Good day, ladies and gentlemen, and welcome to the Adaptimmune Therapeutics Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct question-and-answer session and instructions will be given at that time. [Operator Instructions]. I would now like to introduce your host for today’s conference, Ms. Juli Miller.

Ma'am, you may begin..

Good morning, and welcome to Adaptimmune's conference call to discuss our fourth quarter and full year 2018 financial results and other business updates. We issued a press release earlier this morning and I would ask you to please review the full text of our forward-looking statements.

As a reminder, we anticipate making projections during this call and actual results could differ materially due to a number of factors. In addition, I would like to make you aware of an update to our SPEAR T-Cell nomenclature.

From here forward, we will refer to our SPEAR T-Cells with a prefix ADP or our company name, followed by a reference to the HLA type specific for the SPEAR T-Cell, which currently a A2 for all of our trials and then a reference to the target antigen. So MAGE-A10 is now ADP-A2M10, MAGE-A4 is ADP-A2M4, and AFP is ADP-A2AFP.

This is also outlined on our website for reference. James Noble, our Chief Executive Officer is with me for the prepared portion of this call, and other members of our management team will be available for Q&A. With that, I'll turn the call over to James Noble.

James?.

Thank you, Juli. Good morning, everyone, and thank you for joining us. We came a very long way during 2018. We started the year with trials in our partnered NY-ESO program and two studies with our wholly-owned SPEAR T-Cells targeting MAGE-A10. We had not treated any patients in our other wholly-owned programs targeting MAGE-A4 or AFP.

In January last year, we had just announced our first successful manufacture of patient product at our Navy Yard facility and that we had finalized an agreement to open a dedicated vector manufacturing plant in the UK. By the end of 2018, we had transitioned the NY-ESO program to GSK, allowing us to focus on our three wholly-owned programs.

Our trials with our SPEAR T-Cells targeting MAGE-A10, MAGE-A4 and AFP all cleared major safety milestones and progressed throughout 2018. In addition, we are routinely manufacturing patient product at targeted doses at our Navy Yard facility for multiple solid tumors and we expect to have our first vector production in the UK in 2019.

In our trials with ADP-A2M10 and ADP-A2M4, we saw no evidence of off-target toxicity or alloreactivity in the first three dose cohorts, which enabled us to progress in to the expansion phase treating patients with up to 10 billion cells. We are currently enrolling in dosing in the expansion phase of all three studies.

As previously indicated we are accumulating data and plan to give a full clinical update at our quarterly call in May of this year. We also cleared the first dose cohort in our ADP-A2AFP study and are currently dosing in the second cohort with target doses of 1 billion cells.

Later today, you will find an abstract that will be available online for the upcoming AACR conference, where we will provide a safety update on the first two patients on this study. We plan to provide further updates throughout the year. Our trials have progressed as planned and we continue to add new clinical clients.

We are working with more than 20 active clinical sites at leading cancer centers in the USA, Canada, and in the EU. We’ve also increased our focus on our translation research to understand fully our SPEAR details.

To that end, there were several key features of translational data of this logjam which we believe are critical to the conduct of our trials. First, the data from cohort 1 and 4 of our partner NY-ESO study in the Synovial Sarcoma indicated that a more intense preconditioning regimen could be beneficial.

Second, upon further investigation of the cytokine profile from the peripheral blood of these patients, we found that there were high levels of cytokines that promote T-cell growth and expansion in the cohort 1 patients who received more intense pre-conditioning, compared to the cohort 4 patients.

These data prompted us to increase the intensity of pre-conditioning in our current trials. We have learned a great deal of our translation research to-date and it will continue to inform our current and future trials.

We have been working for some time on ways to improve how our T-cells can find and destroy cancer cells as part of our next generation programs. We have already shared data with two initial next generation approaches namely, (inaudible) and TGF Beta.

As you’ve seen another AACR, abstract coming out later today, we will share initial data for another next generation SPEAR T-cell, in which we have added a CD8 alpha homodimer that will be expressed along with our engineered TCR targeting MAGE-4.

The addition of the CD8 element is believed to increase TCR finding ability and promote CD4 T-cells responsive post infusion, thereby broadening the immune response against our tumor targets. We also made good progress with our off-the-shelf program in 2018.

In addition, we have been actively exploring potential collaborations with partners which have technologies that could enhance the activity of our SPEAR T-cells.

This is an exciting area and one in which we fell we are well positioned to lead the way and advance in not only our knowledge in TCR therapy, but also the way in which TCRs are employed to fight cancers.

Turning to manufacturing; capacity at our Navy Yard facility is now at 10 patients per month and scalable to 30 patients without significant additional capital expenditure. We also had capacity for 10 patients per month at our CMO HCAT, formally PTT.

In addition, we have implemented rapid sterility testing at our Navy Yard facility to better deliver SPEAR T-cells to patients. With respect to vector, we are well positioned with our own vector manufacturing coming online as well as production in place of a third party vendor.

The vendor has already manufactured vector for ADP-A2M10, ADP-A2M4, ADP-A2FP and next generation SPEAR T-cells, and we anticipate vector production using our proprietary suspension process at our dedicated facility in 2019. We remain funded till late 2020 and are well positioned to complete our trials and to initiate the next stage development.

We continue to examine different trials with our eye to the future to say that we can utilize our therapies in the most effective way for patients. With that I’d like to open the call up for questions.

Operator?.

[Operator Instructions] And our first question comes from Jonathan Chang with SVB Leerink. You may proceed. .

First question, based on the NY-ESO experience, would you expect responses on the MAGE-A4 and A10 studies to be achieved in the first two scans?.

Rafael, do you want to call it?.

I’m not sure I heard the question, so you’re saying the sort of true scales?.

The questions Rafael just to repeat, it wasn’t quite clear was, based on the NY-ESO experience would you expect to see responses when you have had two scans in patients?.

It’s a good question, in general in sarcoma responders have responded perhaps within the first two scans. Many patients have their first scan were on their way to responding, but didn’t achieve the 40% threshold from resist. So these are not prominent responses where you see large decreases in tumor size right away.

So perhaps you start with the percentage and then eventually crosses the threshold, whereas at the second scan or the third that varies patient by patient. I think the patient that took the longest to respond took six months.

And occasionally there’s been patients that have responded at the first scan, but I would say that by the second scan, a majority of patients that were to responded have responded. Now those are unconfirmed responses, so as you know one needs another scan at least 28 days later to confirm that response. .

Second question, can you talk about reasons for confidence and why responses could be achieved at the current high dose being evaluated in those studies, with the optimized size for measurement?.

I’ll just say a couple of comments and then pass it on to you James.

But I think nobody knows what’s the best condition in regimen is but choosing those two drugs both in terms of clinical outcomes measured by response and durability and also by biomarkers such as Cytokines that promote T-cell expansion, higher doses of fludarabine are better and that’s I think been shown in our NY-ESO studies and then we’ve been able to replicate in our mixed trials as well.

We are now looking at the role of cyclophosphamide and whether higher doses of cyclophosphamide such as dose employed in cohort 1 also contribute to higher peak expansion and so I think conditioning is definitely important and higher doses of cells we know what the minimum dose is, we haven’t authorized the dose response verified the upper limit of some numbers because frankly we didn’t make sense of 16 billion cells in the past.

Now routinely we are able to make high number of cells in our facility and so we’re planning to see whether there is dose response relationship at the upper range of the dosing term. So I think a higher dose question is still to be answered the slower I think it’s a billion cells, we rarely see below a billion. .

Yeah, I think you’re right, the concept of dose rising studies wasn’t always in any of the protocols, either authorized to any of the other players, and so if you’d actually get back to the NY-ESO cohort, we’ve actually dosed the patient with a number of cells that we had produced out of the previous manufacturing systems.

In fact from memory in cohort 1 it varied to about 300 million cells to14 billion, and in fact the range was based on at least 10% transfused cells anywhere between 1 billion and 10 billion cells in fact one patient got 14 billion cells.

There wasn’t a dose response information coming out of the original studies because none of them were designed that way, but we are seeing as Rafael said that if you see nothing when you dose patients with a billion cells, but don’t get any decent resistance or expansion in-vivo. So we think obviously this is the best threshold effect. .

I would also add when this product was tested at the NCI, they gave a medium of 50 billion cells and this was some time ago, they used IL2, it was [wild] vector, it was a different manufacturing process. So there are all the caveats about whether the T-cells were the same. The TCR was the same TCR, but the details may have been different.

But in current condition they routinely administer many for higher doses. So I think no one really knows in the TRC what the optimal high dose is, and as I said before we are attempting to characterize it now because this is really the right time to do it during dose finding studies..

Just one last question from me, will investors get a sense of your ability of response you have achieved in the (inaudible)?.

I think that’s very difficult to expect, just because of the way the expansion and those cohort really started to vary towards the end of last year, and actually then what happened you have to understand quite a long period for first of all the patients that we have treated, then they have the cells that you manufactured and then the first scan doesn’t take place for either four weeks or six weeks depending on the protocol on to the second scan that wasn’t going to take place for another four weeks after that.

So the first scan just gives you unconfirmed response stages, second gives you confirm, but I don’t think we’ll have any meaningful durability data in there. I don’t think it’s time to work for that. .

And our next question comes from Peter Lawson with Sun Trust Robinson. You may proceed. .

This is (inaudible) for Peter. I guess a few questions on around the expansion cohort. It seems to us that there are two dimensions in the expansion phase, one, the lack is staggering but also there is an increase of upper range for the target close to 10 billion from 6 billion.

When you talk a little bit about the progress you’ve made in manufacturing and they take advantage of using the increased upper limit, because it seems to us that both the manufacturing (inaudible) not so much patient characteristics but also can you comment on when a certain patient may be excluded from being able to take in high dosage as well?.

Yes, I’ll make a general comment, and that’s, I think two years whether we regularly produce 5 million, we’d have said, no way, but actually we have made a lot of progress, but I’ll let Ad to comment specifically Ad Rawcliffe, our CFO, since he’s in charge of manufacturing. .

Yes.

So I think you’re right to characterize as Rafael spoke to the confidence in the top end of that dose ranges been established by the performance of the manufacturing organization over the past 18 months or so, and key to that is obviously the setting up of our own cell manufacturing site and the development of that up to its current capacity of sort of heading patients lots for a month for the moment.

And we are routinely getting cell doses out new cells that are around 10 billion cells and in some cases they’re even higher.

So it seems logical to be able to give all of those cells to patients, and we’ve not so far characterized patients who would not be eligible for the top end of that dose different to the 6 billion thresholds on the first cohort either.

But that’s all a function of the number of new cells that we get out which in turn relies on the vector efficiency and things like that. So it’s a number of improvements across the entire manufacturing process that has led us to this point. .

Yes, I would point out that something is being remarked on before and that’s the biggest variable for autologous T-cell therapy as close to starting material, and I think there is an incredible advantage of having your own manufacturing facility.

Say for example, we can actually normally tell within the first week of manufacturing a particular patient whether we’re going to get enough cells at the end of the manufacture at the end of sort of four days or so.

We actually know whether we’re going to have success, and if we’re not looking very successful and then being just initiate a second round for the same patient out of the same (inaudible) and make it up so the patient will never know that there was a – the manufacturing was difficult.

And I think all of those things are part of the learning that really justifies the investment in having our own facility.

In fact I would go so far as to say that not having your own manufacturing is more catastrophic for an autologous T-cell company right now because the technology is still beholding and the only way you can control that evolution is to have the process under your own hands, under you own roof. .

So right now from MAGE-A4 I guess you have three patients in progress for the expansion on – you have met how many patients, you may have seen from the expansion, and then also given all these however was in place, what do you say on I guess of all the patients you would probably treat, how many of them may receive up to 10 billion or so dose?.

We’re not giving individual patients (inaudible), but anybody in the expansion phase is eligible to get 10 billion. So if some will, some won’t. .

I guess my final question is for Rafael, how are you thinking about integrating (inaudible) combined your role in clinical and R&D, can you give us a little bit more color about your plan on integrating the two and the changes that may be made for R&D to clinic?.

That’s a great question. I think oncology is a comparative disadvantage to have R&D integrated because as you know approvals can be obtained very early to take trials, and so you want to have a cross-pollination of people that understand how to develop drugs, how to write labels and how to understand unmet needs and regulatory guidance etcetera.

Those people who are working with the scientists very early on have a selective target and how they use surrogate markers for [TKPV] relationships and eventually how to design the trial.

And so our discovery group now is exclusively focused on opportunities that have line of sight to making medicines, and all the activities that support not just obviously the discovery of the product, but also characterization and improvement and translation of sciences that will tell us how our products are functioning in vivo.

So likewise, discovery group is also now better informed of what’s happening in the clinic, and so when we are designing improvement such as the some other ones that James described in the second generation, they’re going to be tailored to whatever deficits we are observing in patient tissue with regards to the potency of the T-cells, their ability to traffic to the tumor site to kill cancer cells, to persist etcetera.

So, it’s that cross talk I think that’s going to be really necessary from the choice of the target to the choice of the disease to characterization in patients back to improvement of the TCR and the T-cell product.

And so instead of a three legged stool if you will, aside from precision development, manufacturing is an integral part of what we do because its related to T-cell i.e. [TCR] cell that causes cancer killing and they are also very integrated within our discovery and development group.

So that’s being really the emphasis since I took over is to really unify these three groups and remove anything that was strenuous to being able to get a job in the market. So I know this is sort of high level answer, so I think those are the fundamentals of R&D organization at the moment. .

And our next question comes from Peter Lawson with SunTrust. You may proceed. .

Just a couple of follow-ups, as we think beyond May, the potential updates there, how should we be thinking about the timing and other data for the year on potential venues to data?.

So when we say we’re going to give a full update in May, we’re going to give details on responses if any obviously across the programs, and we’re also going to give an update of what we intend to do with the programs, first and second generation, in other words what further trials we’ll be setting up, which trials we’ll be looking to start and we also at that time give details of where we can present.

As you know, one of the issues with presenting with these very small patient numbers is the very long lead times for the conferences that are sometimes difficult unless you give really breaking abstract.

So in the May meeting we intend to give a sort of complete overview of where we are today and we’re going from today, and if we can we’ll give the confident information out at that time.

As you’ve seen today, we’ve just got a couple of abstract on the ATR, which will be published online later today, and one on the CD8 and one on the feel safety profile and we’ll obviously be following it out.

So we do intend to give credible May update not just saying what just happened in the trials, but also what we’re going to be plan in future, which programs going to get forward in what respect and what type of trials and we’ll also try to give a better implication of where we expect to present data. .

And based on what data you have so far, and also have a (inaudible) landscape of change, and do you think it’s kind of pointing north to combination therapies versus mono therapy?.

I think we are interested in both types. I think we remain interested in both. We’ve always as you know with the NY-ESO program we ran a combination (inaudible) GSK, we ran a combination study with key (inaudible) and that was an initial study, which we handed over to them.

And actually it’s more important to look at the effect of monotherapy and then to see if there is a role for a scientific rationale for adding a combination to that. So rather than start off with that, I think we’ll always start with a monotherapy.

If you like it maybe first generation, may be second generation and then add a combination study to that if it’s appropriate in the context of that disease, as we didn’t grant a combination study in sarcoma because it wouldn’t be appropriate in that instance.

So I think where there is a role, where there is a disease which might help, we’re just as keen as ever, but we’re soft with monotherapy and with combination trials when there is a disease where I can say the combination will be beneficial. .

And then just a couple of questions for Adrian, just around any pointers on expansion of 2019 and how we should be thinking about compensate revenue, why not (inaudible)?.

I think the guidance that we’ve given produces a fairly logic or rational outcome as to what the cash burn will be for 2019 and 2020 versus the end of the last year we closed with 205 million of total liquidity, and that we’ve said it takes us to late 2020.

So we’re not going to give time on those expense line by expense line basis or indeed in total, but I think that gives you a fairly clear runway as to what that is likely to look like with inbound materiality certainly.

On the revenue line, I think the large payments that we’ve had relating to the GSK contract, I think have largely happened in the short terms in 2018 and 2017 as well.

And the GSK contract is now in a phase where as we’ve talked about before they’re able to nominate additional targets, but we complete the work through to a preclinical stage and we locate that in to the (inaudible) and that will carry on and we anticipate getting revenue from that, but not to the same magnitude obviously as the option fees or in the future development milestones that might be associated with any of the programs..

And the other income expense line item, I didn’t catch that, is there anything, was there one timing that?.

The other income or expense line largely relates to the exchange rate gains and losses on the portfolio of investments that we hold as part of our total liquidity balance. So we hold those and the balance sheet of our UK subsidiary when converted back in to dollars.

So there is not actually a – it’s not a real expense gain or loss, but it is an accounting expense gain or loss. .

And the next question from Michael Schmidt with Guggenheim Securities. You may proceed..

This is actually Kelsie on for Michael. Two quick questions, first, on your last earnings call you had mentioned that a 10 enrollment was recruiting non-small cell in kind of cross-bow study, and then the A4 was mostly ovarian. Has there been a focus on further diversifying or should we be expecting mostly read through to those two.

And then secondly, how will be the May data update inform potential mix development steps on over the clinical hurdle. .

Rafael, do you want to answer that one?.

For MAGE-A10 there are two trials, one is exclusively long and obviously that one is embroiling histology of lung cancer that’s (inaudible) mostly, and that’s in the expansion phase as was mentioned before.

And then there is a triple tumor one which is enrolling bladder, head and neck and melanoma and you’ll have to look at the numbers, but I think it’s been pretty diversified in terms of the histology for those three tumor types. So we haven’t really suffered from a clustering of a particular tumor type in the triple tumor.

Later what we did initially in the dose expansion have mostly ovarian cancer patient, and that was just a function of the (inaudible) we had NY-ESO study in ovarian cancer.

So we had a lot of patients that we knew already who were actually too positive and the investigators were very keen to see whether they would qualify for the MAGE-A4 study, and so therefore we got bonus of patients that came through and because we were trying to characterize the safety and tolerability, that histology wasn’t as critical.

Since then we’ve made efforts to expand the range of tumors. While we said that there are nine tumor types in the MAGE-A4 study, so it’s really very difficult to have a very good representation of each one of the tumor types and we won’t have that by May, because obviously by May the study wouldn’t have finished.

But we have made a lot of progress in enrolling patients with other diseases including bladder, head and neck, some melanomas, and gastric and others.

And recently, I think we announced in the quick north to recent past that we added sarcoma to the trial, and so we went ahead and added a number of centers that sarcoma center with which we had been working in the past in NY-ESO.

So we have runway of patients with synovia sarcoma and we’re also trying to recruit MRCLS patient and we’ve been very successful in timing those patients. Some of them have been treated already, some are being treated now and some to be treated, hopefully we’ll have some results to talk about during the main call.

So I would tell you we’ll be full diversity in MAGE-A4, but there will be representation from a number of tumors. And in order to accomplish that to disease specific sites as well.

In the past we were mostly in phase 1 sites, where we would get whatever gets referred to the phase 1 unit and now we are able to go to the two specific sites to get the specific tumors that we would like to get to have in enough diversity.

And in terms of what would emerge from that, I think we would characterize the signal where we announce before we launch in to last trials or registration trials and I think that’s something that we will know when we see it.

And so if we see responses we will continue to enroll in the particular histology to try to characterize the benefit risk and then make decisions on where to invest our resources for phase 2/3 registration studies, and we have to be able to make those positions this year. .

And our next question comes from Marc Frahm with Cowen & Company. You may proceed. .

You just clarified in your earlier comment when you kind of described the agenda the May update.

You just said programs, is it still going to be the MAGE programs or should we expect to kind of have a fulsome update on ASP as well?.

We’ll play with whatever is going to on happen on ASP, but as we’ve repeatedly told you it’s a much slower study to recruit, but we are recruiting patients at the fit-in level. So we’re still not at the 5 billion level, we haven’t got there. It is slower to recruit and we have been adding centers recently trying to speed that up.

So we’ll tell you whatever we’ve got I think is the answer of May. But it’s going to be – there will be far more MAGE-A10, MAGE-A4 patients to come until and then there will be for ASP..

You now have a menu of different generation two or next generation construct that you disclosed or about to disclose (inaudible), could you talk about which one do you think you’re going to file that and what the level of data is supporting that that’s the right choice for the first one. .

We’re not disclosing today which one we’re going to pick for the IND, we’ve now disclosed details on four different programs, so one was (inaudible) and the (inaudible) feature which we’ve talked about before.

This week we actually had published (inaudible) on IL7 which the third, the fourth one is the CDA program, and for competitive reasons really we don’t go to tell people where we’re going exactly, but in general they are going to inform the effect of the T-cells in man, but we will be telling people at the May meeting when we’re going to file an IND and for what.

It will come as a great surprise what we do with MAGE-A4 because it is clear from all of us that MAGE-A4 has a much higher presentation than MAGE-A10 or in fact invasive for that matter in patients. There’s are many more patients expressed MAGE-A4 than present MAGE-A10, I might say even more further than the (inaudible) I think.

So it will be to do with MAGE-A4, but we will update the timing of an IND and which one we’ve selected for IND as the main meeting. .

And then the last one, you mentioned through 2018 the kind of progress in manufacturing and now you have in-house the ability to do roughly 10 patients per month. Yeah, and there is this flexibility to expand our base.

Are there plans in 2019 to expand beyond that or do you think the 10 capacity is the right place for you for the near term future?.

Obviously, the most effect of the trial the more we need capacity. It’s easy for us to get to 30 a month in terms of capital expenditure in this Navy Yard facility. We’ve actually built quite a lot of number of suites and essentially just equip the suites more affectively.

So you could get to 30 a month, and don’t forget we have 10 a month that (inaudible). But to get to there is relatively simple, and doesn’t involve much expenditure to carry or pounce that 30 plus 10 would involve a series fatality of the building we’ve closed the empty half of the building which we - is for the next stage.

We’ve got the facilities in place in order to expand. If we get to 30, I’d say is a relatively insignificant magic half essentially to our people and to go beyond that 30 requires a significant expenditure. .

And our next question comes from Reni Benjamin with Raymond James. You may proceed. .

James in the past we’ve talked about our response rate of somewhere in the 30% range when it came to a go or no-go decision.

I kind of wanted to just get a sense from you now, based on all the data that you’ve seen so far, is that still the boogie that we’re looking at, and going forward if that isn’t met let’s say for one indication, does that – it doesn’t seem like there’s any more tinkering per say that we can do, and maybe we can go about 10 billion cells.

I’m not sure what else can be done, if you can kind of talk about what else can be done if the response rates are below 30% and has that boogie changed at all that’d be great. .

I think so far it is a complex procedure for patients. If one projects forward having something on the market, it wouldn’t be fair for the patients and I don’t think you would expect clinicians and payers to favor something without a reasonable response rate. And that’s really where thet3 in 10 came from.

If you have a sort of one in 20 patients responding, I just don’t see (inaudible) cells that’d be really cutting the mustard, so that’s where that came from. So in general I don’t think that has changed very much, but I don’t agree with the second half of your question as well sentiment that isn’t much what you can do, yeah you can put up the doses.

Rafael mentioned earlier that the MTI is based to more than 50 billion cells, but actually that’s exactly the tinkering that you do.

I think your word it’s actually that sort of second generation is about, and they do different characteristics, they are designed to address the issues of the tumor microenvironment or epitope spreading etcetera which other things may make cells less affective or in the case the CD8 program which we just sealed, you’ll see the process later today for ACR that’s really to make CD4 cells active as CD8 cells if you like and that could induce a whole series of different things.

So I think we are, as I’ve said many times before, we are on the foothills of exploring a very complicated technology. I’m personal fantastically pleased that we can dose large numbers of cells apparently safely without series – any protectivity or alloreactivity.

And the last bit of that, there were two things I’d add on to that and that’s – one is the combination which I mentioned earlier maybe appropriate and I also think that it is astounding how many technologies are out there to enhance the performance of cells in the cell therapy, and we have been looking very keenly at and I actually signed a few comfort deals with technology companies.

And so I think there are a lot of different things you can do, whether its characterizing the cells. You look back in to people whether its enhancing the activation of the cells in the patients, whether its combination, whether its increasing the ability to track a good tumor or to deal with tumor micro-environment.

I think there are many different routes to go, and Rafael put his finger on this earlier in response to that question about coordinating research with development.

And he said essentially that’s what the research engine is doing now, it is making better medicines by taking in to account the data we’re getting back or the consolational data we’re getting back from patients looking at both the characterization of the cells and the response data to see how could enhance it.

So I’d say it’s probably only about 50 more years of development, but it’s still quite a lot. There are a lot of things you can do, and it isn’t just increasing the cells (inaudible). Quite a long answer but it is a very complicated thing. We know something we pay a lot of attention to. .

That makes sense. And just switching gears to manufacturing, I think you mentioned the first vector production using the suspension process would be in-house in 2019. I’m kind of curious, I understand the importance of bringing the cell manufacturing parts in-house.

I was pretty much under the assumption that vector product was pretty standard and that depend so I’m curious why bring it in-house and what are the advantages kind of that versus just contract manufacture. .

Actually that is a very good question. There are actually a lot of advantages, first of all, the ability to get the title that you need to make cost effective vector that is certainly a part which is continuing to improve.

So there’s actually massive improvements still to be made in terms of how you actually make back to the whole movement away from a clearer process as to a substantive process as it is inherently much more efficient. It’s just not a fixed.

If you know that you’ve actually won the rocky (inaudible) and you know exactly the process (inaudible) that you can do. If you want to improve that process and you want continuously to make it more efficient and have certain characteristics which we do then actually brining in-house has been fantastic.

So effectively we have a process development team which is responsive to cell manufacture. We have a second team which actually looks at nothing but improving the vector. And it’s had some effective cost. It can be absolutely gastronomical and cell therapy is going to have to come down in prior at some point.

And if you use the vector cost of three years ago where sometimes you can spend a $100,000 a patient, you cannot make things that are $100,000 of vector obviously it will rather cost now, its radically below that already. So before you write that down and concern about that.

But it’s got to come down to a few thousand dollars for patient at most and that’s why you have it in-house. .

So just as a follow-up, the game plan is not just, for a lack of a better word, can’t go with the process to make the best vector production and then out license it back to a third party, really it would all be in-house even at the commercial stage. .

I think we have a dual supply at the moment, we have a commercial vector supplier that has changed (inaudible) supplier vector from our current trial and then we have our in-house capacity. And that’s similar to what we would do for – that’s similar to what we’d do for cell therapy.

Whether or not you then supply since our process out to a third party or you have two different vector production processes running in parallel including for different trials, I think very much depends on the characteristics of the process and the plan and the development plan and regulatory plan for those at the time.

But that’s absolutely an option. I think what James is referring to is whether it’s very difficult, and like cell therapy it is very difficult to end up at an advance cost effective process if you are entirely reliant from third party for that supply. I think in time by the way it will become commoditized.

I agree, because if you can have unlike so many factor you mentioned inventories, it will become commoditized. But I promise you it’s no way near that at the moment. Whatever people say, I’d say there are also issues which we haven’t mentioned to do with obtaining slots of (inaudible) when you want them.

For example, a program is certainly becoming more and more successful than you need more vector suddenly. We can switch obviously in half at the drop of a hat, where as in some part it tends to be a bit more complicated (inaudible) slots. So, I think unlike the cell manufacturing it will become commoditized, but it’s no way near that yet. .

And then just one final one from me, you mentioned the good progress that you made with the off-the-shelf product, and so can you provide a little bit more color regarding that and when do you think an off-the-shelf product could be in the clinic?.

Rafael that’s probably one for you.

I thought we are commenting on the time table, but Rafael do you want to comment about this progress on the off-the-shelf?.

Sure. So, there are two aspects to making off-the-shelfs from induced fluid (inaudible) stem cells. One is the genetic editing aspect, so what modifications that we want to make to the cell genome to make your cell officially invisible to their host immune system to prevent [grapher] cells disease and also to carry the therapeutic TCR.

So there are a number of editing that can be done. One can do multiple (inaudible) to knock out class 1 and class 2 and including [HLAE] to avoid linkage cell susceptibility and knock out the endogenous TCR.

So there’s a set of many editing steps, but the minimum that one has to do is to remove endogenous TCR because otherwise the cells will cost [GBH].

And so the timelines will very much depend on the amount of editing that we chose to do, and this is done in partnership with Universal Cells which is a company now a subsidiary of Astellas and we’re working very closely with them. They have all the expertise on AAV gene editing and we’re supplementing that in-house.

But it is likely that we would go initially to the clinicians minimally edited line and we’re excited to have regulatory discussion around that on the choice of cell line and on the editing steps and how obviously the process would look like.

So in addition to the editing, the other pillar being able to do this is to differentiate stem cells in to T-cells that are functional, and that is something that we have done in-house.

So we’re very happy with the progress and we have made tremendous progress in differentiating the cells in to CD4 positive cells which are Hematopoietic Progenitor and then from there going in to double positive and single positive T-cell to express TCRs to numbers that could be used for a therapy.

So hundreds of billions of cells, and then we’re also showing the functionality of these cells and all this work will be presented at the American Society of Gene therapy I think for the first time.

So again James said, we’re not necessarily guiding on the timing of it, but we are working pretty hard on being able to put our first TCR in to this system that’s been responsible. .

And our next question comes from Soumit Roy with Jones Trading. You may proceed. .

I just had two questions, first is, you guys are in a unique position to look at the effect of TCR T-cells in quite a variety of solid tumors, some long to bladder melanoma to several others.

Curious if you’re seeing and all these indications are different with patients characteristic, different tumor stroma, different mutational burden, are you seeing any difference or marked difference between – expansion amongst these patient groups when you compare it back to synovial sarcoma? And the second question is, what kind of immunological data you’re collecting or we could expect to see to make some kind of thoughts around durability, like are you looking at epitope spreading, memory cell formation, number of (inaudible) memory.

So what kind of immunological data could we expect to see long before the durability day, when it comes out a year from now?.

Rafael, that’s probably one for you. .

Yes, I think the first question was whether there were differences in expansion along the histology. I think it’s too early to be able to answer that question. Clearly the differences in expansion are more to do with the initial cell dose than any other parameter that we’ve been able to analyze to-date.

There is anecdotal evidence that there is higher expansion in patients that have higher target expression. But we’ll take a look at everything that we have and see whether we can make those correlations with enough significance to make conclusion.

I think that this is only with the expansion is that we come to know what is really true expansion that’s due to hemostatic set of resetting of the T-cell numbers versus antigen-driven expansion.

And I think those parameters probably play more of role in the expansion together with the cell dose and the antigen expression than the type of tumor itself. But by and large given a similar dose, we’re not seeing sudden differences between different histology including Sarcoma. So that’s just a general statement.

I think in terms of the logical data that we’re collecting; first of all we were looking at the makeup of the product that we are giving. So, obviously what the tumor type, most of the cells obviously are CD3, but how many of them are CD4 versus CD8, how many of them have the TCR and we mention that by that [summer].

How many of them are terminally differentiated cells versus stem cell memory cells and/or so we try to factorize what’s in the increases, what’s in the manufacture product, and then periodically what survives in (inaudible) and when available in tumor in patients.

And we do that, unfortunately we have to stop doing that, not when the patient, if the patient progresses because we stop collecting this persistence data. And as long as we have samples, we continue to look at this.

We’ve shown in the past and this is being probably mentioned in the NY-ESO experience that patients that persist along this and have long responses and to have a persistent prospect arise by stem cell memory type tumor type. To do this correlation you need very long follow-up which obviously we don’t yet have.

But I think being able to identify those cells early on because you see expansion and there’s the grind and then a resetting. If you can identify stem cell memory, T-cells that carry TCR in the 1% or 2% of the cell persist, we believe that that’s a good predictor that there may be immunological memory that has developed.

For all of these will need to be verified in these new tumor types that they were treating with the new products. .

Is there a reason to why you wouldn’t try to look to in to a later stage like a mere update or even second half this year update? The episode spreading are how much of the affected T-cells versus memory T-cells forming later on versus in the (inaudible) product.

Don’t you think that would give a better look in to the durability of the response and with earlier look or it doesn’t really matter that way..

So as I said before the patients that remain without progression will continue to be swallowed and obviously we’ll continue factorize again the makeup of the T-cells. We expect that there would be a shift from (inaudible) or sector cells to stem cell phenotype.

That’s something that we’ve seen in NY-ESO and we’re beginning to see in the few patients that we’ve been able follow for the longest time, and we’ll continue to do that.

I think epithelial spreading is not an easy thing to discern, but it is – you can make some inferences about epithelial spreading by doing T-cell [chronometry] which we have published on in our multiple myeloma study and shown that you’ll see emergence of clones that do not carry the TCR that were not there prior to T-cell infusion suggesting that there are some T-cells that are clonal that are reacting to epitopes older than NY-ESO.

And we will definitely do that in the current studies.

In fact we think that to have durable responses with cancer testis antigen one has to expect epithelial spreading because not all the cells express this cancer testis antigen and therefore there is no epithelial spreading slightly that there will be a survival antigen negative cells and you’ll get that resistance.

So, we collect the samples and we will analyze detailed chronometry at different time point looking exactly for what you said, and it’s just too early to do based on where we are with these cells. .

And our next question comes from Jim Birchenoug with Wells Fargo. You may proceed. .

Can you just clarify as far as the Navy Yard expansion; I’ve heard you say a couple of times now, that you can expand 30 per month, so now significant investment. The press release says 100 per month without significant investment I believe. .

It’s scalable to a 100 patients per month without significant capital expenditure under the building administration. .

It is 30 patient and market without significant capital expenditure it’s a 100 patients a month within the facility. But that will cost a few 10s of million. Our employee has a proof reader future. We’ll correct that..

And the other thing that sort of jumped off the page here was really that the target dose for the expansion is 1 billion with up to 10 billion. So dose level 3 was I think 5 billion or 6 billion. And I heard you say, while some patients it’s hard to make the cell.

So is this really just to give you the flexibility it takes a long time to get these patients and then if they don’t get the 5 billion, you have to say I’m sorry whereas you don’t really know yet whether 1 billion is good enough. .

The way the system is designed actually, the way the (inaudible) designed so you don’t throw away yourself. We’ve made 7.2 billion, let’s take a little example, the 10 billion just means we give them the all 7.2 billion, it seems a bit ridiculous to give them 5 billion or actually it tend to 5 billion to 6 billion and not give the rest.

So this really gives us the flexibility. We think that 10 billion, I think I’m looking at – we think that 10 billion every time we do get it frequently.

So it’s just a method of – in a protocol you have to specify what the dose is and if you just specify something lower, you can’t then just give them the extra cell even though they’re just sitting there. So it’s really to give us that flexibility.

So if we produce anywhere between 5 billion and 10 billion, they will get that number of cells the ones that are available. .

My question is really 1 billion to the expansion and not 5?.

The target is 5, we’re allowed as low as 1.2. The target is 5 for the expansion. (inaudible) is currently 1 billion cells, it’s the majors that are at the high level, the ASP is we can only give 1 billion for the second dose of the dose rising, but for the majors the target is 5, we can give 1.2 and up to 10. .

Again the press release says target of 1, but dose it up to 10 on the third bullet. .

They are major 10 and (inaudible) 5, and major 4 --..

So, treating patients with the expansion phases of M10, M4 with target doses of 1 billion cells of doses up to 10 billion cells. .

It’s 5..

We are getting full year of (inaudible)..

So maybe I’ll ask question of what I read in the press release.

And can you also remind us of the number of patients that are going in to each of the expansion phases?.

Rafael you want to try?.

They vary by trial, but essentially they are between 10 to 20 patients inclusive of the third dose. So, however many patients we put on the last dose, which has a target of 5 billion, we would have that to the patients in the expansion to treat between 10 and 20 patients under various (inaudible) study. .

So really I’m just wondering when you get to May how much – I think you’ve said the trials won’t be completed. So will we able to define concrete next steps for initiating say potential registration enabling trial or is it more while we think we’re going to move to gen 2 or a combination approach to get to the efficacy levels we want to see. .

So that’s exactly what we’re going to do, talking about in May as these are the data, these are the number of patients. It’s either, it could be anything from we’ll need to take small patients to come to know the answer to that.

We’re now going to move forward with the registration trial or we need to move gently and that’s exactly what we’re going to talk about (inaudible). .

[Operator Instructions] And our next question comes from Ying Huang from Bank of America Merrill Lynch. You may proceed. .

Hey guys this it Alex on for Ying. Thanks for taking our question. I had a couple of clarification question on the cash burn guidance. So on manufacturing the 10 patients per month was a slight increase from the roughly A, 10 person Navy Yard and HCAT you mentioned previously.

Is this due to capacity expansion or better efficiencies with your current capacity, and is the up to 30 patient expansion included in your 2020 cash balance. And in terms of the vector manufacturing plant, what does this look like sort of in a physical manifestation and how much are you budgeting towards that.

And this buildout is this baked in to the 2020 guidance as well?.

If I just start with a comment on the vector plant then (inaudible) in detail, we were incredibly lucky and the vector is a dedicated facility because the capital expenditure was actually borne largely by the UK government which decided to whatever reason they fulfilled a large building actually on GSK land as (inaudible) in the UK out of tax payers money to host various companies activity either the cell manufacture or for vector and that’s actually where the vector production, I think (inaudible) that is their facility, so we are very lucky in that respect just to clarify that.

So its dedicated to us but we didn’t have to build a thing I believe (inaudible). .

Taking your first question the throughput of the Navy Yard facility is roughly two patients per week, so that’s how you get to the short month depending on timing you end of with sort of eight patients and a slightly longer month you end up with 9 or 10 patients, and 10 patients is the sort of capacity that we’re thinking about.

So those are numbers are actually about the same. The infrastructure is in place to be able to go (inaudible) in mind is the number of people that we would employ to do that and we would do that in quarters with the demands of the clinical trials, but with (inaudible) ongoing.

But it should be noted that between 10 patients at Navy Yard, a month in Navy Yard and roughly the same at HCATs we do have the capacity to service the pilot trials out of the existing capacity and in some cases the move in to pivotal trial as well. So we’re not commenting in detail on how much is in the cash flow for both the vector.

The vector requirement, if we have a choice I’d be going externally or internally, and at the moment those costs are in there on the trials that we expect to complete versus as opposed as you pointed out the need for significant CapEx..

Ladies and gentlemen, this concludes our Q&A session for today’s conference. I would now turn the call back over to James Noble for closing remarks. Sir, you may proceed..

Thanks again every one for joining us this morning, giving us some very interesting questions. Our commitment to our patients remains strong and we’ll continue to work diligently to realize the potential of our T-cells therapies to treat cancer patients with few other options, and we look forward to giving a more general update in May.

Thank you very much. .

Ladies and gentlemen, thank you for attending today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day..