Atara Biotherapeutics, Inc. (NASDAQ:ATRA) Q3 2023 Earnings Call Transcript

Atara Biotherapeutics, Inc. (NASDAQ:ATRA) Q3 2023 Earnings Call Transcript November 4, 2023

Operator: Good morning, and thank you for standing by. Welcome to Atara Biotherapeutics’ Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today’s call is being recorded. I would now like to hand the call over to Alex Chapman, Vice President of Corporate Communications and Investor Relations at Atara Biotherapeutics. Please go ahead, sir.

Alex Chapman: Thank you, Sherry. Good morning, everyone, and welcome to Atara’s conference call to discuss our expanded tab-cel global partnership with Pierre Fabre Laboratories and our third quarter 2023 update. Earlier today, we issued a press release announcing this partnership and our third quarter financial results. This press release and an updated slide deck are available in the Investors & Media section at atarabio.com. Joining me on today’s call are Dr. Pascal Touchon, President and Chief Executive Officer; and Eric Hyllengren, Chief Financial Officer. We will begin with prepared remarks, then open the call for your questions. We would like to remind listeners that during the call, the company’s management will be making forward-looking statements.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today’s press release and the company’s SEC filings. These statements are made as of today’s date, and the company undertakes no obligation to update these statements. Now I’d like to turn the call over to Pascal. Pascal?

Dr. Pascal Touchon: Thank you, Alex, and thank you all for joining us this morning. Today, we announced the global expansion of our tab-cel partnership with Pierre Fabre Laboratories. We are already successfully launching this product across Europe. In parallel, we announced a strategic restructuring that together with the expanded tab-cel partnership will extend Atara’s planned cash runway into Q3 2025. This positions us well to continue building the value of our pipeline, including through anticipated clinical milestone for ATA188 with the EMBOLD readout in early November as well as initial data for the ATA3219 program in lymphoma. Now I’ll start by covering the details of the partnership and strategic restructuring, followed by upcoming clinical milestones.

After a competitive process, with significant interest from across the spectrum of large pharma, midsize pharma and biotech companies, we are excited to announce an expanded partnership with Pierre Fabre to commercialize tab-cel in the U.S. and all remaining global markets. This moment signifies the pivotal transition in Atara’s evolution. We are now optimally positioned as a nimble allogeneic T cell immunotherapy company with near-term catalysts and the opportunity to advance a pipeline of differentiated therapies across a range of oncology and autoimmune indications from our proven EBV T cell platform. We sought a partner that is committed to deliver tab-cel, a product with life-saving potential, to the U.S. and global patients. In parallel, we pursued a deal structure that meaningfully reduces our cash burn over the next 2 years and provides Atara and shareholders with significant value, both through short-term cash and potential milestone payments and long-term significant double-digit royalties.

Pierre Fabre brings substantial and demonstrated capabilities, evidenced by the successful launch of tab-cel, branded as Ebvallo, in European markets. We have found them to be committed collaborators of adding [indiscernible] to expand our partnership for tab-cel to reach as many patients as possible worldwide. Specific to the U.S., which is the largest commercial opportunity, Pierre Fabre is in a strong position to succeed, strengthening their U.S. presence with tab-cel as their flagship product and building on to the marketing experience in Europe. Now for the specifics. Atara will receive up to $640 million in additional consideration, plus significant double-digit tiered royalties on net sales. As part of the deal, we will receive approximately $30 million at deal closing in upfront and inventory purchase and $100 million more in potential regulatory milestone payment through potential BLA approval.

In addition, Pierre Fabre will reimburse Atara for expected tab-cel global development cost through BLA approval and will purchase existing and future tab-cel inventory on the BLA transfer date. Substantially, all tab-cel manufacturing, regulatory and development activities are targeted to transition from Atara to Pierre Fabre at the time of the BLA approval transfer. We remain confident that tab-cel represents a significant business opportunity with several hundred EBV+ PTLD addressable patients in the US alone, who could benefit from this potentially life-saving therapy with a favorable safety profile. With significant pricing potential based on its value for patients and health care systems in such an ultra-rare disease, we believe that tab-cel has the potential to deliver U.S. peak sales of over $500 million per year following potential label expansion from the multi-cohort study.

With future sales milestone and significant double-digit royalty through our agreement with Pierre Fabre, we believe U.S. tab-cel commercialization will progressively grow future revenues for Atara over the term of the agreement. As we continue to evolve as an organization focused on developing innovative allogeneic cell therapies for cancer and autoimmune disease, we are undertaking a strategic restructuring to reduce our current workforce by approximately 30%. The benefits of the expanded tab-cel partnership as well with the restructuring are anticipated to reduce our planned cash expenditures from 2023 levels by approximately 40% or $100 million by the end of ‘25. I would like to extend my sincere gratitude to all Atara staff both who’s continuing to the next phase of Atara and those departing for their unwavering commitment to the patient’s lives we seek to transform and their significant contributions in advancing truly innovative medicine for patients in need.

Thank you for what you have done to get us where we are today. We believe these actions, when combined with cash of approximately $102 million on September 30, 2023, and certain anticipated payments from the expanded tab-cel commercial partnership will be sufficient to fund Atara planned operations into Q3 2025. This will position Atara well to deliver multiple anticipated clinical milestones, including the early November EMBOLD data readout as well as key data readout for the ATA3219 program in lymphoma and potentially in autoimmune disease. On the regulatory front, we are encouraged from the recent positive FDA assessment of comparability that supports pulling the pivotal clinical data from different process versions of tab-cel in the BLA submission expected in Q2 2024.

We now have a clear plan for the clinical data package, and the expected BLA submission timing aligns with our filing strategy to include the latest pivotal ALLELE study data for inclusion in and to obviously support both the pre-BLA meeting and anticipated BLA filing package. We’re also excited to disclose initial data from our Phase II multi-cohort study with various EBV+ cancer in December at ESMO I-O. Now on to ATA188 or potentially transformative therapy for people living with progressive multiple sclerosis. The primary analysis readout for the Phase II double-blind, placebo-controlled EMBOLD study is on track for early November, which will include the primary outcome merger of confirmed disability improvement by EDSS and relevant imaging and free biomarkers for more than 90 patients.

This includes a number of patients that enrolled earlier in the study and have been evaluated beyond the primary endpoint of 12 months at 15, 18, 21 and 24 months. The EDSS data from these later time points will be analyzed as part of the primary analysis, and may give a sense of ATA188 impact on EDSS stability and progression, which usually requires longer follow-up time to assess the disability improvement. Our goal is to disclose sufficient study data to allow investors to result potential value of ATA188 in nonactive progressive MS. As a reminder, significant unmet need remains in progressive MS, especially in nonactive progressive MS, which represents the vast majority of the progressive MS population and is a focus of the EMBOLD study.

There are no approved therapies right now that have demonstrated disability improvement for nonactive progressive MS. The currently approved therapies only demonstrate more the slowing of disability progression with an approximately 6% difference versus placebo that is primarily driven by patient with active disease. As a result, anything better than the ranging from more slowing of progression to stabilization of disability to trends for disability improvement to significant improvement is potentially transformative and sets up the others and robust clinical development opportunities, including potential pivotal Phase III trials. Finally, we are progressing our potential best-in-class allogeneic CAR-T assets, which could play a foundational role in our portfolio moving forward.

We will focus resources in the near term on clinical development of ATA3219 following recent IND clearance and on preclinical activities for ATA3431 or CD19, CD20 targeted CAR-T. While these are the programs that have the highest potential for value creation over the next 2 years, we will also continue to strategically invest in other attractive targets and platform enhancements. With respect to ATA3219 or allogeneic CAR-T for B-cell malignancies expressing CD19, we are progressing to activate study centers and start enrolling patients in the coming months in the Phase I study in relapsed or refractory B-cell NHL. We expect preliminary clinical data in the second half of 2024. We are particularly excited to bring this allogeneic CD19 CAR-T asset to the clinic as it’s been optimized to offer a potential best-in-class product profile, featuring off-the-shelf availability and clinically validated technologies like the 1XX signaling domain associated with favorable response rate and durability, enrichment for less differentiated T cell memory phenotype for improved clinical responses and retention of the endogenous T cell receptor, which may be a crucial survival signal for T cells.

We are also pleased that ATA3431, an allogeneic bispecific CAR directed against CD19 and CD20 built on the EBV T cell platform with the 1XX costimulatory domain is moving into IND-enabling studies with competitive profile. Compared to an autologous CD19, CD20 CAR-T benchmark, technical data demonstrate potent antitumor activity, long-term persistence and superior tumor growth inhibition. And this has been accepted for poster presentation at the upcoming ASH meeting in December. Beyond oncology, there has been high interest recently in the potential of CAR-T cell therapies for autoimmune disease with remarkable results from early data in patients living with severe respiratory disease such as lupus. At Atara, we have believed for a while in the important role cell therapy can play in addressing autoimmune conditions.

With ATA188, Atara is pioneering the use of an allogeneic T cell immunotherapy in the neurological autoimmune condition. Building on this experience, we are actively considering option best suited for auto allogeneic CAR-T disease therapies in autoimmune disease. Our EBV T cells have compelling potential benefits like persistence and favorable safety with no requirement for complex genetic editing. Specifically, they possess a memory phenotype that can expand and traffic to site of disease, which provide a versatile platform with off-the-shelf accessibility that can address several potential shortcomings of other approaches. To that hand, we are actively progressing efforts toward the potential IND to evaluate ATA3219 in autoimmune disease in parallel with NHL development.

More to come on that soon. To close, we’re excited about the near term opportunities for Atara to demonstrate the potential of our pipeline. We are coming up to one of the most exciting milestones in Atara’s history with a primary analysis result of the EMBOLD study very soon, and we are now well capitalized with planned cash runway into Q3 2025 to pursue our potential best-in-class portfolio of CAR T assets in areas of great unmet need where we believe we can make the biggest difference. I will now turn the call over to the operator for the Q&A part of the call. Operator?

See also 13 Best ESG Stocks To Buy Now and 12 Best Mid-Cap Dividend Stocks To Buy Now.

Q&A Session

Operator: [Operator Instructions] Our first question is from Salim Syed with Mizuho.

Salim Syed: Congrats on the deal. Just a couple for me, if I can. One on the process. Pascal, you mentioned that there were large pharma players involved here. Just curious, the rationale to go with Pierre Fabre, was it just more operational that you wanted just one partner globally? Was that just really important to you? Or was it also financially driven that Pierre Fabre actually offer greater economics? And then second, just on the $500 million number that you put out for U.S. peak sales, just curious if you could break that down for us even ballpark-wise. How much of that is for the first indication EBV for PTLD? And just what portion of the $640 million in milestones could you get just on the first indication alone potentially? Ballpark would be helpful.

Dr. Pascal Touchon: Thank you, Salim, for your questions. So the first one, competitive process, a mix of big pharma, mid pharma and biotech. Decision was based on 3 key aspects. One, of course, is financial. And financial, not only about an upfront level, but very importantly, the way for us to be able to have the partner progressively taking over activities, but immediately taking over the cost of the activities for tab-cel. That was very important for us because that was the one — the way for us to really move into focusing our cash into the development in MS and in allogeneic CAR-Ts. So that was one aspect, on financial. The other one was the level of commitment that this particular partner will — is demonstrating through the process, the diligence.

And with Pierre Fabre, we have experience with them. We know how committed they are to the success of Ebvallo in Europe. And then thirdly, it’s true that having only one partner is much easier to manage for us as a biotech company. It was not the most important decision point, but it was really an important aspect to say if the financials are exciting because they cover exactly what we need in terms of taking over the cost and adding cash to the balance sheet. On top of that, having someone who is truly committed to succeed and having tab-cel as their flagship product in the U.S., they’re going to put 100% and even more of efforts behind it. And then, of course, the fact that having only one partner makes it easier to manage in general.

Now on to your second question. The $500 million peak sales, as we said, is linked with different type of indications. So first indication in second-line PTLD — EBV+ PTLD and additional indications coming from the multi-cohort study that is coming. By the way, we’ve announced that there will be some first preliminary data presented at ESMO I-O in December. So that’s the way the $500 million peak sales is progressively build up there in the U.S. in the way we see the potential of that product commercially. Now on the milestone that — sales milestone are not related to a specific indication, just sales milestone. And we’re not going to disclose exactly what’s the detail of this sales milestone, but we think that they are reasonable in the approach that we’re taking in terms of what is the potential of the product and how that potential can be reached.

Does is it answer your question?

Salim Syed: Got it. Sort of. I’m happy to rephrase it if that’s okay. But if you can’t answer, I understand that as well. I guess I just want…

Dr. Pascal Touchon: We cannot disclose more on the milestone. That’s my point.

Salim Syed: Okay. I guess just for the $500 million though, how much of that is weighted on the first indication alone, I guess, is the question. And the…

Dr. Pascal Touchon: I think it’s a significant part because we always say it’s several hundred patients in the first indication. And we also say that we have, we believe, a significant pricing potential based not only on the expense in Europe, where the price in Europe today — listed price is about $640,000 or the equivalent of $640,000. And usually, the difference between the U.S. and Europe is about 30% to 40% for this type of product. It gives us an idea. We don’t know what Pierre Fabre will take as the price, but we’ve been discussing that with them, and we think they will try, like they are doing in Europe, to optimize the pricing potential in line with the value that the product is giving to patients and health care system.

But also, we’ve had a lot of discussion as Atara with payers in the U.S., and we know exactly what the price sensitivity and what the price that will be considered as acceptable to offer significant coverage of the patients. So we’re confident about the number of patients, we’re confident about the price and we’re saying by itself, this is going to create — to reach a significant part of that $500 million.

Salim Syed: Got it. All right. Pascal, congrats again.

Dr. Pascal Touchon: Thank you.

Operator: Our next question is from John Newman with Canaccord Genuity.

John Newman: And congrats on a nice deal here. So my question is regarding the tab-cel regulatory process. I’m just curious, Pascal, if you could just give us an update on the new clinical data or the additional clinical data that will be included when you file the application in 2024.

Dr. Pascal Touchon: Yes, certainly. So when we reach the alignment and agreement on comparability, that was when we could then organize a new data cut for the ALLELE study, the pivotal study. So that has been on in October. And now we’re going to have all the typical time needed to get the data clean, to get the I-O array, the independent review of the scans and so on. And that will give us new set of data compared with the one we’ve presented in December 22 at ASH on 43 patients. So that new set of data will then be, in the typical way, put together, presented through the agency pre-BLA meeting and then move on to the BLA submission. So the time needed is really the time to clean up the data. We’re very confident in this data and with many reasons to be very confident in this data.

But one that you all know is about the fact that whatever the type of study, whatever the process versions we’ve used in the past, and we’ve treated more than 400 patients with tab-cel across different disease and more than 260 patients in PTLD, EBV+ PTLD. So we have a very significant data package and experience. But whatever the study, whatever the process versions, we always have found similar results from an efficacy and safety point of view. So very similarly, efficacy with — and over in terms of overall response rate, long-term efficacy with good persistence of the response and then of course, favorable safety. So that’s why we feel extremely confident about this new data that will be put together and discussed with the agency.

Does it answer your question?

John Newman: It does. I just had one additional question on ATA188. Just curious, obviously, the data will be coming here shortly, but wondered if you could discuss your thoughts on the commercial plans for that product if you’re considering a partnership, if you’re planning on marketing the product on your own, if perhaps partnership is being considered for only Europe. Just curious there.

Dr. Pascal Touchon: Yes. No, thank you for your question. So it depends on the next step. But if indeed, we are — to the point where the next step is to move to Phase III, as we disclosed in the past, we have already discussed with the FDA about the type of Phase III that they would like to see when we obtain our 2 Fast Track designation and that’s where the agency mentioned 2 Phase III, one in nonactive PPMS, one in nonactive SPMS. And the reason they offered 2 instead of just 1 is mainly because the medical need is slightly different in the U.S. in these 2 potential indication because in nonactive SPMS, which is, by the way, the vast majority of the patients with SPMS, with secondary progressive MS. In that particular population, there is no approved therapy in the U.S., whereas in nonactive PPMS, there is officially 1 approved therapy — recently approved therapy, which is OCREVUS.

So that’s why there is a slight medical need from the Fast Track and potential BTD as a type of status later on. So we’ll discuss with the agency. These 2 Phase III studies will be also put together with a Phase II program to go in earlier stage of MS and maybe some other autoimmune indications. All that will be a very significant clinical development program that we believe will benefit from having a strategic partner that could bring financial and operational capabilities to be able to run all of these studies in parallel. So at this stage, the idea will be to consider partnership but not a pure licensing out, more of a strategic co-development, maybe with some options for other activities, especially in the U.S. And that’s really the aim being to activate rapidly this next stage of the development.

At the same time, to retain significant value for — within Atara. And we’ve discussed in the past that the type of partnership with profit split, particularly in the U.S., which is about 75% to 80% of the world market for MS, could make sense for the company and our shareholders. So too early to say what type of partnership and how we will implement that. But certainly it’s something that we have been actively considering and discussing with a large number of big pharma companies over the last couple of years.

Operator: Our next question is from Phil Nadeau with Cowen & Company.

Phil Nadeau: Let us add our congratulations on the expanded partnership. A couple of questions from us. First, in terms of the royalty that you’re going to get from Pierre Fabre, any — can you give us any more information on the magnitude of that royalty? Is it a greater royalty in any sense of the royalty range? And then second, a follow-up on the EMBOLD trial. Could you talk us through your current thought process as you — as to how you would frame the go/no-go decision post the EMBOLD data? What do you need to see in EMBOLD to advance 188 into those 2 Phase III trials?

Dr. Pascal Touchon: Thank you for your question. So the first one, unfortunately, we cannot say more than significant double-digit tiered royalties, and it’s an agreement with our partner, Pierre Fabre, that is not willing for us to disclose the royalty level. So we cannot say more than significant double-digit tiered royalties. And let’s say that we are very pleased with that deal. Now on your second question, the way we see the different scenarios, as we explained in the past, is as follows. We believe that if we have a significant statistical results on top of an impactful clinical result in terms of showing a percentage of CDI or confirmed disability improvers in active versus placebo, in that case, we would be — with a significant p, we’ll be considering moving into Phase III.

But it could be also the case if this is not a significant p, but a very strong trend, supported by a number of additional data from other clinical measures, from imaging biomarkers such as MTR, magnetization transfer ratio, or some additional fluid biomarkers. So having a strong trend, supported by this type of biomarkers and additional clinical data could also make the case for moving into Phase III. So that’s the type of scenario where we’ll move to Phase III. A scenario where we will not move to Phase III in this specific indication of nonactive positive MS will be a scenario where we have evidence of effect, but that there is a need either to continue to study [indiscernible] 2-year study or to be able to have data, for example, on stability on a larger number of patients.

We’ll have already data on stability of the disability and the ability to limit promotion of disability, but we might want to have more patients and to have all the patients reaching a 2 years’ time point. We might also have some particular signal — strong signal in subgroups of patients based on the data. So all that could lead to the need to continue some additional work for EMBOLD, expansion of EMBOLD or just the continuation of EMBOLD or some other studies that we could do to be able then to be in a stage where we could move to Phase III. So that’s the best way probably to answer your question right now is, if it is a statistical significance or very strong trend backed by biomarkers and other data, there is a clear path to move into Phase III following end of Phase II meeting with the agency and scientific advice in Europe.

If it is something that shows evidence of effect, which, by the way, will be a big first and truly transformational already because nobody has ever shown in such a large study that there is evidence of effect versus placebo that could be of a significant signal to be able to explore further or continue the study until its end. So that particular scenario will require some additional work, but we are well positioned to do that work.

Phil Nadeau: That’s very helpful. Congratulations again.

Operator: Our next question is from Jonathan Miller with Evercore ISI.

Jonathan Miller: Congrats on the tab-cel deal. We’re really looking forward to the MS data coming out, obviously. I would love to get a little bit deeper into the, I guess, the pipeline and the runway from here. So you mentioned there are certain anticipated payments included in the cash runway to ‘25 there. Is BLA approval included in that runway? For instance, what are the certain anticipated payments that you’re counting explicitly? And what are you not counting? And secondly, how much of the CAR-T program, the oncology program trial initiations are counted in the runway? And how much of those trials are covered versus not covered with your current expectations?

Dr. Pascal Touchon: No, thank you for your question, Jon. So in terms of the expected payment from the deal, this is really around the regulatory milestone. It’s not only a milestone at approval, it’s through approval we have a number of steps that, if successfully achieved, will be linked with payments. So that’s why we say $100 million regulatory milestone through BLA approval. That includes the BLA approval, by the way, but it’s not the only milestone. There are a number of milestone before the BLA approval that could lead to payment from Pierre Fabre based on the progress we’re making on a regulatory front. So that’s to answer your first question. On your second question, what we are putting together in this cash runway expectation is the start, as we were doing right now, of our study in lymphoma with ATA3219.

It’s also starting the study in autoimmune disease as we believe that there is a great potential for that product in autoimmune disease like lupus and we’re working on that right now. And it’s also the IND-enabling studies for 3431, which is a very exciting, very competitive CD19, CD20 CAR-T — allogeneic CAR-T. And then, of course, we have EMBOLD that is continuing because even though we’re going to present very soon the 12 months readout, the study, as you know, is continuing up to 2 years. So we have a number of patients that have reached already 2 years, but many that have not yet reached 2 years. So we’ll be able to continue that until next year, of course. So all that is part of the expenses, knowing that on the tab-cel form, the expenses are mostly covered by Pierre Fabre.

Does it answer your question?

Operator: Our next question is from Salveen Richter with Goldman Sachs.

Tommie Reerink: This is Tommie on for Salveen. And congrats on the deal. So with the closing in December and the workforce reduction, can you kind of walk us through what the financial impact will be into year-end, if any? And on the MS release, how much detail do you expect to provide here? Will it be more so just p values? Or could we actually see the trends in more quantitative measures too?

Dr. Pascal Touchon: Eric, do you want to take the first question? I’ll take the second one.

Eric Hyllengren: Yes, absolutely. So Tommie, the way we’re looking at it, obviously, there’s going to be — we signed the deal, but then there’s going to be the customary HSR review, which we don’t expect to be a problem. So bigger kind of the December effective date there. So benefits of the upfront payment, inventory purchases, it’s going to be right around end of December, early January, depending on that and the payment terms. And then, yes, the 30% reduction in force, obviously, there’s the lower headcount benefit, but then that’s offset by some severance, of course, for those folks. So I would expect the main — you’d look at the main benefits to begin in 2024 as a step down and then another step down in 2025 as we fully transition regulatory development and manufacturing activities over to Pierre Fabre.

Dr. Pascal Touchon: And on to your second question, so what we said so far that we plan to disclose sufficient data for investors to be able to have a better understanding of the value created by that study and for that particular asset. So it’s difficult to say exactly we’ll disclose, but it depends on the data. But you can expect more than just the primary analysis of the 12 months confirmed disability improvement active versus placebo. And as you know, there will be data on beyond 12 months because we have a number of patients that will have been evaluated at 15, 18, 21, 24 months, so not only confirmed disability improvement, but also CDP, confirmed disability progression, to see what’s happening on the stability front.

And then there will be imaging biomarkers for [indiscernible] and MTR in particular, the biomarker we presented from our Phase I a couple of years ago at ECTRIMS that shows the sign of [ myelination ] within the chronic lesion in the brain of the patients that were improving on the treatment. So you can expect that type of data as well. And then, of course, a number of other type of clinical and potential biomarkers. So ideally, we’d like to give enough information for investors to be able to have an understanding of what’s the value created by the study so far and for this particular product. And of course, to try to also disclose what we see as a next step for the program. Does it answer your question?

Operator: That concludes our question-and-answer session for today. Thank you for joining Atara Biotherapeutics’ Third Quarter 2023 Financial Results Conference Call. You may now disconnect.