Cellectis S.A. (NASDAQ:CLLS) Q1 2023 Earnings Call Transcript May 5, 2023

Operator: 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.

Arthur Stril: 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.

Andre Choulika: 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.

Mark Frattini: 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.

Bing Wang: 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.

Andre Choulika: 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.

Q&A Session

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

Operator: Our next question comes from Yanan Zhu with Wells Fargo.

Operator: Our next question comes from Yigal Nochomovitz from Citigroup.

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

Operator: Our next question comes from Kelly Shi with Jefferies.

Operator: Our next question comes from Hartaj Singh with Oppenheimer.

Operator: Our next question comes from Jack Allen with Baird.

Operator: Our next question comes from Silvan Tuerkcan with JMP Securities.

Operator: Our next question comes from Ingrid Gafanhao with Kempen.

Operator: 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.

Andre Choulika: 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.

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