Q3 2023 Gamida Cell Ltd Earnings Call

Okay.

Ladies and gentlemen, thank you for standing by.

Well welcome to commit ourselves conference call for third quarter 2023 financial results.

My name is Christian I'll be the operator for today's call.

Please be advised this call is being recorded at the Mirasol is replaced.

Not to introduce your host for today's conference Mike discuss key upcoming US all corporate communications. Please go ahead.

Thank you, Chris and good morning, everyone welcome to today's call during which we will provide an update on the company and review our financial results for the third quarter of 2023.

Earlier. This morning, we issued a press release summarizing our financial results and providing a business update which is available on our website at www dot gamete of cell Dot com.

Here with me on our call today are Abbey Jenkins, President and Chief Executive Officer, Michel Corvin, Chief operating Officer, and Chief Commercial Officer, Roni, Chairman <unk> Chief.

Chief Medical Officer, and Chief Scientific Officer, and Terry <unk>, Our Chief Financial Officer.

Before we begin I want to remind everyone that during this call. We may make forward looking statements about our future expectations and plans, including with respect to the potentially lifesaving or curative therapeutic potential of I'm, a search I'm gonna do Michelle Owen L. D. The Companys cell therapy candidate GDA 201 expectations regarding the commercial launch of I'm, a surge and potential to capture.

Sure and generate revenue can meet yourselves plans for commercial or strategic partnerships to support the launch of I'm. A search do you mean to sell financial runway to meet yourselves ability to keep its Israel facilities opened the state of its workforce and tissue development that may adversely impact from yourselves Israel operations. Our actual results may differ materially from what we projected.

Due to a number of important factors, including those related to clinical scientific regulatory and technical developments and those inherent in the process of developing and commercializing product candidates that are safe and effective for use as human therapeutics and in the endeavor of building a business around our product and product candidates as well as those considerations described in the risk factors.

Actions of our most recent quarterly report on Form 10-Q, and other filings that we may make with the SEC from time to time.

These forward looking statements represent our views only as of today and we caution you that we may not update them in the future whether as a result of new information or future events, except as required by applicable law now let me turn the call over to our President and CEO Abbey Jenkins.

Thank you, Mike and everyone joining us today.

I want to begin by providing a brief corporate update.

We've made strong progress this quarter, which I'll go into detail on in a moment.

I would be remiss if I didn't start this call by first acknowledging the courage and resilience of our Israeli team members, who have shown incredible dedication and commitment to patients as they continue operations to ensure we reliably deliver ami starts to patients in need while living and working in a war zone.

For patients with hematologic malignancies in need of an allogeneic stem cell transplant.

<unk> may represent their last four best hopes breaks here.

And we are proud to be able to continue to serve our patients under these challenging circumstances. Our employees safety is a key concern and we are relieved to be able to say everyone remains safe.

As you might imagine the process of getting sells into Israel, and delivering omni search back to transplant centers in the U S could have been impacted when many airlines suspended flight service in Israel.

Our team of dedicated employees do not hesitate to put patients first when their own lives were impacted working diligently to maintain operation and adapting in real time, that's been unfolding.

To see our team members demonstrated such resilience and strength in a challenging environment has been inspiring to witness.

Shifting gears and moving onto our corporate update.

Our lean launch has continued to exceed our expectations across the two key metrics, we defined for lunch transplant center Onboarding and market access for patients.

As of this morning, we have on boarded 17 transplant centers exceeding the top end of our projected goal of 10 to 15 transplant centers for the year.

Mhm serves husky firms coverage with U S payers covering more than 90% of commercial lives exceeding our full year goal of 70%.

This includes confirmed coverage with all of the top 20 U S commercial payers.

On the search has also confirmed coverage and reimbursement with Medicare for the centers for Medicare and Medicaid services.

This means the vast majority of patients now have coverage in place for only search.

The third quarter marks the moment, the neatest fell truly transitioned to a commercial stage company we are.

First revenue reported.

We are so proud to provide omni search the potentially lifesaving cell therapy for those in need of a transplant donor stores.

We are reporting revenue from the delivery of two <unk> in the third quarter and are estimating revenues from the delivery of a total of four to six units of army searched for the full year 2023.

The patient volume and army surging it ramps are aligned with our expectations based on a lean launch model and number of transplant centers onboard it and consistent with other launches in the cell and gene space.

We've received very strong feedback from transplant centers on the Onboarding process and can meet a seller says as a tool and resource and most importantly, an army searches ability to fulfill an unmet need.

On the search is the first and only true pharmaceutical transplant option approved on the basis of a global randomized phase III trial and transplant to see its value and potential.

As we enter 2023 and prepare to enter 2024, we will continue to maintain our being launched efforts due to resource constraints as we pursue additional funding.

The early launch phase of Omni search has confirmed our market research insight there is an unmet need in the market that omni search can fulfill.

Rapid transplant center Onboarding has proven that transplant centers are interested in making army surgeon option for patients with hematologic malignancies.

Considering the need to thoughtfully invest based on our cash position, we will be prioritizing virtually all of our resources moving forward to expand patient access to omni search.

Assuming our ability to extend our cash runway, we expect to have more than 40 transplant centers onboard it by the end of 2024, including at least half of the top 70 transplant centers in the U S.

To reiterate we remain committed to our two pronged corporate strategy announced earlier this year, which involves first launching on the surge in the U S with a focus on expanding patient access onboarding transplant centers and ensuring market access coverage and reimbursement.

Second pursuing a strategic partnership or transaction to fully to support fully resources commercialization of omni search.

In terms of our business development activities or efforts to identify a strategic partner are ongoing we have received considerable interest from multiple potential partners. During the process, which has been supported by the leading global independent investment Bank Moelis <unk> company and has resulted in oral and written.

However at present, we have not identified a partnership that will adequately address our strategic needs and plans to continue the business development process in 2024.

It will be critical for us to ensure we have sufficient capital to execute this two pronged strategy.

A key step in the process was achieved at our recent annual general meeting of shareholders held in October.

At this meeting a majority of shareholders voted to approve six proposals relating to the companys business, including an increase in Gametothallus authorized share capital.

This will provide us with the flexibility to continue to finance, our operations and enable a potential transaction shouldn't want to be available to us.

So in summary.

Our lean launch is proceeding ahead of our expectations and we expect to maintain our lean launch approach to expand the number of onboarding of transplant centers and patients receiving omni search into 2024.

We are proud to report our first omni surge deliveries and official transition into being a commercial stage revenue reporting company expecting to deliver a total of four to six units for the full year of 2023.

We are speaking the necessary funding to support expanded patient access to army search and enable a strategic partnership to fully resource commercialization of research.

I will now turn the call over to Michelle for a more in depth update on the Ami search lunch Michelle over to you.

Thank you Abby and good morning, everyone.

Have you mentioned commuter sell continues to advance efforts and prioritize resources across the organization to execute almost surges lean launch and ensure patients in need have access to the therapy.

I will be sharing a few updates on how the launch is progressing as well as a bit of context regarding the process of delivering on our search to a transplant center for use of a donor source for a patient in need of an allogeneic stem cell transplant.

The strong interest in all the search from transplant centers, including centers that were not part of the phase III trial has continued to grow since our last update.

As of this morning, we have on boarded 17 transplant centers exceeding our full year target range of 10 to 15 centers. Overall, we're pleased with how onboarding is proceeding having already exceeded our expectations for 2023, and considering the limited resources with which we launched.

In 2024 provided we obtain the necessary resources to support the ongoing commercialization of home a search we anticipate continuing to onboard transplant centers at a robust pace.

To support this onboarding, we have expanded our team of account managers since our last call.

With our expanded team in place and subject to securing additional financial capital. We anticipate we could onboard more than 40 transplant centers by the end of 2024.

At least half of the top 70 transplant centers in the U S.

As a reminder, this is a targeted market with about 70 of the top transplant centers performing 80% of allogeneic stem cell transplants on an annual basis.

Transplant Center Onboarding is a key step to enable patients to access almost search our onboarding team works closely with transplant center personnel on the clinical training and administrative policies and procedures required to begin using almost surge as a donor source.

It could be the team has the ability to be flexible with the timing of our onboarding approach.

Quickly a transplant centers onboard it is determined by the needs of each individual transplant center and can include factors like staff availability to participate in the Onboarding and the status of patients currently under evaluation, who may be good candidates for on the search.

We have been able to onboard sensors very quickly who have a patient already identified from a search.

Well, it's almost searches selected as a donor sourced by the patients transplanted and allogeneic cells are received like a beta so we're ready to begin manufacturing you have an experienced team in place and we are ready to reliably deliver almost surge within 30 days from the start of manufacturing.

In terms of the number of almost search deliveries to date, we are tracking as we expected based on the number of transplant centers, we anticipated having onboard it at this time and the time. It typically takes for a patient to go from being identified as a candidate for transplant to the transplant taking place.

Published data have shown that getting to transplant may take four to six months, depending on the transplant centers preferred approach and the patients' diagnosis and clinical profile.

The evaluation process for patient considered from a surge is consistent with other donor sources and is therefore very familiar to transplant center personnel.

This is why it is so critical for us to focus our resources in the first months of launch an accelerating transplant Center onboarding.

By exceeding our initial target range of 10 to 15 centers, we are in a position to increase the number of patients receiving almost search.

As more transplant centers are now onboard it we are seeing an increasing number of patients enrolled and could be to sell assist.

Enrolling a patient in gamete of cell assist indicates the transplant or intends to use almost search as the patient's donor source.

As a result of our progress in the third quarter, we reached a milestone of delivering almost search as a donor sourced for two patients.

I can share that manufacturing is underway for additional units a form of search and we project delivering a total of four to six units of all my search for the full year 2023.

Given the pace of transplant center, Onboarding and the variability of timelines for preparing a patient for transplant. These numbers are in line with our expectations and we are excited about the possibility that almost surge will capture up to 20% market share peaks provided we are able to secure the necessary funding to support its fully resource.

Commercialization.

I also have to note that aren't going to sell team has gone above and beyond to ensure manufacturing of almost search continues at our facility in care got Israel, making truly heroic efforts to continue operations during the Israel Hamas War.

What they almost search launch ongoing and additional patients enrolled into me to sell assist one of the foremost concerns for business continuity wasn't sure that we could transport almost search out of our manufacturing facility and to patients.

We were able to adapt and quickly overcome logistical challenges at our facilities remain operational thanks to the dedication and resilience of our employees.

With that said, we continue to monitor the situation as it evolves and will adjust our plans if needed.

We are incredibly proud of the effort of all of our global employees as they have passionately worked with any lean launch team to ensure patients in need have access to almost search every team member is honored to play a role in bringing home a surge to patients in need.

Now I'd like to turn the call over to Ronnie Cenotaph, our chief Medical and Chief Scientific Officer Rohit.

Thank you Michelle and good morning, everyone.

Today I'll be sharing early feedback from transplant centers on the search and some recent data on almost search and our NK cell therapy candidate GDA 201.

As Michele stated earlier, we continue to see growing interest in home search from transplant centers My team and I are engaged in conversations with physicians and staff at transplant centers across the country and the feedback we hear reinforces our confidence in the value of on the search.

Of note, we know from the discussion that a number of our onboard a transplant centers have identified multiple patients are candidates for almost search.

The transplant teams, we are engaged with a.

A clear need for an additional donor source option for their patients and are eager to make almost search available at their institution.

So far the patients that have enrolled in going to you to tell us that we're seeing some pause on the third is the only option and who would otherwise go on transplanted and some patients with transplant, there's are considering almost surged over other options, including high flow.

We recently presented new data at the society for immunotherapy of cancer or <unk> 50 annual meeting that's further advanced our understanding almost or just cellular makeup and potential mechanism of action.

The data showed that the application of our NAV technology leads to a unique cellular composition enriched in myeloid populations and dendritic cells, providing a potential mechanism for the rapid and grassman and immune reconstitution observed in patients who were transplanted with on the search this emphasizes how on the search is differentiated from other donor source.

Option.

So that you can have the opportunity to hear from a transplant physician directly about his experience with on the search I'm pleased to share that we'll be holding a virtual fireside chat with Dr. Gary Schiller Professor of Hematology oncology and director of Hematological malignancies, and stem cell transplantation, and Ronald Reagan UCLA Medical Center.

Sure.

This event will take place on Monday December 4th at 430 P. M. Eastern time via webcast and will also be recorded.

Doctor Schiller with an investigator in the phase III study, Oh, Madhu yourself and UCLA health is one of the 17 onboard at transplant centers, where patients can access on the search and.

In addition to sharing his experience with on the search Dr. Sheila will talk about the patient journey from diagnosis to transplant and the decision making around donor source selection.

I'd now like to take some time to share. The recent news about our natural killer cell therapy candidate GDA 201.

We recently reported preliminary data from the ongoing multi center phase one study of Cryopreserved GDA 201, designed to evaluate safety and determine maximum tolerated dose.

The preliminary data from 10 patients with CD 20 positive non Hodgkin lymphoma in a phase one study showed no dose limiting toxicities in patients enrolled in the first three cohorts treated with doses of up to 100 million cells per kilogram of GDA 201.

Enrolled patients had relapsed refractory lymphoma and were heavily pretreated with a median of six prior lines of therapy, including car T cell therapy in six patients and prior hematopoietic stem cell transplant and for patients.

We saw marked shrinkage of target lesions in five of the 10 patients and efficacy evaluation using Lugano criteria demonstrated two patients with complete response, two with partial response and one with stable disease.

Activity appeared to be dose dependent with two of the three patients in cohort three responding.

These results are consistent with previously reported data from the investigator initiated study on the fresh formulation of GDA 201, which showed complete responses in patients with non Hodgkin lymphoma.

The fourth and final cohort of the current phase one study is enrolling and we are on track to report full data in the first quarter of 2024.

We're pleased to continue to work with transplant centers and academic institutions to further the availability of our search and to add to the body of scientific evidence about the mechanism and potential of our innovative Nam technology.

I will now turn the call over to Terry Coelho, Chief Financial Officer Terry.

Thank you Renee and good morning, everyone.

I'm pleased to share the commuter sellers reporting revenue for the first time in its history with the transition to a product revenue generating company a number of changes have been incorporated into our financial reporting beginning with the third quarter of 2023.

And I would point out some of those key changes as we walk through the financial results.

In the third quarter ended September 30th 2023, we are reporting net revenue of $673000, resulting from the delivery of two units of them search.

The gross to net allowances and deductions were particularly low in the third quarter, given the confirmed insurance coverage and transplant status for those patients.

Cost of sales, including cost of direct manufacturing and quality. In addition to royalty expenses was $626000 in the quarter overtime, we expect the cost of sales and therefore, the gross margins to improve measurably as production volumes scale to capacity.

Beginning July 1st 20 twenty-three reporting of operating expenses has been modified to reflect the company's transition to commercial stage with all operating expenses being reported as either research and development expenses or selling general and administrative or SG&A expenses.

For 2022, and the first two quarters of 2023 previously reported commercial and general and administrative costs were combined into SG&A expenses.

Additionally, certain expenses previously reported in research and development are now are now being reported in SG&A beginning in the third quarter of 2023 with no reclassification of prior periods.

Research and development expenses were $4 $2 million in the third quarter of 2023 compared to $9 $9 million in the same quarter of 2022.

$5 7 million dollar decrease was primarily due to the aforementioned reporting transition along with reduced army through the tso clinical spend relating to the phase III clinical trial.

Selling general and administrative expenses were $13 $8 million in the third quarter of 2023, an increase of $6 $6 million compared to $7 $2 million in the third quarter of 2022.

The aforementioned financial reporting transition, which resulted in the inclusion of medical affairs, and certain indirect supply chain and quality assurance expenses and SG&A reporting contributed $4 4 million to the increase in the quarter.

Additionally, excess capacity cost of $2 $2 million associated with our manufacturing facility were recorded in SG&A in the third quarter.

Selling and marketing expenses increased by $1.3 million compared to the prior year quarter due to commercial launch activities.

To further expand upon the excess capacity costs. These costs reflect the labor and manufacturing overhead costs incurred but not absorbed in cost of goods sold in the period given that our facility is theft produced the anticipated demand over the course of the coming year.

Yeah.

Financial income and expenses net were $16 $5 million of.

Income in the third quarter of 2023 compared to $741000 in expenses in the same period of 2022.

The $17 2 million dollar change in financial income was primarily due to $14 million of income related to the valuation of warrants liability and $3 $2 million of income related to the valuation of the company secured convertible senior notes issued in December 2022.

Our net loss in the third quarter was $1.5 million compared to a net loss of $17 $8 million in the third quarter of 2022.

Driven primarily by the $17.2 million change in financial income as just discussed.

As of September 30th 2023 give me just so had total cash and cash equivalents of $64 million compared to $64 $7 million as of December 31, 2022.

The decrease of $4 $3 million is due primarily to $59 $2 million in net cash proceeds from financing activities.

Apprised of $21 $1 million in net proceeds from the issuance of ordinary shares and warrants from the company's underwritten public offering in April 2023, and.

And $39 $4 million in net proceeds from the issuance of ordinary ordinary shares via the E M or at the market facility.

Offset by $1 $1 million in principal payments of the company's 2022 convertible senior note and $62 $9 million of net cash used in operating activities.

The company expects its current cash and cash equivalents, including the funds raised subsequent to the close of the third quarter to support its ongoing operating activities into the second quarter of 2024 based on <unk> current operational plans and excluding commercialization activities beyond the initial launch of omni search as well as any additional financing.

Activities that may be undertaken.

The company raised $25 $6 million in net proceeds from its ATM facility in the third quarter at an average price of $1 40 per share.

As of September 30th 'twenty to 'twenty three the company had reduced the principal balance on the 2022 secured convertible note by $16.7 million from $25 million as of December 31, 2022 to $8 $3 million at the end of the third quarter of 2023.

The company also holds a 2021 convertible senior note with an aggregate principal amount of $75 million.

Earlier in the year, we embarked on a strategic restructuring process to prioritize the vast majority of our resources for the launch of omni search.

And we have now mostly completed that process, including consolidating operations in Israel to a single location.

Cause that'd be mentioned earlier shareholders at our recent annual general meeting of shareholders voted to approve an increase in commuter sells the authorized share capital to 325 million ordinary shares.

We believe this increase in authorized shares will provide us with increased flexibility necessary to finance our operations.

With that I'll turn the call back over to Ed for some concluding remarks Eddie.

Thank you Terry.

Before I turn the call over to the operator for questions I want to bring us back around the beginning of the call and summarize the key points from our discussion today.

We continue to make strong progress on the commercial launch of Ami searched having exceeded our goals across both of the key metrics for lunch, a transplant center onboarding and market access.

Additionally, we have reported revenue for two deliveries of Ami surged in the third quarter and project four to six deliveries about me surge units for the full year 2023, which is in line with our initial launch assumptions based on our lien launch model and the transplant process for patients.

With our expanded launch team in place and the securing of additional capital. We anticipate we could onboard a total of more than 40 transplant centers by the end of 2024, including at least half of the top 70 transplant centers in the U S.

Operations in Israel continue and our team is adapting processes as necessary to ensure patient access to omni search continues during the ongoing Israel Hammas War.

In terms of business development, we have not identified a partnership that will adequately address our strategic needs and plan to continue the business development process in 2024.

We shared promising preliminary data from the phase one clinical trials for GDA 201, and are on track to share the full data readout in early 2024.

We are continuing to carefully manage our expenses and prioritizing virtually all of our resources towards the launch of omni search.

We are thrilled to see increasing demand for army surged and are working to ensure that all patients in need have access to our NAND modified cell therapy.

We believe our early launch success is a promising sign of army searches long term potential to increase access and address critical unmet needs in stem cell transplantation.

Now, let's open the call for questions Chris.

Yeah.

Thank you.

And gentlemen, we will now begin the question and answer session.

We'd like to ask a question. Please press star and then one on your telephone keypad.

A confirmation tone will indicate your line is in the question Keith.

You May press star and being too if you would like to move to a question from the queue.

For those using speaker equipment. It maybe makes it saved you pick up your handset before pressing the star keys.

Our first question is from Gil Blum with Needham and co. Please go ahead.

Hi, Good morning, Thank you for taking our questions.

So just given the relatively small number of patients in the queue right now could you give us some color on the individual patient types or anything but you know at this point.

Okay.

[noise] Romy and Michele you went away and I'm sure. Thank you.

I'm happy this is roni and I'm happy to weigh in and thank thanks Gil for the question. So yeah. So there are patients who are enrolled in the meat of cell system and we know some facts about these patients and in what way. We also know information that we're hearing directly from transplant physicians when we have conversations with them about potential patients.

And the kinds of patients mm.

There are different depending on what the transplant centers like.

Some are Ah patients, who really don't have any other transplant options.

There are no other graph sources for them none in the unrelated donor registry no other related donor options and almost surge is really seen as their only choice and they would otherwise not receive a transplant, which is a quite quite difficult for them.

So patients actually who we've heard from physicians, who have more than one choice and what physicians do is they really choose the best potential graft source for their patient all of the available choices. So there are some patients who have other choices mismatched or have low or other potential donor.

Sources for whom almost surge has actually seen as the best choice.

So that's kind of how things are divided up and these are patients who need allogeneic stem cell transplants and may or may not have any other available donor sources.

Thank you yeah. Thank you Ronnie and good. Thank you I'll also say it on just going back to what we've spoke about even before launch.

Generally you see patients that are consistent with what we believed would meet the promise of a search to both increase access and improve outcomes. So on the increasing exercise, where we're seeing patients as roni you'd indicated we're almost search is they're only doing her source option and that's consistent with the data that we had identified through our market insights that at.

Leased 1700 patients are eligible each year for transplant, but unfortunately, we're not able to find a donor sourced before almost surge approval and then on the improving outcome side as Roni had indicated we've heard examples where the transplant or has another option and in one case. The other option was a halfway identical batch, but the transplant or is choosing home a search for the patient.

Although still in an early stage of the launch where we're very encouraged by what we are hearing.

Alright. Thank you for the answers so maybe a bit about the dynamic with Onboarding centers are there examples of where it was a bit of a reverse inquiry or the center reached out to you guys.

Yes, we have had multiple centers, who have reached out to us. Some some part of the clinical studies are something that we're not that had a patient that was actively being evaluated for transplant and the transplant or felt on the search would be the most appropriate option you know certainly.

Those who were part of the clinical study we've been asked in active dialogue with them, but in the case of one particular center, who was in the clinical study. They they asked if we could expedite the onboarding, which we were able to accommodate you address the patient needs.

Thank you very helpful and maybe a last one.

So outreach to physicians and I know you guys have a care of all of them in December 4th.

Are you going to have to present at the upcoming ash I didn't see any specific presentation, but a booth for you know kind of outreach to physicians. Thank you.

Yeah. So why don't I I'll start and then I'll turn to real needs. So we will have a presence at the ash I'll speak about the commercial presence and then Ronnie will talk about the medical but well we'll have our representatives from our launch team at Ash, We will have a commercial book. So if you are there please stop by and.

We will have the opportunity to attend sessions and understand that the dynamics of the scientific developments, but also just as you alluded to Gill had the chance to interact with individuals' from the transplant centers that are either onboard it or in the queue to be onboard. It. So we're looking forward to what's a San Diego I'll turn to Rooney to discuss the medical side.

Oh, Hey, thanks, Michele so some true we don't have any academic presentations at ash. This year, but we do have a product theater presentation as well as our medical folks engaging in a small group and individual dialogues with.

Additionally at Ash.

Yeah.

Does that answer all your questions Gil.

Thank you you've.

Got it all my questions.

Thank you very much ladies and gentlemen, as a reminder, if you do wish to ask a question. Please press star and being one though.

Okay.

Okay.

Thanks, Nathan we have reached the end of our question and answer session and I would like to turn.

Turn the call back to President and CEO Jenkins with some closing remarks.

Thank you Chris.

Thank you all for joining us today to recap we remain confident in our team's ability to deliver on the search to an increasing volume of patients in need of a stem cell transplant and transplant centers across the U S. We believe an army surgeon's ability to achieve its market potential and increased patient access to allogeneic stem.

Cell transplant.

You everyone for joining us on today's call and we look forward to providing further updates on future calls. Thank you.

Yeah.

Thank you very much.

Ladies and gentlemen that concludes today's event you may.

Now disconnect your lines.

Mhm mhm.

Hmm.

Mhm mhm.

Hum.

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