Aug 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Allogene Therapeutics Inc earnings conference call or presentation Wednesday, August 5, 2020 at 12:30:00pm GMT

Allogene Therapeutics, Inc. - Chief Communications Officer

Allogene Therapeutics, Inc. - Co-Founder, President, CEO & Director

Allogene Therapeutics, Inc. - CFO

Allogene Therapeutics, Inc. - Chief Medical Officer and Executive VP of Research & Development

H.C. Wainwright & Co, LLC, Research Division - Analyst

Canaccord Genuity Corp., Research Division - Principal & Senior Healthcare Analyst

Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Allogene Therapeutics' Second Quarter 2020 Conference Call. (Operator Instructions) Please be aware that today's conference call is being recorded.

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

Christine Cassiano, Allogene Therapeutics, Inc. - Chief Communications Officer [2]

Thank you, operator, and good morning. Before market opened today, Allogene issued a press release that provides a corporate update and financial results for the second quarter ended June 30, 2020. This press release is available on our website at http://www.allogene.com.

We remind listeners that today's call is being webcast on our website and will be available for replay. Joining me on the call today are Dr. David Chang, President and Chief Executive Officer; Dr. Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer; and Dr. Eric Schmidt, Chief Financial Officer.

We continue to conduct calls from different locations, so we appreciate your patience should we have any technical difficulties.

During today's call, we will be making certain forward-looking statements. These may include statements regarding the success and timing of our ongoing and planned clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities, and 2020 financial guidance, among other things.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change. These statements may involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended June 30, 2020. You are cautioned not to place undue reliance on these forward-looking statements, and Allogene disclaims any obligation to update these statements.

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

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David D. Chang, Allogene Therapeutics, Inc. - Co-Founder, President, CEO & Director [3]

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Thank you, Christine. Good morning, and thank you for joining us on our second quarter conference call. The last few months have been very exciting for Allogene as we unveil the first clinical data from our AlloCAR T portfolio at ASCO. We were very pleased with the initial data from the ongoing ALPHA trial with ALLO-501 and what it means for our allogeneic platform as it paves the way for the development of ALLO-501A, which we expect to enter into a potential pivotal Phase II trial in 2021. Key findings from our initial Phase I data presentation include that ALLO-501 with ALLO-647 as a part of the lymphodepletion regimen was well tolerated with no dose-limiting toxicities, graft-versus-host disease or Immune Effector Cell-Associated Neurotoxicity Syndrome in heavily pretreated patients with advanced non-Hodgkin's lymphoma.

We continue to believe that our anti-CD52 antibody, ALLO-647, will be one of the important components in our ability to achieve the promise of AlloCAR T therapies. Initial data from the ALPHA trial supports our strategy with a higher dose of ALLO-647 being associated with a higher complete response rate.

Of the 8 patients who received a higher dose of ALLO-647 of 90-milligram, 5 or 63% had a partial response and 4 or 50% achieved a complete remission. While we await the additional follow-up on patients to assess the durability of response, especially those who are lymphodepleted with 90-milligram dose of ALLO-647, it is worth noting a couple of the important learnings that came out of the initial review of the Phase I data beyond what might be expected from a dose-escalation study.

I believe I can speak for Rafael in this as well, in that, as oncologists, it is critical to identify and understand the type of patients that have the potential to respond to a therapy and which do not. In the ALPHA data presented at ASCO, we observed a meaningful anti-tumor activity across multiple tumor histologists and patient baseline characteristics, the one exception being patients who are refractory to previous autologous CAR-T therapy. Initial data from ALPHA suggests such patients may have intrinsic resistance to CAR-T and we are keen to explore the science underpinning this resistance. Across all doses of ALLO-501 and ALLO-647, the overall and complete response rate in CAR-T-naive patients was 75% and 44%, respectively. Although follow-up was limited, these efficacy data are comparable to those reported from autologous CAR-T trial.

Lastly, this initial readout gave us a small peek at what may be one of the most exciting benefits of allogeneic cell therapy, on-demand treatment and the ability to redose patients. Overall, the time from enrollment to start of treatment average is 5 days. Early experience with redosing has been very encouraging. One case study we presented was a 62-year-old male patient with stage 3 follicular lymphoma, who had been refractory to 3 prior lines of therapy. His first AlloCAR T treatment was with 120 million cells of ALLO-501 and a 39-milligram dose of ALLO-647. He achieved a partial response at month 1, but progressed at month 2. Shortly after progression, he was retreated with another 120 million cells of ALLO-501, and this time, with the 90-milligram dose of ALLO-647. This retreatment led to a deeper response and the patient achieved a complete remission, which was ongoing as of the data cutoff.

While there is still much to be done in terms of understanding the potential for redosing, we, along with our clinical investigators and scientific advisory board are very excited to continue this exploration to optimize treatment outcome. We believe we are in an enviable position with the ability to utilize ALLO-501 ALPHA trial to inform our ongoing studies as we proceed in parallel with our ALLO-501A ALPHA2 trial.

From an efficiency standpoint, this is a great benefit as we plan for a potential pivotal Phase II trial of ALLO-501A in 2021. You will recall that ALLO-501A is our anti-CD19 AlloCAR T construct in which the rituximab recognition domain have been removed in order to allow a broader population of patients to receive therapy. We are pleased to report that we are successfully advancing our abbreviated dose escalation of ALPHA2. We have completed a cell dose level 1 cohort with lymphodepletion using the 90-milligram dose of ALLO-647 in combination with cyclophosphamide and fludarabine and are now dosing patients in the higher cell dose cohort. Rafael will provide more details on the design of ALPHA2 trial.

Enrollment has also continued in the universal trial of ALLO-715 targeting BCMA. The strategy and trial design of UNIVERSAL is in many ways similar to what we have done with ALLO-501. We have recently completed the initial dose-escalation portion of UNIVERSAL which evaluated 3 different cell doses of ALLO-715. The study is continuing to involve patients to evaluate additional doses, different lymphodepletion regimens, including those that utilize a higher dose of ALLO-647 and treatment expansions. Our plan remains to present initial data from the UNIVERSAL trial in relapsed/refractory multiple myeloma in fourth quarter at a medical meeting.

Lastly, as we review the progress we have made across our AlloCAR T platform, we are increasingly enthusiastic about the potential for ALLO-316, our anti-CD70 candidate and breaking down the various to solid tumors. CD70 expression can be found in solid tumors such as lung cancer, glioblastoma and renal cell carcinoma as well as hematologic malignancies, and with adequate preclinical safety, which makes this an exceptional target.

RCC, in particular, is known for being responsive to immune-mediated treatment. Hence, we believe it could potentially be responsive to CAR-T therapy. Patients with localized renal cell cancer undergo nephrectomy. However, 30% to 40% of the patients developed metastasis with a 5-year median survival rate less than 15% to 20%. While there has been industry progress in treating patients with metastatic renal cell carcinoma with a VEGF pathway targeting therapies and checkpoint inhibitors, many patients have come to this treatment-resistant disease.

Based on our excitement for this program, we have rapidly progressed ALLO-316, and we'll be filing an IND in renal cell carcinoma by the end of this year with a plan to initiate clinical trial in 2021. Operationally, we continue to manage our activities in the face of a challenging external environment.

Work from home has become a norm for most of our employees. We have also grouped our teams at Allogene, so those who need to be on-site for lab work had ample space to do so. This has allowed us to continue to advance all of our key clinical and preclinical programs, and I would like to thank our employees for their dedication and engagement during these difficult times.

We believe we are moving closer to our goal to have allogeneic cell therapy follow the success of autologous CAR-T therapy, while providing major benefits in time, convenience, reliability, scale and breadth of malignancies that can be targeted. Our efforts to validate aspects of our AlloCAR T platform sets the stage for our ability to advance multiple AlloCAR T candidates in the near term to midterm.

Longer term, the progress of autologous anti-CD19 CAR-T therapies are making beyond relapsed and refractory patients, including a recent approval in mantle cell lymphoma served to forge the path for how we might quickly expand indications for our AlloCAR T therapy, including ALLO-501A.

As we look to transform the field of cell therapy, our research team continued their work to identify and progress next-generation tools and technologies. And we expect these efforts to keep us at the forefront of innovation as this important therapeutic modality has the potential to serve many patients in need.

I will now turn the call over to Rafael for further updates on our research and development activities.

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Rafael G. Amado, Allogene Therapeutics, Inc. - Chief Medical Officer and Executive VP of Research & Development [4]

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Thank you, David, and I hope you are all staying safe. I'm extremely pleased to report that the initial data from our Phase I ALPHA trial from ALLO-501 presented in an oral session at the virtual ASCO meeting in May exceeded our expectations.

Responses were observed across all cell doses and tumor histologies, diffuse large B-cell lymphoma and follicular lymphoma, with an overall response rate of 63% and a complete response rate of 37%. With a median follow-up of 3.8 months, 9 of the 12 responding patients or 75% remained in response until the data cutoff. Included in their overall efficacy analysis are 3 patients who were refractory to prior autologous CAR-T therapy. The best response for these patients was disease progression within 3 months. None of these patients responded to AlloCAR T therapy. In CAR-T naive patients, the ORR was 75% and the CR rate was 44%.

As David noted, a higher dose ALLO-647 was associated with a higher complete response rate of 50%, deeper lymphodepletion and delayed host T cell recovery, while sparing neutrophils and platelets. One of the ongoing responders was a patient with an initial PR who progressed by month 2. This was a patient that David referred to earlier, who achieved a complete response after retreatment with the same dose of ALLO-501, a 90-milligram dose of ALLO-647.

I would like now to put this data into context. Firstly, the enrolled population was heavily pretreated. The median number of regimens was poor. 95% have stage 3 or stage 4 disease, and 86% of the 22 patients were refractory to the last regimen as defined by progression within 12 months of therapy. We treated a mix of follicular lymphoma and diffuse large B-cell lymphoma patients. This was done to collect as much information as possible in this Phase I study. We were able to gain clear signals of activity in both patients subsets.

You may recall from our ASCO investor meeting that we juxtaposed our initial data from the CAR-T naive patients in the ALPHA study with the results published from a range of autologous CAR-T studies. The point of that analysis was not to make direct comparisons that this study's varying composition, size, Phase II development, enrollment criteria and a number of other parameters, but rather to illustrate what may be possible with our CAR T. The results of this analysis showed clear similarities between autologous and AlloCAR-T in response rates at this early time point. While these promising initial findings will need to be confirmed with more patient experience and longer follow-up times, we believe we have answered yes to several important questions that the ALPHA trial aimed to address, namely, ALLO-501 can be successfully manufactured; ALLO-501 can be safely administered without causing clinically relevant graft-versus-host disease; ALLO-647 can be safely administered and it leads to dose-dependent lymphodepletion that associates with ALLO-501 expansion; and ALLO-501 can provide complete responses across multiple histologies.

Beyond these questions, we've also gained important understanding as to which patients may not respond to AlloCAR T therapy, how we may be able to improve patient outcomes with redosing, which continues in the current protocol and how to optimize lymphodepletion. In addition, the promising safety profile demonstrated by ALLO-501 and ALLO-647 opened up the potential to explore dosing in the outpatient setting.

Overall, these findings enhance our enthusiasm for what may ultimately be possible with the AlloCAR-T therapy platform. We look forward to our next data readout from the ALPHA trial, which we expect to be in late 2020 or early 2021.

Meanwhile, our Phase I/II ALPHA2 study is actively enrolling patients. ALPHA2 is a single-arm, open-label, multicenter study of ALLO-501A in non-HLA-matched adult patients with relapsed/refractory large B-cell lymphoma. Patients with follicular lymphoma are excluded. Patients must have received at least 2 prior lines of therapy, including an anthracycline and an anti-CD20 monoclonal antibody.

While prior autologous CAR-T therapy is ALLO, if the tumor remains CD19-positive in patients who previously responded to autologous CD19 CAR-T therapy, we are considering whether to enroll autologous CAR-T patients as we learn more from the ALPHA trial experience about the outcome of patients who had a meaningful response to autologous treatment.

The primary objective of Phase 1 is to evaluate the safety and tolerability of escalating doses of ALLO-501 in combination with ALLO-647, cyclophosphamide and fludarabine. Key secondary objectives include ALLO-501A cell kinetics, ALLO-647 pharmacokinetics and depth and duration of host lymphocyte depletion.

The study will replicate certain aspects of the ALPHA study to corroborate the findings from that trial. We initiated dosing with ALLO-501A at 40 million AlloCAR T positive cells, a dose cohort that was abbreviated to a single patient. The trial will follow a 3-plus-3 design with patients enrolling a dose level 2 cohort of 120 million cells, and a dose level cohort of 360 million AlloCAR T cells. We're using a total dose of 90 milligrams of ALLO-647 administered concomitantly with flu/cy. We continue to target moving into the Phase II portion of this study in 2021.

Our additional clinical focus is our Anti-BCMA AlloCAR T cell therapy for the treatment of relapsed/refractory multiple myeloma. We have a 3-pronged clinical strategy targeting BCMA. UNIVERSAL, our Phase I trial with ALLO-715 is well underway, and we are on track to report initial data from this trial in the fourth quarter of this year. This study was initially designed to explore optimal dosing of all the components of the lymphodepletion regimen, including ALLO-647, fludarabine and cyclophosphamide with patients receiving ALLO-715 at 1 of 3 doses: 40 million, 160 million and 320 million cells in a 3-plus-3 dose-escalation design.

As David noted, we have recently completed the initial dose-escalation portion of the UNIVERSAL trial using 39 milligrams of ALLO-647 and enrolling in other lymphodepletion cohorts, which admit fludarabine. The endpoints being assessed are safety, tolerability, death and duration of lymphodepletion, cell expansion and antitumor activity, including minimal residual disease rate.

Given the complexities of this disease and propensity for disease progression for patients with multiple myeloma, we are excited to explore regimens, which include both lower and higher doses of ALLO-647. We also look forward to applying all the lessons learned across our platforms, such as redosing as we evaluate ways to optimize therapy for this patient population in need of novel treatment.

The other 2 prongs of our BCMA strategy include exploring the use of a gamma secretase inhibitor in combination with ALLO-715 and investigating our TurboCAR technology platform to potentially enhance the efficacy of an anti-BCMA CAR T therapy in myeloma.

Since our last earnings call, we have advanced a regulatory discussion on how to best evaluate the combination of ALLO-715 with the gamma secretase inhibitor, nirogacestat, from our partners at SpringWorks Therapeutics. We expect to file an IND to support the clinical evaluation of this combination this year. The innovation behind TurboCAR could be a breakthrough as this technology has the potential to expand AlloCAR T cell viability and efficacy while reducing CAR-T cell dose requirement and overcoming exhaustion. These properties may enable CAR-T therapies in harder to treat hematologic malignancies and solid tumors. ALLO-605 will be our first TurboCAR clinical candidate. We are excited about what this technology may mean for next-generation AlloCAR-T therapy in multiple myeloma and anticipate submitting an IND for ALLO-605 in 2021.

At the American Society of Gene and Cell Therapy Annual Meeting in May, we presented preclinical findings on our TurboCAR technology. The versatility of this technology could allow us to harness the signaling of different cytokines. And we believe TurboCAR could eventually become a standard for AlloCAR T platform.

As our clinical teams focus on clinical trial progression for ALLO-501, ALLO-501A and ALLO-715, our research teams continue to progress our preclinical activities. Our preclinical work on ALLO-316, our anti-CD70 candidate, continues as we look to traverse the use of cell therapy from hematologic malignancies into solid tumors. Our ALLO-316 IND is planned by the end of this year in treatment-resistant renal cell carcinoma with the potential to study other malignancies in the future.

In addition to the above, preclinical work continues on candidates, such as ALLO-819, an investigational AlloCAR-T therapy targeting Flt3 as a novel treatment for acute myelogenous leukemia as well as earlier stage technologies, such as our induced pluripotent stem cell program.

We are relentless in our pursuit to bring AlloCAR T therapy to patients and are very excited by the strong momentum we've achieved across both our clinical and preclinical pipeline. I look forward to continuing to provide updates at scientific congresses.

While we continue to leverage our internal capabilities and our existing partners, we will also pursue innovation externally as we advance additional pipeline candidates and next-generation technology.

I'd like to now turn the call over to Eric to review financials.

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Eric Thomas Schmidt, Allogene Therapeutics, Inc. - CFO [5]

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Thank you, Rafael, and good morning. Let me start by thanking all of you on the call or those who may listen in later to the replay, for your ongoing support of Allogene in our efforts to bring AlloCAR T therapy to patients.

That support was particularly evident during our recent financing, which benefited from the participation of many new and existing shareholders. In June, we closed a follow-on offering that raised $632.5 million in gross proceeds prior to deducting underwriting discounts, commissions and offering expenses payable by us. Included in this figure is the exercise in full by the underwriters of their option to purchase additional shares of common stock.

As a result and as noted in our SEC filings and second quarter press release issued earlier today, our financial position is stronger than ever, with cash, cash equivalents and investments totaling $1.1 billion as of June 30, 2020. In the second quarter, our research and development expenses were $47.3 million, which included $8 million of noncash stock-based compensation expense. General and administrative expenses were $15.9 million for the second quarter of 2020, which includes $8.8 million of noncash stock-based compensation expense. Our net loss for the second quarter of 2020 was $61 million or $0.53 per share including noncash stock-based compensation expense of $16.8 million.

I am pleased to report that our build-out for our Newark manufacturing facility is continuing in full force. Thus far, we have experienced only minor delays as a result of the pandemic, and we remain on track to bring the manufacturing facility online in 2021. We maintain an expectation that our full year 2020 net losses will be between $260 million and $280 million, which includes an estimated noncash stock-based compensation expense of $70 million to $75 million and excludes any impact from potential business development activities.

With that, we will now open the call for your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Our first question comes from Phil Nadeau with Cowen and Company.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [2]

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Abiding by the one-question rule, I was wondering if you could give us a bit more detail on what we should expect from the Q4 data release from the UNIVERSAL trial? Are we likely to just see results from that initial dose escalation portion with the 39-milligram of ALLO-647? Or is it possible that we could get data from the additional cohorts?

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David D. Chang, Allogene Therapeutics, Inc. - Co-Founder, President, CEO & Director [3]

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So Phil, first of all, good morning, and I hope for those who are in the east coast weathering the storm well. I hear that it has passed and things are getting better. The question that you're asking about what to expect for the 715 data presentation at the year-end, I'm going to refer to the part 2, Rafael to answer the details. Rafael?

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Rafael G. Amado, Allogene Therapeutics, Inc. - Chief Medical Officer and Executive VP of Research & Development [4]

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We have, as David mentioned and I mentioned in the initial remarks, finished the dose escalation, so that was at 3 plus 3. We didn't have any DLT. We also put some patients, as I mentioned in my remarks, in the CA cohort as well. And we will treat some patients at 90 milligrams. The total number of patients that will make it into the end of the year presentation is still to be determined, but I think you can probably get an idea of how many patients, if you compare what we presented at ASCO so there would be a number thereabouts similarly to that.

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Philip M. Nadeau, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [5]

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And maybe just one follow-up. Can you give us an idea of the -- actually, the duration of follow-up for the patients that will be in that initial data release?

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Rafael G. Amado, Allogene Therapeutics, Inc. - Chief Medical Officer and Executive VP of Research & Development [6]

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You have to calculate what the median follow-up will be, but I think it's difficult to know. Obviously, the patients who have started at 40 million will have a much longer follow-up than the patients that started at the later doses. But that's a number that I think we will come up with once we do the analysis. We don't have that number right now.

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Operator [7]

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(Operator Instructions)

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