Autolus Therapeutics plc
Q4 2020 Earnings Call Transcript

Published: 4 Mar 2021

[Operator:]

Hello, ladies and gentlemen, and welcome to the Autolus Therapeutics Fourth Quarter 2020 Financial Results Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Dr. Lucinda Crabtree, Vice President, Investor Relations. Please go ahead.

[Lucinda Crabtree:]

Thank you. Good morning or good afternoon, everyone, and thank you for taking part in today's call on the financial results and operational highlights for the fourth quarter 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.

[Christian Itin:]

Thank you, Lucinda, and good morning to all of you and thank you for joining us. I'm pleased to review our progress for the fourth quarter of 2020. First on Slide 5, I would like to provide an update in our programs. We have now entered into more stable period post initial COVID peaks last year, and our programs remain on track. We have not seen any further disruption in the fourth quarter last year. We continue to work hard with our supply chain and logistics teams, as well as our clinical centers to ensure timely continental and transatlantic deliveries of leukapheresis, final products and samples for analysis, in order to support our clinical trials and in short, timely data availability and integrity. We continue to monitor developments very carefully with a particular focus on patient safety. In Q4 and indeed the full year, we provided data updates from our Phase 1 ALLCAR of AUTO1 at EHA in June and also at ASH in December 2020. The pivotal program, AUTO1-AL1, which we now can also refer to as the FELIX study remains on track with data expected in 2022. We also provided an update from the ALEXANDER study of AUTO3 in DLBCL at EHA and also at ASH last year.

[Andrew Oakley:]

Thanks, Christian; and good morning or good afternoon to everyone. So if we move to Slide 20, it's my pleasure to review our financial results for the fourth quarter to set to December 31, 2020. So let's start with the cash position. Cash and cash equivalents at December 31, 2020 totaled $153.3 million as compared to $210.6 million at 31 of December, 2019. In January of this year, the company sold 1.7 million ADSs under its at-the-market sales agreement, resulting in net proceeds of $15.3 million. And in February of this year, the company conducted a public offering of 16.4 million ADSs, including the exercise in full by the underwriters of their option to purchase an additional $2.1 million ADSs at an offering price of $7 per ADS resulting in net proceeds of $108.1 million. Net total operating expenses for the 12 months ending 31 of December, 2020 were $168.1 million, net of grant income and license revenues of $1.7 million, and this compares to net operating expenses of $146.1 million net of grant income of $2.9 million for the same period in 2019. Research and development expenses increased to $134.9 million for the year ending 31 of December, 2020 from $105.4 million for the year ending 31 December, 2019. Our cash costs, which exclude depreciation and amortization as well as share based compensation increased to $116.9 million from $83.4 million. The increase in research and development cash costs of $33.5 million consisted primarily of – firstly an increase of $8.8 million in compensation and employment related costs, that’s net of lower travel costs, due to an increase in employee headcount to support the advancement of our product candidates in clinical development the lower travel costs obviously due to the COVID-19 pandemic. Secondly, an increase of $14.4 million in project expenses as a consequence of the advancement of our clinical portfolio, which – this includes research and process development and manufacturing activities necessary to repair, activate and monitor clinical trial programs. Thirdly, an increase of $6 million in facilities costs, and that relates to the commencement of the lease for additional manufacturing suite and the continued scaling of our manufacturing operations. Fourthly, an increase of $4 million in IT, infrastructure and support for information systems related to the conduct of clinical trials and manufacturing operations. Fifthly, an increase of $0.5 million related to professional fees. And lastly, an increase of $1.7 million related to cell logistics net this all offset by a reduction in materials purchases of $0.7 million and license fees of $1.1 million. Non-cash R&D costs decreased to $18.1 million for the year ending 31, December 2020 from $22 million for the year ending 31 of December 2019. The $3.9 million decrease is related to a decrease of $4.8 million in share-based compensation expense as a result of lower fair value of stock options recognized in the period, and that's offset by a $0.9 million increase in depreciation charges. General and administrative expenses decreased to $35.0 million for the year ending 31, December 2020 from $39.5 million for the year ending December 31, 2019. Cash costs which exclude depreciation as well as share-based compensation increased to $27.4 million from $26.6 million. There were increases of $1.3 million related to D&O insurance costs and intellectual property and $0.1 million in facility costs, and this was offset by decreases of $0.5 million in compensation and other employment related costs and $0.1 million in general office expense. Non-Cash G&A costs decreased $7.6 million for the year ending December 31, 2020 from $12.9 million for the corresponding period last year. The decrease of $5.3 million is mainly also again attributed to lower share-based compensation expenses as a result of lower fair value of the share options recognized during the period. Interest income decreased to $0.5 million for the year ending December 31, 2020 from $2.5 million from last year. This decrease is due to the lower cash balances held during the year and combined with lower interest rates for cash held on deposit. Other income decreased to $1.4 million for the year December 31, 2020 from $4.5 million from the prior year, and that was primarily due to a weakening of the U.S. dollar exchange rate relative to the pound sterling. The decrease of $4.6 million in the year ended December 31, 2020 was offset by lease termination gains of $1.5 million. Income tax benefit increased to $24.2 million for the year ending December 31, 2020 and that compared to a $15.2 million for the prior year, and that's due to additional UK research and development tax credits receivable from HMRC. Research and development credits are obtained at a maximum rate of 33.35% of our qualifying research and development expenses, and the increase in the net credit was primarily attributable to an increase in eligible R&D expenses. The net loss attributable to ordinary shareholders was $142.1 million for the 12 months ending December 31, and that compares to a loss of $123.8 million for the same period in 2019. The basic and diluted net loss per ordinary share for the 12 months ending December 31, 2020 was a loss of $2.76 per share and compares to a basic and diluted net loss per ordinary share of $2.88 for the 12 months ending December 31, 2019. We can now update that our current cash on hand, which includes the recent financings in January and February of this year will extend the company's runway into the first half of 2023. And with that, I will now hand the call back to Christian to give you a brief outlook on expected milestones, Christian?

[Christian Itin:]

Thanks, Andrew. Let me conclude the management discussion with a review of the upcoming milestones and news flow through 2021. Let's move to Slide 22. As we look at the year 2021, there are a number of clinical milestones and opportunities for value creation. Our chief and most imminent operational focus will be continuing enrollment and dosing of patients in the pivotal Phase 1b/2 FELIX trial for AUTO1 in adult patients with relapse refractory ALL. In addition, we have clinical activities or planning to initiate our clinical activities with AUTO1/22, AUTO4, AUTO6NG, AUTO8 during 2021, and a preparing AUTO5 and AUTO7 for clinical trials as well. In conclusion, on Slide 23, I'd like to recap the major messages from today's call. The company is in a good position combined with our cash on hand, we feel well poised for success. We're very excited about the AUTO1 program. We continue to enroll patients and expect to report data in 2022. We started the Phase 1 program of AUTO1/22 in pediatric ALL at the end of last year and expect first data to readout in Q4 this year. Additionally, we expect data at EHA in June from our ALLCAR study extension in indolent Non-Hodgkin’s Lymphoma. We also are planning on expanding AUTO1 in primary CNS lymphoma with a CAR study plan to start imminently. As indicated in our business outlook – this year we have announced a renewed focus on the AUTO1 program, we're intending to partner our lead program AUTO3 before pressing it into the next stage of development. Additionally, we expect Phase 1 data from our AUTO4 program – our program for the peripheral T cell Lymphoma later this year as well, and expect multiple next generation development candidates to enter clinical development over the course of 2021 and into 2022. Finally, with our successful recent raise, we’re in the position of strength that the cash runway into the first half of 2023. We're happy now to take questions.

[Operator:]

Thank you. You have your first question from the line of Eric Joseph from JP Morgan. Please go ahead.

[Hannah Adeoye:]

Good morning. This is Hannah on for Eric. Thanks for taking the questions, just a few from us. First in terms of primary CNS lymphoma, how should we be thinking about the size of that market? And given the limited clinical and the indication? What about AUTO1’s profile gives you comfort and its ability to show a meaningful clinical benefit? And then I have a follow-up after that.

[Christian Itin:]

Okay. Well, first of all thanks for joining, appreciate it. Peripheral CNS lymphoma is a fairly tough disease, it's a disease that originates into brain it’s very similar pretty much a form of aggressive lymphoma. And so, there are a few things that you need to have with the product, the product needs to obviously have good access to the brain that is certainly true for CAR T therapies, but AUTO1 also in particular. Secondly, you need a high level of activity, which the program has demonstrated in the adult ALL setting. And at the same time, you would want to have a minimal amount of cytokine release, that would actually generate, which is one of the hallmarks of the program, so that the local concentrations could be kept low. I think those are the key features you'd be looking for, in terms of the profile for a product we think AUTO1 has actually fits this profile very well. In terms of the size of the indication, when we look at the U.S., we're looking at approximately 1,400 patients, in that relapsed refractory pack portion of the disease. So sizable, not quite the size, overall act we're seeing in adult ALL, but not too far off from it either.

[Hannah Adeoye:]

Okay, great. Thank you. And then also for AUTO3, what do you expect in terms of cadence and the inflow from the ALEXANDER trial? Where and when might we expect additional updates from that candidate?

[Christian Itin:]

Right. So as I had indicated in the summary statements, is that we obviously had four oral presentations for the program last year, and the next step present – the next day to update, we're planning to do it in the context of an actual publication of peer reviewed journal. So we have an ability to actually give a full overview of the data rather than the 10 minute short updates that we tend to give to the conferences, the next update is planned to the actual publication.

[Hannah Adeoye:]

Okay. That's helpful. And if I could ask one more, for the upcoming AUTO1 update that you have in the lymphoma coming at DHA, how can we expect safety and efficacy compared to that teen and adult ALL, like to the extent that you can clarify that?

[Christian Itin:]

Well, we have given a – obviously the first four patients were indicated at the ASH update, which has given. What we basically reported on these patients all four received a metabolic complete remission and achieved that with limited adverse events, there was a low rate cytokine release that was seen, but no high grade cytokine release observed in these patients. So that's sort of the initial experience. And in general, you would expect a safety profile that would be less – actually more benign than what seen in adult ALL, just given the fact that the disease is not as easily accessible as ALLAs, which resides in the marrow and is a place where your T cells almost quantitatively migrate to – and all of a sudden lead to a very high level of activity in a short period of time, which drives the adverse events we're seeing in ALL. Obviously in lymphoma settings, the disease obviously is much more distributed and tends to be not as easily accessible and as a consequence, the adverse event profile is definitely going to be quite reduced compared to what we're seeing in ALL, quite similarly to what the experience it is in has been with some of the programs in the space.

[Hannah Adeoye:]

Great. Very helpful. Thanks for taking the questions.

[Christian Itin:]

Thank you.

[Operator:]

Thank you. Your next question is from the line of Mara Goldstein from Mizuho. Please go ahead.

[Mara Goldstein:]

Great. Can you hear me?

[Christian Itin:]

Yes, we can.

[Mara Goldstein:]

Excellent. Thank you. I had a couple of questions. The first is on the AUTO5 and AUTO4 program and just the advancement of AUTO5 and the bar you are expecting to use for success, given that previously, I think you said that the AUTO5 would only advance after you’ve evaluated the AUTO4 program. And then, I'm also just curious on AUTO3 program, understanding that your plan is to partner that program. I'm curious as to what level of support it will require in the interim and what you expect or hope your role will be with a partner going forward, if at all? And then secondarily, I just had a question on the ATM and whether that financial product is complete at this point, or are there still more opportunity to exercise at ATM?

[Christian Itin:]

Yes, sure. I'll start with the AUTO4/5 question. I'll say AUTO4 is in dose escalation, and we do expect to have an understanding of the dose and activity relationship from AUTO4 by the end of the year. And AUTO5 has actually worked up to an IND that will be as planned for towards the end of the year. And so, obviously it puts us in a good position then also building on the experience with AUTO4 to also think about the starting point then in terms of dose 40 for the explanation of AUTO5. So in that sense, we're using or planning to use information from the AUTO4, experience also to inform us for the conduct of the AUTO5 program. As you remember, this is – the programs are only different in the sense that they're basically seeing the same – the very same element of the structure of the T cell receptor beta chain, but it's an inversion with isoforms, it's just an inversion of two amino acids. So you would expect that what we learn with AUTO4 is highly likely also going to be directly applicable to AUTO5. So that's the first question. The second question was related to AUTO3 support required going forward with the program. At this point, I think it's too early to speculate. And I think, that will be I think a conversation at the time point when we're ready to spend the path forward for the program and a potential partner. The third question was related ATM. The ATM is obviously is in place, this was the first time the ATM was – basically triggered by an inbound interest and put the facilities in place.

[Mara Goldstein:]

Okay. Thank you.

[Christian Itin:]

Thanks, Mara.

[Operator:]

Thank you. Your next question is from the line of Ingrid Gafanhão from Kempen. Please, go ahead.

[Ingrid Gafanhão:]

Hi, good morning; good afternoon. Thank you for taking the questions. I have a couple if I may. Could you mention, I don't know if I missed that, but I didn't hear you mentioning when exactly in 2021 you are planning to start the trial in CNS lymphoma. Can you remind me of that, please?

[Christian Itin:]

I think the word I was using was imminently, so we're expecting that to actually start anytime now.

[Ingrid Gafanhão:]

Okay, great. And if I may just give more follow-ups. You mentioned as well the readout for AUTO4 trial was, of course dependent on how the pandemic would affect enrollment in the trial. So I was curious if you could share us with some thoughts on how that has been going so far, and if you think there is actually the chance that you can meet that H2 timeline for the data?

[Christian Itin:]

Are you – you mentioned AUTO4 the time you quoted was not – probably not related to AUTO4. The AUTO4 timeline we expect to give is, data by the end of the year in terms of dose escalation. The enrollment of AUTO4 is running well. The study we're conducting predominantly in the UK and in Spain, and we're actively enrolling in treating patients at this point.

[Ingrid Gafanhão:]

All right, that's good. Thank you.

[Operator:]

Thank you. Your next question is from Matt Phipps from William Blair. Your line is open.

[Matt Phipps:]

Hi, thanks for taking the questions. Christian, actually, I was wondering if I could ask the question about the ALLO program. A couple of things, is this based on the CAR construct of AUTO1? And do you plan to look at ALL or NHL? And really my question being, do you think in ALLO product can achieve the persistence needed for a durable response in ALL? Or is it better suited for something like NHL where data so far shows you may not need the level of persistence through these cells to achieve durable responses?

[Christian Itin:]

Yes. So first off we haven’t guided actually on the construct we're using and the ALLO program. We'll make that public when the program is underway. So we haven't actually guided on that yet. And we'll do that obviously when the study is up and running. The second question is, I think a very important one. I did highlight the sort of success factors that we see for CAR T program in ALL, I wonder the fundamental factors that you sort of have to get right is very long persistence. We're talking 18 months persistence or maybe longer to get into long-term benefit. That is an enormous challenge for any program on the autologous side, and it is a daunting challenge for any allogeneic program, because you basically need to create an allogeneic product that does not get recognized by the patient's immune system for that period of time. We have no evidence in the space today that this is anywhere close to being feasible. So when I think about the disease settings, ALL is probably the most challenging disease setting to get to long-term remissions with an allogeneic program. If you try to get sort of a bridge to transplant, you may try to do – you might try to see whether that might give you some activity. But if you want to get actually sustained responses, this is probably going to be the hardest hurdle to take. In some of the lymphoma settings, it looks like based on the initial experience that we’re seeing with JCAR in DLBCL, that the activity could be sort of basically successful, also from a durability perspective, even if the activity would be delivered for a shorter period of time. So there is probably more of a likelihood or more of a chance with an allogeneic product to be active in certain non-Hodgkin's indications. However, the caveat there is that – this may be true for a more aggressive setting like the DLBCL, although not an easy hurdle to take – to be clear. But it may – it might likely – is a challenge, when you look at any of the more indolent forms of non-Hodgkin's lymphoma, where we have disease that basically with everything we do today can still trigger relapses after extended periods of time. So I would assume that non-Hodgkin’s indications on the indolent side will quite likely require significant levels of persistence, potentially the aggressive forms of non-Hodgkin's lymphoma might create a bit of an opening with a shorter duration of persistence. But whether the non – persistence we're seeing today is anywhere close to what is needed, I think remains to be seen.

[Matt Phipps:]

Okay, thanks, Christian. For AUTO4 and a little bit on kind of benchmarking efficacy but with the one patient that's been shown to-date, I mean, they achieved a complete molecular response, but it wasn't durable. Based on the disease and just everything, do you think a lot of patients in this study will be pushed to transplant if they do achieve a deep response, or is that going to be allowed in the study?

[Christian Itin:]

I think it's difficult to tell at this point in time, I think if you get patients into complete remissions and these are metabolic complete remissions that we typically score in these patients. That obviously is a good starting point, but you need to show the durability of effect. Obviously what we have reported on was based on an extremely low level of the product, just 25 million sales, which is the entry dose in the dose escalation. And we'll obviously have to see where we get to as we dose escalate. And this is also what we're exploring at this point in time. In terms of transplant, but it is an option that at times is used. And typically the patients that we're obviously dealing with here are patients that often actually have already relapsed from a transplant. And so doing second transplants is tends to be a lot more tricky, not to dissimilar from what you see in the ALL setting as well.

[Matt Phipps:]

All right. Thanks Christian.

[Christian Itin:]

Okay. Thanks, Matt.

[Operator:]

Thank you. Your next question is from the line of Nick Abbott from Wells Fargo. Please go ahead.

[Nick Abbott:]

Hi, Christian and thanks for the update. Just to clarify on AUTO5, is that going to be starting at trial gating on data from AUTO4 or be seen enough to commit to the IND?

[Christian Itin:]

I think with regards to the nonclinical development you can do there is not – I don't think there's anything more. I think we can really learn about the program. What we'd like to sort of understand from the AUTO4 program is where – at what range do we see the active level of the program so that we could sort of fine-tune actually the entry level for the AUTO5 study. I think that's probably the key parameter to come out. Should we have a challenging safety event as an example with AUTO4 and that may obviously have an impact on the program. But I think the primary information that we would derive from the AUTO4 study is actually understanding the likely entry point for a shortened dose escalation for AUTO5.

[Nick Abbott:]

Okay, thanks. And then given what you've seen on AUTO1 in the refractory ALL population, where do you go next and in your cash runway guidance did not allow for expansion, clinical investigation program in adult ALL, presuming that you're also looking at commercializing the product within the cash runway as well?

[Christian Itin:]

So when we look at the current program, obviously the focus is on that, on the relapse/refractory setting. And we include – we will have patients that will be post-relapse, post-blina or post-inotuzumab, as well as patients that are have not yet been exposed to either one of the two agents. So it's going to be basically it's two slight variations in the patient population. And that's going to be an important obviously aspect to sort of capture the entirety of the relapse/refractory part of the population. We will also explore the patients in MRD status as well within the study at this point. This is not part of the pivotal part of the study. But we'll also have to see as we go forward, whether that might become an element to be considered. As we think then further to the opportunities in adult ALL, clearly I think there's an interest which we would expect to actually really get going in full steam with market approval of the product is to move the product into early line of therapy. And there's several opportunities there that you can look at either into sub-populations, high risk populations in the frontline setting, or then certain settings in the second line setting as well. So there's opportunity to grow the overall patient base within ALL and sort of create a broader footprint, not to dissimilar from frankly what you seen Amgen work on with Blincyto, working from the backend towards the stages which I think gives you a pretty good sense of where you can go. And what do you need to show. So those are kind of probably the key aspects, obviously what we are doing in parallel is that we're exploring the activity of the product in adjacent indications. And I think what that gives us is a – gives us information to then actually pick the indications to sort of add on and sort of expand the revenue stream, building from a core of ALL, and then further out. Part of that includes obviously the pediatric work that we're doing, which is certainly one of the areas that we have to be active in no matter what given the indication. And I think that is clearly an activity that will have a priority. And then as we look into the other indications, I think it's going to be driven by the data and in terms of the role, I think, capacity we have.

[Nick Abbott:]

Great. Thank you very much.

[Christian Itin:]

Thanks Nick.

[Operator:]

Thank you. Your next question from the line of Biren Amin from Jefferies. Your line is open.

[Biren Amin:]

Yes. Hi guys. Thanks for taking my questions. On AUTO1 for the indolent NHL data expected at EHA, Christian, how should we be thinking about that data? Should we be looking at ZUMA-5 as context for that dataset?

[Christian Itin:]

Thanks for joining, Biren. First off, I think it's a good dataset because it gives sort of an understanding of what a CAR T can do in indolent lymphoma, particularly in that case, follicular. And then it gives us obviously a sort of good benchmark to look at. So it's certainly a good starting point. I think when we look at the space, I think the two things that stand out in the indolent lymphomas, and that is that also similar to DLBCL. Most of the patients are not treated in transplant centers. Most patients are not treated in in-patient segments either. So I think what you need to find is sort of the sweet spot of activity and a very good tolerability profile. And so those are the two things to looking at. And so to get an initial understanding of what the profile of the product would look like in this in non-Hodgkin's indication, maybe indolent setting.

[Biren Amin:]

And are you allowing patients with prior CD19 to come into that study?

[Christian Itin:]

Right now, actually will be conducted. So this is a study where it's an extension of the ALLCAR study and actually adding additional arms to this study. This study is conducted in the UK and sort of limited access for patients with indolent lymphoma. We're probably starting to have first patients getting access in MCL. But at this point in time, there are no patients that are sort of post commercially available CAR T in the space in UK.

[Biren Amin:]

Got it. And then on the CLL cohort for AUTO1 question, there's been limited success, I guess, with the CD19s in CLL, what gives you confidence in this cohort?

[Christian Itin:]

CLL is interesting as you pointed out, because it was sort of – it's a reasonably challenging indication, I think, to crack what we've seen and probably the best data we've seen the life of sale data in the space. Looking at treating patients in the presence or the absence of ibrutinib, and potentially a slight improvement of activity with ibrutinib – basically in combination with ibrutinib. So the fundamental challenge is sort of twofold. The first is that the overall activity actually has been probably below of what you would have expected to see in other lymphomas. And secondly, there's been quite significant levels of toxicity recorded still in these patients. But I think you have to sort of work on both ends of the spectrum and actually create then a sustained level of activity in these patients. CLL is particularly challenging in the sense that obviously you need to be able to really also put pressure on the leukemia for an extended period of time. So I think persistence will be important, but also the overall adverse event profile, I think will be critical to see that you can – whether you can translate the initial effect into a long-term benefit. Those are obviously two properties that we see the AUTO1 program to certainly in ALL demonstrate very nice level of activity, but also a good level of differentiation to other programs. And that's why we're interested in actually exploring that particular indication and see where they're going, whether we can get an adequate profile there.

[Biren Amin:]

Okay, great. Thanks for taking my questions.

[Christian Itin:]

Thank you, Biren.

[Operator:]

Thank you. We don't have any further questions at this time, sir. Please continue.

[Christian Itin:]

All right, well, thank you very much for joining. Appreciate you taking the time today, and we're looking forward to keeping you updated. Thank you, and have a great day.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now all disconnect. Have a great day.