Welcome, everybody. Thank you for making it. I know it's been a long day, and we're sort of reaching the end of the day. I'm Douglas Tsao, Senior Analyst at H.C. Wainwright. We are thrilled to have with us Steven Nichtberger, the CEO of Cabaletta Bio, which is a company that I've known now for over 5 years and has been an exciting ride. Maybe just as a starting point before we sort of dive into some of the real details, for investors who are newer to the story, just maybe explain why there's been so much excitement around CAR T and autoimmune disease over the last two-plus years.
First, thanks for the opportunity. Cellular therapy, particularly, CD19-directed CAR T therapy of the autologous type, hit the scene pretty impressively through the New England Journal of Medicine about two or three years ago, I suppose it was three years ago, when an academic from Germany decided to treat a lupus patient with a CD19 CAR T product that was autologous. Lo and behold, six months later, it was published this young lady who had severe lupus on multiple medications, stopped all of her medicines prior to the administration of a single dose on a single day of the CD19 CAR T product. Lo and behold, six months later, she had no symptoms of her disease, and she had no medicines necessary to maintain her health.
That was either one of the most important breakthroughs in autoimmunity perhaps ever, or it wasn't true. Knowing that ultimately it turned out to not only be true, but profoundly true, durably true, you know, our team set about in 2023 to find the best and to design the best autologous CAR T product that we could to replicate those amazing results. Following that, every modality of cell therapy, every modality, frankly, bispecifics, in vivo, and everybody else jumped on the bandwagon of trying to achieve the same results as were achieved and have been achieved in the autologous CD19-directed CAR T space since then.
Many investors, I think, have viewed autologous CAR T as perhaps sort of operationally too complex for big autoimmune indications. Do you think that that's the case? If not, what have they perhaps underestimated?
No, I think they got it right. I do. I think they got it right. I think that autologous CAR T done the way that it has historically been done in the treatment of oncology patients is simply not a viable business when you're trying to do it the way it was done in 2018, 2019, and 2020, even as recently as 2023. The opportunity to treat tens and then hundreds of thousands of patients requires at its core that you understand the problems that they ran into in the last decade and that you solve those problems. A problem well-stated is half solved, and the problem is that the manufacturing of product has not been scalable, has not been affordable.
The capital requirements are prohibitive, the cost of goods are excessive, and the administration modality in the hospital where there are limited beds and limited reimbursement is a real challenge. If that's the domain into which you're launching a large market autoimmune product, it's not doable. Back when we first jumped into the development of rese-cel, our lead program, we decided we have to solve those problems. The way that we've gone about solving them centers on, first and foremost, a more industrialized, automated form of manufacturing. We've announced a commercial agreement with Cellares, which can produce literally tens of thousands of products per year for us and others with a fully automated, industrialized manufacturing process that has demonstrated really excellent comparability in engineering runs to our manual produced product.
In patients, we reported recently at ASGCT, the first two patients dosed with Cellares manufactured rese-cel had exactly the response you would have liked to see pharmacokinetically and pharmacodynamically. If you've solved for the industrialization and automation of manufacturing of autologous CAR T, all of the things that were a challenge in that regard melt away. Now you're left with, how are you going to find enough inpatient beds, and is reimbursement adequate for treatment of these patients? That's where you need to have a drug that's very safe. We designed rese-cel unlike just about every other company that is advancing a product in this field. We designed rese-cel exclusively for use with autoimmune patients. It didn't have to be a fast turnaround time of manufacturing because autoimmune patients aren't dying tomorrow for the most part.
It didn't have to be fast manufactured at all, in fact. What it had to be was safe and effective. To do that, we designed rese-cel as a fully human product, not mixed with murine and human elements. It could be redosed perhaps if necessary. We designed it and dosed it as was done in the academic studies that we all, you know, frankly just stimulated our interest in the field, right? If they had such good data, why wouldn't you try to replicate everything they did? We designed our product with the fully human equivalent of the actual binder that they used in that study. We dosed it the same way they dosed it, on a weight-based dosing regimen. Heavier patients get more drug.
It's not a surprise therefore, that we come as close as anybody in the industry according to the Nature Biotechnology review of all of the industry's data to date on safety. We come as close as anybody has to replicating that original data set from Germany. It's because our product is designed similarly, and it's being dosed similarly. There is no other company that we know of that is using a weight-adjusted dosing. If you are safe, guess what you can do? You can go outpatient. If you go outpatient, two things happen. There are far more beds, and reimbursement is now a completely different paradigm for the Medicare patients. Most of the patients in cancer are Medicare, some of them in autoimmunity are Medicare.
Now all patients can be ASP plus 6% reimbursement, not a DRG-based reimbursement, which has been such a challenge for the field. If you dissect systematically the reasons why investors are right to not want to invest in autologous CAR T, then you begin to understand how industrialized automated manufacturing knocks most of them out of the box, scalability becomes available. Minimal cost of goods that are as low as anybody in the industry is what we have secured with our contract with Cellares, and minimal capital investment required to get there. Now you need the ability to dose a lot of patients. Outpatient is possible because our safety profile is second to none. You put all that together, and now you can really go after autoimmunity in a serious way.
That's really the very systematic, very thoughtful approach that we've taken to developing rese-cel. Every CD19 directed autologous product is the same, and there are dozens of them, only they're not. There is nobody else who is anywhere in terms of progress with a fully automated, integrated, scalable manufacturing approach that causes a minimal capital investment to go to 10,000 units per year. There is nobody whose dose regimen is a weight-adjusted dosing regimen that does a number of things, including produce better safety, we think. It allows us to go into children. Kids with myositis, which is our lead indication for adults, is a really big problem. There are 3,500 juvenile myositis patients in the U.S.
These children, if successfully treated by us in our ongoing study, will have the first time ever, will have a drug that after they stop all their medicines, they may actually be able to go back to school or throw a ball. They'll do that at the same time that Cabaletta will earn a voucher. That voucher most recently has been sold for $180 million by other companies that have earned such vouchers for pediatric indications at launch. That's just another benefit of doing this in a very thoughtful, systematic way.
Steven, one of the things that you have emphasized lately is the opportunity for preconditioning free delivery of rese-cel. I think it's maybe worth talking about what enables you to do that, and whether you think some of your competitors will be sort of fast followers, and if they even can be fast followers, in this regard.
Preconditioning involves fludarabine and cyclophosphamide typically. One of the most important advances that you can make in this field would be to get rid of the preconditioning, which is three days of infusion and a single day of dosing for Flu-Cy as a regimen. That's pretty standard. We knew that that's the most important thing we can do. Not faster turnaround time, not get rid of the apheresis, but get rid of the preconditioning if you can.
Once we knew that we had found the right dose using this weight-based dosing regimen, and across myositis, scleroderma, lupus, myasthenia gravis, and more recently pemphigus, that we have a dose that works, we then embarked on the question of, "Why do we need the preconditioning?" Turns out that professor Schett, the academic I referred to earlier, who really, I think is probably the father of the field if folks like Carl June are the grandfather of the CAR T field. In autoimmunity, his was the first patient, and his work has really helped spur everybody's interest. He had a patient with the anti-synthetase form of myositis. He redosed that patient after they had a breakthrough of disease.
I think they were like six months or one year in, excuse me, and they had a recurrence of disease. Milder than it was previously, the obvious thing to do was to try to re-treat the patient with Flu-Cy preconditioning plus the cells. As I referred to earlier, if you redose and you're using a murine binder as he was, same binder that others are using in the field, you can't redose it because the body will reject it. There are antibodies that have formed from the first dose you gave. The cells were rejected, and there was no evidence of cell expansion. The patient didn't have any improvement. Wait a minute. That patient, that myositis patient, got a dose of Flu-Cy. If Flu-Cy was doing anything for the autoimmune disease called myositis, the patient would have improved, and they didn't.
In the absence of cells expanding, Flu-Cy had no impact on that patient. We knew from that patient that our thesis was right. Flu-Cy is not necessary for autoimmune patients. It's critical for cancer. It is simply not necessary for autoimmunity. We believe that. That's our hypothesis, and we're out to prove it to be true. Once we had our dose known with Flu-Cy preconditioning, we shifted our attention to getting rid of the preconditioning in the most important indication where it would impact our positioning for patients and relative to competition. Myositis, we fully expect will be first to market. Excuse me. At EULAR coming shortly, we'll have not only the safety, but the efficacy with many months and even over a year and a half of follow-up in some patients in myositis, scleroderma, lupus.
In those patients we'll see the impact of rese-cel. The ability to move to a preconditioning-free regimen is most important in our minds in lupus. We have patients who were enrolled in our lupus program, and we already have FDA alignment on how we could do a pivotal trial in lupus. There are 30 cell therapies with an IND cleared in lupus. There are some big companies that are well into pivotal trials with preconditioning. If you can do it without preconditioning, patients will do what they did in our trial. They were enrolled in the rese-cel trial with preconditioning. They hadn't yet been dosed. They heard that an opportunity existed to be treated with an unproven form of rese-cel without preconditioning.
Same drug, same rese-cel, no evidence that with preconditioning it would work. They pulled themselves out of a trial where it has been demonstrated to be effective, put themselves into the form of that trial, the arm of that trial that was without preconditioning. I don't need a lot of market research to tell you that this will be the first-line therapy of choice among cell therapies if we are successful in demonstrating that rese-cel is effective and safe without preconditioning. That's a big, big market opportunity for Cabaletta Bio, and it positions us ahead. If you're a doctor, you're a patient, you have a choice. With preconditioning, you can have any of these four that are already developed or this new one that just got to market with no preconditioning at all.
Oh, by the way, a year from now, if you do have a breakthrough and you need more therapy, you can redose with rese-cel. This time we'll give it to you with preconditioning if you'd like, because if it's more effective, we have the opportunity to do that. If it's not more effective, we won't. We can redose you a year later or two years later if you need it. Our form of manufacturing with Lonza and with others allows us to produce two or three doses with every manufacturing run. That repeat dose comes at no charge for us. We have no cost of goods other than freezing your next dose and holding on to it, and then shipping it and delivering it in a timely way.
When you look at your experience so far with the preconditioning free regimen, and you reported some data last week, two weeks ago, last week, what was most encouraging to you?
We were flat out surprised. The hypothesis that we could work without preconditioning started in 2019. We've been working on a no preconditioned regimen of a totally different form of cell therapy from 2018 until 2022. Now, it was very safe, but it was not nearly as effective as what we're seeing with rese-cel. Based on that experience, we have a lot of understanding of the preconditioning-free regimens, and probably more than, frankly, anybody on Earth.
Using that knowledge and a scientific paper from 2019 written by one of our scientific founders, which looked at myeloma patients, and it asked the question, "If we dose a routine BCMA CAR T with preconditioning and we get a certain treatment effect, what happens if we get rid of the preconditioning, we increase the cell dose by an order of magnitude, and we just give the cells?" The answer was they were the same. The effect on patients was the same. I don't need preconditioning if I increase the dose of cells by an order of magnitude. In cancer, you're not going to do that, and giving a couple of doses of chemotherapy to a cancer patient is frankly not a big deal relative to autoimmune patients, where it's a very big deal.
We thought we're going to have to go up eight, 10-fold in dose. We treat our first pemphigus patients, two out of four have a complete, really a abolition of their symptoms. They end up with essentially no symptoms by six months, through six months of follow-up, and they're on no medicines from the day they got a single dose of rese-cel. We didn't expect there would be any treatment effect without Flu-Cy at the starting dose. The fact that two out of the four have a six-month response tells us that we're not very far from the effective dose.
We're already fully enrolled in the next cohort, and we also have started our program in lupus with no preconditioning and expect to be able to discuss whether this really odd, surprising phenomenon where at the starting dose, we actually saw two of the four Pemphigus patients have a six-month response with no medicines required. The question now is that a one-off in a B-cell mediated disease? 'Cause lupus is, remember, not pure B-cell, so it wouldn't be surprising that it's not as effective in lupus. We'll hopefully have enough data before the end of June to be able to present the first two patients that we dosed.
We'll know from the pharmacokinetic, the pharmacodynamic data, whether we are replicating the same outcomes that we saw in the PK/PD data with preconditioning in lupus patients. We didn't have the with preconditioning comparator in pemphigus. We just didn't have that data. In lupus we do, so it should be an easy comparison there. We'll also be able to compare to our pemphigus patients without preconditioning. We're excited about that program mostly because we're gonna quickly dose up to doses that we think are gonna be highly effective.
I guess, you know, along the initial dose showing signs of efficacy, I guess, how do you then hone in on your final dose? You know, do you have a threshold? Say you get to three-fourths of patients having, you know, very strong clinical responses, is that enough?
Yeah.
Is the bar trying to get to 100%?
Right. Listen, the We have said for quite some time that this concept from three years ago that 100% of patients are 100% better, that's never happening in any medical field, not this one or any other. We think that about 80% of patients across the autologous CAR T space are going to be durable, curable, if I can say it that way, outcomes off of all medicines with a cell therapy, a single dose. If we go to a preconditioning free regimen, it may be that 80% of patients ultimately get to that sort of home run outcome. If it's only 60% and you can redose and get the others across the finish line, that's perfect medicine. As a physician, I wanna give the preconditioning only to the patients who really need it.
If I can take six out of 10 patients and not give them the Flu-Cy, then the other four tell them, "Look, I understand there is a risk of ovarian failure that you perceive to be there, even though it's not, in fact, a risk that is real scientifically with the low dose we give you of cyclophosphamide. It's important that you get that if you wanna get rid of the disease." Then the patient will have a choice to make. That choice can only be offered by a fully human construct, and there are not that many fully human constructs in the field of autologous CAR T for autoimmunity.
You know, one of the things that investors have focused on is manufacturing logistics, and one of the key priorities or accomplishments for you as a company was Cell Shuttle and the Lonza agreement earlier this year. You know, why do you think that matters strategically?
For years, the only people who wanted to talk to us were those who were in autologous CAR T, and then a casual interest from those big companies that were not in autologous CAR T. After all, given the experience, who in their right mind wants to get into autologous CAR T as a newbie, as a new entrant? It turns out that since the Cellares approach has been utilized and discussed by Cabaletta, most of the interest from strategics has come from those who are not already deeply invested in the capital equipment, the capital infrastructure of autologous CAR T.
Evidence that what I'm saying is true, at our most recent financing, we had multiple new mutual funds, sovereign wealth funds, and Eli Lilly at a corporate level invest in Cabaletta, and that was after they had made their in vivo investments. We think that it's important to recognize that when you can get rid of all of the manufacturing problems that have burdened this field for so long, and you have a safe and effective product that can go to larger and larger market opportunities and tap into those opportunities simply because you have manufacturing that is industrialized, scalable, reproducible, and frankly, cost-effective and efficient, it opens the door to any company entering into this field of essentially curative medicine with a single dose and having, at the same time, stopped all of your medicines.
One other thing I want to say is it doesn't stop with the manufacturing, right? Our Chief Commercial Officer, Steve Gavel, who sits in the back over here, was the Chief Commercial Officer who launched CARVYKTI at Legend, ran it until about a year ago, a little over a year ago, and grew it through that entire period. Took it to the outpatient setting, which is why at the end of the day it became so successful. The person who is developing our supply chain, I call it the aorta, at Kite, they called it Kite Connect. It was that monitor, that information technology pipeline that everybody taps into to know exactly where the cells are, whether or not they should be charged, you know, whether they're gonna arrive on time, all of that.
The person who first ever built and designed that works for Cabaletta. The benefit of being at Cabaletta for so long, for all of us frankly, is that we are now attracting the best people in the industry. Chief Commercial Officer, previously responsible for the most successful CAR T launch in the history of the field. The person who's building our aorta, as I call it, which is absolutely critical and is complementary to the manufacturing, is the person who built it at Kite, which was the prototype that everybody followed. Time and again, we're recruiting the best and brightest, and that plus a great product, on top of the already awesome team that we have, we've got a long uphill battle to win, but we are going to win.
I think we're out of time, but I think we have one or two minutes to sneak in one other question.
Are we over or under the question number that we said we were.
We're under, so I win the bet.
You're winning. Damn.
I'm not rolling. We'll get my parlay in maybe. Just curious if you could just touch on really quickly in vivo. You touched on a in vivo CAR T and where you think autologous CAR T plays in, just given the excitement.
Yeah.
Interest we've seen across the industry for in vivo CAR T.
Listen, autologous CAR T spawned the in vivo industry, the bispecific industry, and all the others because it was an intolerably difficult and challenging product to scale and make money with. How do you solve for the manufacturing challenges and the scalability challenges and the cost challenges and the logistical challenges of autologous CAR T? You use another modality. Only one problem, those other modalities, years now already available to them, have yet to deliver data that looks anything like almost everybody who does an autologous CAR T has the same data, pretty much. Safety's a little better, a little worse. Efficacy is always there. In vivo hasn't done that in autoimmunity whatsoever. In fact, the opposite. The safety is more of an issue than the efficacy has demonstrated itself.
Bispecifics, one by one, they're showing themselves to be awesome drugs that are annual therapy on top of all other therapies. We think that each of these was something we were predicting would happen. I don't mean to pat us on the back, but this is sort of how we see the field. By knowing what we know from autologous CAR T and the translational insights we have, in vivo is trying to transduce 100% of the T cells and kill 100% of the B cells 'cause there's no preconditioning. If you do that, it's different from what Professor Schett and his colleagues did, which is lymphodeplete, so you have a third to a half of the number of B cells, and transduce only 30% or 60% of your T cells. Why would these two things look like each other?
In one case, you're taking half the T cells, killing half the B cells that are normally there. In the other case, you're doubling those numbers and expecting you're gonna get the same outcomes. You're not. It's just not a surprise to us. We're not as worried about those things as we are about successfully delivering the product safely to patients.
Okay. With that, we'll have to cut it off and end it. Thank you.
Thank you for your time. How much do I owe you?