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Autolus Therapeutics Plc(NASDAQ:AUTL)Q12020 Earnings CallMay 07, 2020, 8:30 a.m. ET

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Autolus Therapeutics first-quarter 2020 financial results and operation highlights conference call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand your conference over to your speaker today, Mr. -- excuse me, Dr.

Lucinda Crabtree, vice president of investor relations. Thank you. Please go ahead, ma'am.

Lucinda Crabtree -- Vice President of Investor Relations

Thank you, Carrie. Good morning, and -- or good afternoon, everyone, and thank you for taking part in today's call on the financial results and operational highlights for the first quarter of 2020. I am Lucinda Crabtree, vice president of investor relations. With me today are Dr.

Christian Itin, our chairman and chief executive officer; and Andrew Oakley, our chief financial officer. Before we begin, I would like to remind you that during this call, we will be making forward-looking statements. All statements other than statements of historical facts contained in this presentation are forward-looking statements. Our actual results, performance or achievements may be materially different from those expressed or implied by the forward-looking statements.

For a discussion of the risks and uncertainties related to our business and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, please see the section titled Risk Factors in our annual report on Form 20-F filed on March 3, 2020, as well as discussions of potential risks, uncertainties and other important factors in our other periodic filings with the SEC. The forward-looking statements contained in this presentation reflect the company's views as of the date of this presentation regarding future events, and the company does not assume any obligation to update any forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing the company's views as of any date subsequent to the date of this presentation. So with that, on Slide 3, you will see the agenda for today, and it is as follows: Christian will provide a brief introduction, and that will be followed by our operational highlights for the first quarter of 2020.

Andrew will next discuss the company's financial results, and then Christian will conclude with upcoming milestones and other concluding comments and, of course, we welcome your questions following our remarks. So with that, I'd like to now turn the call over to Christian. Thank you.

Christian Itin -- Chairman and Chief Executive Officer

Thank you, Lucinda, and welcome to all of you, and thank you for joining us. I'm pleased to review our progress for the first quarter in 2020. First, on Slide 5, we are pleased to report on a very productive first quarter. We remain on track with our clinical programs, despite the challenges of COVID-19.

As an organization, we have quickly adapted to this very challenging environment, ensuring business continuity. Our focus has been on ensuring our clinical B-cell programs, AUTO1 and AUTO3, continue to progress, and we remain on track with recruitment ongoing and manufacturing operations uninterrupted. As such, we expect to deliver data in the time lines that we have previously guided. While some of our participating clinical centers have been an infection hotspots and had to pause enrollment for a few weeks, others could continue to work unimpacted.

We expect infections will continue throughout the year with flare-ups in places that were hit by the first wave of infections, while the areas spared for now may see a rise in infections at some point in the upcoming months. However, what is important to remember is that the patients we enroll in our trials have a very high medical need, no different from a severe COVID-19 patient and the drive for centers to continue to treat these cancer patients is very high. Typically, if a center gets under heavy pressure from COVID-19 infections, stem cell transplants and CAR-T therapy are among the last procedures to be stopped and are among the first to resume the post-peak infection. As many of you have analyzed, the tie from establishing social distancing and stronger measures to reaching the other side of the first infection peak has in all impacted areas taken approximately eight weeks, irrespective of whether the measures were taken early or late relative to the rise of infections.

The consistency of this infection pattern is helpful to anticipate the time of impact on a given center and catchment area. Finally, we expect the increasing levels of preparedness and adjustments under way in the various healthcare systems, and the continued implementation of social distancing measures that will allow for continued treatment of these severely ill patients throughout the year. We expect that the adjustments we made for clinical trial operations and in our supply chain will remain relevant and in place for the duration of this infection cycle, plus the wider operational adjustments we made to minimize risk of infection and exposure as well as increased resilience toward the risk of business interruptions will also remain in place and, if necessary, will be adjusted. With regards to our earlier-stage programs, we are monitoring potential impact.

At this point, we may see up to a quarter of delay depending on the program and the impact COVID-19 had on our respective academic or business partners. With that, and remaining on Slide 5, let me give you an overview of our corporate highlights. We announced in April that the FDA accepted the IND application for AUTO1, our lead CAR-T product candidate, for the treatment of adult patients with acute lymphoblastic leukemia, which allows us to initiate clinical sites in the company's first pivotal study, AUTO1-AL1 in the U.S. This followed up the opening of the first site in the U.K.

in March of this year, having received approval of the clinical trial applications by the MHRA earlier in the quarter. We expect to initiate dosing of our first patient in this study this quarter, and remain on track to provide full data by the end of 2021. With regards to our lead product candidate for the treatment of DLBCL AUTO3, the Phase 1/2 ALEXANDER study is ongoing. The timing of the program remains on track, and we will update on the decision for Phase II in mid-2020, as previously guided.

We're excited about our DLBCL program and its broader market potential, following the positive data update we provided at the EHA-EBMT CAR-T Cell Meeting in February 2020. Our Chief Scientific Officer, Dr. Martin Pule, presented early encouraging signs of sustained complete responses we've achieved with low toxicity and minimal patient management required. We're now planning to add a 20-patient cohort to the ongoing ALEXANDER study in second half of this year, with patients treated in an outpatient setting, which I will explain -- expand on a little later in this call.

The last item I wish to touch on in this slide is our forthcoming clinical data updates expected through May and June. For AUTO1 in adult ALL, we plan to present updated data at the virtual EHA Meeting in June with approximately six months of additional follow-up post our ASH 2019 data cut. For AUTO3, we are planning to present these updated data at ASCO in an oral session. We will also follow up with a similar presentation at the EHA Meeting two weeks later.

We plan to present both sets of data to investors in calls shortly following these virtual conferences. Moving to Slide 6, in addition to our two lead clinical candidates, we're planning a series of preclinical data updates on some of our pipeline programs at AACR II in late June. We have been invited to make an oral presentation in our prostate cancer program AUTO7 and and also have poster presentations planned for both AUTO6NG in small cell lung cancer as well as AUTO5 assisted program to the AUTO4 in T-cell lymphoma. Much like ASCO and DHA, we're planning an investor call that will shortly follow these presentations at AACR II.

Finally, I would like to thank our partners at the cell therapy, Catapult, and the GSK site organization in Stevenage for their continued support that enabled us to maintain operations throughout the peak of infection and support the critically ill patients in our trials. Moving to Slide 7, I wanted to spend a brief moment recapping on our lead program AUTO1 in adult ALL. Relapsed/refractory adult ALL is a challenging disease and often impacted in elderly patients. A lot of these patients have significant comorbidities, making them a fragile patient group to treat.

The indication is approximately three times the size of relapsed/refractory pediatric ALL and represents an attractive market opportunity. Within the U.S. and the top five European countries, approximately 3,000 patients every year are at an end stage of treatment, having failed chemo and transplant and, therefore, requiring other options. At this point, there's no CAR-T therapy approved for adult ALL.

Obviously, there are a number of programs that are being tested. However, all of them have experienced significant challenges with the management of the toxicities. And what we created with AUTO1 is a product that is designed to behave physiologically and engages target cells like a normal T-cell would. First generation CAR-T products share the identical binder to CD19, this is true for Kymriah to start to analyze the cell.

This binder has a slow off-rate from the CD19 target. And as a consequence, once the CAR-T cell binds to the leukemia cell and has delivered the cytotoxic payload, it has difficulty letting go from the target cell and get stuck. When you have a CAR-T cells -- when you have CAR-T cells getting stuck to target cells, they continue to be activated, which drives cytokine release and thus adverse events. In addition to leading to cytokine release syndrome, this continued activation of the CAR-T cells can drive exhaustion, which negatively impacts persistence.

So there's a real fundamental challenge with that type of engagement. In contrast, what we created with AUTO1 is a CAR-T product that mimics the behavior and the binding kinetics of a physiological T-cell with a very fast off-rate and an ability to disengage relatively rapidly after delivering the kill. The result is reduced cytokine release and also an increase in target cell killing as the CAR-T cells are freed up more quickly and can reengage new leukemia cells. In addition, CAR-T cells can expand more readily, that's leading to more active CAR-T cells in the patient's body capable of fighting the leukemia.

Now turning to Slide 8, what we show on the left-hand side is the data for blinatumomab, or Blincyto, which is also the current standard of care in this disease setting. What is important to understand is that the patients that we have treated on our trial that we highlighted and what we highlighted at ASH is that the patients have mostly undergone and failed stem cell transplant. In addition, approximately 60% of patients have been on inotuzumab or blinatumomab and failed. So our data is based on a patient population with more advanced disease compared to the data shown for blinatumomab.

However, what you see in the blinatumomab results is that our CR rate in that population is about 40% with an event-free survival of about 30% at six months. And in fact, most patients relapse within less than a year. When we look at the safety profile, Blincyto shows a good safety profile overall. And in fact, the product is typically delivered in an outpatient setting.

Now when we look at our own data for AUTO1, if you look at the total data set of 16 patients, we have an overall CR rate of 87%, and they have an event-free survival of 68% at six-month level. So in a simple way, we have around twice the activity that was reported with blinatumomab with a comparable safety profile. We have had no patients with high-grade cytokine release syndrome. We have 19% of the patients with high-grade neurotoxicity.

All patients with high-grade neurotoxicity had a very high tumor burden in the marrow of more than 50%. Going forward, we will manage these patients when the neurotoxicity starts to build to minimize high-grade adverse events. Finally, I just wanted to touch on the subset of patients that were treated with the closed commercial manufacturing process. You can see that the data, if anything, looks somewhat better than the total of overall, which includes patients that were treated with product that was manufactured by hand with a conventional manufacturing process.

So based on this data, I'm turning to Slide 9, we decided to move the program forward into a pivotal study. The CTA was filed in the U.K. and cleared in Q1, and we're enrolling currently in the U.K. The U.S.

IND also is now open, and we're opening up these centers in the U.S. with the aim of enrolling patients in the second quarter. As a reminder, this is a single-arm 100-patient study of relapsed/refractory patients. The primary endpoint is CR rate, and secondary endpoints include molecular CRS event-free survival and duration of response.

We remain on track to complete enrollment in the first half of next year. To what extent we may be impacted by the COVID-19 situation going forward, we'll have to see, but we currently expect the impact to be limited. Our plans to deliver data by the end of 2021 remain on track. Let's now turn to Slide 10, where I would now like to switch gears and talk about AUTO3, a program that is designed for the treatment of patients with diffuse large B-cell lymphoma.

Third line DLBCL is about four times bigger an indication than relapsed/refractory adult ALL and a setting with already two approved CAR-T therapy products with Yescarta and Kymriah plus liso-cel, or JCAR-17, expected to be approved later this year or beginning of next year. We know this is a large opportunity with approximately 10,000 patients in the back end of the disease, which is a sizable population with a very significant medical need. In terms of the outlook for those patients, they have typically run through a series of chemotherapy combinations often with a monoclonal antibody, and they also have received the transplant if they were eligible for it. If not, they go directly to salvage therapy.

CAR-T therapies are approved in the third line of salvage therapy setting in trials ongoing in patients in second-line setting. There are two things that we see as being really important for successful treatment and commercial uptake in DLBCL. First, you have to induce complete remissions that are lasting. This is a disease setting where you aim for cure.

Second is that you actually have to have a therapy that can be administered where our patients are situated. Today, in the U.S., approximately 80% of the patients are treated outside of university hospitals and only about 10% of the patients are treated as university hospital in-patients. It is this population that is primarily treated with CAR-T therapies. The key challenge for treatment centers is the need for intense patient management, which has the limited use of CAR-T outside of the university hospital in-patient setting.

What we're looking for in AUTO3 is a high level of sustained complete remissions. In addition, we're looking for a safety profile that can be managed in nonacademic outpatient settings to reach the majority of patients. Moving to Slide 11, across the CAR-T populate -- programs in DLBCL, we observed a fairly high overall response rate, yet the sustained complete response rate is limited. It is somewhere between 30% and 40%, depending on the program and the subset of indications that were treated or included in the respective trials.

Roughly 1/3 of the complete responses are lost early on, typically within the first three to six months. There are two key mechanisms reported that are likely driving relapse. Loss of CD19 antigen in about 30% to 50% of the patients at time of relapse and PD-L1 checkpoint upregulation in about two-thirds of our patients at time of relapse. Looking at safety.

With the commercial CD19 CARs, there's a significant amount of management of those patients required to address severe cytokine release syndrome and, in particular, as well as the severe neurotoxicity. Typically, these toxicities have an early onset and require intense patient management and monitoring, meaning patients are largely confined to a classical hospital in-patient setting. We designed a program with a dual targeting approach having two independent receptors in each CAR-T cells, individually designed and optimized for the respective target antigen to minimize the impact of CD19 antigen loss. We also gained at the PD-L1 upregulation and checkpoint based scope of lymphoma cells with a single dose of pembrolizumab on the day before infusion of AUTO3, providing the cover to achieve a CR and sustain it.

AUTO3 has shown a high level of CRs in the dose escalation phase of the current study, and we will present a further update at ASCO. It is worthwhile noting that the high level of complete remissions were obtained without inducing high-grade CRS, or cytokine release syndrome, and no neurotoxicity of any grade in the patients dosed at 150 million to 450 million cell doses, and this is a very unusual finding. When you compare this profile with Yescarta, Kymriah and JCAR-17 data, the contrast is remarkable. What is also important to note is that with AUTO3, we have not managed the patients actively for adverse events.

Now to talk about the extent of the total addressable market, this profile enables us to potentially reach, let's continue to Slide 12. Currently, our approved products are only tapping into a proportion of substantially less than 20% of the market opportunity, which is managed by the academic centers. There's very little to no penetration to the remaining 80% of the market, which comprises settings that we cannot deal with the intensity of patient management required for the current CAR-T products. We believe this creates an enormous opportunity for the profile of a product that we're seeing with AUTO3.

And as such, we believe that the program has a unique potential going forward. We expect to provide an updated ASCO on the clinical profile of the program. So let us turn to Slide 13, where I would like to outline how we continue to build on this potential patient profile. Given the highly differentiated clinical and safety profile we have reported so far, we see an attractive opportunity for AUTO3 as an in and outpatient solution for patients with DLBCL, therefore, maximizing that commercial potential of CAR-T products all across the settings of care in this disease.

As such, we're planning to add a 20-patient cohort to our ongoing Phase 1/2 ALEXANDER study in the second half of this year, with patients treated in an outpatient setting in order to broaden our understanding of the feasibility of outpatient administration. With that, I will turn over the call to Andrew for our first-quarter 2020 financial update. Andrew?

Andrew Oakley -- Chief Financial Officer

Thanks, Christian, and good morning or good afternoon to everyone. If we move to Slide 15, it's my pleasure to review our financial results for the first quarter of 2020. Net total operating expenses for the three months ending March 31, 2020 were $38.6 million. That was net of grant income of $300,000.

And that compares to net operating expenses of $30.2 million, net of grant income of $2 million for the same period in 2019. The increase was due, in general, to our continued increase in clinical trial activity which is expected to deliver on key milestones throughout the rest of 2020; also increased headcount; and an increase in public company costs, primarily related to insurance. Research and development expenses increased to $31.3 million for the three months ended March 31, 2020, and that's up from $22.6 million for the same period in 2019. Cash costs, which also exclude depreciation and amortization as well as share-based compensation, increased to $25.6 million from $17.5 million.

The increase in R&D cash costs, that's $8.1 million, consisted primarily of an increase in some compensation-related costs of $2.2 million due to an increase in employee headcount that supports the advancement of our product candidates as well as an increase of $3.7 million in project expenses associated with a clinical activity. And that includes the research, process development, manufacturing activities necessary to conduct the studies. Plus an increase of $1.8 million in licenses, legal fees and consulting services, which -- some of which is related to an option to negotiate a future license as well as the IT infrastructure and support. The remainder was attributable to other additional costs in the amount of about $400,000.

General and administrative expenses decreased to $7.6 million for the three months ending March 31st, and that's down from $9.6 million for the same period in 2019. Cash costs, again, which exclude depreciation as well as share-based compensation, decreased to $5.9 million from $6.3 million. Compensation-related expenses decreased by $300,000 and IT, communication -- telecommunication and general office costs decreased by the same amount and a decrease also of the same amount in commercial costs, but -- that was all offset by an increase in public company costs of around $0.5 million, which primarily relates to insurance, as I have previously mentioned. Net noncash costs within the G&A area decreased to $1.7 million for the three months ending March 31, and that compares to $3.3 million for the same period in 2019.

The decrease here is attributed to basically share-based compensation expense, which decreased by $1.6 million as a result of the lower value of the stock options that were recognized during the period. The net loss attributable to ordinary shareholders was $29.9 million for the three months ending March 31, 2020, and that compares to $27.2 million for the comparable period in 2019. Cash and cash equivalents at the end of the quarter totaled $243.3 million, and that compares with $210.6 million that we had at the end of December 2019. As such, we anticipate that, that cash on hand provides us with a runway into 2022.

And with that, I will now hand the call back to Christian to give you a brief outlook on expected milestones. Christian?

Christian Itin -- Chairman and Chief Executive Officer

Thanks, Andrew. Let me conclude this part of the management discussion with a review of the upcoming milestones and news flow through 2020. Let's move to Slide 17. The upcoming eight months will be an end full period for us with multiple clinical milestones and opportunities for value creation.

Our chief and most imminent operational focus is to conduct these, obviously, our pivotal trial for AUTO1 in adult ALL. We expect to report clinical data across multiple programs, including updated AUTO3 ALEXANDER data at the forthcoming ASCO Meeting and updated AUTO1 or CAR19 data as well as AUTO3 data at EHA, as previously mentioned. We will look to progress a number of our other preclinical candidates through the second half of 2020 and are looking forward to providing preclinical data updates in our solid tumor programs AUTO6NG and AUTO7 at AACR as well as our T-cell lymphoma program with AUTO5. Finally, toward the end of the year, and we look forward to providing further data updates on both AUTO1 and AUTO3, as we expect for the end of the year.

In conclusion, on Slide 18, I'd like to recap the major message raised from today's call. First AUTO1 is our first Autolus' program to move into pivotal stage. Given the positive safety and efficacy profile today, we believe that AUTO1 has the potential to be a best-in-class CD19 CAR-T program in adult ALL, a disease setting with a very high unmet medical need. Secondly, with regards to AUTO3 and DLBCL, which is expected and slated for additional clinical data updates at the ASCO and EHA.

We plan to conduct an outpatient cohort in the second half of this year. The company is in an excellent position, combined with a strong balance sheet, which provides us a run rate into 2022. We feel we're in a good position. I think are looking forward to an exciting second half of the year.

We're now happy to take questions. Thank you.

Operator

[Operator instructions] Your first question comes from the line of Chad Messer with Needham & Company.

Unknown speaker

Hi, everyone. This is Joe on for Chad. And congratulations on the progress in a difficult environment. So just a couple of questions from me.

You discussed kind of the challenges that are related to DLBCL. And hypothetically, what would you consider more important, patient accessibility or the duration of and deepness of response?

Christian Itin -- Chairman and Chief Executive Officer

Well, thanks a lot for joining, really appreciate it. The -- I think with regards to DLBCL, you want -- you need both aspects actually to be addressed. You need a high level of sustained CRs and you need an excellent safety profile to reach the population. Both aspects are important, and we believe that we have an ability to make a significant improvement on both sides of the program.

Unknown speaker

So you do not consider one more important than the other in this instance?

Christian Itin -- Chairman and Chief Executive Officer

Well, there's -- it is -- it's a life-threatening disease. The first thing you have to make sure is you -- the patient survives. So getting to a long-term remission is what the ultimate goal is, but then you also have to make sure that the patient has access to the therapy. And right now, in the U.S., there are only about 10% of the patients in that disease setting that has access to CAR-T therapy because it is confined to the inpatient segment of the centers of excellence.

And that has actually created a situation where while there is a big demand for these types of therapies, the actual access that can be realized is very, very small. And that is all on the actual intensity of the management of these patients during the adverse events that occur in the -- at the onset of the therapy. And that is sort of the key reason for the confinement to this relatively small number of centers. So you have to make fundamentally have the impact on the disease.

That is what the sustained CR rates give you, but then you actually have to have a safety profile that allows you to further expand the delivery of this type of therapy to centers beyond the relatively small numbers of academic centers of excellence.

Unknown speaker

All right. All right. Thank you.And we are very much looking forward to seeing some of the preclinical data at the second half of AACR. I noted that it looks like the AUTO6NG data would be presented in small cell lung cancer.

So that's a very interesting indication, not just because of the target, but also because of the lack of immunogenicity that's seen in a lot of these cells. Kind of maybe you could kind of orient us what kind of data we should be expecting at AACR?

Christian Itin -- Chairman and Chief Executive Officer

So at AACR, what we're going to be presenting are obviously a preclinical data on these -- from these programs. As you may remember, the way we designed the programs is actually to include a set of cell programming modules that enable the cells to have a higher resilience and higher ability to cope with the challenging microenvironments that we find in these particular sets of tumors. I believe that is going to be a key part of the data that we're going to be presenting is the use of those modules in those settings and the impact the modules have to actually give us an appropriate level of activity in these, as you point out, very challenging tumor environments.

Unknown speaker

Excellent. Then -- and just some kind of a last clarification. You're expecting to complete enrollment in the pivotal study by year-end '21 or [Inaudible]

Christian Itin -- Chairman and Chief Executive Officer

First half next year.

Unknown speaker

First half next year?

Christian Itin -- Chairman and Chief Executive Officer

First half next year with data at the year-end, next year.

Unknown speaker

OK. Thank you. That's what I thought. Thank you for taking my questions, and congratulations on your progress.

Christian Itin -- Chairman and Chief Executive Officer

Thanks a lot. Thanks for joining.

Operator

Your next question comes from the line with Mara Goldstein with Mizuho Securities.

Mara Goldstein -- Mizuho Securities -- Analyst

Thanks very much for taking the question. If I could just ask on the AUTO3 outpatient program, can you just talk a little bit about what the profile of that patient would look like relative to inpatient within to the content -- to the extent that you can discuss protocol on that basis? And then just also if I could drill in a little bit on the sort of go, no-go decision as well expected later in this year and the decision tree that will help you get to making that decision, if you could discuss that?

Christian Itin -- Chairman and Chief Executive Officer

Yes. Hi, Mara, thanks for joining. So in terms of the patients, the patients actually, we don't expect to look different from the patients that we've treated so far. The reason why you treat the patients in an inpatient setting with the current CAR-T programs is not because of the state the patient is in, but it is the consequences of the toxicity induced at the onset of the therapy that you're providing.

So there is not a -- and we don't expect to see a difference in the patients. And in fact, as you can imagine, with the majority of the patients treated outside of the academic centers, the patients are in a reasonable condition and can obviously normally manage -- be managed in oncology clinics and networks, et cetera, much more in the periphery of the healthcare system. So we expect the same patients, but obviously, we're treating them in a slightly different setting than what the inpatient setting is. So this is not a difference of the patients, it's a difference on the level of patient management that's required to actually get these patients safely through the therapy.

And that is what the profile of AUTO3 is actually enabling us to explore.

Mara Goldstein -- Mizuho Securities -- Analyst

OK. Thank you.

Christian Itin -- Chairman and Chief Executive Officer

And then with regards to decision points, obviously, we're going to provide an update of where we are with the program at ASCO. That gives us a very good view on the response rate level. We will have additional follow-up that we'd like to see, which gets us into -- slightly into the second half of the year that, at which point, we'll understand what the sustained CR rate looks like. And that will be the key piece of information that will inform us on the path forward.

And as you can imagine, getting the data from the outpatient cohort would also enable us to actually design a pivotal study somewhat differently, including outpatients -- an outpatient setting in the pivotal study as well, which we believe it would actually be a very important component of the pivotal program. So that data will be very informative in terms of the design of the study as well.

Mara Goldstein -- Mizuho Securities -- Analyst

OK. Thank you. I appreciate it.

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Autolus Therapeutics Plc (AUTL) Q1 2020 Earnings Call Transcript - The Motley Fool