Cellectis S.A. (NASDAQ:CLLS) Q3 2023 Earnings Call Transcript

Cellectis S.A. (NASDAQ:CLLS) Q3 2023 Earnings Call Transcript November 7, 2023

Operator: Good morning, everyone, and welcome to the Cellectis Third Quarter 2023 Earnings Calls. [Operator Instructions]. I'd now like to introduce the first speaker Arthur Stril, Chief Business Officer. You may begin.

Arthur Stril: Good morning, and welcome, everyone, to Cellectis third quarter 2023 corporate update and financial results conference call. Joining me on the call today with prepared remarks are Dr.Andre Choulika , our Chief Executive Officer; Dr. Bing Wang, our Chief Financial Officer; and Dr.Mark Frattini our Chief Medical Officer. Yesterday evening, Cellectis issued a press release reporting a corporate and business update for the third quarter 2023 and its financial results for the nine- month period ended September 30, 2023. As a reminder, we will make statements regarding Celectis financial outlook, including the sufficiency of cash from operations in addition to its manufacturing, regulatory and product development status and plan and product development of its license partners.

A biochemist observing cell cultures under a microscope, representing the groundbreaking research of the biotechnology company.

These forward statements, which are based on management's current expectations, and assumption and on information currently available to management, including information provided or otherwise publicly reported by our license 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 20F filed with the Securities and Exchange Commission SEC and the financial report including the management report for the ended on December 31, 2022, and subsequent filing Cellectis makes with the SEC from time to time. I would now like to turn the call over to Andre.

Andre Choulika: Thank you, Arthur, and good morning, and thank you, everyone, for joining us today. Last week, we announced a strategic collaboration and investment agreement with AstraZeneca. We are very proud to initiate this partnership with one of the top leaders in the pharma space, pairing our strong commitment and ambition cell and gene therapy, AstraZeneca, because we have been very much impressed by the long term strategy in this space. Backed by a strong commitment and development already made paving the way powered by top leadership in this arena. We strongly believe that together since AstraZeneca, that next generation of genomic medicine will be developed under our collaboration will revolutionize medicine across a number of therapeutic areas in the years to come.

Part of our agreement, AstraZeneca has agreed to make an initial payment of $105 million to select composed of $80 million equity investment in exchange of $16 million ordinary shares at $5 per share. $25 million upfront payment under the research collaboration agreement. Cellectis is also eligible to receive an additional $140 million equity investment in exchange for $28 million convertible preferred shares at $5 per share, subject to Cellectis shareholders' approval and several other condition of closing. Now some words about the research collaboration. It's a very ambitious proposal to develop novel cell and gene therapies across oncology, immunology and rare diseases. We have exclusively reserved 25 genetic targets for AstraZeneca from which up to 10 novel candidate product could be explored for development.

The beauty of this agreement is that our clinical stage assets UCART22, UCART123, and UCART20x22 remain under our own ownership and control. And you should expect regular updates in the advancement of this program for us. Within the collaboration, we will leverage our cutting edge innovation and best-in-class manufacturing capability. Develop new disruptive product candidate and AstraZeneca will have an option for a worldwide exclusive license on 10 of the candidate products exercise before IND filings Our research costs under the collaboration will be funded by AstraZeneca and we're eligible to receive an IND option key and development, regulatory and sales- related milestone payments ranging from $70 million and up to $220 million, per each of the 10 candidate products, plus tiered royalties.

We're very excited to get to work with AstraZeneca to leverage our capabilities and build the next-generation of genomic medicines to address areas of high unmet patient need together. During this past third quarter Cellectis innovation key excelled in releasing disruptive preclinical data on gene editing of stem cell gene therapy for an immunological disease. Later, on our proprietary power base editing technology and multi armored allogenic CAR-T cell targeting MUC1 for triple negative breast cancer, demonstrating one more time to spend and the power of our gene-editing platform and to develop next-generation cell and gene therapies for patients with unmet medical need. In addition, our clinical team will be presenting update of results for the Phase 1, BALLI-01 trial of UCART22 and preliminary results of the NATHALI-01 trial evaluating UCART20x22 in relapsed or refractory B-Cell Non-Hodgkin's Lymphoma at the American Association, the Hematology Annual Meeting.

But I will let Mark in a couple of minutes talk about these abstracts. However one thing I would like to highlight in what Mark is going to present after, is the importance of the know-how in manufacturing. In cell therapeutics nothing is more important but the fitness of the cell that will be injected to patients. The quality, the reproducibility of manufacturing is one of the game changer in the success of these therapies, which is why we have fully internalized manufacturing. Now this work is totally completed and this is why it's going to make a difference. So like this will continue to control strictly cash burn within these difficult market environment. And we will continue to focus our efforts and expenses on advancing our core clinical trial BALLI-01 evaluating UCART22.

NATHALI-01 evaluating UCART20x22, and AMELI-01 evaluating UCART123 With that, I would like to turn the call over to Dr.Mark Frattini our Chief Medical Officer, who will give an overview of these clinical trials. Mark, please go ahead.

Mark Frattini: Thank you, Andre, we will be presenting updated results of the Phase 1, BALLI-01 trial of UCART22 in relapsed or refractory acute leukemia. And preliminary results for the NATHALI-01 trial evaluating UCART20x22 in relapsed or refractory B-Cell Non-Hodgkin's Lymphoma at the American Association of Hematology 65th annual meeting in December. As Andre just mention regarding our clinical trial, BALLI-01 evaluating UCART22 and relapsed or refractory B-cell ALL. We have a comparison between a product manufactured at a CDMO, this is process 1. And the same product manufactured in house here at Cellectis, this is process 2. In vitro comparability studies suggested that UCART22, process 2 manufactured by Cellectis biologics is is more potent than UCART22 process 1 manufactured by an outside CDMO.

In June at the EHA Congress, we showed you data of patients enrolled at dose level three with 5 million cells per kilogram with UCART22 using process 1. Since then and as of July 1, 2023, three patients were enrolled into the first UCART22, P2 cohort at dose level 2 at 1 million cells per kilogram. UCART22, P2 was administered after fludarabine, cyclophosphamide, and alemtuzumab (FCA) lymphodepletion and was well tolerated. No dose-limiting toxicities or immune effector cell associated neurotoxicity was observed. And CRS observed was Grade 1 or 2. There was a higher preliminary response rate, 67% at dose level 2 with 1 million cells per kilogram with with UCART22 P2 compared to 50% response rate with a dose 5 times higher at dose level 3 of UCART22, P1 that was manufactured by outside CDMO.

UCART22 expansion was observed in the responding patients and correlated with increases in serum cytokines and inflammatory markers. The study continues to enroll patients at dose level 2i 2.5 million cells per kilograms with UCART22, P2. We will also be presenting preliminary results of NATHALI-01 study, evaluating UCART20x22, the first in a dual CAR T-cell product in patients with relapse refractory B-cell non-Hodgkin lymphoma at the ASH meeting in December. In this case UCART20x22 has been fully manufactured in-house by selective, at our raleigh manufacturing plants. As of July 1, 2023, three patients were enrolled and treated at dose level 1. Here, we are using a flat dose of 50 million cells for patients over 50 kilograms. Cytokine release syndrome,Grade 1 or 2 occurred in all patients, and all CRS resolved with treatment.

No immune effector cell associated neurotoxicity or graft versus host disease was observed. There were no UCART20x22 dose limiting toxicities and there was 1 CLLS52 or alemtuzumab. 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. UCART20x22 expansion correlated with increases in serum cytokine and inflammatory marker levels as well as with Cytokine release syndrome. These initial data with the 100% responses at the initial dose of 50 million cells per per patient support the continued study of UCART20x22 in relapsed refractory B-cell NHL and the study continues to enroll. Lastly, our AMELI-01 study evaluating UCART123 in patients with relapsed or refractory acute myeloid leukemia continues to progress and enroll patients in the FCA 2 dose regimen are.

With that, I would like to hand the call over to Dr. Bing Wang, Celectis's Chief Financial Officer for an overview of our financials for the third quarter of 2023. Bing, please go ahead.

Bing Wang: Thank you, Mark. I would like to highlight that in our financials, the cash, cash equivalents, restricted cash position of Cellectis, excluding Caelyx, as of September 30, 2023, was $72 million compared to $95 million as of December 31, 2022. This $23 million difference mainly reflects from the $79 million of cash-out, which includes $23 million for R&D, $12 million for SG&A $32 million for staff cost, $8 million for rent and taxes, $4 million of reimbursement of the PGE loan, and $2 million unfavorable impact on foreign exchange partially offset by a $23 million net cash inflow from the capital raise closed in February. And a $21 million net cash inflow from the European Investment Bank loan from a $6 million of net cash received from the research tax credit refinancing, a $1 million cash outflow related to the grant, a refundable advances from BPI, $3 millions of financial investments' capital gain and interests, a $1 million reimbursement of social charges paid on stock options, and a $2 million net cash inflow from licenses and other cash receipts.

With cash and cash equivalents of $67.4 million as of September 30, 2023, and a $105 million from the AstraZeneca agreement. The company believes that we have sufficient resources to continue operating for at least 12 months following the consolidated financial statements' publication. Additionally, the MOU contemplates that AstraZeneca will make a potential further equity investment in Cellectis of $140 million by subscribing for two newly created classes of convertible preferred shares of Cellectis. If confirmed the closing of the additional investment will remain subject to Cellectis shareholder approval with a two-thirds majority of the votes cast by voting shareholders and a clearance of such investments from the French Ministry of Economy according to the foreign direct investment, French regulations and other customary closing conditions.

So the current with these additional $140 million in our anticipated borrowing of EUR15 million under the Tranche B of the EUR40 million finance contract with a European Investment Bank, the company believes that we would extend this cash runway into 2026. The closing of the proposed Calyxt Merger was finalized on May 31, 2023. Consequently, Calyxt was de-consolidated and presented as discontinued operation in the financial statements only until May 31, 2023. The net loss attributable to shareholders of Cellectis was $58 million were $1.7 per share. For the nine months of 2023, of which $53.2 million was attributed to Cellectis continuing operation compared to $79 million or $1.74 per share. For the nine months ended September 30, 2022, of which $73 million was attributed to Cellectis continuing operations.

The $21 million decrease in net loss between the first nine months of 2023 and 2022 was primarily driven by a $14 million decrease from R & D expenses and a $4 million decrease of SG&A expenses, and also increased $4 million or the financial gain due to the de-consolidation of Caelyx compensated in part, but the decrease of fair value Cytovia's note receivable and decrease of $2.2 million loss from discontinued operations attributable to the shareholders of Cellectis. These downward impacts on the net loss were partially offset by a decrease of $1.2 million of revenues and other income. The adjusted net loss attributable to shareholders of Cellectis, which excludes non-cash stock based compensation expenses, was $57 million, were $1.05 per share in the first nine month period of 2023 compared to a loss of $72 million or $1.58 per share in the first nine months of 2022.

We are laser focused on spending our cash on developing our clinical candidates and operating our state-of-the-art manufacturing facility in Paris and Raleigh. In addition, our focus on maintaining an efficient corporate infrastructure should also enable more limited growth in G&A expense. At this point, I'd like to hand it back to Andre for closing remarks.

Andre Choulika: Thank you, Bing. Post out this call, I would like to reiterate how excited we are about a strategic collaboration with AstraZeneca and how much confident we are about the continued progress of our three ongoing clinical trials in as well as our continued development of our pre-clinical program. At Cellectis, we strongly believe that our product candidates, our technologies and our in-house manufacturing capabilities will lead us and our partners to a paradigm shift for patient with hard to treat cancer, positioning us at the forefront of this promising medical and scientific field. With that I would like to open the call for question and answers.

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