Good day and welcome to the Adaptimmune Second Quarter 2024 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Dan Od-Cohen, Investor Relations. Please go ahead..

Thank you, operator. Good morning and welcome to Adaptimmune's conference call to discuss our second quarter 2024 financial results and business updates. I would ask you to review the full text of our forward-looking statements from this morning's press release.

We anticipate making projections during this call and actual results could differ materially due to several factors including those outlined in our latest filings with the SEC. Adrian Rawcliffe, our Chief Executive Officer is here with me for the prepared portion of the call, and other members of our leadership team will be available for Q&A.

With that I'll turn the call over to Adrian Rawcliffe.

Ad?.

Thanks, Dan, and thanks everyone for joining us. We are incredibly proud that Adaptimmune is now a commercial stage cell therapy company. Following the US FDA approval and the launch of our first product in our sarcoma franchise, Tecelra. This is a fantastic achievement for the company for the cell therapy field and for people with synovial sarcoma.

Tecelra is the first engineered cell therapy for a solid tumor, the first medicine in its class.

And it's also the first new treatment option for synovial sarcoma in over a decade and the culmination of groundbreaking R&D, our investment in manufacturing, the demonstrable clinical benefit exhibited throughout development and incredible execution of the regulatory process.

Tecelra is a vindication of autologous cell therapy for solid tumor cancers. And together with the synovial sarcoma community, we're going to redefine how synovial sarcoma is treated. Launch activities for Tecelra started the instant we received approval and we hit the ground running.

I want to provide some updates on how Tecelra's launch is going bearing in mind that we're only 10 days in. As synovial sarcoma is a rare disease, treatment is concentrated in sarcoma centers of excellence. We've already recruited, trained and deployed a commercial footprint to deliver Tecelra to people with sarcoma.

Our commercial med affairs, manufacturing and supply teams are all in place and engaging patients, physicians payers and treatment centers. The companion diagnostics for HLA and MAGE-A4 testing were approved concurrently with Tecelra, so health care providers can arrange for patients to get tested to establish their biomarker eligibility.

Instead, we believe this is the first time that a therapy has been improved together with two new diagnostics at the same time. Adaptimmune Assist, our patient support program is up and running to ensure a personalized experience throughout the treatment journey.

And we've previously discussed our plans to activate 6 to 10 authorized treatment centers during Tecelra's launch periods. We are on track to do this. We have five ATCs available in our locator tool on tecelra.com website and all of our internal systems are in place to accept orders to manufacture and deliver Tecelra.

Over the next few quarters, and prior to having trends for patients treated and for sales, we'll be updating you on two key performance indicators for launch execution as we go forward. Firstly, the number of ATCs opened; and secondly, the number of patients they've released.

As we move to the first half of next year, we will transition to patients treated and obviously to sales as the key metrics. Moving on to the positioning of Adaptimmune beyond the launch of Tecelra. I want to touch a little on our balance sheet and our pipeline.

At the end of Q1 this year, we had approximately $144 million in total liquidity and runway guidance into late 2025. During Q2, we signed a collaboration agreement with Galapagos and entered into a debt facility with Hercules. And at the end of the quarter, we have total liquidity of $215 million.

We believe we are well capitalized to deliver the successful launch of Tecelra and also develop the rest of the pipeline.

As we transition into a commercial cell therapy company, we will move away from extending cash runway guidance given the complexities of estimating future revenues in the near term as we establish our sarcoma franchise and instead we'll provide high-level forward cost guidance alongside regular updates on the commercialization progress.

So in the first half of this year, our total expenditure was approximately $114 million. This included investments preparing for the launch of Tecelra as well as hiring and onboarding the commercial team. For the next 18 months, we expect our run rate operating expenses to be broadly consistent with that of the first half of 2024.

We will update this cost guidance as we progress together with the launch metrics that I previously articulated, namely the number of ATCs and the number of patients they've released. Moving on to our pipeline.

We are progressing our clinical pipeline with the second product in our sarcoma franchise, lete-cel, expanding the number of sarcoma patients we can treat with our cell therapies. Lete-cel is clinically derisked as the pivotal trial, IGNYTE-ESO, has already met the primary endpoint of efficacy at the interim analysis.

And this was presented earlier this year at ASCO by Dr. Sandra D'Angelo. Lete-cel's regulatory pathway will build on our experience with Tecelra's regulatory submission. And as lete-cel also targets soft tissue sarcomas, the commercial footprint is essentially identical to Tecelra's and we expect significant channel synergies once we launch lete-cel.

We're also progressing uza-cel, our next-generation cell therapy, in the SURPASS-3 trial in ovarian cancer, which is currently enrolling and we'll be moving forward in partnership with Galapagos in a head and neck cancer Phase I trial with uza-cel on Galapagos' distributed manufacturing platform.

We are an integrated cell therapy company built from the ground up to design, develop and deliver cell therapy products to redefine the treatment of solid tumor cancers and we are now realizing this vision in real time. And with that, myself and members of the leadership team are happy to take any questions.

Operator?.

We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Marc Frahm with TD Cowen. Please go ahead..

Hey, thanks for taking my questions. Maybe just to start out, I mean, you mentioned that you've got a few ATCs already loaded on the website.

Are you seeing patients kind of flow through that website? And maybe could you characterize maybe any new sources of patients that you're seeing in terms of referrals and things like that? I know it's very early days, but just anything you're seeing there?.

Thanks, Marc. I'll ask Cintia Piccina to give you an update on early patient flows, et cetera..

Yes. Thank you for the question. It is really very exciting to see the enthusiasm from not only our treatment centers and future treatment centers as well, but also beyond across other sarcoma centers of excellence. Now with the approval, we're very excited to be able to treat patients.

So we are aware of patients that started the testing journey there in that process of identifying the visibility for Tecelra. And the majority of the new sources that we're seeing in terms of questions and interest and having potential patients to refer to the ATCs are coming from other sarcoma centers of excellence across the country..

Okay. Thank you..

Cheers, Marc..

The next question comes from Jonathan Chang with Leerink Partners. Please go ahead..

Hey, guys. This is Matt Cowper on for Jonathan Chang. Thank you for taking my question.

Could you comment on how the first version of ADP-600 stands out within the frame targeting space? And additionally will the initial clinical version incorporate next-generation enhancements like CD8 or will those be reserved for future iteration? And if so would introducing enhancements to be step-wise and similar to the MAGE experience? Thanks..

So I'm going to ask Jo Brewer, our Chief Scientific Officer to talk to that.

Jo?.

Hi. Thanks. Yes. So we are looking at next-gen approaches with our ADP-600 program. We are evaluating several in research and we're looking at how we can bring those forward to the clinic. And we will update on more firm plans with the ADP-600 program in the future..

Got it. Thank you..

The next question comes from Michael Schmidt with Guggenheim. Please go ahead..

Hi. This is Paul on for Michael. Thanks for taking our questions. Just on the ATC for Tecelra, it looks like the five active sites you've put on the website overlap with those that have afami-cel clinical trial experience.

Can you speak to roughly what proportion of synovial sarcoma patients are seeing in those particular centers? And then how long until the remaining 6 to 10 that you're targeting for initial sites are onboarded? And can you also comment on expectations for patient capacity in terms of perhaps treated patient per center I guess on a monthly basis? Thank you..

Cintia?.

Thank you for your question. So we are planning to onboard about, over time, about getting to 30 ATCs. These ATCs in total represent about 80% of the patients that are in the sarcoma centers of excellence today, which we believe to be about 50% to 70% of all the patients with some of those sarcoma that are across the country.

The ones that we have in our locator to already and the ones that are next in line in the process of being finalizing their onboarding are most of them clinic trial sites for afami-cel and they are the ones that we are planning to be the first ones that will be up and running. They already have experience.

We've started engaging with them several months ago. And then beyond that, some of the other ATCs would be lete-cel sites and then some others beyond just based on the volume of patients that they see..

And we've not given guidance to how many patients go through each site on a monthly basis, and it does vary somewhat depending on which site it is..

And we expect also that referral base to grow and change significantly now that there is a treatment available for synovial sarcoma in the specific sites. So as we see that volume coming in, we'll see that being reflected in our numbers..

Got it. Great. Thank you. And then perhaps just a quick follow-up. So you mentioned that patients don't necessarily have to be tested at the treatment center.

So do you have full visibility into sort of real-time testing metrics? How many patients are ID-ed that might be appropriate for treatment? And is it possible to provide, I guess, qualitative updates on that metrics? Thank you..

So we don't have -- so the testing is approved and it's available commercially. And they are run by labs that are independent labs that we don't really manage or control. We are going to have visibility to part of the testing metrics, but we don't have visibility to the full number of patients that are being tested.

And so for that reason, we're not going to be providing accurate testing numbers because we don't know what they are. We don't have a way to know what they are specifically. We hear anecdotal information, that's why I shared that we are aware of patients that are in the testing process, but we're not aware of all of them.

But some of them, when the treatment sites or the centers of excellence share with us, then we are aware of what's happening. The testing can happen from anywhere. We did provide in our tecelra.com website the path to testing for both MAGE-A4 and HLA as well.

And then at the moment that, that testing is initiated, then the labs will take over, you just send it to the labs..

The next question comes from Tony Butler with Rodman & Renshaw. Please go ahead. Tony, your line is open. You may ask your question..

Yes, I'm sorry. Thank you very much. Adrian, I wanted to move to SURPASS-3 for a moment. ClinicalTrials.gov suggests that 28 sites have been identified. What's interesting, though is roughly maybe even slightly less than 1/3 are in the US, the majority, ex-US. I assume that's somewhat strategic.

But I guess the question is, will more US sites be opened? And any thoughts around that? It may not necessarily matter, but the rate of enrollment is kind of important.

And then the part two of this question is, I would assume, and this is just an assumption, that given the ramp in that trial-trial costs, if in fact more sites were to be open and, in fact, the $114 million or, let's call it, $230 million a year roughly and costs would actually ramp, maybe not appreciably, but certainly ramp higher than the guidance you've given.

So any color would be help. Thanks..

Yes, thanks. So why don't I take a stab at that. And if you have follow-up questions, we can do that, too. So the majority of the sites that are going to be open for SURPASS-3 are already open.

And you're right, there are a significant number of sites ex-US, and that mirrors the pattern that we've had quite a lot of success recruiting both in the US and ex-US. And just a reminder, we're working with the Gynecological Oncology Group, GOG, to recruit the SURPASS-3 trial. Recruitment is going.

Enrollment is going well at the moment and we look forward to being able to complete enrollment next year and provide data subsequent to that. So that's going well.

In terms of the cost, the overall cost profile that I gave is a mix of what you've got to think about is there's also the cost of SURPASS-3, which is up and running and ongoing and a significant trial. But also there's been the historic costs over the 2023 and '24 of, for example, the SPEARHEAD set of trials associated with the approval of Tecelra.

And then also, of course, the ongoing, we've got to factor in the ongoing IGNYTE-ESO trial and the costs associated with that now we've taken that over from GSK. And so that's why we're comfortable with the position that our overall run rate will remain relatively consistent.

And that includes the fact that we've already recruited and made the investments in the commercial team in the first half of this year. And that's why we believe that will be, the cost will be broadly consistent going forward for the next 18 months..

Thanks, Adrian. I appreciate it..

Cheers. Thanks..

The next question comes from Graig Suvannavejh with Mizuho. Please go ahead. Graig, your line is open. You may now ask your question.

Hey, good morning. Sorry about that. Thanks for taking my questions and let me congratulate, Ad, you and the team on the approval. It's great achievement for the company and for patients as well..

Thanks, Graig..

A couple of questions if I could. Just on maybe the first question on your sales and projection of $400 million. I realize that's for the sarcoma franchise and I realize that's for the US.

Any color on how we should think about between the two products that you have realizing that lete-cel is not yet approved, but how you think about potentially the split of revenue between those two products? My second question, maybe it is one that you might be reticent to comment on, but just your level of comfort with how the Street is currently modeling the launch and revenue over the next, let's call it, six quarters as we look at the back half of this year and 2025.

I realize that you've been trying to guide us to be relatively gradual and how we think that's going to be. But just wondering if you had an opportunity just to see kind of where the Street is and whether you think we are doing a good job with that kind of more gradual approach..

Thanks, Graig. So with respect to the breakdown of the peak US sales estimate for the launch indications for our sarcoma franchise of $400 million, the best way of thinking about that is that the patient split is roughly 40% afami-cel, 60% lete-cel, so 40% Tecelra, 60% lete-cel.

And so the split of that peak year sales estimate, broadly speaking, follows that.

So on your second point, I think the key thing that we've been keen to ensure is that whatever you think the ramp-up of the sales for Tecelra is and I think you'll appreciate I'm not going to comment specifically on the analyst expectations, although I am pleased to see that people have sort of been paying attention over the last six months or so to the opportunity here, whatever you think that ramp-up is, I think, it's important to recognize that it is frame-shifted by two to three months from the launch date.

And that's the most important thing to get right in the short-term is.

And I think, by and large, people have done with first sales recognized in Q4 this year and those being relatively modest, representing the very front end of the patients as they flow through the manufacturing -- through the identification and manufacturing and then get treated in the quarter after launch.

So that's the biggest thing that I think has changed. And I do think the analyst community has picked up on that, that frame shift into Q4 this year..

Okay. Thank you. And then if I could ask one more just on lete-cel.

You might have mentioned this in your prepared comments, I might have missed it, but what are the gating steps for that BLA submission? And maybe just a follow-up, are you anticipating that we will see additional data on lete-cel before you file or is the data, from your perspective, already out there and pretty much we have what we or we have basically a view of the data that are available for the product? Thanks..

Thanks, Graig. Yes, I'll ask Dennis Williams to comment on those questions.

Dennis?.

Yes, sure. So I would say that for lete-cel, it follows the exact same regulatory pathway that we did for Tecelra. So we need a companion diagnostic. We need to supply the clinical data from IGNYTE-ESO, CMC information. And so basically we'll follow the exact same paradigm that we did for Tecelra.

I will say that we are looking forward to presenting primary data from the IGNYTE-ESO trial later this calendar year..

Okay. Thank you very much. Congratulations again on all of the achievements and progress..

Thanks, Graig..

The next question comes from George Farmer with Scotiabank. Please go ahead..

Hi. Great. Thanks for taking my question. Just wanted to ask about the absence of MRCLS on the label for Tecelra. Wondering, what sort of conversations went on with the FDA? And does that really matter? Certainly, you have lete-cel coming up. And then also with lete-cel, I understand, I believe that the product is manufactured in the UK.

Is that where commercial material will ultimately be originating from? And are there efforts underway to bring manufacturing over to the US?.

Okay. So I'm going to ask Dennis to talk about the label for and the data for Tecelra from the SPEARHEAD-1 trial and the MRCLS portion of that. And then I'm going to ask John Lunger to talk about the manufacturing for lete-cel for the approval and launch.

Dennis?.

Yes, sure. So I mean we made the decision to not pursue myxoid/round cell liposarcoma as a labeled indication some time ago and it really came down to the fact that the trial SPEARHEAD-1 was overwhelmingly synovial sarcoma. So it would be challenging, I think, for a regulatory review to have such limited patient numbers.

There were only eight patients with myxoid/round cell liposarcoma treated in the trial. And we just thought that it would add a lot of regulatory burden to an application where we really wanted to get the approval in synovial sarcoma. As you mentioned, right now that we have lete-cel, this is less of a concern for us.

Lete-cel is the NY-ESO-1 expression in myxoid/round cell liposarcoma, it's much higher than MAGE-A4 expression in myxoid/round cell liposarcoma. So from a target perspective, lete-cel is, where expression is north of 80% of that population is a much more appropriate target to pursue for that indication.

And then John?.

Yes. Hi. So as far as the manufacturing of lete-cel, the actual manufacturing that was primarily done for the IGNYTE trial was in a contract manufacturer in Germany, not the UK. So as you can imagine, our primary objective is speed to market for lete-cel.

And so making changes to the supply chain related to that particular filing is probably a risk that we don't necessarily want to take. However, we are looking at adding a US site, whether that's our own or another CDMO for the future to the lete-cel supply chain to better enable the supply into the States..

Okay. Great. Thanks for that and congratulations on all the progress..

Thanks, George..

The next question comes from Arthur He with H.C. Wainright. Please go ahead..

Hey, good morning, team. Thanks for taking my question. So I had two questions. So first, thanks for the update on the onboarding for the ATCs.

But on the, at the same time, just curious, could you guys give us the onboarding progress for those center of excellence for as a referral network? How should we think about those things to support the launch?.

Cintia?.

Sure. So, yes, we do have a lot of activity going on with the sites that will eventually become authorized to treatment centers and also to the sarcoma centers of excellence that we'll be referring patients to the future ATCs. So our field teams across both medical affairs and commercial target both the future ATCs and current ATCs and beyond.

So that already -- that work already started in terms of educating the broader sarcoma centers of excellence into the new biomarkers, the importance of testing patients as early as possible and then into referring the patients that are positive to both biomarkers to the treatment sites.

So that work started with our few teams and we'll see these referrals already started to come in through the ATCs..

Awesome. Thanks, Cintia. And my second question is regarding the lete-cel.

So could you, so is there, before you guys submit the rolling submission or BLA, do you see a need to meet with the FDA? And if so when or at what circumstance you can request the meeting?.

Dennis?.

Yes, sure. I mean we've already had meetings with the FDA, and we will continue to have meetings with the FDA. This is really the advantage of having, in this case, lete-cel has breakthrough therapy designation. And one of the main advantages of that is to have frequent interactions with regulatory agencies.

So we'll be talking about a lot of things related to the rolling submission, how the application should be organized. I mean some of this, to be fair, like an earlier comment, I mean some of what we'll do with lete-cel is a bit of excuse the expression rinse and repeat of what we did with Tecelra.

But there are definitely some things that are unique, right? There's two different populations in this dataset. And so there -- and as John mentioned about the supply chain aspect. So there are some differences, but in general, I would expect to have many meetings between now and the submission of the rolling BLA next year..

Great. Thanks, Dennis, and I'll talk to you guys soon..

Thanks..

The next question comes from Yanan Zhu with Wells Fargo. Please go ahead..

Hi. Thanks for taking our question. Congrats on the progress. This is Kuan-Hung for Yanan. So can you share with us the overall time line from patient screening to the infusion? Like roughly how long does it take? And which part of the process can be accelerated? Thank you..

Cintia?.

Sure. So the time line between patient screening and infusion, over time, the testing can take a few weeks if you do both tests in parallel. And then from the time in which the a freeze take place all the way into the infusion can be received back into the site or to the patient, it takes about 30 days.

At the beginning of this process, because the testing just were approved, and we have to go also through reimbursement journey and the referral pattern from the beginning, we believe that the first patient is going to take a little bit longer into the whole process, can get more on a faster pace.

And so that's why we are anticipating to be able to treat our first patients in the first quarter of the year..

Got it. Thank you so much for that. And when do you expect to have broad payer coverage? Thank you..

So right now, in terms of Medicare, we already have -- it's already available. It's covered. For commercial patients, we expect similar coverage than what we see for CAR-Ts. At the beginning, it usually is through a single-case negotiation with the payers until a policy is established.

But it doesn't mean that we do have coverage, only that it can take a little bit longer because it will be through single-case agreements until where we established moving forward. So we expect to have good coverage at the beginning, it may take just a little longer..

Got it. Thank you so much for the colors..

Thanks..

The next question comes from Michael Kim with Zacks Small-Cap Research. Please go ahead..

Hey, everyone. Good morning and thanks for taking my questions. First, just assuming similar pricing and penetration rates for Tecelra and lete-cel, my math suggests peak sales of $400 million translates into roughly about a 50% to 55% market penetration rate.

So just wondering if you could maybe provide some color on sort of the underlying drivers behind your thinking..

Cintia?.

So a couple of thoughts. So first I think that the penetration rate for lete-cel is hopefully going to be faster, so the uptake faster because a lot of the treatment sites will be opened and have experienced with the testing and with having the patients being referred to and treated. So I would expect that to be greater.

The assumption in terms of potential number of patients is given more so by the eligibility based on HLA-A2 and then the MAGE-A4 and the NY-ESO expression in both tumor types.

And then the assumptions beyond that are really mostly assuming similar access rates than other products in the space and similar manufacturing success rates as we've seen in our clinical trials..

Got it. Okay. That's helpful. And then maybe just a second question. Appreciate your updated guidance on expenses over the next 18 months. And I know you guys have done a good job in terms of scaling up your sales infrastructure ahead of Tecelra approval. But just curious if your guidance includes the R&D funding from Galapagos.

And then any updates on sort of the anticipated time line for starting the proof-of-concept trial?.

So maybe I'll cover that briefly. So we've not included in that expense guidance the things that the revenue sources that offset expenses in that context. And you'll look back on our filings and you'll see that there are elements for both partnership income and R&D tax credits and things like that, that offset those expenses. So that's not included.

In terms of the timing, we've not updated beyond what we said at the time of the partnership with Galapagos, which is that we anticipate going into the clinic in head and neck as soon as humanly possible and that we're working with Galapagos to enable that..

Understood. Thanks for taking my questions..

Thanks..

The next question comes from Peter Lawson with Barclays. Please go ahead..

Hey, good morning. This is Alex on for Peter. Thank you for taking our questions. You previously talked about the possibility to do an interim analysis in the SURPASS-3 study. Just wondering if you could remind us kind of the timing for that and the gating factors for that in the study. Thank you..

Elliot, do you want to talk about the interim reads on SURPASS-3?.

Yes, just very briefly. I mean we do anticipate interim analyses that are built into the trial at certain junctures, the first one being after 13 patients are dosed in each arm. We have not provided specific guidance as to the time line for that.

But I also want to just advise that when we see that interim analysis, it will not lead us to disclose clinical data until the entire study has been enrolled in that it has the potential to be registration-enabling and we wouldn't want to put out clinical data that could bias the trial..

And that enrollment, full enrollment, we anticipate happening next year..

Great. Thank you..

Thanks..

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks..

Thank you, everyone, for your time today and your questions. We look forward to updating you as we progress the launch of Tecelra and, of course, the development of the rest of the pipeline to redefine how cancer is treated with cell therapies. Please don't hesitate to follow up if you would like to discuss anything further and have a great day.

Cheers..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..