Cellectis S.A. (CLLS) Q1 2023 Earnings Report, Transcript and Summary

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

Good morning, and welcome, everyone, to Cellectis' First Quarter 2023 Corporate Updates and Financial Results Conference Call. Joining me on the call today with prepared remarks are Dr. Andre Choulika, our Chief Executive Officer; Dr. Bing Wang, our Chief Financial Officer; and Dr. Mark Frattini, our Chief Medical Officer. Yesterday evening, Cellectis issued a press release reporting its financial results for the 3-month period ended March 31, 2023. The report and press release are available on our website at www.cellectis.com. As a reminder, we will make statements regarding Cellectis' financial outlook in addition to its manufacturing, regulatory and product development standards and plans and product development of its license partners. These forward statements, which are based on our management's current expectations and assumptions and on information currently available to management, including information provided or otherwise publicly reported by our license partners are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Form 20-F filed with the Securities and Exchange Commission, SEC, and the financial report, including the management reports for the year ended on December 31, 2022, and subsequent filings Cellectis makes with the SEC from time to time. I would now like to turn the call over to Andre.

Thank you, Arthur. Good morning, and thank you, everyone, for joining us today. Cellectis made significant progress with it's pipeline this quarter. We took a notable step forward with the first patient being dosed in France with our in-house manufactured product candidate, UCART22 is evaluated in the BALLI-01 clinical study. This is an important advancement for the Cellectis' team who has worked tirelessly to expand the BALLI-01 clinical study to Europe. UCART22 is currently the most advanced allogeneic CAR-T cell products and development for relapsed or refractory B-cell acute lymphoblastic leukemia. We believe that our off-the-shelf treatment approach, coupled with our ability to manufacture UCART-T product candidate, completely in-house, give us a competitive advantage on the market. It potentially maximizes the chances for eligible patients to be treated without delay. On the business development front, our partnerships proved to be an exciting highlight for Cellectis. Last month, we announced that we have implemented the use of Sanofi's alemtuzumab as only selective investigational medicine product Coded as CLLS52 as part of the lymphodepletion regimen for UCART22 in the BALLI-01 clinical trial, for UCART12 in the AMELI-01 clinical trial and for UCART20X22 in the NATHALI clinical trial. This follows the partnership and supplies agreement that we entered with Sanofi regarding alemtuzumab. This quarter, we were proud to present encouraging preclinical data at the American Association for Cancer Research Annual Meeting on TALEN edited MUC1 CART-T cell to enhance efficacy in targeting triple-negative breast cancer. The data showed the capability of armored allogenic MUC1 CART-T cell with sophisticated gene edits to excel in the immune suppressive tumor and microenvironment, suggesting that there could be an effective option in treating patients with limited therapeutic options. We're proud of these results that reinforces the performance of our technologies and our commitment to treat cancer patients. We also announced that 2 abstracts have been accepted at the upcoming American Society of Cell and Gene Therapy Annual Meeting. Cellectis will present clinical data on the AMELI-01 clinical trial in evaluating UCART123 that were already showcased in an oral presentation at the ASH Annual Meeting, as well as preclinical data on multiplex engineering for superior generation of CART-T cells. Those presentation will take place on May 17 in the Los Angeles. This quarter, Cellectis announced the closing of the global offering of $25 million of its depository shares launched in February. The net proceeds of the global offering is approximately $22.8 million. Finally, in April, we announced that the drop-down of the first tranche of the €20 million under the finance contract for up to €40 million credit facility made with the European Investment Bank in December 2022. Cellectis plan to use the net proceeds of the funds to focus on the development of its pipeline of allogeneic CART-T cell product candidate, UCART22, UCART20x22 and UCART123 and decided to stop enrollment of treatment of patients with UCARTCS1. To accelerate the speed of enrollment of patients in the MELANI-01 study evaluating UCARTCS1, the company would have had to invest meaningful amount of resources. Therefore, to optimize its resources, Cellectis decided to focus its development efforts under BALLI-01, AMELI-01 and NAtHaLI-01 studying and stop MELANI-01. Lastly, based on our current plan, we anticipate our cash runway to take us into the third quarter of 2024. We're excited about the drive in our clinical trials, building on the momentum of our lead print product candidate in our pipeline, and the upcoming milestones for 2023. With that, I would like to turn the call over to Dr. Mark Frattini, our Chief Medical Officer, who will give us an overview of the clinical trials. Mark, please go ahead.

Thank you, Andre. As Andre mentioned, we have made progress in our BALLI-01 clinical trial with the dosing of our first patient in Europe with our in-house manufactured product candidate, UCART22. UCART22 is an allogeneic CAR T-cell product candidate that targets CD22 and is evaluated in the BALLI-01 clinical study, a Phase I/IIa open-label study designed to evaluate the safety and clinical activity of the product candidate in patients with relapsed/refractory B-cell acute lymphoblastic leukemia. The last preliminary data presented in the live webcast last December support the continued administration of UCART22 after FCA lymphodepletion,in patients with relapsed/refractory B-cell ALL and are very encouraging for patients who have limited, if any, treatment options, especially for those who have failed prior CD19 directed CART-T cell therapy and allogeneic stem cell transplant. The BALLI-01 study is actively enrolling patients after FCA lymphodepletion. Our AMELI-01 study evaluating UCART123 in patients with relapsed/refractory AML continues to progress and enroll patients in the FCA 2-dose regimen arm. We look forward to sharing clinical data from this program when it becomes available. Next, I'll move on to our MELANI-01 clinical trial, our CS1-directed TALEN gene-edited allogeneic CAR T-cell product candidate being evaluated in patients with relapsed or refractory multiple myeloma. As Andre previously mentioned, in order to focus on the development of our pipeline of allogeneic CAR T-cell product candidates, UCART22, UCAR20x22 and UCART123, we decided to stop enrollment and treatment of patients in the MELANI-01 study evaluating UCARTCS1. Lastly, I will speak about our NAtHaLI-01 study evaluating UCART20x22. UCART20x22 is Cellectis' first allogeneic duo CART-T cell product candidate being developed for patients with relapsed or refractory B-cell non-Hodgkin lymphoma. UCART20x22 is also the first product candidate Cellectis has designed, developed and manufactured completely in-house. In addition, the advantage of UCART20x22 is that it goes beyond the highly competitive CD19 antigen directed therapy space by providing a dual antigen CD20 and CD22 targeted allogeneic alternative. Cellectis is now enrolling patients in the NATHALI-01 trial. Lastly, as Andre mentioned, Cellectis announced that we have implemented the use of Sanofi's alemtuzumab as a selective investigational medicinal product,coded as CLS 52 as part of the lymphodepletion regimen in the BALLI-01, AMELI-01 and the MELANI-01 clinical trials. As previously reported, the importance of alemtuzumab in the lymphodepletion regimen was demonstrated in our BALLI-01 and AMELI-01 studies, where the addition of this lymphodepletion agent to the fludarabine and cyclophosphamide regimen was associated with sustained lymphodepletion and significantly higher UCART-T cell expansion, allowing for greater clinical activity. We believe these encouraging outcomes are a meaningful step forward to a safe, effective and controllable therapeutic window for our allogeneic CAR-T cell product candidates. With that, I would like to hand the call over to Dr. Bing Wang, Cellectis' Chief Financial Officer, for an overview of our financials for the first quarter of 2023. Bing, please go ahead.

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

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

[Operator Instructions]. Our first question comes from Gena Wang with Barclays.

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

Gena, thank you so much for these great questions. So we'll start with Mark for the first 2 on 123 and 22 and then Bing for the financial question.

Thanks, Gena, for the questions. So in regards to your first question about 123, yes, there is an oral presentation at ASGCT coming up in a couple of weeks, and it is an encore presentation of the ASH presentation in that forum. As you know, we are -- as we discussed in December, we are proceeding with enrollment in the 2-dose regimen arm and that data will be presented later when available. In terms of your second question about 22, yes, there is a full DLT waiting period of 28 days between the first and second patient, but subsequent patients can be enrolled simultaneously, and we will be updating the 22 data later this year as well.

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

Our next question comes from Yanan Zhu with Wells Fargo.

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

Great question. That would be for Mark as well.

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

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

Sure. So as we've already presented at ASH prior 2x with the 22 product and last December with the 123 product, the alemtuzumab component of lymphodepletion is very important for allowing for sustained lymphodepletion and optimal UCART expansion and, therefore, clinical activity. And what we did show looking at the AEs that were presented for both products was that there was no significant difference in terms of safety with the use of --either with or without the use of alemtuzumab. Those are very equivalent.

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

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

Our next question comes from Yigal Nochomovitz from Citigroup.

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

Mark?

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

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

Yes. So for -- as we said, for the 22, there will be a data update later this year about the patients enrolled with the P2 that we will disclose at that time.

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

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

Yigel, yes, It's a definitely the competition between all the called out that are currently in either approved or in clinical development makes our enrollment very difficult. And what we're getting currently in the trial are patients, as we've shown in the past with multiple lines of treatment. And also we need to remanufacture the product that addition to the current product that we were using was essentially manufactured at [indiscernible], and we think that it's essential to manufacture ourselves pro logs. We see it with 22 and 20x22, it makes a huge difference. And so the arbitration has -- like either you open more sites and probably outside the United States or -- and you can get the thing going or you try to focus and focus has been choice in the current conditions, given the drive we have for 22 and 20x22 and ofcourse 123.

Our next question comes from Salveen Richter with Goldman Sachs.

This is Anoumid on for Salveen. Just another question on the CS1 program. do you anticipate bringing it back at some point given the opportunity for a non BCMA-targeted CAR-T in the multiple myeloma space. And then of the -- are there any patients that have been dosed already from this program? And would we see data from those patients? And then just a quick follow-up on CD20x22. I guess are you targeting mostly the CD19 naive or CD19 relapse patients? And then in that context, what clinical profile are you looking to achieve relative to the approved CD19 therapies or ALLO CD19 program?

Anoumid. Thank you very much for the question. I'll leave the first question on CS1 to Andre and then Mark for 2022.

Yes, thank you very much for the question. Well, we really like the target CS1, and we believe it's a very interesting alternative to BCMA. We've already presented data in the past, and we showed that UCARTCS1 can provide like meaningful tumor reduction and like had some patient that went into -- it's not a CR because like the M-protein is still quite high, but than VGPR, so Mark will correct me concerning this, but we definitely think that it's a great target. And for us it's something that has been an arbitration that we really needed to do. And I think that it's healthy for the company. But of course, if we have the potential to change the course of this, especially if we have like the means to do it, we would definitely restart it as we believe that CS1 is a huge alternative to BCMA and all multiple myeloma current product that are developed. It's a validated target with alemtuzumab, and it's Self-lymphodepleting. So it's great in its own space. So there's a lot of features that are extremely interesting, but you have to remain factor the product internally given the performance of our group currently, and this is something we would like to focus on the current driver in the company, which are 22, 20x 22 and 123. Mark?

Okay. Thanks, Andre. So -- and I'll go to the 20x22 question. So yes, so patients that have had prior CD19-directed therapy of any variety are eligible for this study. And in addition, patients that obviously could not receive CD19-directed therapy for 1 reason or another are also eligible for this study.

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

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

Our next question comes from Kelly Shi with Jefferies.

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

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

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

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

Our next question comes from Hartaj Singh with Oppenheimer.

Good to hear everybody's voice. I just want to ask a more holistic question, maybe just stepping back. You had mentioned previously that I believe it's for BALLI-01, the patients would be post autologous CAR-T and stem cell therapy. And correct me if I'm wrong. Can you give us an idea for BALLI, and I think you mentioned this for AMELI and then for NAtHaLI. What line of patients generally are you recruiting for these studies right now? And then secondly, I assume you have ongoing discussions with regulators. If you get to a recommended Phase II dose. Can you just kind of walk us through quickly what sort of dose expansion trials could we look forward to in these? I know that could be -- there might be some hypotheticals there, but it would be nice to get an idea.

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

Thanks, Hartaj. Good to hear you. In terms of the first question in terms of the studies. What we did -- these patients are all heavily, heavily pretreated. And so what we've disclosed for '22 from the obvious prior to ASH, where we presented a lot of these patients fail 19-directed therapy at least some blinatumomab, some blinatumomab CD19 autologous CART-T cells as well as inotuzumab as well as allogeneic stem cell transplant. So they really truly really have no other treatment options for a lot of these patients due to all the lines of therapy that they failed. For 123, it's very similar because AML, as you know, very aggressive, very refractory in these patients once they relapse and they fail multiple different chemotherapeutic regimens, some small molecule targeted regimens and almost greater than almost 3 quarters, 2/3 to 3/4 have failed an allogeneic stem cell transplant and those that haven't failed to transplant have been such that they've been refractory and haven't had a significant response to even go on to transplant. So again, this is the kind of heavily pretreated patients we're seeing for 123, as we presented before. And with 22 -- 20x22, as we just discussed, again, these are going to be patients that are going to be heavily pretreated, and they will be an additional line at least and if 1 additional line beyond their first CD19-directed therapy. In terms of your second question, again, this is stuff that's currently being discussed with the regulators. What we have what we have disclosed, obviously, the ALL study will be open to young adults and older adults and down to the age of 12 once we get into expansion from the pediatric perspective. For 123, it's obviously right now, it's adults 18 to 65. And for 20x22, it's also in the adult space, but we are with 18 to 80. And currently, as we've discussed, the logical first expansion cohort is in the large B-cell lymphoma space due to the -- just due to the incidents, the high incidents.

Our next question comes from Jack Allen with Baird.

Congratulations on the whole progress in the quarter. I guess the first question, I just wanted to confirm, you mentioned the ASGCT presentation of the AML data will be an encore presentation. Will there be any additional follow-up of patients in that presentation? Or will it just be more of an encore as it relates to ASH. And then as it relates to 20x22, you've made a few comments that you're enrolling patients in the study, but I was wondering if you could provide some additional thoughts around the dose levels that you've reached and what we should think about as it relates to data readouts as we move through the year from the 2022 program.

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

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

Our next question comes from Silvan Tuerkcan with JMP Securities.

I have a question about your manufacturing capabilities. So clearly, you can manufacture fully in-house in the U.S. and in Europe at this point. Are there any access capacities that you could potentially monetize in the short term? Or will you -- do you just plan to fully use that for yourself?

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

Well, first of all, we're extremely proud of our manufacturing capacities. And I think that it was blessing that the strategy that we did took initially, it was like before COVID to integrate all the chain of manufacturing means like from Buffers to DNA to RLDs to the final product even for commercial that has been internalized and the [indiscernible] To more to more internalizing things. And I don't know in which position we would be if we wouldn't have taken this decision previously. The second thing that we're excited about is this year, as Mark is saying, since the beginning of the call, is present you the data with the total that has been manufactured internally in the performance of our manufacturing. Now if this manufacturing is essentially for internal use, we're always open to manufacture for our partners. But Cellectis is not positioned itself as a potential CMO, and this is not our business, and there is like an offer that is driven by a series of CMOs outside. Now if there's a potential to monetize this, there's always -- this option is always open, but we don't think that it's something that must be discussed today because the opportunity of this, but it's definitely an asset that Cellectis has and it's a very strong asset that we would like to keep internal so far. I think that makes a big difference and there's 2 categories of cellular and gene therapy companies, the one that know how to manufacture the [indiscernible] and the others and Cellectis this is among the first capability that I think would distinguish themselves.

Our next question comes from Ingrid Gafanhao with Kempen.

I have two questions, if I may. So the first one, you mentioned that you have changed the trade name of alemtuzumab with no context of your trials. Can you just remind us how the regulatory landscape might look like? Do you have to -- alemtuzumab is a approved product? Is that enough for the agencies? Or do you have to do something in parallel to get this approved as lymphodepletion regimen together with yourselves. And my second question is regarding the next EIB, the tranche from the EIB loan. When do you roughly expect time-wise to have access to that one?

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

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

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

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

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

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

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