it is now my pleasure to turn the conference over to Greg Mann. Please go ahead.
Thank you, Rylan, and good afternoon, everyone. I'm Greg Mann, Vice President of Investor Relations and Public Affairs at Encarta. Thank you for joining us to discuss Encarta's new strategic partnership with CRISPR Therapeutics to transform the power of natural killer cells against cancer. Paul Hastings, President and CEO of Ancarta and Nadir Mahmood, Chief Financial and Business Officer of Encarta, will review the details of the collaboration. We'll then open the call to questions and we'll be joined by James Traeger, Chief Scientific Officer Kania Rajangam, Chief Medical Officer and Ralph Brandenberger, Senior Vice President of Technical Operations, all from Encarta.
Before we begin our prepared remarks, we'd like to remind everyone that comments made by Encarta management and responses to questions on this call will include forward looking statements and information. Forward looking statements include, among others, statements of our future expectations, plans and prospects. All forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such statements, including the risks and uncertainties that are described in our filings with the SEC, including the section entitled Risk Factors in our most recent Annual Report on Form 10 ks, as well as other risks and uncertainties detailed in our subsequent SEC filings. Except as required by law, we have no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Given the nature of the collaboration, we may not be able to answer all the questions that you have today.
With that, I'd like to turn the call over to President and CEO, Paul Hastings.
Paul? Thanks, Greg, and good afternoon, and welcome, everybody. This is an exciting day for our companies and for all of cell therapy. We're delighted to enter this very unique technology focused partnership with CRISPR Therapeutics, a preeminent genome engineering company with Nobel Prize winning technology, a company that is at the forefront of a new class of CRISPRCas9 based treatments for serious diseases. This is a bold collaboration and it's about the synergy across 2 leading science driven companies that has the potential to create new best in class treatment options for patients.
Working together and guided by a creative and powerful business structure, Encarta and CRISPR Therapeutics will combine our respective strengths in the NK cell biology field, genome engineering and T cell biology field with the goal of transforming the power of engineered immune cells against cancer. Now this is a breakthrough biotechnology deal at its best, connecting complementary technologies
when and where
it makes sense to drive collaboration and rapid innovation in areas of high unmet need. And in a truly fifty-fifty collaborative way, equally investing in and benefiting from each other's expertise and sharing profits in the collaboration products equally as well. The synergies as well as the shared commitment across the 2 organizations will enable greater focus, impact and speed and have the potential to deliver better therapies to more patients in less time. Now before I cover the rationale and key value drivers of the partnership, I'd like to say a few words about Encarta's overall strategy and progress. From the start, our goal has always been to become a category leader in the cell therapy immuno oncology space.
We embarked with a clear vision and an ambitious strategic plan to deliver on our mission to transform patient care by delivering truly off the shelf allogeneic engineered NK cell therapeutics, it's essential to bring together the best science. It's essential to access a broad set of technologies to stay ahead of the curve and it's critical to have a broad diversified pipeline that accelerates the pace of translational insights putting us on a path to develop best in class products. In the brief history of our company, we made tremendous progress executing on the strategy. We founded the company on the discoveries of Doctor. Dario Campana, whose fundamental insights helped spawn the growing interest we're witnessing today in the immunogenicity and safety of NK cells as the next generation of cell therapy.
We delivered a unique cell expansion technology using our proprietary stimulatory cell line to generate NK cells at commercial scale. We created an NK cell backbone featuring a proprietary version of membrane bound IL-fifteen that extends the time tumor killing NK cells are in circulation. We engineered our own proprietary targeting receptors into this backbone to amplify the natural killing potency of NK cells. And last but not least, through enormous work, we created a reproducible process to cryopreserve our engineered NK cells, giving us the potential to have true off the shelf NK cell therapies without the potential toxicities associated with currently approved autologous CAR T therapies and with an attractive cost of manufacturing and the potential to be delivered in a frozen vial, thawed and administered in an outpatient setting with the ability to repeat dosing. In sum, these elements make for a powerful platform designed to exploit the full therapeutic potential of NK cells, address the challenges of currently approved cell therapies and broaden access for patients.
So with this strategy and access to the best in class technologies, we're building a diversified clinical pipeline that includes a clinical trial of NKX101, our CAR NK candidate engineered to overexpress the native NK cell receptor, NK G2D, currently ongoing in patients with relapsed refractory acute myeloid leukemia and higher risk myelodysprostic syndrome. And just last week, we announced the IND clearance by the FDA for our 2nd lead program, NKX-nineteen. NKX-nineteen is a CAR NK engineered to target CD19 and we expect 1st patient dosing in the second half of this year. First data readouts from these 2 COLI programs are not that far away. We expect to present data this year from a handful of patients in the 101 study and early clinical data next year from the NKX-nineteen study.
Now the partnership we announced this afternoon with CRISPR Therapeutics is another key advancement in the execution of our strategy. We're now in a much stronger position than ever to lead the NK cell therapy space and we could not have aligned with a more successful, capable and well established partner than CRISPR to accomplish our shared goals. Long before doctors Charpentier and Doudna received a Nobel Prize for CRISPR Cas9 gene editing and Carta understood quite well the need to introduce the power of gene edits into the design of NK cell therapeutic candidates. It's well known that there's a shortage of exceptional tumor targets and an excess of immunological mechanisms of resistance when it comes to cancer therapies. And that's particular for solid tumors.
Genome engineering has the potential to shift the balance and enable cell therapy to overcome biological limitations. So with this partnership, Encarta has now has access to the most powerful, robust and clinically validated gene editing technology available. The human immune system as we know it is a remarkable and exclusively powerful mechanism for combating disease. It embodies 2 distinct and finally integrated mechanisms of response to viral and cancerous invaders, the innate immune system and the adaptive immune system. In the field of cell therapy, an interesting parallel is emerging.
While we expect NK cells will likely prove to be a powerful therapy on their own, there's a growing interest in what might be achieved for patients through a combination of NK cells and other therapeutic modalities, including T cells. As a leader in NK cell therapy, this dual attack by NK plus T is an area we are eager to explore. And Carta is really good at NK cell biology and the clinical development and manufacturing science of NK cellular immunotherapy. But we don't pretend our strength in NK cells makes us an authority in T cells. Excellence in one area doesn't necessarily translate into the other.
So rather than endeavor to build a world class capability in T cell therapy and manufacturing and go through the time and expense to get there, we chose to work with a great company that already has these capabilities, and that's CRISPR Therapeutics. We believe this is a truly transformative deal for us, CRISPR and our industry. The bold agreement directly supports our goal of accelerating our early stage programs and driving the next wave of NK cell therapies, including off the shelf product candidates for treating solid tumors. By continuing to focus on our strength and partnering with CRISPR Therapeutics on what they do supremely well, we'll have the best chance of fully realizing our ability and promise to become an industry leader in immuno oncology and other future potential therapeutic areas. We couldn't be more excited to be partnering with CRISPR Therapeutics.
And I'll now ask Nadir Mahmud, our Chief Financial and Business Officer to walk you through the terms of the collaboration structure. Nadir?
Thanks, Paul, and thank you everyone for joining our call today. From a business perspective, we have established a structure for this agreement that gives us confidence in the long term success of our partnership. This is a true fifty-fifty deal, which means that both companies have a vested interest in the success of the program. This was our goal from the beginning and it gives us confidence in making an optimal product for patients in need. As Paul mentioned, the agreement allows both Encarta and CRISPR Therapeutics to invest more deeply in understanding how to exploit the immune system within their respective areas of expertise, while opening up the potential from both an operational and a financial perspective for each company to benefit from the efforts of the others.
This is a co development and co commercialization agreement in pure form. Both parties bring valuable resources and capabilities to the table and share in the decision making. The deal structure itself is not typical or ordinary, so I'll spend a few minutes reviewing the operational and economic terms. As I mentioned before, this is a true fifty-fifty deal, so there is no upfront payment made by either company. Fundamentally, Encarta and CRISPR will co develop and co commercialize 2 programs from NCARTA's early stage pipeline, a CAR NK targeting CD70, what we have previously called our program 3, and our NK plus T program.
There's also a future CAR NK program that CRISPR has an opt in right to co develop and co commercialize with us. For clarity, our 2 COLI programs, NKX101 and NKX-nineteen remain unencumbered and wholly owned by Encarta. The companies will form a Joint Steering Committee or JSD to oversee all activities related to these collaboration programs, including determining what gene edits are needed to develop an optimal CAR NK or NK plus T product candidate. For the collaboration programs, the companies will share equally all research and development costs and profits worldwide. For the NK plus T program, CRISPR is responsible for gene editing activities and T cell related activities, while Encarta is responsible for NK cell related activities.
This agreement also includes a 3 year exclusivity period between CRISPR Therapeutics and Encarta covering the research, development and commercialization of allogeneic gene edited donor derived NK cells and NK plus T cells. Now switching gears to the wholly owned Encarta programs, I would like to highlight that Encarta gets a license from CRISPR Therapeutics to 5 CRISPRCas9 gene editing targets that we can use in an unlimited number of our own programs. For any of these Encarta product candidates that fall outside of the co development, co commercialization collaboration and contain a CRISPR generated gene editing target, and Carta retains worldwide rights and pays CRISPR milestones and royalties on net sales. These total less than mid $20,000,000 for milestones and tiered royalties up to mid single digits per product candidate. While the scope of the agreement governing the edited Encarta products that are wholly owned by us is defined by a specific number of gene editing targets, these backend economics I just described are payable on a product by product basis.
As a result, one product may contain multiple gene edits and the same gene edit can be applied to an unlimited number of Encarta product candidates. From our earlier comments, our agreement with CRISPR does not involve upfront payments. To put this in broader context, in our review of other licensing agreements, upfront payments and milestones on a per target basis are industry standard. In the case of gene editing deals, we have seen upfront payments as high as $45,000,000 and milestones up to $400,000,000 per target. In the case of cell therapy, upfronts are as high as $25,000,000 and milestones up to $750,000,000 per target.
While these aren't perfect apples to apples comparisons, taken together they provide an idea of the value of gene editing rights that we are receiving from CRISPR Therapeutics. To echo Paul's earlier point, Encarta could not have chosen a better partner than CRISPR Therapeutics. Among the many differentiators in gene editing, one that ranks highly in our decision process is that CRISPR's technology is already operationalized for clinical application. This point in operationalizing CRISPR Cas9 technology is one that I cannot stress enough. From guide selection and process development to regulatory filings and clinical validation, CRISPR is a been there, done that established clinical player.
In the complex world of cell therapy, this is a rare and meaningful strategic advantage. As a result, we do not need to build infrastructure and capabilities from scratch, thereby potentially conserving valuable resources and capital. In addition to CRISPR's expertise in genome engineering, we had extensive research and development capabilities in CD70 targeted cell therapy with our CTX-one hundred and thirty program, as well as industry leading capabilities and allogeneic CAR T therapy more broadly. Both of these are assets that can directly benefit our CD70 and NK plus C programs. With CRISPR as our partner on gene edited NK cell therapy, we are optimistic about accelerating the development of our early stage pipeline and increasing its probability of success.
With that said, we will now open the call to questions.
And we will take our first question from Selwyn Fayed. Please go ahead. Your line is open.
Hi, Mike Linden here on for Salin. Thanks so much for taking our question. Regarding the license for use in existing products, will the CRISPR tech be used in current assets 101 and 19? And if so, how might this impact the cost of the manufacturing process?
Yes. We're not at the moment planning on putting those into 101 or 19. The collaboration is focused on the 3 collaboration programs and the future pipeline in Encarta. Do you want to
speak to the manufacturing? Yes. So on the manufacturing side, we've already been working with CRISPRCas9 gene editing as a research tool. So we've begun doing some work on that. So we're excited about partnering with our peers at CRISPR Therapeutics to pull those in and sort of update and optimize the process development aspects of manufacturing accordingly, ongoing work.
And impact on cost of manufacturing, we're not expecting a big impact on our already very reasonable cost of manufacturing.
Thanks so much. Thank you.
And our next question will come from Stephen Willey. Please go ahead. Your line is open.
Yes, good afternoon. Congratulations on the collaboration and thanks for taking the question. So not sure if you can speak maybe to just some of the edits that you're potentially interested in making. I mean, we've obviously seen the FATE platform incorporate a number of different edits. We know that there's other, modalities that have tried to knock down some of the endogenous stress ligands that may result in something like fatricide when you try to combine an NK and a T cell.
So I guess any color that you might be able to provide there would be helpful. And then I just have a quick follow-up on CD70.
Adir, do you want to start and maybe James might want to chime in?
Sure. Yes. I mean, we haven't spoken specifically to which edits we'd be putting into future products. We have done some work in a poster, I believe, maybe going back to last year, where we talked about some edits that we tried out. These will be a variety of different things we're looking at from things that can impact NK cell fitness to other edits for example that could address issues around fracture side as cells proliferate.
And James, you can why don't you jump in and share your thoughts?
Yes. I mean, obviously, we have been doing a lot of background work both what's in that poster and unpublished work. And we have a pretty unique perspective on what works and K sells specifically. A lot of great candidates there. The candidates are need to contribute both to the basic biology of the NK cell and probably need to marry well with the indication that we're going into.
Clearly, in combining NK and T cells, there'll be other considerations as to editing there as well. Some of that work we've already commenced and obviously a lot of it will be done in collaboration with Chris' team.
Yes. And Steve, thanks for the question. Let me just say that we would have not moved forward with an unedited CD70 program. We really felt it was important, particularly in solid tumors to use gene editing technology and sort of have done this collaboration now and benefit that program. That was really important to us.
Okay. And just on the topic of CD70, I know this has been a fairly popularized target antigen within hematological malignancies, I know AML specifically. But I guess I'm a little bit less familiar with it in the realm of solid tumors. So could you maybe just speak to which solid tumors you see CD70 overexpression on? And I guess what kind of biological role is it playing in tumor biology?
Yes.
So there's a number of solid tumors. The one that comes to mind immediately is renal cell carcinoma. But Tanya, maybe you want to speak to other tumor types that we could look at with CD70 and James, you might speak to the biologic rationale. Tanya?
Yes. Happy to, Paul. As Paul mentioned, renal cell cancer, obviously, that's the obvious one for CD70 targeted approach. There's a variety of different solid tumors as well. A lot of them have CD70 identified in a subset of tumors as well.
So we will be working closely with CRISPR as we shape the upcoming clinical program for the CD70 NK product.
Yes. And James, do you want to speak to the biological rationale in solid tumors with CD70?
Yes. I think this is data here are still developing. I mean, clearly part of the biological driver is simply the unique expression in tumor cells. CD70 interacts with its partner CD27, triggering sort of costimulatory pathways for T cell expansion. And some of the emerging thinking here is that impacting specifically to expand Tregs, which may be suppressive in the tumor microenvironment.
And so it has a role in driving the continued sort of immune resistance in the tumor setting. I'll be really clear that I don't think that the jury is out on that yet.
Okay. And then just lastly, just to clarify. So, Dafir, I think you had mentioned that you have the capacity to edit multiple targets within a single product? And does the milestones and the royalties that you mentioned apply to each individual product and not the number of edits that you're making within that product. Is that correct?
Yes, that's correct. Those are payable on a product by product basis regardless of whether that product has 1 edit or 4 edits, for example.
Excellent. Thanks for taking the questions and congrats again. Thanks,
And our next question will come from Althea Young. Please go ahead. Your line is open.
Hey, guys. Thanks for taking my question and congrats on a very innovative deal for both companies. Can you talk a little bit about maybe potential timelines into kind of bringing this pre clinically and out to kind of a clinical program? That would be very interesting. And then just maybe just also talk about how you believe this technology can fine tune in more detail, obviously, your NK cell approach.
Thanks.
Yes. As I mentioned before, I think it was Steven that we wouldn't have moved the CD70 program for without gene editing. That was really important to us. And for solid tumors with NK plus T and other targets, it's going to be a real valuable tool. And yes, timeline.
Let me speak to the timeline. So the nice thing about doing a truly collaborative fifty-fifty like this is that the 2 organizations are going sit down now and put together a research and development plan for CD70 as well as NK plus T as well as eventually the 3rd potential collaborative program in collaboration style and we'll give more guidance as we do that. But as you know, we started the company in 2015. And in 2018, we went from 6 employees to where we are now at 110, Alethia, and we put 2 programs into the clinic. And what gene editing will help us do, as we said before, is fine tune our approach and speed up the development of these NK cell therapeutics in an already rapid that are already being done in a rapid fashion.
Did you want to add something, Didier? Yes. I think just on
the second point Alethia, around fine tuning the NK cell approach, I think we're excited by the sort of the current product candidates that we have in the clinic and their potential with the CAR and the membrane bound IL-fifteen. So we believe there's a foundational engineering piece that has built the platform for success. So we see the editing as sort of an extra layer that allows us to move into potentially new areas, particularly solid tumors where we know that there are going to be some really unique challenges that the NK cells will face from the tumor microenvironment. So we think this is going to help enhance that activity and that NK cell potency within the context of those types of tumors. And since we're pulling this in, we think it will certainly help in the hematological settings as well.
Just a housekeeping question. Is there any kind of timeline complete as far as how long the collaboration lasts or just based on how many targets you're going after?
So the first timeline is sort of the 3 year period of exclusivity that I mentioned. But otherwise, it will go on while we are as long as we are working and collaborating together. So we've got the CD70 collaboration product. We'll work on that to co develop, co commercialize that. Same with the NK plus T program.
And then there's a future product candidate that will be named later on where CRISPR can opt in and co develop and co commercialize that with us. So on those three programs, we will go as far as those programs go. We'll continue working together. And then despite sort of even if the 3 year exclusivity ends, we still have the ability to access those gene editing targets for our own wholly owned programs.
Okay, great. Thank you.
Thanks.
Our next question will come from Joon Lee. Please go ahead. Your line is open.
Hi. Can you guys hear me? We can. Okay, great. Well, thanks for taking our questions and congratulations on the very interesting deal.
I have three questions. The 5 editing targets, does that does the scope of the agreement include the edits that CRISPR is already using in their IO program? And then secondly, are you looking to generate NK CAR cells in vivo in the future as a way of bypassing the condition regimen and does the deal extend into that sort of modality of editing? And lastly, why CRISPR as opposed to other CRISPR CAS companies and even other genome editing companies like Think Finger or Tailin or Base Ed? Thank you.
Let me start June with why CRISPR. We looked at the gamut of gene editing companies. We did an extensive evaluation of all of them, including CRISPR companies as well as the Think Finger Companies. And we felt CRISPR was the obvious choice, both from a scientific point of view and biological rationale, but also that they're one of the few companies that actually has clinical proof of concept and they delivered programs into the clinic and they've got a pipeline of programs that they're also going to continue to deliver. And the programs they have delivered in the clinic have shown early signs of efficacy and safety.
So for us, it was a no brainer. Others might want to add to that, James, perhaps, before we go on to the conditioning and then maybe the edits that CRISPR currently uses.
Yes. I mean, I would just reiterate what you just said, Paul. I think that there's a galaxy of technologies out there. But to our eyes, CRISPRCas9 really stood out as the technology that had the highest degree of validation at this point, most versatile for identifying and introducing new edits. And really to reemphasize CRISPR as a company to us that has most clearly translated to technological promise to thrill operational prowess.
And you can talk all day about what any given technology might do, but what's really critical is what it can do today. And CRISPR has shown that they can move products to the clinic and move them with confidence.
And James, perhaps you and Kania want to speak to the lymphodepletion impact
that?
I mean, I guess specifically to the question, For NK Cells specifically, the role of the lymphodepletion is to kind of eliminate the host of the patient's immune system from targeting the NK cells. So we are, as many others, are exploring ways to more effectively mask the NK cells to the immune the patient's immune response. And certainly gene editing can play a strong role in that.
I was actually wondering if you have plans to go into in vivo NK card editing so as opposed to ex vivo and if you could also use CRISPR Cas editing for in vivo if you were to do that, take that approach?
Go ahead, Nadir. Yes. So our collaboration is
focused on ex vivo editing. Got it. Got it.
Sorry, Jun, I didn't quite understand that question. Okay. So now on to whether we're using CRISPR's current gene edits.
Yes. So for the 5 gene editing targets that we get to use for Encarta's wholly owned products, Those are focused on NK cell specific edits. So it is TBD whether there's going to be overlap. I think it's still early. We have a list of editing targets that we think are interesting and we'll work with our partners at CRISPR to figure out whether they've already generated data or they already have used those in any of their other programs.
Certainly, there might be some overlap, but that's something we'll determine as we continue to move down that path.
Got it. And then if I could just ask one more follow-up. CrystalCat is as a tool, anybody can do it, right? So as a therapeutic, you need the license. But as a tool, you could have experimented on your own.
So do you have some ideas as to which targets you would like to use already? Or is that something that you would need to figure out over the next year or so before you can actually disclose that? I'm just curious if you already have something in mind.
So we do, but we won't disclose that right now. We're going to use that in our know how to develop the programs going forward. But as we move forward with the programs, we may talk more and more about those targets.
Got it. And one last question, the 5 targets, is that exclusive? Can CRISPR use those edits as well? Or if you choose if you pick those that the CRISPR cannot use those?
Well, they can certainly use them in our collaboration products and I'm
And Rick and during the exclusivity period, of course, we'll be exclusive to one another. Got it.
Thank you.
Yeah. Thank you so much. Thank you, Jim.
And we do not have any more questions at this time. I will turn it back over to the speakers.
Great. So again, thanks everyone for joining our call today on such short notice and during earnings week. We're obviously very excited about this partnership with CRISPR Therapeutics, what it means for cell therapy, what it means for our ability to deliver new therapies to patients, and we look forward to updating you again soon, and we wish you all a good evening. Operator, you may now end the call.