Cellectis Inc.

Good morning, and everyone, welcome to CELTI's second quarter 2023 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 introduce the first speaker, Arthur Strill, Chief Business Officer. You may begin.

Good morning, and welcome everyone to Selective Second Quarter 2023 Corporate Update and Financial Results Conference Call. Joining me on the call today with prepared remarks are Dr. André Choulika, our Chief Executive Officer, Dr. Bing Wang, our Chief Financial Officer, and Dr. Mark Fettini, our Chief Medical Officer. Yesterday evening, Selectus issued a press release reporting a corporate and business update for the second quarter 2023, and its non-audited financial results for the six-month period ended June 30th, 2023. As disclosed in our press release published yesterday, the report including our non-audited financial statements for Q2 will be released in the coming days. As a reminder, we'll make statements regarding Selectus financial outlook, including the sufficiency of cash to fund operation, in addition to its manufacturing, regulatory and product development status and plans, and product development of its licensed partners. These forward 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 20F filed with the Security Exchange Commission, SEC, and the financial reports, including the management report, for the year ended on December 31st, 2022, and subsequent filing selected makes with the SEC from time to time. I would now like to turn the call over to Andre.

Thank you, Arthur. Good morning, and thank you, everyone, for joining us today. The second 2023 quarter was marked by strong execution. Our last clinical data presented for UCAR T22 at the European Hematology Association annual meeting are encouraging for patients with relapsed or refractory B-cell acute lymphoblastic leukemia who have failed multiple lines of treatment options, including chemoimmunotherapy, CD19-directed CAR-T cell therapy, and allogeneic stem cell transplant. We're looking forward to releasing our new data later this year on UCAR-T22 manufactured in-house. Blechtis also presented an encore of the clinical data of the AMELY-01 clinical trial evaluating UCAR-T123 at the American Society of Gene and Cell Therapy annual meeting. These preliminary data support the continued administration of UCAR T123 after fludarabine, cyclophosphamide, and alamthuzumab lymphodepletion in patients with relapsed or refractory acute myeloid leukemia. In addition, this quarter, The LECTUS innovation team was proud to present strong preclinical data on gene editing process to develop a bonafide HBB gene correction of sickle mutation. In addition to that, we have presented a comprehensive analysis to better design efficient TAO-based editor at the International Society of Cell and Gene Therapy annual meeting. These achievements showcase more the power of gene editing platform, both as tailings for therapeutic gene editing and that we are continuing to deliver constant breakthrough innovation to treat diseases with unmet medical needs. Blectus announced that during this annual shareholder meeting, Dr. Cecile Chartier has been appointed as a director of the company's board of director. At the end of this meeting, The terms of the office of Mr. Opno and Mrs. Fadig ended. I'm very pleased to welcome Dr. Chartier to select this board. Her extensive experience in the development of next generation cell and gene therapies, coupled with her deep knowledge of U.S. biotechnology industry, will be a huge asset to Selectus. We look forward to her contribution and insights as we continue advancing the development of our product candidates. In 2023, we made substantial progress with our pipeline. Despite an unprecedented challenging market environment for the cell and gene therapies company, Selectis remains deeply focused on its core clinical trial, Bally01 Evaluating UCAR T22, Natalie 01 evaluating UCAR T20 by 22, and Emily 01 evaluating UCAR T123, and on its mission to develop innovative cancer therapy product candidate. With that, I would like to turn the call over to Dr. Frattini, our chief medical officer, who will give an overview of these clinical trials. Mark, please go ahead.

Thank you, Andre. As Andre mentioned, we have made progress in our Bally01 clinical trial with the presentation of updated clinical and translational data at the European Hematology Association annual meeting that supports the preliminary safety and efficacy of UCAR22 in a heavily pretreated relapse refractory B-cell ALL population. The poster presentation reviewed clinical and translational data from patients who received UCAR22 after lymphodepletion with fludarabine and cyclophosphamide, or FC, or fludarabine, cyclophosphamide, and alamtuzumab, or FCA, in patients with relapsed refractory B-cell ALL. Compared to the clinical update on BALI-01 and ASH-2021, The poster presented data from six additional patients who received UCAR22 at dose level 3 as of December 31, 2022 data cutoff. UCAR22 administered after FC or FCA lymphodepletion regimen was well tolerated. No dose-limiting toxicities or immune effector cell-associated neurotoxicity syndrome were observed. For FCA dose level 3, 5 million cells per kilogram, 50% of the six patients responded. Closed lymphocytes remained suppressed through day 28 for all patients who received FCA lymphodepletion. Peak ferritin levels correlated with UCAR22 cell expansion and cytokine secretion. UCAR22 continues to be safe and tolerable. with no treatment emergent serious adverse events or DLTs recorded. UCAR22 cell expansion was detected in 9 of 13 patients in the FCA lymphodepletion arm and associated with clinical activity. The BALIO1 study is currently enrolling patients after FCA lymphodepletion with Selectus' in-house manufactured product. The next data set is expected to be released later this year. Our Amelie 01 study evaluating UCART123 in patients with relapsed refractory AML continues to progress and enroll patients in the FCA two-dose regimen arm. On May 17th, Selectus presented an encore of the clinical data that were unveiled at the ASH 2022 annual meetings. at the American Society of Gene and Cell Therapy Annual Meeting. These preliminary data support the continued administration of UCAR123 after FCA lymphodepletion in patients with relapsed refractory AML. The oral presentation reviewed preliminary data from patients who received UCAR123 at one of the following dose levels. Dose level 1, 2.5 times 10 to the fifth cells per kilogram. Dose level 2, 6.25 times 10 to the fifth cells per kilogram. Dose level 2 intermediate, 1.5 times 10 to the sixth cells per kilogram. Or dose level 3, 3.3 times 10 to the sixth cells per kilogram after lymphodepletion with FC or FCA. The data presented showed that adding allamtuzumab to the FC lymphodepletion regimen was associated with sustained host lymphodepletion and significantly higher UCART123 cell expansion that correlated with improved anti-leukemia activity. Two of eight or 25% of patients at dose level two in the FCA arm achieved meaningful responses, including one patient who failed five prior lines of therapy, including allogeneic stem cell transplant, who experienced a durable minimal residual disease negative complete response that continued beyond 12 months as of December 2022. Lastly, I will speak about our Natalia 1 study evaluating UCARD 20 by 22. UCART 20x22 is Selectus' first dual allogeneic CAR T-cell product candidate, targeting both CD20 and CD22, and is being evaluated in patients with relapsed refractory B-cell non-Hodgkin lymphoma. The Natalia 1 clinical study is ongoing, and Selectus expects to provide first-in-human data later this year. Selectus also continues to advance our preclinical programs and provided preclinical proof-of-concept data for UCAR20x22 to overcome current mechanisms of resistance to CAR T-cell therapies in B-cell NHL while providing a potential therapeutic alternative to CD19 targeting and allowing a reduction in the time from treatment decision to cell infusions. We demonstrated that UCAR20x22 displays robust activity both in vitro and in vivo against targets expressing heterogeneous levels of CD22 and CD20. In vitro cytotoxicity assays against different tumor cell lines showed strong activity whether these cells expressed a single antigen, CD20 or CD22, or both antigens simultaneously. These preclinical data were presented in June at the International Society of Cell and Gene Therapy Annual Meeting. With that, I would like to hand the call over to Dr. Bing Wang, Selectus' Chief Financial Officer, for an overview of our financials for the second quarter of 2023.

Bing, please go ahead. Thank you, Mark. I would like to highlight that in our financials, the cash, cash equivalent, and restricted cash position of selectives, excluding Calix as of June 30, 2023, was $89 million, compared to $95 million as of December 31, 2022. This difference mainly reflects $55 million of cash out, which includes $50 million of payments for R&D expenses, $7 million for SG&A suppliers, $23 million for staff costs, $7 million for rents and taxes, $3 million of reimbursement of the PGE loan, a $21 million net cash inflow from EIB loan, a $1 million of refundable advance from BPI, $2 million of financial investments capital gain and interest, a $1 million reimbursement of social charges on stock options, a $1 million cash inflow from customers, and a $23 million net cash inflow from the capital raise close in February. This cash position is expected to be sufficient to fund selected standalone operations into the third quarter of 2024. The closing of the proposed Calix merger was finalized on May 31st of 2023. Consequently, Calix was deconsolidated and presented as discontinued operations in the financial statements only until May 31st, 2023. The net loss was 46 million in the six-month period of 2023 compared to a loss of 54 million in the six-month period of 2022. This 8 million decrease in net loss between 2023 and 2022 was primarily by a decrease of 6 million in purchases and external expenses because of quality and manufacturing internalization, a decrease of $4 million in personnel expenses due to headcount rationalization, and an increase of $2 million of net financial gain almost fully offset by an increase of $3.5 million in net loss of discontinued operations. The net loss attributable to shareholders of Selectus was $41 million. or 76 cents per share in the six-month period of 2023 compared to a loss of 51 million, or $1.12 per share in the six-month period of 2022. This 10 million decrease in net loss between 2023 and 2022 was primarily driven by a decrease of 11 million of R&D and SG&A expenses, an increase of 2 million of the financial gain partially offset by the 3.5 million decrease of net loss from discontinued operations attributable to shareholders of selectives. The adjusted net loss attributable to shareholders of selectives, which excludes non-cash stock-based compensation expenses was 37 million or 68 cents per share in a six-month period of 2023 compared to a loss of 46 million or $1 per share in 2022. The tranche A of 20 million euros of the credit facility we received from the European Investment Bank was received in April. The initial payment from BPI related to our grant and refundable advance of 1.1 million was received in June for $0.9 million and $0.2 million in July. We are laser focused on spending our cash on developing our clinical candidates and operating our state-of-the-art manufacturing facilities in Paris and in Raleigh. In addition, our focus on maintaining an efficient corporate infrastructure should also enable more limited growth in G&A spend. in the future.

Thank you, Bing. To close out this call, I would like to reiterate how confident we are about the continued progress of our three ongoing clinical trials in immunological malignancies, as well as our continued development of our preclinical programs. At Selectus, we strongly believe that our product candidates, our technologies, and our in-house manufacturing capabilities will lead us to a paradigm shift for patients with hard-to-treat cancers, positioning us at the forefront of this promising medical and scientific field. With that, I'd like to open the call for the Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Yigal Nakomovich with Citigroup. Please proceed with your question.

Yeah, hi. I had a question about the Valley of study in ALL. So you said you had six additional patients at dose level three, 50% ORR, and now you're continuing with the study with the in-house product. Are you going to be going with the same dose with the in-house product, or will the in-house product move to a higher dose above DL3? Thanks.

Thank you, Yigal. Great question.

I'll hand this one over to Mark.

Hi, Yigal. Thanks for your question. So, yeah, so that presentation was at DL3 with the CDMO manufactured product. I think as we've discussed previously, the in vitro comparability tests that were done between the CDMO manufactured product and the product that was manufactured at Selectus showed that the Selectis product was significantly more potent than the CDMO manufactured product. And therefore, we elected to bring the Selectis product into the clinic at a reduced dose level, at dose level two. So it started in patients at one million cells per kilo due to the significant increased potency of the product.

Okay, thanks. And could you talk about the expectations for when we might see the first data from the in-house product?

Yeah, so we will discuss the first patient's dose with the in-house product later this year.

It will be disclosed. Okay, thank you.

Our next question comes from Gina Wang with Barclays. Please proceed with your question.

Thank you for taking my questions. I have two. The first one is regarding clinical data, the UCAR22. You did show very promising response at the EHAR update. Just wondering how long do you think a post-treatment could give us a definitive durability profile? And this question applied to UCAR22, but also applied to other programs in general for LOCAR-T approach. My second question is regarding your base editor. And, you know, you also demonstrate your gene editing platform capability with base editor. So any plan to maximize your potential and value proposition with this tool?

Thank you, Gina. These are two great questions. I will give the first one to Mark, and then on base editing, maybe Andre.

Okay, great. Thanks, Gina, for your question. So, yeah, agreed. In terms of durability of response, this is obviously once we get to an RP2D dose that we want to move forward with, you know, I think in similar fashion that's been shown in the autologous space you know, we're looking at the six-month duration I think would be appropriate.

Oh, hi, Gina. Thank you very much for the question on base editing. We're very excited by this technology because of its extreme precision and the ability to reduce as much as possible the potential genotoxicity because it doesn't clip DNA unlike nucleases and we consider using them in series of different type of disposition for example making combos when you want to do knock-ins and knock-outs so with the base editor you can essentially edit the base so you can disable the gene so make a knockout and or restore function of the gene in changing the base pair that might induce a mutation. But you cannot insert or replace DNA. Therefore, the technology could be used, for example, when you want to multiplex. And in order to reduce the number of clips in the DNA, even though if you do two series of cutting, and you wait between the two, if you want to pile up, it's better to combine a base editor that does not clip the DNA with a potential nucleus to do a knock-in, wait a bit, and do a second shot. For example, when you look at the product that we have developed, MUC1 has two knock-ins and three knock-outs. And this could be, for example, disposition for this amazing prologue for triple negative breast cancer and ovarian cancer. So it has a lot of potential with this. The second thing that we believe that could be used for base editing is potentially for in vivo delivery for a certain type of genetic diseases. And because it doesn't require to have the combination with a repair matrix to, for example, fixing DNA and can essentially either by knockout or by fixing a mutation, uh, induce certain, uh, uh, certain mutations. And then also in other type of application in genetics. But, uh, essentially I think that's going to be a huge, uh, add up on, uh, on the design of the CAR-T that we do when we'll move into, we'll scale up the sophistication of gene editing into this and multiplexing and modification in these cells, so it's next-gen things that we're bringing. The thing that you don't want is to make too many cuts in the DNA, because that would induce, whatever you do, it will induce translocation and a certain rate is not acceptable. Hope it answers your question.

Yep, that's very helpful. Thank you both.

Thanks.

Our next question comes from Yanen Zhu with Wells Fargo. Please proceed with your question.

Hi, thanks for taking the questions. I was wondering about the UCART 20 by 22 data readout later this year. What could we expect from the readout in terms of how many patients and what duration of follow-up? And also, will the patients be mostly in a setting of post-autologous CD19 CAR T? And what would be considered a successful outcome from this readout, from the company's perspective? Thank you.

Thank you very much, Yanan, for the spotlight on UCAR 20x22. Over to you, Mark.

Yeah, great. Thanks for the question. So obviously, we're all very excited about 20x22. And as you know, the trial just recently started accruing earlier this year. So we expect to reveal the first inhuman data for this very interesting dual allogeneic CAR T-cell product. in patients with relapsed refractory B-cell non-Hodgkin lymphoma. As part of the inclusion criteria for this study, the patients will have to have failed some form of CD19-directed therapy, including autologous CD19 CAR-T if they're eligible to get them, but patients are also eligible for this study if for some reason that they are not able to generate an autologous product. So, and in terms of the response, these are early days in escalation. So, you know, we'll reveal that response rate later this year with the first in human group.

Got it. In terms of the dose level, you know, could you talk about the designed dose levels and at which dose level we might see data?

Yeah, so the initial dose level that we started enrolling patients is 50 million cells flat dose. So it's a flat dosing like most of the NHL CAR T cell studies.

Got it. And lastly, I was wondering if you could talk about options to extend the cash runway and whether there could be consideration for, for example, the money, for example, monetization of the royalty stream from Avogene.

Yeah, sure. I'll take this one.

Go ahead. Sure. I mean, from our cash perspective, I will also highlight we have, you know, multiple other options. I'll give you, for example, the European Investment Bank Loan that we signed in the end of last year, for example. We haven't drawn on Tranche B yet, even though we fulfilled the precedent condition for Tranche B, as an example. As opposed to monetization of royalty, we're not obviously in a position to discuss that right now in this form. Thank you very much, Anna.

Great. Thank you.

Our next question comes from Salveen Richter with Goldman Sachs. Please proceed with your question.

Hi. Yes, this is Anna Medan for Salveen. Thank you for taking our question. Just jumping on the back of the previous question, if you could just provide an update on how enrollment is going in that trial, whether you've experienced any bottlenecks there, and then just what has the physician feedback been with respect to that asset? Thank you so much.

Thank you. These are great questions.

I'll hand them over to Mark.

Yes, thanks for the question. So, yes, enrollment is continuing, and what I can say is that the investigators are incredibly excited by the potential to use an alternative to CD19 in this disease space, and particularly dual CAR T-cell and one that's allogeneic coming off the shelf to provide rapid access to these patients of this product. So there's intense excitement around this protocol.

Thank you. Our next question comes from Kelly Shee with Jefferies.

Please proceed with your question.

Hi, this is Dave on for Kelly Shee at Jefferies. Thank you for taking our question. So continuing on EUCAR22, quick question. How many patient data should we expect at year-end, and if the baseline will be similar to what we saw with the previous product? Also, just wondering if you can add how many sites are active in the U.S. and EU, and maybe if you can remind if you have initiated dosing at the U.S. sites or not. Thank you.

Thank you. That will be for you, Mark, as well.

Yeah, thanks for the question. So, you know, as we discussed previously, we will be revealing the first patient data with the new in-house manufactured product. And as we discussed prior, we did bring that into the clinic at dose level two. So that's what we will be discussing later this year. In terms of enrollment, this trial is enrolling both in the U.S. and in the EU with the in-house manufactured product.

Thank you for taking that question.

Our next question comes from Hartej Singh with Oppenheimer & Co. Please proceed with your question.

Great, thank you, and thanks for the question after a very busy week this Friday. I just had a quick question on UCAR22. You know, maybe you could just talk a little bit about the unmet need in that, you know, post-CD19 patients. It seems that, you know, a few years ago, there was a small, maybe for lack of a better word, niche population, but it seems to be increasing the patient population there, and the unmet need is fairly high, too. If you could just talk a little bit about that, And I imagine that's where UCART 22 slots in. And then with just UCART 1, 2, 3, you indicated previously this target can be unstable and it's a difficult patient population. With the addition of FCA, how is that changing in your view and your ability to treat patients? Thank you for the questions.

Thank you, Hartaj. And I think both questions would definitely go for Mark.

Thanks, Hartaj, for the question. I think in the 22 space, the UCAR22 right now is the only allogeneic CAR T cell that's being developed in the ALL space. As you point out, there was all the initial success of 19, which is a great target. However, there are a significant number of relapses that have been seen as also in terms of the duration in the ALL space as well. And so this clearly, as you point out, opened up a very significant window for this UCART 22 in this space. Also, in the fact that, you know, in terms of being able to give this product to patients that have been so heavily pre-treated, chemo, transplant, prior CD19 CAR T, a lot of times these patients come in with limited marrow reserve. So obviously an allogeneic CAR T cell is in fact a great option for them at that point where they may not be able to mobilize anything for an additional autologous product. I think for 123, I don't know about it being unstable. I think the issue is more that we needed the alimtuzumab to allow for significant host lymphosuppression throughout the DLT period and beyond, so at least 28 to 30-plus days of having the host lymphocytes down so that we could see significant expansion of the UCART123 and therefore clinical activity. So I think that's really the major focus for the addition of the alamtuzumab. It's very similar into what we've shown in the 22 study for why we need the alamtuzumab to allow for better UCART expansion and clinical activity. And this is also the reason why we just proceeded with 20 by 22 going in with FCA lymphodepletion for that reason.

I hope that answers your question. Oh, no, no. That's great. Thank you, Mark. Appreciate the update.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Jack Allen with FAIR. Please proceed with your question.

Great. Thank you so much for taking our questions. Just two quick ones from us. Maybe starting on the clinical side with UCard 20 by 22, it's great to see that product getting a lot of focus on the call today. A number of questions I've already been asked here, but the one I had was, what are the expression requirements for CD20 and 22 in the patients as it relates to enrollment criteria? Are there any expression requirements, or are you taking all comers in that post-CD19 setting? And then on the financial side, I was hoping, Bing, maybe you could speak just briefly about any comments around the Sevier disputes. I know it's more analogy and Sevier thing, but I'd love to hear any updates you have on that perspective as well. Thanks so much.

Thanks, Jack, for the questions and the continued focus on 20 by 22. We'll start with Mark on this one.

Hi, Jack. Thanks for the question. Yes, so for the 20 by 22 study, there's no requirement for both antigens. They only have to express one or the other, so either 20 or 22 or both.

So that's in terms of expression. Okay, thanks. And for the question on the survey, I'll hand it over to André.

Hi, Jack. Well, thank you very much for the questions. Really appreciate it. You know, last year, like in September 2022, Allergen and us issued some information that survey was not helping that much on these trials. And since then, there was limited communication. Given the situation, I'm going to abstain to say anything in order not to complexify the situation. Therefore, you'll have to wait up to the time the situation clarifies. And today, I hope that there will be clarity in the future.

No problem. Thank you very much for the question.

But I know it's frustrating, but this is it. Like, you know, these type of situations.

Yep. Yep. Completely understand. Thanks for the comment.

Our next question comes from Sylvain Turican with JMP Securities. Please proceed with your question.

Yeah, good morning and thanks for taking my question. I just have a quick question on your FATCAR-T. Could you talk a little bit about the target and the initial populations there? And then in terms of big picture, when would that move that into the clinic or are you currently just executing on your three assets in the clinic? Thank you so much.

Thanks, Sylvain. Great question on eukaryotic FAP. That one would be for André.

Well, we're super excited by this product. FAP is an amazing cancer, like a product for a series of different types of cancers, but could be applied potentially for other things also. And we would like to... We can push it either in monotherapy or combo therapies. And we haven't... given clear guidance on how we're going to use it, but definitely it's one of the products that is one of the highlights of the preclinical pipeline that Selectus wants to push. There is like a mention about this product in Frontiers in Immunology publication that we have currently, but Watch the company if the cash position would change in the near future. It's something that would definitely be one of the highlights in the current pipeline we have.

Great. Thank you.

There are no further questions at this time. I would now like to turn the floor back over to Andre for closing comments.

Well, thank you very much, everyone, for attending this Q&A session and earnings call. And we're very excited by the first half of this year and the execution. We're extremely proud of what happened. And we're really looking forward into the second half of this year because there are a lot of strong events that will mark the company in the future. for the second half up to the end of the year. And definitely watch like this and the execution that is happening today and also the innovation that we're bringing to the clinic. It would be very interesting.

And thank you very much for everyone.

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