Good morning, and welcome once again to TD Cowen's 46th Annual Health Care Conference. I'm Phil Nadeau, one of the biotech analysts here at Cowen. It's my pleasure to moderate a fireside chat with Cabaletta. We have with us today Steven Nichtberger, the co-founder, president, and CEO, David Chang, CMO, and Steve Gavel, CCO. Guys, I'll kick it to you for a brief state of the company. Biggest strengths, biggest challenges, and what is Cabaletta gonna do to create shareholder value over the next year?
Thanks, Phil. Thanks for having us, thanks for investing a few minutes with us. We're in a terrific moment at Cabaletta right now. We recently announced that we've initiated enrollment in our pivotal 17-patient myositis trial, which is a single-arm study as agreed with FDA repeatedly over the past year. We are also using a fully automated manufacturing process in partnership with Cellares.
Over the last three years, we've partnered with this terrifically innovative company that has finally cracked the code on autologous CAR T manufacturing, which will and is occurring with no human intervention in a fully automated system that we think will deliver for us, the lowest cost of goods in the industry for a autologous CAR T product, and associated with that, minimal capital investment, healthy margins, and a company that for the first time out of autologous CAR T can look like a biotech company and deliver the sort of returns that investors would expect from a routine biotech company. Very excited about that. In addition, no preconditioning has always been sort of the holy grail for CAR T. We took on the task of evaluating whether our cells, rese-cel, with no preconditioning could work in pemphigus.
We announced earlier this year, that I'm sorry, late last year, that in the treatment of pemphigus patients, the severe pemphigus that was seen in the patients who enrolled was either eliminated or reduced to minimal pemphigus with no preconditioning at the usual starting dose. However, not all of the patients had a great response. Some of them didn't have much of a response at all. We think we're at a threshold dose. Because of the safety profile of rese-cel, as reviewed in Nature Biotechnology about three weeks ago, in a review of the field of autologous CAR T, you'll notice that the safety profile of rese-cel is actually quite good.
As a result, we can increase our dose by multiples with pretty high comfort that we're gonna have a safe drug without preconditioning at higher doses, which has always been the thesis as to how we might actually get the drug to work with no preconditioning. Go to higher doses without preconditioning, you probably can get efficacy without preconditioning. We'll see if that data bears fruit.
We have already said acutely it has demonstrated data. Later this year, we expect to show durability data not only in pemphigus but in the treatment of lupus patients, which is a really big deal because if lupus can be treated with no preconditioning, we will jump to the front of the line among the 30 companies that have been evaluating lupus with their cellular and similar therapies of all sorts, none of whom are going with no preconditioning in a manner that has previously produced reliable and sustainable clinical results. Very excited about that. In the background, just to continue on why at the end of the day we are really at such a good moment at Cabaletta.
In the background, we're presenting a complete data set of phase I/II clinical studies in scleroderma, in lupus nephritis, and in myasthenia gravis in the first half of this year. A tremendous amount going on, and the final thing that I'll punctuate with is we expect to achieve alignment with FDA on a scleroderma pivotal trial, and if and when we do, we will announce that. If we are able to achieve alignment, that could well be our next pivotal study initiating enrollment this year. A lot going on. Our challenges, as Phil asked, we're an autologous CAR T company, and, you know, if we're honest with each other, there's never been a good investment other than Kite and Juno in an autologous CAR T company, and actually now Arcellx, I suppose.
They really for the longest time have had unpredictable cash requirements that were just too high, with inability to scale, and all sorts of problems relating to reimbursement. I think Cabaletta through automated manufacturing, addressing an autoimmune population that's largely commercial and going after the indications we're going after, has really cracked the code on all of those challenges in a way that set us up for success.
Great. Maybe to dive into some of the elements that you mentioned in a bit more detail. Last year, ESGCT and ACR, Cabaletta presented updated data on rese-cel. Can you maybe go into a little bit more detail on exactly what was presented and put it into context of what else is available out there for those conditions?
We were looking at the pemphigus vulgaris population, which is another autoimmune disease in which we treated the patients with the exact same dose as those patients who received full precondition, which is 1 million cells per kilogram. The difference here was that no preconditioning was given, no fludarabine, no cyclophosphamide, we started at the same initial dose. Our anticipation was that we may need a higher dose to overcome the lack of preconditioning. As it turns out, in our first three patients that we treated with no preconditioning, we're seeing evidence of good responses. The first patient had a partial response.
Which means that there's some partial B-cell depletion, partial clinical improvement, as well as partial improvement with respect to seeing a partial expansion that actually looked like what you were seeing in the full preconditioned population. The other two patients did quite well with regards to expansion, B-cell depletion, as well as clinical improvement. We felt that this is actually very close to achieving the right dose, but maybe not quite there. We believe we're at a threshold dose and may need a higher dose, which we are pursuing late this year, and we will be able to report on that patient or those patients that receive the higher dose later this year. This, of course, prompted us to start exploring the opportunity in lupus.
We're taking the no preconditioning concept and putting that into the lupus cohort, where we actually have a new cohort that will not be receiving preconditioning and will be starting at the same 1 m illion cells per kilogram dose initially, and hopefully reporting on that later this year as well.
In terms of those data reports later this year, how many patients with what follow-up will you be able to present? Steven, you mentioned being able to assess durability in those updates. Can you frame how we should look at the durability data?
I'll start with durability question. Obviously durability, the true answer is when you actually can see them out for several years. We need some earlier markers to be able to predict that. The two things that we use that are quite helpful is, number one, look at the phenotype of B-cells that repopulate after you've completely reset the B-cell immune system. When the B-cells come back about two to three months, we have to look at the phenotype. Are these the same as the B-cells that were there before, or are we seeing now transitional naive cells suggesting that there's new B-cells coming out of bone marrow? That is actually a real key indicator that you've now achieved immune reset, therefore more predictive of long-term outcomes and long-term durability.
The second piece of data that we look at now, this is a new, something we've been actually investigating it and advancing, is looking at BAFF levels, which is B-cell activating factor. This is a cytokine level that goes up in response to B-cell depletion. The higher it goes up, more predictive of deeper B-cell depletion, especially more so not only in the periphery but also in the lymph nodes. We've seen a very good correlation. We'll be looking at BAFF levels to go up high, similar to the levels that we've seen with those with full preconditioning, and we're looking at the B-cell phenotype repopulating at two to three months.
Have you disclosed what the higher dose is that you're using?
We have not disclosed that. What I can say is that the binder, the CD19 binder that we in-licensed, has been used in dual CAR in oncology with full preconditioning at -fold the dose. 3 x 10⁶ per kilogram has been looked at, and that has been dosed safely in the oncology patient, full preconditioning as a dual CAR with the CD22.
In terms of safety and tolerability, can you talk about the profile that you've seen to date and how that could be changed with no preconditioning?
Overall in the entire RESET study, this is across four different indications of myositis, lupus, systemic sclerosis, and myasthenia gravis. We reported on 40 patients, and this is also in the Nature Medicine review article. We reported on 40 patients, and of these 40 patients across the four indications, we're seeing 95% of patients with CRS grade 1 or no CRS at all. That's indicative of the safety profile, which is very different than what we've seen in oncology, where we're seeing probably, you know, 75% or so getting a CRS and maybe 50%-75% getting a higher grade CRS of grade 3 or 4. A very different, dramatic difference in what we see in oncology. We believe autoimmune patients will have a safer profile.
I think we may differentiate versus some of the other CD19-CAR T therapies in autoimmunity for a variety of reasons, and this is mentioned in an article. You know, one would be the 4-1BB costimulatory domain. Another one, key one is maybe our potential our dosing regimen, which is weight-based, and none of the other key players are looking at a weight-based dosing regimen. Third is that we're using a manufacturing process that is shortened, which is creating a more activated CAR T- cells, which may potentially lead to higher rates of CRS and ICANS in more severe grades. I think these are the three factors, key factors that are potentially differentiating our compound versus some of the others.
Investors debate the level of AEs that would be acceptable for an autoimmune CAR T. Can you give us your sense of what rate of ICANS?
Yeah
... toxicity would be acceptable?
Where was your last ICANS?
We haven't had an ICANS in over a year. That's after we instituted specific requirements saying if a patient has any evidence of fevers, any evidence of an infection, the patient cannot be treated, and they need to attest to that. Previously, this was highly recommended, but we did have one, you know, case that they actually did not follow that.
Right
... recommendation. We made it now a requirement. What is the minimum? I mean, I think that's comes back to market research.
Yeah
... I would say that if you have grade 1 CRS, that's a fever manageable with acetaminophen, manageable with tocilizumab if needed, it can be even managed as an outpatient if needed. I think that gives you a sense that CRS grade 1 is em inently manageable.
If the concern of any investor is the side effect profile of rese-cel, you now have the Nature Biotechnology report on the first 40. We're now coming up on dosing like 80 patients, enrolling more... It's.
The numbers are-
... a meaningful number. You know, I would say what we're seeing in our side effect profile, let's just say is not getting any worse for sure than we've seen. I would suggest that you don't really need market research. Take a look at the label for any of the major autoimmune products that are used in the major indications and compare it to the Nature Biotechnology article on rese-cel, you'll see that our safety profile will compare to pretty much any drug that's used for autoimmune disease today, it probably compares favorably in terms of clinically meaningful side effects. The number one side effect with rese-cel is fever that's transient, sometimes Tylenol, sometimes tocilizumab. We don't prophylax with steroids. We don't prophylax with tocilizumab.
We don't need to somehow manage the side effects of the drug with other drugs as, you know, with rituximab or some other things that would commonly be used. I don't think side effects are going to stop doctors from using rese-cel is really the conclusion. At the end of the day, you know, we'll see when we, when we launch the drug and the BLA filing scheduled for next year, that won't be too far in the future.
Great. In terms of clinical updates, we're gonna get the SLE and LN data in this year. We interpret that to be SLE in the first half and LN in the second half. Is that accurate, or are you gonna give us two updates from both cohorts?
This is no preconditioning?
Yeah.
Yeah. We don't specify one or the other. It's basically within the lupus population, which includes LN as well as those with non-renal lupus. We'll have at least one patient, potentially two, maybe more, depending how things go. In the near term, I think, you know, 'cause everybody's looking for the catalyst and the timing for investment, why should they own the stock now or tomorrow? The bottom line is this. phase I/II data across the whole portfolio is gonna get released, as I reviewed earlier, in the first half of this year. Cellares dosing of the first patient, I found out myself actually, true story. Yesterday on LinkedIn, they posted that the first patient that they were clinically treating finally after seven years, has now been fully manufactured successfully and cleared QC.
That's how I found out. Apparently that has happened, and that patient will be dosed imminently, and we will report on the safety data in the first couple few patients dosed with the Cellares product, confirming its profile as to its safety. The acute no preconditioning data at the starting dose with lupus will be coming in the very near term. The acute high-dose pemphigus data with no preconditioning coming in the near term, and the durability with no preconditioning, that can change everything, not only for us, but for the entire field. The longer-term durability and clinical outcomes in the Cellares-treated patients also coming in the second part of this year, maybe the middle of the year to the second part of this year. We have an awful lot of reasons that we're excited.
Each person has their own preference as to what's most important to them, but that's the portfolio of things that are coming.
Steven, you referenced the durability data, coming mid-ish this year. How would the introduction of a non-preconditioning regimen expand the market opportunity should that turn out to be viable?
Yeah. Let's talk about what viable looks like first, right? What is good enough? Our market research over the last many years in literally hundreds, probably 600 different physicians surveyed or interviewed who treat myositis and some of the other diseases we treat, they tell us that if I can get 18 months of disease-free, drug-free remission for my patients, that's a grand slam home run, and I'm willing to do preconditioned cell therapy for the patients who would benefit. They tell us it's about 20% of their population who they would administer rese-cel to. If we got rid of the preconditioning, I think it would be differentially impactful.
Lupus, particularly young couples, young women, young men who suffer from lupus, mostly women obviously, they don't wanna suffer ovarian failure due to cyclophosphamide. They would far prefer a regimen without any preconditioning. We actually have not only the market research that tells us this, but the actual data. We had some patients enrolled in the trial in our expansion phase of our lupus study with preconditioning. They withdrew from that trial as soon as they heard that a preconditioning-free regimen was available, and they entered the preconditioning-free regimen. You don't need more than that to tell you. You don't need market research to tell you how important this is to that population.
Knowing how big the lupus and lupus nephritis markets are, knowing how many competitors there are, we really strongly believe that if we can get to 18 months of durable response in most patients. You should carry, we carry as an assumption about 85% of patients we've treated across our portfolio, we're seeing durable, complete elimination of active disease. I choose my words carefully because we don't eliminate the fibrosis over the first 12 months in scleroderma. Over time, it looks like that is resorbing. It's a different discussion, but the active disease seems to be halted in its tracks durably and reliably in about 85% of all the patients we're treating. And I think that's true, by the way, across the industry. I don't think anybody has an advantage there. That, that's a complete game changer.
If we go with no preconditioned regimens and we hit, you know, 70%, 60% of all patients treated get 18 months, even 50%, you get 18 months durability with no preconditioned regimen, I think that becomes the primary modality of cell therapy of reset in lupus. What happens after that, though? When a patient has a recurrence, and we'll be generating data on this this year, when a patient has a recurrence, there are two options in our minds. One is we can redose rese-cel. When we do a manufacturing run of rese-cel, we get about five doses worth of product. The other four can be aliquoted and frozen, waiting for the need to occur for the patient.
With almost no cost of goods besides freezing the sample, they can call up, and we can send another dose for use 12 months from now if they had a recurrence that would have warranted it. They can choose to take that dose with or without preconditioning. You can imagine a world where you don't take on the risks of preconditioning until you really need to take them on, but maybe you can get away without it. To us, that's really a great outcome for a no preconditioned product. We think that wins in the marketplace. The best of all, of course, is 18 months comparable data with or without preconditioning, high dose, rese-cel is as good as lower dose with preconditioning. The fact that we can do one manufacturing run and get five doses is a complete game changer.
How translatable is non-preconditioning from indication to indication? Would you need to do prospective, no preconditioning trials to get this on the label for each indication? If you do it for a couple indications, is that translatable to everything else that's being investigated?
I think the question on translatability, what I take is instruction from looking at the four diseases that we're looking at currently with full preconditioning. We're using the same dose, same preconditioning regimen. We're still seeing same expansion, same B-cell depletion, same level of clinical responses. We believe that pemphigus, which is also another autoimmune disease that doesn't have massive numbers of B-cells due to leukemia or lymphoma, should translate. We would want to explore that. We wouldn't just go in blindly and say it's gonna work. We need to at least get some preliminary data on no preconditioning of different diseases.
Turning to a few commercial questions. Steve, you recently joined, and I think you bought some stock when you came on board. What attracted you to Cabaletta?
Well, thanks, first of all, noticing the buy. Appreciate that. Yeah, I mean, there's a number of things. I could hit rewind what these gentlemen have been here talking about. The one thing that really jumped out at me was, and David does a really nice job of outlining this, is that autoimmune patients are just fundamentally much healthier than trying to treat end-stage cancer patients. For the last 10 years, I've been launching ABECMA, and I was launching in the early days, as well as CARVYKTI. The health of that patient at inbound material T-cells, the viability of that is so much better... Whoops, than inbound material as I get disconnected. The inbound material for cancer patients... Give me a second. There we go. I might just hold that. Yeah, the...
That leads to a lot of different positive effects, obviously, in manufacturing. Much lower out-of-spec rates, et cetera, et cetera. That's the one piece of it, just in terms of the autoimmune patient population themselves. Much more mobile, much more healthier, and also the fact that these patients, because they are younger, we're dealing with a private insured patient population, which has been historically very problematic, when launching prior CAR T drug, especially for cancer, where you're dealing with the Medicare inpatient environment. That's one piece of it. The second part is, again, what David was getting into.
What was interesting to me, knowing that the hurdle was going to be extremely high in terms of toxicity requirement from market because these patients are so healthy, is that when you take a look at the tox profile, the safety profile that rese-cel has versus the inbound competition, it's order of magnitude better. From my perspective, that opens up a couple opportunities for us commercially. When you're starting to really scale up in these multiple indications that we are pursuing, one of the key challenges is not just the environment for reimbursement with our hospitals, which has been problematic for Medicare. We won't have that issue here because we're commercially insured. It's throughput, outpatient CAR T. You see, with the old CARVYKTI program that I was working on, we were successful of actually the latest...
last data I've seen is about 50%-60% of all new starts was actually being administered in the outpatient setting for late-stage cancer patients. You're gonna see a fundamental shift to outpatient treatment with these healthy autoimmune patients. That, from my perspective, it's gonna be nice to see these eligible patient populations actually being treated. I know I would get a lot of questions from investors when I was at CARVYKTI trying to understand the slope, saying, "Why aren't we treating more patients?" That was a challenge for a lot of different reasons behind that, not to belabor them here. We won't have those headwinds with us because our patients are so much healthier and predictable. The last reason for CARVYKTI.
I'm sorry, for Cabaletta, that is because of the staff, the personnel that's come on board with Cabaletta. It's a very seasoned crew here. You could, you know, flying as a wingman with David and others, it's an outstanding group that we have there.
You and Steven have both referenced manufacturing as differentiating. Can you take a step back and give us a little bit more detail about the Cellares automation platform? How could that be differentiating for rese-cel in the marketplace?
Yeah. I would urge you, if you're interested, to search for either on Vimeo or on YouTube for the Cellares Cell Shuttle four-minute video, 'cause that'll do a far better job than I can describing to you what the system is, or email us and reach out and we'll share it with you. You know, the academic process that Carl June and others developed in the early 2000s to manufacture an autologous CAR T-cell has been the basis on which everybody has manufactured their CAR T- cells. Yeah, there were incremental advances that made it more systematic, but not necessarily industrialized.
Certain elements of the process were automated, certain elements were simplified, maybe a little more rigorous process around it, but nobody started from scratch and built a fully integrated cassette the size of a microwave oven that had every one of the necessary steps built into it for the management of pretty much any cell therapy to be manufactured with no human intervention. The way the process works is you have a Cell Shuttle. You could fit a Cell Shuttle in this front part of the room where it extends outwards. It would take about that much space, and it will manufacture 16 patient samples simultaneously, and it could be 16 different products. Not just different patients, but different products for the different patients. They've designed and engineered a system that can finally industrialize autologous CAR T.
It's really interesting when you think about sort of the allogeneic or the in vivo who, you know, their advantage has always been in the back end of stuff. It's sort of like we can manufacture faster, it can be off the shelf, it's lower cost of goods, and it can scale. The problem they have is it's not effective and it's not safe, right? The problem autologous has always had is it's effective as all heck. Can't get away from it. It's really safe in autoimmunity. The problem we have is you can't scale, it's too expensive. A lot of capital up front. This Cell Shuttle solves all of those problems.
You literally take the apheresis product and you pour it into one side of this cartridge that gets put into the Cell Shuttle, and you come back a couple of weeks later and the manufacturing is done. The product is already bagged and ready to go to the patient. When you take the cartridge out, you lift out the bag that will go to the hospital, and you're done. That's astonishing. We don't need skilled technicians anymore. We just need people who can make sure that the discard is discarded out of the back of the Cell Shuttle, and there are sufficient raw materials, if you will, media and the like, in place in time to be used in the various samples. That's it. Now what does that mean for us?
If I need 1,000 units in the first year, which would be more than any CAR T has ever had, 1,000 patients treated in the first year, I need two Cell Shuttles. A Cell Shuttle might cost on the order of $10 million, and it doesn't need vacation, and it doesn't need time off to, you know, benefits. It doesn't need to be paid. It sits there until it's ready to be used. It doesn't even need a sterile room. It just needs a room that is sufficiently clean. There's no cost, no fixed cost associated with reserving future capacity.
For those who would be interested in Cabaletta, we've been urging people, please build an Excel model of our runway and our path to profitability. What you'll find is a biotech company that has minimal, if any, capital investment required to hit revenue numbers that are just fundamentally better than and different from any autologous CAR T company you've ever seen. It's enabled by a safe product properly developed in the outpatient setting where demand can occur, not infringe on inpatient oncology CAR T indications where the unmet need is very substantial and the treatment effect is really meaningful. All of it is unleashed by the ability to supply it without major capital investment, and to do so in a world where the cost structure is as good as any company in the industry the year we launch.
The cost per run, the total cost of goods per patient treated we will have will be as good as any company in the industry. It's not because we're bigger, it's not because we're dreaming, it's not because we don't know. It's because of this fully automated type of approach where you just don't have all those layered on costs, the failed runs of a cancer patient whose cells weren't any good, you know, weren't able to be manufactured. The patient who died waiting with cancer. Those don't exist in autoimmunity. Most importantly, the capacity that you need to reserve for the future no longer needs to be reserved because one Cell Shuttle equals two or three clean rooms with staffing for them both or all three of them. I don't need clean rooms, and I don't need those staff.
As a result, we have a fundamentally different business model that I think is just very poorly understood right now. When you put together the no preconditioning opportunity, put together the basic opportunity to start, layer on top of that the transformative nature of the manufacturing that I've described, fully automated, data coming short-term and durable data later this year. The no preconditioning opportunity, the acute high-dose data in lupus, low-dose data, high dose in pemphigus, and then durability in both later this year. You put all of that together, I think, it makes two things true. Number one, any pharma company can now consider partnering with us because there is no need to be an expert in manufacturing and there's no capital requirement to be fearful of.
This is just a drug that happens to have an 85% complete response rate when it comes to elimination of acute disease across a portfolio of autoimmune indications. You know, it is not surprising, I'm sure, that pharma companies have woken up to the opportunity that this may become interesting. Number two is this is a company that will launch rese-cel, file it next year in the BLA, and will launch in a way that we can scale to meaningful numbers profitably in a way that no other autologous CAR T company has ever done.
Great. With that, I think we're out of time. Thank you guys for answering all our questions.
Thanks.
Thank you.