Allogene Therapeutics Inc (ALLO) 2018 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standby, and welcome to Allogene Therapeutics' Fourth Quarter 2018 Conference Call. (Operator Instructions) Please be aware that today's conference call is being recorded.

I would now like to turn the conference over to Christine Cassiano, Chief Communications Officer. Ms. Cassiano, please go ahead.

Thank you, operator, and good morning. Before market opened today, Allogene issued a press release to provide the corporate update and financial results for the fourth quarter and full year ended December 31, 2018. This press release is available on our website at www.allogene.com. We will also be discussing our ALLO-501 Phase I clinical trial protocol and have posted on our website a slide, which provides an overview of the trial. This can be found in the Investors section under News & Events.

We remind listeners that today's call is being webcast on our website and will be available for replay.

Joining me on the call today are Dr. David Chang, President and Chief Executive Officer; and Dr. Eric Schmidt, Chief Financial Officer.

During today's call, we will be making certain forward-looking statements. These may include statements regarding the success and timing of our ongoing and planned clinical trials, regulatory filings, future research and development efforts, manufacturing capabilities and 2019 financial guidance among other things.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended September 30, 2018, as well as our upcoming Form 10-K for the year ended December 31, 2018. You are cautioned not to place undue reliance on these forward-looking statements, and the company disclaims any obligation to update such statements.

I'll now turn the call over to Dr. David Chang.

Thank you, Christine. Good morning, and thank you all for joining us today on Allogene's first quarterly call. We will keep our scripted comments relatively brief as we look forward to any questions you may have on our ALLO-501 ALPHA trial and other business activities.

2018 was a very memorable year for us at Allogene, and we are very proud of what our team accomplished in just 10 short months, since we began the operations. From building a stellar executive management team to our successful IPO and the IND acceptance for our first clinical candidate, we believe, we are making excellent and rapid progress and we plan to continue on that trajectory.

We are 100% focused on bringing allogeneic CAR T or as we refer to them AlloCAR T therapies to market so that all appropriate patients have the opportunity to receive treatment. Every path we undertake at Allogene is aimed at achieving that goal.

While we realized that bringing AlloCAR T therapies to patients is a tall order and that many hurdles will need to be overcome before we are successful, we believe Allogene is well positioned with the people, programs, technologies and resources to pioneer the development of what we believe is the next frontier in cancer therapy.

In our cell therapy experience, we know manufacturing and the strength of the technical operations team can make the difference in successful outcomes for patients or manufacturing products in time for patients. As such, we've made this one of our top priorities, and we'll be devoting considerable time and resources to this area.

Our first step was to hire one of the best people in the industry to lead this effort, Dr. Alison Moore. Alison's vast experience in biological manufacturing and her advanced training in cell biology are well suited to the challenge of building our allogeneic. cell production capabilities.

That work is fast underway with a signed lease to build our own 118,000 square foot, state-of-the-art manufacturing facility in the East Bay for our AlloCAR T therapies. This new facility is being designed to provide GMP manufacturing for clinical supply and commercial products upon potential regulatory approval.

Now I would like to discuss progress we have made in advancing our pipeline candidates. In January of this year, the FDA cleared our IND ALLO-501 ALPHA trial in patients with relapsed/refractory non-Hodgkin's lymphoma or NHL. We are currently in the process of qualifying potential clinical sites, and we remain on track to initiate dosing in the Phase I portion of this trial in the first half of this year. The Phase I portion of the ALPHA trial is designed to assess the safety and tolerability at increasing dose levels of ALLO-501 with a goal of identifying an optimal dose of ALLO-501 for the potential Phase II portion of the study, which could be a pivotal study for BLA submission. This trial will also utilize ALLO-647, our proprietary anti-CD52 monoclonal antibody as a part of the lymphodepletion regimen.

Patient entered criteria for the ALPHA trial are similar to what we have been used in the autologous setting, and there is no requirement for HLA matching.

Specifically, we will be enrolling up to 24 patients with relapsed and refractory large B-cell lymphoma and follicular lymphoma after 2 or more lines of systemic therapy in a 3 x 3 trial design. Details of the starting cell dose and the lymphodepletion regimen can be found on the slide Christine referenced earlier in this call. Note that we initially treat patients at the starting dose of 40 million CAR T cells, which roughly equates to 500,000 cells per kilogram. It is possible that higher-dose cohort may be required to demonstrate the optimal efficacy of ALLO-501.

In addition to identifying an optimal dose of ALLO-501, with ALLO-647 as part of the lymphodepletion regimen, the ALPHA trial should allow us to better understand the potential durability of response to ALLO-501. This is an important consideration in non-Hodgkin's lymphoma, where autologous CAR T therapy has demonstrated the potential to induce a complete remission in nearly 40% of patients treated at the 2-year follow-up.

If the study proceeds as planned, we anticipate reporting initial clinical data from this trial at a medical meeting in the first half of 2020.

Before I turn the call over to Eric, I would also like to provide a quick update on both UCART19 and ALLO-715. We continue to support our partner, Servier, advancing UCART19 in pediatric and adult ALL. We are pleased with a pooled analysis from PALL and CALM studies reported at ASH last year.

Based on our last updates from Servier, they continued to work through their supply issues and now project the Phase II trials will begin in 2020.

Finally, for ALLO-715, which targets BCMA for the treatment of patients with relapsed and refractory multiple myeloma, we remain on track to submit an IND to the FDA in time to allow us to initiate a Phase I clinical study later this year.

I will now pass the call over to Eric.

Thank you, David. The press release we issued today provides an overview of our fourth quarter and year-end financial results. We will be providing additional details in our 10-K, which will be filed with the SEC. Following our equity offerings of 2018, we're in a strong financial position and are well capitalized to further advance our clinical development programs and support the manufacturing build-out David mentioned earlier on the call.

As of December 31, 2018, Allogene had cash, cash equivalents and investments totaling $721.4 million. In the fourth quarter, our research and development expenses were $18.5 million, which includes $1.3 million of noncash stock-based compensation expense.

For the full year 2018, research and development expenses were $151.9 million, which includes $109.4 million related to the asset acquisition from Pfizer. The total research and development expense for the year includes $1.7 million of noncash stock-based compensation expense.

General and administrative expenses were $14.5 million for the fourth quarter of 2018, which includes $4.6 million of noncash stock-based compensation expense.

For the full year 2018, G&A expenses were $41 million, which includes $16.9 million of noncash stock-based compensation expense.

Our net loss for the fourth quarter of 2018 was $30.5 million or $0.37 per share, including noncash stock-based compensation expense of $5.9 million. For the full year 2018, our net loss was $211.5 million or $7.31 per share, including noncash stock-based compensation expense of $18.6 million.

Turning now to financial guidance for 2019. We expect our full year 2019 net losses to be between $200 million and $210 million. This includes an estimated noncash stock-based compensation expense of $45 million to $50 million and excludes any impact from potential business development activities. And for those of you modeling Allogene's financials, please note that while we have 121.5 million shares outstanding, our GAAP loss per share calculation will exclude those shares that remain subject to vesting conditions. At the beginning of 2019, the number of shares outstanding that will be excluded from our GAAP loss per share calculation, which is approximately 25 million.

With that, operator, I would now like to turn the call over to questions.

(Operator Instructions) Our first question comes from Salveen Richter with Goldman Sachs.

Two for me. Just could you remind us of the changes to the manufacturing processes with ALLO-501 versus UCART19? And then secondly, how many sites are you including in this trial, and how competitive is enrollment from these sites just given the number of CAR T trials in NHL there ongoing?

Salveen, thanks for those 2 questions. This is David Chang. And let me take the -- actually, let me take the both of those questions. In terms of ALLO-501, as we have previously communicated, the molecular construct of ALLO-501 is nearly identical to UCART19. What really has changed is the manufacturing process. So if I can just sidetrack about what happens in the cell manufacturing and for that matter, manufacturing in general, there are many different aspects that one has to consider. It's not just taking the cells into the laboratory and doing a few things and how you have the cell products. There are whole issue around the supply chain that you have to take care of. This includes the raw materials, viral vectors and any proprietary reagents that goes into the manufacturing. And then there is a stepwise manufacturing process that also includes the assays in between -- intermediate assays to understand what's going on during the entire manufacturing process. And then lastly, when you finally produce a material, you have to go through all the release tests and all that. So we haven't really made, what I would consider as a large big change, but incrementally, in each of those area, we have improved and end result is that manufacturing process is more robust and consistent. And as we have previously said, currently, we estimate, based on the production runs that we have already done, that we can treat up to about 100 patients from each manufacturing run. And we believe that this yield will continue to go up as we introduce the additional improvement to the manufacturing. So the second question. So we are in the midst of site activation. This is a Phase I study. They will enroll patients in a controlled manner. As we have said, the starting dose of the Phase I is approximately 40 million cells per patients. And we will do some dose exploration as well as trying to optimize the lymphodepletion before we embark on the Phase II study. We expect the number of sites that we will need will range somewhere between 6 to 8. And so far, our interactions with the investigative site has been extremely positive. We will see once we open up the study and enrolling patients. But we expect in terms of identifying patients, we will be fine. I'd just say, [we're a little bit off guard] there because we haven't actually enrolled any patients as of today.

Our next question comes from Biren Amin with Jefferies.

I guess, David, let me just start on ALLO-647. Do you need to get this IND cleared before you initiate the 501 study?

Biren, thanks for that question. The long answer -- short answer is, yes. And another short answer is everything has been taken care of. And in the 501 study, we will be using ALLO-647 as the part of the lymphodepletion. So for those who may not know what ALLO-647 is, this is our own proprietary anti-CD52 antibody. And when -- as we presented the latest update of UCART19 study at ASH 2018, it's a small set of patients, but what we have learned is that for the AlloCAR T cells to expand, you require more than the conventional Flu/Cy based on lymphodepletion. In patients who only received Flu/Cy, we have not seen much cell expansion or the response, whereas patients who received Flu/Cy plus anti-CD52 antibody, we have consistently seen both cell expansion as well as very robust responses.

Okay. And then David, as I look at the study design for the ALPHA study and the lymphodepletion regimen that you're using, and I compare that to the UCART19 CALM, the adult ALL study, I think fludarabine, you're using the same regimen as CALM. But for cyclophosphamide, I think there's a change. I think you're using a lower dose of cyclophosphamide on a daily basis. I think CALM used 500 versus, I think, ALPHA is using 300. And so I want to kind of understand the rationale behind that change? And then how should we think about the alemtuzumab dose, where CALM used 1 milligram per kilogram, and I think you're using 13 milligrams daily for 3 days?

Yes, great question. I'm impressed with the attention to the details that you're placing on our study design. There are minor modifications that we are introducing to the lymphodepletion. Some of this is based on what we have learned from others, and some of the change has been introduced based on the pharmacokinetic modeling. And at this point, we believe, we have enough information to make these minor adjustment notably, bringing down dose -- the dose of the cyclophosphamide, and also bringing down the dose of anti-CD52 antibody. And just to correct, in the study we will be using our own proprietary anti-CD52 antibody in ALLO-647 and not alemtuzumab. And so these are, sort of, the kind of lymphodepletion exploration that we'll be doing, doing a little bit. And as this is a Phase I, as -- and as we learned the cell expansion and other sort of efficacy-related outcomes, we can certainly adjust some of these lymphodepletion as well as cell doses to really optimize what we need to do in our planned Phase II study.

Okay. And then maybe just the last question. I think you mentioned that the Phase II trials, so UCART19 will start now in 2020. What -- I guess, can you just provide color on what Servier need to rectify in the manufacturing process to get this back on track?

Yes, we work closely with Servier and try to advise and provide some input into their both manufacturing as well as development programs. And it is a partnered program. Some of the details, it would defer to Servier to comment, and it really has to do -- the kind of things that I talked earlier in response to Salveen's question, what needs to be done in manufacturing. It is not anything major, but these little things really adds up to a lot of different work. For example, if you have to improve an assay, you got to develop the assay, validate the assay and then actually start -- before you can use it, all those things do take time. I think a lot of work is ongoing right now. And I feel confident that in 2020, they'll be able to move their UCART19 program into Phase II.

Our next question comes from Cory Kasimov with JPMorgan.

Just a couple of them. First for 501, with regards to manufacturing, can just kind of update us where you are in terms of doses produced? And do you have enough product at this point for the Phase I, II trials? Or is there still more manufacturing that needs to take place? Then I have a follow-up after that.

Okay. So Cory, in terms of manufacturing of ALLO-501, we will continue to manufacture additional batches. But as I've said, each batch at this point can produce upwards -- enough material to treat upwards 100 patients. So in terms of do we have enough material to complete the Phase I study of 24 patients, definitely. But we're also planning other things, so additional production is currently ongoing.

Okay. And then another question is, what do you expect the typical hospitals stay to be for patients post cell infusion with a regimen utilizing the anti-CD52 antibody?

Great question. We have not studied ALLO-501 in non-Hodgkin's lymphoma patients. In terms of hospitalization, there are so many different things that factors in, including the disease and the conditions that patients are in, sometimes the lymphodepletion, which can cause neutropenia, it can result in hospitalization, and which is one of the reasons that we are trying to really optimize the chemotherapy dosing, the lymphodepletion. And also in Phase I, there are sample collections that require patients to be -- if -- even if they are outside, our patient need to come into the hospital pretty frequently. So the protocol will require a few days of hospitalization as part of the Phase I. And in terms of exactly how long they will need to stay in the hospital will be determined based on our Phase I experience. And we estimate based on what others have seen in non-Hodgkin's lymphoma, the hospitalization could be anywhere between 5 days to 14 days.

Our next question come from Phil Nadeau with Cowen and Company.

First one on the dose in the trial. You said the starting dose is 40 x 10 to the 6 cells. Thinking of the CALM study, 2 dose levels that were tested were either 6 x 10 to the 6 or 60 x 10 to the 6. So your 40 starting dose is somewhere in between. How do you arrive on that dose? What's the rationale for 40 versus one of the doses that Servier tested in CALM?

So because we have some experience coming from the UCART19, we were trying to come up with a starting dose that is reasonable with a chance of efficacy even in the Phase I study and then progress as we go up to the higher dose. And as I've said, we are testing ALLO-501 in an indication that has not been previously tested. So what will be the optimal dose that we decide for the Phase II will depend on the -- on what we see during the Phase I -- in the Phase I study.

Got it. That make sense. And second, on the dose of the anti-CD52, you are using 13 milligrams per day times 3 days. I think CALM used 1 milligram per kilogram. And then in response to Biren's question, you said you backed off on the anti-CD52 dose a little bit. Can you talk how those 2 dose compare a bit more, and then given how important it seems to be for cell expansion? Why did you decide to back off on the dose a bit?

It's a lot to do with the pharmacokinetic modeling. We went through some of the early available information about pharmacokinetics, anti-CD52 antibody as well as based on some of the modeling that we have done in the preclinical study. I mean Phase I is really a study where you can test different -- explore different doses. I mean, in my previous experience, when I was running another CD19 CAR T program, we spent a considerable time trying to optimize the lymphodepletion regimen, and at the end, that really proved -- it was proven to be the right thing to do because once we started the Phase II study, we were able to stay on the same lymphodepletion as well as same cell dose throughout the study, that -- which allowed the study to be completed in a relatively short period of time.

Okay. And for -- I guess, I'm curious on the conversion. So for an average 80-kilogram adult, are they going to get about half the anti-CD52 on your protocol versus what was used in CALM?

That will be -- let's see, roughly, I mean, maybe, slightly less than half. So it's about -- your estimate is correct.

Okay, great. That's helpful. And then last -- just a follow-up question on Servier. You mentioned the Phase II trials are going to start in 2020. But are they able to enroll patients now? Do they expect to enroll any more patients in CALM or PALL during 2019 or are those trials now virtually complete in the next time to enroll patients will be in the Phase II in 2020?

Yes, right now, the board comment, studies are active, but not enrolling the patients. And in terms of enrolling additional patients in 2019, I mean, that I think we need to sort of see how some of the improvement that are currently being investigated pans out.

Our next question comes from Mark Breidenbach with Oppenheimer.

Just one more on the lymphodepletion regimen. You mentioned that the possibility of being able to modulate or alter the concentrations or doses of some of the free agents being used in lymphodepletion, but can we assume for the first 24 patients were fixed that the doses that are listed in your slides?

Mark, thanks for that, very important question. Phase I study, right now, the design is as detailed in the slide that Christine has shared as part of this earnings call. In terms of our ability to make adjustment, and that is just the nature of the Phase I protocols. I mean the beauty of doing a Phase I study is, based on the result, especially around the safety, and also we will be able to assess cell expansion relatively quickly. And those will give us an opportunity to make some changes if that is seemed to be -- they just view it as needed. And I would say, during this call, I'm really impressed and amazed about the attention to the lymphodepletion. And a few years ago, people were sort of very dismissive of lymphodepletion and some not even considering lymphodepletion and all that. But as you know, lymphodepletion is part of the -- any cell therapy. People have shown repeatedly without their lymphodepletion, you don't get much cell expansion. When we go from the autologous to allogeneic, there is additional need to further augment the lymphodepletion. And that's really where ALLO-647 is coming in. And what we've seen is with the anti-CD52 antibody, we can get a deeper lymphodepletion that can also be more lasting. So that certainly seemed to allow AlloCAR T cells to expand and persist for the desired length of time. So certainly, we will keep updating you on the progress of Phase I study. And as we said in the prepared transcript, we expect the data to be available in 2020.

And would you say that there's any preclinical evidence or otherwise, suggesting you might be able to eventually get away with a CD52 only lymphodepletion regimen and exclude Cy/Flu altogether?

Well, great question. This is probably, I think you're the first one to ever ask that question. Let's say, I will not exclude that possibility and let's stay -- stay tuned. We will be looking at some of those elements in many of our planned ongoing study -- planned studies, not just in the 501 study, but 715 study. Obviously, [AlloCAR T], they will give us another opportunity to look at the lymphodepletion as a way to optimizing the AlloCAR T therapy.

This concludes the Q&A session. I would now like to turn the call back over to management for any additional comments.

Well. Thank you for your time today. We are very pleased with the progress we have made to date. And we'd like to especially thank all the employees who make up Allogene. I've been amazed about what small group of people can do and have done over such a short period of time. And without them, the success we've achieved so far would not have been possible. And we certainly look forward updating you over the next coming months, as we advance our planned 2019 milestones. And I thank you for your continued support. Operator, you may now disconnect.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect, and have a wonderful day.