Autolus Therapeutics plc (AUTL) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Autolus Therapeutics First Quarter 2020 Financial Results and Operation Highlights Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand your conference over to your speaker today, Mr. - excuse me, Dr. Lucinda Crabtree, Vice President of Investor Relations. Thank you. Please go ahead, ma'am.

Thank you, Kara. Good morning, and/or good afternoon, everyone, and thank you for taking part in today's call on the financial results and operational highlights for the first quarter 2020. I am Lucinda Crabtree, Vice President of Investor Relations. With me today are Dr. Christian Itin, our Chairman and Chief Executive Officer; and Andrew Oakley, our Chief Financial Officer. 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 March 3, 2020, as well as discussions of potential risks, uncertainties and other important factors in our other periodic filings with the SEC. 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. So with that, on Slide 3, you'll see the agenda for today, and it is as follows: Christian will provide a brief introduction, and that will be followed by our operational highlights for the first quarter of 2020. Andrew will next discuss the company's financial results, and then Christian will conclude with upcoming milestones and other concluding comments. And of course, we welcome your questions following our remarks. So with that, I'd like to now turn the call over to Christian. Thank you.

Thank you, Lucinda, and welcome to all of you, and thank you for joining us. I'm pleased to review our progress for the first quarter in 2020. First, on Slide 5, we are pleased to report on a very productive first quarter. We remain on track with our clinical programs, despite the challenges of COVID-19. As an organization, we have quickly adapted to this challenging environment, ensuring business continuity. Our focus has been on ensuring our clinical B-cell programs, AUTO1 and AUTO3, continue to progress, and we remain on track with recruitment ongoing and manufacturing operations uninterrupted. As such, we expect to deliver data in the time lines that we have previously guided. While some of our participating clinical centers have been infection hotspots and had to pause enrollment for a few weeks, others could continue to work unimpacted. We expect infections will continue throughout the year with flare-ups in places that were hit by the first wave of infections, while the areas spared for now may see a rise in infections at some point in the upcoming months. However, what is important to remember is that the patients we enroll in our trials have a very high medical need, no different from a severe COVID-19 patient and the drive for centers to continue to treat these cancer patients is very high. Typically, if a center gets under heavy pressure from COVID-19 infections, stem cell transplants and CAR-T therapy are among the last procedures to be stopped and are among the first to resume post-peak infection. As many of you have analyzed, the tie from establishing social distancing and stronger measures to reaching the other side of the first infection peak has in all impacted areas taken approximately eight weeks, irrespective of whether the measures were taken early or late relative to the rise of infections. The consistency of this infection pattern is helpful to anticipate the time of impact on a given center and catchment area. Finally, we expect the increasing levels of preparedness and adjustments underway in the various health care systems, and the continued implementation of social distancing measures will allow for continued treatment of these severely ill patients throughout the year. We expect that the adjustments we made for clinical trial operations and in our supply chain will remain relevant and in place for the duration of this infection cycle, plus the wider operational adjustments we made to minimize risk of infection and exposure as well as increased resilience towards the risk of business interruptions will also remain in place and, if necessary, will be adjusted. With regards to our earlier stage programs, we are monitoring potential impact. At this point, we may see up to a quarter of delay depending on the program and the impact COVID-19 had on our respective academic or business partners. With that, and remaining on Slide 5, let me give you an overview of our corporate highlights. We announced in April that the FDA accepted the IND application for AUTO1, our lead CAR-T product candidate, for the treatment of adult patients with acute lymphoblastic leukemia, which allows us to initiate clinical sites in the company's first pivotal study, AUTO1-AL1 in the U.S. This followed up the opening of the first site in the U.K. in March of this year, having received approval of the clinical trial applications by the MHRA earlier in the quarter. We expect to initiate dosing of our first patient in this study this quarter, and remain on track to provide full data by the end of 2021. With regards to our lead product candidate for the treatment of DLBCL AUTO3, the Phase I/II ALEXANDER study is ongoing. The timing of the program remains on track, and we will update on the decision for Phase II in mid-2020, as previously guided. We're excited about our DLBCL program and its broader market potential, following the positive data update we provided at the EHA-EBMT CAR-T Cell Meeting in February 2020. Our Chief Scientific Officer, Dr. Martin Pule, presented early encouraging signs of sustained complete responses achieved with low toxicity and minimal patient management required. We're now planning to add a 20-patient cohort to the ongoing ALEXANDER study in second half of this year, with patients treated in an outpatient setting, which I will explain - expand on a little later in this call. The last item I wish to touch on in this slide is our forthcoming clinical data updates expected through May and June. For AUTO1 in adult ALL, we plan to present updated data at the virtual EHA Meeting in June with approximately six months of additional follow-up post our ASH 2019 data cut. For AUTO3, we are planning to present updated data at ASCO in an oral session. We will also follow up with a similar presentation at the EHA Meeting two weeks later. We plan to present both sets of data to investors in calls shortly following these virtual conferences. Moving to Slide 6. In addition to our two lead clinical candidates, we're planning a series of preclinical data updates on some of our pipeline programs at AACR II in late June. We have been invited to make an oral presentation in our prostate cancer program AUTO7 and also have poster presentations planned for both AUTO6NG in small cell lung cancer as well as AUTO5 assisted program to AUTO4 in T-cell lymphoma. Much like ASCO and DHA, we're planning an investor call that will shortly follow these presentations at AACR II. Finally, I would like to thank our partners at the cell therapy, Catapult, and the GSK site organization in Stevenage for their continued support that enabled us to maintain operations throughout the peak infection and support the critically ill patients in our trials. Moving to Slide 7. I wanted to spend a brief moment recapping on our lead program AUTO1 in adult ALL. Relapsed/refractory adult ALL is a challenging disease and often impacted in elderly patients. A lot of these patients have significant comorbidities, making them a fragile patient group to treat. The indication is approximately 3x the size of relapsed/refractory pediatric ALL and represents an attractive market opportunity. Within the U.S. and the Top 5 European countries, approximately 3,000 patients every year are at an end stage of treatment, having failed chemo and transplant and, therefore, requiring other options. At this point, there's no CAR-T therapy approved for adult ALL. Obviously, there are a number of programs that are being tested. However, all of them have experienced significant challenges with the management of the toxicities. What we created with AUTO1 is a product that is designed to behave physiologically and engages target cells like a normal T-cell would. First generation CAR-T products share the identical binder to CD19, this is true for Kymriah to start to analyze the cell. This binder has a slow off-rate from the CD19 target. And as a consequence, once the CAR-T cell binds to the leukemia cell and has delivered the cytotoxic payload, it has difficulty letting go from the target cell and get stuck. When you have a CAR-T cells - when you have CAR-T cells getting stuck to target cells, they continue to be activated, which drives cytokine release and thus adverse events. In addition to leading to cytokine release syndrome, this continued activation of the CAR-T cells can drive exhaustion, which negatively impacts persistence. So there's a fundamental challenge with that type of engagement. In contrast, what we created with AUTO1 is a CAR-T product that mimics the behavior and the binding kinetics of a physiological T-cell with a very fast off-rate and an ability to disengage relatively rapidly after delivering the kill. The result is reduced cytokine release and also an increase in target cell killing as the CAR-T cells are freed up more quickly and can reengage new leukemia cells. In addition, CAR-T cells can expand more readily, leading to more active CAR-T cells in the patient's body capable of fighting the leukemia. Now turning to Slide 8. What we show on the left-hand side is the data for blinatumomab, or Blincyto, which is the current standard of care in this disease setting. What is important to understand is that the patients that we have treated on our trial that we highlighted and what we highlighted at ASH is that the patients have mostly undergone and failed stem cell transplant. In addition, approximately 60% of patients have been on inotuzumab or blinatumomab and failed. So our data is based on a patient population with more advanced disease compared to the data shown for blinatumomab. However, what you see in the blinatumomab results is that the CR rate in that population is about 40% with an event-free survival of about 30% at six months. And in fact, most patients relapse within less than a year. When we look at the safety profile, Blincyto shows a good safety profile overall. And in fact, the product is typically delivered in an outpatient setting. Now when we look at our own data for AUTO1, if you look at the total data set of 16 patients, we have an overall CR rate of 87%, and they have an event-free survival of 68% at six months. So in a simple way, we have around twice the activity that was reported with blinatumomab with a comparable safety profile. We have had no patients with high-grade cytokine release syndrome. We have 19% of the patients with high-grade neurotoxicity. All patients with high-grade neurotoxicity had a very high tumor burden in the marrow of more than 50%. Going forward, we will manage these patients when the neurotoxicity starts to build to minimize high-grade adverse events. Finally, I just wanted to touch on the subset of patients that were treated with the closed commercial manufacturing process. You can see that the data, if anything, looks somewhat better than the total overall, which includes patients that were treated with product that was manufactured by hand with a conventional manufacturing process. So based on this data, I'm turning to Slide 9, we decided to move the program forward into a pivotal study. The CTA was filed in the U.K. and cleared in Q1, and we're enrolling currently in the U.K. The U.S. IND also is now open, and we're opening up centers in the U.S. with the aim of enrolling patients in the second quarter. As a reminder, this is a single-arm 100-patient study with relapsed/refractory patients. The primary endpoint is CR rate, and secondary endpoints include molecular CRS event-free survival and duration of response. We remain on track to complete enrollment in the first half of next year. To what extent we may be impacted by the COVID-19 situation going forward, we'll have to see, but we currently expect the impact to be limited. Our plans to deliver data by the end of 2021 remain on track. Let's now turn to Slide 10, where I would like to switch gears and talk about AUTO3, a program that is designed for the treatment of patients with diffuse large B-cell lymphoma. Third line DLBCL is about 4x bigger an indication than relapsed/refractory adult ALL and a setting with already two approved CAR-T therapy products with Yescarta and Kymriah plus liso-cel, or JCAR-17, expected to be approved later this year or beginning of next year. We know this is a large opportunity with approximately 10,000 patients in the back end of the disease, which is a sizable population with a very significant medical need. In terms of the outlook for those patients, they have typically run through a series of chemotherapy combinations often with a monoclonal antibody, and they also have received the transplant if they were eligible for it. If not, they go directly to salvage therapy. CAR-T therapies are approved in the third line of salvage therapy setting with trials ongoing in patients in second-line setting. There are two things that we see as being really important for successful treatment and commercial uptake in DLBCL. First, you have to induce complete remissions that are lasting. This is a disease setting where you aim for cure. Second is that you actually have to have a therapy that can be administered where the patients are situated. Today, in the U.S., approximately 80% of the patients are treated outside of university hospitals and only about 10% of the patients are treated as university hospital in-patients. It is this population that is primarily treated with CAR-T therapies. The key challenge for treatment centers is the need for intense patient management, which has limited the use of CAR-T outside of the university hospital in-patient setting. What we're looking for in AUTO3 is a high level of sustained complete remissions. In addition, we're looking for a safety profile that can be managed in non-academic outpatient settings to reach the majority of patients. Moving to Slide 11. Across the CAR-T populate - programs in DLBCL, we observed a fairly high overall response rate, yet the sustained complete response rate is limited. It is somewhere between 30% and 40%, depending on the program and the subset of indications that were treated or included in the respective trials. Roughly 1/3 of the complete responses are lost early on, typically within the first three to six months. There are two key mechanisms reported that are likely driving relapse. Loss of CD19 antigen in about 30% to 50% of the patients at time of relapse and PD-L1 checkpoint upregulation in about 2/3 of the patients at time of relapse. Looking at safety; with the commercial CD19 CARs, there's a significant amount of management of those patients required to address severe cytokine release syndrome and, in particular, as well as the severe neurotoxicity. Typically, these toxicities have an early onset and require intense patient management and monitoring, meaning patients are largely confined to a classical hospital in-patient setting. We designed a program with a dual targeting approach having two independent receptors in each CAR-T cells, individually designed and optimized for the respective target antigen to minimize the impact of CD19 antigen loss. We also gained at the PD-L1 upregulation and checkpoint based escape of lymphoma cells with a single dose of pembrolizumab on the day before infusion of AUTO3, providing the cover to achieve a CR and sustain it. AUTO3 has shown a high level of CRs in the dose escalation phase of the current study, and we will present a further update at ASCO. It is worthwhile noting that the high level of complete remissions were obtained without inducing high-grade CRS, or cytokine release syndrome, and no neurotoxicity of any grade in the patients dosed at 150 million to 450 million cell doses. This is a very unusual finding. When you compare this profile with Yescarta, Kymriah and JCAR-17 data, the contrast is remarkable. What is also important to note is that with AUTO3, we have not managed the patients actively for adverse events. Now to talk about the extent of the total addressable market, this profile enables us to potentially reach, let's continue to Slide 12. Currently approved products are only tapping into a proportion of substantially less than 20% of the market opportunity, which is managed by the academic centers. There's very little to no penetration to the remaining 80% of the market, which comprises settings that cannot deal with the intensity of patient management required for the current CAR-T products. We believe this creates an enormous opportunity for the profile of a product that we're seeing with AUTO3. And as such, we believe that the program has a unique potential going forward. We expect to provide an updated ASCO on the clinical profile of the program. So let us turn to Slide 13, where I would like to outline how we continue to build on this potential patient profile. Given the highly differentiated clinical and safety profile we have reported so far, we see an attractive opportunity for AUTO3 as an in and outpatient solution for patients with DLBCL, therefore, maximizing the commercial potential of CAR-T products across all settings of care in this disease. As such, we're planning to add a 20-patient cohort to our ongoing Phase I/II ALEXANDER study in the second half of this year, with patients treated in an outpatient setting in order to broaden our understanding of the feasibility of outpatient administration. With that, I will turn over the call to Andrew for our first quarter 2020 financial update. Andrew?

Thanks, Christian, and good morning or good afternoon to everyone. We move to Slide 15, it's my pleasure to review our financial results for the first quarter of 2020. Net total operating expenses for the three months ending March 31, 2020, were $38.6 million, that was net of grant income of $300,000, and that compares to net operating expenses of $30.2 million, net of grant income of $2 million for the same period in 2019. The increase was due, in general, to the continued increase in clinical trial activity which is expected to deliver on key milestones throughout the rest of 2020; also increased headcount; and an increase in public company costs, primarily related to insurance. Research and development expenses increased to $31.3 million for the three months ended March 31, 2020, and that's up from $22.6 million for the same period in 2019. Our cash costs, which exclude depreciation and amortization as well as share-based compensation, increased to $25.6 million from $17.5 million. The increase in R&D cash costs, that's $8.1 million, consisted primarily of an increase in compensation-related costs of $2.2 million due to an increase in employee headcount that supports the advancement of our product candidates as well as an increase of $3.7 million in project expenses associated with a clinical activity. And that includes the research, process development, manufacturing activities necessary to conduct the studies. Plus an increase of $1.8 million in licenses, legal fees and consulting services, which - some of which is related to an option to negotiate a future license as well as IT infrastructure and support. The remainder was attributable to other additional costs in the amount of about $400,000. General and administrative expenses decreased to $7.6 million for the three months ending March 31, and that's down from $9.6 million for the same period in 2019. Cash costs, again, which exclude depreciation as well as share-based compensation, decreased to $5.9 million from $6.3 million. Compensation related expenses decreased by $300,000 and IT, communication - telecommunication and general office costs decreased by the same amount. And a decrease also of the same amount in commercial costs, but - that was all offset by an increase in public company costs of around $0.5 million, which primarily relates to insurance, as I have previously mentioned. Net non-cash costs within the G&A area decreased to $1.7 million for the three months ending March 31, and that compares to $3.3 million for the same period in 2019. The decrease here is attributed to basically share-based compensation expense, which decreased by $1.6 million as a result of the lower value of stock options that were recognized during the period. The net loss attributable to ordinary shareholders was $29.9 million for the three months ending March 31, 2020, and that compares to $27.2 million for the comparable period in 2019. Cash and cash equivalents at the end of the quarter totaled $243.3 million, and that compares with $210.6 million that we had at the end of December 2019. And as such, we anticipate that, that cash on hand provides us with a runway into 2022. And with that, I will now hand the call back to Christian to give you a brief outlook on expected milestones. Christian?

Thanks, Andrew. Let me conclude this part of the management discussion with a review of the upcoming milestones and news flow through 2020. Let's move to Slide 17. The upcoming eight months will be an end full period for us with multiple clinical milestones and opportunities for value creation. Our chief and most imminent operational focus is to conduct, obviously, our pivotal trial for AUTO1 in adult ALL. We expect to report clinical data across multiple programs, including updated AUTO3 ALEXANDER data at the forthcoming ASCO Meeting and updated AUTO1 or CAR19 data as well as AUTO3 data at EHA, as previously mentioned. We will look to progress a number of our other preclinical candidates through the second half of 2020 and are looking forward to providing preclinical data updates in our solid tumor programs AUTO6NG and AUTO7 at AACR as well as our T-cell lymphoma program with AUTO5. Finally, towards the end of the year, we look forward to providing further data updates on both AUTO1 and AUTO3, as we expect for the end of the year. In conclusion, on Slide 18, I'd like to recap the major message raised from today's call. First AUTO1 is our first Autolus' program to move into pivotal stage. Given the positive safety and efficacy profile today, we believe that AUTO1 has the potential to be a best-in-class CD19 CAR-T program in adult ALL, a disease setting with a very high unmet medical need. Secondly, with regards to AUTO3 and DLBCL, which is expected and slated for additional clinical data updates at ASCO and EHA, we plan to conduct an outpatient cohort in the second half of this year. The company is in an excellent position, combined with a strong balance sheet, which provides us a run rate into 2022. We feel we're in a good position, and I think are looking forward to an exciting second half of the year. We're now happy to take questions. Thank you.

[Operator Instructions] Your first question comes from the line of Chad Messer with Needham & Company.

This is Gil [ph] on for Chad. And congratulations on the progress in a difficult environment. So just a couple of questions from me. You discussed kind of the challenges that are related to DLBCL. And hypothetically, what would you consider more important, patient accessibility or the duration of and deepness of response?

Well, thanks a lot for joining. I really appreciate it. The - I think with regards to DLBCL, you want - you need both aspects actually to be addressed. You need a high level of sustained CRs, and you need an excellent safety profile to reach the population. Both aspects are important, and we believe that we have an ability to make a significant improvement on both sides of the program.

So you do not consider one more important than the other in this instance?

Well, there's - it is - it's a life-threatening disease. The first thing you have to make sure is if the patient survives. So getting to a long-term remission is what the ultimate goal is, but then you also have to make sure that the patient has access to the therapy. And right now, in the U.S., there are only about 10% of the patients in that disease setting have access to CAR-T therapy, because it is confined to the inpatient segment of the centers of excellence. And that has actually created a situation where while there is a big demand for these types of therapies, the actual access that can be realized is very, very small. And that is all on the actual intensity of the management of these patients during the adverse events that occur in the - at the onset of the therapy. And that is sort of the key reason for the confinement to this relatively small number of centers. So you have to make fundamentally have the impact on the disease. That is what the sustained CR rates give you, but then you actually have to have a safety profile that allows you to further expand the delivery of this type of a therapy to centers beyond the relatively small numbers of academic centers of excellence.

All right. And we are very much looking forward to seeing some of the preclinical data at the second half of AACR. I noted that it looks like AUTO6NG data would be presented in small cell lung cancer. So that's a very interesting indication, not just because of the target, but also because of the lack of immunogenicity that's seen in a lot of these cells. Kind of maybe you could kind of orient us what kind of data we should be expecting at AACR?

So at AACR, what we're going to be presenting are obviously a preclinical data on these - from these programs. As you may remember, the way we designed the programs is actually to include a set of cell programming modules that enable the cells to have a higher resilience and higher ability to cope with the challenging microenvironments that we find in these particular sets of tumors. And that is going to be a key part of the data that we're going to be presenting is the use of those modules in those settings and the impact the modules have to actually give us an appropriate level of activity in these, as you point out, very challenging tumor environments.

Excellent. And just some kind of a last clarification. You're expecting to complete enrollment in the pivotal study by year-end '21 or first half...

First half next year.

First half next year?

First half next year with data at year-end, next year.

Congratulations on your progress.

Your next question comes from the line with Mara Goldstein with Mizuho Securities.

If I could just ask on the AUTO3 outpatient program, can you just talk a little bit about what the profile of that patient would look like relative to inpatient within - to the extent that you can discuss protocol on that basis? And then just also if I could drill in a little bit on the sort of go, no-go decision as well expected later in this year and the decision tree that will help you get to making that decision, if you could discuss that?

Yes, Mara, thanks for joining. So in terms of the patients, the patients actually, we don't expect to look different from the patients that we've treated so far. The reason why you treat the patients in an inpatient setting with the current CAR-T programs is not because of the state the patient is in, but it is the consequences of the toxicity induced at the onset of the therapy that you're providing. So there is not a - we don't expect to see a difference in the patients. And in fact, as you can imagine, with the majority of the patients treated outside of the academic centers, the patients are in a reasonable condition and can obviously normally manage - be managed in oncology clinics and networks, etcetera, much more in the periphery of the health care system. So we expect the same patients, but obviously, we're treating them in a slightly different setting than what the inpatient setting is. So this is not a difference of the patients, it's a difference on the level of patient management required to actually get these patients safely through the therapy. And that is what the profile of AUTO3 is actually enabling us to explore. And then with regards to decision points, obviously, we're going to provide an update of where we are with the program at ASCO. That gives us a very good view on the response rate level. We will have additional follow-up that we'd like to see, which gets us into - slightly into the second half of the year, at which point, we'll understand what the sustained CR rate looks like. And that will be the key piece of information that will inform us on the path forward. And as you can imagine, getting the data from the outpatient cohort would also enable us to actually design a pivotal study somewhat differently, including outpatients - an outpatient setting in the pivotal study as well, which we believe would actually be a very important component of the pivotal program. So that data will be very informative in terms of the design of the study as well.

Your next question comes from the line of Debjit with H.C. Wainwright.

This is Aaron on for Debjit. Congrats on the progress. So my first question is, so if a no-go decision were made on AUTO3, the Phase II portion, would you still continue with outpatient study of AUTO3? And what kind of learnings could you glean from that if it were discontinued?

You're asking a good question, Aaron. Obviously, we have a good level of confidence about the program. You've seen the data early in the year. As I said, we're going to be about to provide an update on the program. We feel good about the program and believe that, that is an important data set to be generated.

Okay. And are there any plans for outpatient studies at AUTO1 as well?

At this point in time, there is no and the reason for that is actually the state the patients are in themselves. So this is different from DLBCL. The adult relapsed/refractory, adult ALL patients typically are in a very difficult situation. A lot of them are prone to sepsis as a consequence of the disease and the progression of the disease. So they're at a significant risk of picking up infections. A lot of them actually have to be managed in ICUs for sepsis and other types of comorbidities on - as a part of the normal course of the progression of the end stage of the disease. So the disease is quite different. So in this setting, you - we obviously will treat the patients mostly in inpatient setting for the first few weeks, just to have an ability to observe them and be able to help manage the disease mostly, much less better than the therapy itself, it is mostly about managing the disease here. And obviously, as I think we see a larger group of the patients, we can then actually decide whether we might take a similar route as I was able to take with my previous program with blinatumomab, where we could do actually a lot more of the activities outside the hospital at some point in time. But for this study, the patients will be primarily treated in inpatient setting, driven by the state that the patients are in mostly, much less so than actually the consequence of the therapy itself.

Okay. And then...

Aaron, do you have another question?

Yes, I do. So one more. In DLBCL, comparing allogeneic and autologous CAR-T approaches, so do you think that the additional 3- to 5-week vein-to-vein time could contribute to increased CRS or neurotoxicity?

I don't think there is a connection between vein-to-vein time and cytokine release or neurotoxicity. If you would have a concern around vein-to-vein time or a long vein-to-vein times is that the disease may progress further. That would mean more tumor load and more tumor typically means is often related to more adverse events. So if there is a connection, that might be - there could be relationships there. It's not what we're seeing. It's not what we're picking up. But there is - the relationship you're suggesting, I don't think it's there.

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

Congratulations on all the progress and initiation of your first pivotal. I guess, first, just on the midyear go, no-go decision, should we expect that in concert with ASCO and EHA update, is that midyear? And I guess the second part of it is just given the strong positioning statement, the strong data we've seen so far and the commitment to an outpatient study, should we consider a no-go decision unlikely? And would have to have something unusual happen between now and that decision? It just seems like you've made a pretty strong positioning statement. The data seems very strong. You're committing to further development in the outpatient setting. So just trying to understand a bit more on the timing and the bias towards go, no-go.

Right. So obviously, we're - I cannot guide you through the data we're about to present. That's a few more weeks to go for that data. As I indicated, we feel good about the program. That's what you've also picked up from the presentation, and that is certainly a true statement. So this is where we'll obviously provide more update at ASCO. We'll have a bit more follow-up in terms of the time. I think one of the key parameters that we're looking at is obviously sustained CR rates. And we're going to give - we'll have a view, obviously, for ASCO, but we believe that in the - within the third quarter, we'll have, I think, a better visibility on kind of the full data set from the patients we've treated to date in terms of the sustained CR rate. So we'll get a very good view on that. And as you've pointed out, and clearly, the fact that we want to move forward and actually explore the potential of the program in an outpatient setting is obviously indicative of overall the positive view that we have on the program.

And then, Christian, to the extent that when we get the update at the upcoming medical meetings, there'll be some need to make cross-trial comparisons. Do you feel like the baseline characteristics will hold up with Yescarta and JCAR-17, I think back on when the debate between JUNO and KITE was on relative tumor burden? So just maybe if you could give us a sense of tumor burden and whether you think it holds up and will allow for those comparisons on CR and durability of CR?

I think that, first of all, if you have some tumor burden, I think you will obviously present the data on tumor burden as well. And you'll see that this is a very comparable patient population as was reported for Yescarta and JCAR-17 on tumor burden. In terms of kind of the patients that we have included, I think we're tracking very nicely with the Yescarta population. There is obviously the JCAR-17 population, it was somewhat different to what the Yescarta population. We're also - we're closer to the Yescarta population and the JCAR. In general, the Yescarta population was probably a bit tougher population to deal with.

Maybe just a final question just on thoughts on outpatient treatment. Have you done much work talking to those 80% of centers that are treating patients away from tertiary care centers? And what their threshold is to move towards a greater level of comfort with CAR-T? Is a 100 patients' data enough to kind of rule out the bad things in their minds? And is there an in-between scenario where a strong profile could generate more referrals to tertiary centers before the communities actually pick up on it? Just trying to get a sense of level of comfort and your ability to address that with a pivotal study?

It's a very good question, and it's sort of any change in sort of treatment paradigm or adoption is actually a process that will take some time and will need to require a buildup of confidence. And that is true when you start with your KOLs and the experience they make. And then that obviously experience then starts to propagate outwards. So it's a process where you go, where we expect to go from the university hospital outpatient setting, which is one of the categories of outpatient to the non-university hospital's outpatient setting, and then you can actually move from there. You have to expect that, that will be sort of a gradual motion through the various types of centers. And with that, obviously, you gain a lot of experience, not just from a pivotal study, but then also from the ongoing experience going forward in terms of the real overall data that will actually continue to support the rollout and the capture of that opportunity in full. All of these therapies, particularly with new therapies, take experience, which is personal experience with the product. And that needs to be developed, that needs to be rolled out appropriately.

Your next question comes from the line of Biren Amin with Jefferies.

Maybe I could just start on the AUTO3 outpatient cohort. Are you planning to dose the outpatient cohort with pembrolizumab? And then I guess on that, what are your thoughts in terms of this data that we're expecting soon midyear? And should we be comparing these data to the ZUMA-6 data, which were presented at AACR recently, where I think they saw a 46% CR rate and a 75% ORR rate? So I guess, if you could address those questions?

Yes Biren, thanks for joining. Obviously, the way that we're treating the patients is that we're giving a single dose of pembro on day minus 1, and that is going to be in any of the settings. Obviously, the nice thing about this approach is you can sort of bake it into the preconditioning regimen, which is a 3-day regimen, Flu/Cy regimen, so you can build it in and it can actually be nicely integrated in any setting, frankly. With regards to what we need to look at, I think the data using the PD-L1 monoclonal with Yescarta, it didn't seem different in any significant way from the Yescarta data in the absence of the PD-L1 monoclonal. So I think we just look at the Yescarta data as it stands, whether it's the original ZUMA trial or the ZUMA-6 trial. I think they're relatively close together. And there's not an indication, I think, that the addition of PD-L1 monoclonal has increased or changed the profile. So it's going to be against the Yescarta data as we know it today, which I think is very consistent. So that's what we'll be comparing to and what we're looking at and what we, at this point, clearly, has the most significant data set as we could tell from an efficacy perspective in the space.

So, if pembrolizumab doesn't provide any additional contribution on efficacy, why not evaluate the outpatient cohort without pembro?

I'm sorry, that's not what I said. I'm not sure what you're concluding.

Well, I think the ZUMA-6, if you look at the cell kinetics, there was a - and when they showed us the data on ZUMA-6 versus ZUMA-1 cell kinetics, there wasn't really much of a change. And one would have concluded that maybe you get better cell kinetics within ZUMA-6 because you have pembrolizumab on board.

There wasn't pembro onboard. Was it? It was atezo.

Well, atezo, sorry. I mean, PD-1.

Yes. It's - the interaction is not at the same place. We're acting on the T-cell - on the CAR-T cell, atezo acts on the tumor cell. So it's not necessarily the same biology to begin with. You have different - pembro has additional impact on the T cell itself. So what we're seeing is, obviously, and this is what we're - what we'll be talking about is what we'll be looking at the sustained CR rate, and you'll start to get a view of that at the ASCO presentation coming up. And that's probably worthwhile having a look at. And as we go forward, as indicated, we will include pembro as part of the preconditioning regimen, which is a single dose of pembro, which obviously on its own doesn't have any impact on the lymphoma as an agent itself.

Okay. And then, I guess just one more on the outpatient cohort. What do you - how - I guess, what are your plans for treating the Grade I/II CRS? Are these patients going to be truly outpatient like will they be able to go home? Or are they going to be at a separate facility outside of the hospital?

Well, that varies a lot depending on the institution. Typically, if it is associated with an academic center, those are basically facilities relatively close by to the center that could be set up like a hotel, as an example, where patients can actually be managed. And obviously, if need be, they could be sort of looked at in the context of the hospital itself. That's one set of settings, and there's obviously the more distant settings in going out. As we're obviously collecting the data on the feasibility and the experience with it, obviously, what you want to make sure is you capture the data. What is the experience of the patient? What is the safety profile? What is the management requirement for these patients? And that's what you record. And that actually doesn't matter for that cohort, whether how far removed the patient is, whether a patient is far removed from the hospital or not. What you need to do, you need to be able to collect the data. So most of what we're going to be working with are obviously centers that have outpatient facilities in a reasonable distance to the center. All right. Operator, do we have any more questions?

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

This is Rob [ph] on for Matt here. Just a very quick one on the - just on the outpatient setting again, the additional cohort that you're planning there. Is the idea to move the pivotal study kind of entirely into the outpatient setting? Should that be - should you make a good decision on that one? Or is that going to be kind of at the discretion of participating centers there? And then maybe if I could just quick one on AUTO4. It was good to see some initial data at the start of the year there. How has enrollment been on that AUTO4 city? And maybe what can we expect in data at the end of the year? Is that likely to be enough to make a decision on AUTO5? And maybe a possible a bit of outlook of that program into 2021, following on from that day there, if possible?

Okay. Rob, thanks for joining. With regards to the design of the pivotal study, what you want to make sure is that you have an ability to include centers that provide - that treat patients in the outpatient segment as part of the pivotal study, that was the idea to be able to do that. So there will be a mix of patients that will be treated in an inpatients and patients that are in an outpatient setting. But you want to generate sufficient data that gives you then an ability to move forward with the broader population and the broader treatment settings based on the data you generate in that study. So that's the first part. And the first question. The second question related to AUTO4. AUTO4 was somewhat impacted by the current COVID situation, and the challenges that we had in terms of the - within the U.K., where we had, obviously, hospitals had had to shut down the treatment for cancer patients that were impacted. We were not impacted with AUTO3 because we basically keep on operating in the U.S. at the same time. But AUTO4 is predominantly operating at a clinical trial within the U.K. and, therefore, we have been impacted. We're in the process of evaluating what the impact is. I think it's difficult to guide at this point in time what level of impact we'll have, and we'll guide probably later in the year once we have better visibility what we can expect by the year-end.

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

Congrats on the progress. I've got three questions, if you don't mind. My first is, again, just focusing on the outpatient opportunity. Any sense that you could give us? I know it's early days with kind of what the incremental magnitude of the revenue opportunity could be versus the inpatient setting? And then my second question. I just wanted to get an update on the allogeneic program. Super interested in that. And if you could remind us how that program and how you're engineering that - the candidate? How it might differ versus other approaches from other allogeneic companies? And then lastly, I just want to touch upon manufacturing. Can you just give us an update on where you are on the manufacturing side in terms of capabilities and scale up? And if there are any, what are the next key internal milestones you're looking for in terms of getting the company where you think it needs to be?

Graig, thanks for joining. Obviously, first, starting with the AUTO3 program and the question in terms of the impact on market potential. When you look at the centers of excellent inpatient segment, which is where currently the CAR-T therapies are being used, that is - represents 10% of the actual commercial opportunity within the DLBCL third-line setting in the U.S. So asking the question differently. If you - in terms of the increase, there were 90% of the market that are - we're looking to find a way to actually get tapped into. There's an enormous opportunity weigh substantially beyond the current profiles that we're seeing at the current opportunities that are sort of being visible from the CAR-T cells that you're seeing because they're literally catching about 10% to 11% of the total. So that's - I think, hopefully gives a sense for the importance of having a profile that allows you to go beyond the center of excellent inpatient setting. With regards to the manufacturing question. Obviously, we have been able and continue to manufacture throughout the peak of the COVID crisis. I think which gives you and should give you a good sense of the ability that we've developed now to be able to deliver, including managing the complex supply chain in the U.S. with a vast reduction in commercial flights, and that was still feasible. So we feel good about the way - where we are on the commercial - on the manufacturing side and our ability to deliver for our clinical studies and also are now gearing up to the full conduct of the pivotal study and as well as other activities on the clinical side, as we've alluded to in the context of the presentation. So we're on-track where we want to be with the manufacturing and have been able to consistently deliver product even in the current environment, which certainly was a challenge for everyone in the business in our larger business, I think, for every one of the companies. The final question was related to some of the technology that we started to show at the beginning of the year related to an ability to expand the technology to the - towards the allogeneic side. What we have shown at that point in time is programming module that renders the cells in a state where there's no T-cell receptors left on the surface of actually graft-versus-host disease, we'll do that with, in essence, a capturing protein in the secretory pathway that captures. The newly formed T-cell receptor, CD3 complex vision actually shuttles them back to the ER for degradation. That turns out to work very nicely. And we've shown, I think, a very nice set of graft-versus-host disease models that showed the utility of that. And we're working with our colleagues at the academic side to start up a study towards the end of this year to first explore the utility of that module. So that's sort of where we are on that program. Further elements of the technology we haven't yet disclosed.

And your final question comes from the line of Daniel [ph] with Polygon Global.

It seems like a really good update. So happy to hear that for sure. two quick questions. One, could you be really kind and just give us a reminder of sort of approximate cost savings that treating patients and also, it's really - in an outpatient setting would bring, again, sort of a total cost of treatment? And two, it's interesting to see [indiscernible] is going to be talking at ASCCT. The presentation coming up, I think, next week, about sort of some optimization techniques he has been using, using AUTO1 product. And I was just wondering sort of are there further manufacturing tweaks that can be still brought in at this stage of development across the programs. It seems sort of very interesting, but I just wonder how much flexibility the FDA will give you changing manufacturing processes at this stage?

Thanks, Dan, and thanks for joining. I'll start with the second question. The - in terms of the manufacturing processes, obviously, there's a certain degree of improvements you can make that allows you to stay within still the same product. And you can do, obviously, quite a bit of work as you go through the early stages of development, as you point out. Once you get into a pivotal study, you obviously want to be sure that the process you're running actually remains consistent throughout the trial so that indeed, you have a proper integrity of the data set. So to that part of the question, you don't want to move or change your manufacturing process in a pivotal study. You want to actually keep it steady and make sure that there is a consistent data set. With regards to, in general, process improvement in the - for CAR-T therapies, very clearly lots of ways on how you over time can improve processes, not that is similar to what we had seen when we were developing kind of the from the early stages of antidevelopment to the kind of manufacturing processes we have now. A lot of that was continuous tweaking and optimizing of individual processing steps. And absolutely, those are areas that we're very actively working on, and looking for ways to continue to improve the processes going forward. And I think that will continue to be an activity, as you would have with any biological approach and certainly with approaches as complex and with as much opportunity for optimization as a cell-based manufacturing process. But you're absolutely right. You don't want to run changes through a pivotal study. That would not be a good idea because it risks the integrity of the study. So that's the first - the second question. The first question you asked was about the costs related to the management of the safety aspects in - for the treatment of CAR-T patients. And the question is a very relevant one. It's not that easy to quantify that precisely for each of the centers. What we can say is that it's been a major issue within the U.S. center's set that extra work, that extra effort that had to be put in to manage the patients, put them in ICU, et cetera, actually was not - is not properly covered in the current reimbursement schemes. And it's still not. It was a problem early on, and it continues to be a problem. The amount of reimbursement that the hospitals can get for the management of the patients is still not sufficient, which is certainly not only an issue in terms of resource use within the hospital, but there also is a financial burden on a lot of the hospitals on top. And that remains a problem despite the fact that - obviously, there is a certain level of compensation and reimbursement that is built in within the U.S., but it is not sufficient to cover the cost. I don't think I can give you an exact number at this point in time down. But I think the statement that, indeed, it is a loss-making operation for many of these centers is true and remains a true statement.

Okay, that's very interesting. And so has it been quite easy to find people who are interested in doing the outpatient setting, so in terms of going out and finding the new clinics?

I mean it is obviously an interesting thing to do also because even if you run an academic center of excellence, if you have a lot of resources owned by an individual patient means that there is just less other patients you can care for. So resources is also a challenge, and it's an issue also at academic centers. So the interest is equally big, whether this is on the inpatient or the outpatient side to actually limit the source of the amount of resources that are needed to sort of manage the patient through. And if you can then actually further relieve that burden by having an ability to actually move the patients either from your normal wards, that in addition actually is a support and significant help for actually any of the centers or practices.

And there are no further questions at this time.

All right. Well, thank you very much. I'd like to thank everyone for joining. Looking forward to obviously keeping updated through a very busy second set of the quarter with obviously several calls that we're planning to update you on the data presentations at ASCO, EHA and the second part of the AACR Meeting. With that, I'd like to wish you a great day and looking forward to connecting with you obviously over the next few weeks. Thank you. Bye-bye.

This concludes today's conference call. Thank you for your participation. Have a great day.