Good morning, everyone, and thank you for joining us at the second day of the Needham Healthcare Conference. My name is Gil Blum, and I'm a senior biotech analyst here at Needham & Company covering the gene and cell therapy space. It is my pleasure to have with me today Nkarta's management, Nadir Mahmood, President, and David Shook, Chief Medical Officer. Maybe a good place to start, and this is a question I've asked all companies attending: any exposure to the tariff situation?
Hi, Gil. Pleasure to be here. Thanks for having us. Very relevant and timely question. I think, generally speaking, companies at our stage, sort of early clinical trials, we're sort of more impacted by the overall uncertainty in the market and sort of the confusion that a lot of the recent regulation, but then also comments about dialing back and the fluctuations in the market, you know, with obviously with the risk profile of biotech. As we think about potential tariffs and pharmaceuticals, this is something that I think the whole industry, whether you're exposed to it today or in the next few years or many years from now, I think everyone's going to sort of feel the swings from that impact. Today, not directly, but you know, at a macro level, obviously, it's something that impacts public companies like ours.
From a regulatory perspective, you know, current changes in the FDA and direction and personnel, does that compute as well?
Yeah, I think we're all concerned and trying to get some clarity around, you know, especially in CBER, what's going to happen there with the departure of Peter Marks and some of the other key leaders in that space that have really pioneered the way for cell and gene therapies and sort of specialized modalities to advance and be evaluated by the agency. What does that future look like? I think that uncertainty, murkiness also creates a lot of volatility for our industry. Specifically for us as a cell therapy company, you know, it's important for us to know that we've got a partner there that we can interact with that's responsive in a timely manner and that we can engage with as we continue to develop these more novel therapies.
Maybe we should start with a bit of an introduction for the company, kind of your core technology and some of the reasoning behind your overall shift to autoimmune diseases.
Sure. I can start off with a little bit of background on the company, and then Dave can walk us through sort of the shift and the approach and strategy in autoimmune disease. Nkarta is an allogeneic cell therapy company. You know, we're focused on realizing the potential of engineered CAR-NK, natural killer cells to deliver a more broadly accessible and off-the-shelf, on-demand type of treatment. We have a lead program, NK019. This is an engineered CD19 CAR cell that's designed to improve the killing ability of NK cells through the targeting and trafficking. We also engineer it to express a membrane-bound form of IL-15 that increases its persistence and activation.
I'm sure most people are familiar now with Georg Schett's data out of Erlangen, where they saw some pretty transformative drug-free remissions in patients with autoimmune disease following autologous CAR-T therapy and by depleting autoantibody-producing B cells and creating this immune reset. We are natural killer cells. This is off-the-shelf. This is allogeneic, much more accessible. It's a favorable safety profile, in our opinion, that makes us more amenable in the rheumatology setting and these autoimmune indications. We think that there's a pretty big differentiator for this approach versus an autologous CAR-T. Dave, do you want to say anything about sort of the overall strategy and thoughts around that?
No, I think those are the highlights. Obviously, we've seen, and I don't think anybody, it's no longer a question, the potential impact of B cell targeting therapies could have on particular B cell-mediated autoimmune disease. Cell therapy came in, made a huge splash, a lot of excitement, and now I think we're wrestling with kind of where the space goes from here.
From our standpoint, we do feel like allogeneic NK cells are a differentiator, you know, definitely CAR-NK, you know, not just the off-the-shelf availability, which we think meets the moment and meets the space where it tends to exist and not have to kind of recreate a new treatment paradigm, but also in a sort of that accessibility benefit of ease of access in the place where patients are treated, but also safety benefit of trying to reduce toxicity in a group of diseases where safety is at a premium.
Maybe just to focus the point a bit, how would you say NK cell-based therapeutics are differentiated from, let's say, other allogeneic options?
You want to take it, Dave?
Sure. I think in terms of allogeneic cell therapies, I mean, I think they're, you know, just in the sort of broadest differentiation of NK versus T, I think is probably the most classic differentiation. T cell-based therapies obviously work differently than NK cell-based therapies, and that difference has been highlighted a lot through the history and development of those entities predominantly in the oncology space, where things like cell persistence and durability, et cetera, become more in focus.
Here, where we feel like this is a group of diseases, and when we're talking about rheumatologic and even neurologic indications, where patients are treated predominantly as an outpatient, where we feel like toxicity and decisions are made to incrementally but safely and effectively advance standard of care, we feel like the NK cell is a natural transition moving from a sort of classical biologic to what we consider to be sort of a more advanced biologic, and where we feel like it has a target profile of an off-the-shelf product that can be delivered by rheumatologists in an outpatient space and really not ask the field to do something completely transformative to their way of practice, but still get that potentially transformative result. I think T cells are going to T cell, and NK cells just don't do that a little different, do it a little differently.
Maybe a cell therapy that a rheumatologist can feel confident giving.
Right. Wrap their arms around and feel like this is their drug, right? I think this is, and you know, much has been said, sort of the sort of quote-unquote low rates of expansion-related toxicities like ICANS or high-grade CRS, and low rates are still rates, right? I think the space has seen the potential impact of single events of toxicity. If you're asking a new group of investigators and a new group of physicians to take on the cell therapy, there's sort of the good and the bad of cell therapy. You've got to kind of have to deal with the ugly of the cell therapy. We believe that as long as there are rates of expansion-related toxicities, high-grade expansion-related toxicities, those are still going to have to be reckoned with. That's where we feel like NK cells really fit the moment.
You have sort of the, you know, outside of the cell therapy space, then you've got sort of bispecific antibodies that are obviously creating a lot of interest and excitement right now, sort of that promise of the off-the-shelf product in the hands of the rheumatologists. I think the way we see it, the data there is still pretty early. We haven't seen a lot of data sets sort of demonstrating the level of profound activity and drug-free remissions that we've seen so far in the limited data sets out of the cell therapy space. Early days there, I think trying to understand if you get deep enough B cell depletion to cause immune reset and sort of what that looks like is still very much TBD. You know, there could be an opportunity where there's multiple types of players here depending on the types of indications.
I think that people see some promise there in what the bispecific antibodies, I think we just need more data to really figure out what their role and what their place would be.
Maybe one last general question before we dive into the product profile. It appears a lot of investors have lost patience with the cell therapy and autoimmune space in general. How is your messaging working on this angle? How are you trying to convince them otherwise?
I think generally there's sort of a lot of wait-and-see mode with investors when it comes to cell therapies. I think, you know, folks are in that boat with us as well. We've been saying we're going to have our first data update from the autoimmune disease trials in the second half of this year. I think as the space moves from the academic setting with the Schett data of 100% response rate to sort of a more realistic expectation, I think there's a lot of opportunity there to demonstrate benefit over standard of care. I think for rheumatologists, and I think this is the point that Dave was saying, it's about giving them something that looks like a drug that they're used to.
Bridging that gap of the immune reset that allows these drug-free remissions to happen for a, you know, period of time, which is compelling and exciting for rheumatologists to say, "I'm going to give this versus an antibody or even a steroid." Also with that accessibility and convenience that's not forcing them to be so far removed from their standard practice, right? We have to remember, we all come from the oncology space where there is a very different calculus that's done for every patient from a risk-benefit profile. Rheumatologists have a completely different approach in their practice. We have to understand what they are looking for and what resonates with them.
I think that's where an NK cell with the safety profile, but potentially with the power of what we've seen with the autologous cell therapies, can sort of thread that needle in a very unique way. That's why we're really excited about the opportunity for this particular program and this indication set.
Maybe to focus a moment on manufacturing and help the audience understand the differences as it relates to NK cells. Just in contrast to CAR Ts, how much more scalable they are, and maybe also in contrast to other allogeneic cell therapies, let's say IPSC-derived?
Yeah. So unlike an autologous product, which is bespoke per patient, you know, we can scale NK cells. These are inherently allogeneic. So there's no engineering or manipulation, genetic modification required in order to make them allogeneic. We do engineer them to enhance their activity and their persistence with the CAR as well as the membrane-bound IL-15. So we know we can scale these pretty significantly. We haven't given specifics about sort of what that scale is exactly, but we currently have an early stage phase one manufacturing facility where we've achieved scale more than sufficient to manufacture for our phase one trials. We also have a pivotal commercial facility that can allow us to produce potentially thousands of doses per patient. There is scalability here. These are still engineered.
You know, if you think about what some of the allogeneic T cell companies have talked about in the ranges of doses that they can manufacture single runs, you know, I think anything in the hundreds to thousands of range is sort of pretty similar for us as well. You know, I think just the other thing to think about here is because this is a scale-up and not a scale-out, the infrastructure and capital required to do that is also more closely aligned with, say, a biologic scale-up manufacturing than autologous T cells where you need multiple suites and your footprint just grows in order to satisfy sort of patient demand. I think you asked about sort of like IPSCs, other cell types. Ours are peripheral blood-derived cells. These are PBMCs.
IPSC-derived, I think the pitch there, I believe, is sort of, you know, because you have a single cell that can basically just be grown almost at infinity and scaled that way. There's potential, but at the end of the day, we believe that having a bona fide NK cell that is engineered and enhanced and we can scale to hundreds, potentially thousands of doses should more than satisfy us from a demand perspective, but also a cost of manufacturing that is appealing in this indication group in autoimmune disease.
Okay. Just to kind of go back to the safety profile, so far very impressive safety in oncology with very limited CRS or ICANS. I think we haven't seen either. How do you expect the safety profile will help you as it relates to development in autoimmune diseases? You did touch upon it a little bit before.
Yeah, I think in the world of oncology where patients, even if they're treated as an outpatient or treated generally at facilities that are capable or equipped to deal with toxicities. As I said, when you have rare events, you want to be able to respond to those. If you have no events, it's different, right? I think from our standpoint, we absolutely feel like safety is a differentiator here. We feel like some of, excuse me, some of the lack of familiarity with these events, their ability or interest in responding to these events, things like ICANS, when we speak to our investigators and KOLs, those are the things that keep them up at night.
We feel like it's one thing in the sort of phase one or clinical development setting, as we start to move these out to become drugs and think about how they're going to be prescribed, and knowing that we're not looking to develop a drug in referral centers. We're looking to develop a drug in referring centers where the majority of these patients are treated. That's when as you move out of the trial stage and you move into the implementation stage or even the dose expansion, we start getting into some of these other sites, the criticality of safety and, you know, to a lesser extent accessibility becomes so paramount, right?
If you can't be in an outpatient infusion center down the road from the hospital, if you feel like there's a legitimate chance, albeit rare, of a high-grade ICANS event, it's not going to be the same kind of drug as you're given next to a patient getting a CD20 antibody, for instance. It has to, I think that was, it's one of the things that I think the space has faced head-on was, I think there was initial feeling that the enthusiasm coming out of, you know, Erlangen was going to carry through and overcome any, you know, inertia about sort of treatment paradigms that everybody was going to rip up their treatment sheets and say, "Well, we just want everybody to get CAR-T." I think, and rightly so, I think the field of rheumatology and neurology has said, "You know, we've been through this before.
You sold us this with rituximab and said there's miracle cures, et cetera. Show us the data. Let's walk us through this. Let's do these studies. We know that safety is of concern here. It's, you know, they've been giving chemotherapy for a while and managing those kinds of toxicities. Cell-based toxicities, expansion-related toxicities are not in that group. It's not a toxicity they're looking to want to incorporate if they don't have to. As Nadir said, if you can get that same kind of activity level with not just an off-the-shelf availability, which I think in this space is kind of a nice to have, but clean up the space to go from, you know, low, but there are risks of serious toxicity to eliminating those risks and deliver an outpatient, you know, kind of off-the-shelf product, then it's a totally different, totally different profile.
Remember, in oncology with this program, we were outpatient in that trial. You know, we know this drug can be delivered in an outpatient setting. That is the opportunity as Dave just elucidated there.
In your guys' view, has any other product reached this type of safety profile today?
I think maybe the closest we've seen or what we've seen so far is perhaps out of Ruyi Therapeutics. It's a CD19 CAR-NK being developed in China. I believe they had pretty clean safety data in their data that they presented to ACR last year.
Yeah, I agree. I think the Ruyi data helped us understand and really validate that the safety profile was intrinsic to NK cells and not an oncology-specific phenomenon. You could still drive remissions without the risk of, you know, the high-grade expansion-related toxicities. I think it highlights the differences between how, you know, you target B cells in autoimmune disease versus how you would in oncology.
Maybe we should spend a second on the Ruyi data. The disclosures were interesting, but not sufficiently full. What would you say you've learned from this data set and what do you think is still missing there?
I think what we've learned from the data set is that you can drive durable drug-free remissions with a CD19 CAR-NK cell. That the response rates were excellent, you know, with half of patients being in endorse remission and two-thirds being, you know, in LLDAS. I think that, and with an excellent safety profile, right? We mentioned that already. I think that was to be expected. It was nice to have a relatively homogeneous group of patients treated, the same approach, same agent. You know, at the time, and I think probably still, one of the largest data sets in cell therapy for autoimmune disease. I think what's still missing, and I think what is kind of overhanging that is there's a lack of a correlative publication that gives us some more zoomed-in detail on patient detail.
I would say the B cell depletion was about as expected. I think the impact on autoantibodies and complement levels and to some extent the, you know, the class switching data were presented in aggregate versus as individual patients. It was harder to track, hey, is this patient that went to SLEDAI 0 quickly, are they the one with, you know, good impact on autoantibodies? Are they the one with the complement? Are they the one with, because the class, I said it's sort of like a class drift rather than a class shift on the B cells. It's not quite as switch, which I think asks a lot of good questions with those data too, is to say, hey, if they're seeing those durable 9, 12-month remissions and they're not getting that kind of impact on class switching or even autoantibodies, how feasible are those as biomarkers, right?
We've started with the Schett data and sort of assumed whatever Erlangen shows you need to show. Ultimately, what you need to show is patients responding, right? Everybody wants biomarkers, right? That'll be the key to a more aggressive regulatory strategy and a more, you know, patient stratification and identifying good potential patients. I think it did ask some good questions in its, you know, in the data that are kind of, and the questions that people have of saying, hey, how is it that you have this sort of modest impact on autoantibody, yet you still have a very good response rate? How is it that, you know, the class switching happens, but it's not as on-off switch as maybe was seen before? I think it answered some questions.
Can you give NK cells to patients with autoimmune disease at a very high dose and do it safely? Yes. Can you drive, can that approach drive durable remissions? Yes. Do you have correlative translational data? Maybe. I think that's, you know, a question mark. I think that, you know, is in the setting of another space might actually give us good things to talk about. In the case of here, it kind of casts a bit of, you know, I don't want to say suspicion, but some questions on the data. I think there's always going to be some discount for data that aren't US data that we can't have sort of immediate access to PIs and company representatives that some of these questions, you know, you might get out of. I think Ruyi kind of dropped out of the sky.
You know, there were some of us that were kind of following these sort of early data sets being leaked out, expecting some high-impact publication, and then all of a sudden, late breaker, right? More or less silent since. We are still very encouraged by Ruyi. It is still a big data set, good responses, good safety, some questions remain.
Maybe this is actually a good juncture to discuss a bit as it relates to endpoints and kind of discussions you've had with regulators to date. You talked about biomarkers are not necessarily misleading, but maybe not that useful. I think there's a lot of examples with the Erlangen data showing very impressive biomarker results, but others not being able to reproduce that. Do you think the agency might be open to maybe something PFS-like, you know, treatment-free duration or something like that?
Yeah, I think the, you know, historical biomarker or historical endpoints of, you know, that, you know, agents like Belimumab or Voclosporin have been held against of two-year endpoints is just not what the space wants, right? Nobody wants to run a two-year cellular therapy study with hundreds of patients. Having an endpoint or a different way to approach it would be super helpful, right? As you mentioned, those endpoints aren't quite there yet, and biomarkers aren't quite there yet. I think things like, you know, proteinuria or impact on, you know, renal function are challenging in spaces like renal nephritis or in lupus nephritis where there's pre-existing damage. Even if you can shut down the immune response completely, having ongoing proteinuria is still going to count against you.
Thus you then start moving into these kind of other biological biomarker, you know, endpoints, if you will. Things like autoantibodies, B cell reset, those kind of things would be great because then it would be almost a platform-level biomarker. I think the agency would like to see those. I mean, I think we're starting to see things like MRD negativity being used as endpoints in, you know, the oncology space, which is, you know, kind of a place that we went after very early. Yes, I think the space is want for those kind of endpoints. I do hope, again, I do, where we are now, who knows? I do hope and I'm optimistic that FDA is going to want these kind of endpoints with a focus on, you know, efficiency. I just came from a conference yesterday.
One of the comments that came out, which I thought was telling, is with a focus on efficiency, that there is some thought that maybe there will be some more openness of ways to run these studies a bit smaller, with less sort of, you know, an ability to look to maybe not this classical, huge, long, big study, which contributes to our cost and ultimately the cost of developing these drugs.
You guys also have a different approach to lymphodepleting conditioning. Just remind us what that is and how it's different from some others in the space.
Yeah, we started with a fairly aggressive approach by aggressive by de-escalating. We started our programs using a cyclophosphamide-only lymphodepletion. We felt like that was the right place, the right way to do this, right? Able to start by evaluating patients with less toxic, more in line with what, you know, how patients are being treated now. I think that does provide some helpful pathway with the regulators as you look for, you know, contribution of component. That being said, the space has used cyclophosphamide and fludarabine, you know, all of the data thus far has been generated with fludarabine. We're going to, you know, continue to evaluate our cyclophosphamide data as they come in. We do feel like it's important to evaluate that first. Ultimately, if we need to adjust lymphodepletion, we will.
This is a space, as I mentioned, that evaluation of safety and accessibility is paramount. And then moving on from there.
Another key feature for your product in oncology was redoability. We were able to recover some complete responses. Do you think this feature could see use in autoimmune diseases as well? Would redosing be included in protocols?
Absolutely. Yes, redosing is included in our INTREST-1 lupus nephritis protocol. You know, patients that respond and then lose response can be retreated without discussion with us or FDA. As you know, we retreated several patients and presented those data in the Pan-Pacific Lymphoma meeting last year, showing that every patient that we retreated went back into remission. That is of particular interest here because these are not underlying cures, right? We are looking at treating patients and not changing their genetics. Their risk of recurrence is still theoretically there. Yes, we do believe that retreatment is a good feature. We see it as an opportunity, not an obligation, right? If patients were to recur, we could very easily roll off product that is off-the-shelf available and retreat them immediately.
Yeah, we think that we'll continue to keep retreatment as an opportunity for our patients. As I said, it's already incorporated in the INTREST-1 protocol. No reason to believe that it couldn't be used in other ones as well.
A couple of questions on clinical practice and study enrollment challenges. We've heard that it's been pretty challenging to enroll some of these studies, primarily because you need to coordinate oncologists and rheumatologists and supportive apheresis function, especially in the case of CAR-Ts. Have you guys faced some of these challenges and how have you overcome them?
Yeah. Yeah. No, I was just, you want to go ahead?
Yeah. I think everybody in the space is facing these challenges. I think Dave's point earlier where it sort of was, you know, everybody would take what we'd seen from the Erlangen data and all of a sudden just say, we're going to completely change the way we administer and treat our patients is, I think, sort of the opposite, far from the reality that we sort of have. I think everybody's excited about the potential and the transformative ability of these medicines. I think that this part of the coordination and the thinking about the lymphodepletion, especially for autologous CAR-T products where you've got apheresis and then you have to come off your meds for the apheresis, the drug gets manufactured, you need to get it administered, you come off your meds again, you know, if you have to get back on.
This is challenging for rheumatologists to handle and sort of manage. I think it's very different. It's sort of, and then handing over patients to the oncologist to help sort of with all these various aspects and then the follow-up and then the risk of ICANS or CRS. I think it's a partnership that's needed for sure. I mean, Dave has been sort of living and interacting in this world for the last several months and can share sort of more firsthand.
Yeah, I think not just coordination, but sometimes introduction. These are not investigators or even physicians that even knew each other beforehand that would exist in the same medical system, but often the rheumatology clinic or even in major medical centers that you would recommend your relatives go to. The rheumatology practice is often down the road, sometimes in another town in an outpatient suite and not associated with the hospital. There is not that sort of colloquial doctor's dining room like, "Oh, I know Dr. So-and-So from rheumatology. I'll just work with them." In many cases, we are providing introductions to physicians within the same institution. In the oncology space, there was still a, "Hey, you're an oncologist, but this is my patient," you know, and referring to from one hematologist to a transplanter.
There's still some reticence there to hand over patients, you know, and I use the term hand over loosely, but trust their patients. Sometimes they've been treating for decades, literal decades, you know, meet them as a teenager and they're in their 30s or 40s now and say, "Okay, now I'm going to trust another physician who I just met weeks ago or months ago with a potentially life-threatening therapy." When they're done, they'll come back to me maybe. That's a big ask for those of us who, you know, have the privilege to take care of patients to be able to say, "Okay, I'm going to not only change medicines I prescribe in a transformative way, but that those medicines be prescribed by a different physician." That really has been a challenge.
The amount of, you know, and I use that word inertia of historical practice, it's not an unwillingness to change. This is a complete paradigm change in a way that I think that term is overused. This is asking a group of physicians to just completely change the way they see patients and treat patients. That relationship building and that practice change takes time.
The other side of the clinical enrollment question is also competition for patients, especially in lupus nephritis. How have you been "selling" your product here?
Similar to how I've been selling it to you, Gil. This is a safe, accessible product that can be largely managed by rheumatologists, right? That the kind of risk that more closely capitulates the kind of medicines they're used to using, like biologics, right? To say, "Hey, this is a drug that patients will receive with a kind of toxicity you're used to seeing." That does not require extraordinary coordination or involvement of other team members. When doing so, it really maintains the sort of sovereignty of rheumatologists over their patients. It's safety paramount. Accessibility of not having to have these patients come in and deal with weaning medications, getting apheresis, waiting for manufacturing. The other thing is this is a different patient population. When we diagnose patients with cancer, you know, people, their lives totally change. It stops.
You know, that's what their life is. These people living with autoimmune diseases, this is their life. It's a part of their life. It's worked in between jobs and children and partners. That treatment can't interrupt that in a way that is too disruptive. We are acknowledging that we know how these patients are treated. We know how the lives that people have. We're getting that insight through really intentional partnerships with patient advocacy organizations and understanding not just speaking to the physicians, but speaking to the patients as well.
An obligatory study status question. What can you tell us as it relates to the current enrollment status? What should we be expecting at the time of readout, number of patients, length of follow-up, that sort of thing?
Yeah, we haven't given any specifics other than we'll have a data update in the second half of this year. I think expectations for this would be sort of initial data coming out of, call it about a handful of patients. This is going to be across multiple indications. As a reminder, we have two INDs, one in lupus nephritis, one's a basket trial in systemic sclerosis, myositis, and ANCA-associated vasculitis. Then we've got two ISTs, one in myasthenia gravis and one in systemic lupus. For the two INDs, you can see we might have data sort of across the different indications. There'll be a difference in follow-up, the duration of follow-up across these patients. Some might be much shorter, some might be longer that got dosed earlier.
The idea there is to give us an initial sort of indication and sense of where the program is headed, where we're getting traction both in terms of responses, but then also in terms of ability to enroll patients and get to meaningful clinical milestones beyond this first update as well.
We only have a couple more minutes left. I'll remind the audience that they can ask questions through the ask a question box. Maybe one last item for you, Nadir. You guys made the very difficult decision of cutting the workforce to extend the cash runway. Just to remind our viewers, your cash position and runtime.
Yeah, we ended 2024 with about $380 million in cash. With our restructuring that we announced with the 10K and sort of having to part ways with about just over one-third of the company, including more than half of the leadership team, we have extended the cash runway into 2029. That is over a year of cash runway extension. The whole idea there is, you know, we recognize the challenges just not within the sectors we have been talking about and the ability to get to meaningful data in timeframes where we have cash, but also the macroeconomic conditions and what that means in terms of ability to get financed and the likelihood of being financed on data. You know, we see the bar keeps moving in the space. Every opportunity, every data set is a liquidity event.
We want to make sure that we're prepared not just to hit one, but hopefully, ideally, a few milestones over time to give ourselves maximum optionality and have cash, significant cash, substantial cash at the end of those, beyond those milestones. It is not like we're coming with, "Hey, here's sort of the compelling data," and we're almost out of cash. We want to make sure there's plenty of runway there. It gives us flexibility, gives us optionality that we think can help us really navigate some of these waters and get to meaningful data in that timeframe.
Great. All right, Nadir and David, thank you very much for joining us today. It's been very enlightening.
Thanks for having us. Pleasure.
Thank you, Gil. Always a pleasure.