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Edited Transcript of ALCLS.PA earnings conference call or presentation 7-Mar-17 1:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Cellectis SA Earnings Call

Romainville Mar 7, 2017 (Thomson StreetEvents) -- Edited Transcript of Cellectis SA earnings conference call or presentation Tuesday, March 7, 2017 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andre Choulika

Cellectis - Chairman and CEO

* Eric Dutang

Cellectis - CFO

* Simon Harnest

Cellectis - VP of Strategy & Finance

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Conference Call Participants

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* Jim Birchenough

Wells Fargo - Analyst

* Christopher Marai

Insanet - Analyst

* Peter Lawson

SunTrust Robinson Humphrey - Analyst

* Josh Schimmer

Piper Jaffray - Analyst

* Wangzhi Li

Landenburg Thalmann - Analyst

* Biren Amin

Jefferies - Analyst

* Hartaj Singh

Oppenheimer - Analyst

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Presentation

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Operator [1]

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Greetings and welcome to the Cellectis full year 2016 financial results conference call. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Simon Harnest, Vice President of Strategy and Finance. Thank you Mr. Harnest, you may begin.

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Simon Harnest, Cellectis - VP of Strategy & Finance [2]

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Thank you very much and welcome everyone to Cellectis' fourth quarter and year end 2016 financial results conference call. Joining me on the call today with prepared remarks are Andre Choulika, our Chairman and Chief Executive Officer, and Eric Dutang, our Chief Financial Officer.

Yesterday evening, Cellectis issued a press release reporting our financial results for the fourth quarter and year ended December 31, 2016. This press release is available on our website at www.cellectis.com.

As a reminder, we will make forward-looking statements regarding financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to defer from those forecasted. A description of these risks can be found in our most recent Form 20F on file with SEC. I would now like to turn the call over to Andre.

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Andre Choulika, Cellectis - Chairman and CEO [3]

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Thank you, Simon, and good morning, everyone. Thank you for joining us on today's call. At this time, I would like to review some our 2016 highlights and then I will turn the call over to our Chief Financial Officer, Eric Dutang, who will review the financial results for the fourth quarter and the year ended December 31, 2016.

In 2016, Cellectis made significant progress on getting our first wholly owned product candidate UCART123 into clinical trials for AML and BPDCN patients. UCART123 is the second TALEN gene-edited off-the-shelf CAR T product candidate to enter clinical trials.

At the 2016 American Society of Hematology annual meeting, very encouraging pre-clinical data was presented by Dr. Monica Guzman from Weill Cornell Medical Center in New York, showing that UCART123 induces long-lasting complete remission, including molecular remission in mice with largely improved survival. This stands in contrast to our control group of mice that showed earlier relapses after being treated with Cytarabine alone, which is the current standard of care in AML.

Furthermore, the UCART123 xenograft mouse models show that our CAR T-cells preferentially target CD123 expressing AML cells sparing normal hematopoietic cells.

This is the result of our know-how in (inaudible) engineering and selecting a specific CAR T architecture that preferentially targets CD123 over-expressing cells. On December 14, 2016, Cellectis presented at the National Institute of Health's Recombinant DNA Advisory Committee meeting for the planned Phase I clinical trials, applying UCART123 in patients with acute myeloid leukemia and blastic plasmacytoid dendritic cell neoplasm. We are proud that the RAC meeting members granted unanimous approval of the planned Phase I program.

By the end of December, following the RAC meeting, we filed an investigational new drug or 9D application for UCART123 Phase I clinical trial in AML and BPDCN patients. Within 30 days, we received approval from the Food and Drug Administration to start those Phase I clinical studies, and we are very encouraged by the FDA support in getting UCART123 in clinical trials to offer patients a new treatment option in these two critical indications.

This also marked the first clinical trial approved by the FDA for an allogeneic off-the-shelf TALEN gene-edited CAR T-cell product candidate MDUF.

The AML clinical program would be led at Weill Cornell Medical College by Dr. Gail Roboz, Director of Clinical and Translational Leukemia Programs, and she is Professor of Medicine.

The BPDCN clinical program would be led at MD Anderson Cancer Center, by Dr. Naveen Pemmaraju, Assistant Professor, and Dr. Hagop Kantarjian, Professor and Department Chair of the Department of Leukemia, Division of Cancer Medicine. We anticipate enrolling patients in these two clinical trials in the second quarter this year.

The key to selective progress in UCART123 program is the successful cGMP manufacturing of UCART123 at large scale, to provide doses for initiating our planned Phase I clinical trial in AML and BPDCN patients. We are in the first stages of shipping our manufactured product to our clinical sites where the product will be readily available to patients in these clinical trials. We are looking forward to updating you on our progress in these trials.

Moving onto UCART19, which is our first gene-edited allogeneic off-the-shelf, CD19 directed CAR T product candidate that entered Phase I clinical trials in June 2016, in patients with acute lymphoblastic leukemia. As a reminder, the rights over UCART19 have been exclusively licensed to Servier and Servier has exclusively licensed the right to Pfizer to develop and commercialize UCART19 in the US.

Servier and Pfizer presented encouraging safety and efficacy data on the first 7 patients treated with UCART19 at the RAC meeting on December 14, 2016. The details of this presentation can be found on the RAC website and were the subject to a prior conference call on December 20, 2016.

We are encouraged by UCART19 first data in pediatric and adult ALL patients and we're looking forward for the coming updates on this program by our partners. The two UCART19 Phase I clinical trials in pediatric and adult ALL patients are currently ongoing at University College London and King's College London in the United Kingdom sponsored by Servier.

Pfizer and Servier plan to open a US site for the adult ALL clinical study and additional sites in other European countries are planned to be opened, subject to approval of regulatory bodies.

We are very much looking forward to see this promising next generation off-the-shelf CAR T program being made available to US clinical centers and providing a treatment option to relapsed refractory ALL patients with high unmet medical needs. Relapsed ALL is in association with extremely poor prognosis and patients in this setting have virtually no treatment option.

We are also looking forward to expanding the application of our gene-edited allogeneic CAR T program in the coming months as we -- in the initiation of our UCART123 clinical trial in AML and BPDCN patients.

In order to expand our clinical expertise and network Cellectis recently formed a clinical advisory board comprising leading experts in the hematological malignancies, stem cell transplant, immunotherapy, and hematology-oncology clinical research fields.

On the collaboration front, we are excited to see that the progress of our partner Pfizer is showing, with the recent announcement of pre-clinical data at the ASH, of a BCMA targeted allogeneic CAR T-cell program in multiple myelomas, as well as the EGFRvIII- targeted allogeneic CAR T-cell program in glioblastoma, which was just announced in an AACR abstract.

Those programs are TALEN gene-edited CAR T-cells and results of our collaboration we entered into with Pfizer in June 2014.

To give you the outlook of the news flow in 2017, as discussed, we will soon initiate trials in AML and BPDCN patients with UCART123 and plan to provide interim data update by year-end. We are currently initiating the manufacturing process for UCART-CS1, our first product candidate in multiple myeloma and are expecting to file an IND of this product candidate by year-end.

The data update on UCART19 in ALL are solely managed by Servier in collaboration with Pfizer and we cannot mention specific timelines on their behalf, but we are looking forward to more updates this year.

In parallel to our progress on the therapeutic programs, our plant science subsidiary, Calyxt, based in New Brighton, Minnesota, is evolving into the first commercial pure play gene-editing agricultural company. In October, Calyxt completed an expansion of its high-oleic/non-trans-fat soybean variety, CAL1501, in the US with the production of 1,200 tons of soybeans. This positions CAL1501 for a commercial launch by 2018 after two more rounds of amplification.

If a favorable and regulatory environment enables the rapid advancement of the crops developed by Calyxt into field-testing, and [really power] to commercialization. To date, we have received five letters from the USDA for five different crop varieties, classifying these crops as non-regulated.

The vision of Calyxt is to be the leading pure play gene-editing agricultural biotechnology company, focused on developing healthier crops that are in direct response to consumer needs while satisfying modern farming yield expectations. All without the use of trans genes.

The selected route is to be well capitalized to pursue its mission on all fronts with a current cash position over $291 million at the end of December 2016 to be compared to the $342 million the prior year.

With that, I'll turn it over to Eric for a discussion of our financial results.

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Eric Dutang, Cellectis - CFO [4]

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Thank you, Andre. As of December 31, 2016, Cellectis had EUR276.2 million or $291 million in total cash, cash equivalents and current financial assets compared to EUR340.2 million or $342 million as of December 31, 2015. This decrease of EUR38 million was notably driven by the following elements.

Firstly, EUR29.6 million of cash used in operating activities related to our research and development and manufacturing efforts including the advancement of UCART123 for which an IND was filed in the US in early 2017.That was partially offset by payments received from Servier and Pfizer in relation to our collaboration agreements and R&D tax credits.

Secondly, EUR12.5 million of cash used in investment activities primarily to Calyxt's land acquisition and greenhouse construction, an aggregate amount of EUR9.5 million.

Finally, the decrease was partially offset by EUR4.4 million positive translation effect of exchange rate fluctuations applied on our US-dollar-denominated cash, cash equivalents, and current financial assets.

Cellectis expects that its cash, cash equivalents, and current financial assets of EUR276.2 million as of December 31, 2016 will be sufficient to fund its current operations to 2019.

Total revenues were EUR51 million for the year ended December 31, 2016, compared to EUR56.4 million in 2015.

Collaboration revenues decreased by EUR10.4 million which was notably explained by two elements. Firstly, by the revenue recorded in 2015 in relation to the earlier exercise by Servier of its option to purchase the exclusive worldwide rights to further develop and commercialize UCART19, partially offset by a second element which was the revenue recognized in 2016 from an agreement to provide Servier with raw material and additional batches of UCART19 products on the achievement of two milestones in 2016. Research tax credit income increased by EUR4 million from EUR5 million in 2015 to EUR9 million in 2016.

On the operating expenses side, total operating expenses was EUR111.8 million in 2016 compared to EUR84.3 million in 2015.

Excluding non-cash stock-based compensation expenses which amount to EUR53 million in 2016 and EUR31 million in 2015, adjusted total operating expenses increased by EUR4.6 million from EUR54.2 million in 2015 to EUR58.8 million in 2016.

Research and development expenses increased by EUR18.5 million from EUR52.4 million in 2015 to EUR70.9 million in 2016. Excluding non-cash stock-based compensation expenses, adjusted R&D expenses increased by EUR7 million from EUR33.9 million in 2015 to EUR40.9 million in 2016.

The increase in adjusted R&D expenses of EUR7 million was notably related to UCART123 and other product candidates' development including payments to third parties and costs related to the preparation of UCART123 clinical trials, purchases of biological materials, and expenses associated with the use of laboratories and other facilities.

We recorded EUR27.2 million and EUR39.2 million of selling, general and administrative expenses in 2015 and in 2016 respectively. Excluding non-cash stock-based compensation expenses, adjusted SG&A expenses increased by EUR0.6 million from EUR15.7 million in 2015 to EUR16.3 million in 2016.

Net loss was EUR60.8 million in 2016 or $1.72 per share on both a basic and a diluted basis compared to a net loss of EUR20.5 million in 2015 or $0.60 per share on both a basic and diluted basis.

Adjusted loss attributable to shareholders of Cellectis was EUR7.8 million in 2016, EUR0.22 per share on both a basic and diluted basis, compared to adjusted income attributable to shareholders of Cellectis of EUR9.6 million in 2015, $0.28 per share on both a basic and diluted basis. Adjusted income or loss attributable to shareholders of Cellectis excludes non-cash stock-based compensation expenses of EUR53 million in 2016 and EUR30.1 million in 2015, respectively.

I will now hand the presentation back over to Andre for closing remarks.

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Andre Choulika, Cellectis - Chairman and CEO [5]

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Well, thank you very much, Eric, for this clear presentation. With this considerated P&L for the year 2016, Cellectis has today a strong balance sheet and will remain well positioned to continue our progress into the years ahead.

I want to reiterate what a remarkable year 2016 was for Cellectis and for the field of gene-editing overall. The initiation of the Phase I of clinical trial with the first ever off-the-shelf CAR T-cell product candidate, UCART19, marks a milestone in modern medicine. We are very proud of the growing support of partners.

Pfizer and Servier are showing us -- pushing forward the allogeneic CAR T programs into the clinic in the US and in Europe. At Cellectis, we are at the forefront of revolutionizing cancer treatment by transforming powerful CAR T-cell therapy into a true universal pharmaceutical products. We are the next generation, CAR T 2.0.

I look forwarding to updating you on our progress over the coming months. I want to thank you very much for your attention and I would like to open up the call to questions. Joining me for the Q&A will be Eric Dutang, our CFO, and Simon Harnest, Vice President of Corporate Strategy and Finances.

Operator, please go ahead.

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Questions and Answers

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Operator [1]

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(Operator Instructions). Our first question comes from the line of Jim Birchenough with Wells Fargo. Please proceed with your question.

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Jim Birchenough, Wells Fargo - Analyst [2]

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Hi, guys, congratulations on all the progress, a couple of questions. I guess first off if you could maybe contrast the risk of GvHD in the AML population you'll be studying in the UCART123 versus the population that's been studied with the CD19 product. I guess one of the issues is how immuno-suppressed the ALL patients are, and I'm just wondering if the AML patients are expected to be more immune competent, if that's an increased risk and how you're going to handle that. Then I've got some follow ups, thanks.

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Andre Choulika, Cellectis - Chairman and CEO [3]

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Well, I can answer this question, it's Andre Choulika speaking. Well, the difference between UCART19 and UCART123 is essentially on the gene-editing side is that first of all, they all both have targeted gene-editing of TCR alpha gene, therefore, both of them don't have a functional TCR. So on the presentation of the T-cell receptor, on the surface of T-cell, the percentages that we get that are some percent of T-cell positive cells should be similar.

The big difference between UCART19 and UCART123 resides in the [TD] 52 disabling. We disabled TD52 in UCART19 in order to be able in preconditioning the patient to taking an injection of alemtuzumab in order to maintain the immune system of the patient down, while we inject UCART19.

As the [lymphocyte] depletion induced by alemtuzumab is deep and long, it allowed UCART19 to expand and have a survival in these patients. But when we looked at the result that we get with UCART19, which is a very strong expansion, even on low doses -- with doses are at 10 times lower than the lowest effective dose for target trials, and it's very hard like a strong expansion that we see for this first dose ranging, we are encouraged by the fact that if we don't have maybe to precondition that much the patient and UCART123 will have only [cyclofluda] in the standard doses, and when we inject UCART123 that we don't think will induce a different grade of GvHD than UCART19.

This means in some cases the skin rash that disappears quite quickly in the time, it means like in a few hours to a few days. We don't expect to have the different profile of skin GvHD but of course at different manufacturing, different products, so maybe science will say something else. But the fact is that there is a total similar profile between the security and the safety of 19 that shows like very strong safety and 123 because the gene-editing of UCART -- of T-cell are absolutely similar in the purification system are similar, so we don't expect something special on this side.

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Jim Birchenough, Wells Fargo - Analyst [4]

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Just in terms of the trial conduct, did we -- as you start that trial should we assume that no news is good news? If you saw a case of GvHD, would you update us and if we're not hearing anything should we assume that all is well? Just trying to think about how to follow the progress of that trial on our side of things.

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Andre Choulika, Cellectis - Chairman and CEO [5]

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Well, on the principal, no news is always good news, for sure, but I hope to update you with good data at the time.

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Jim Birchenough, Wells Fargo - Analyst [6]

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Just finally, on the Calyxt side of things, what are the plans for that business? Could you maybe talk about how you think about it strategically as we get closer to launching a product from your first crop, thanks?

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Andre Choulika, Cellectis - Chairman and CEO [7]

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Can you ask again your question, I'm sorry I'm not sure I got it.

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Jim Birchenough, Wells Fargo - Analyst [8]

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Yes, so just strategically how you're thinking about the Calyxt business on the plant science side and how you're thinking about optimizing value of the platform.

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Andre Choulika, Cellectis - Chairman and CEO [9]

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Well, Calyxt has great ambitions. This company can be turned to a leader in the field of agriculture and should in this space in the coming year and of course decade, we have great ambition for Calyxt.

The purpose of Cellectis is of course we financed Calyxt totally up to now but is to fly by their own wings in the future and to have their own potential. With this great ambition, we have to match the potential capital in front of these ambitions in order to reach the goals they've targeted. Therefore, we anticipate to try to find for Calyxt their own finances and see them fly by themselves.

So that's like their purpose and this would probably -- we think that Calyxt is a company that has unprecedented potential for the past 50 years in the ag space. If there is one pure player in the field of gene-editing in the ag space that can make it to the top, it's probably Calyxt today and Calyxt will have this opportunity opened by Cellectis to the Company as much as we can in the coming future.

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Jim Birchenough, Wells Fargo - Analyst [10]

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A final question then I'll drop in the queue. I'm just wondering in terms of process improvements, that I'm sure you're always pushing for, is there a (inaudible) 2.0 coming that might eliminate an even greater percentage of androgynous TCR? I think right now it's 99.5%, which is near complete but is there further efficiencies in androgynous TCR removal that you expect as we move forward over time?

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Andre Choulika, Cellectis - Chairman and CEO [11]

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Well, you know we're at the beginning of this type of technology and therapies. It's like sequencing in 1990, and people were calculating like at this time you -- the base pair for sequencing cost $10, the base pair, and to sequence the human genome which is like 6.4 billion base pair and you have to make more coverage, so it's like probably 100 billion base pair to cover, this was unaffordable.

The technology went way more faster than what was expected beating the laws of Moore in this space. We anticipate that the technology for purifying TCR negative cells will improve very significantly in the coming future. Of course, Cellectis, Pfizer and surrogates investing a tremendous amount of energy to refine -- to improve these technologies.

Of course, they will not come immediately to the product that will go into an IND because you need GMP-approved products such as the CliniMACS that we're using currently. CliniMACS used for bone barrow transplant by Weill. By watching these technologies, validating them, testing, and all these things. They will come up in the coming future, -- coming system of purifying T-cells that will come through purity degrees that are in no comparison to what we have today.

Of course, this will evolve in the future. Not only the gene-editing technologies are evolving, and also the process of manufacturing the T-cells, but the partners we're working with in this space. For example, we are working with this and maintaining for the purification currently on CliniMacs.

There are a series of other companies working in this space and there is a huge potential for getting higher grade technology and purity of product. So 2017 for Cellectis, will be a key year in trying to [ratify] the technology we're using with T-cells to make this product as standard as possible in the future. You don't have to see this technology as not moving in the future.

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Jim Birchenough, Wells Fargo - Analyst [12]

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Thanks for taking my questions.

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Operator [13]

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. (Operator Instructions). Our next question comes from the line of Christopher Marai with Insanet. Please proceed with your question.

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Christopher Marai, Insanet - Analyst [14]

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Hi, good morning, guys, thanks for taking the question. I was wondering first if you could maybe touch upon perhaps gating factors for opening CD123 positive hematologic malignancy trials in the EU, particularly for BPDCN.

Then secondarily, and this is more in reference in the AML trials, could you maybe speak to the capacity for the cGMP manufactured product that you have ready to go for the AML trials, thank you?

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Andre Choulika, Cellectis - Chairman and CEO [15]

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Well, the main -- the gating factor is essentially very much like paperwork, to get all the patient consents, the IRB, and the normal procedure once you get the green light from the FDA. So it takes a bit of time to finalize all these documents, ship the product to the centers, and once everything is ready and we have the green light from the centers then start recruiting the first patients.

There is no difference to our understanding from AML that will be ongoing at MD Anderson - like, no, at Weill Cornell compared to BPDCN trial at MD Anderson. So the recruitment will -- should approximately start at the same time. It depends on the patient recruitment of course but we don't expect any big differences between the two.

So it's like a protocol and amendment to protocols, finalizing all these documents, the IRB on both sides and this would be it. It takes a bit of time to finalize this but we're getting close to finalizing it. So normally as I said it should start Q2 but --. If you remember, we filed the IND of UCART19 in December 2015. And the first patient dose was in June, we are trying to beat that.

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Christopher Marai, Insanet - Analyst [16]

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Okay, great. And then in terms of just maybe a EU trial especially for that smaller BPDCN population what (multiple speakers) with respect to your (multiple speakers). Thank you.

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Andre Choulika, Cellectis - Chairman and CEO [17]

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Yes, for now we have no plan. For now, there is no plan for a BPDCN on the European side for now. We will update you. We, of course, have the ambition to develop the product in multi-centers in the future, but we will start this at MD Anderson for now. And there are some BPDCN patients in Europe and we have some interest from European clinical centers to develop this product in Europe. But for now, we think that we just have to go step by step wise. And once we'll have a more solid idea on how UCART123 behaves in patients for the first dose then we'll start maybe beginning to extend it.

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Christopher Marai, Insanet - Analyst [18]

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Great, thanks for taking the questions. I'll jump back in the queue.

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Operator [19]

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Thank you. Our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey. Please proceed with your question.

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Peter Lawson, SunTrust Robinson Humphrey - Analyst [20]

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Hi Andre, just thinking about the high-risk first-line AML patients, how many are you targeting and how do you identify them and how quickly is it you see to identify these patients?

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Andre Choulika, Cellectis - Chairman and CEO [21]

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To my understanding is also or in discussion with the physician is there is a significant amount of patient waiting in line in this space. It does not mean that one will finish up all the paperwork and all the preparation to get the first patient in, we'll get the perfect patient to start a trial with. And if this perfect patient exists ever.

Nevertheless, there is neither on AML nor on the BPDCN side according to the clinical center there is difficulties in recruitment, because there is a lot of refractory relapse patients in both of these indications. And with most of time when the standard of care is like the protocol it's very simple and the path of the patient is very predictable.

So we anticipate that normally the first patient in should come pretty quickly. The only thing that you have to wait for 50 -- how much time do we have to wait, Simon, it's like 45 days between two patients before we can do the second enrollment.

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Simon Harnest, Cellectis - VP of Strategy & Finance [22]

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It's 42 days from patient to patient.

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Andre Choulika, Cellectis - Chairman and CEO [23]

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42 days between two patients. So you cannot make a patient wait up to the time like you [phase] the 42 days. The fact is that there is unfortunately too many patients waiting in line in the States.

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Peter Lawson, SunTrust Robinson Humphrey - Analyst [24]

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Got you. How big do you think that population group is? What are your estimates?

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Andre Choulika, Cellectis - Chairman and CEO [25]

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Our estimates for AML in the US is approximately between 20,000 and 25,000 -- 22,000 patients a year with over 10,000 deaths. And in Europe it's approximately the same maybe slightly above with 25,000, between 20,000 and 25,000 patients, new patients a year with approximately 12,000 deaths a year.

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Peter Lawson, SunTrust Robinson Humphrey - Analyst [26]

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And then that kind of genetic group of high risk patients, how large do you think that is? Do you get any estimations from the --?

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Andre Choulika, Cellectis - Chairman and CEO [27]

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No. This -- we don't know because -- we are going to start with this, but when you look at the trial design, once we've completed the dose escalation, according to the results we'll have, we'll move into an expansion phase with 144 patients in total. And we might have maybe first-line patients in this with pretty bad prognosis. We estimate that this population might, for example, approximate half of this -- one-third of this population which is between 3,000 to 5,000 patients a year.

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Peter Lawson, SunTrust Robinson Humphrey - Analyst [28]

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Got you. Okay, thank you so much.

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Operator [29]

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Thank you. Our next question comes from the line of Josh Schimmer with Piper Jaffray. Please proceed with your question.

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Josh Schimmer, Piper Jaffray - Analyst [30]

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Good. Thanks for taking the question. I was hoping maybe you could give us an update in terms of the progress at Calyxt in building out the supply chain for the zero trans soybeans and then identifying end user purchasers.

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Andre Choulika, Cellectis - Chairman and CEO [31]

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Well, of course, the supply chain it goes from the -- I'm not an expert like Federico Tripodi in this space, but to my understanding from the management of Calyxt which has a huge experience in this space because of course, him and all the team come from like Monsanto or other companies such as Cargill, it's really very skilled people that have more knowledge than me in this space.

But to my understanding it's like the supply chain is essentially to find enough farmers with acreage to the expansion of the current high-oleic soybean. And we are dealing with a lot of different farmers that are interested in the product and trying to ship to Calyxt CAL-1501 and moving to this expansion phase. That's the first step is to secure acreage not only in the US but also in Argentina.

The second thing that is important is to have access to crusher facility with identity preservation. And you have to have enough yield in order to have this identity preservation of CAL-1501. Therefore, the more you have yield, the lesser the crushing is required.

Then finally you have the meals -- you have to sell the meals on one side, so the meals to meals buyers so it's essentially for poultry feeding and animal feeding generally. And we have also identified a series of buyers in this space and also brokers that are interested in purchasing the oil that is high-oleic, non-trans-fat oil.

Not only this but you have a conjunction of two facts in 2018 that comes to very good timing which is a ban over trans-fat in the food in United States by 2018 at the time we reach the market with CAL-1501. So there will be a shortage in supply for high-oleic non-trans-fat soybean oil. And we think that it will probably drive in the supply chain a big request for this.

Not only this but we have also discussions with end users such as food processors in the interest of using non-transgenic low-trans-fat high-oleic oil in their food cooking in general. And that would solve it. You have to drive, for example, the demand on the food supply essentially from the food processors and the consumer at the end. And then your supply chain adjusts according to this.

So currently the team is essentially working on securing essentially some acreage and crushing facility and selling the -- having people interested in buying the meals and the oil. And there is also other byproducts from soybean crushing.

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Josh Schimmer, Piper Jaffray - Analyst [32]

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And then maybe a quick question on the UCART123. I might have missed this but are there CD 123 expression level cutoffs for enrollment in the trial? And if so, what percent of the patients would meet the criteria?

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Andre Choulika, Cellectis - Chairman and CEO [33]

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Well, we try to -- of course there is interest in trying to find people expressing at the minimum cutoff UCART123. We are not disclosing this data for now, because to my understanding they are not public. But having a sharp selection of the patients with a clean expression of UCART123, in order to have a better impact for the CART is something that we are interested in. So we will be specific at selecting the right patient in the clinical trial, and to have a bold and high expression of UCART123.

For BPDCN it's different because I think that most of BPDCN patients overexpresses the CD123, CD123 over-expression is part of the diagnosis of BPDCN but for ML it's more tricky. But we are not disclosing this here.

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Josh Schimmer, Piper Jaffray - Analyst [34]

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Thank you.

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Operator [35]

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Thank you. Our next question comes from the line of Wangzhi Li with Ladenburg Thalmann. Please proceed with your question.

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Wangzhi Li, Landenburg Thalmann - Analyst [36]

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Good morning. Thanks for taking my question. So I would like to ask a question also about the UCART123 trial. I just wanted to get a little color in terms of the cells, manufacture UCART123, you have several bases so I think it's on different donors. But I just wanted to -- the extra cells would be used for the Phase 1 trial, are you going to use the cells from one batch and a single donor or is there multiple donors?

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Andre Choulika, Cellectis - Chairman and CEO [37]

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Well, currently the plan is to use it with multiple donors. But we'll start of course with one batch, one of the batches we've done and then we'll move forward with other batches in the future. But for now, we'll start with one single batch.

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Wangzhi Li, Landenburg Thalmann - Analyst [38]

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Okay, got you.

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Andre Choulika, Cellectis - Chairman and CEO [39]

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We haven't see with UCART19 any patient like a donor effect for now. So this is for now a big question mark. If there is a donor effect here, no, we don't know the 17 the 19, so we might not expect this on 123 but maybe there is a donor effect. It's always every product is new and different so we can always have some question on this side. But for now, we have decided that there was no donor effect. According to the selection, it will be single donors.

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Wangzhi Li, Landenburg Thalmann - Analyst [40]

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I actually -- my follow up question is for the UCART19 trial for the seven patients reported, I know two of compassionate use patients are from the same donor but, for the other five patients they are from different donors.

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Andre Choulika, Cellectis - Chairman and CEO [41]

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Yes.

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Wangzhi Li, Landenburg Thalmann - Analyst [42]

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Okay, got you. And also, any further color in terms of the expectation for the UCART123 trial to start in the second quarter. Is that still a reasonable expectation?

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Andre Choulika, Cellectis - Chairman and CEO [43]

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Yes, it's a reasonable expectation. Actually, we're -- all the team is working hard and [it's always] side-by-side this clinical trials so we expect to have the green light on clinical centers to move forward with the first recruitment, so we'll , probably announce it at the time we do it.

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Wangzhi Li, Landenburg Thalmann - Analyst [44]

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Okay. And I know it's maybe a Pfizer question but any color in terms of when the UCART19 US trial to be started?

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Andre Choulika, Cellectis - Chairman and CEO [45]

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As I said during the Q&A like the conference before, when I was talking before, we have unfortunately no control over how Pfizer and Servier are going to communicate on this. So we are making no plans and we definitely expect, because they're very excited by the trial they are moving on that it's moving onto UCART19 that they will probably update people on these trials as soon as possible but I cannot make any forecast.

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Wangzhi Li, Landenburg Thalmann - Analyst [46]

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Okay.

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Andre Choulika, Cellectis - Chairman and CEO [47]

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I would love to do one, but it's totally reserved to them.

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Wangzhi Li, Landenburg Thalmann - Analyst [48]

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Okay. Last question from me for Eric, so just wondering do you have any color or guidance in terms of potential milestone payments from the Pfizer partnership as you are proceeding to targets and moving forward maybe this year or next year.

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Eric Dutang, Cellectis - CFO [49]

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We don't disclose any milestone projections. But we'll see in the future but we don't disclose specific milestones under (collaborations.

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Simon Harnest, Cellectis - VP of Strategy & Finance [50]

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Just to add to that, Wangzhi, this is Simon, as you say the -- what we just mentioned is that the EGFRvII glioblastoma CAR T moving forward. The BCMA target is moving forward. So you see already the fruits of the collaboration coming out at scientific conferences. And I think that's probably the best indicator how our milestone payments are also translating, because there is numerous funds now moving forward on the Pfizer side and they're working on more. So we are looking forward to their update.

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Wangzhi Li, Landenburg Thalmann - Analyst [51]

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So, yes, so that's why actually the reason I wanted to ask is if you already presented their abstract for those targets, does that mean they're already triggered milestone payment or is there still another decision point to trigger the milestone payment.

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Simon Harnest, Cellectis - VP of Strategy & Finance [52]

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We've a pretty steady revenue flow like any standard milestone agreement pre-clinically and then clinical phases up to commercialization. So that's pretty standard so that would be a pretty steady revenue flow. There is no skewness to the beginning or the end.

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Wangzhi Li, Landenburg Thalmann - Analyst [53]

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Okay, all right. Thanks a lot for answering my questions.

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Operator [54]

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Thank you. Our next question comes from the line of Biren Amin with Jefferies. Please proceed with your question.

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Biren Amin, Jefferies - Analyst [55]

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Yes, thanks, guys, for taking my questions. Maybe I'll just start on UCART123. If I do the calculation, is it fair to say that enrollment for dose escalation on the first nine patients would finish around mid-2018 if you have to wait 42 days between each patient?

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Andre Choulika, Cellectis - Chairman and CEO [56]

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No, it's not for the -- all the trial it will not be 42 days. This will accelerate according to the safety profile that we have at the beginning. The more that we show some safety on the CART, the more will this time will shorten down. And once we find the right dose then we'll stop and stay at the same dose (inaudible) 19 and enrollment will accelerate. So it's not -- I hope it won't take that much time, I think it will be probably faster.

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Simon Harnest, Cellectis - VP of Strategy & Finance [57]

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This is Simon. Biren, sorry just to add to that so the first three patients on each arm of the trial will have this 42 day follow up. So it's the first three patients on AML, the first three patients on BPDCN and we expect the enrollment to be simultaneous in both trials. So if things go well by the end of the summer, we'll already have the first six patients on UCART123 and that's three for AML and three for BPDCN. And after that, as Andre said, timelines can accelerate.

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Biren Amin, Jefferies - Analyst [58]

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Got it. And then is there optionality for the BPDCN trial to enroll frontline patients in addition to the relapse refractory patients?

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Andre Choulika, Cellectis - Chairman and CEO [59]

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I'm not sure of your question.

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Simon Harnest, Cellectis - VP of Strategy & Finance [60]

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Yes, there is. There is the potential for frontline patients. This will be not in the first arm in the first dose, but as we go into the expansion phase, the FDA indicated that they would encourage us to enroll frontline patients.

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Biren Amin, Jefferies - Analyst [61]

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And then just on this trial are you also allowing patients to be bridge to transplant?

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Simon Harnest, Cellectis - VP of Strategy & Finance [62]

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This an option? Sorry, Andre.

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Andre Choulika, Cellectis - Chairman and CEO [63]

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Yes it's not part of the trial itself, bridge to transplant is like -- we deliver products and bridge to transplant is up to the physician to make a transplant or not. We hope that the product might develop without the it of a bridge to transplant. And when you look at the profile for -- safety profile on mice this might not be needed at the end.

So we have to wait and let the product develop as a normal product. It should be need escalation, redosing, consolidation phase and all these things and at the end, you will have a protocol on how to dose these patients. And so now we just have to check for the safety profile of this product, see if they have an effect eventually and then if there is the need for bone marrow transplant then we'll see, but we don't position ourselves as a bridge to transplant. Nevertheless, if this product leads to a bridge to transplant in AML then definitely it's a big milestone.

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Biren Amin, Jefferies - Analyst [64]

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And then -- I know you had a couple of scientific papers that were published in recent months, one detailing the HIF1 CAR. There seems to an advance from the current CAR constructs that provides on/off activity especially in hypoxic environments. Can you just talk about your plans for this? What targets would you potentially pursue with this construct? And when could we see this move forward into IND stage?

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Andre Choulika, Cellectis - Chairman and CEO [65]

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Yes, this is a very interesting and exciting CART. We think that this CART is adapted for a solid tumor CART. We do have some solid tumor targets selected. We have not disclosed them up to now. And we will, I hope, in the future, the coming future.

This CART is very interesting because in the solid tumor environment, you have hypoxia and t-cells have also a competitive advantage to work -- these kind of CART give the t-cell a competitive advantage toward a hypoxic environment while it keeps it competitive advantage when it leaves the solid tumor.

Therefore, we think that there is very high potential of better safety for targets that are more or less confined to the solid tumor that can maybe have a pattern of expression that is differentiated that can work only with solid tumor environment. And so we will see this only when we will get into solid tumors which is not for now.

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Biren Amin, Jefferies - Analyst [66]

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Okay. And then maybe just one last question, Andre. In the Qasim paper that detailed the two patients that received UCART19 during compassionate use, I noticed that the safety switch the RQR8 had a low expression on the CART19 cells. Do you know what causes this? Was this just because the cells were manufactured at the academic center?

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Andre Choulika, Cellectis - Chairman and CEO [67]

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No, I don't think so. Actually the -- well, it's very difficult to answer such a type of question. But, no, I don't think that the academic center -- they have built a very powerful CART and the fact that they're manufacturing the CART there they do have a very good potency and they were very successful in building this. No, I think it has no relation with that.

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Biren Amin, Jefferies - Analyst [68]

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Okay, thank you.

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Operator [69]

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Thank you. Our final question comes from the line of Hartaj Singh with Oppenheimer. Please proceed with your question.

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Hartaj Singh, Oppenheimer - Analyst [70]

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Yes, thank you for the question. Just to follow up a little bit on the AML trial and some of the patients you are recruiting. So is there going to be any sort of age stratification, Andre, or pre/post transplant? Are these patients that are -- saw complete response earlier and now they are -- they've relapsed? Are these refractory patients? Are these post-transplant? Any insight you can give there on these first six -- sorry, the three in AML. And then how are you choosing the patients for BPDCN?

And then just a follow-up type of housekeeping question.

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Andre Choulika, Cellectis - Chairman and CEO [71]

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Okay. Well, the question is how are we going to select our first patient for AML.

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Hartaj Singh, Oppenheimer - Analyst [72]

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Yes, meaning are these patients that are -- that have -- saw a complete response or softened response and then relapsed or were these patients that were refractory to begin with.

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Andre Choulika, Cellectis - Chairman and CEO [73]

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Yes. There are refractory lapsed patients in there now that have failed standard of care which see like relapse and they're totally refractory to receive care and then we can open the trial and try them there. We'll probably go and try to select patients that do have the targeted stripe on AML cells. And as much as we can do a proper selection after the tumor profile. And we'll start with these patients.

Once we get idea of the dose and we are starting at a very low dose then we'll know exactly how the safety profile of UCART123 in these patients and not inducing any side effects that could go from GvHD to they shouldn't be different, any different than UCART19 to other unknown potential side effects that maybe [CRS] something like this. We'll probably move to the next phase and next dose and we'll try to remain in the same type of criteria on the selection for expression of CD123 on the AML cells in the patient.

Once we've finished the dose escalation, we find the right dose we'll probably try to move on patients that are not as totally refractory lapsed and try to move on patients that have less doses of cytarabine because these patients have to -- tend to develop a higher tumor burden at the end and increase the risk of having higher CRI, so a full developed while we are moving forward into the dose escalation.

For BPDCN, it's not any different. The only trial that was ongoing -- there is a trial that has stopped currently and there's a lot of BPDCN patients that are in a way waiting for the trial to start at MD Anderson. And it's not the same profile as for AML because there is no standard of care actually for BPDCN. And it's like an orphan disease and it would open other types of possibilities in the space.

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Hartaj Singh, Oppenheimer - Analyst [74]

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That's very helpful, Andre. Just are you doing any sort of age stratification? I know that AML patients based on age can -- are treated differently. Is there any age stratification in the AML trial?

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Andre Choulika, Cellectis - Chairman and CEO [75]

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Not for now. Not for now. It will probably come up at the expansion phase.

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Hartaj Singh, Oppenheimer - Analyst [76]

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Got it. And are you using any conditioning regime with 123?

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Andre Choulika, Cellectis - Chairman and CEO [77]

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Yes, it's cyclofluda, it's similar as -- like any (inaudible) therapy.

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Hartaj Singh, Oppenheimer - Analyst [78]

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Okay, got it. And then just a last question.

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Andre Choulika, Cellectis - Chairman and CEO [79]

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No alemtuzumab such as UCART19.

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Hartaj Singh, Oppenheimer - Analyst [80]

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Yes got it, thank you. And then just for your burn, should we use the fourth quarter as the way to think about it or is it more the year-on-year difference between 2016 and 2015. Just any rough ideas on how to model burn into 2017. Thank you.

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Andre Choulika, Cellectis - Chairman and CEO [81]

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Well, the model of burn when you look at the quarter-by-quarter we had EUR276 million at the end of Q1 2016. Eric ,correct me if I'm wrong.

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Eric Dutang, Cellectis - CFO [82]

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Yes, it EUR260 million.

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Andre Choulika, Cellectis - Chairman and CEO [83]

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EUR260 million, third quarter it was EUR276 million.

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Eric Dutang, Cellectis - CFO [84]

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No, it was EUR260 -- third quarter was EUR263 million or EUR264 million.

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Andre Choulika, Cellectis - Chairman and CEO [85]

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And EUR276 million so the Company has been burning a lot of cash at the first quarter of 2016 and tried to stabilize as much as possible the expenses. Nevertheless, we had only 19 ongoing as a trial and of course the burden of conducting the trial was taken off our back by Servier and Pfizer because they exercised their option in end of 2015.

But now we have 123 that will start in two Phase 1, then we'll have [TS1] to start manufacturing. We have UCART22 for CD22 that will start also. And, of course, UCART38 that will start. Plus we're pushing other things forward, so the Company will have to increase also the burn during this year in order to have a better and a stronger and a more built pipeline. And we are expanding outside, potentially trying to find other ways to expand outside the (technical difficulty). Don't forget that (inaudible).

And I said it before, we'll try to find proper finances for Calyxt under (inaudible), so this should be a separated thing under (inaudible). So it's difficult to forecast how the burn will be but we try to be as reasonable as possible. The market has been very volatile these days. And we think that Cellectis is very well positioned to change total dimension of the Company during this year. And the finances that we have currently on the large perimeter including Calyxt can lead us up to 2019 puts us in a very good position to conduct all these clinical trials in a very comfortable way.

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Hartaj Singh, Oppenheimer - Analyst [86]

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Yes, got it, Andre. Thank you very much. That's very helpful.

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Andre Choulika, Cellectis - Chairman and CEO [87]

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Sure.

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Operator [88]

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Thank you. There are no further questions at this time. I would like to turn the call back over to Simon Harnest for closing remarks.

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Simon Harnest, Cellectis - VP of Strategy & Finance [89]

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Yes, thanks again, everyone, for the great questions and for participating in this call. I think it was very helpful. I think if anything one most important thing to note is we have an extremely strong cash position that gives us multiple years of runway. And we've already started a number of clinical trials. So, I think this is a huge achievement at a very lean balance sheet.

And again, thank you for your participation today. And contact me if you have any further questions. All the best.

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Andre Choulika, Cellectis - Chairman and CEO [90]

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Thank you very much to everyone. Have a great day. Thanks.

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Operator [91]

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Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.