Q3 2023 Gamida Cell Ltd Earnings Call

Participants

Mike Kuczkowski; Corporate Communications; Gamida Cell Ltd.

Abbey Jenkins; President and CEO; Gamida Cell Ltd.

Michele Korfin; COO and Chief Commercial Officer; Gamida Cell Ltd.

Ronit Simantov; Chief Medical Officer and Chief Scientific Officer; Gamida Cell Ltd.

Terry Coelho; CFO; Gamida Cell Ltd.

Gil Blum; Analyst; Needham & Company, LLC

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Gamida Cell's conference call for third-quarter 2023 financial results. My name is Chris and I'll be the operator for today's call. Please be advised that this call is being recorded at Gamida Cell's request. I would now like to introduce your host for today's conference, Mike Kuczkowski of Gamida Cell Corporate Communications. Mike, please go ahead.

Mike Kuczkowski

Thank you, Chris, and good morning, everyone. Welcome to today's call during which we will provide an update on the company and review our financial results for the third quarter of 2023. Earlier this morning, we issued a press release summarizing our financial results and providing a business update, which is available on our website at www.gamidacell.com.
Here with me on our call today are Abbey Jenkins, President and Chief Executive Officer; Michele Korfin, Chief Operating Officer and Chief Commercial Officer; Ronit Simantov, Chief Medical Officer and Chief Scientific Officer; and Terry Coelho, our Chief Financial Officer.
Before we begin, I want to remind everyone that during this call, we may make forward-looking statements about our future expectations and plans, including with respect to the potentially life-saving or curative therapeutic potential of Omisirge, omidubicel-onlv; the company's cell therapy candidate, GDA-201; expectations regarding the commercial launch of Omisirge and potential to capture market share and generate revenue; Gamida Cell's plans for commercial or strategic partnerships to support the launch of Omisirge; Gamida Cell's financial runway; Gamida Cell's ability to keep its Israel facilities open, the state of its workforce, and future developments that may adversely impact Gamida Cell's Israel operations.
Our actual results may differ materially from what we project today due to a number of important factors, including those related to clinical, scientific, regulatory, and technical developments and those inherent in the process of developing and commercializing product candidates that are safe and effective for use as human therapeutics, and in the endeavor of building a business around our product and product candidate, as well as those considerations described in the risk factors section of our most recent quarterly report on Form 10-Q and other filings that we may make with the SEC from time to time.
These forward-looking statements represent our views only as of today, and we caution you that we may not update them in the future, whether as a result of new information or future events except as required by applicable law.
Now let me turn the call over to our President and Abbey Jenkins.

Abbey Jenkins

Thank you, Mike, and everyone joining us today. I want to begin by providing a brief corporate update. We've made strong progress this quarter, which I'll go into detail on in a moment. But I would be remiss if I didn't start this call by first acknowledging the courage and resilience of our Israeli team members, who have shown incredible dedication and commitment to patients as they continue operations to ensure we reliably deliver Omisirge to patients in need while living and working in a war zone. For patients with hematologic malignancies in need of an allogeneic stem cell transplant, Omisirge may represent their last or best hope for a cure, and we are proud to be able to continue to serve our patients under these challenging circumstances.
Our employees' safety is a key concern, and we are relieved to be able to say everyone remains safe. As you might imagine, the process of getting cells into Israel and delivering Omisirge back to transplant centers in the US could have been impacted when many airlines suspended flight service in Israel. Our team of dedicated employees did not hesitate to put patients first when their own lives were impacted, working diligently to maintain operations and adapting in real time as events unfolded. To see our team members demonstrate such resilience and strength in a challenging environment has been inspiring to witness.
Shifting gears and moving on to our corporate update. Our lean launch has continued to exceed our expectations across the two key metrics we defined for launch, transplant center onboarding and market access for patients. As of this morning, we have onboarded 17 transplant centers, exceeding the top end of our projected goal of 10 to 15 transplant centers for the year. Omisirge has confirmed coverage with US payers covering more than 90% of commercial lives, exceeding our full-year goal of 70%. This includes confirmed coverage with all of the top 20 US commercial payers. Omisirge has also confirmed coverage and reimbursement with Medicare for the Centers for Medicare and Medicaid Services. This means the vast majority of patients now have coverage in place for Omisirge.
The third quarter marks the moment Gamida Cell truly transitioned to a commercial stage company with our first revenue reported. We are so proud to provide Omisirge a potentially life-saving cell therapy for those in need of a transplant donor source. We are reporting revenue from the delivery of two Omisirge unit in the third quarter and are estimating revenue from the delivery of a total of four to six units of Omisirge for the full-year 2023.
The patient volume and Omisirge net ramp are aligned with all our expectations based on a lean launch model, a number of transplant centers onboarded, and consistent with other launches in the cell and gene space. We've received very strong feedback from transplant centers on the onboarding process on Gamida Cell Assist as a tool and resource. And most importantly, on Omisirge ability to fulfill an unmet need. Omisirge is the first and only true pharmaceutical transplant option approved on the basis of a global, randomized Phase 3 trial and transplanters see its value and potential.
As we end 2023 and prepare to enter 2024, we will continue to maintain our lean launch efforts due to resource constraints as we pursue additional funding. The early launch phase of Omisirge has confirmed our market research insights, there is an unmet need in the market that Omisirge can fulfill. Rapid transplant center onboarding has proven that transplant centers are interested in making Omisirge an option for patients with hematologic malignancies. Considering the need to thoughtfully invest based on our cash position, we will be prioritizing virtually all of our resources moving forward to expand patient access to Omisirge. Assuming our ability to extend our cash runway, we expect to have more than 40 transplant centers onboarded by the end of 2024, including at least half of the top 70 transplant centers in the US.
To reiterate, we remain committed to our two-pronged corporate strategy announced earlier this year, which involves, first, launching Omisirge in the US with a focus on expanding patient access by onboarding transplant centers and ensuring market access coverage and reimbursement; and second, pursuing a strategic partnership or transaction to fully -- to support fully resourced commercialization of Omisirge.
In terms of our business development activities, our efforts to identify a strategic partner are ongoing. We have received considerable interest from multiple potential partners during the process, which has been supported by the leading global independent investment bank, Moelis & Company, and has resulted in oral and written proposals. However at present, we have not identified a partnership that will adequately address our strategic needs and plans to continue the business development process in 2024. It will be critical for us to ensure we have sufficient capital to execute this two-pronged strategy.
A key step in the process was achieved at our recent annual general meeting of shareholders held in October. At this meeting, a majority of shareholders voted to approve six proposals relating to the company's business, including an increase in Gamida Cell's authorized share capital. This will provide us with the flexibility to continue to finance our operations and enable a potential transaction should one be available to us.
In summary, our lean launch is proceeding ahead of our expectations, and we expect to maintain our lean launch approach to expand the number of onboarded transplant centers and patients receiving Omisirge into 2024. We are proud to report our first Omisirge deliveries and official transition into being a commercial stage revenue reporting company expecting to deliver a total of four to six units for the full-year 2023. We are seeking the necessary funding to support expanded patient access to Omisirge and enable a strategic partnership to fully resource commercialization of Omisirge.
I will now turn the call over to Michele for a more in-depth update on the Omisirge launch. Michelle, over to you.

Michele Korfin

Thank you, Abbey, and good morning, everyone. As Abbey mentioned, Gamida Cell continues to advance efforts and prioritize resources across the organization to execute Omisirge's lean launch and ensure patients in need have access to the therapy. I will be sharing a few updates on how the launch is progressing, as well as a bit of context regarding the process of delivering Omisirge to a transplant center for use of a donor source for a patient in need of an allogeneic stem cell transplant.
The strong interest in Omisirge from transplant centers, including centers that were not part of the Phase 3 trial, has continued to grow since our last update. As of this morning, we have onboarded 17 transplant centers, exceeding our full-year target range of 10 to 15 centers. Overall, we're pleased with how onboarding is proceeding, having already exceeded our expectations for 2023, and considering the limited resources with which we launched.
In 2024, provided we obtain the necessary resources to support the ongoing commercialization of Omisirge, we anticipate continuing to onboard transplant centers at a robust pace. To support this onboarding, we have expanded our team of account managers since our last call. With our expanded team in place and subject to securing additional financial capital, we anticipate we could onboard more than 40 transplant centers by the end of 2024, including at least half of the top 70 transplant centers in the US. As a reminder, this is a targeted market, with about 70 of the top transplant centers performing 80% of the allogeneic stem cell transplants on an annual basis.
Transplant center onboarding is a key step to enable patients to access Omisirge. Our onboarding team works closely with transplant center personnel on the clinical training and administrative policies and procedures required to begin using Omisirge as a donor source. The Gamida team have the ability to be flexible with the timing of our onboarding approach. How quickly a transplant center is onboarded is determined by the needs of each individual transplant center and can include factors like staff availability to participate in the onboarding and the status of patients currently under evaluation who may be good candidates for Omisirge.
We have been able to onboard centers very quickly who have a patient already identified for Omisirge. Once Omisirge is selected as a donor source by the patient's transplanter and the allogeneic cells are received by Gamida Cell, we are ready to begin manufacturing. We have an experienced team in place and we are ready to reliably deliver Omisirge within 30 days from the start of manufacturing.
In terms of the number of Omisirge deliveries to date, we are tracking as we expected based on the number of transplant centers we anticipated having onboarded at this time and the time it typically takes for a patient to go from being identified as a candidate for transplant to the transplant taking place. Published data have shown that getting to transplant may take four to six months depending on the transplant center's preferred approach and the patient's diagnosis and clinical profile.
The evaluation process for a patient considered for Omisirge is consistent with other donor sources and is therefore very familiar to transplant center personnel. This is why it is so critical for us to focus our resources in the first month of launch on accelerating transplant center onboarding. By exceeding our initial target range of 10 to 15 centers, we are in a position to increase the number of patients receiving Omisirge. As more transplant centers are now onboarded, we are seeing an increasing number of patients enrolled in Gamida Cell Assist. Enrolling a patient in Gamida Cell Assist indicates a transplanter intends to use Omisirge as the patient's donor source.
As a result of our progress, in the third quarter, we reached a milestone of delivering Omisirge as a donor source for two patients. I could share that manufacturing is underway for additional units of Omisirge and we project delivering a total of four to six units of Omisirge for the full-year 2023. Given the pace of transplant center onboarding and the variability and time lines for preparing a patient for transplant, these numbers are in line with our expectations, and we are excited about the possibility that Omisirge will capture up to 20% market share peak, provided we are able to secure the necessary funding to support its fully resourced commercialization.
I also have to note that our Gamida Cell team has gone above and beyond to ensure manufacturing of Omisirge continues at our facility in Kiryat Gat, Israel, making truly heroic efforts to continue operations during the Israel-Hamas war. With the Omisirge launch ongoing and additional patients enrolled in Gamida Cell Assist, one of the foremost concerns for business continuity was ensuring that we could transport Omisirge out of our manufacturing facility and to patients. We were able to adapt and quickly overcome logistical challenges and our facilities remain operational, thanks to the dedication and resilience of our employees.
With that said, we continue to monitor the situation as it evolves, and we'll adjust our plans as needed. We are incredibly proud of the effort of all of our global employees as they have passionately worked with a lean launch team to ensure patients in need have access to Omisirge. Every team member is honored to play a role and bringing Omisirge to patients in need.
Now I'd like to turn the call over to Ronit Simantov, our Chief Medical and Chief Scientific Officer. Ronit?

Ronit Simantov

Thank you, Michele, and good morning, everyone. Today, I'll be sharing early feedback from transplant centers on Omisirge and some recent data on Omisirge and our NK cell therapy candidate, GDA-201.
As Michele stated earlier, we continue to see growing interest in Omisirge from transplant centers. My team and I are engaged in conversations with physicians and staff at transplant centers across the country and the feedback we hear reinforces our confidence in the value of Omisirge. Of note, we know from these discussions that a number of our onboard of transplant centers have identified multiple patients as candidates for Omisirge. The transplant teams we are engaged with be a clear need for an additional donor source option for their patients and are eager to make Omisirge available at their institution.
So far, the patients that have enrolled in Gamida Cell Assist we're seeing some progress Omisirge is the only option and who would otherwise go on transplanted. And some patients where transplanters are considering Omisirge over other options, including haplo.
We recently presented new data at the Society for Immunotherapy of Cancer or SITC Annual Meeting that further advanced our understanding on Omisirge's cellular makeup and potential mechanism of action. The data showed that the application of our NAM technology leads to a unique cellular composition enriched in myeloid populations and dendritic cells, providing a potential mechanism for the rapid engraftment and immune reconstitution observed in patients who were transplanted with Omisirge. This emphasizes how Omisirge is differentiated from other donor source options.
So that you can have the opportunity to hear from a transplant physician directly about his experiences on Omisirge, I'm pleased to share that we'll be holding a virtual fireside chat with Dr. Gary Schiller, professor of hematology/oncology and Director of hematological malignancies and stem cell transplantation at Ronald Reagan UCLA Medical Center. This event will take place on Monday, December 4 at 4:30 PM Eastern Time via webcast and will also be recorded. Dr. Schiller was an investigator in the Phase 3 study of omidubicel and UCLA Health is one of the 17 onboarded transplant centers where patients can access Omisirge. In addition to sharing his experience with Omisirge, Dr. Schiller will talk about the patient journey from diagnosis to transplant and the decision making around donor source selection.
I'd now like to take some time to share the recent news about our natural killer cell therapy candidate, GDA-201. We recently reported preliminary data from the ongoing multi-center Phase 1 study of cryopreserved GDA-201, designed to evaluate safety and determine maximum tolerated dose. The preliminary data from 10 patients with CD20 positive non-Hodgkin lymphoma in a Phase 1 study showed no dose-limiting toxicities in patients enrolled in the first three cohorts, treated with doses of up to 100 million cells per kilogram of GDA-201. Enrolled patients had relapsed or refractory lymphoma and were heavily pretreated with a median of six prior lines of therapy, including CAR T cell therapy in six patients and prior hematopoietic stem cell transplant in four patients.
We saw marked shrinkage of target lesions in 5 of the 10 patients and efficacy evaluation using Lugano criteria demonstrated two patients with complete response, two with partial response, and one with stable disease. Activity appeared to be dose-dependent with two of the three patients in cohort three responding. These results are consistent with previously reported data from the investigator-initiated study on the fresh formulation of GDA-201, which showed complete responses in patients with non-Hodgkin lymphoma. The fourth and final cohort of the current Phase 1 study is enrolling, and we are on track to report full data in the first quarter of 2024.
We're pleased to continue to work with transplant centers and academic institutions to further the availability of Omisirge and to add to the body of scientific evidence about the mechanism and potential of our innovative NAM technology.
I will now turn the call over to Terry Coelho, our Chief Financial Officer. Terry?

Terry Coelho

Thank you, Ronit, and good morning, everyone. I'm pleased to share that Gamida Cell is reporting revenue for the first time in its history. With the transition to a product revenue generating company, a number of changes have been incorporated into our financial reporting beginning with the third quarter of 2023 and I will point out some of those key changes as we walk through the financial results.
In the third quarter ended September 30, 2023, we are reporting net revenue of $673,000, resulting from the delivery of two units of Omisirge. The gross to net allowances and deductions were particularly low in the third quarter, given the confirmed insurance coverage and transplant status for those patients. Cost of sales, including cost of direct manufacturing and quality in addition to royalty expenses, was $626,000 in the quarter. Over time, we expect the cost of sales and therefore the gross margins to improve measurably as production volumes scale to capacity.
Beginning July 1, 2023, reporting of operating expenses has been modified to reflect the company's transition to commercial stage, with all operating expenses being reported as either research and development expenses or selling, general, and administrative or SG&A expenses. For 2022, and the first two quarters of 2023, previously reported commercial and general and administrative costs were combined into SG&A expenses. Additionally, certain expenses previously reported in research and development are now being reported in SG&A beginning in the third quarter of 2023, with no reclassification of prior periods.
Research and development expenses were $4.2 million in the third quarter of 2023 compared to $9.9 million in the same quarter of 2022. The $5.7 million decrease was primarily due to the aforementioned reporting transition, along with reduced omidubicel clinical spend relating to the Phase 3 clinical trial. Selling, general, and administrative expenses were $13.8 million in the third quarter of 2023, an increase of $6.6 million compared to $7.2 million in the third quarter of 2022.
The aforementioned financial reporting transition, which resulted in the inclusion of medical affairs and certain indirect supply chain and quality assurance expenses in SG&A reporting, contributed $4.4 million to the increase in the quarter. Additionally, excess capacity costs of $2.2 million associated with our manufacturing facility were recorded in SG&A in the third quarter.
Selling and marketing expenses increased by $1.3 million compared to the prior year quarter due to commercial launch activities. To further expand upon the excess capacity costs, these costs reflects the labor and manufacturing overhead costs incurred, but not absorbing cost of goods sold in the period, given that our facility is tasked to produce the anticipated demand over the course of the coming year.
Financial income and expenses net were $16.5 million of income in the third quarter of 2023 compared to $741,000 in expenses in the same period of 2022. The $17.2 million change in financial income was primarily due to $14 million of income related to the valuation of warrants liability and $3.2 million of income related to the valuation of the company's secured convertible senior notes issued in December 2022.
Our net loss in the third quarter was $1.5 million compared to a net loss of $17.8 million in the third quarter of 2022, driven primarily by the $17.2 million change in financial income as just discussed. As of September 30, 2023, Gamida Cell has total cash and cash equivalents of $60.4 million compared to $64.7 million as of December 31, 2022. The decrease of $4.3 million is due primarily to $59.2 million in net cash proceeds from financing activities, comprised of $21.1 million in net proceeds from the issuance of ordinary shares and warrants from the company's underwritten public offering in April 2023 and $39.4 million in net proceeds from the issuance of ordinary shares via the eight PM or at-the-market facility, offset by $1.1 million in principal payments of the company's 2022 convertible senior notes and $62.9 million of net cash used in operating activities.
The company expects its current cash and cash equivalents, including the funds raised subsequent to the close of the third quarter, to support its ongoing operating activities into the second quarter of 2024 based on Gamida Cell's current operational plans and excluding commercialization activities beyond the initial launch of Omisirge, as well as any additional financing activities that may be undertaken. The company raised $25.6 million in net proceeds from its ATM facility in the third quarter at an average price of $1.40 per share.
As of September 30, 2023, the company had reduced its principal balance on the 2022 secured convertible note by $16.7 million, from $25 million as of December 31, 2022, to $8.3 million at the end of the third quarter of 2023. The company also holds a 2021 convertible senior note with an aggregate principal amount of $75 million.
Earlier in the year, we embarked on a strategic restructuring process to prioritize the vast majority of our resources for the launch of Omisirge. And we have now mostly completed that process, including consolidating operations in Israel to a single location. As Abbey mentioned earlier, shareholders at our recent annual general meeting of shareholders voted to approve an increase in Gamida Cell's authorized share capital to 325 million ordinary shares. We believe this increase in authorized shares will provide us with the increased flexibility necessary to finance our operations.
With that, I'll turn the call back over to Abbey for some concluding remarks. Abbey?

Abbey Jenkins

Thank you, Terry. Before I turn the call over to the operator for questions, I want to bring us back around the beginning of the call and summarize the key points from our discussion today. We continue to make strong progress on the commercial launch of Omisirge, having exceeded our goals across both of the key metrics for launch of transplant center onboarding and market access. Additionally, we have reported revenue for two deliveries of Omisirge in the third quarter and project four to six deliveries of Omisirge units for the full-year 2023, which is in line with our initial launch assumptions based on our lean launch model and the transplant process for patients.
With our expanded launch team in place and the securing of additional capital, we anticipate we could onboard a total of more than 40 transplant centers by the end of 2024, including at least half of the top 70 transplant centers in the Us. Operations in Israel continue and our team is adapting processes as necessary to ensure patient access to Omisirge continues during the ongoing Israel-Hamas war.
In terms of business development, we have not identified a partnership that will adequately address our strategic needs and plans to continue the business development process in 2024. We share promising preliminary data from the Phase 1 clinical trial for GDA-201 and are on track to share the full data readout in early 2024.
We are continuing to carefully manage our expenses and prioritizing virtually all of our resources towards the launch of Omisirge. We are thrilled to see increasing demand for Omisirge and are working to ensure that all patients in need have access to our NAM modified cell therapy. We believe our early launch success is a promising sign of Omisirge's long-term potential to increase access and address critical unmet needs in stem cell transplantation.
Now let's open the call for questions. Chris?

Question and Answer Session

Operator

(Operator Instructions) Gil Blum, Needham & Co.

Gil Blum

Hi. Good morning. Thank you for taking our questions. Just given the relatively small number of patients in the queue right now, could you give us some color on the individual patient types or anything that you know at this point?

Abbey Jenkins

Ronit and Michele, do you want to weigh in on this?

Michele Korfin

Sure, thank you.

Ronit Simantov

This is Ronit. I'm happy to weigh in and thanks, Gil, for the question. So yeah, there are patients who are enrolled in Gamida Cell Assist and we know some facts about these patients and what we also know is information that we're hearing directly from transplant physicians when we have conversations with them about potential patients. And the kinds of patients are different, depending on what the transplant center is like. Some are patients who really don't have any other transplant options, there are no other graft sources for them, no unrelated donor registry, no other related donor options and Omisirge is really seen as their only choice. And they would otherwise not receive a transplant, which is quite difficult for them.
There are other patients actually, who we've heard from physicians, who have more than one choice. And what physicians do is they really choose the best potential graft source for their patient of the available choices. And so there are some patients who have other choices, either mismatched or haplo or other potential donor sources for whom Omisirge is actually seen as the best choice. And so that's kind of how things are divided up. These are patients who need allogeneic stem cell transplants and may or may not have any other available donor sources.

Gil Blum

Thank you.

Michele Korfin

Thank you, Roni, and Gil, thank you. I'll just add on just going back to what we spoke about even before launch, we are generally seeing patients that are consistent with what we believe would meet the promise of Omisirge to both increase access and improve outcomes. So on the increasing side, we're seeing patients, as Ronit indicated, where Omisirge is their only donor source option. And that's consistent with the data that we had identified through our market insights that at least 1,700 patients are eligible each year for transplant but unfortunately, were not able to find a donor source before Omisirge approval.
And then on the improving outcome side, as Ronit indicated, we've heard examples where the transplant or has another option, and in one case, the other option was a haploidentical match, but the transplanter is choosing Omisirge for the patient. Although still in an early stage of the launch, we're very encouraged by what we are hearing.

Gil Blum

All right. Thank you for the answers. Maybe a bit about the dynamic with onboarded centers. Are there examples of where it was a bit of a reverse inquiry where the center reached out to you guys?

Michele Korfin

Yes. We have had multiple centers who have reached out to us and some part of the clinical studies, some that were not, that had a patient that was actively being evaluated for transplant and the transplanter felt Omisirge would be the most appropriate option. Certainly, those who were part of the clinical study, we've been in active dialogue with them. But in the case of one particular center who was in the clinical study, they asked if we could expedite the onboarding, which we were able to accommodate to address the patient need.

Gil Blum

Thank you. Very helpful. And maybe a last one. So outreach to physicians, I know you guys have a KOL event in December 4. Are you going to have presence at the upcoming ASH? I didn't see any specific presentation, but a booth for outreach to physicians. Thank you.

Michele Korfin

I'll start and then I'll turn to Ronit. So we will have a presence at ASH. I'll speak about the commercial presence, and then Ronit will talk about the medical, but we'll have our representatives from our launch team at ASH. We will have a commercial booth. So if you're there, please stop by. And we will have the opportunity to attend sessions and understand the dynamics of the scientific developments. But also, just as you alluded to, Gil, you'll have the chance to interact with individuals from the transplant centers that are either onboarded or in the queue to be onboarded. So we're looking forward to San Diego.
I'll turn to Ronit to discuss the medical side.

Ronit Simantov

Thanks, Michele. True, we don't have any academic presentations at ASH this year, but we do have a product theater presentation, as well as our medical folks engaging in small group and individual dialogues with physicians at ASH.

Operator

Does that answer your questions, Gil?

Gil Blum

Thank you. You've gotten all my questions.

Operator

(Operator Instructions) Ladies and gentlemen, we have reached the end of our question-and-answer session and I would like to turn the call back to President and CEO, Abigail Jenkins, for some closing remarks.

Abbey Jenkins

Thank you, Chris. Thank you all for joining us today. To recap, we remain confident in our team's ability to deliver Omisirge to an increasing volume of patients in need of a stem cell transplant in transplant centers across the US. We believe in Omisirge's ability to achieve its market potential and increase patient access to allogeneic stem cell transplant.
Thank you, everyone, for joining us on today's call, and we look forward to providing further updates on future calls. Thank you.

Operator

Thank you very much. Ladies and gentlemen, that concludes today's event and you may now disconnect your lines.