Cellectis Q3 2023 Earnings Call Transcript

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November 7, 2023

There are 11 speakers on the call.

Operator

Good morning, everyone, and welcome to the Selectix Third Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please be aware that today's conference call is being recorded. I'd now like to introduce our first speaker, Arthur Strel, Chief Business Officer, you may begin.

Speaker 1

Good morning, And welcome, everyone, to Selectix's Q3 2023 corporate update and financial results conference call. Joining me on the call today with prepared remarks are Doctor. Andre Schulika, our Chief Executive Officer Doctor. Bing Wang, our Chief Financial Officer and Doctor. Mark Frutini, our Chief Medical Officer.

Speaker 1

Yesterday evening, Selectix issued a press release reporting a corporate and business update for the 3rd quarter 2023 and its financial results for the 9 month period ended September 30, 2023. As a reminder, we will make statements regarding Selecteq's financial outlook, including the sufficiency of cash to fund operations In addition to its manufacturing, regulatory and product development status and plan and product development of its licensed 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 reports, including the management report for the year ended on December 31, 2022, and subsequent filings Selectix makes with the SEC from time to time. I would now like to turn the call over to Andre.

Speaker 2

Thank you, Arthur, and good morning and thank you everyone for joining us today. Last week, we announced a strategic collaboration and investment agreement with AstraZeneca. We're very proud to initiate this partnership with one of the top leaders in the pharma space, bearing our strong commitment and ambition Cell and gene therapy. Why AstraZeneca? Because we have been very much impressed By the long term strategy in this space, backed by a strong commitment and development already made, Paving the way towards the top leadership in this arena.

Speaker 2

We strongly believe that together This is AstraZeneca that next generation of genomic medicine will be developed under our collaboration to revolutionize medicine across a number of therapeutic areas in the years to come. As part of our agreement, AstraZeneca has agreed to make an initial payment of $105,000,000 to Selectix composed of $80,000,000 equity investment in exchange of 16,000,000 Ordinary shares at $5 per share and a $25,000,000 for upfront payment under the research collaboration agreement. Selectix is also eligible To receive an additional $140,000,000 equity investment in exchange for 28,000,000 convertible preferred Shares at $5 per share subject to Selectix shareholders approval and several other conditions of closing. Now some words about the research collaboration. It's a very ambitious proposal to develop novel cell and gene therapies across We have exclusively reserved 25 genetic targets for AstraZeneca from which up to 10 novel candidate products could be explored for development.

Speaker 2

The beauty of this agreement is that our clinical stage assets, UCART T22, UCART T123 and UCART T20x22 We remain under our own ownership and control and you should expect regular updates in the advancement of these programs for us. Within the collaboration, we will leverage our cutting edge innovation and best in class manufacturing capabilities, Develop new disruptive Prologue candidates and AstraZeneca will have an option for a worldwide exclusive license on 10 of the candidate products we exercised before IND filing. Our research costs Under the collaboration, we'll be funded by AstraZeneca and we're eligible to receive an IND option fee and development, Regulatory and sales related milestone payments ranging from $70,000,000 up to $220,000,000 for each of the 10 Kandi Day products plus tiered royalties. We're very excited to get to work with AstraZeneca to leverage our capabilities and build the next generation of genomic medicines to address area of high unmet We have patient needs together. During this past Q3, Selective's innovation team excelled In releasing disruptive preclinical data on gene editing of hematopoietic stem cell gene therapy For a neurological disease, data on our proprietary tau based editor technology A multi armored allogeneic CAR T cell targeting MUC1 or triple negative breast cancer demonstrating One more time the spend and the power of our gene editing platform and to develop next generation cell and gene therapies for patients with unmet medical need.

Speaker 2

In addition, our clinical team will be presenting update of results For the Phase 1 BALY-one trial of UCART T22 and preliminary results of the NATALY-one trial evaluating UCART 20x22 in refractory and or relapsed B cell, not Hodgkin lymphoma at the American Association of Hematology Annual Meeting. But I will let Mark in a couple of minutes talk about these abstracts. However, one thing I would like to highlight and what Mark is going to present after is the importance of the know how in manufacturing. In cell therapies, nothing is more important that the fitness of the cell that will be injected to patients, the quality, the reproducibility Manufacturing is one of the game changer in the success of these therapies. This is why we have Fully internalized manufacturing, now this work is totally completed and this is why it's going to make a difference.

Speaker 2

Selectix will continue to control strictly cash burn within these difficult market environment And we will continue to focus our efforts and expenses on advancing our core clinical trials, VAL-one evaluating UCART T22, NATAL-one evaluating UCART T20 by 22 And AMOLED01 is evaluating UCAR T123. With that, I would like to turn the call over to Doctor. Marc Fratini, our Chief Medical Officer, Sue will give an overview of this clinical trial. Mark, please go ahead.

Speaker 3

Thank you, Andre. We will be presenting updated results of the Phase 1 BOLI-one trial of UCART22 in relapsedrefractory B cell Acute lymphoblastic leukemia and preliminary results for the NATALI-one trial evaluating UCART 20x22 in relapsedrefractorybcellnonhodgkin lymphoma at the American Association of Hematology 65th Annual Meeting in December. As Andre just mentioned, regarding our clinical trial VALIO-one evaluating UCART22 in relapsed or refractory B cell ALL. We have a comparison between a product manufactured This is Process 2. In vitro comparability studies suggested that UCART22 Process 2, Manufactured by Selectus Biologics is more potent than UCART-twenty two Process 1 manufactured by an outside CDMO.

Speaker 3

In June at the EHA Congress, we showed you data of patients enrolled at dose level 3 with 5,000,000 cells per kilogram with UCART22 using Process 1. Since then and as of July 1, 2023, 3 patients were enrolled into the first UCART22 UCART22P2 was administered after fludarabine, cyclophosphamide and alemtuzumab or FCA Lymphodepletion and was well tolerated. No dose limiting toxicities or immune effector cell associated neurotoxicity There was a higher preliminary response rate, 67% at dose Level 2 with 1,000,000 cells per kilogram with UCART22p2 compared to a 50% response rate with a dose 5 times higher at dose level 3 of UCART22p1 that was manufactured by an outside CDMO. UCART22 expansion was observed in the responding patients and correlated with increases in serum cytokine and inflammatory markers. The study continues to enroll patients at dose level 2i, 2,500,000 cells per kilogram with UCART22P2.

Speaker 3

We will also be presenting preliminary results of NATALI-one study Evaluating UCART20x22, the first allogeneic dual CAR T cell product in patients with relapsedrefractory B cell non Hodgkin lymphoma at the ASH meeting in December. In this case, UCART 20x22 has been fully manufactured in house by Selective at our Raleigh manufacturing plant. As of July 1, 2023, 3 patients were enrolled and treated at dose level 1. Here we are using a flat dose of 50,000,000 cells for patients Over 50 kilograms cytokine release syndrome grade 1 or 2 occurred in all patients And all CRS resolved with treatment. No immune effector cell associated neurotoxicity Our graft versus host disease was observed.

Speaker 3

There were no UCAR20x22 dose limiting toxicities And there was one CLLS-fifty 2 or alemtuzumab DLT. All patients responded at day 28 with 1 partial metabolic response and 2 complete metabolic responses in patients who had failed prior autologous CD19 CAR T cell therapy. UCAR 20 by 2022 expansion correlated with increases in serum cytokine and inflammatory marker levels as well as with cytokine release syndrome. These initial data with 100% responses at the initial dose of 50,000,000 cells per patient supports the continued study of UCART 20x22 in relapsedrefractory B cell NHL and the study continues to enroll. Lastly, our AMALY-one study evaluating UCART-one hundred and twenty three in patients with relapsed or refractory acute myelogenous With that, I would like to hand the call over to Doctor.

Speaker 3

Bing Huang, Selectus' Chief Financial Officer, for an overview of our financials for the Q3 of 2023. Bing, please go ahead.

Speaker 4

Thank you, Mark. I would like to highlight that in our financials, the cash, cash equivalents A restricted cash position of Selective, excluding Calyxt, as of September 30, 2023, was $72,000,000 compared to $95,000,000 as of December 31, 2022. This $23,000,000 difference mainly reflects $79,000,000 of cash out, which includes $23,000,000 for R and D, dollars 12,000,000 for SG and A, dollars 32,000,000 for staff costs, $8,000,000 for rent and taxes, dollars 4,000,000 of reimbursement of the PGE loan and $2,000,000 unfavorable impact on foreign exchange, partially offset by a $23,000,000 net cash inflow from a capital raise closed in February and a $21,000,000 net cash inflow from the European Investment Bank loan. A $6,000,000 of net cash received from the research tax credit refinancing, A $1,000,000 cash inflow related to the grants and refundable advance from BPI, dollars 3,000,000 of financial investments, capital gain and interest and $1,000,000 reimbursement of social charges paid on stock options and a $2,000,000 net cash inflow from licenses and other cash receipts. With cash and cash equivalents of $67,400,000 as of September 30, 2023 and the $105,000,000 from the AstraZeneca agreement, the company believes that we have sufficient resources to continue operating for at least 12 months following the consolidated financial statements publication.

Speaker 4

Additionally, the MOU contemplates that AstraZeneca will make a potential further equity investment in Selective of $140,000,000 by subscribing 2 newly created class of convertible preferred shares of Selective. If confirmed, the closing of the additional investments will remain subject to Selective's shareholder approval With a 2 thirds majority of the votes cast by voting shareholders and a clearance of such investment from the French Ministry of Economy according to the foreign direct investment branch regulation and other customary closing conditions. Concurrent with these additional €140,000,000 and our anticipated borrowing of €15,000,000 under the tranche fee Of the €40,000,000 finance contract with the European Investment Bank, the company believes that we would extend its cash runway into 2026. The closing of the proposed Calyxt merger was finalized on May 31, 2023. Consequently, Calyxt was deconsolidated and presented as discontinued operations in the financial statement only until May 31, of 2023.

Speaker 4

The net loss attributable to shareholders of Selective was 58,000,000 were $1.07 per share for the 9 months of 2023, of which $53,000,000 was attributed Selective's continuing operation compared to $79,000,000 or $1.74 per share for the 9 months ended September 30, 2022, of which $73,000,000 was attributed to Selective's continuing operations. The $21,000,000 decrease in net loss Between the 1st 9 months of 2023 2022 was primarily driven by a $14,000,000 decrease of R and D expenses, A $4,000,000 decrease of SG and A expenses and also an increase of $4,000,000 of the financial gain due to the deconsolidation of Calyxt Compensated in part by the decrease of fair value of Cytovia's note receivable and a decrease of $2,000,000 loss from the discontinued operations attributable to the shareholders of Selectix. These downward impact on the net loss were partially offset by a decrease of $1,000,000 revenue and other income. The adjusted net loss attributable to shareholders of Selectix, which excludes non cash stock based compensation expenses, was $57,000,000 or $1.05 per share in the 1st 9 month period of 2023 compared to a loss of $72,000,000 or $1.58 per share in the 1st 9 months of 2022. We are laser focused on spending our cash on developing our clinical candidates and operating our state of the art manufacturing facilities in Paris and in Raleigh.

Speaker 4

In addition, our focus on maintaining an efficient corporate infrastructure should also enable more limited growth in G and A spend. At this point, I'd like to hand it back to Andre for closing remarks.

Speaker 2

Thank you, Bing. Close out this call, I would like to reiterate how excited we are about the strategic collaboration with AstraZeneca and how much Confident we are about the continued progress of our 3 ongoing clinical trials in metallurgical malignancies as well as our continued development of our preclinical program. At Selectix, We strongly believe that our product candidates, our technology and our in house manufacturing capabilities 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 question and answers.

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. It may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from Kelly Hsieh with Jefferies.

Operator

Please go ahead. Hi, this is Dave on for Kelly Shi. Thank you for taking our question and congratulations on the updates. I have one question on UCART 20 by 2022. You showed a great result at DL1.

Operator

So my question is, do you plan to increase the enrollment sites? And how many dose level do you anticipate to study before finalizing the RP2D? Thank you.

Speaker 1

Great. Thank you very much for this first question, which will go to Mark.

Speaker 3

Hi, thanks for the question. And yes, we will we anticipate doing An escalation, obviously, and the data from the subsequent escalation will obviously determine where we Stop and call in RP2D. So right now it's to be determined with the clinical data.

Operator

Thank you. Thank you. Our next question is from the line of Gina Wong with Barclays. Please go ahead.

Speaker 5

This is Yi on Jina. So we have two questions on your clinical programs. One is that you previously guided UCARTI-one hundred and twenty three, I believe, by end of 2023. May I ask like the time line for now, would it be a slip breaker for ASH? And another question is the next step for UCARTI22.

Speaker 5

You mentioned about potential to advance to pivotal study without further dose escalation. Is that still the plan? Thank you.

Speaker 1

Great. Thank you very much for both questions. Definitely, Fomor.

Speaker 3

Thank you. So for 123, as you know, we began At ASH last year, we announced how we were remodeling the treatment program to include a 2 dose regimen, And we are continuing in that 2 dose regimen and dose escalation. So we anticipate that we will rebill clinical data at some point next year. And in terms of 'twenty two study, Yes. We in fact, we even pointed out in the abstract for ASH that we have Those escalated to 2,500,000 cells per kilo with the 22P2 product.

Speaker 3

So We will see where that data bears us out and as we move ahead.

Operator

Gina, do you have any questions?

Speaker 5

Thank you so much Maybe one last follow-up question on the AstraZeneca deal. Is there a time line that they have to select certain lead targets? And would you only get to keep it as your own like Olihold if they turn it down, turn some targets down?

Speaker 1

Sorry, I'm not sure I understood the this is Arthur. I'm not sure I understood the end of the question. But definitely, so as part of the agreement, AstraZeneca will have to choose up to 10 candidate products from a pool of 25. And then once the 10 products are selected, the remaining non selected targets will come back to us.

Speaker 5

Okay, got it. Thank you.

Operator

Thank you. Our next question It's from the line of Yigal Nochomovitz with Citi. Please go ahead.

Speaker 6

Hi, team. This is Carly on for Yigal. Thanks for Two from us. First on UCART2220 by 22, just wanted to clarify if we should Data on additional patients at ASH relative to the abstract? Or will the ASH data be focused on longer term follow-up from the patients, Just the patients included in the abstract.

Speaker 6

And then the second question is on the potential additional $140,000,000 equity investment from AstraZeneca, just wondering if you can clarify if there's a specific trigger for that from AstraZeneca's side and what the potential timing might be? Thank you.

Speaker 1

Great. So I'll hand it over to Mark for the first clinical question and then I'll take the question on the AZ deal.

Speaker 3

Thank you. Yes, in terms of the 2 abstracts that we will be presenting, we will be presenting some Follow-up on the patients described in the abstracts.

Speaker 1

Yes. On the €140,000,000 so this is subject A few closing conditions, including approval of our shareholders at a 2 third majority of the vote cast, Clearance, according to foreign direct French foreign direct investment French regulations and a couple of other customary closing conditions, We're working expeditiously to finalize this.

Speaker 6

Okay, got it. Thank you.

Operator

Thank you. Our next question is from Hartaj Singh with Oppenheimer. Please go ahead.

Speaker 7

Great. Thank you. Thanks for the update. I got two questions. One is, you're starting to show some complete responses In Valley and Natalie, I was wondering what would you view as sort of like a durability From a durability perspective, how many months of follow-up would you like to see and when you could classify these as being very durable responses, especially on the CR side.

Speaker 7

And my second question is just specific to UCART 1, 2, 3. Have you Switched over to the commercial product there also. And if not, what's the timing on that? Thank you.

Speaker 1

Thanks for both questions. And Mark, over to you.

Speaker 3

Thanks, Hartaj, for the question. So I'll start with the 123 first. And for the 123, we are still currently using the CDMO made Product for 123 and that's where we are with that right now. In terms of your first question, yes, we are definitely seeing CRs, as you pointed out, in the two studies. I think importantly, the stress for the 20 by 22 studies at the initial dose level, we did see 2 metabolic CRs and these were in patients that failed prior CD19 CAR T, in addition to several other therapies.

Speaker 3

So I think in the setting of 2019 failures, having 2 CRs is great news at this dose level. I think in terms of your question for durability, I think that remains to be seen given the line of therapy that we're in and giving the extensive therapies that these Patients have been relapsed and refractory from. I think at some point looking in the 3 to 6 month Range is not unreasonable to look for a good duration of response in these patients.

Speaker 7

Great. Thank you, Mark. Thanks for all the questions.

Operator

Thank you. Our next question is from Jack Allen with Baird. Please go ahead.

Speaker 8

Great. Thanks for taking the questions and congratulations to the team on the progress. My question is also as it relates to the ASH abstract, really impressive results out of the UCAR 2020 by 'twenty two program, at the first dose level here, I was wondering to see if the team had any comments about the need to escalate dose, Are you satisfied with the early results you're seeing here? Love to hear about that.

Speaker 3

Mark? Hi, Jack. Thanks for the question. And yes, as you point out, 3 out of 3 responders at the initial dose level. And as also you can see the safety was quite good at this dose level as well.

Speaker 3

And I think given both of those facts, we will be we will in fact be dose escalating this study Just to see where we can get at the next higher dose level. So stay tuned for that.

Speaker 8

And then just one brief follow-up. As it relates to longer follow-up on these patients, could you provide some context around when the data cut was taken for ASH and what you expect to present at the conference. And then just to clarify, we should be primarily focused on Additional data from the first three patients rather than a second dose cohort as well?

Speaker 3

Yes. So we'll be focusing on the first three patients for the poster presentation.

Speaker 8

Any thoughts on additional kind of follow-up or what kind of follow-up we could expect from those 3 patients at the conference?

Speaker 3

So we'll give some further follow-up that we have on them. So please Come by and visit us at the poster.

Speaker 1

Great. Thanks so much.

Operator

Thank you. Our next question is from Salveen Richter with Goldman Sachs. Please go ahead.

Speaker 9

Hi, this is Lydia on for Salveen. Thanks so much for taking our question. Could you just remind us of the strategy for UCART 20 by 2020 to in terms of the targeted patient population given the positive data at ASH.

Speaker 1

Thank you very much for the question. That would be for Mark.

Speaker 3

Hi. Yes, thank you for the question. So, we are this is in third line or greater that we're using this and this Prior CD19 failures are also included in this study. So that's where we're continuing.

Speaker 9

Thanks so much.

Operator

Thank you. Our next question is from the line of Silvan Toukhan with JMP Securities. Please go ahead.

Speaker 8

Hi, good morning and congrats and thanks for taking my question. My first question is, now that you have human Data with UQ22 with the product 1 and product 2, do we know what why product 2 is so much Potent, do you have any measures of like cytokines or more expansion peaks, etcetera? And then a second question is, Are there any more near term milestones associated with Allogene's anti CD70 or anti claudin 18.2 programs that you could be Getting? Thank you so much.

Speaker 1

Great. Thank you very much for both questions. I'll hand it over to Andre for the first one.

Speaker 10

Yes. Hi, Silvan. Thank you very much for the nice question, because I think that the manufacturing definitely makes a huge difference. And as Mark described in his presentation, there is Process 1 that was the process that was used at the CMO And the one we've implemented after internally there's process 2, so there's like few things that have changed.

Speaker 2

We know exactly why.

Speaker 10

One day someone asked me a question about how we do it, How we can do cells that have so much potency? And let me tell, I'm going to share the secret with you here online. So I see all the faces around me. It's awkward. Oh, I'm sorry, Andre, don't do this.

Speaker 10

I'm going to do it. Well, we've done close to 10,000 batches internally in process development. We've done and crushed and crushed and crushed And tweaked every parameter and there are hundreds of parameter. This is called experience. We are the ones that have invented the concept of allergenic CAR T.

Speaker 10

I can tell you The concept like the process didn't came out like this like from the ground. It took a long time before we got to the point where we are. And today, I think that we're probably the best on the planet to do allogeneic CAR T. As Mark said, come at our poster session at ASH, watch the expansion of the cells even at super low doses. You will see what it means That's such type of experience.

Speaker 10

And experience cannot be invented in a day. It can be transmitted, but we do not transmit these 10 years Of crushing batch after batch, small, midsize, large size batch, in GMP conditions, etcetera, up to the time we have tweaked all parameter Good. Perfection. That's the answer. And for the Allogene?

Speaker 1

Thanks, Andre. And on the Allogene question, so we definitely have a significant vested interest Analogy success, just remembering up to $410,000,000 in development and sales milestone for CD19 through our agreement with Servier and up to $2,800,000,000 in development

Operator

and sales

Speaker 1

milestones with Allogene. So we haven't disclosed the granularity of the But we'll definitely communicate that and when Allogene hits those milestones and we get the amounts in our bank.

Speaker 8

Thanks for revealing the secret sauce.

Operator

Thank you. Our next question is from the line of Yanan Zhu with Wells Fargo. Please go ahead.

Speaker 1

Hi, congrats on the progress. This is Kwan on for Yanan. So my Question is on UCAR T22. So can you give us more detail about the grade 5AE that was revealed in the abstract and how that may affect the further study contact? Thank you.

Speaker 1

Thank you for the question, and this will be for Mark.

Speaker 3

Yes. So as we revealed in the abstract, this Grade 5 event Happened after long after several couple of weeks after the day 28 assessment in this patient who had a morphologic leukemia free state. So it was bacterial infection that the investigator Related to everything, which is why it's there. So it's really not affecting You know, anything as we

Speaker 1

move ahead. Got it. And Is there a way to quantify how much of that was contributed by The Ucardi 22 itself or the linked quarter depletion? Thank you.

Speaker 3

Yes. So there's as we'll show on the poster, there's a level of Expansion that was seen with these cells by flow cytometry. At the time point of this event happened, We don't believe there were any UCART22 cells remaining. So we think that the likelihood it was less related to UCART22. This was a patient who was, again, as outlined in the abstract, was super heavily pretreated.

Speaker 3

They failed allo transplant. They failed Prior autologous CAR T times 2 infusions, they failed multi agent chemo and they also failed blinatumomab, inatumomab And venetoclax. So, the cumulative dosing of the prior chemo that they made in going into the study, Very hypocellular, explain some of the issues that developed.

Speaker 1

Got it. That's super helpful. Thank you so much.

Operator

Thank you. As there are no further questions, I would now hand the conference over to Andrei Cholika, CEO for closing comments.

Speaker 10

First of all, I would like to thank the team for helping in doing the call here. It's been a Pleasure to prepare this together. And I would like very warmly thank all the analysts that have been following the company and supporting and watching what we're doing. It's very valuable and I would like to make a special word also to our long term shareholders that has been continuously supporting the company over the And I hope that the company is going to have like a very strong end of 2023 and 2024 2025 and So, we'll come up very soon for an update on the progress. Thank you very much.

Operator

Thank you. The conference of Selectix has now concluded. Thank you for your participation. You may now disconnect your lines.

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