay. And then the -- well then the AUTO3 next generation will that use the CD22 CAR that you guys have kind of presented preclinical data on? Or will you also incorporate this novel CD22 CAR into that AUTO3 program?

The AUTO3 NG is still on the current version of AUTO3.

Okay. And then just high level Christian. Just recently there was the change in CMS reimbursement policy for CAR T therapies wondering your thoughts on that and how that might help the kind of rollout here in the U.S?

I think overall, it's a good thing. I would say it's come a bit later than it was initially anticipated. I think it was initially scheduled for May, but it's a good thing that there is a resolution. I think the general rules that now apply, I think are helpful to help patients get access to the therapy. I think it also highlights the importance of managing the adverse events and minimizing the costs associated with that managing the adverse events, which is clearly one of the key challenges of the first generation of CAR T programs and adds a significant amount of cost to the system. And I think when you look at the more fine print into the various elements of the guidance here it really points to the importance of finding ways to actually provide these products in an outpatient setting ultimately. But certainly even if you're in a hospital setting in a way that actually doesn't require the high level of patient management that is often still required with the with a certain range of the products. I think those are some of the key points here, highlighting still I think to some extent the challenges for Medicare patient to get access and properly -- proper reimbursement for these therapies which still remains somewhat of a challenge. I think there's a good move in terms of the direction that the change has bring -- indicated. But there's still a gap in coverage that, I think will need to be worked on going forward. But overall I think a positive outcome and a helpful set of new rules.

Great. Thanks, Christian

All right. Thanks, Matt.

Your next question comes from the line of Jim Birchenough from Wells Fargo. Your line is open.

Good morning. It's Nick on for Jim this morning. First question can you just outline the PIP and perhaps what advantages it gives you, will this use the AUTO1 or AUTO1NG? And is there a parallel process for the U.S.?

Right. Hi Nick. Thanks for joining. I appreciate this is an ungodly hour, so appreciate you joining the call. The -- with regards to the PIP obviously the PIP is a requirement for any program that gets approval in the European Union under the guidance of EMEA. Hence, it has to basically -- it wants to make sure that as new therapeutics become available, that those therapeutics also get developed for pediatric patients. So that's a requirement you have to fulfill. I think -- but I think also in the U.S., there is clearly a need to ensure that the programs can ultimately be made accessible for children as well. So in the context of moving AUTO1 into adult ALL into registration study, we'll have to address those questions. And obviously, the obvious way to go is to have AUTO1 in additional clinical activities in pediatric patients. And as you've seen, obviously, with the CARPALL study we've taken, obviously, and have -- already have taken the first step in that direction. One of the things we'll have to explore as -- once we've seen kind of the data from the next-gen version of AUTO1 is which program actually should be taken forward alongside the AUTO1. And that's also going to be a discussion with the regulatory bodies in terms of acceptability of potential next-gen version to go alongside the AUTO1 program adults, but that remains to be discussed. That is open at this point in time. But it clearly from a scientific perspective, the next-gen version is a program, we want to move forward, want to explore in that indication. And the rest is really up to negotiation with the regulatory bodies on the appropriate path, and that's still ahead of us.

So Christian does that suggest that pediatric development and registration trial is unlikely to start next year, if you want to get some experience with NG?

I think the first registration trial that we’ll start is clearly in the adult population and the pediatric program will start with an element of lag to that to the main program. And that gives us the time to actually explore AUTO1NG and get the data from that program and then make a decision based on that.

Okay. That makes sense. And then and I might be and tying myself in knots here because I'm trying to reconcile that -- the statement that I assume I heard correctly is that, for AMELIA now you have only seen 1 CD19 negative relapse in 14 subjects. But you're also saying that durability may be in theory for AUTO3. So should we assume that you're seeing more CD19 positive relapses which are not being seen with AUTO1 due to its improved persistence?

We've seen patients that have -- where you see persistence to come to an end. And after the persistent stops, in other words you cannot discover or detect CAR T cells anymore at that point, you'll start to see tumor cells coming back which are CD19 positive.

Okay. That makes sense. And then currently I -- if I recall correctly, AUTO1 is manufactured at your academic partner and so, got obviously the registration. You're going to manufacture this in the Catapult. So, can you talk to us about the tech transfer and your degree of confidence that you'll be able to manufacture the product? You got an equivalent product to Catapult, than what you manufactured. I think it was King's, perhaps.

Right, so the manufacturing -- you're correct. The manufacturing for the ALLCAR19 study occurs at the Royal Free Hospital, in London. And we have actually transferred manufacturing processes for AUTO2, AUTO3 and AUTO4, from that facility, into the Catapult successfully. So AUTO1 tech transfer is ongoing. We don't see that -- I don't think that actually, is going to be a technical challenge at all. And this is a very straightforward process, very much in line with the processes for the other programs that is already transferred successfully. And obviously, have been supplying to patients already also from the Catapult.

Okay. Great, thank you.

All right, thanks, Nick.

Your next question comes from the line of Gil Blum from Needham & Company. Your line is open.

Hi everyone. Hi, Christian, thanks for taking my question. It sounds like we have a pretty exciting ASH, ahead of us. So I'd like to ask a question actually about the, AUTO6 program. Remember, we had some data from this awhile back. Is there going to be any updates on the neuroblastoma with, the original program?

Hi, Gil thanks for joining. And you're right. The data that -- from the original AUTO6 study was presented at a plenary session, at AACR in 2018. And the purpose of that study was to explore, whether we could actually create, a chimeric antigen receptor targeting GD2 that, will give us a proper therapeutic window, which means could give us therapeutic effects without inducing neurotoxicity. In that case, it is basically a pain syndrome, which is the feared adverse event, which is triggered as an example also by neural monoclonal antibodies to GD2. And what we managed to do at that -- in that particular study. And as presented in 2018, is that we managed to actually demonstrate that we can get to clinical responses without inducing the toxicity, which gives us obviously a lot of confidence and tells us that we got the chimeric antigen receptor, figured out got an appropriate therapeutic window for that. And we now for the AUTO6 NG are adding additional programming modules that actually help the cell persist longer. And also to help the cells cope with a hostile microenvironment in the tumor. And that is the program that we're now moving on to the name of AUTO6 NG, which we're -- are planning for preclinical data to be shown at SITC. On the original clinical trial with AUTO6, we don't expect to actually have an update on that. I think that data set was fairly complete, as it was presented. And obviously will be written-up eventually and published, in a peer-reviewed journal.

Got that and thanks for clarifying that. Again maybe, I've missed this in the past. But about the ALLCAR19 study, there was only a single patient that had a Grade three neurotoxic. So why did three patients, received a lower dose?

The algorithm, we're using on dosing is -- this is similar to what is used actually, also with blinatumomab or some of the other programs in the space is that, many of the adult patients have very high levels of tumor burden. We're talking 70% to 90% blast in the marrow. That is a very risky type of environment. Because if you put too many, CAR T cells in at the start, you have an enormously fast clearance of these -- of the bone marrow from the tumor cells. And that leads to pretty massive tumor lysis syndrome, cytokine release syndrome and other adverse events. So the strategy, we're pursuing here is that, we make a cut-off in this case for the study here, at 20% blast in the marrow. If we're below 20% blast, at inclusion of the patient, we're going to treat the patient with a higher dose of about 100 million cell. And if we have patients that do have a very high tumor burden above 20% that those patients are treated with a 10 million cell dose as a way to make sure that the kill -- is not going to get out of control. And that's the mechanism that we're using or the dosing regimens to make a determination of the blast. And based on that we use either --- at the full dose we use a fraction of the dose at the start of therapy, and then after a period of time we actually give an additional -- the additional remaining dose in a second go.

Yeah. I understood that design. I'm just wondering why the three patients that did not have toxic responses didn't receive the higher dose afterward?

There's the -- what we did have obviously with some of the patients is that you basically got already to pretty much full clearance of the tumor with the low dose. No second dose was retarget and there were significant amounts of detectable CAR Ts in these patients very quickly. And then it was basically a physician decision not to give the second dose because they didn't think it would have actually added anything on top of the already expanded compartment. Maybe one of the points that may get lost at times is that the expansion of CAR T cells in the body exceeds by a significant proportion what we actually dose in these patients. In other words, if you already have significant expansion of CAR T cells from these initial dose and you give the second dose that second dose can actually be only a small fraction of what's already present in CAR T cells in circulation and in tissue in that patient. At which point the second does is pretty much --doesn't really add anything in terms of overall activity. And so if you do have massive expansion often wouldn't give a second does because it's really not indicated.

That’s super helpful. Thank you for taking the question, and good luck.

Thank you very much. Appreciate it.

I'm showing no further questions at this time. I would like to turn the conference back to Christian for closing remarks.

All right. Well thank you all for joining us this morning or this afternoon. Hope to see you at one of the upcoming scientific or investor meetings. And for now have a good day. Thanks a lot. Bye-bye.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may all disconnect.