All right, we're on. Thanks for tuning in, everyone. Next up, we have the full team from Cabaletta. We have CEO Steven Nichtberger, David Chang, CMO, and Steve Gavel, Chief Commercial Officer. Thanks for joining us, guys. Steven, I'm going to turn it over to you just for an overview of the company, where things stand today. Then we'll get into it.
Yeah, thanks for having us. For a brief overview, I'll start with, at ACR this year, I think ourselves, Bristol Myers , and others validated the safety, efficacy, and durability of autologous CAR-T in the treatment of autoimmune patients. For our part, we presented information, data from our phase I-II program, the RESET clinical trial program, in myositis, showing that four out of four patients, if they were in our pivotal program, would have met the primary endpoint at 16 weeks. Our pivotal trial, as a reminder, as agreed with FDA, as aligned with FDA, most recently when they reviewed our protocol in August, is a 14-patient clinical study looking for moderate TIS improvement off of immunosuppressants and steroids. We presented truly groundbreaking data in scleroderma patients, as well as data in lupus, where DORIS remissions were frequently seen and objective renal response as well.
We also recently presented data on our pemphigus program, showing that without preconditioning, we can get acute responses. We now wait to see if durability is intact or if we need to go to higher doses with no preconditioning. We announced, after seeing that data, that we will prioritize a no preconditioning regimen in our lupus program. We are thrilled that even more recently, we were able to recruit our Chief Commercial Officer, Steve Gavel. I'm hoping that we'll have the opportunity to talk about why we're so excited that all of this clinical data, the regulatory alignment that we have, and soon, hopefully, alignment on scleroderma and lupus pivotal programs, all matters to patients and to investors, because there is a very attractive commercial business model for autoimmune CAR-T that was not possible with oncology, but is very likely with autoimmune patients.
All right, perfect. Let's just start off on the regulatory side. I feel like we need to ask this question every day. Single-arm trial, had that alignment previously, as you have future discussions, do you have the opportunity to essentially reconfirm that that is still viable, especially outside of just myositis, but as we turn to scleroderma and also lupus?
Yeah, so I'll take that one. The initial meeting that we had with the FDA was earlier this year, probably before the changes in the FDA. What we had was a follow-up with them in terms of us submitting the full protocol with any amendments and changes that were recommended. That was communicated back to us in August. We did get feedback from the FDA with minimal comments. It was mostly minor changes, but nothing related to the single-arm trial design, nor the number of patients that was requested. Everything remained intact from earlier this year with the follow-up in August. I think we got good confidence from the FDA that despite some changes, there's some stability and some ability to move forward with the program that we had originally designed.
All right, great. What's your base case assumption for both lupus and scleroderma? Do you think these will both be single-arm designs similar to myositis, or maybe for lupus especially, given it's a larger market with some precedence? There could be kind of a controlled design or something different there.
Yeah, I think that, I think Steven had mentioned this earlier, is that there's a movement towards more of these single-arm trials, especially in the autologous CAR-T world, where we're seeing really good therapeutic responses. Also, the ability to do these single-arm trials has been not only aligned with us, starting with myositis, but we've seen other companies do the same, and even some companies shifting over from what they originally designed as a randomized study and saying, wait a minute, I think we can do this as a single-arm trial. Other CAR-T companies are looking at that as well. We're not the only one. Obviously, FDA is showing some willingness to do single-arm trials in the autologous CAR-T world in autoimmunity. I would not be surprised if they're willing to go forward with single-arm trials in other autoimmune patients.
To put a fine point on it, right, Novartis on clinicaltrials.gov just converted from a comparative study to a single-arm study in the treatment of lupus with their autologous CAR-T. Bristol already announced a single-arm trial. These single-arm trials, when you have high magnitude of treatment effect with objective clinical responses that are not achievable otherwise, that's where these single-arm trials are going to make a lot of sense. Even with today's FDA, we believe it's not just us, it's the industry of autologous CAR-T is benefiting from efficient regulatory pathways.
Yep.
All right, perfect. Just a couple of questions on the myositis cohort, because I want to spend time on the commercial side. You're working with an external registry to kind of figure out the background rate for the trial, which I think underlies some of the powering assumptions. Are you planning to give us an update when you kind of iron that out?
Yeah, we need to generate some more of the data in order to come up with the actual exact background rate. We've done the literature search. We've discussed this with experts. When we talk about the endpoint of achieving this TIS response off of all immunomodulatory agents and on low dose of steroids, we know that the number is going to be very small in terms of actually patients being able to achieve that endpoint. We need to get the registry to make sure that the FDA can see that data and feel comfortable with it.
Yeah, and our clinical study with myositis will initiate only after we dot every i and cross every t, which is to say the statistical analysis plan and all the details that we recently have all become so familiar with are taken care of properly. If subsequently in 2026, we have additional meetings with FDA or additional discussions that would suggest the background rate is higher than we would anticipate, we've already accommodated in our trial to be able to modify as needed. Moving ahead now is, in our view, not with any undue risk.
OK, great. And when you start the trial, are you going to lay out some of those different powering assumptions or kind of give us some of those updates along the way?
Yeah, I mean, I think we've already discussed and presented that information that we know we certainly wanted power to be appropriate, right? You have to have, usually you want to target at least 80% power. That is sort of the minimum. That is how you come up with the number. There are certain assumptions. What is the background rate? What do you think your response rate would be? How many patients do you need? What is the power? Then come up with the number. That is how the 14 came up. That is based on those assumptions.
Awesome. All right, we'll come back to myositis if we have time. Let's actually switch gears. Let's go over to the commercial side, since I think that's where a lot of investor questions are, and especially since you're with us. Steve, maybe to start off, you could just kind of give us a background introduction to.
Yeah, yeah, no, pleasure. Yeah, so it's Steve Gavel. I recently joined the organization. Prior to coming here, I was working for Orca Bio. Prior to that, I was working for Legend Biotech, where I launched CARVYKTI with Legend. Prior to that, I was at Celgene, where I was involved in early commercial development for which is now the ABECMA program. So I've been in the CAR-T space now for the better part of, I guess, 10 or 12 years, which seems like forever for CAR-T. Yeah, it's super exciting now to transition from cancer CAR-T therapies now to autoimmune. Maybe if you'd like, we could talk about some of the differences there, because there's quite a bit.
Yeah, let's go there.
Yeah, I think the big challenge is in a lot of the articles that have been written are factually valid by a lot of your peers in this area in terms of are CAR -T therapies, auto CAR-T therapies, a viable business opportunity for our industry. Like I said, I've worked on two pretty big ones. It's a challenge, right? There's a lot of reasons behind that challenge. Not only is it a challenge for the manufacturer, which we'll go into some of that, but it's also been a challenge for the market providers. On the manufacturing side of things, when you're dealing with late-stage cancer patients, there's a plethora of issues that you're dealing with. Not only is your operating cost very high in terms of just your manufacturing expenses, but also the variable cost associated with manufacturing is very high because of the high out-of-spec rates.
You hear about that a lot, especially when you're treating these patients that are so ill. Because of that, it puts a significant drag on the P&L, and it's very difficult to manage that. That aside, the beauty, I think, around autoimmune patients is that you're looking at a very, very different patient population in terms of, first of all, how healthy they are, how viable their T cells are, the fact that they're extremely mobile. It's really, from my perspective, a perfect situation for a platform like this, because as we're seeing in our clinical trials, we're seeing extremely low out-of-spec rates, numbers that you had never seen before with CAR-T therapies, which I think is very important to note, which assist you in your turnaround times.
Also, as you are bringing in a commercial environment drug product that is within spec, you can actually bill for it. One of the challenges that we had in a number of different cases with other programs I was working on, when you're dealing with out-of-spec rates, that product is being developed and manufactured. Those costs are being incurred and being shipped to patients. Those patients are then utilizing it. However, it's deemed out of label. There is a big cost drag on your P&L when that happens. Thank God patients have the ability to use that. There are challenges around the reimbursement side of that. One thing I will want to take note of, so that's kind of the manufacturing side, is equal a challenge and has been on our providers. It has been happening with the CD19s when CD19s launched years ago.
You could see this in the market, because we were monitoring it when I was at Celgene, is why were these CAR-T drugs that were so much better than standard of care launching so poorly? Didn't make any sense. It makes sense if you really understand it, right? Because you're launching into a large Medicare population. Unfortunately, you're rolling into a DRG environment. That puts a big draw on reimbursement and really puts a lot of pressure on hospitals on how to navigate a reimbursement environment that is suboptimal for them. Which leads me to the point, once again, with Cabaletta. What you did see over time, and CARVYKTI is a good example of that, because the tox profile being delayed with CRS, the marketplace was able to navigate and move CARVYKTI into the outpatient setting.
I believe the latest count is between 40% to 50% of all now new starts, I think, with CARVYKTI is in the outpatient setting. Now, if you fast forward here with Cabaletta, you're looking at an asset with the CRS rate, first of all, which is much lower than anything I've ever seen before. Most patients don't even get CRS. The last time that I had the data that I was looking at a list, it's about less than 30% of those who do get it are treated with Tylenol. It is such a light touch CRS, it really lends itself to that point I made earlier with a really healthy, mobile environment, these patients, to move itself into the outpatient setting. I think you're going to see rapid adoption, which is going to be really a great situation for patients, but also for providers.
These patients are younger, equals private insurance. You have commercial insurance, right? You are now navigating out of these really rough currents of DRG, Medicare, and also we did not even get into the issue of throughput. Patients are stacking up trying to get into hospitals. You do not have to treat them as an inpatient. That is why it is really exciting from an autoimmune perspective to get CAR-T therapies available for these patients, because I think you are going to see quite a bit of uptake with them.
Yeah, and I guess on the reimbursement side for the providers, there's an ASP spread.
Correct.
It's also a 340B component.
Correct.
How does that work out for the provider side?
Yeah, when you net net, because I've done all that math, yeah, so this type of an asset will be very, very, very welcomed for them, mostly because the majority of patients who get myositis are younger. They're under the age of 65. This is private insurance. Hospitals who now have to deal with mostly Medicare, 70% Medicare, will be looking at about 65% commercial. It's a complete flip in terms of just the insurance coverage. This will be extremely welcome to them. Again, I think from our perspective, and I didn't think you got into the clinical trial design for the - OK, because David can maybe get into what we're doing on the clinical trial side of things with outpatient.
It's an important piece of our strategy, because we know that ultimately, not only is it better from the reimbursement side for our hospitals, but ultimately they'll be able to treat more patients. They won't have to continue to admit them, because there's quite frankly none of bed space in the United States right now to keep admitting anybody.
Maybe to extend Steve's comments, our clinical program is designed and currently as designed will allow in our pivotal trial for outpatient administration by choice. If a site wants to do it, they'll do it. Given the experience that Steve has and our focus on outpatient administration, because our drug has such an attractive safety profile, you will see data coming out before we launch on patients who are treated as outpatients and the safety associated with that. For us, that's a really high priority because it permits outpatient treatment, which permits an ASP plus 6% reimbursement paradigm for the hospital, and it allows for a financially viable approach to the use of CAR-T. That's never existed before.
Every assessment of CAR-T has been based on most patients are treated as inpatients with a DRG that never ever anticipated a drug that's going to cost $500,000, whatever the CD19s on the market today would cost. It just wasn't accommodated for. It's a money-losing proposition. Imagine that all of a sudden you can treat outpatients, you have better throughput, you have a safer profile, and you can actually have a viable approach for your hospital where you're not every day losing money on every single patient.
That's right. Yeah, so it's a combination of, like we said, I think it's a double whammy, right? You have a high cost on the manufacturing side, you have really poor reimbursement, and low throughput on the provider side. Hence, I get it why a lot has been written around this space.
There's one other point that I think is important to highlight on the commercial side, which is the use of rese-cel in myositis has demonstrated so far and continues to demonstrate the absence of need for any pharmaceutical therapy after one single dose of rese-cel. That means that you're not going to need to use the expensive products, whether it's FcRn's or others, that are coming to market for myositis in the next two years. The ability to avoid direct health care costs this year and next is something that payers will pay for. We're thrilled at the opportunity to actually create a more efficient approach with perhaps much better outcomes for patients.
Have you spoken with the sites for the myositis trial and have a sense for how much they're going to use outpatient versus inpatient in the trial?
Stay tuned. That is what we're doing right now. We're starting to put together our commercial footprint. Obviously, you could speak maybe the clinical side of things. We're going to rapidly, as you can imagine, go well beyond our clinical footprint. Do you have any insight?
No, I mean, there are already sites that we know are very much attuned to outpatient therapy in oncology. Those are sites that we're particularly interested in because they would be able to adopt very quickly.
I think it's an important point. I didn't note until I started getting more closely with this program. It's something that'd be an important part of this as I mentioned my prior program with our friends over at Legend. Legend did a very nice job of educating the community, and the community took that to the next level and really extended into the outpatient setting. Like I said, I think it's about half now of all new starts are in the outpatient setting. Those same providers are going to be the same providers that are going to be administering rese-cel as well. So they have muscle memory in terms of how to manage patients in the outpatient settings and much more difficult patients to manage in the outpatient setting.
I think this will be welcome news to them to say, if you like that, you're going to really like this quite a bit.
In the background, it sounds like you're kind of mapping out the overlap of all those sites to figure out.
Yeah, it's exactly right.
We have the largest footprint in the United States of clinical sites in the autologous CAR-T space. Historically, that has been a good predictor of commercial success.
Could I leave you one last thing? I don't want to.
Yeah, perfect.
I'm a commercial person up here, right? The other thing to take note of is supply. If you look back on how these products were launched and how choppy these launches were, they were staged over time. It was really problematic in the market. When we were launching, whether it be Legend, our friends over at BM S did the same thing with Abecma. There's a long history there. It is one of the other areas where I was so happy to hear about our supply schedule and strategy in terms of how to come to market the way you should come out with a full-on launch, the way that we'd love to be able to do it. I don't know if we have time to get into manufacturing, looking at double zeros, triple zeros. Our manufacturing plant does support that.
With a very large clinical footprint, we will be in a lot of places at once.
Awesome. I think that was a good discussion of kind of what we're going to be talking a lot more about in 2026.