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Edited Transcript of AUTL.OQ earnings conference call or presentation 3-Mar-20 1:30pm GMT

Q4 2019 Autolus Therapeutics PLC Earnings Call

Mar 25, 2020 (Thomson StreetEvents) -- Edited Transcript of Autolus Therapeutics PLC earnings conference call or presentation Tuesday, March 3, 2020 at 1:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew J. Oakley

Autolus Therapeutics plc - CFO & Senior VP

* Christian Martin Itin

Autolus Therapeutics plc - Chairman & CEO

* Lucinda Crabtree

Autolus Therapeutics plc - VP of IR & Corporate Communications

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Conference Call Participants

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* Aaron Welch

H.C. Wainwright & Co, LLC, Research Division - Analyst

* Biren N. Amin

Jefferies LLC, Research Division - MD and Senior Equity Research Analyst

* Chad Jason Messer

Needham & Company, LLC, Research Division - Senior Analyst

* Graig Suvannavejh

Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst

* Matthew Christopher Phipps

William Blair & Company L.L.C., Research Division - Senior Research Analyst

* Nicholas M. Abbott

Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst

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Presentation

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Operator [1]

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Hello, ladies and gentlemen, and welcome to the Autolus Therapeutics FY 2019 Q4 2019 Financial Results Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dr. Lucinda Crabtree, Vice President of Investor Relations. Please go ahead.

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Lucinda Crabtree, Autolus Therapeutics plc - VP of IR & Corporate Communications [2]

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Thank you, Kevin. 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 full year 2019. 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.

Before we begin, I would like to remind you that during this call, we will be making forward-looking statements. All statements other than the statements of historical facts contained in this presentation are forward-looking statements. Our actual results, performance or achievements may be materially different from those expressed or implied by the forward-looking statements. For a discussion of the risks and uncertainties relating to our business and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, please see the section titled Risk Factors in our annual report on Form 20-F filed on March 3, 2020 as well as discussions of potential risks, uncertainties and other important factors in our other periodic filings with the SEC.

The forward-looking statements contained in this presentation reflect the company's views as of the date of this presentation regarding future events, and the company does not assume any obligation to update any forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing the company's views as of any date subsequent to the date of this presentation.

On Slide 3, you will see the agenda for today, and it is as follows: Christian will provide a brief introduction, and that will be followed by our operational highlights for the full year of 2019; Andrew will next discuss the company's financial results; and then Christian will conclude with upcoming milestones and other concluding comments. And of course, we will welcome your questions following our remarks.

So with that, I'd like to turn the call over to Christian. Thank you.

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [3]

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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 full year of 2019 as well as some recent company highlights in the fourth quarter. Let me first begin by giving an overview of our corporate strategy on Slide 5.

We're focused on progressing our potential best-in-class therapies, AUTO1, for adult ALL and AUTO3 for DLBCL, with major value steps expected through 2020 and 2021. We're in the process of starting our first pivotal study with AUTO1 in adult ALL, which we'll both drive to completion in 2021 and target approval in 2022.

We will also move our DLBCL program, AUTO3, to proof-of-concept by midyear and assuming a go decision at that time, would expect to be preparing for a pivotal study in this indication. In addition to our new to lead a clinical candidates, we will be delivering clinical milestones related to our T-cell lymphoma program, AUTO4, and also our first solid tumor indication. To date, we have seen encouraging initial antitumor activity with from AUTO6 targeting GD2, and we are now progressing an enhanced next-generation modular candidate, AUTO6NG, into the clinic in the second half of this year. AUTO6NG is specifically tailored to address some of the challenges related to the solid tumor microenvironment as initially presented at SITC last November.

Additionally, we also see 2 of our next-generation development candidates enter Phase I this year. It is AUTO1NG in pediatric ALL and AUTO8 in multiple myeloma.

Finally, I would like to highlight our longer-term value-creation steps related to our broad and highly innovative next-generation preclinical pipeline. In addition, we've been working extensively to solidify our scalable, fully enclosed manufacturing platform capabilities, which have, to date, delivered products to our AUTO1 and AUTO3 clinical programs.

Turning to Slide 6, which gives an overview of our company highlights for fiscal year 2019. As I mentioned, we have made great clinical progress with our lead programs, AUTO1 in adult ALL and AUTO3 in DLBCL. In terms of our program in adult ALL, we've presented updated results for ALLCAR19, the Phase I trial evaluating AUTO1 in adult patients with recurrent, refractory ALL in an oral presentation at ASH. The trial enrolled patients with high tumor burden, who are considered high risk for experiencing the kind of toxicities normally associated with CAR T therapy. As of the data cutoff of November 25, 16 patients had received at least 1 dose of AUTO1. AUTO1 was well tolerated, with no patients experiencing grade 3 or higher cytokine release syndrome, and 3 of 16 patients or 19% who had experienced neurotoxicity in particularly, patients with high levels of leukemia in the bone marrow. All of those neurotoxicities restrict the result for steroids.

Of 15 patients available for efficacy, 13 achieved molecular remission and -- at 1 month, and all patients had ongoing CAR T cell persistence at the last follow-up.

As touched on above, in the patients dosed with AUTO1 manufactured in a closed process, 9 out of 9 patients achieved a molecular CR at 1 month and 6 months event-free survival. Overall survival in this cohort was 100%.

More recently, at the EHA-EBMT CAR T Meeting end of January, our Chief Scientific Officer, Dr. Martin Pule, presented very encouraging updated data for AUTO3 to treat adults with relapsed/refractory diffuse large B-cell lymphoma, which we'll have -- which we'll expand on later part of the presentation. At SITC in November, we presented exciting preclinical data in our AUTO6NG program, which we'll talk to a little later.

Finally, through the course of 2019 and early 2020, we completed 2 successful fundraisings, raising in aggregate approximately $184 million in net proceeds.

In terms of our manufacturing capabilities, the Catapult site is now fully operational and delivering clinical products for patients in Europe and the U.S. We also continue to progress the build-out of our U.S. facility, which has expected capacity for 5,000 patients per year.

Moving to Slide #7. Let's start the discussion with some more detail of our most advanced program, AUTO1, in adult ALL. We do believe there is a significant opportunity and unmet medical need in the relapsed and refractory B-cell acute lymphoblastic leukemia setting, which represents an underappreciated and significant commercial opportunity in terms of both the potential market size as well as the high level of unmet need in the management of the disease. Worldwide, approximately 8,400 patients are diagnosed every year, with about 6,000 of those patients coming from the U.S. and the top 5 European countries. While response to initial combination chemotherapy regimen is encouraging, only 30% to 40% of adult ALL patients will achieve long-term remissions, and the median survival for adult patients with relapsed/refractory ALL is less than 1 year. While Kymriah, a CD19 target in CAR T therapy, was approved for pediatric ALL patients in 2017, no CAR T therapy has been approved for adult ALL patients.

The only redirected T-cell therapy approved for adult ALL is blinatumomab or BLINCYTO, a bispecific CD19-targeting T-cell engager. Blinatumomab has a 42% response rate, yet the durability of the response is limited and its event-free survival is only 31% at 6 months.

CAR T therapies are clearly highly active in this setting, but we currently see no clear sense of durability without subsequent allograft. And it is worth noting that patients are generally more fragile with more comorbidities in this setting. Initial CAR T therapies, which have been notable with high incidences of severe CRS and cases of fatal neurotoxicity show less-than-suitable profiles for addressing this pool of very sick patients.

We will have further updates from our ongoing Phase I ALLCAR19 study through the course of 2020 and starting at EHA, where we'll have approximately 6 months additional follow-up on the patients presented at ASH at the end of last year, and we also will include additional patients.

Turning to Slide #8. I wanted to spend some time focusing now on how we have specifically designed AUTO1 for durable response without the need for allotransplant and achieving a reduced level of severe cytokine release syndrome. We wanted to achieve a product that can put pressure on the tumor for long periods of time, and at the same time, exerting a good safety profile. We touched on this earlier, but this is particularly important as elderly patients tend to be a lot more fragile at more comorbidities and are much more likely to tolerate -- are much more less likely to tolerate toxicity.

The durable benefit in adult ALL patients requires an ability to put long-term pressure on the leukemia. So when we look at the current generation of CAR T therapies in the field, they all share the same construction features and, particularly, an identical binder called FMC63 to recognize the CD19 antigen of the leukemia cells. It is the binder that has an ability to hold on very tightly to CD19 and has a very high affinity.

As a consequence, this creates a very unphysiological engagement with the target cell. The result being overly-activated CAR T cells, which drive cytokine release, differentiation and exhaustion, all features that drive toxicity and lower persistence. We hypothesized that for AUTO1, that if we were able to generate a product that could deliver the kill but then disengage rapidly, we should be able to avoid overactivation of the CAR T cell and the subsequent high levels of cytokine release and thus, generate a program that has an improved toxicity profile and overall, a better efficacy profile as well. We also believe that the product should be in better shape, less differentiated, less exhausted, which should drive better persistence and, as such, should also be present over a longer period of time in the patient, exerting pressure on the leukemia.

Turning to Slide #9. In this table, we compare the current standard of care, blinatumomab or BLINCYTO, to AUTO program. Remember, most of the patients that we've treated have already received blinatumomab or inotuzumab and failed on those therapies. As you can see, the CR rate for blinatumomab is 42%. All patients in AUTO1 are at 87%. The event-free survival at 6 months for blinatumomab is 31%. We've reported 68% for the total population as well as an improved number for the patients treated with the Clovis manufacturing process.

This suggests a product profile that is emerging to be clearly differentiated from BLINCYTO, most notably from other emerging CD19 CAR T approaches. If these findings are confirmed in our registration trial, AUTO1 has the potential to set a new standard of care in adult ALL.

On Slide 10, I'd like to summarize where we are with AUTO1 now in adult ALL. This program will be the first Autolus programs to move to pivotal stage. We have filed a clinical trial authorization of CTA in the U.K. at the end of last year, and the IND is expected to be filed in the U.S. this month. The trial will be a single-arm study of approximately 100 patients IN morphologically relapsed among sites in the U.S. and Europe. The primary endpoint will be overall complete response rate. Secondary endpoints will include MRD-negative complete response and event-free survival. We're targeting the second half of 2021 for a BLA filing.

Moving to Slide 11, our program in diffuse large B-cell lymphoma. We believe that DLBCL is a large commercial opportunity and given the market size and aggressive nature of this disease. DLBCL is the most common type of non-Hodgkin lymphoma, with approximately 25,000 patients diagnosed every year in the U.S. alone. High-dose chemotherapy, combined with a monoclonal antibody, led to remission in about 50% to 60% of the patients. Thus, we expect that the addressable population to be approximately 10,000 patients in the U.S. and EU5 combined. DLBCL represents an aggressive and rapidly progressing cancer for patients who relapse or are refractory to first-line therapy. The current standard of care for second-line therapy consists of platinum-based chemotherapy regimen with rituximab. Patients who respond to second-line therapy may go on to receive autologous hematopoietic stem cell transplant or HSCT. Patients who are not candidates for HSCT or those who do not respond to second-line therapy or who relapse after HSCT are typically treated with the third-line salvage chemotherapy. These patients have a poor prognosis and treatment is generally palliative to try to prevent further cancer growth without the intent to cure.

There are 2 approved CAR-T products available today. Yet here, there remains a high unmet need. Despite highly active CD19 CAR T therapies in the relapsed/refractory setting, most of the responses are not durable in toxicity limits, broad application, particularly in the outpatient setting.

Turning to Slide #12. We highlight the current status of CAR T cell therapies in DLBCL. Despite an objective response rate of 70% to 80% and high base CR rates of 40% to 55%, only 29% to 37% of the patients achieved a durable complete remission in DLBCL. Approximately 1/3 of the CRs are lost over time. And loss of CRs are caused by PD-L1 upregulation, which contributes to CAR T exhaustion and CD19 antigen loss.

Safety is also an issue with high rates of severe cytokine release syndrome of 13% to 22% and severe neurotoxicity of 12% to 28%. The early onset and severity of toxicities requires intensive inpatient management.

Moving to Slide 13. We profiled the desired features of CAR T necessary to target a broad use across all settings of care, including as outpatient therapy. Key features include high sustained complete response rate, preventing target negative relapse on checkpoint-mediated resistance as well as low severe CRS without intensive management and low neurotoxicity rates. The latter safety profile elements, lending themselves to safe -- to use that would not require intensive management of these patients and ultimately, may allow you to actually treat these patients in an outpatient setting and avoid readmissions of those patients back at the hospital.

Continuing to Slide 14. You can see that we have designed a product in AUTO3 that targets a total addressable relapsed/refractory DLBCL patient pool far exceeding those that can be reached by the approved products. Patients received the approved products as the most part is in-patients in centers of excellence because of the high rate and severity of toxicities. And as such, the market opportunity is limited to approximately 20% of the patients that were treated in these centers, an even smaller groupings of patients that are eligible for approved CAR T products. However, with minimal tox management of AUTO3, this would allow treatment across all settings of care, increasing health care utilization of our product candidate and growing the addressable market and maximizing reimbursement options compared to approved products.

If we now move to Slide 15, we highlight the preliminary efficacy we presented at EHA. As of the data cutoff of January 21, 2020, in the cohorts dosed at 450 million cells of AUTO3, plus pembrolizumab, 5 out of 7 patients achieved a response and 4 out of 7 patients achieved a complete response.

Turning to Slide 16, we show that across all those levels, 7 out of 8 complete responders had ongoing complete responses at a median follow-up of up to 6 months, range of 1 month to 18 months. All 7 out of 7 complete responders treated with AUTO3 and pembrolizumab have ongoing complete responses as of January 21, 2020 at a median follow-up of 3 months, a range of 1 to 18 months.

Looking at Slide 17. AUTO3 continues to demonstrate a safety profile, much like the desired profile we described earlier, which may allow use in the larger outpatient setting. No patients experienced grade 3 or higher cytokine release syndrome were reported with a primary treatment. And as of the data cutoff, no patient has experienced neurotoxicity of any grade in cohorts treated with AUTO3 and pembrolizumab. You will see this compares very favorable -- favorably to other CAR T therapies, both approved and in development across the competitive landscape.

Overall, as summarized in Slide 18, we are very pleased with the profile of AUTO3 to date, its successfully manufactured product for all patients from the cell and gene therapy Catapult at Stevenage, and the AUTO3 program is on track for a decision mid next year -- middle of this year to advance the program to Phase II.

On Slide 19 onwards, I would like to conclude with a brief discussion of 2 other programs in our pipeline, because they have the potential to bring additional value inflection in 2020 and beyond. Slide 19, we highlight our unique targeting approach in T-cell lymphoma. We've been able to decide for very small differences in the amino acid sequence of the T-cell receptor beta chain constant domain, such that we identified 2 mutually exclusive receptors, which can be individual targeted by antibodies unique to the specific subtype. Unlike B-cell approaches, an individual cannot live without the T cells, and therefore, this approach allows us to salvage subtype of T cells likely to represent an equal proportion in the body in order to restore a functional immune system.

Moving to Slide 20. We recently revealed the clinical outcome of patient 1, which despite having been treated at the lowest dose of 25 million CAR T cells, showed a complete metabolic response. The patient subsequently had progression on day 71. Patient enrollment in our Phase I study with the more advanced product, AUTO4 targeting TRBC1, is ongoing with supply from the Catapult. As a result, we expect to present initial Phase I data by the end of 2020. We remain very excited about this program and the opportunity to progress another specifically tailored product utilizing our advanced modular approach to a disease setting where no other CAR T product option exists.

Finally, on Slide 21 through 23, we summarize some important points from our lead program in solid tumors. Focusing on Slide 21, solid tumors have remained a challenging area for advancement of cellular therapies due to the complexity of the microenvironment and the ability to target disease-specific antigen. AUTO6, a GD2-targeted therapy has been encouraging -- has shown encouraging preliminary data, demonstrating initial antitumor activity, giving us confidence that this target is an interesting and relevant target to pursue.

Turning to Slide 22. We draw your attention to our modular approach to enhance AUTO6NG for the solid tumor microenvironment. We have empowered our next-generation product to tackle the key areas that have previously been shown to hamper responses in the solid tumor environment. AUTO6NG leverages the same GD2-targeting CAR T, but increase persistence and also improve the persistence as well as help the cells survive in a checkpoint-rich and TGFBeta-rich environment. This product has been specifically designed to address the persistence, control tumor defenses.

Turning to Slide 23. At SITC, we were excited to reveal data showing that the addition of these modules to the AUTO6NG product were shown to augment its functions by extending T-cell persistence and rendering modified T cells resistant to both TGFBeta and PD-1, PD-L1-driven immune inhibition in vitro. We've also revealed that the clinical outcome of patient 1 in our Phase I program, despite being treated at the lowest dose, demonstrated encouraging evidence of activity. We believe AUTO6NG is positioned for additional value inflection as we commence the Phase I study second half of 2020.

With that, I will turn over the call to Andrew for our third (sic) [fourth] quarter 2019 financial update. Andrew?

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Andrew J. Oakley, Autolus Therapeutics plc - CFO & Senior VP [4]

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Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the full year, January through December of 2019. And we are on Slide 25.

Total -- net total operating expenses for the 12-month period ended 31 December 2019, were $146 million, and that was net of grant income of $2.9 million. That compares to net operating expenses of $74.1 million, also net of grant income of $1.5 million for same period. The increase in total net operating expenses was due in general to the increase in development activity to support the advancement of our product candidates, increased headcount primarily in our development and manufacturing functions as well as the cost of being a public company.

Research and development expenses increased to $105.4 million for the year ending December 31, 2019, from $48.3 million for the year ended 31 December, 2018. Cash costs, which exclude depreciation as well as share-based compensation, increased to $83.4 million from $41.5 million. The increase in research and development costs of $41.9 million consisted primarily of an increase in compensation-related costs of $20 million, primarily due to an increase in headcount to support the advancement of our product candidates in clinical development and investment in manufacturing facilities and equipment; an increase of $4.1 million in research and manufacturing consumables, in part due to the migration and expansion of our research and process development laboratories from Forest House to our new location in the MediaWorks facility; preparations in advance of any potential disruption to supply arrangements that may occur due to Brexit; as well as validation and training costs as part of the startup at the Catapult facility; an increase of $10.2 million in facility costs, primarily related to increase the number of facilities, mainly at MediaWorks and at Catapult; an increase of $3.8 million in project expenses related to activities to prepare, activate and monitor clinical trial programs; and an increase in legal and professional fees that includes a decrease in milestone payments of $0.5 million consisting of a milestone payment to UCL Business plc of $2 million in 2018; and a milestone payable to Noile-Immune Biotech in the current year; as well as an increase in IT and general office expenses as well to round it out.

General and administrative expenses increased to $39.5 million for the year ended 31 December, 2019, from $27.3 million for the year ended 31 December 2018. Cash costs in this area, which exclude depreciation as well as share-based compensation, increased to $26.6 million from $21.4 million. The increase of $5.2 million consisted primarily of an increase in compensation-related costs of $2.6 million due to an overall increase in headcount; an increase of $1.9 million in commercial activities; and an increase in public company compliance costs of around $1 million; an increase of $0.7 million in facility costs, and this was offset by a decrease of $1 million in IT charges and other office expenses.

Net loss attributable to ordinary shareholders was $123.8 million for the 12-month period compared to $57.8 million (sic) [$57.9 million] for the same time frame in 2018. The basic and diluted net loss per ordinary share for the 12 months ended 31 December 2019, totaled $2.88 compared to a basic and diluted net loss per share -- ordinary share of $1.48 for the 12 months ending 31 December 2018.

Cash and cash equivalents at the end of the period totaled $210.6 million, and that compares with $217.5 million at the end of December 2018. Adjusting for the recent follow-on offering in January, where we raised gross proceeds of $8 million, our cash at the end of January approximately stood around $286 million. And we anticipate that, that cash on hand provides us with the runway into 2022.

With that, I will now hand the call back to Christian to give you a brief outlook on expected milestones. Christian?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [5]

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Thanks, Andrew. Let me conclude this part of the management discussion with a review of the upcoming milestones and news flow through 2020. Let's move to Slide 27. The upcoming 9 months will be an eventful period for us with multiple clinical milestones and opportunities for value creation. Our chief operational focus will be commencing the registration trial for AUTO1 in adult ALL in the U.K. and U.S. We also expect to report data across multiple programs and to progress a number of our other clinical trial candidates, specifically updates on our ongoing clinical trials, initiation of Phase I study of AUTO1NG in pediatric ALL in the first half of this year; a go/no-go decision on Phase II initiation of AUTO3 in DLBCL middle of this year; initiation of a Phase I study for AUTO6NG toward neuroblastoma towards the end of this year; and initiation of the Phase I study of the next-generation program in multi myeloma called AUTO8 also towards the end of 2020; as well as working on some exploratory clinical trials towards allogeneic approaches as well.

In conclusion, on Slide 28, I'd like to recap the major messages from today's call. First, AUTO1 is our foundational program and first Autolus program expected to move into pivotal stage. Given the positive safety and efficacy profile today, we believe that AUTO1 has the potential to be a best-in-class CD19 CAR T in ALL. Secondly, our next priority is on AUTO3 in DLBCL, which, obviously, is expected and slated for clinical data middle of the year. We expect to report full Phase I data for AUTO3 in middle of 2020 to reach a decision point for a Phase II trial initiation thereafter.

Looking ahead to the remainder of the year, we see opportunity for additional value steps for T-cell lymphoma as well as the -- or the start for the AUTO6 next-generation program, targeting GD2-positive tumors. The company has a strong balance sheet with $286 million in cash, which will create a run rate into 2022. And finally, we're looking forward to seeing many of you at the upcoming AACR, ASCO and EHA meeting over the upcoming few months and are now happy to take questions.

Operator, please open the line. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Debjit Chattopadhyay with H.C. Wainwright.

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Aaron Welch, H.C. Wainwright & Co, LLC, Research Division - Analyst [2]

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So I have a question on the barriers -- oh, this is Aaron on for Debjit, by the way. This is -- I have a question on the barriers to outpatient treatment with AUTO CAR Ts in DLBCL. So we were looking at a study in which they treated patients with a median of only 2 prior lines with liso-cel in an outpatient setting, and they ended up hospitalizing 59% of the patients at the first time of CRS or neurotox. So what do you think would be a reasonable level of hospitalization that could warrant expansion to the outpatient setting? And do you think that there could be more competition in certain subsets of patients in the outpatient setting for various auto CAR Ts?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [3]

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So very good question, Aaron. And it's obviously a very interesting kind of analysis when you look at the field, where you realize that approximately at this point, only about 20% of the patients sort of can be targeted with CAR T therapy in the current setting, which is really focused on the centers of excellence.

And the reason for that is predominantly driven by the requirement for fairly intense management of these patients to deal with the adverse event profile that the current products have. And what we basically quoted that basically flux of patients back into the hospital that were considered initially to be treated in outpatient setting just indicates the need for significant level of management of these patients to begin with. And that's a fundamental property of the product itself. And I think it's shared by all of the current products that have either been approved or are about to be approved.

So what I think we were highlighting in our presentation is that the AUTO3, at this point, has shown no high-grade cytokine release syndrome. And this did not require actual management of the patients. So we didn't actually have to put steroids in -- steroid covering that we have -- didn't have to put tocilizumab in these patients as a preventative measure and management measure. This is the data actually from unmanaged patients.

What was probably more surprising and obviously a remarkable outcome is the fact that we have seen no neurotoxicity of any grade in the patients that we have treated in combo, in combination with pembro across a set of dose levels. And that is truly surprising, because none of the programs targeting -- redirecting T cells, targeting CD19 to date has shown this type of a feature. All of them actually have a neurotoxicity as a core type of adverse events that they do experience. The fact that we have seen none, without managing the patients, gives us a lot of confidence that we have a type of profile that should be well manageable also in an outpatient setting and also, importantly, in centers that are not the few centers of excellence in the country, but also much more broadly in the periphery, where, in fact, most of the DLBCL patients do get treated in the U.S. And I think that's going to be a core feature for the program. And to date, what we've seen as a profile certainly has not been reported by anyone else within field.

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Operator [4]

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Our next question comes from Chad Messer with Needham & Company.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [5]

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Maybe we can just start by continuing a little bit the discussion we're just having on AUTO3 and safety, about a go/no decision coming up. Is there an actual bar there you can describe? I mean 0% would be awesome, but maybe not all that practical to hold on to.

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [6]

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I think if you have a low level of neurotox, low-grade neurotox at a low level, I think that would be very well manageable. We also should remember that the patients treated with BLINCYTO actually are treated in an outpatient setting, and they're managed that way. So -- and the neurotox rate obviously for BLINCYTO is not 0, but it is less intense than what we see with the CAR Ts that are currently -- have currently gone through approval or close to approval.

And so there's clearly a bar here that is not a 0 number, but definitely want to see a low level of neurotoxicity. And you want to avoid the high-grade cytokine release syndrome, which is really requires you to go back into the hospital.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [7]

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Okay. And then just again, thinking on efficacy and safety bars. On the AUTO4 program, I mean, for T-cell lymphomas, we don't have good standard of care to compare ourselves up against. So what do you -- what do we need to see later this year for AUTO4 in order to get excited and optimistic about that one?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [8]

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I think what we would like to see is we see a good level of responses in those patients and evidence that we start to see also a reasonable level of persistence. So we get some durability of those responses. As you pointed out, this is a very devastating disease. There's very little options at this point. And I think a program that gives you a reasonable level of remissions in these patients together with some durability of response will go a long way. And clearly, the bar for this indication is lower than what we're seeing in lymphoma and certainly much lower than what we're seeing in leukemia.

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Chad Jason Messer, Needham & Company, LLC, Research Division - Senior Analyst [9]

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All right. Great. We're looking forward to all the data you guys got coming up this year.

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Operator [10]

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Our next question comes from Biren Amin with Jefferies.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [11]

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Christian, on AUTO2, can you just give us a status update on the NG program there?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [12]

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With multiple myeloma, obviously, went back and reengineered a new program, which is called AUTO8, and that program is slated to get back into the clinic second half of this year.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [13]

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Got it. And then on AUTO4, thanks for the prior response. But if I look at some of the data with bendamustine, for example, in relapsed/refractory setting, I think there's some data out there that reports an OR of close to 30%; CR of about 20%, 25%; median DOR of about 3.3 months. Is that kind of like the bar that you would need to beat with AUTO4?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [14]

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I think you want to be above that. But you're right, that is currently what the bar looks like in that disease setting. That is sort of as kind of the best we can do for these patients at this point.

So it's clearly one of the CR rate side, but it's clearly a very poor starting point.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [15]

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Okay. And then maybe just a question on AUTO3. How much data do we need to see later this year to move this program into pivotal? Can you -- and I guess, at what cell dose are you looking at? Greater than 150 million in cell dose? Or are you looking at the 450 million cell dose to make a determination on pivotal studies there?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [16]

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So we're clearly looking at, at this point at greater of 150 million. We're treating at 450 million, and we'll have to see kind of how the dose levels do differentiate. They do much at this point. And we want to see a sustained CR rate of 50% plus in this population.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [17]

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50% plus sustained, meaning greater than 6 months?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [18]

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Greater than 3 months.

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Operator [19]

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Our next question comes from Matt Phipps with William Blair.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Senior Research Analyst [20]

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So two questions on AUTO1. First, for the pivotal trial, how are you thinking about the criteria for baseline blast counts? And are you going to do split dosing based on blast counts in a pivotal trial there? Was there any difference in kind of outcomes from that in the original all-CAR study?

And then in the trial, what kind of health economic data do you think is particularly important when you go to hospital administrators here in the U.S.? There's been quite a lot coming out recently about the cost of rescue medications or looking at ICU days or potential to get it outpatient by not getting something like CRS or something that causes how patients have to go to a hospital for a certain number of days. I guess what do you think is most important there amongst all these different kind of health economic endpoints that are being looked at?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [21]

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Right. So first of all, thanks for joining, Matt. With regards to the tumor or the tumor burden of these patients, these are patients that actually are in relapse, in morphological relapse, which means that they have 5% or more blast in the marrow. That's the first, I think, answer to your question.

The second answer is with regards to the approach to dosing. We're going to use the same dosing that we have used for the ALLCAR19 study, the Phase I study, which is that we look at a cutoff of 20% blast. If we are -- if the patient is above 20% blast, we do a dose reduction, and we give a lower for initial dose of the product to sort of manage the kinetics of the initial antitumor activity, which is really what determines, to a significant part, the overall toxicity profile in the patients. So yes, there's going to be a very identical approach that is used in the Phase I study.

With regards to AUTO1 and kind of the parameters that drive reimbursement and so on, I think it's important, first of all, to understand that this is a patient group that obviously is very intensely managed to date. In other words, the treatment of adult ALL patients is very expensive. Even if the outcome is death, it is a very expensive therapy because you have to manage these patients due to the immune suppression quite frequently at the hospital, manage them through infections and so on and so forth, which requires often ICU stays for these patients. So managing these patients through the final year of life is extremely costly, and it's costing the system to date.

So what we're doing with regards to collecting information, we're obviously collecting very diligently information related to resource utilization across all the patients in the trial. And we also do record the information also from a patient's perspective with patient-reported outcomes as well. So we have both perspectives that we collect the data from and that will also be built into the appropriate arguments for the respective payers. And as you know, depending on the health care system we're looking at, there are quite differences on what the various payer groups are actually looking for.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Senior Research Analyst [22]

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Can I -- one follow-up on the split dosing again. I know there were a couple of patients who had some neurotoxicity in the data presented today with AUTO1, and they had higher tumor burden. With the neurotox, do those patients get the second half of the dose? Or did the neurotoxicity occur with that first lower dose?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [23]

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It's typically linked to the initial expansion of the CAR T cells, which is mostly driven off the first dose. And what we obviously have seen is, and that's what you're referring to, is that the patients did actually developed a higher-grade neurotoxicity with AUTO1 in this particular indication. Where all patients with very high tumor burden, we're looking at more than 50% tumor burden in these patients. And all of them actually responded well to dose steroids to actually get normalized.

So obviously, what we can do with these patients, we can execute these patients a steroid cover upfront, given that we kind of identify the patients at risk here, and that should mitigate in a significant way actually the rate of high-grade neurotox in these patients. But it's very clear population of the cells that were at risk of neurotox, and that was straight linked to very high tumor burden in the marrow.

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Operator [24]

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Our next question comes from Graig Suvannavejh with Goldman Sachs.

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Graig Suvannavejh, Goldman Sachs Group Inc., Research Division - Executive Director & Senior Equity Research Analyst [25]

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I've got three this morning, if you don't mind. My first is I noticed you've got a new program, which is as an allogeneic approach. And so I'm just wondering, what's the thought process here? What's the target product profile you're hoping to achieve? How is it different from other allogeneic approaches? So that's kind of all wrapped up in one question. My apologies for that.

My second question just has to do with the PRIME technology that you licensed last November. If you could just give us some more color on that opportunity.

And then my third question, if you could, just provide some -- this question is for Andrew. Just on 2020 OpEx and how we should think about trends relative to how you finished the year in 2019.

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [26]

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Okay. All right. I'm happy to get started on the first 2 questions. So the first question was related to dimension of approaches towards the allogeneic approaches. Obviously, there are -- if you have patients that are underserved, either have basically no usable T cells that you can actually extract a leukapheresis or are such -- at such a speed of progression that you can actually manufacture a product, that's obviously where you would like to have an allo product that could go in there, even if that allo product will be inferior to the neural products that we're producing.

And so what we're looking here is using basically the technology approach that we've been using, which is programming the cells and changing the behavior at the protein level, which is the basic foundation in terms of technology that we're using. We're creating protein modules that change the behavior of cells.

What we have outlined is 1 module that actually changes the expression of the T-cell receptor, and the surface of the cells prevents that from happening. And with that, obviously, you do prevent graft-versus-host disease. We're doing some initial clinical testing starting towards the end of this year together in a collaboration with one of our academic partners. So that's sort of moving us towards -- technologically towards an allogeneic type of approach.

So that's what we're doing there. It's built from the same way of programming cells that we're doing, obviously, in general, and it avoids just the usual gene-editing type of approaches that we've seen typically across the space by actually making the modifications at the cellular level, at the protein level in the cell.

The second question was related to the PRIME technology that we've in-licensed. And that is, in essence, a technology where that looks to address heterogeneity within solid tumors. And there's sort of different types of heterogeneity, one of which is related to the fact that often, a tumor is not homogeneous for a single target antigen. And in other words, you may have -- those of you who remember kind of the early HER2 stains when Herceptin came up, where you actually have a -- when you look at the slide stained by -- with HER2 antibodies, you see actually kind of a very spotty staining, certain areas that are positive, but many areas that are either just barely positive to actually straight negative. So in other words, there's heterogeneity in terms of target expression, and that's quite common.

It is not the case for GD2, which is one of the reasons why we're working with that particular antigen. But where you have heterogeneity, what you would like to do is you'd like actually to take out the cells with the target antigen of choice that you can identify, but then also induce a natural immune response against the other parts of the tumor that are not positive, that are negative for the target antigen, and you can directly address with the CAR T cell. The PRIME technology actually allows you to boost that natural immune response towards the tumor. And that's what we're using with these modules. And with that, I think I'm handing over to Andrew.

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Andrew J. Oakley, Autolus Therapeutics plc - CFO & Senior VP [27]

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So thanks for the question, Graig. Look, I'm not quite sure that we're really in a position that, I guess, we're going to get sort of too granular in terms of OpEx guidance for the year. Our guidance is that the cash runway we've got will last into '22. In a practical sort of sense, if we look at the 3 buckets of cash spend in terms of R&D, G&A and CapEx itself, you'll probably see an increase in all 3 categories during the course of 2020, but G&A, not too much. R&D, reasonable sort of increase, but there were a lot of sort of costs of -- in terms of the validation, training and setup of Catapult that in the '19 year that obviously won't occur in '20, but will then be sort of offset by -- in terms of actual patient processing or manufacturing. So I think that's at the moment about as far as we want to go from a guidance perspective in relation to OpEx for '20. We'll just stick with the concept that we've got a cash runway into '22.

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Operator [28]

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Our next question comes from Jim Birchenough with Wells Fargo.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [29]

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It's Nick on for Jim this morning. I really would just want to focus on AUTO1. Unfortunately, I joined the call a little late, so I apologize if my questions will be answered from your prepared comments. But as far as the CTA goes, that was filed over 3 months ago. Have you enrolled a patient in the U.K. into the registration study?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [30]

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We're expecting enrollment starting actually this month in the U.K.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [31]

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And then as far as the U.S. goes, obviously, that's lagging in terms of the IND filing. But have you got sites identified, ready to go? How many sites do you think you need for the trial? And is it feasible to warehouse patients for this trial?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [32]

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So first of all, the U.S. IND is expected to be filed this month. That will allow us to actually enroll and treat the first U.S. patients in the second quarter, which is what we have guided to and which we're on track for.

In terms of the clinical centers, yes, they're absolutely identified. We expect to have approximately 30 patients in -- sorry, 30 (inaudible). We expect the majority of those centers, more than 20 in the U.S., the remainder in the U.K. and rest of Europe. So yes, all of those centers are obviously active and we're in contracting processes, et cetera, as you would expect.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [33]

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And so in order to complete the study...

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [34]

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I'm sorry, the last, the last...

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [35]

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Sorry, go ahead.

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [36]

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Question on warehousing patients, the answer is no, you can't. This is a rapidly developing disease. The patients are in need of therapy and you have to treat. You can't just park those patients with some intermediate type of therapy. It's very hard to do.

Yes. I mean you may decide within a 2, 3 weeks period sort of thing, but you can't actually park patients for much longer than that.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [37]

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And so Chris, in your assumptions and for completing this trial 1H '21, what -- obviously, you have to have data on all 70 complete response -- or response rate data on all 70 patients. But what degree of follow-up are you going to need in order to declare the trial has been completed or for registration at least?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [38]

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So the primary endpoint is CR rate, and the CR rate is determined typically after 1 month. So that is a very early time point in terms of the determination where you're tracking with the trial. It also will give you most of the safety at that point already. There's just very little safety events that happen actually after 1 month. And then you obviously want to see approximately 6 months of follow-up in these patients to get a good sense of what the event-free survival looks like. And so that is sort of the data point that we're looking at. But as you enroll the patients, obviously, you'll have a range of follow-up in these patients. And we expect to discuss with the agency on how we would actually file, and what process we would file the particular trial.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [39]

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Right, right. Okay. And then are you allowing -- going to allow bridging therapy in this trial?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [40]

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In general, in -- and this is ALL, adult ALL. Often in adult ALL, there can be some form of bridging therapy that is being used to match the patients. But that is sort of that is truly up to the treating physicians to determine what is appropriate to do with the patient. And there's obviously a range of therapeutic options that can be used typically in some form of chemo. Unfortunately, I would say, with these patients to chemo doesn't really allow you to actually get to any responses in this setting anymore, but it might allow you to sort of just buy a bit of time or keep the disease for a little bit during the manufacturing process.

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Nicholas M. Abbott, Wells Fargo Securities, LLC, Research Division - Director & Associate Analyst [41]

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And just remind me, Christian. For the U.S., will product be manufactured in the U.S. or in the U.K.?

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [42]

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In the U.K.

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Operator [43]

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And I'm not showing any further questions at this time.

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Christian Martin Itin, Autolus Therapeutics plc - Chairman & CEO [44]

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All right. Well, we'd like to thank you all for joining us this morning. Looking forward to, obviously, keep you updated and seeing you on the road. Thanks a lot. Have a great day.

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Operator [45]

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Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.