Cellectis S.A. (NASDAQ:CLLS) Q1 2024 Earnings Call Transcript

Cellectis S.A. (NASDAQ:CLLS) Q1 2024 Earnings Call Transcript May 30, 2024

Operator: Good morning, everyone, and welcome to the Cellectis First Quarter 2024 Earnings Call. [Operator Instructions] Please be aware that today’s conference call is being recorded. I’d now like to turn the conference over to your first speaker, Arthur Stril, Interim Chief Financial Officer. You may begin.

Arthur Stril: Good morning, and welcome, everyone, to Cellectis’ first quarter 2024 corporate update and financial results conference call. Joining me on the call today are Dr. André Choulika, our Chief Executive Officer; and Dr. Mark Frattini, our Chief Medical Officer. Yesterday evening, Cellectis issued a 6-K in the press release reporting our financial statements for the three months’ period ending March 31, 2024, and a corporate and business update. The report and press release are available on our website at cellectis.com. As a reminder, we will make statements regarding Cellectis’ financial outlook, including the sufficiency of cash to fund operations in addition to its manufacturing, regulatory and product development status as well as product development status of its license partners.

These forward-looking 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 licensed 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 report for the year ended on December 31, 2023, and subsequent filings Cellectis makes with the SEC from time to time. I would now like to turn the call over to André.

André Choulika: Thank you, Arthur. Good morning, and thank you, everyone, for joining us today. Last November, we were excited to announce our strategic collaboration and investment agreement with one of the most impressive pharmaceutical company of the past decade, AstraZeneca, to design and shape next generation of cell and gene therapies. This agreement, AstraZeneca made an initial investment of $105 million to Cellectis composed of an $80 million equity investment in exchange of 16 million ordinary shares at $5 per share and a $25 million upfront payment under the joint research collaboration agreement. This month, we are proud to announce the closing of the additional equity investment of $140 million by AstraZeneca. As part of the additional investment, AstraZeneca subscribed for 10 million Class A convertible preferred shares and 18 million Class B convertible preferred shares in each case at a price of $5 per convertible preferred shares.

Today, AstraZeneca owns approximately 44% of the share capital of Cellectis and 30% of the voting rights. In addition, the appointment of Mr. Marc Dunoyer and Dr. Tyrell Rivers as members of the Board of Directors of Cellectis is now effective. Following AstraZeneca’s additional investment, we expect our cash runway to fund operations into 2026. Cellectis will continue to focus its efforts and expenses on advancing its core clinical trials, BALLI-01, NatHaLi-01 and AMELI-01, our wholly owned assets, while building the next generation of genomic medicine to address areas of high unmet patient needs within our partnership with AstraZeneca and within our proprietary preclinical pipeline. We strongly believe that gene-edited cells and gene therapies are revolutionizing medicine across a number of therapeutic areas and will become a large part of molecular medicine in the future.

This quarter, we have also announced the appointment of Arthur Stril as interim Chief Financial Officer following the resignation of Bing Wang. First of all, I would like to warmly thank Bing for the great two years he has been at Cellectis. It has been a huge honor and a pleasure for us all to work alongside with him and wish him great success in his next adventures. Arthur has been managing Cellectis’ business development and portfolio management teams since 2020 and most recently led the execution of company’s strategic collaboration investment agreements with AstraZeneca. Through his past responsibility, Arthur has a deep knowledge and detailed understanding of Cellectis. He will be of tremendous value to Cellectis as interim Chief Financial Officer as we advance our critical pipeline of assets into expansion and pivotal trials and explore new opportunities.

With that, I would like to turn the call over to Dr. Mark Frattini, our Chief Medical Officer, who will give an overview of our clinical trials. Mark, please go ahead.

Mark Frattini: Thank you, André. As André mentioned, Cellectis continues to focus its development efforts on the BALLI-01, AMELI-01 and NatHaLi-01 studies. Last December, we shared updated clinical data in a poster from our BALLI-01 trial at the American Society of Hematology Annual Meeting. In vitro comparability study suggested that UCART22-P2 manufactured in-house by Cellectis is significantly more potent than UCART22-P1 manufactured by an external CDMO. As of July 1, 2023, three patients were enrolled in the first UCART22-P2 cohort at dose Level 2, 1 million cells per kilogram. UCART22-P2 was administered after fludarabine, cyclophosphamide and alemtuzumab lymphodepletion and was well tolerated. No dose limiting toxicities or immune effector cell-associated neurotoxicity was observed.

The cytokine release syndrome observed was limited to Grade 1 or 2. There was a higher preliminary response rate of 67% at dose Level 2 with 1 million cells per kilogram using the UCART22-P2 compared to a 50% response rate with a dose 5x higher at dose Level 3, 5 million cells per kilogram using UCART22-P1 that was manufactured by an external CDMO. UCART22 expansion was observed in responding patients and correlated with increases in serum cytokines and inflammatory markers. The study continues to enroll patients using UCART22-P2. I will now speak about our NatHaLi-01 study of Phase 1/2a dose finding and expansion study evaluating UCART20x22 in relapsed/refractory B-cell non-Hodgkin lymphoma. UCART20x22 has been fully manufactured in-house by Cellectis at our Raleigh manufacturing facility.

Cellectis presented a poster with the preliminary results from the NatHaLi-01 trial at the annual ASH 2023 meeting in December. As of July 1, 2023, three patients were enrolled and treated at dose Level 1, 50 million cells flat dose. Cytokine-released syndrome Grade 1 or 2 occurred in all patients and resolved with standard of care treatment. No immune effector cell-associated neurotoxicity or graft-versus-host disease was observed. There were no UCART20x22 dose-limiting toxicities, and there was one dose-limiting toxicity related to alemtuzumab of CLS-52. All patients responded at day 28 with one partial metabolic response and two complete metabolic responses in patients who have failed prior autologous CD19 CAR T cell therapies. UCART20x22 expansion correlated with increases in serum cytokine and inflammatory marker levels as well as with CRS.

These initial data with all three patients responding at the starting dose of 50 million cells per patient support the continued study of UCART20x22 in relapsed/refractory B-cell non-Hodgkin lymphoma. The study continues to enroll. Lastly, I will speak about our AMELI-01 study evaluating UCART123 in patients with relapsed/refractory AMO. The AMELI-01 study continues to progress and is currently enrolling patients after fludarabine, cyclophosphamide and alemtuzumab lymphodepletion in a 2-dose regimen arm. With that, I would like to hand the call over to Arthur Stril, Cellectis’ Interim Chief Financial Officer, for an overview of our finances for the first quarter of 2024. Arthur, please go ahead.

Arthur Stril: Thank you, Mark and André. I’m very excited to step into the role of Interim CFO and continue working with Cellectis’ team, shareholders and partners at such an important moment for the company. I would like to highlight that in our financials, the cash, cash equivalents, restricted cash and fixed-term deposits classified as current financial assets as of March 31, 2024, amount to $143 million compared to $156 million as of December 31, 2023. This $13 million decrease is mainly due to cash payments from Cellectis to suppliers of $13 million, including $9 million to R&D suppliers and $4 million to SG&A suppliers. Cellectis’ wages, bonuses and social expenses paid of $15 million, the payments of lease debt of $3 million and the repayment of the PGE loan of $1 million, partially offset by the $16 million cash received from EIB pursuant to the disbursement of the €15 million tranche B and $2 million of cash in from our financial investments.

With cash and cash equivalents of $123 million and a $15 million term deposits maturing in May 2024, classified as a current financial asset as of March 31, 2024, and taking into account the $140 million equity investment received on May 3, 2024 from AstraZeneca pursuant to the subsequent investment agreement, the company believes its cash and cash equivalents will be sufficient to fund its operations into 2026 and therefore, for at least 12 months following the unaudited interim condensed consolidated financial statements publication. The consolidated net income attributable to shareholders of Cellectis was $5.6 million or $0.08 income per share for the three months ended March 31, 2024, compared to a $30.1 million loss or a $0.58 loss per share for the three months ended March 31, 2023, of which $27.8 million was attributed to Cellectis continuing operations.

This $38.2 million difference was primarily driven by an increase in revenues and other income of $2.9 million; a decrease of $0.7 million in noncash stock-based compensation expense due to a decrease in the average unit fair value of stock options and free share awards vested in between the two periods; a $30.7 million change from a net financial loss of $4.4 million with a net financial gain of $26.3 million and a decrease in net operating expense of $0.6 million and a $2.5 million decrease in net loss from discontinued operations attributable to shareholders of Cellectis, partially offset by an increase of $1.3 million in purchases, external expenses and an increase of $0.4 million in wages. The consolidated adjusted net income attributable to shareholders of Cellectis was $6.5 million or $0.09 income per share for the three months ended March 31, 2024, compared to a net loss of $28.1 million or $0.55 loss per share for the three months ended March 31, 2023.

We are focusing our spend on developing our clinical candidate UCART22, UCART20x22 and UCART123 and operating our state-of-the-art cell and gene therapy manufacturing facilities in Paris and Raleigh. Research costs under the AstraZeneca collaboration are funded by AstraZeneca. In addition, our focus on maintaining an efficient corporate infrastructure should also enable more limited growth in G&A spend. And now I would like to turn the call over to André for closing remarks.

André Choulika: Thank you, Arthur. To close out this call, I would like to reiterate how excited we are about our strategic collaboration with AstraZeneca and how much confident we are about the continued progress of our three ongoing clinical trials in hematological malignancies as well as our continued development of our preclinical programs. At Cellectis, we strongly believe that our product candidates, our technologies, our in-house manufacturing capabilities will lead us and our partners to a paradigm shift for patients with hard-to-treat cancers, positioning us at the forefront of this promising medical and scientific field. With that, I would like to open the call for Q&A.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Gena Wang with Barclays. Please proceed with your question.

Gena Wang: Thank you for taking my question. I also want to — congrats on the completion of AstraZeneca deal. So now with AstraZeneca on board. So wondering if there is any strategic change regarding the strategy from a Cellectis perspective? And also how much AstraZeneca can have access to your manufacturing capability both in New Jersey and in Paris. And lastly, very quickly regarding the upcoming data by the year-end ’24, I assume you will very likely be at ASH. Can you give us the status of the enrollment for both BALLI-01 and NatHaLi-01? And what kind of data sets should we expect to see?

Arthur Stril: Great. Thank you so much, Gena. This is Arthur. I’m going to take the first question on the strategy and the AstraZeneca piece, and then I’ll hand it over to Mark for the data update. So we’re obviously very excited to have completed the subsequent investment and now have AstraZeneca fully on board. I mean as you have seen from the recent disclosures, they’re betting very hard and very long term on cell and gene therapy and having them as a strong partner across a number of indications, not just oncology, but also immunology and rare diseases, is going to be very important. So the strategy on our wholly owned asset has not changed. We’re still pushing 22, 20×22 and 123 very hard, and Mark will give you an update on where we stand.

Obviously, the big change is we are going to be doing these novel programs with them across a wide range of indications in the cell and gene therapy space. And we also have a new strategic shareholder that is strongly invested in the space, and that has this long-term vision, which we’re very excited to have. Regarding your question on manufacturing. So as you know, under the collaboration, we’re going to do up to 10 cell and gene therapy programs together. And the agreement allows for the possibility for AstraZeneca to leverage our manufacturing capabilities, both the starting materials, but also the final cells that we have in Raleigh for Cellectis to be manufacturing this program. So that’s definitely one of the driver of the interest of AstraZeneca.

And maybe I’ll hand it over to Mark for the data updates.

Mark Frattini: Hi, Gena. It’s Mark. Thanks for the questions. And I think as you know, our last disclosure for data was at ASH last year in December. We have continued to enroll, obviously, on both of these studies you asked about 22 and 20×22. We expect to have data disclosure at the end of the year this year for both of these studies. Regarding 22, ideally, we will be completing the expansion part of the 22 study this year. So we’ll move ahead from that. And for 20×22, we continue enrollment and expansion and actually, hopefully, we’ll be in the same place, near completion of the escalation phase by the end of this year.

Gena Wang: Thank you.

Operator: Thank you. Our next question comes from the line of Kelly Shi with Jefferies. Please proceed with your question.

Dev Prasad: Hi. Congrats on the progress. This is Dev, on for Kelly Shi. So on UCART20x22, can you add some color how many sites are active right now? And will you be able to identify RP2D by year-end? And if you are enrolling three patients per dose level, so should we expect around 10- to 12-patient data by year-end? Thank you.

André Choulika: Mark?

Mark Frattini: Hi. Thanks for the question. So obviously, I can’t go into a lot of details about all of the sites, but I can tell you that we have sites open in the U.S. and in the EU, both in France and Spain, currently enrolling on this study. Regarding the progress with 20×22, we continue to enroll in the escalation phase, and we hope to be completed with the escalation by the end of this year. So to your point, in terms of we would — at that time, there would be RP2D declared as we open the expansion part of the study.

Dev Prasad: Thank you.

Operator: Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Please proceed with your question.

Salveen Richter: This is Lydia, on for Salveen. Thanks so much for taking our question. Can you provide any further granularity on the cadence of readouts across the program this year? And what your expectations are for the respective data sets? Thanks so much.

André Choulika: Lydia, thank you so much for the question. That’s definitely one for Mark.

Mark Frattini: Thanks. So yes, as you’ve just heard from the prior two, so for 22 and 20×22 — for 22, we will be completing escalation, and we will discuss the data results later this year. For 20×22, again, we are also continuing enrollment in the escalation with the aims of completing escalation and discussing that at the end of this year as well. And for the 123 study, I think, as you know, we reverted to a new treatment paradigm where we’re giving actually two doses of the cells for AML since it’s a highly aggressive, highly proliferative disease. And so we continue to enroll in this two dose regimen part of the cohort. And when we have sufficient data, we will be disclosing that as well, but it continues to actively enroll currently.

Salveen Richter: Thanks so much.

Operator: Thank you. Our next question comes from the line of Jack Allen with Baird. Please proceed with your question.

Jack Allen: Great. Thanks so much for taking the questions and congratulations on the progress. The first one was on AstraZeneca. I was hoping you could provide some color as to where things sit as it relates to the collaborative work you’re doing with the large pharma here and when we might expect to hear the first program announced. And then I was also hoping you could talk a little bit about how you’re thinking about potential plans in autoimmune indications. And then finally, if I may, I wanted to ask about what the expectations are for the year-end updates from BALLI-01 and NatHaLi-01 as it relates to durability? How are you thinking about the bar for success in those studies with the allogeneic platform here?

Arthur Stril: Jack, this is Arthur. Thank you so much for the questions. I’ll take the one on AstraZeneca. So the work has definitely kicked out in full gear. There’s a ton of discussion and interactions at all levels within the AstraZeneca and Alexion teams. So as you know, there was already an initial amount of work that had been done on preselecting because AstraZeneca preselected ’25 targets. So we’re starting from a shorter list. And there’s a lot of discussion ongoing on selecting the first program and getting them into gear. So we’re very excited. And obviously, there’s a ton of connectivity between the research teams at all levels. And we’re looking forward to be providing updates as to the first programs when that makes sense. And I think there’s a question on the data for Mark.

Jack Allen: Yes, I was just wondering if Mark had any thoughts on how we should think about durability and what the bar for durability should be as we look towards the year-end ’24 updates on these responses hopefully?

Mark Frattini: Yes. Thanks, Jack. So yes, as you know, we’re — we will discuss completion of escalation for 22 and continued enrollment and completion of escalation for 20×22 as well. I think as stand-alone products in the disease space, I think the bars, I think, are pretty well set, particularly in terms of what the regulatory agencies would want to see in particularly like the relapsed/refractory ALL space, there would be a three month CR within three months timeframe is what the agencies would be looking for. And I think for 20×22 in the NHL space, we’re looking at something closer to six months.

Arthur Stril: And Jack, this is Arthur again. Sorry, I didn’t mean to skim your question on autoimmune. So this is, I mean, definitely an interesting space that we’re monitoring very carefully, and we’re looking at the development in that space. It’s also a space where we think the allogenic value proposition is going to be absolutely critical given the size and potential scope of the market opportunity. We want to address it in a smart and thoughtful way. So we’re definitely looking into this and monitoring the space. And again, we’ll update when it makes sense. Thanks for the question.

Jack Allen: Thank you.

Operator: Thank you. Our next question comes from the line of Luisa Morgado with Van Lanschot Kempen. Please proceed with your question.

Luisa Morgado: Hi team. First of all, indeed, congrats on the completion of the investment from AstraZeneca. I think most of my questions have been answered so far, but I do have one. In terms of the partner programs, could you just give a brief overview on what we should be on the lookout, let’s say, throughout this year? What would you highlight on that side?

André Choulika: Thank you, Luisa, for the question. I mean we talked about AstraZeneca at length. I think I can reiterate the guidance that Allogene has provided on the anti-CD19 and anti-CD70 programs. And obviously, I would direct to them for future updates. I think the first one is, they announced that the start-up activities for the ALPHA3 trial, which will be Cema-Cel. So previously ALLO-501A in first-line consolidation are ongoing, and they’re planning a study initiation in the middle of this year. And they also have an ongoing enrollment in the relapsed/refractory CLL cohort for the Phase 1 ALPHA II trial, also of Cema-Cel. So that’s going to be interesting to see how Cema-Cel moves forward. And they also announced that they are planning by year-end the Phase 1 data update of the TRAVERSE trial, which is ALLO-316, the anti-CD70 in renal cell carcinoma. So we’re also looking forward to this.

Luisa Morgado: Okay, that’s all for me. Thank you so much.

Operator: Thank you. Our next question comes from the line of Yigal Nochomovitz with Citi. Please proceed with your question.

Unidentified Analyst: Hi. This is [Amin] on for Yigal. Thank you for taking our questions. We had a couple. First on the dose expansion strategy. Do you see a scenario that the dose expansion studies could convert to registrational studies? And if so, what would be the timeline look like? And then the second, I wanted to know what do you think the target population would be for a registrational trial? Is that going to be something like a relapsed/refractory following the CD19 treatment?

André Choulika: Thank you so much. I think these are two great questions, definitely for Mark. Mark, we can’t hear you.

Mark Frattini: Sorry, pardon me, I was on mute. Thank you for the question. So I think in terms of the expansion part of the study, yes, indeed, these could potentially be pivotal expansions at this level. As you know, however, this — in terms of number of patients and timeline, et cetera, will require some additional discussions with the regulatory authorities in order to nail this down. So these are things that are actively being discussed at this time. I think in terms of your other question in terms of target populations, I think, particularly in the — in both disease spaces, I think for 22, we’re talking about relapsed/refractory ALL, as you know, and these will be — include patients who have received prior CD19-directed CAR T cell therapy or patients for whatever reason could not be eligible to receive prior CD19 CAR T cell therapy and similar situation in terms of the relapsed/refractory non-Hodgkin lymphoma space as well.

Unidentified Analyst: Okay, that’s great. Thanks very much for taking our questions.

Operator: Thank you. Our next question comes from the line of Yanan Zhu with Wells Fargo. Please proceed with your question.

Kuan-Hung Lin: Hi, thanks for taking our question. This is Kuan-Hung for Yanan. So two questions from us. First of all, 22 and 20×22, can you remind us what dose level has been planned for the studies? And are you planning to also explore fixed dosing for 22? And the second question is any color on the safety data from the patients beyond ASH update for these two studies? Thank you.

André Choulika: Great. Thank you so much for the two questions, also for Mark.

Mark Frattini: Yes. Thank you for the question. So in terms of the dose level, I mean, what we’ve disclosed to date is that originally for 22, we were at 1 million cells per kilo at dose Level 2. And for 20×22, we were at 50 million cells flat dose. Obviously, we have been escalating those since the last data disclosure and we will update later this year in terms of where we’re landing in terms of dose levels for both of these studies. I missed the one question you asked something about dosing with 22. I missed that. Can you repeat that, please?

Kuan-Hung Lin: Yes. Just curious if you are also planning to explore fixed dosing for 22?

Mark Frattini: No, for 22, we’re going to keep a weight-based dosing, obviously, because of the great age criteria in terms of the study from the very young to the very old. So we will, like most all studies in the ALL space continue with a weight-based dosing for 22.

Kuan-Hung Lin: Got it. And any colors on the safety data from patients beyond the cash update? Thank you.

Mark Frattini: Yes. So far, we have not disclosed. We will later this year. As you know, so far, the — both products were very safe and well tolerated with no DLTs related to the cells and no graft versus host disease and no ICANS and the CRS limited to Grade 1 and 2.

Kuan-Hung Lin: Got it. Thank you for the color.

Operator: Thank you. Our next question comes from the line of Hartaj Singh with Oppenheimer. Please proceed with your question.

Unidentified Analyst: Hi everyone. Thanks for taking the questions. This is [indiscernible] on for Hartaj. We have questions for 20×22. So as we’ve talked before, it seems like this program has great potential in EU market because like less competition there. So can you elaborate to talk about that? Thanks.

André Choulika: Thank you so much for the thoughtful question. I’ll leave it to Mark.

Mark Frattini: Yes. Thank you. So yes, as you point out, there is just based on the slide availability for autologous CAR T cell therapy in the EU, it is much less than the U.S. So there is a need for this in the EU as well, obviously. And so we have opened up as I said earlier, we have sites in France and sites in Spain that are currently open, and we are obviously — we’ll be looking to open other countries as well.

Unidentified Analyst: Got it. Thank you.

Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Choulika for any final comments.

André Choulika: Well, thank you very much, everyone, for your time. It was really appreciated to have all these questions and enthusiasm, and we’re really excited by 2024 and what’s going to happen in the coming years after ’25, ’26. I think the company is within a year where things are meaningfully changing on the shape of the company. And I’ll give you a rounded roof for the next time, and I think that we’ll share more of the execution inside the company. Thank you very much, and wish you a good day.

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