Good morning everyone. This is Daina Graybosch. I'm a senior equity research analyst here at Leerink Partners, and I have the pleasure of hosting management from Nkarta this morning, Paul Hastings and Nadir Mahmood. We're gonna jump right in. Thank you for joining us.
Thanks for having us.
Many years in a row. Yeah, I wanna start with the transition you've had in the company over the last couple of years. You've essentially built an entirely new company from our perspective, both internally and externally, around a product you've had for a while, your AlloCAR- NK program and NKX019. Can you remind us about this program and help us understand why and how you've shifted the organization at Nkarta to enable the success of the program?
Sure. Can you just clarify for me when you say externally, you mean just messaging?
Yeah.
Okay. Yeah. Okay, that's helpful. Yeah, let me take a stab at it. Nadir will fill in the pieces that I miss if I miss anything. What's really fascinating about this is that originally we had two programs. We had an NKG2D program and the CD19 program. I go all the way back to the start of this company when we were five people in JLABS when we did the Series B. I remember the folks at RA Capital and Samsara saying to me, "It's great you have NKG2D, but it's great that you, like, non-scientist, said we gotta have a CD19 program." 2018, right?
You get the high-risk program with a high reward, and you get the kind of low-hanging fruit program. What CD19 represents is a validated target.
When you combine it with a safe, effective, hopefully effective, allogeneic, off-the-shelf NK cell, you have kind of a handmade program for autoimmune disease for a number of different reasons. The focus of the company now, compared to what it was before, where we had oncology and a couple different targets, is now you have to focus. You have to. The combination of so many different things makes it really important to focus, so that when you have data coming out, you don't have to say, "We're in a rush to put the data out." We have plenty of time to give you good, sort of, interpretable data in a good number of patients because we have enough cash to take us beyond that, so we don't have to raise cash after we present data.
All these different things were important to us to build now this new company, where we have one target focused on six different indications initially, then we'll narrow that down, in autoimmune disease with diseases that are exquisitely sensitive to B-cell depletion and reset and are diseases where the short activity of an NK cell, 'cause they go in there, they do their thing, and they leave, is a very good thing versus in oncology where this expansion with T cells is important, where NK cells maybe didn't have an advantage. They definitely have an advantage in autoimmune disease. In this day and age, sticking to your strategy and making sure that you have enough capital to get you through your data and room on the other side, and have an engineered allogeneic off-the-shelf accessible cell for the patients in autoimmune disease, which are different than oncology patients.
They tend to be single moms living in rural areas that, you know, wanna be treated in their rural areas, and the NK cell has this ability to be in an outpatient setting. Even though we're not there yet in our phase I autoimmune trials, we were there in oncology, so we know we can be there. The cell, the NK cell, is exquisitely made for autoimmune disease. The diseases are sensitive to CD19 and the B-cell depletion that a CD19 CAR NK, when combined with correct lymphodepletion, will create.
I think the other thing is the part of that transformation has been just with the team as well. Right? I mean, we started with an oncology-focused team, cell therapists, transplanters, and really sort of pivoted now to a very I&I autoimmune experienced team. A new CMO and head of R&D. He's a rheumatologist. We have another rheumatologist on staff who runs clinical development. Even within clinical operations, people have worked in the immunology space for a long time to understand these indications and, you know, really how do you get patients in these indications and think about the relevant endpoint. That's been part of the transformation journey, if you will.
Well, we built our manufacturing facility at the time when people had a lot of capital and everybody wanted to do their own manufacturing, and we're doing that. What we found is by trimming that area and focusing on clinical development. The people that are actually in the lab doing the work are now running CMC, and it's doing just fine. That was another thing we made a very tough decision on that's actually paid off very nicely for us 'cause it's given us the runway we need.
Who's doing the CMC you said?
The people that were doing the work in the labs versus the people who were managing the people in the labs are now doing the work in the lab and managing the function, which is more efficient.
Within the internal team.
It's basically you're in maintenance of that function.
We've done the engineering. We've done the things we need to do to make these cells optimized, and we don't potentially need all that excessive management. We need more hands-on people that are also good managers.
Got it. Can you talk about, well, two follow-ups. Is the NK cell advantage greatest in its higher potential for outpatient, or do you see any other advantages? What gives you confidence, 'cause you still need lymphodepletion, that it is a fully outpatient therapy?
Well, there's a couple things to start with. One is the rheumatologist actually came to us and said, "Hey, we're used to using lymphodepletion now, fludarabine and cyclophosphamide. We're seeing deep B-cell depletion with that. We're okay with that now." That helped us to make the decision to make sure that what we were doing in our phase I dose escalation could be compared to what other people were doing in their phase I dose escalation. Full lymphodepletion.
What we saw also was that we saw good, you know, on the high end lymphodepletion, but not full B-cell depletion with Cy alone. When we went to Flu/ Cy, virtually everybody has complete B-cell depletion. The importance of getting that deep depletion so the NK cells can do the reset is quite important. We see the NK cell in autoimmune disease having the advantage of outpatient setting, but also we haven't seen any CRS. We have seen no ICANS. We've seen no neurotoxicity in autoimmune disease. We saw a little bit in oncology, as you remember, but it was mostly injection site reactions. There were no cytokines released with that cytokine release syndrome that it was labeled as. It's a safety, accessibility and convenience for the patient.
We'd like to be in a place where ultimately you don't need a cell therapist to administer these cells, and we think we're there now. The rheumatologist can manage their own patient all the way through in their community setting.
One follow-up on the Cy/Flu. You believe fundamentally you have to have a full B-cell reset to have durable clinical remissions.
Versus not having lymphodepletion and having maybe a partial reset, something like GAZYVA obinutuzumab. Like, would you end up with something better than a monoclonal antibody, like obinutuzumab, but have no lymphodepletion? Is that a product?
I think the transformational effect, and I think what got everyone excited about sort of the cell therapy and these new B-cell depletion modalities was that immune reset that led to these long-term drug-free remissions. I think if you have partial reset and you have a modality that can be dosed more frequently, but also without side effects and some of the other things like what we see even with the T-cell engagers, for example
I think potentially, I think just given the safety profile, I think an NK cell fits nicely in a space where you potentially could see long-term drug-free remissions and, you know, call that 12 months plus. You have the flexibility to go in and redose as well. We just feel like there's an opportunity there where this fits in and can bridge that gap between the vast number of patients who are in the community setting and those that have to go in to see specialist centers. You know, I think there's a flexible space there where I think the NK cell approach can be kind of uniquely positioned-
What needs to play out, we're all kind of in the same place. Although we have a little bit more data now. I think sort of the gradation of treatment is the original small molecules, targeted agents, bispecifics, trispecifics, TCEs, cell therapies. What we're hoping we're gonna see is some efficacy increases across that spectrum with a safety advantage with NK cells. That's gonna play out as time goes on, right? The toxicity profile of even the TCEs and the antibodies could be similar even without lymphodepletion. I think that's something that needs to be watched, and the durability just needs to be watched.
I mean, you know, so when we talk to some of these clinicians, a lot of them, if they see sort of younger patients, you know, who have not had sort of chronic exposure yet for like 20 years to steroids or severe immunosuppressants, for them, the idea of like a one and done or even a one and maybe a second potential or third and done type of therapy is incredibly appealing because at this point, they're like in their late 20s or early 30s, and they see an opportunity to just shift away completely from some sort of frequent dosing and get back to something normal. I think it's that sort of transformative potential that I think really excites them and the investigators at least who we interact with.
Actually, I had this question way lower, but it feels right here. Can you talk about redosing? How is that in your strategy right now? Is that a consolidation, a maintenance, a as-needed upon flares, hopefully every couple years?
Think of it differently than you did with oncology, right? 'Cause you may not need the consolidation here as much as the flexibility. What we hope is that, you know, get up to 4 billion cells times 3 over seven days with lymphodepletion gives you complete remissions with durable responses. If they happen to flare, the option of being able to redose is what's important. It's not about consolidation, it's not about that. It's about being able to redose if you need to. We think the initial dose will be enough, particularly if we get up to that 4 billion times 3 dose.
Should we expect any redosing in your next clinical update?
No, probably not. Not in autoimmune disease. We wanna make sure that we have the flexibility to do it, though. You remember in oncology, what we saw was we could take somebody that had relapsed, put them back in CR. Or we could take someone that was in a PR and convert them to a CR, if they got retreated. In autoimmune disease, you wanna see the CRs right up front, and then you wanna have the flexibility to redose.
Got it. Okay, so maybe you could talk about what we should expect from a clinical update, this year.
Yep, if you think about where we've been, you know, we started with cyclophosphamide-only lymphodepletion. The middle of last year we pivoted to full fludarabine and cyclophosphamide. We've started basically in the middle of the year getting patients in this new lymphodepletion regimen. That is the regimen we wanna sort of take forward, and we've been going through dose escalation from 1 billion cells - 2 billion cells with the ability to then even dose escalate up to 4 billion cells given three times. When we think about what that update is gonna look like, that update is really gonna be around best responses.
The responses that we're seeing, call it in, you know, handful of patients, in the indications we wanna advance and approximately three months of follow-up at least, I think is what we'd like to be able to demonstrate with the idea being here's where we started, this is the regimen and the dose we wanna move forward, and given we've got this basket of indications, part of that is gonna be sort of honing down on this is the one, or these are the two indications that we wanna move forward, and potentially what that next step in clinical development looks like. Having hopefully had some conversations with FDA and we can give updates sort of like, "This is where we're going and this is what the next 12, 18 months could look like.
One thing I wanna add to that is for the record, when we said we're gonna give guidance last year, we would've given data with Cy alone by the end of the year, and people would've thought those were our data. We wanted to make sure that when we present the data, we had a chance to show the Flu/Cy patients, right, that people didn't think, "Okay, Cy alone plus cells is what it does. These are their data." We're gonna be able to see if there's a dose response between Cy alone and Flu/Cy and the dose levels with Flu/Cy full lymphodepletion.
Is a handful of patients per indication enough to hone into the 1-2?
We think so. Yep. Yeah, it's gotta be. I mean, depends on what you call a handful, right? Probably more than five figures, but maybe a handful and a half.
Yeah.
Is that decision gonna be informed on where you see the best activity or a mixture, sort of competitive and unmet need? How much internal your own data versus external?
Yeah, I think it is gonna be. You have to have good data, right? You can't. If you have something that's safer and less effective, it's okay, but you really want something that's really good efficacy and is safer. That would be the goal, but we'll see when we get there.
Yeah. Also where we can continue to see enrollment at a pace that gives us, you know, key milestones and catalysts that aren't like four years down the road, but something that could come, you know, relatively soon where we can advance the program and make meaningful progress.
Informed just by who's enrolling in your study in some ways, and the excitement.
As part of it, I think, yeah.
Yeah. We have enough cash to have at least a couple of these pivotal cell therapy pivotal, not small molecule pivotal, but cell therapy pivotal trials.
Yeah. You, your cash runway is into 2029. Does that anticipate bringing two, Two pivotal forwards?
Yep, it could. Yeah, it could be more than that actually, but that's safe to say. Again, cell therapy pivotal. It's not like thousands of patients, but enough patients going forward. The same kind of guidance other people are getting, we've gotten as well. Your dose escalation shows this. You can do a 14-20 patient, you know, pivotal kind of thing.
You think that there is, I mean, 14-20 patient pivotal didn't even happen in oncology. Because you have to have 100 safety. You're saying that you have a safety database informed by the oncology.
You do. You still need to have a safety database to support that.
Is the oncology patient safety included in that or you're gonna have to g et AID?
I think right now a lot of it is autoimmune patients, but I think we're not the only ones. Multiple companies I think are having conversations to try and leverage safety data from oncology as well.
Got it. Like maybe the more you build it.
Cells act the same, you know?
Yeah, exactly. I think we'll have enough even in autoimmune to be able to get that safety database filled, so.
I think what you see is companies who are narrowing in on registrational trials and they're moving forward. They're still enrolling in these other indications because we need to build up this database of about 100 patients.
There's so much uncertainty at FDA. How confident are you in what you've heard so far, what others have heard, and whether that would change?
Well, in terms of what others have heard or said, I gotta tell you that I've heard or said the same things mostly, or heard mostly the same from the FDA. The nice thing about us, we have these two trials, Ntrust-1 and Ntrust-2, we have the same reviewers. They haven't moved. They're sticking it out, good for them. They've been consistent. Our communications with them on protocol amendments move quickly and efficiently. We have a trust relationship with them. That hasn't changed. Now, with [Peter Marks] leaving and someone else coming in, you never know what's gonna happen next and whether the philosophy changes or not, but my sense is this administration likes cell therapy, this total administration all the way to the White House.
That shouldn't change, but one is gonna find that out depending on what the uncertainty of the next person to take his seat is gonna be like.
We saw when [Peter Marks] left the first time and then came back and there was sort of this confusion. I mean, fortunately, we didn't see any of that impact us negatively at the time. We're hopeful that that sort of continued interaction maintains itself.
What should we expect, 'cause we're getting these handfuls of patients in terms of supportive translational data, what do you think in terms, like sort of biological plausibility that will support these signals?
Yeah. I think it's a combination of, you know, you get some early response data, you get B-cell depletion. Then the next key things are gonna be things like immune reset in the context of a naive populating B-cell population reconstituting, coming back. I think a lot of that then points to the potential of these earlier responses being more durable. I mean, the best correlatives we have right now are from, say, Georg Schett's data and some of the other studies where they've gone out multiple years, and most of that is based on the initial B-cell depletion and reconstitution of the naive population. I think there's other biomarkers too that can be really helpful. BAFF, for example, B-cell maturation and survival signal is sort of correlated with the, you know, the depletion of B- cells and the emergence of a naive population.
Some of those I think give us a really good idea. Ultimately at least one of the things we're doing is we're looking at lymph node biopsies in some patients too. Really trying to assess beyond peripheral B-cell depletion, how are we getting into some of these compartments.
Some of the tissues, yeah.
Yeah. Also tissue biopsies in some patients too, to help support that.
Things like scleroderma make that easy, right? With skin biopsies, right? Some of the other ones are a little bit more complicated.
Got it. What have you learned in this from the new rheumatology leadership? Has this either translational or your clinical thresholds or focus changed based on what's important to them?
Rheumatology. I was telling someone this morning, Rheumatology, I don't think realizes that there are as many clinical trials going on there than any other specialty right now. There's lots going on there. They don't even realize how many patients are coming through their clinical trials and what power they might have. The younger folks that are coming out of school and coming into the field tend to be more assertive, more aggressive, and you want those as your investigators. The patients are patients who are living in communities who are potentially single moms, a lot of women with autoimmune disease. You wanna make sure that the rheumatologists are reaching out to those patients and holding onto those patients and not transferring them to a cell therapist.
Because the patients don't wanna go there. All of that's important, and the rheumatology community, I think, is moving along. You go to a rheumatology meeting now, you get as many analysts and investors there as you get at the oncology meetings. Their space is starting to fill up and they're starting to realize the importance of what they're doing is getting a lot of attention outside, which they weren't getting in the past. This is a good thing.
Got it. Can you talk about the indications that you're picking from that you think are most validated from a B-cell depletion approach? Are any of them an NK cell you think has a unique advantage biologically?
I think we're starting to see some really interesting data. Obviously, you've got companies progressing in indications like systemic lupus, myositis, scleroderma. Multiple cell therapy companies have now talked about potential registrational trials there. Whether it's, you know, a specific NK setting where the NK's have a stronger potential, I don't know if we've seen necessarily enough there, but I would say one of the strongest data sets was Rui Therapeutics out of China, right? That was SLE. I think they had over 28 patients, and out of those nine in that Lancet publication last year were evaluable out to 12 months, and I think they had six out of nine in a DORIS or LLDAS remission. That's a clear indication in the systemic lupus side where NK cells look to be quite effective.
We think that just based on what we've seen in terms of the kinetics of B-cell depletion and B-cell aplasia, that an NK cell with its profile of coming in and sort of having, you know, two-three weeks to really drive as much anti-B-cell killing as possible is the right period. Yeah, I think we're pretty excited about the potential across our indications.
I think it's gonna be really sort of as the response data evolve and that durability evolves as to sort of which ones we'll really narrow in on.
Right. We think of the NK cell as having a pretty broad advantage in autoimmune disease, should the efficacy be the same as or similar to CAR- T. We don't necessarily think that specific indications are more exquisite in NK cells within autoimmune disease, but we'll find that out in the clinic, as Nadir said.
Got it. You've done a lot to improve your patient enrollment, and I wonder what were the primary bottlenecks, and have you already observed shifts in your own trials?
Originally in lupus, the bottleneck was so many other people in that field when the patients didn't know.
Didn't see the efficacy that they were seeing now. The lupus patients now seem to be well aware that these cell therapies could be very useful for them. You get the patient side understanding that, and now you're seeing. You know, we're very connected to the patient community because of the work that I do with patient advocacy. We're getting the myositis foundations and the scleroderma foundations and the myasthenia gravis and the, you know, all the different foundations communicating with patients. There's a lot of social media communication. I think the autoimmune patient community now understands where cell therapy could be beneficial to them that might be different than when they've had to enroll in a blinded trial, for example, years ago, or even some of the newer targeted agents now.
I think that we're at a pretty good place there.
Yeah. I think we spend a lot of time trying to understand the patient journey.
Right? The type of things that they need to help support them to come to these trials beyond just, here's a center, you know, how can we help them get to the center? Can we help support them in other ways? You know, a lot of them are single females, minorities who, you know, have don't live in the big city, and so, you know, it's hard to leave for a month and be at a clinical trial site or close to a site even for a week. How do you support them throughout that and try and make things as convenient as possible given the circumstances? I think that's one area where we're trying to kind of support patients.
I think the other thing that's really helped was this change to fludarabine and cyclophosphamide, because our investigators, like Paul said, the rheumatologists were coming to us and saying, you know, "We've seen the data from CAR- T, and that uses this lymphodepletion regimen, so if you wanna give these cells the best shot, we wanna try and recapitulate as much of that setting as possible." I think that's really also so boosted things. Of course, what we talked about earlier, with a new clinical team coming in with the experience and understanding of how to run these types of trials definitely also helps.
You know, it's kind of a competitive advantage doing things for patients because you notice that a lot of people aren't doing that, but we want everybody in this space to be doing this for patients because we offer fertility for patients.
Because of fludarabine. Just offering that and giving them the opportunity to do that, to have, you know, their reproductive health taken care of. The cost of doing this is infinitesimal compared to the cost of the overall trial. It helps patients. I mean, the simple thing of getting a patient who has to travel to a major center through the front door of that center to find the clinic, so they're not getting lost in that hospital, is really important to do. These concierge services that started with some of these specialty oncology drugs are really, really good, and they're really important in autoimmune disease. Everyone needs to be doing it.
That's great. Where are you in outpatient dosing?
Close.
What's gating that?
We're working on being able to do that just like we did in oncology. Again, this whole cyclophosphamide to cyclophosphamide-fludarabine approach, the rheumatologists are now comfortable using it. Doesn't seem to be an issue for them. They can manage it. Being able to reach out to the community, all really important.
Got it. So we've talked about dosing and that you're getting up to this 4 billion cells times 3. I think that's higher cell load than maybe we had anticipated. Why are you going that high in this case? At some point, does it start to be a burden on your COGS?
No, it won't be a burden on COGS given the nature of what it costs to make NK cells versus T cells. It's Rui Therapeutics went there, even higher than that. They did 4.5 billion times five.
Artiva went there. What you wanna make sure of is if you get that high, you're also looking at 3 billion, right? You go one-three, or you go one-four, then back to three to make sure if you see a dose response, and you can do it with a few or less cells, that's, you'll do that. But they're all, the cells are safe. You know, I remember back doing oncology trials, you saw great results with a high dose. You'd go higher 'cause the drug was safe. You really wanna push that dose. You really wanna know before you get into your pivotal that you've picked the right dose and you haven't left, you know, dose on the table.
I think when you look at, like, some of the autologous CAR -T studies where, you know, they dose, say, 1 million cells per kilogram, and you sort of do the back of the envelope math as to what does that mean when those in vivo CAR- T cells, or sorry, the ex- vivo autologous CAR- Ts expand in vivo, they probably get to somewhere between, like, 7 billion+ to maybe, you know, 50 billion-ish type of range, depending on the level of expansion. When you're giving 4 billion cells in three doses for 12 billion, you're probably more in that i n that range that the autologous actually get to in vivo.
Might you go higher than 4 billion x 3?
Unlikely. We could, but.
Possible, but.
We think 4 billion will do. We're hoping 4 billion does the trick.
You talked about supporting patients with fertility, but that does remind us, you know, that that is still a challenge. Does adding fludarabine, how much does that erode your competitive advantage compared to in vivo CAR- T, the mRNA and T-cell engagers, which will have none?
Well, again, we haven't seen any clinical data in patients with disease with those agents yet, so they got a ways to go. I think, you know, 'cause when you've looked at what's going on with antibodies and TCEs, we're seeing similar toxicity profiles. Let's give that a chance to play out. No, fludarabine is something that is probably necessary for full B-cell depletion. How well an antibody will give you full B-cell depletion for what durable effect without having side effects is still yet to be seen. All of that needs to be borne out in the clinic.
I think with TCEs, we'll sort of see, right? Like, the early molecules, you know, had some of that extreme CRS in order to get the kind of effects that they wanted. I think with the engineering and the way people are trying to approach it is maybe in autoimmune you can dial back some of that. How much of that activity and efficacy do you lose, and what does that mean in terms of frequency of dosing or how high your dose then might need to get? You know, what is the trade-off? I think data will eventually sort of give us a better idea over time.
What we have seen, Daina, is people that have sort of followed us. Now that we've moved into full lymphodepletion, people that followed us into the less lymphodepletion are seeing data that reminds us of the data we saw with Cy alone. It's not full B-cell depletion. It's not durable effects. Right?
No, totally. I think it's, It's a strategic bet that you're gonna trade off efficacy with that.
Get more frequent dose, and that you're going after a different segment.
I think you just simply. Feel like that it's better to go for fewer doses and a more durable response.
I think sometimes people forget that these agents, even though they're in pivotal trials now, this is still phase I that turns into a pivotal.
You still gotta figure out where to go with your dose. If someone has cytopenias, they can get Cy alone with our cells right now as well. Ultimately, if you could do what Schett did and pick your patients, which is what'll happen on the market, and can use less lymphodepletion, by all means.
Let's do that, right? Have the durable responses. Wanna do what's right for patients at the end of the day.
That's a good way to end.
We'll leave on that note.
Thank you very much. It's always a pleasure. We look forward to the data and where you're gonna go.
Thank you.
Great.