Transcript: Oppenheimer 32nd Annual Healthcare Conference

Matt Hagood, Analyst, Oppenheimer & Co. Inc. Okay, good morning, everyone. And welcome to the third day of Oppenheimer’s 32nd Annual Healthcare Conference. My name is Matt Hagood, I’m on the emerging biotech team here at OpCo. Our next company is Celularity, and I’m pleased to be joined today by the management team from Celularity, CEO, Robert Hariri; and Andrew Pecora. Guys thanks for joining.

Robert Hariri, Founder and Chief Executive Officer

Thank you

Andrew Pecora, President

Thanks for having us.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Maybe just start with you, Bob, Celularity was spun-out of Celgene not too long ago. But you guys have actually been working in cell therapies for many years now. Could you maybe just start by giving us an overview of, who Celularity is and the evolution of how the company got where it is now?

Robert Hariri, Founder and Chief Executive Officer

Absolutely. So, you’re absolutely right. Celularity was spun-out of Celgene Corporation back at the end of 2017 after spending the better part of 15 years building a very proprietary technology platform in cellular medicine, all focused and based upon our discovery that the postpartum placenta was an ideal and very rich source of cells and other biological materials for therapeutic purposes.

So, if you go back over 20 years at the – at sort of the dawn of cellular medicine some of the greatest challenges were identifying a source of these cells, which were high quality, scalable and could ultimately lead to the production of products for therapeutics that had economics that were consistent with the current healthcare system. In addition, the challenge was understanding the fundamental biology of cells used in the development of therapeutics and how the attributes, how those biological attributes actually influence the behavior of the products?

As we all know, there are lots of places you can find and identify cells that can be used to produce derivatives of stem cells, immune cells, for example, but there is a tremendous difference in the ability to create a consistent, reliable, high quality product when the source can be very variable, adult tissues, for example, highly variable. And if you recover cells from a pre-birth phase of biology, there are biological inconsistencies, and quality issues that will ultimately impact the final product.

In contrast, we often say that our discovery that the postpartum placenta, so a full term healthy pregnancy that is 40 weeks gestational age plus or minus two weeks, yields a very, very consistent source of stem and progenitor cells, as well as immune cells for the purposes that we’ll be talking about today. Immunotherapy, regenerative medicine, treating degenerative diseases, and so on.

Now, along the way and we originated as a company called Lifebank Anthrogenesis, which was focused on using the service business of collecting cord blood and postpartum placenta after a full term healthy pregnancy. Over the years, we have developed a very, very deep expertise in all the processes from procuring that raw material, the logistical management, and custody of that material all the way through to a GMP manufacturing environment that can produce a range of different cell types for therapeutics.

That deep understanding of the systems engineering around manufacturing, the analytics necessary to ensure that the products have the biological properties that are relevant to the therapeutics we’re creating and the ability to produce products at scale with consistency and logistical, convenience and economics is in fact, one of the great strengths of Celularity. So suffice it to say that although we are a newly minted public company our efforts in this space have gone on for more than two decades. We have perhaps the longest and deepest experience in producing GMP quality cellular products from this source and our intellectual property portfolio is very dominating in the area of placental derived cells and other materials.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great, thanks. And so I do want to dig a bit deeper on one thing you mentioned, which is scalability. I was wondering if you just give a sense for how scalability compares to some of the other sources we do see in the cell therapy space, for example, peripheral blood, or iPSCs just how does that stack up?

Robert Hariri, Founder and Chief Executive Officer

So, I’m going to start, and then I’m going to hand it over to Andy Pecora, our President, who’s also a renowned stem cell transplant physician and scientist. But suffice it to say that a postpartum placenta is an organ that can approach a kilogram in size. And the vast majority of that organ includes a range of stem and progenitor cell populations from which we can derive as you know, virtually any cell type. If you compare that to the source of an iPSC for example, which will come from an adult cell derived by micro biopsy or perhaps from peripheral blood, the sheer difference, quantitative difference in the starting material is a very, very easy and intuitive explanation as to why the scalability from placenta dwarfs the scalability from other sources.

But more importantly and Andrew can speak to this in greater detail, the biological property of stemness, which as you can imagine is directly linked to the chronological biological age of the starting material has a huge impact on the behavior and manufacturing, which is a scaling process all the way through to the behavior of the cells in patients as a therapeutic, and Andy, I’m going to turn it over to you so you can talk about stemness and persistence and so on.

Andrew Pecora, President

Yeah, no, thanks, Bob. And Matt, that is the Rosetta Stone question for the whole space in the following sense. You have to – no one’s making cells in the laboratory. You have to source cells from somewhere and you have to turn them into the product that you then want to give to patients and that product then has to be effective and it has to be at a reasonable cost. The underlying biology that defines the possibility of those things is stemness, the simplest way to think about this is, we as human beings are somewhere between 30 and 40 trillion cells, we all started from one cell. So obviously that single starting fertilized egg has the greatest natural ability to grow proliferate, create a human that can live then hundred – and perpetuated cell for a hundred years.

The placental-derived cells are very, very close to that fertilized egg, and they have much, much, much greater inherent stemness. And what we have found is in the laboratory, the greater starting stemness, the faster and greater cells can grow and develop into the cell type you’re trying to make a T-cell and NK cell, a genetically modified cell, and maintain their potency and their stemness that then be put into a patient to affect a disease modification. And if you, I think the field has now accepted that of all the things we look at with CAR T-cells and multi-varied analysis, the single most important thing is your proliferation of your CAR T-cells over the first 30 days and that is a direct consequence of stemness. So stemness will lead to lower cost of goods, greater scalability, and greater efficacy. And now we are starting to see some new data that stemness may actually confers greater safety as well.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great. And that’s super exciting; I do want to touch on that later. First, I guess, just to dive into the platform, I wanted to ask, your source material, great source for both T-cells and NK cells. Maybe, could you walk us through how you selected NK sales for your lead program CYNK-001?

Andrew Pecora, President

Sure. I’ll start, and then Bob will weigh in. So, what we did is, pre-clinically, we looked at in the classic way in vitro assays that in animal models where rare cells, immune effector cells could be effective T-cells and NK cells. And then we have a third platform, which are immune modulatory cells, where they could be effective. Then we went into animal models and the two strongest signals we got for NK cells were Acute myelogenous leukemia and glioblastoma multiforme.

The NK cells derived from the human placenta, the lowest EDT ratio with the greatest percentage killing and then correlating to the greatest efficacy in animal models were in those two indications. And then we looked at the market and the need, and obviously relapsed refractory AML, AML-associated with a measurable residual disease and of course, relapse glioblastoma multiforme. These are huge unmet medical needs, and very substantive markets. That’s why we chose to go into those indications with NK cells.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great. And so, and I might – go ahead, sorry.

Robert Hariri, Founder and Chief Executive Officer

No, I might add, you asked a very interesting question at the beginning. And I just wanted comment that the fundamental biology of the placenta, which has intrigued us for over 20 years included an observation that, that although in pregnant women, roughly one in a thousand pregnant women has some form of cancer during pregnancy. Yet we were really intrigued by the fact that transfer of maternal cancer to a developing fetus, and this placenta really doesn’t occur. And that got us searching for the underlying component of the innate immune system. We believe this is responsible for that defense. And as Andrew pointed out, it’s that – it’s that exquisite ability of the natural killer cell that got us looking in this area to begin with.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great. Awesome. So maybe just start with the ongoing study in AML, Andrew, you mentioned the two big unmet needs in AML and your study features a pretty unique trial design. Maybe could you just first walk us through how you’ve set that trial up and the rationale behind it?

Andrew Pecora, President

Yeah, sure. So, I mean, I think everyone who understands the field of cellular medicine understands the concept of effect to target ratio. You need to give a certain number of immune effector cells to kill a certain number of targets. So, when you’re diagnosed with acute myelogenous leukemia, you have about two pounds of AML in your body. It’s a couple trillion cells. When you get chemotherapy and you beat it down to measurable residual disease, you can go down to almost 10 billion cells. If you have relapsed refractory AML, your starting point is a couple hundred billion leukemia cells. So, we knew early on, you cannot develop a drug. That’s going to have a different dosage requirement based on the starting number of cells you’re going after at the same time. So that’s why we divided measurable residual disease or MRD from relapsed refractory AML.

The second thing is, is the clinical path to a drug for relapsed refractory AML is going to be different than it is for MRD. And we knew that going in. So, what we did is we designed a trial one, and we’re actually very proud about this. We did the work to define the window of dosing opportunity. There was a big debate in the field, the last couple of years of, how do you lympho-deplete? What’s the purpose of lympho-depletion? How do you know you’ve done Goldilocks? Just enough, not too much, not too little.

And so what we showed a couple months ago is that we found the ideal dose of Cytoxan and fludarabine that leads to T regulatory cells being almost undetectable out to 28 days. And at the same time, endogenous, IL-15 levels being well above baseline for 28 days. And that has enabled us now to focus now that we’ve resolved that issue on the NK cell dosing. And we are in the dose response curve, part of the experiment the clinical trial, and we are already seeing biologic activity, that’s clinically meaningful, and we’re still going up on dose. And now that we got rid of T regulatory cells we can add IL-2 in and not worry about stimulating T regulatory cells.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. So, can you maybe elaborate on, we’re just walk us through some of the data you guys showed back in your update in December, sort of where are you at now with dosing and where are you planning to go this year?

Andrew Pecora, President

Yeah, absolutely. So, one of the first concerns from the field and even the FDA was, well, how do you know the lympho-depleting regimen itself isn’t reducing blast counts? How do you know the cells are doing anything? And so we did a classic dose escalation where we gave very high dose lympho-depletion, higher dose than we’re actually doing now. And we started at 70 million NK cells in four patients we didn’t see any decrement in AML blast and relapsed refractory patients.

We went up to 240 million NK cells; we didn’t see any decrement in blast. Once we got to 700 million NK cells with IL-2, two or four patients had complete responses, but the complete responses were not that durable. They only lasted a couple of months, 60 days in one patient, I think about 70 days in another. So, we knew, okay, that’s the baseline. Now, we are all the way up to 5.4 billion NK cells. We are now adding IL-2 back that we figured out the T-reg story, and we’re on our way to get to 12 billion NK cells. In relapsed refractory AML, we will finish all of those cohorts this year and will be reporting out on that data this year. Similarly in measurable residual disease, we are already at 5.4 billion NK cells. We are now moving into adding IL-2 and we will work our way up again to 12 billion NK cells.

Now we know with IL-2, this NK cells are going to be more persistent and more potent. We also know that we may not need as many NK cells to get the clinical meaningful benefit in MRD, which is converting from MRD positive to MRD negative, and that translating to a survival outcome. We may not need the same number of cells as we will need in relapse refractory. So that’s why we separated the paths. So they’re both on independent paths and as you know, we received a fast track designation from the FDA to develop this program, and we are in conversations about our registration approach to both arms.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. And so, I mean, I want to ask sort of a very, big picture question about the AML treatment landscape, which is, do you believe NK cells can be curative in AML and this sort of gets back to your trial design, how are you thinking the ultimate treatment landscape could play up? Because you guys are very unique and sort of going after this MRD positive setting, potentially you consolidation setting pre-allogeneic transplant.

Andrew Pecora, President

Yeah. So, we’re very fortunate. The world thought leaders in AML have all, the five or six people in the United States and overseas that really oversee development of AML on the academic side are all excited in helping us. And we’ve had a lot of internal conversations with our advisors and now starting with FDA. And to answer your question, what’s clear is MRD is not going to be a registration endpoint for AML in the near future. Because no one’s really defined MRD precisely is it less than 0.1? Is it less than 0.02? Is it NGS detection? So therefore our trial thought process for MRD is, you would have people get to MRD. However, they get there with whatever the latest and best drugs are, but they’re still MRD positive. We knew know that’s associated with lower event-free survival.

We would do a trial, a prospective trial going forward, comparing NK treated versus non-NK treated and look at event-free survival. And that is according to a recent publication in a Journal of Clinical Oncology by the FDA that looks like it’s going to be an acceptable endpoint. In relapse refractory AML, if you can get durable CRs for six months, everyone accepts that that’s probably a drug. So that’s why we separated the two. And those are the general paths we’re going to go down. And we’re already seeing signs at that, and this is all public, a biologic activity that would allow us to go down those paths.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. And so you mentioned with these AML cohorts, you hope to complete them. I think you said by the end of the year, have you shared, or do you plan to share data this year, do you have any granularity around maybe the timing of when investors should expect a next update in that program?

Robert Hariri, Founder and Chief Executive Officer

Yes. So, we’re going to present the next update probably at ASCO. That’s what we’re targeting, because one of the things we’ve learned is Matt that showing CR rate is one thing showing duration of CRs is other and probably more important thing. So not only do we want to show our response rate, we want to show durability.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Yep. Looking forward to that. I do want to move on to some of your other pipeline programs, but I don’t want to forget the glioblastoma program. Could you just remind us sort of the clinical rationale there for NK cells and glioblastoma and then what we should be expecting in terms of the updates from that program?

Andrew Pecora, President

Right. So, we know that NK cells are capable of causing significant lysis of glioblastoma multiforme in the test tube. We also know that this is a massive unmet need. The survival rate from relapsed glioblastoma at five years is almost zero. So there is no rate drugs out there. Even the patients that have IDH mutations and get targeted therapies while they’re wonderful. They’re not curing people and many people are not alive at five years. So this space calls for a non-cross resistant approach and checkpoint inhibitors haven’t been all that effective and CAR T cells, haven’t been all that effective.

So our approach is we know NK cells are, we know glioblastoma cells are very susceptible, but the problem is dosing and distribution. And so we were very fortunate that the FDA approved and gave us a fast track and orphan designation for our current program that just open and we’re starting to recruit patients as we sit here today, where we can give NK cells in addition to intravenously into the cavity from which the tumor was removed and Ommaya reservoir was placed. So, we can put the effectors on target in the cavity where the residual glioblastoma resides as well as giving the NK cell systemically. And we’re hoping to see a synergy between the two, and this dovetails us something else, Matt, that I’ll talk about a little bit more in our gastric program.

Bob mentioned this, the innate immune system, NK cells are critical to help T cells create memory so that you can have long-term memory against solid tumors. And this is probably how checkpoint inhibitors cure cancer because they allow T cells to create memory CD4 and CD8 cells that then can remember the neoantigens, so that at early relapses you can overcome the early relapse. We’re hoping that NK cells can prime endogenous T cells in addition to killing cancer cells to further facilitate what I just said.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great. And so I do want to move on to that program in gastric cancers, this uses your more engineered NK cell programs, CYNK-101, which leverages the enhanced CD16 construct. Could you just walk us through that program and how you plan to use that to maybe enhance antibody dependent cytoxicity as well in gastric cancers?

Andrew Pecora, President

Yeah, absolutely Matt. So, everybody knows that in HER2 new positive gastric cancer not all that long ago, the FDA gave a rapid accelerated approval to Merck for pembrolizumab when added to trastuzumab and chemotherapy, because response rates went up from about 50% to over 80% and CR rates went from about 3% to 11%. In solid tumors these are unheard of improvements, right, and very exciting. Immunologically, what that showed is that T cells are active in HER2 new positive gastric cancer, right. And the thing that was holding them back was checkpoints.

So what we did, and this is why we got a fast track designation is, we worked with the FDA on the immunology of our approach, and that is the following. So the induction phase of treatment, you have unresectable G junction and gastric carcinoma that’s HER2 new positive. You get pembrolizumab, Herceptin and chemo that cyto reduces the tumor, releases lots of neoantigens, and helps T cells expand under the context of a checkpoint inhibitor. But we already know that’s necessary, but insufficient because the CR rate’s still only 11% and median progression-free survival is still only about a year. That means half of people are progressing in dying months later, still even with that. So it’s incompletes, that’s where we come in.

We then will introduce after the chemotherapy is done NK cells that have been genetically modified to bind to more avidly, the FC set portion of the Herceptin molecule resist cleavage, further enhancing cyto reduction, non-cross resistently from the T cells and the Herceptin. And that’s exciting and that we hope will add to the CR rate and as well as prolonged medium progression-free survival, but we’re most excited about is the interplay of NK cells from the innate immune system, working with the T cells from the adaptive immune system to further stimulate the creation of T cell memory and further facilitate long-term benefit. And that is exactly why we were given a fast track that narrative.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. So, I guess maybe just remind us where that program is at and what we should expect from that program going forward this year?

Andrew Pecora, President

The program is open. Our first site went through SSIV visit. We’re now adding sites very rapidly. We will start to accumulate data and we will present some preliminary data from this program by the end of this year.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Awesome. And maybe with the time we have left, we can talk about the CAR T program CyCART-19. And to start, I wanted to ask, why go with a T cell program here versus maybe a CD19 CAR NK, some other companies have done just given that you already have those NK cell programs underway. What’s the thinking there?

Andrew Pecora, President

Yeah. So the thinking is right now there is an accepted market for CD19 CARs, mostly vast majority autologous, but that market is profoundly limited by the logistics and cost of CAR T cells. And this isn’t talked about much, but they only work about 50% of the time long term, right? So, you’re spending a million bucks to get a 50% long term benefit. I’m not dismissing that, but that’s not ideal. And not everyone who should have access to them, gets access to them.

We believe because of the stemness and we’ve shown preclinical animal data that our therapy has the potential of being significantly more effective than the available CAR T cells for CD19, potentially less toxic based on some data that is now evolving and significantly less expensive. So, we see this as low hanging fruit to get into the marketplace and supplement, if not supplant the current market. At the same time, by proof-of-concept, we can then rapidly pivot, which we plan to do to what you’re talking about.

And the other thing that we have announced, that I should get more attention. We signed an agreement with a company called Imugene. Imugene has oncolytic virus that can infect solid tumors to express constituently CD19. We like to say, we’re going to turn solid tumors into lymphoma, and then we will take our CyCART-19 program and apply it to a solid tumor platform. That’s the other reason we’re doing this.

Andrew Pecora, President

Got it. And so I wanted to ask, and I.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Go ahead.

Robert Hariri, Founder and Chief Executive Officer

I might add please take note of the fact that as a company that really has a platform technology of deriving these cells from the placenta at scale, quality and economics that we’ve been, speaking of, it means that success with CD19 in a placental CAR T program is highly leveragable across the range of targets. And so, as you probably know, we have relationships that give us access to other CAR constructs et cetera, which we believe will allow us to rapidly leverage success in this CD19 program into the next generation CARs.

Andrew Pecora, President

Yeah. And I want to mention this Matt as criticals, because we put this out publicly from one placenta we can derive CD34 cells that can lead to hundreds of billions, hundreds of billions of NK cells and similar numbers of T cells in 35 days. So from one placenta, we can dose many, many, many patients very economically and we can do that today.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it.

Robert Hariri, Founder and Chief Executive Officer

And as a completely allogeneic platform that can be cryopreserved and stored for long periods of time. This is the one size fits all off the shelf solution to the CAR, the CAR challenges.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. And want to squeeze in one more question with the time we have left, we’ve seen how important durability can be for off-the-shelf CAR T programs in lymphoma. Is there any evidence that, the greater stemness from your platform could contribute to maybe greater persistence, potentially being greater durability.

Andrew Pecora, President

Matt, you’re absolutely right, but I’ll tell you the thing that’s more important than durability and many companies that we’re talking about persistence are now not talking about that so much anymore, because everyone realizes what happens in the first 30 days, may be all that matters. It really may be all that matters. And stemness, you’ll see the greatest proliferative potential, the greatest Cmax over the 30 days. Having said that, yes we do believe that a placental-derived source with its stemness and the ability somewhat greater ability to evade immune detection, which is natural to placental-derived cells those two things together will compliment the greater Cmax in the first 30 days.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Got it. So we got about one minute left. Could you just maybe summarize, what the plans are that program going forward, when you’d expect it to get into the clinic?

Andrew Pecora, President

Yeah, well, the IND is going in on the schedule. We’ve already reported. We plan to be in the clinic soon thereafter and we plan to be reporting on data this year from it.

Matt Hagood, Analyst, Oppenheimer & Co. Inc.

Great. Well guys, thank you so much, I really appreciate you guys taking the time to do this. Thank you to everyone in the audience watching, looking forward to all the milestones ahead this year. Thanks so much.

Andrew Pecora, President

Thanks, Matt.

Robert Hariri, Founder and Chief Executive Officer

Thank you.