Q3 2023 Atara Biotherapeutics Inc Earnings Call

Participants

Alex Chapman; VP, Corporate Communications & IR; Atara Biotherapeutics, Inc.

Pascal Touchon; President and CEO; Atara Biotherapeutics, Inc.

Eric Hyllengren; SVP, CFO; Atara Biotherapeutics, Inc.

Salim Syed; Analyst; Mizuho Securities USA, LLC

John Newman; Analyst; Canaccord Genuity

Phil Nadeau; Analyst; Cowen & Co., LLC

Jonathan Miller; Analyst; Evercore ISI

Presentation

Operator

Good morning, and thank you for standing by. Welcome to Atara Biotherapeutics' third-quarter 2023 financial results conference call. (Operator Instructions) Please be advised that today's call is being recorded. I would now like to hand the call over to Alex Chapman, Vice President of Corporate Communications and Investor Relations at Atara Biotherapeutics. Please go ahead, sir.

Alex Chapman

Thank you, Sherry. Good morning, everyone, and welcome to Atara's conference call to discuss our expanded tab-cel global partnership with Pierre Fabre Laboratories and our third-quarter 2023 update. Earlier today, we issued a press release announcing this partnership and our third-quarter financial results. This press release and an updated slide deck are available in the investors and media section at atarabio.com.
Joining me on today's call are Dr. Pascal Touchon, President and Chief Executive Officer; and Eric Hyllengren, Chief Financial Officer. (Event Instructions)
We would like to remind listeners that during the call, the company's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and the company's SEC filings.
These statements are made as of today's date, and the company undertakes no obligation to update these statements. Now, I'd like to turn the call over to Pascal. Pascal?

Pascal Touchon

Thank you, Alex, and thank you all for joining us this morning. Today, we announced the global expansion of our tab-cel partnership with Pierre Fabre Laboratories. We are already successfully launching this product across Europe.
In parallel, we announced a strategic restructuring that together with the expanded tab-cel partnership, we'll expand Atara planned cash runway into Q3 2025. This positions us well to continue building the value of our pipeline, including anticipated clinical milestones for ATA188 with the EMBOLD readout in early November as well as initial data for the ATA3219 program in lymphoma.
Now I'll start by covering the details of the partnership and strategic restructuring, followed by upcoming clinical milestones. After a competitive process, we have significant interest from across the spectrum of large pharma, midsize pharma, and biotech companies. We are excited to announce an expanded partnership with Pierre Fabre to commercialize tab-cel in the US and all remaining global markets.
This moment signifies a pivotal transition in Atara's evolution. We are now optimally positioned as a nimble, allogeneic T-cell immunotherapy company with near-term catalyst and the opportunity to advance a pipeline of differentiated therapies across a range of oncology and autoimmune indications from our proven EBV T cell platform.
We sought a partner that is committed to deliver tab-cel, the product with life-saving potential for the US and global patients. In parallel, we pursued a deal structure that meaningfully reduces our cash burn over the next two years and provides Atara and shareholder with significant value, both for short-term cash and potential milestone payments and long-term significant double-digit royalties.
Pierre Fabre brings substantial and demonstrated capabilities evidenced by the successful launch of tab-cel, branded as Ebvallo in European markets. We have found them to be committed collaborators of adding [compel justification] to expand our partnership for tab-cel to reach as many patients as possible worldwide. Specific to the US, which is the largest commercial opportunity, Pierre Fabre is in a strong position to succeed, strengthening their US presence with tab-cel as their flagship product and building onto their marketing experience in Europe.
Now for the specifics. Atara will receive up to $640 million in additional consideration, plus significant double-digit tiered royalties on net sales. As part of the deal, we will receive approximately $30 million a deal closing in upfront and inventory purchase and $100 million more in potential regulatory milestone payment through potential BLA approval.
In addition, Pierre Fabre will reimburse Atara for expected tab-cel global development cost, full BLA approval, and will purchase existing and future tab-cel inventory through the BLA transfer date. Substantially, all tab-cel manufacturing, regulatory, and development activities are targeted to transition from Atara to Pierre Fabre at the time of the BLA approval transfer.
We remain confident that tab-cel represents a significant business opportunity with several hundred EBV-positive PTLD addressable patients in the US alone, who could benefit from this potentially life-saving therapy with a favorable safety profile. With significant pricing potential based on its value for patients and health care system in such an ultra-rare disease, we believe that tab-cel has the potential to deliver US peak sales of over $500 million per year, following potential label expansion from the multi-cohort study.
With future sales milestones and significant double-digit royalties from our agreement with Pierre Fabre, we believe US tab-cel commercialization will progressively grow future revenues for Atara over the term of the agreement. We continue to evolve as an organization focused on developing innovative allogeneic cell therapies for cancer and autoimmune disease.
We are undertaking a strategic restructuring to reduce our current workforce by approximately 30%. The benefits of the expanded tab-cel partnership, coupled with the restructuring, are anticipated to reduce our planned cash expenditures from 2023 levels by approximately 40% or $100 million by the end of '25.
I would like to extend my sincere gratitude to all Atara staff, both those continuing to the next phase of Atara and those departing, for their unwavering commitment to the patients' lives we seek to transform and their significant contributions in advancing truly innovative medicine for patients in need. Thank you for what you have done to get us where we are today.
We believe these actions when combined with cash of approximately $102 million on September 30, 2023, and certain anticipated payments from the expanded tab-cel commercial partnership will be sufficient to fund Atara planned operations into Q3 2025. This will position Atara well to deliver multiple anticipated clinical milestones, including the early November EMBOLD data readout as well as key data readouts for ATA3219 program in lymphoma and potentially in autoimmune disease.
On the regulatory front, we are encouraged from the recent positive FDA assessment of comparability. It supports putting the pivotal clinical data from different process versions of tab-cel in a BLA submission expected in Q2 2024.
We now have a clear plan for the clinical data package, and the expected BLA submission timing aligns with our filing strategy to include the latest pivotal ALLELE study data for inclusion in and to obviously support both the pre-BLA meeting and anticipated BLA filing package. We are also excited to disclose initial data from our Phase 2 multi-cohort study values EBV-positive cancer in December at ESMO-IO.
Now onto ATA188, a potentially transformative therapy for people living with progressive multiple sclerosis. The preliminary analysis readout for the Phase 2 double-blind placebo-controlled EMBOLD study is on track for early November, which will include the primary outcome measure of confirmed disability improvement by EDSS and the relevant imaging and fluid biomarkers for more than 90 patient.
This includes a number of patients that enrolled earlier in the study and have been evaluated beyond the primary endpoint of 12 months at 15, 18, 21, and 24 months. The EDSS data from these later timepoints will be analyzed as part of the primary analysis, and they gave a sense of ATA188 impact on EDSS stability and progression, which usually requires longer follow-up time to assess that disability improvement.
Our goal is to disclose sufficient study data to allow investors to have a potential value of ATA188 in on-active progressive MS. As a reminder, significant unmet need remains in progressive MS, especially non-active progressive MS, which represent the vast majority of the progressive MS population needs a focus of the EMBOLD study.
There are no approved therapies right now for that demonstrated disability improvement for non-active progressive MS. The currently approved therapies only demonstrate modest slowing of disability progression with an approximately 6% difference versus placebo. That is primarily driven by patient with active disease.
As a result, anything better than we swinging from more slowing of progression to stabilization of disability to trends for disability improvement to significant improvement is potentially transformative and sets up diverse and robust clinical development opportunities, including potential pivotal Phase 3 trials.
Finally, we are progressing a potential best-in-class allogeneic CAR-T assets, which could play a foundational role in our portfolio moving forward. We will focus resources in the near term on clinical development of ATA3219 following recent IND clearance and on preclinical activities for ATA3431 of CD19/CD20 targeted CAR-T.
While these are the programs that have the highest potential for value creation over the next two years, we will also continue to strategically invest in all the attractive targets and platform announcements. With respect to ATA3219 for allogeneic CAR-T for B-cell malignancies expressing CD19, we are progressing to activate study centers and start enrolling patients in the coming months in the Phase 1 study in relapsed or refractory B-cell NHL. We expect preliminary clinical data in the second half of 2024.
We are particularly excited to bring this allogeneic CD19 CAR-T asset to the clinic as it's been optimized but also potential best-in-class product profile, featuring off-the-shelf availability and clinically validated technologies like the 1XX signaling domain associated with favorable response rate and durability. Enrichment for less differentiated T cell memory phenotype for improved clinical responses and retention of the endogenous T cell receptor, which may be a crucial survival signal for T cells.
We are also pleased that ATA3431, an allogeneic bispecific CAR directed against CD19 and CD20, built on the EBV T cell platform with the 1XX costimulatory domain is moving into IND-enabling studies with a competitive profile. Compared to an autologous CD19/CD20 CAR-T benchmark, preclinical data demonstrated potent antitumor activity, long-term persistence, and superior tumor growth inhibition. And this has been accepted for poster presentation at the upcoming ASH meeting in December.
Beyond oncology, there has been high interest recently in the potential of CAR-T cell therapies for autoimmune disease with remarkable results from early data in patients living with severe refractory disease such as lupus. At Atara, we have believed for a while in the important wholesale therapy can play in addressing autoimmune conditions. With ATA188, Atara is pioneering the use of an allogeneic T-cell immunotherapy in a neurological autoimmune condition.
Building on this experience, we're actively considering options best suited for Atara allogeneic CAR-T EBV therapies in autoimmune disease. Well, EBV T cells have compelling potential benefits like persistence and favorable safety with no requirement for complex genetic editing. Specifically, we process a memory phenotype that can expand and traffic to site of disease, which provide a versatile platform with off-the-shelf accessibility that can address several potential shortcomings of other approaches. Because at hand, we're actively progressing efforts towards the potential IND to evaluate ATA3219 in autoimmune disease in parallel with NHL development. More to come on that soon.
To close, we are excited about the near-term opportunities for Atara to demonstrate the potential of our pipeline. We are coming up to one of the most exciting milestone in Atara's history with the primary analysis readout of the EMBOLD study very soon, and we are now well capitalized with planned cash runway into Q3 2025 to pursue a potential best-in-class portfolio of CAR-T assets in areas of great unmet need where we believe we can make the biggest difference.
I will now turn the call over to the operator for the Q&A part of the call. Operator?

Question and Answer Session

Operator

(Operator Instructions) Salim Syed, Mizuho.

Salim Syed

Great. Good morning, guys. Congrats on the deal. Just a couple of from me, if I can. One on the process. Pascal, you mentioned that there were large pharma players involved here. Just curious, the rationale to go with Pierre Fabre, was it just more operational that you wanted just one partner globally? Was that just really important to you? Or was that also financially driven that Pierre Fabre actually offer greater economics?
And then second, just on the $500 million number that you put up for US peak sales, just curious if you could break that down for us, even ballpark wise? How much of that is for the first indication EBV for PTLD? And just what portion of the $640 million in milestones could you get just on the first indication alone, potentially? Ballpark would be helpful. Thank you.

Pascal Touchon

Thank you, Salim, for your questions. So the first one, competitive process, a big pharma, mid pharma and biotech. Decision was based on three key aspects. One, of course, is financial. And financial not only about an upfront level, but very importantly, the way for us to be able to add the partner progressively taking over activities, but immediately taking over the cost of the activities for tab-cel. That was very important for us because that was the one the way for us to really move into focusing our cash into the development of -- in MS and in allogeneic CAR-Ts. So that was one aspect on financial.
The other one was the level of commitment that this particular partner will -- is demonstrating through the process of diligence, and with Pierre Fabre, we have experience with. We know how committed they are to the success of Ebvallo in Europe.
And then thirdly, it's true that I think only one partner is much easier to manage for us as a biotech company. It was not the most important decision point. But it was really an important aspect to say if the financial are exciting because they cover exactly what we need, in terms of taking over the cost and adding cash to the balance sheet. On top of that, I think someone who is truly committed to succeed in having tab-cel as their flagship product in the US, we're going to put 100% and even more effort behind it. Then, of course, the fact that I think only one partner is makes it easier to manage, in general.
Now onto your second question, the $500 million peak sales, as we said, is linked with different type of indications. So first indication in second-line PTLD -- EBV-positive PTLD and additional indications coming from the multi-cohort study that is coming. By the way, we've announced that there will be some first preliminary data presented at ESMO-IO in December. So that's the way the $500 million pixel is progressively build up there in the US, in the way we see the potential of that product commercially.
Now on the milestone that the sales milestones are not related to a specific indication, just sales milestones. And we're not going to disclose exactly what the detail of the sales milestone, but we think that they are reasonable in the approach that we're taking in terms of what is the potential of the product and how that potential leveraged. Does it answer your question?

Salim Syed

Got it. Sort of. I'm happy to rephrase it, if that's okay. But if you can't answer, I understand that as well.

Pascal Touchon

(multiple speakers) we cannot disclose more on the milestone. That's my point.

Salim Syed

Okay. I guess just for the $500 million though, how much of that is weighted on the first indication alone, I guess, was the question. And (multiple speakers) PTLD (multiple speakers)

Pascal Touchon

I think it's a significant part because we always say it's a several hundred patients in the first indication. And we also say that we have, we believe, a significant pricing potential based not only on the expense in Europe, where the pricing you have, today, the listed part is about $640,000 or the equivalent of $640,000.
And usually, the difference between the US and Europe is up 30% to 40% for this type of product. That gives you an idea we don't know what Pierre Fabre will (inaudible) price, but we've been discussing that with them and we think they will try [elected] they are doing in Europe to optimize the pricing potential in line with the value that the product is giving to patients and health care system. But also, we've had a lot of discussion as Atara with payers in the US, and we know exactly what's a price sensitivity and what the price that will be considered as acceptable to offer significant coverage of the patients.
We talked about the number of patients. We're confident about the pipe. And we're seeing by itself, this is going to create -- to reach a significant part of that $500 million.

Salim Syed

Got it. Thank you so much, Pascal. Congrats again.

Pascal Touchon

Thank you.

Operator

John Newman, Canaccord Genuity.

John Newman

Hi, there. Thanks for taking my question, and congrats on a nice deal here. So my question is regarding the tab-cel regulatory process. Just curious, Pascal, if you could just give us an update on the new clinical data or the additional clinical data that will be included when you file the application in 2024?

Pascal Touchon

Yeah, certainly. So when we reached the alignment and agreement on comparability, that was when we could then organize a new data cut for the ALLELE study, the pivotal study. So that has been on -- in October. And now we're going to have all the typical time needed to get the data clean, to get the I/O array, the independents, we do have the scans and so on. And that will give us a new set of data compared with the one we presented in December '22 at ASH on 43 patients.
So that new set of data will then be in a typical way put together, presented to the agency at the pre-BLA meeting and then move on to the BLA submission. So the time needed is really the time to clean up the data. We're very confident in this data, and we've many reason to be very confident in this data. But one that you all know is about the fact that whatever the type of study, whatever the process versions we've used in the past, and we've treated more than 400 patients with tab-cel across different disease and more than 260 patients in PTLD -- in EBV-positive PTLD, so we have a very significant data package and experience.
But whatever that study, whatever the process versions, we always have found similar results from an efficacy and safety point of view. So very similarly, efficacy with that and over in terms of overall response rate, long-term efficacy with good persistence of the response, and then, of course, favorable safety. So that's why we feel extremely confident about this new data that will be put together and discussed with the agency.
Does it answer your question?

John Newman

It does. I just had one additional question on ATA188. Just curious, obviously, the data will be coming here shortly, but I'm wondering if you could discuss your thoughts on the commercial plans for that product, if you're considering a partnership, if you're planning on marketing the product on your own, if perhaps partnership is being considered for only Europe? Just curious there. Thanks.

Pascal Touchon

Thank you for your question. So it depends on the next step. But if indeed, we are to the point where the next step is to move to Phase 3. As we disclosed in the past, we have already discussed with the FDA about the type of Phase 3 that they would like to see when we obtained two fast-track designation and that's where the agency mentioned two Phase 3. One in non-active PPMS. One in non-active SPMS.
And the reason they asked for two instead of just one is mainly because the medical need is slightly different in the US in these two potential indication because in non-active SPMS, which is, by the way, the vast majority of the patients with SPMS, with secondary progressive MS, in that particular population, there is no approved therapy in the US. Whereas the non-acute PPMS, there is officially one approved therapy -- recently approved therapy, which is Ocrevus there. So that's why there is just like some medical need from a fast-track and potential BTD type of studies later on. So we'll discuss with the agency.
These two Phase 3 studies will be also put together with a Phase 2 program to go in earlier stage of MS and maybe some other autoimmune indications. All that will be a very significant clinical development program that we believe will benefit from having a strategic partner that could bring financial and operational capabilities to be able to run all of the studies in parallel.
So I'd say the idea will be to consider partnership, but not a pure licensing out, more of a strategic co-development. Maybe we have some options for other activity, especially in the US, and that's really the aim being to activate rapidly this next stage of the development at the same time to retain significant value for within Atara.
And we've discussed in the past that the type of partnership we've profit split, particularly in the US, which is about 75% to 80% of the world market for MS, could make sense for the company and our shareholders. So too early to say what type of partnership and how we will implement that. But certainly something that we have been actively considering and discussing with a large number of big pharma company over the last couple of years.

John Newman

Great. Thank you for taking my questions.

Operator

Phil Nadeau, Cowen and Company.

Phil Nadeau

Good morning. Congratulations on the expanded partnership. A couple of questions from us. First, in terms of the royalty that you're going to get from Pierre Fabre, any -- can you give us any more information on magnitude of that royalty? Is it a graded royalty in any sense of the royalty range?
And then second follow-up on the EMBOLD trial. Could you talk us through your current thought process as you -- as how you'd frame the go, no-go decision post the EMBOLD data? What do you need to see in EMBOLD to advance 188 into those two Phase 3 trials? Thanks.

Pascal Touchon

Thank you for your questions. So the first one, unfortunately, we cannot say more than significant double-digit tiered royalties, and it's an agreement with our partner Pierre Fabre that is not willing for us to disclose the royalty level. So we cannot say more than significant double-digit tiered royalties. And let's say that we are very pleased with that deal.
Now on your second question, the way we see the different scenarios, as we explained in the past, is as follows. We believe that if we have a significant statistical result on top of an impactful clinical result in terms of showing a percentage of CDI or confirmed disability improvers in active versus placebo, in that case, we will be a -- with a significant p, we will be considering moving into Phase 3. But it could be also the case, if it is not significant p, but very strong trend supported by a number of additional data from other clinical measures from imaging biomarkers such as MTR, magnetization transfer ratio, or some additional bio -- feed biomarkers.
So I think a strong trend supported by these type of biomarkers and additional clinical data could also make the case for moving into Phase 3. So that's the type of scenario where we'll move to Phase 3.
The scenario where we will not move to Phase 3 in this specific indication of non-active progressive MS would be a scenario where we have evidence of effect, but that there is a need either to continue to steadily trend is a two-year study or to be able to have data from sample and stability on a larger number of patients. We'll have already data on stability of the disability and the ability to limit the progression of disability, but we might want to have more patients and to have all the patient reaching a two years' timepoint. We might also have some particular signal -- strong signal in subgroups of patients based on the data.
So all that could lead to the need to continue some additional work for EMBOLD, expansion of EMBOLD, or just a continuation of EMBOLD, or some other studies that we could do to be able then to be in a stage where we could move to Phase 3.
So that's the -- the best way probably to answer your question right now is if it is statistical significance of very strong trend backed by biomarkers and other data, there is a clear path to move into Phase 3 following end of Phase 2 meeting with the agency and scientific advice in Europe. If it is something that shows evidence of effect, which, by the way, will be a big first and truly transformational already, because nobody has ever shown in such a large study that there is evidence of effect versus placebo that could be of significant signal to be able to explore further or continue the study till it ends. So that particular scenario will require some additional work, but we are well positioned to do that work.

Phil Nadeau

That's very helpful. Congratulations again and thanks for taking our questions.

Pascal Touchon

Thank you.

Operator

Jonathan Miller, Evercore ISI.

Jonathan Miller

Hey, guys. Congrats so much on the tab-cel deal. We're really looking forward to MS data coming out, obviously. I would love to get a little bit deeper into the, I guess, the pipeline and the runway from here. So you mentioned there, certain anticipated payments included in the cash runway to '25 there. Is BLA approval included in that runway? For instance, what are the certain anticipated payments that you're counting explicitly and what are you not counting?
And secondly, how much of the CAR-T programs, the oncology program trial initiations are counted in the runway and how much of those trials are covered versus not covered with your current expectation?

Pascal Touchon

Thank you for your questions, Jon. So in terms of the expected payment from the deal, this is really around the regulatory milestone. If not on the milestone, that approval is full approval. We have a number of steps, that if successfully achieve, will be linked with payments. So that's why we say $100 million [figuratively mentioned] the full BLA approval.
That includes the BLA approval, by the way. But it's not the only milestone . There are a number of milestones before the BLA approval that will -- could lead to payment from Pierre Fabre based on the progress we're making on the regulatory front. So that's to answer your first question.
On your second question, what we are putting together in this cash runway expectation is the start as we are doing right now of our study in lymphoma with ATA3219, is also starting the study in autoimmune disease as we believe that there is a great potential for that product in autoimmune diseases like lupus, and we're working on that right now, and is also the IND-enabling studies for -- 3431, which is a very exciting, very competitive CD19/CD20 CAR-T -- allogeneic CAR-T.
But then, of course, we have EMBOLD that is continuing. Because even though we're going to present very soon the 12 months readout, the study, as you know, is continuing up to two years. So we have a number of patients that have reached over the two years, but many that have not yet reached two years. So we'll be able to continue that till next year, of course.
So all that is part of the expenses. Knowing that on the tab-cel form, the expenses are mostly covered by Pierre Fabre. Does it answer your question?

Jonathan Miller

Yeah, that's very helpful. Thank you.

Operator

Salveen Richter, Goldman Sachs.

Thanks so much for taking our questions. This is Tommy on for Salveen, and congrats on the deal. So with the closing in December and the workforce reduction, can you kind of walk us through what the financial impact will be until year end, if any? And on the MS release, how much detail do you expect to provide here, will be more so just p-values or could we actually see the trends and more quantitative measures too? Thank you so much.

Pascal Touchon

Eric, do want to take the first question? I'll take the second one.

Eric Hyllengren

Yeah, absolutely. So Tommy, the way we're looking at it, obviously, there's going to be -- I mean, we signed the deal, but then there's going to be the customary HSR review, which we don't expect to be a problem, so bigger kind of a December effective date there. So benefits of the upfront payment inventory purchases, it's going to be right around end of December, early January, depending on that in the payment terms.
And then yes, the 30% reduction in force, obviously there's the lower head count benefit, but then that's offset by some severance, of course, after those folks. So I would expect, you know, the main -- you'd look at the main benefits to begin in 2024 as a step down and then another step down in 2025 as we fully transition regulatory development and manufacturing activities over to Pierre Fabre.

Pascal Touchon

And on to your second question, so what we say so far that we plan to disclose sufficient data for investors to be able to have a better understanding of the value created by that study and for that particular asset. So it's difficult to say exactly we'll disclose but depends on the data. But you can expect more than just the primary analysis of the 12 months' confirmed disability improvement active versus placebo. And as you know, there will be data on beyond 12 months because we have a number of patients that will have been evaluated at 15, 18, 21, 24 months, not only confirmed disability improvement, but also CDP, confirmed disability progression, to see what's happening on the stability forms.
And then there will be a imaging biomarkers were going to high. And MTI, in particular, the biomarker we presented from our Phase 1 a couple of years ago with extremes that show that sign of remyelination within the chronic lesions in the brain of the patients that were improving on the treatment, we can expect that type of data as well. And then, of course, a number of other type of clinical and potential biomarkers.
So ideally, we'd like to give enough information for investors to be able to have an understanding of what's the value created by the study so far and for this particular product, and of course, to try to also disclose what we see as the next step for the program. Does it answer your question?

Thanks so much.

Pascal Touchon

Thank you.

Operator

That concludes our question-and-answer session for today. Thank you for joining Atara Biotherapeutics' third-quarter 2023 financial results conference call. You may now disconnect.