ALLO - NASDAQ

Thank you for standing by, and Welcome to Allogene Therapeutics First Quarter 2022 Conference Call [Operator Instructions]. I would now like to turn the call over to Christine Cassiano, Chief Communications Officer. Please go ahead.

Thank you, operator, and welcome to all who have joined this call. After the market closed today, Allogene issued a press release that provides a business update and financial results for the first quarter of 2022. This press release and today's webcast are both available on our Web site. As a reminder for this call, we ask that all keep their questions to one per person. Joining me on the call today are Dr. David Chang, President and Chief Executive Officer; Dr. Rafael Amado, Executive Vice President of Research and Development and Chief Medical 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 advance clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities and 2022 financial guidance, among other things. These forward-looking statements are based on current information, assumptions and expectations that are subject to change. A description of potential risks can be found in our earnings press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and Allogene disclaims any obligation to update these statements. I'll now turn the call over to David.

Thank you, Christine, and good afternoon. This month marks the fourth anniversary of Allogene‘s Inception. We founded Allogene with a belief that for cell therapy to truly change the landscape, it would need to be industrialized. Today, as we report on the first quarter of 2022, I am immensely proud of all we have accomplished in the last four years. This includes delivering proof of concept data from our CD-19 and BCMA programs that is differentiated in the field, including the most comprehensive set of Allogene CAR-T allogeneic data demonstrating durability, as well as operationalizing Cell Forge 1. Advancing our AlloCAR T into solid tumors, progressing multiple clinical programs with each testing innovative concepts that have the potential show to fuel the growth of allogeneic CAR-T and most importantly, bringing our lead ALLO CAR-T product candidates to a cusp of a pivotal trial. We are proud to have treated more patients with our AlloCAR T candidates than any other player in the field. But the true promise of allogeneic therepay comes not from treating tens or even hundreds of patients in clinical trials, but from being able to serve tens of thousands of patients in a commercial setting. With each advance we make in manufacturing, clinical development, research and execution, we are one step closer to achieving our vision of creating a new reality for patients, a reality in which all eligible patients can access this important modality. As someone who has had the privilege of playing a role in the development of autologous CAR-T therapy, I am proud of the progress the field is continuously making. Just last month, the first autologous CAR-T therapy was approved by the FDA as a second line treatment for adults with large B celll lymphoma that is resistant to initial therapy or relapsed within one year of the start of the frontline treatment. This treatment is also the first CAR-T therapy to receive a national comprehensive cancer network category one recommendation based on high level of clinical evidence that the therapy is appropriate. In February, the FDA approved the second BCMA directed or autologous CAR-T therapy for patients with relapsed or refractory multiple myeloma. These are meaningful advances that will change the practice of medicine. And we are pleased to see the increase in the number of patients who can potentially benefit from CAR-T therapy. But broader treatment recommendation create inherent challenges for therapists that must be manufactured and delivered on an individual patient basis. The logistical challenges and cost of manufacturing patient by patient, as well as waiting times and potential for manufacture failure must all be addressed in order for the field to move forward. Markets like second line large B cell lymphoma and relapsed refractory multiple myeloma are large, consisting of many thousands of potentially suitable patients. Autologus therapies have simply not been able to keep up with demand. Sadly, no matter how efficacious an autologous CAR-T therapy may be, it’s benefit do not extend to those patients who elect and leave. The recent approval and expected approval of additional indications will place more pressure on the supply bottleneck. Autologous companies are building up manufacturing capacity in response to growing demand but creating ready, available and scalable supply with personalized therapies simply isn't possible when production runs need to be individually tailored. For an autologous therapy to serve 25,000 patients, it must successfully execute 25,000 manufacturing runs. The most efficient way to meet such demand is an allogeneic CAR-T product, which also provides the promise of growing the market. Based on our experience with ALLO-501A, we project that at scale we can manufacture approximately 20,000 patient doses annually and reduce the number of required manufacturing runs hundred fold as compared to autologous CAR-T therapies, while importantly, delivering this product on demand to any eligible patient in need. We think this type of step function improvement in both efficiency in production and speed of treatment will be a requisite for treating the large number of patients who stand to benefit from CAR-T therapy. We recently conducted a virtual unveiling of our new manufacturing facility Cell Forge 1 or CF-1 in Newark, California. From the beginning, we knew that controlling the production of our AlloCAR T product would be key to our ability to deliver off the shelf CAR-T product faster, more reliably and at greater scale. Hence our decision to build out our own cell manufacturing facility at an early time point. CF-1 was built to support clinical and commercial manufacturing, analytical testing and the distribution of our cell therapy products with a flexibility that would allow optimization of all steps in the manufacturing process and incorporation of new learnings for next generation of AlloCAR T products. Thank you for those who participated in this facility virtual and daily. In this case, I truly believe a picture is worth a thousand words, and our virtual event provided powerful visualizations of the unique aspects of our facility design. And based on the feedback, we are thrilled so many of you found this event to be insightful and highly educational. On the clinical front, as most are aware, we properly resumed clinical study activities after the FDA lifted our clinical hold early this year. We are actively enrolling patients in our trials for ALLO-715 and ALLO-605 in relapsed refractory multiple myeloma and ALLO-316 in advanced or metastatic renal cell carcinoma. We have also chosen to continue enrollment in our Phase 1 study of ALLO-501A in advance of initiating our pivotal trial that is projected to start midyear. We are completing CMC activities that should enable us to initiate the pivotal program using materials produced at CF-1. We view this as strategically important and a major competitive advantage that could reduce timeline to BLA filing and potential FDA approval. Lastly, I would like to take few minutes to welcome Susan Lundeen, our new Chief People Officer, to our senior leadership team. In this newly created position at Allogene, Susan will oversee our human resources efforts as we scale our teams in support of advancing our pipeline, a breadth of experience in designing and implementing systems and strategies to support companies as they transition for from development to commercial stage will be key to our success. Thank you for joining us today. We are grateful for your support as our vision for the future of allogeneic CAR-T continues to materialize with each patients we treat. I'll now turn the call over to Rafael for further updates on our research and development activities.

Thank you, David. Our clinical teams have been incredibly engaged with clinical trial sites and investigators as we enroll patients across four active studies, UNIVERSAL for ALLO-715 and IGNITE ALLO-605 in relapse or refractory multiple myeloma, TRAVERSE for ALLO-316 in renal cell carcinoma and the extended Phase 1 portion of the Alpha 2 trial for ALLO-501 in relapse or refractory large B cell lymphoma. We are keenly focused on initiating our pivotal trial on ALLO-501A in third line large B cell lymphoma around the middle of this year. Given ongoing FDA discussions directed at finalizing clinical trial design, chemistry, manufacturing and controls requirements and the competitive nature of the field, we will share details about the single arm study at the time of initiation. In the meantime and as noted by David, we'll continue to enroll in the Phase 1 portion of the study to offer ALLO-501A to patients in need. Separate from Alpha 2 pivotal trial, we are preparing to launch the EXPAND trial to support registration of ALLO-647, our proprietary anti-CD52 monoclonal antibody. EXPAND is designed to establish the contribution of ALLO-647 to the lymphodepletion rate. We deploy ALLO-647 as part of our early lymphodepletion regimen in order to enable enhanced expansion and persistence of AlloCAR T cells, and we have shown a strong correlation between serum concentrations of ALLO-647 and the likelihood of clinical response. Based on this data, we believe this trial will not only result in a positive outcome but also competitively differentiate our platform by demonstrating that ALLO-647 contributes to superior outcomes. In particular, we believe the rate and durability of responses demonstrated to date with ALLO-501A is in part related to the degree of lymphodepletion enabled by the use of ALLO-647, which differentiates our platform from that of others in the allergenic field. To that end, we do intend to have an update on longer term follow up from the Alpha studies by the end of the year. Our BCMA program is the first and only AlloCAR T BCMA program to generate clear proof-of-concept data. Data from the UNIVERSAL trial on ALLO-715 continue to be well received by investigators, and we are optimistic that we will have a competitive product for the treatment of relapse refractory multiple myeloma. As David mentioned, there is tremendous unmet need in myeloma. And despite the recent approvals of autologous CAR-T therapies, there remains strong interest in a product that can be delivering days and without need of bridging chemotherapy. Our approach to myeloma gives us four shots on wall, which our first ALLO-715 as a monotherapy already demonstrating a profile that appears attractive relative to that of ABECMA and a proof of autologous CAR-T therapies. We are also evaluating ALLO-715 utilizing consolidated dosing and in combination with SpringWorks Therapeutics investigational gamma-secretase inhibitor, Nirogacestat. Lastly, ALLO-605 our first TurboCAR candidate is in Phase 1 evaluation. As you may recall, TurboCARs are designed to provide selective programmable cytokines signaling to CAR T cells to counter T cell exhaustion, improve T-cell function and potency and potentially reduce cell dose requirements. Just last week, ALLO-605 was granted orphan drug designation by the FDA. Notably, in March, we announced the publication of preclinical results in cancer research communications, which demonstrated strong evidence of the superior long-term myeloma killing activity of allogeneic anti BCMA CAR-T cells manufacturing from healthy donors compared with anti BCMA CAR-T cells from patients with multiple myeloma. We intend to provide a holistic update on our BCMA program by the end of the year. We remain eager to better understand the potential of our AlloCAR T in solid tumors. Our first candidate, ALLO-316 targeting CD-70 for the treatment of advanced or metastatic clear cell renal cell carcinoma is proceeding to Phase 1 dose escalation. Last month, we presented preclinical data, the 2022 American Association for Cancer Research Annual Meeting, which supports the clinical evaluation of ALLO-316 for the treatment of patients with renal cell carcinoma and other CD-70 expressing tumors. The finding simultaneously published in cancer research followed our announcement in March that the FDA granted ALLO-316 Fast Track designation based on its potential to address the unmet need for patients with renal cell carcinoma who have failed standard therapies. Metastatic solid tumors have historically been a challenge regardless of treatment modality and a five year survival rate for patients with advanced kidney cancer is less than 15%, creating a necessity for scientific innovation. While we still have a long road ahead of us, we continue to make progress and look forward to generating data from our ongoing Phase 1 TRAVERSE trial as we plan for the testing of ALLO-316 in other CD-70 expressing tumors types. In addition to advancing our clinical work, our research teams are making good progress progressing multiple preclinical candidates and innovative technologies. We expect these to ensure Allogene’s leadership position in the field of allogeneic CAR-Ts for years to come. I'd like to now turn the call over to Eric for an update on our financials.

Thank you, Rafael, and good afternoon, everyone. The current fair market for biotech has been long and steep. This is truly a time where experience is critical. At Allogene, we are very fortunate that our leadership team has weathered such markets before and that we have the financial strength to weather the current downturn. We have a strong balance sheet and a sizable cash runway that should allow us to focus on execution as we advance multiple potentially first and best in class AlloCAR T candidates through pivotal trials. We ended the quarter with $733 million in cash, cash equivalents and investments. In the first quarter of 2022, our research and development expenses were $60.2 million, which includes $11.1 million of non-cash stock based compensation expense. General and administrative expenses were $19.9 million for the first quarter of 2022, which includes $11.2 million of noncash stock based compensation expense. Our net loss for the first quarter of 2022 was $79.9 million or $0.56 per share, including non-cash stock based compensation expense of $22.3 million. We continue to expect our full year 2022 operating expenses to be between $360 million and $390 million. This includes an estimated non-cash stock based compensation expense of $90 million to $100 million and excludes any impact from potential business development activities. With that, we will now open the call for your questions.

[Operator Instructions] And our first question comes from Tyler Van Buren from Cowen.

So there's a continuous focus, of course, on comparing your AlloCAR T data to the autologous data for the approved products. But can you just remind us what exactly you need to show in the pivotal ALLO-501A trial for approval? And just as a quick follow up, when ALLO-501 reaches the market, is the goal to focus on patients who don't have access to autologous products where the low hanging fruit, or are you just as focused on competing head-to-head with the autologous products?

In general, we are incredibly pleased by the data that we've generated thus far. And it was last presented at ASH into 2021. You could see the response rates, you could see the durability showing 14 complete responders stay at home were still in complete response. And of all the patients that have had an opportunity to be followed for six months, they were all still in complete response and some of them are [Technical Difficulty]. So we think that there is comparable durability and complete response. And then the 60 profile of the product actually with regards to ICANs and CRS, particularly Grade 3 and beyond is actually very benign comparable infection rate. So I think regarding your premise, we think that these products are going to be comparable to autologous. And so we're not looking for the niche of patients that cannot be treated with autologous, we’re looking to really establish cases of therapy that can be off the shelf and treat everybody that needs it within a very short period of time, and really transform the way that cell therapy is used today.

And our next question comes from Michael Yee from Jeffries.

This is [Yi Chi] on for Mike. So what are the dating steps to starting the pivotal Phase 2 DLBCL study and what are like still the manufacturing things that need to be signed off? What are the limiting steps and can you give us some additional visibility into these things? And is there any difference now than between the tight days where other days when people didn't have issues starting a pivotal study?

We won't be giving any play by play details other than to say that ALLO-501A pivotal study is on schedule to start mid-2022. And as we have commented in the prepared remarks, we are completing CMC activities that should enable us to initiate the pivotal studies using commercial ready materials produced at Cell Forge 1, which we believe is of strategic importance and competitive advantage. Our goal obviously is to position ALLO-501A to be the first allogeneic CAR-T products to gain approval.

And our next question comes from Cory Kasimov from JP Morgan.

I wanted to ask about trial design for Alpha 2. And is consolidation therapy going to be standard for all patients or will you look to have a robust sample with and without, and kind of how do you determine that, the appropriate time to institute consolidation therapy?

We treated I think more patients than one any else in large T cell lymphoma with various regimens and schedules. And we have a wealth of data not just clinical but also translational. And this has allowed us to go into deep analysis to really look into what is the most favorable regimen. Because of the competitive nature of this field, we're not reviewing these and other details of the Phase 1 study until the study starts. But we are very confident that we do not need any more information to actually come up with the dosing and schedule that we're going to use. And therefore, the study with regards to the design and the dosing is already set and ready to start in the middle of the year.

And our next question comes from Salveen Richter from Goldman Sachs.

How comfortable or confident are you that you’ll know how to proceed with the BCMA program with all your data by year end?

We actually are very pleased by the pace of our BCMA program, you know about our data at ASH, which resemble very much the data with Abecma, we’re using 320 million cells where we had over 20 patients worth of data with responses upwards of 70% and VGPR+ in the 46% range, and this was relatively early data. We continue to follow these patients. The median follow up is obviously increasing and we look forward to giving an update towards the end of the year. But as you know, we continue to look for ways to improve this data in addition to seeing what's happening with the patients that we've treated thus far. We mentioned that 605, which is our TurboCAR, which is enrolling now after the cohort listed, and we are also using nirogacestat as well as consolidation to look at outcomes. So everything that we are hearing from investigators is that we've got a profile that is actually worthy of pursuing in pivotal studies. But given the competitive nature of the field, we want to actually be able to position this with the optimal benefit risk profile. So that's why we're looking at this other modalities of treatment. And with regards to whether we're confident to make a decision by the end of the year, the answer is yes, approval is proceeding briskly and we are confident that we will have the data to make the decision.

And our next question comes from John Newman from Canaccord.

My one question is given you’re intending to use commercial ready product from Cell Forge in your pivotal study. Do you have any plans at all to work on the phenotype of the product, maybe to push that more towards younger memory type cells, or are you happy with the current formulation from that aspect?

I have to say that having been involved in cell therapy manufacturing for some time, I'm extremely proud of what the team at Allogene has done. I mean, this is of course many different -- in different aspect of manufacturing, not just manufacturing the cells but analytic assay development and deployment, continuously improving the manufacturing process and also taking care of all the supply chain issues, including distribution of AlloCAR T products to multiple clinical sites. Your question around the cell phenotype we get asked quite a lot. But we have looked at this in multiple different ways. And what we are finding is studying with a healthy donor cells, we end up with cell products that generally has much so-called juvenile phenotype either central memory or sometimes naive cells constituting the majority of the cells. We will certainly continue to look for additional ways to improve the quality of the cell products, as well as the yield of manufactured products. But as for the cell phenotype, we are at a pretty comfortable place and nothing will stop us from moving forward into the pivotal program using the manufactured cells coming from CF-1.

And our next question comes from Mark Breidenbach from Oppenheimer.

This is Jacqueline for Mark. So a couple questions on the EXPAND study. Does the pivotal Phase 2 portion of Alpha 2 have to start enrolling before the EXPAND can begin? Like instead of enrolling more patients in the Phase 1 portion of Alpha 2, could they instead be redirected into the EXPAND study?

The EXPAND study is going to start after the Alpha 2 study. The Alpha 2 study obviously is the registration trial for 501A, the most important trial of the two. Obviously, we need the codevelopment of ALLO-647. And just to remind us on the line that may not be as familiar. This is a study that is really isolating the effect of 647 and therefore, randomized [cladribine] and cyclophosphamide to fludarabine and cyclophosphamide in 647. It is a relatively small study. We have a wealth of translational data that indicates that there is a dose dependent degree of lymphodepletion that correlates with expansion, that correlates with clinical outcomes. There is data out there from other sponsors where they haven't used anti CD52 antibody, at least nine patients worth of data from programs in anti CD-19 and anti CD-22, showing no expansion whatsoever and no responses. So I think, the fact that lymphodepletion and optimization with an agent like an anti CD52 antibody is required, I don't think there's much doubt of that. So it is going to be randomized, because we need that information and it will start after the 501A single arm study starts. So this is sort of the cadency that we continued that we're going to follow this year, finish the Phase 1 study, the 501A first and then EXPAND.

And our next question comes from Luca Issi from RBC Capital.

Maybe one on EXPAND. Can you just talk about how you're thinking about the primary end point for that trial? Do you just need to show like higher T cell expansion, or do you actually need to show better efficacy versus traditional lymphodepletion? And then if I may, I know you mentioned in the past the 501A and 647 will ultimately be approved simultaneously kind of similar to IL-6 and your just called it back in the day. But do they require two separate BLA or can you have one BLA for both combined?

I think in terms of the endpoint, I'm going to sort of reserve the answer until the study opens. These are discussions that we've had with the agency and that finalized and we know well what needs to happen. With regards to -- I mean, it is a lymphodepleting agent but the actual endpoint we will reveal once we talk about the design of the study in more detail. With regards to how we're going to register this, I think we've mentioned in the past that it's sort of codevelopment, so each one of the agents we’ll require is own BLA and that's the pathway that we intend to follow.

And our next question comes from Reni Benjamin from JMP Securities.

I just want to talk a little bit about ALLO-316. You guys had some interesting preclinical data at AACR, showing that these cells didn't undergo [fratricide]. And I'm just trying to understand a little bit better this whole idea of masking and how -- while masking might protect and help with the longevity of the cells, how it might -- could it impact efficacy as well? And then -- or do we just need to kind of see how things progress in the clinical trials? So just love to get your thoughts based on some of the mechanisms that were uncovered at AACR.

It is, I think, a fascinating story. The team tested a number of CARs and obviously, fratricide is -- it's a problem with anti CD70, because as you activate the cells to grow them and make sufficient cells to treat patients, they start expressing CD70 and therefore, the cells the CAR pocket of cells like then, and there's cytotoxicity to those cells. So you essentially are unable to produce these cells. And so some have resorted to actually knocking out CD70, which includes another gene edit, which has its own complexities. Our team opted for a CAR that is able to actually mask the CD70 epitope so that the neighboring cells are not able to encounter CD70 receptor and therefore light those cells. Now your question is what happens in vivo. This masking occurs during manufacturing, then once the cells are in circulation, we believe that the epitopes that are exposed in the CD70 positive cells that could be targeted by the CAR pocketed cells. And this is probably dose escalatory in terms of how many cells are -- how many epitodes are covered versus pre and exposed. Obviously, it's very early to know what that's going to show, because we're still in dose escalation. But we are confident that this masking will allow us to produce the product and at the same time have an effect.

And our next question comes from Kalpit Patel from B. Riley.

You mentioned approval of Axi-cel in the second line treatment for B cell lymphoma. I guess how are you thinking about the potential impact that this approval would have on the pool of patients that would be eligible to receive an allogeneic CAR-T in the third line setting? Is there a percentage -- or is there a number in mind that you have internally discussed?

It's a good one and one that we are actually frequently asked, so appreciate the opportunity to address it here. These are game changing results that we're seeing with Yescarta and Breyanzi in the second line setting and certainly, we expect them to have practice changing implications. But even five years after the launch of these products and similarly game changing results in third line LBCL, only a very small minority of appropriate third line patients are receiving CAR-T therapy. I think our market research suggests between 20% and 30% of all third line patients are getting therapy. So it's obviously going to take some time before these agents move upfront into the second line setting. And I think that time really in many ways reflects the complexity of delivering an autologous product. So obviously with an off the shelf product we think we're going to do much better in terms of our penetration, go to the market and certainly treat patients more rapidly who need on demand treatment.

And our next question comes from Anand Sankar from Truist.

This is Anand Sankar for Asthika. While the near term priority is on the pivotal Alpha 2 study, when do you guys actually plan to start rolling out studies in second line LBCL, and what specific patient subgroups do you think would make the most sense to target first?

So we are -- obviously the potential movement in second line, although we think that this is going to be slow and that there's still going to be sufficient number of patients that David just alluded to in the relapse refractory setting. But given the fact that these products are so active in second line, we intend to move the product into second line therapy as well. Obviously, we have a total order to get two clinical trials, clinical studies standing this year, the EXPAND trial, as well as the Alpha 2, but very shortly after we intend to start the second line study as well. So stay tuned to the cadency of our studies. This is something that we will be doing and will be following shortly the pivotal trials in relapse refractory.

And our next question comes from Raju Prasad from William Blair.

We get a lot of questions on kind of the vector supply for some of the autologous therapies. And obviously, given the fact that you're talking about 20,000 doses annually at scale with Cell Forge 1. I was just kind of curious how you're viewing kind of the potential competition with autologous products that might be having vector supply issues and how you kind of view that from a potential competitive perspective?

I mean, the vector as well as manufacturing supply, this is something that we have been working very closely over the last two and half years. So I think we are in a very comfortable place. And also another thing that I emphasize is that, we currently estimate that our manufacturing facility can produce 20,000 doses per year, which is a tremendous capacity coming out of a single manufacturing facility. But as an allogeneic cell product, I mean, we expand that each manufacturing run to produce hundred plus doses. So obviously that is totally different sort of demand compared to the autologous manufacturing. And this is really some of the things that should really be highlighted as the [damages] of allergenic manufacturing. So there's a lot more that we can go into what we are doing into the [LBV] supply side, just be assured we have covered that area very well.

And our next question comes from Dane Leone from Raymond James.

Could you maybe provide a little bit more color in terms of what the clinical learnings you expect to present for CD-19 and BCMA in the back half of the year are? And then any expectation in terms of when we might see first data of CD70 program? It sounds like it might be more of a 2023 event.

Our plan is to provide additional updates on both CD-19 program and in a BCMA program. Rafael talked about how we will make a decision on the BCMA program, and that's really part of the update that we will be presenting at the end. That's a course, not just 715 studies but other strategies that we have been employing over the last year and a half. In terms of details and how many patients, we will just have to hold that till more appropriate time. CD-19 is additional program that we will be presenting the update last year at ASH, we presented the long term durability. And as Rafael has covered, we are very excited about the durability data that we are seeing, 14 complete responders. And once the responses last six months and after that, we are not seeing many people. And in fact the, seven patients who have passed a six month time point, none had progressed at the time of the data cut. So these are very encouraging data that really differentiated allogeneic CAR-T therapy products from other allogeneic programs, and we are following those patients. And the longer term follow up will be a big part of the additional data presentation at the year-end. 316, that one, we are still in the dose escalation. There's a lot of excitement on that study from the investigator perspective, but we will be generating additional data. And exactly when we will present, I mean, at this point we are guiding more towards next year rather than this year, but we will see.

And thank you. And I'm showing no further the questions. I would now like to turn the call back over to management for closing remarks.

Well, thank you for joining us today and for taking parts in our journey to define, shape and advance the future of our -- not just allogeneic cell therapy but the cell therapy market as a whole. We are pleased with our ongoing progress and look forward to what lies ahead for the rest of the year. Operator, you may now disconnect.