Cellectis Q1 2024 Earnings Call Transcript

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May 29, 2024

There are 10 speakers on the call.

Operator

Good morning, everyone, and welcome to the Selectus First Quarter 20 24 Earnings Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. Please be aware that today's conference call is being recorded. I'd now like to turn the conference over to your first speaker, Arthur Strel, Interim Chief Financial Officer.

Operator

You may begin.

Speaker 1

Good morning, and welcome everyone Selective's First Quarter 2024 Corporate Update and Financial Results Conference Call. Joining me on the call today are Doctor. Andre Schulika, our Chief Executive Officer and Doctor. Marc Frattini, our Chief Medical Officer. Yesterday evening, Selectus issued a 6 ks in a press release reporting our financial statements for the 3 months period ending March 31, 2024, and a corporate and business update.

Speaker 1

The report and press release are available on our website at selectus.com. As a reminder, we will make statements regarding Selectus' financial outlook, including the sufficiency of cash to fund operations in addition to its manufacturing, regulatory and product development status as well as product development status of its licensed partners. These forward looking statements, which are based on our management's current expectations and assumptions and on information currently available to management, including information provided or otherwise publicly reported by our licensed partners, are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Form 20 F filed with the Securities and Exchange Commission, SEC, and the financial reports, including the management report for the year ended on December 31, 2023, and subsequent filings Selectus makes with the SEC from time to time. I would now like to turn the call over to Andre.

Speaker 1

Thank you, Arthur.

Speaker 2

Good morning and thank you everyone for joining us today. Last November, we were excited to announce our strategic collaboration and investment agreement with one of the most impressive pharmaceutical company of the past decade, AstraZeneca, to design and shape next generation of cell and gene therapies. In this agreement AstraZeneca made an initial investment of $105,000,000 to select this composed of an $80,000,000 equity investment in exchange of 16,000,000 ordinary shares at $5 per share and a $25,000,000 upfront payment under the joint research collaboration agreement. This month we're proud to announce the closing of the additional equity investment of $140,000,000 by AstraZeneca. As part of the additional investment, AstraZeneca subscribed for 10,000,000 Class A convertible preferred shares and 18,000,000 Class B convertible preferred shares in each case at a price of $5 per convertible preferred shares.

Speaker 2

Today AstraZeneca owns approximately 44% of the share capital of Selectus and 30% of the voting rights. In addition, the appointment of Mr. Mark Denoyer and Doctor. Tyrell Rivers as members of the Board of Director of Selective is now effective. Following AstraZeneca's additional investment, we expect our cash runway to fund operations into 2026.

Speaker 2

Selectus will continue to focus its efforts and expenses on advancing its core clinical trials, ALAE-one, NATALAE-one and AMAE-one, our wholly owned assets, while building the next generation of genomic medicine to address areas of high unmet patient needs within our partnership with AstraZeneca and within our proprietary preclinical pipeline. We strongly believe that gene edited cell and gene therapies are revolutionizing medicine across a number of therapeutic areas and will become a large part of molecular medicine in the future. Quarter, we have also announced the appointment of Arthur Strel as Interim Chief Financial Officer following the resignation of Bing Wang. First of all, I would like to warmly thank Bing for the great 2 years he has been at Selectus. It has been a huge honor and a pleasure for us all to work alongside with him and wish him great success in his next adventures.

Speaker 2

Arthur has been managing Selective's Business Development and Portfolio Management teams since 2020 and most recently led the execution of company's strategic collaboration investment agreements with AstraZeneca. Through his past responsibility, Arthur has a deep knowledge and detailed understanding of Selectus. He will be of tremendous value to Selectus as Interim Chief Financial Officer as we advance our critical pipeline of asset into expansion and pivotal trials and explore new opportunities. With that, I would like to turn the call over to Doctor. Marc Frattini, our Chief Medical Officer, who will give an overview of our clinical trials.

Speaker 2

Marc, please go ahead.

Speaker 3

Thank you, Andre. As Andre mentioned, Selectus continues to focus its development efforts on the BOLI-one, AMALI-one and NAASLI-one studies. Last December, we shared updated data in a poster from our BOLI-one trial at the American Society of Hematology Annual Meeting. In vitro comparability study suggested that UCART22p2 manufactured in house by CELLECTUS is significantly more potent than UCART22P1 manufactured by an external CDMO. As of July 1, 2023, 3 patients were enrolled in the first UCART22p2 cohort at dose level 2, 1,000,000 cells per kilogram.

Speaker 3

UCART22p2 was administered after fludarabine, cyclophosphamide and alemtuzumab lymphodepletion and was well tolerated. No dose limiting toxicities, our immune effector cell associated neurotoxicity was observed. The cytokine release syndrome observed was limited to Grade 1 or 2. There was a higher preliminary response rate of 67% at dose level 2 with 1,000,000 cells per kilogram using UCART22p2 compared to a 50% response rate with a dose 5 times higher at dose level 3, 5,000,000 cells per kilogram using UCART22p1 that was manufactured by an external CDMO. UCART22 expansion was observed in the responding patients and correlated with in serum cytokines and inflammatory markers.

Speaker 3

The study continues to enroll patients using UCART22p2. I will now speak about our NATALI-one study, a Phase 1,IIa dose finding and expansion study evaluating UCART20 by 22 in relapsedrefractory B cell non Hodgkin lymphoma. UCART 20x22 has been fully manufactured in house by Cellectis at a Raleigh manufacturing facility. Selectus presented a poster with the preliminary results from the NACLEA-one trial at the annual ASH 2023 meeting in December. As of July 1, 2023, 3 patients were enrolled and treated at dose level 1, 50,000,000 cells flat dose.

Speaker 3

Cytokine release syndrome grade 1 or 2 occurred in all patients and resolved with standard of care treatment. No immune effector cell associated neurotoxicity or graft versus host disease was observed. There were no UCAR-twentytwenty two dose limiting toxicities and there was one dose limiting toxicity related to alemtuzumab of CLS-fifty 2. All patients responded at day 28 with 1 partial metabolic response and 2 complete metabolic responses in patients who had failed prior autologous CD19 CAR T cell therapies. UCART 20x22 expansion correlated with increases in serum cytokine and inflammatory marker levels as well as with CRS.

Speaker 3

These initial data with all three patients responding at the starting dose of 50,000,000 cells per patient support the continued study of UCAR20x22 in relapsedrefractory B cell non Hodgkin lymphoma. The study continues to enroll. Lastly, I will speak about our AMALY-one study evaluating UCART-one hundred and twenty three in patients with relapsedrefractory AML. The AMALY-one study continues to progress and currently enrolling patients after fludarabine, cyclophosphamide and alemtuzumab lymphodepletion in a 2 dose regimen arm. With that, I would like to hand the call over to Arthur Stryl, Selectus' Interim Chief Financial Officer, for an overview of our finances for the Q1 of 2024.

Speaker 3

Arthur, please go ahead.

Speaker 1

Thank you, Marc and Andre. I'm very excited to step into the role of Interim CFO and continue working with Selectus' team, shareholders and partners at such an important moment for the company. I would like to highlight that in our financials, the cash, cash equivalents, restricted cash and fixed term deposit classified as current financial assets as of March 31, 2024 amount to $143,000,000 compared to $156,000,000 as of December 31, 2023. This $13,000,000 decrease is mainly due to cash payments from Selectus to suppliers of $13,000,000 including $9,000,000 to R and D suppliers and $4,000,000 to SG and A suppliers. Selectus' wages, bonuses and social expenses paid of $15,000,000 the payments of lease debts of $3,000,000 and the repayment of the PGE loan of $1,000,000 partially offset by the $16,000,000 cash received from EIB pursuant to the disbursement of the €15,000,000 tranche B and $2,000,000 of cash in from our financial investments.

Speaker 1

With cash and cash equivalents of $123,000,000 and a $15,000,000 term deposit maturing in May 2024 classified as a current financial asset as of March 31, 2024 and taking into account the $140,000,000 equity investment received on May 3, 2024 from AstraZeneca pursuant to the subsequent investment agreement, the company believes its cash and cash equivalents will be sufficient to fund its operations into 2026 and therefore for at least 12 months following the unaudited interim condensed consolidated financial statements publication. The consolidated net income attributable to shareholders of Selectus was $5,600,000 or a 0.08 income per share for the 3 months ended March 31, 2024, compared to a $30,100,000 loss or CAD 0.58 loss per share for the 3 months ended March 31, 2023, of which CAD 27,800,000 was attributed to Selective's continuing operations. This $38,200,000 difference was primarily driven by an increase in revenues and other income of $2,900,000 a decrease of $700,000 in non cash stock based compensation expense due to a decrease in the average unit fair value of stock options and free share awards vesting between the two periods a $30,700,000 change from a net financial loss of $4,400,000 to a net financial gain of $26,300,000 and a decrease in net operating expense of $600,000 and a $2,500,000 decrease in net loss from discontinued operations attributable to shareholders of Selectus, partially offset by an increase of $1,300,000 in purchases, external expenses and an increase of $400,000 in wages.

Speaker 1

The consolidated adjusted net income attributable to shareholders of Selectus was $6,500,000 or $0.09 income per share for the 3 months ended March 31, 2024, compared to a net loss of $28,100,000 or $0.55 loss per share for the 3 months ended March 31, 2023. We are focusing our spend on developing our clinical candidates UCART22, UCART2022 and UCART123 and operating our state of the art cell and gene therapy manufacturing facilities in Paris and Raleigh. Research costs under the should also enable more limited growth in G and A spend. And now, I would like to turn the call over to Andre for closing remarks.

Speaker 2

Thank you, Arthur. To close out this call, I would like to reiterate how excited we are about our strategic collaboration with AstraZeneca and how much confident we are about the continued progress of our 3 ongoing clinical trials in hematological malignancies as well as our continued development of our clinical programs. Selective, we strongly believe that our product candidates, our technologies, our in house manufacturing capabilities will lead us and our partners to paradigm shift for patients with hard to treat cancers positioning us at the forefront of this promising medical and scientific field. With that, I would like to open the call for Q and A.

Operator

Thank you. At this time, we'll be conducting a question and answer Our first question comes from the line of Gina Wang with Barclays. Please proceed with your question.

Speaker 4

Thank you for taking my questions. Also want to congrats on the completion of AstraZeneca deals. So now with AstraZeneca on board, so wondering if there are any strategic change regarding the strategy from a Selective's perspective? And also how much AstraZeneca can have access to your manufacturing capability and both in New Jersey and in Paris? And lastly, very quickly regarding the upcoming data by the year end 2024, I assume you very likely will be at ASH.

Speaker 4

Can you give us the status of the enrollment for both VALI and NATALY-one? And what kind of data sets should we expect to see?

Speaker 1

Great. Thank you so much, Gina. This is Arthur. I'm going to take the first question on the strategy and the AstraZeneca piece, and then I'll hand it over to Mark for the data updates. So I mean, we're obviously very excited to have completed the subsequent investment and now have AstraZeneca fully on board.

Speaker 1

I mean, as you have seen from their recent disclosures, they're betting very hard and very long term on cell and gene therapy and having them as a strong partner across a number of indications, not just oncology, but also immunology and rare diseases is going to be very important. So the strategy on our wholly owned asset has not changed. We're still pushing 2022, 20 by 2022 and 1, 2023 very hard and Marc will give you an update on where we stand. Obviously, the big change is we are going to be doing these novel programs with them across a wide range of indications in the cell and gene therapy space. And we also have a new strategic shareholder that is strongly invested in the space and that has this long term vision, which we're very excited to have.

Speaker 1

Regarding your question on manufacturing, so as you know, under the collaboration, we're going to do up to 10 cell and gene therapy programs together. And the agreement allows for the possibility for AstraZeneca to leverage our manufacturing capabilities, both the starting materials, but also the final cells that we have in Raleigh to for Cellectis to be manufacturing these programs. So that's definitely one of the driver of the interest of AstraZeneca. And maybe I'll hand it over to Mark for the data updates.

Speaker 3

Hi, Gina. It's Mark. Thanks for the questions. And I think as you know, our last disclosure for data was at ASH last year in December. We have continued to enroll, obviously, on both of these studies you asked about 22 and 20 by 22.

Speaker 3

We expect to have data disclosure at the end of the year this year for both of these studies. Regarding 2022, ideally, we will be completing the expansion part of the 22 study this year. So we'll move ahead from that. And for 20 by 22, we continue enrollment and expansion and actually hopefully, we'll be in the same place near completion of the escalation phase by the end of this year.

Operator

Thank you. Our next question comes from the line of Kelly Hsieh with Jefferies. Please proceed with your question.

Speaker 5

Hi, congrats on the progress and thanks for taking our question. This is Dave on for Kelly Shee. So on UCaa 22 by 20, can you add some color how many sites are active right now? And will you be able to identify RP2D by year end? And if you are enrolling 3 patient per dose level, so should we expect around 10 to 12 patient data by year end?

Speaker 5

Thank you.

Speaker 1

Mark?

Speaker 3

Hi. Thanks for the question. So, obviously, I can't go into a lot of details about all the sites, but I can tell you that we have sites open in the U. S. And in the EU, both in France and Spain, currently enrolling on this study.

Speaker 3

Regarding the progress with 20 by-twenty 2, we continue to enroll in the escalation phase and we hope to be completed with the escalation by the end of this year. So to your point, in terms of we would at that time, there would be RP2D declared as we hope in the expansion part

Speaker 2

of the study.

Operator

Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Please proceed with your question.

Speaker 6

Hi, this is Lydia on for Salveen. Thanks so much for taking our question. Can you provide any further granularity on the cadence of readouts across the programs this year? And what your expectations are for the respective datasets? Thanks so much.

Speaker 1

Hi, Lydia. Thank you so much for the question. That's definitely one for Mark.

Speaker 3

Hi, thanks. So yes, as you just heard from the prior 2, so for 2022 and 2020 by 2022. For 2022, we will be completing escalation and we will discuss the data results later this year. For 2020 by 2022, again, we are also continuing enrollment in the escalation with the aims of completing escalation and discussing that at the end of this year as well. And for the 123 study, I think as you know, we reverted to a new treatment paradigm where we're giving actually 2 doses of the cells for AML since it's a highly aggressive, highly proliferative disease.

Speaker 3

And so we continue to enroll in this 2 dose regimen part of the cohort. And when we have sufficient data, we will be disclosing that as well. But it continues to actively enroll currently.

Speaker 4

Thanks so much.

Operator

Thank you. Our next question comes from the line of Jack Allen with Baird. Please proceed with your

Speaker 7

Great. Thanks so much for taking the questions and congratulations on the progress. The first one was on AstraZeneca. I was hoping you could provide some color as to where things sit as it relates to the collaborative work you're doing with the large pharma here and when we might expect to hear the first program announced. Then I was also hoping you could talk a little bit about how you're thinking about potential plans in autoimmune indications.

Speaker 7

And then finally, if I may, I wanted to ask about what the expectations are for the year end updates from VAL-one and not only 1 as it relates to durability. How are

Speaker 3

you thinking about the bar

Speaker 7

for success in those studies with the allogeneic platform here?

Speaker 1

Hey, Jack. This is Arthur. Thank you so much for the questions. I'll take the one on AstraZeneca. So the work has definitely kicked out in full gear.

Speaker 1

There's a ton of discussion and interactions at all level within the AstraZeneca and Alexion teams. So as you know, there was already an initial amount of work that had been done on pre selecting because AstraZeneca preselected 25 targets. So we're starting from a shorter list. And there's a lot of discussion ongoing on selecting the first program and getting them into gear. So we're very excited and obviously there's a ton of connectivity between the research teams at all level.

Speaker 1

And we're looking forward to be providing updates as to the first programs when that makes sense. And I think there's a question on the data for Mark.

Speaker 7

Yes. I was just wondering if Mark had any thoughts on how we should think about durability and what the bar for durability should be as we look towards the year end 2024 updates and these responses hopefully?

Speaker 3

Yes. Thanks, Jack. So, yes, as you know, we're we will discuss completion of escalation for 2022 and continued enrollment and complete completion of escalation for 2020 by 2022 as well. I think as standalone products in the disease space, I think the bars, I think are pretty well set, particularly in terms of what the regulatory agencies would want to see and particularly is like for the relapsedrefractory ALL space, there would be a 3 month, a CR within 3 months timeframe is what the agencies would be looking for. And I think for 20 by 22 in the NHL space, we're looking at something closer to 6 months.

Speaker 3

And

Speaker 1

Jack, this is Arthur again. Sorry, I didn't mean to skim your question on autoimmune. So this is, I mean, definitely an interesting space that we're monitoring very carefully and we're looking at the development in that space. It's also a space where we think the allogeneic value proposition is going to be absolutely critical given the size and potential scope of the market opportunity. We want to address it in a smart and thoughtful way.

Speaker 1

So we're definitely looking into this and monitoring the space. And again, we'll update when it makes sense. Thanks for the question. Thank you.

Operator

Thank you. Our next question comes from the line of Luisa Moragato with Van Laanschach Kempen. Please proceed with your question.

Speaker 4

Hi, Tim. First of all, indeed, congrats on the completion of the investment from AstraZeneca. I think most my questions have been answered so far, but I do have one. In terms of the partner programs, could you just give a brief overview on what we should be on the lookout, let's say, throughout this year? What would you highlight on that side?

Speaker 1

Thank you, Luisa, for the question. I mean, we talked about AstraZeneca at length. I think the I can reiterate the guidance that Allogene has provided on the anti CD19 and anti CD70 programs. And obviously, we'd direct to them for future updates. I think the first one is they announced that the start activities for the ALPHA-three trial, which will be semacel, so previously ALLO-five 01A in the first line consolidation are ongoing and they're planning a study initiation in the middle of this year.

Speaker 1

And they also have an ongoing enrollment in the relapsedrefractory CLL I ALPHA2 trial also of SemaCell. So that's going to be interesting to see how SemaCell moves forward. And they also announced that they're planning by year end the Phase 1 data update of the TRAVERSE trial, which is ALLO-three sixteen, the anti CD70 in renal cell carcinoma. So we're also looking forward to this.

Speaker 4

Okay. That's all for me. Thank you so much.

Operator

Thank you. Our next question comes from the line of Yigal Nochomovitz with Citi. Please proceed with your question.

Speaker 8

Hi, this is Amin on for Yigal. Thank you for taking our questions. We had a couple. First on dose expansion strategy, do you see a scenario that the dose expansion studies could convert to registrational studies? And if so, what would be the timeline look like?

Speaker 8

And then the second, I wanted to know what do you think the target population would be for a registrational trial? Is that going to be something like a relapse refractory following the CD19 treatment?

Speaker 1

Hi, thank you so much. I think these are 2 great questions, definitely for Mark. Mark, we can't hear you.

Speaker 3

Sorry, pardon me, I was on mute. Thank you for the question. So I think in terms of the expansion part of the study, yes, indeed, these could potentially be pivotal expansions at this level. As you know, however, this in terms of number of patients and timeline, etcetera, will require some additional discussions with the regulatory authorities in order to nail this down. So these are things that are actively being discussed at this time.

Speaker 3

I think in terms of your other question in terms of target populations, I think particularly in the in both disease spaces, I think for 2022, we're talking about relapsedrefractory ALL, as you know, and these will be include patients who have received prior CD19 directed CAR T cell therapy or patients for whatever reason could not be eligible to receive prior CD19 CAR T cell therapy. And similar situation in terms of the relapsedrefractory non Hodgkin lymphoma space as well.

Speaker 8

Okay, got it. Great. Thanks very much for taking our questions.

Operator

Thank you. Our next question comes from the line of Yanan Xu with Wells Fargo. Please proceed with your question.

Speaker 9

Hi, thanks for taking our question. This is Kwan on for Yana. So two questions from us. First for 2022 and 2022, can you remind us what dose level has been planned for the studies? And are you planning to also explore fixed dosing for 2022?

Speaker 9

And second question is any colors on the safety data from the patients beyond ASH update for these two studies? Thank you.

Speaker 1

Great. Thank you so much for the two questions, also for Mark.

Speaker 3

Yes. Thank you for the question. So in terms of the dose level, I mean, what we've disclosed to date is that originally for 2022, we were at 1,000,000 cells per kilo at dose level 2. And for 20 by 22, we were at 50,000,000 cells flat dose. Obviously, we have been escalating those since the last data hiccupix disclosure and we will update later this year in terms of where we're landing in terms of dose levels for both of these studies.

Speaker 3

I missed the one question you asked something about dosing with 22, I missed that. Could you repeat that please?

Speaker 9

Yes, sure. Just curious if you are also planning to explore fixed dosing for 2022?

Speaker 3

No. For 2022, we're going to keep a weight based dosing obviously because of the great age criteria in terms of this study from the very young to the very old. So we will like most all studies in the ALL space continue with a VoIP based dosing for 2022.

Speaker 9

Got it. And any colors on the safety data from patients beyond the ASH update? Thank you.

Speaker 3

Yes. So, so far we have not disclosed. We will later this year. As you know, so far the both products were very safe and well tolerated with no DLTs related to the cells and no graft versus host disease and no ICANS and the CRS limited to grade 1 and 2.

Speaker 9

Got it. Thank you for the color.

Operator

Thank you. Our next question comes from the line of Hartaj Singh with Oppenheimer. Please proceed with your question.

Speaker 4

Hey, everyone. Thanks for taking the questions. This is Fang for Hartaj. We have questions for 2020 by 2022. So as we've talked before, it seems like this program has a great potential in EU market because like less competition there.

Speaker 4

So can you elaborate to talk about that? Thanks.

Speaker 1

Thank you so much for the thoughtful question. I'll leave it to Mark.

Speaker 3

Yes. Thank you. So yes, as you point out, there is just based on the slot availability for autologous CAR T cell therapy in the EU, it is much less than the U. S. U.

Speaker 3

S. So there is a need for this in the EU as well, obviously. And so we have opened up, as I said earlier, we have sites in France and sites in Spain that are currently open and we are obviously will be looking to open other countries as well.

Speaker 4

Got it. Thank you.

Operator

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Shweta for any final comments.

Speaker 2

Thank you very much everyone for your time. It was really appreciated to have all these questions and enthusiasm. We're really excited by 2020 4 and what's going to happen in the coming years after 2025, 2026. I think the company is within a year where things are meaningfully changing on the shape of the company. And I'll give you a rendezvous for the next time and I think that we'll share more of the execution inside the company.

Speaker 2

Thank you very much and wish you a good day.

Operator

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

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