Adaptimmune Therapeutics plc

Hello and welcome to the Adaptimmune Therapeutics third quarter 2024 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I will now turn the call over to Dan Odd-Cohen, Investor Relations for Adaptimmune. Dan, please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Adaptimmune's conference call to discuss our third quarter 2024 financial results and business updates. I would ask you to review the full text of our forward-looking statements from this morning's press release. We anticipate making projections during this call, and actual results could differ materially due to several factors, including those outlined in our latest filings with the SEC. Adrian Rockliffe, our Chief Executive Officer, is here with me for the prepared portion of the call, and other members of our leadership team will be available for Q&A. With that, I'll turn the call over to Adrian Rockliffe. Over to you, Ed.

Thanks, Dan, and thank you everyone for joining us today. So I'd like to start by addressing the announcement we made in today's press release regarding our new strategic business plan. This plan has three main objectives. One, to streamline operations to focus on our commercial sarcoma franchise. Two, to prioritize the R&D programs that have the best return on capital, and the best opportunities for transformational medicines for patients. And three, to set the company on a course to operating breakeven during 2027. The plan was a result of a thorough review of the entire company and investments across the organization. And it follows the successes we've had in the initial stages of the Decelera launch, which is progressing very well against our objectives and which I'll discuss later. It also follows the successful primary analysis data from the Pivotal Ignite ESO trial with Leticel that we announced earlier today. The positive results from this pivotal trial, which has met its primary endpoint, demonstrated even better outcomes than the interim results we announced back in June. And it will form the basis of the BLA submission for Leticel starting next year. Based on these data and our successful approval of T-Cell in August, we have increased confidence that Leticel has a high probability of approval and will become an important medicine for people with both synovial sarcoma and MR-CLS. Now that we have a very clear path towards a successful sarcoma franchise with potentially two FDA-approved products, we have even greater conviction in our projection of $400 million in combined U.S. peak revenue for Tisara and Leticel. As such, We believe that maximizing the value of this sarcoma franchise is the highest priority for the future of the company, for its shareholders, and for the patients we serve. And we also felt that now was the right time to make these tough business decisions to achieve this objective. So to that end, we will reduce our cost structure to ensure we achieve operating cash flow break even during 2027. we'll reduce our headcount by about 33% and compared to our estimated 24 cost base, we'll reduce our total operating expenses by approximately 25% next year and over 30% in subsequent years. In total, this represents a saving of $50 to $60 million in 2025 and in the range of $300 million in the period from 2025 to 2028. before one-time restructuring costs. These savings substantially reduce the financing needs of the company between now and the transition to cash flow positivity. As a result of this restructure, we will reduce our UK footprint and research functions and suspend clinical trial activities with user cell for ovarian cancer, which will remove the associated CMC and development costs in the coming years. The Galapagos collaboration on user-self head and neck cancer and other indications is going well and will not be affected. And we will be continuing with our lead preclinical assets, PRAME and CD70. And we'll suspend investments in other earlier stage pipeline programs. We continue to seek strategic partners for PRAME and CD70, as well as our leading IPSC allogeneic platform. So following the successful launch of T-Celera and the great letter cell data we're presenting at CTOS, the company is now fully focused on building a successful business with a cost-efficient commercial infrastructure focused on what we anticipate will be two FDA-approved products in sarcoma, achieving our cash flow break-even objective in 2027, and substantially reducing the need to bring in additional capital before becoming cash flow positive. This strategy, whilst involving difficult choices to reduce costs, is in the best interest of our stakeholders and of the patients who need our transformative cell therapies. Now, moving on with an update on the T-Cellera launch, which is tracking very well against our plan. T-Cellera is the first FDA-approved engineered cell therapy for a solid tumor and was approved in August for treating synovial sarcoma. So we're now about three months into the launch. With previously available treatment options providing low response rates and a five-year survival rate of only 20%, we're finding that T-cellular has been embraced by the sarcoma community as a transformational treatment option for this devastating disease. We now have nine authorized treatment centers or ATCs accepting patients and referrals from healthcare providers and that can initiate the T-cellular treatment journey across the U.S. This is at the upper end of the guidance we provided previously of six to 10 centers within the first 90 days. Furthermore, we have an additional four sites that have signed contracts and a further 15 sites that are in active contract negotiations. Our ultimate goal has consistently been to have a network of approximately 30 ATCs offering T-cell retopatients within two years of launch, since those ATCs would cover an estimated 80% of the patients treated in sarcoma centers of excellence. We are confident we can now activate our full network of ATCs by the end of 2025, two to three quarters ahead of our previous projections. This is a testament to the team's focus and to their execution, but also to the high level of engagement of each of our targeted sites. On the payer side, T-Cellular is approved for a rare and serious form of sarcoma with demonstrated clinical benefit for patients. We've seen significant engagement by insurers And currently, insurance plans representing over 67% of commercial lives formally cover T-cellular. And this continues to increase as planned. For these types of therapy, the insurance approval process is almost always conducted individually for each patient by the treatment center and the patient's insurer. And our adaptamine assist team is involved in every step of the process to support the centers and the patients to navigate through financial and logistical needs and to make sure that they have a seamless treatment experience. On the patient side, we're also very pleased to have A4 East our first patient, and manufacturing is currently ongoing. There are now approximately 15 patients that have been confirmed as double positive following biomarker testing, meaning they've tested positive for the right HLA and for MAGE A4. Furthermore, there are at least an additional 25 patients in various stages of biomarker testing before this. Whilst not all of these patients will be eligible for or will opt for T-cellular treatment over a particular timeframe, we provide these metrics so you can see where our level of excitement and confidence is coming from. It is now very clear that we have a robust flow of patients that will progress to treatment with T-cellular in the remainder of 24 and 25. The patients are there, and the commercial model that we've built is working. to make T-cellular available to appropriate patients. Going forward, though, we're unlikely to continue to provide this level of detail regarding launch metrics, and all of this is in line with our previous guidance of expecting our first commercial revenues in Q4 of 2024. Just as a reminder, revenues recognized when the treatment center receives T-cellular So, we don't expect meaningful revenues in Q4 of this year, but as we progress into 2025, we'd anticipate modest revenue in the first two quarters that will continue to accelerate throughout the year as patients flow through our expanding network of treatment centers. With the commercial launch tracking to plan, along with extremely encouraging feedback from centers and from physicians, we're very excited about TESOLA's potential to improve and extend the lives of people with synovial sarcoma. But this is only the first foundational medicine in the sarcoma franchise. And in a separate press release this morning, we announced the results from the primary analysis of the full data set from Lettercell's IGNITE-ESO pivotal trial, which met the primary endpoint and are even more positive than the interim data we released back in June. The full analysis of IGNITE-ESO reinforces the achievement of the primary endpoint for efficacy in the full dataset of 64 patients treated, with a 42% response rate overall. And this included six complete responses, which is a complete response rate of almost 10%. These responses are very durable, and although this dataset is not fully mature, the median duration of response in the MR-CLS population is currently just over a year, and in the syrenovial sarcoma population, the median duration of response is just over 18 months. The full data set will be presented at the Connective Tissue Oncology Society, or CTOS, meeting on November the 16th and will serve as the basis for the BLA filing planned in 2025. We expect Leticel to expand our reach beyond T-Cellera and into NY-ESO-expressing synovial sarcoma and MR-CLS patients. This will more than double the number of treatable patients, and we estimate that Leticel will eventually make up over 60% of the combined sarcoma franchise revenue. Since the commercial footprint and the ATCs for Leticel are essentially identical to that for T-Celera, we will have significant operational, channel, and cost synergies when we launch this second product. Following CTOS, on November the 18th, we will hold a virtual investor event to further elaborate on these findings from the Pivotal IGNITE ESO trial and expand upon what it means for the treatment landscape in sarcoma. The event will feature Dr. Sandra D'Angelo, sarcoma medical oncologist from Memorial Sloan Kettering Cancer Center. She was an investigative clinician in both the Spearhead 1 clinical trial, the Pivotal trial for T-cells, and the IGNITE ESO clinical trial, the Pivotal trial for letter cells. Details are available in today's press release and on our website, and we hope you join us. Moving on to the financial results, at the end of Q3, we had approximately $186 million in total liquidity after further drawdown of $25 million from our debt facility following the FDA approval of Tesara. In the third quarter of this year, our total operating expenditure was $55.6 million. And for Q4, we expect our run rate operating expenses to be broadly consistent with the first three courses of 24. And the impact of the cost reduction initiatives I spoke about earlier will take effect starting in 2025. In closing, Adaptimmune has successfully discovered, developed, and is commercially delivering the first ever engineered cell therapy for a solid tumor. And we now have clear line of sight to our second approval and commercial launch of a wholly synergistic product in this franchise. We've achieved this with the expertise and commitment from our entire team. Now, we've made difficult decisions that are necessary to set the company on the path to cash flow positivity as we bring the benefit of this cell therapy franchise to the sarcoma community. And we will continue to make decisions to enable us to provide therapies with transformative benefits to patients, thus delivering long-term success and value to the company and to its shareholders. And with that, leadership team is happy to take questions. Operator?