Allogene Therapeutics Inc

NASDAQ:ALLO

Earnings Call Transcript 2024-Q1

[Operator]

Hello, and welcome to the Allogene Therapeutics First Quarter 2024 Conference Call. [Operator Instructions]. Please be aware that today's conference is being recorded. We ask that you limit yourself to 1 question only.

I would now like to turn the conference over to Christine Cassiano, Chief Corporate Affairs and Brand Strategy Officer. You may begin.

[Christine Cassiano, executive]

Thank you, operator, and welcome to all who have joined this call. After the market closed today, Allogene issued a press release that provides a business update and financial results for the first quarter of 2024. This press release and today's webcast are both available on our website. Following our prepared remarks, we will host a Q&A session. We ask you to limit your questions to one per person as we will keep this call to an hour and do our best to get to as many questions as possible.

Joining me today are Dr. David Chang, President and Chief Executive Officer; Dr. Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer; and Jeff Parker, Chief Financial Officer.

During today's call, we will be making certain forward-looking statements. These may include statements regarding the success and timing of our ongoing and planned clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities, the safety and efficacy of our product candidates expanded stem cell development and 2024 financial guidance among other things. These forward-looking statements are based on current information, assumptions and expectations that are subject to change. A description of potential risks can be found in our press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements, and Allogene disclaims any obligation to update these statements.

I'll now turn the call over to David.

[David Chang, executive]

Thank you, Christine, and welcome to those on the call today. We are excited to speak with you today to discuss how we have continued to strengthen our allogeneic leadership position on every front. In January, we announced our pivot to focus development on differentiated and competitive programs data, importantly designed to address unmet needs. In doing so, our future market opportunity dramatically increased. In large B-cell lymphoma alone, moving from the later line into the frontline consolidate [ meant that ] the U.S. market opportunity grew from approximately $500 million to more than $6 billion. That change meant something significant. It was time to extend our territory rights to include all of the European Union and the U.K. from Servier. We are excited to have executed that vision and Jeff will provide more details on that agreement on this call.

Our team is making great progress in 4 core programs we outlined in January. We are very proud of the transformative potential of our pivotal ALPHA3 trial with stem cell, which is expected to read out in 2026, leading to potential BLA submission in 2027. This trial is designed to stem cell as a part of curative first-line regimen and has the potential to change the standard of care for patients with large B-cell lymphoma.

The last point being something I want to emphasize as that is very rare in oncology. Our stem cell program could also set a new standard for what a CAR T can achieve in relapse refractory chronic lymphocytic leukemia or CLL. Differentiation is critical across our core programs. We declared a move into autoimmune space with the goal of setting the immune system with a single infusion. ALLO-329, our next-generation CD19 CD70 [ dual ] CAR, which incorporates our Dagger technology and CRISPR-based gene editing for site-specific integration, is designed to meet the unique needs of patients with autoimmune disease. Our data technology provides a potential path to reducing or eliminating lymphodepletion, which we believe may create more development and commercial opportunities for ALLO-329 in autoimmune indications.

Our ALLO-316 program could be the first to demonstrate the unique potential of a CAR T in solid tumor. We believe our $50 million California Institute for Regenerative Medicine grant, awarded last month validates the remarkable enrolls made in our TRAVERSE trial and the therapeutic potential ALLO-316 has for patients with advanced renal cell carcinoma.

This grant funds the [ completion ] of the Phase I trial. We are grateful for the recognition from the [ service ] reviewers of the potential for ALLO-316 to make a difference for patients. We are pleased to have strengthened our cash runway to extend into third quarter 2026. I am very excited by the caliber of investors who participated in this financing and their demonstrated commitment to our mission.

In addition, members of our Board and executive management [ in being ] our Executive Chair, Arie Belldegrun, Jeff, our CFO, and I have further demonstrated our commitment to Allogene by participating in this client offering. Understandably, many investors are focused on milestones related to our pivotal ALPHA3 trial, but it is essential to appreciate the multitude of inflection points across all our programs. Later in the call, Zach will review the development milestones across all 4 core programs. We will continue to focus all our resources on advancing these core programs and believe we are well positioned to change [ our ] treatment landscape to benefit patients.

I would like to turn the call over to Jeff to review our announcement today.

[Geoffrey Parker, executive]

Thank you, David. Let me first start with the press release we just issued announcing our $110 million [ advancing ]. We know that our cash runway is critical. When we announced our pivot earlier this year, we had strong renewed interest from top-tier institutional investors and mutual funds. Based on those conversations, we made the strategic decision to pursue a financing that builds our cash reserves and extends our runway into the second half of 2026, during which time we expect to have the interim efficacy analysis and to complete enrollment of the ALPHA3 trial.

In addition, this financing importantly reshapes our investor base. [ Many ] of the investors who are part of this raise, including 5 of the largest institutional investors and mutual funds, leading health care specialists and select members of our Board of Directors and management team is indicative of the depth of interest in our allogeneic CAR T strategy and we look forward to validating their belief in Allogene as we execute on our goals.

Another example that underscores our belief in our programs is our just completed amendment to our agreement with Servier. You may recall that when Allogene was formed, we had only the U.S. rights for stem cell under the Servier agreement. The timing for us to obtain these rights now versus a few years ago when they first became available, was driven by 2 important factors. First, the dramatically increased market opportunity now with LBCL frontline consolidation and CLL, and two, the ability to establish future strategic partnerships.

Let me start with the market opportunity. Our lead trial for sema cell before our announcement in January was in third line LBCL. At that time, we estimated a market opportunity of approximately $500 million in that indication. After our announced pivot for this program into first-line consolidation in LBCL and relapsed refractory CLL, our new market opportunity dramatically increased to more than $6 billion in the United States.

We just negotiated with Servier significantly expands our rights by adding the EU member states and the U.K. to further increase our market opportunity to more than $9.5 billion. In turn, increasing the potential future revenue opportunity for sema cell by more than 50%. We now also have the option to add Japan and China at no additional cost when we can demonstrate the resources [ were ] to advance sema cell in that region.

This brings me to point number two, future strategic partnerships. Given the market opportunity and excitement for sema cell in community cancer centers, you might surmise growing interest in a potential partnership. And this excitement will only grow over the next 6 to 12 months as the program is risked. We control the only clinically validated allogeneic CD19 CAR T product positioned to transform how and where CAR-Ts are used in heme malignancies. With this agreement, we have consolidated rights in key commercial markets, making a potential partner more attractive.

Importantly, we did sell at a cost that is minimal compared to the market opportunity for sema cell. The financial terms are quite favorable for Allogene given the expanded geography. We've agreed to increase our overall regulatory milestones by $25 million and our obligation on commercial milestones increases by $10 million. Our royalty burn increases modestly but remains effectively the same in the low 10s to mid-teens in the U.S. and we have a flat 10% royalty in the EU territory and the U.K. Our royalty would also be 10% if we pursue our rights in Japan and China.

Let me now turn to our financial update for the first quarter and the impact of our just announced financing. Our cash balance as of the end of Q1 2024 was $397.3 million in cash, cash equivalents and investments. Pro forma for the financing we announced today, our cash balance will increase to approximately $500 million. Our cash runway now extends into the second half of 2026.

Q1 2024 research and development expenses were [ $50 million ], which includes $3.8 million in expenses associated with noncash stock-based compensation. General and administrative expenses in Q1 were $17.3 million, which includes $8.1 million of noncash stock-based compensation expense. For Q1 2024, our net loss was $65 million or $0.38 per share, including noncash stock-based compensation expense of $11.9 million in total.

For 2024, we now expect a cash burn of approximately $200 million, a slight increase of $10 million to our prior guidance due to the timing impact of our revised milestone obligations at Servier, offset by expected proceeds from our $15 million CIRM grant related to our ALLO-316 program. We expect full year 2024 GAAP operating expenses to be approximately $300 million, which includes estimated noncash stock-based compensation expense of approximately $60 million. This guidance excludes any impact from potential business development activities.

I'll now turn the call over to Zach, who will focus his comments on key milestones in our core development programs.

[Zachary Roberts, executive]

Thank you, Jeff. As I review key development milestones, I'd like to turn your attention to the new corporate presentation posted in the Investor Relations section of our website. Approximately 1/3 of LBCL patients who initially respond to R-CHOP will likely relapse. Unfortunately, until recently, there has been no way to know which patients would be cured by frontline R-CHOP versus those who would experience a disease recurrence and require second -- require treatment in second line or beyond.

Because of this inability to give an accurate prognosis after the conclusion of frontline treatment, the standard of care after frontline treatment has for decades been to watch and wait for the disease to relapse. In January, we announced a partnership with Foresight Diagnostics, who is developing a novel and potentially practice-changing test for minimal residual disease, or MRD. This investigational test, when administered following completion of frontline treatment for LBCL has the potential to offer a highly accurate prediction of future disease relapses. We believe this test could provide us with the ability to identify those patients who are most likely to relapse after frontline and to take action to potentially prevent that relapse, namely a consolidation dose of sema cell delivered immediately following the discovery of persistent MRD.

ALPHA3 is designed with the specific attributes of sema cell in mind. First and foremost, it maximizes the allogeneic advantages of sema cell as a onetime off-the-shelf treatment that can be administered immediately upon discovery of MRD following 6 cycles of R-CHOP. If ALPHA3 is successful, sema cell could become the standard seventh cycle of frontline treatment available to all eligible patients with MRD. Additionally, ALPHA3 builds on the growing understanding that administering CAR T therapies to patients with low disease burden can improve safety and efficacy outcomes.

Sema cell's Phase I safety profile with low rates of CRS and ICANS already permits its use in the outpatient setting in relapsed/refractory patients and may further improve in patients with no radiological evidence of disease. The outcome of this pivotal trial could allow sema cell to be embedded in the frontline setting where autologous therapies are far less feasible. Consolidating response following an MRD positive result post R-CHOP requires immediate and definitive action to prevent an impending relapse. Relapses tend to happen quickly after completion of R-CHOP, in many cases, within weeks to a few months, making the speed to treatment a critical factor in the success of a consolidation strategy like ALPHA3. Sema cell treatment could begin within days following MRD test results. As we have seen, autologous CAR-Ts have had difficulty penetrating community cancer centers and [ acts ] earlier line patients. Use of sema cell won't rely on the complex logistics that have hindered [ MRD ] adoption or will there be a reliance on referrals as the intent is for CAR T to be available in the community cancer centers.

These doctors have been waiting for an allogeneic like semi cell to use CAR T in their centers. We believe autologous CAR-Ts [ on ] specifics or any other treatment modality cannot reproduce the differentiated attributes of sema cell. You can see what this journey looks like across modalities on Slide 8.

Slide 14 provides greater granularity regarding what to expect during the ALPHA3 pivotal trial. Start-up activities for ALPHA3 are well underway and are nearing completion at several sites. In fact, we have completed the selection of nearly all clinical trial sites that include community-based cancer centers. The study will randomize approximately 240 patients who are MRD positive at the end of frontline therapy to either consolidation with sema cell or the current standard of care, which is observation with serial clinic visits, blood draws and CT scans.

With the primary endpoint of event-free survival, the design will initially include 2 treatment arms that differ in the lymphodepletion regimen used. One arm will feature standard fludarabine and cyclophosphamide plus ALLO-647 and the other fludarabine and cyclophosphamide alone without ALLO-647. First indication of how the trial is proceeding will be when we announced the selection of the lymphodepletion regimen, we will continue to the end of the trial. That announcement is expected in mid-2025.

The next study milestones will come less than a year later. First, we expect to complete enrollment in the first half of 2026. And second, because the prognosis of patients who are MRD positive at the end of frontline therapy is quite poor, study [ events ] are expected to come in quickly, so we expect to perform efficacy analyses in 2026 as well. This will include an independent data safety monitoring board interim efficacy analysis in first half of 2026 and the data readout of the primary EFS analysis in the second half of 2026. If the trial is successful, we expect to follow these data readouts with a biologic license application or BLA submission targeted for 2027. The outcome of this pivotal trial could allow sema cell to improve cure rates and become the only treatment approved for the consolidation of frontline treatment, potentially reducing the need for [ fee ] in the later lines and simplifying the decision for frontline treatment. Knowing an effective consolidation option exists, could aggregate the need for complex regimens of 5, 6 or even more agents in newly diagnosed patients.

On Slide 19, we briefly look at the next key milestones for the [ ALPHA2 ] CLL cohort. There is strong scientific rationale to believe that an AlloCAR T product derived from [ held for ] cells could create a clinically meaningful advance for these late-stage patients with a onetime dose and simpler administration and logistics. The Phase I cohort will include 12 patients treated with sema cell and is now enrolling patients. We expect to complete Phase I trial enrollment and have an initial data readout by the end of this year. Based on the outcome of this trial, we would expect to move into a pivotal Phase II trial in 2025. The bar for this trial is modest, given that an autologous CAR T therapy was recently approved with an overall response rate of 45% and a complete response rate of 20% in patients who received infusions at the target dose. Considering all those who went underwent leukapheresis, the response rate and the complete response rate fell to 37% and 14%, respectively. Importantly, for an off-the-shelf CAR T product candidate like sema cell virtually all enrolled patients who have met all trial criteria are expected to receive infusions.

I want to turn your attention to Slide 27 in our autoimmune program next. ALLO-329 is our wholly owned next-generation site-specific integration-based dual targeting CD19 CD70 AlloCAR T. Our design is centered on both scalability and reducing or even eliminating lymphodepletion, which we believe is absolutely critical for rapid clinical development and future commercial success. We are currently working on IND-enabling manufacturing process and analytic assay development. We expect to file an IND in Q1 2025 and begin enrolling that trial in the first half of 2025. As a result, we expect to have proof of concept in this trial by the end of 2025. We recognize that highest clinical proof of concept is in lupus. And as we have noted earlier, we also recognize the importance of differentiation so we are considering other indications with unmet need.

Lastly, Slide 30 reviews our Phase I TRAVERSE trial time line for ALLO-316. This quarter, we plan to detail what we believe to be a fundamental discovery the algorithm that may mitigate the treatment-associated hyperinflammatory response without compromising the CAR T function needed to eradicate solid tumors. The manuscript is currently undergoing their review. A Phase I data update from approximately 20 patients with CD70-positive renal cell carcinoma is planned by year-end 2024. In totality, and as shown on Slide 32, we have meaningful flow between now and through 2026 that will demonstrate the potential of our programs.

We look forward to answering any additional questions you have on our pipeline during the Q&A. We'll now open the call for questions.

[Operator]

[Operator Instructions]. Our first question comes from the line of Michael Yee with Jefferies.

[Michael Yee, analyst]

Congrats on all the progress and yes, consolidation of everything. I think it speaks to the bullish nature of how you guys are looking at things. I know you want to keep it to 1 question. I guess it's a 2-parter on the Phase III that you're enrolling in consolidation. Can you explain your visibility on enrollment sites, patient numbers? I know that was always a question for the later [ studies ] but also would be a meaningful question for these studies, given some of the sites we've talked to are still trying to understand the protocol and the design of the study as you'd be breaking new ground. So I want to understand your confidence on that. And then part two of that is what is the difference between the interim analysis and the full primary EFS analysis.

[Zachary Roberts, executive]

Thanks, Michael. This is Zach. Good questions. So with respect to the first question, which I'll sort of relate to feasibility, what we will -- what we can share is that the interest in this program has been quite market, both from academic as well as community-based oncology centers. We expect to have approximately 50 clinical trial sites open in the United States. That will be a blend of community practices and tertiary care academic centers. And almost all of those sites have been selected, and we are on pace to activate our first batch of sites by middle of this year to enable trial enrollment. So I would say that the enthusiasm from these clinical trial sites has been very, very high.

Your second question around the difference between the interim and primary analyses in 2026, in first half and half, respectively, relates to the number of EFS events that we will be assessing at the interim and the primary analysis.

[Operator]

Please stand by for our next question. Our next question comes from the line of Tyler Van Buren with TB Cowen.

[Tyler Van Buren, analyst]

Congrats on all the progress. So I believe the likelihood of the ALPHA3 trial succeeding is super high, frankly. So do patients appreciate the risk of being MRD positive after R-CHOP? Or why wouldn't they choose to undergo this therapy and enroll in the trial?

[Zachary Roberts, executive]

Thanks, Tyler. So I don't think that the concept of MRD has made its way into the general consciousness of the patient population yet. We do think that, that is coming and will probably come quickly. That's not the case for the investigators who have signed up for the trial. They all see the potential for this assay, and it's a potential ability to change practice. With respect to an individual patient and doctor conversation about whether to enroll in the study, we believe that this -- the study will be highly attractive to the patients because there'll be -- look for an MRD negative result to tell them that they're likely cured of their malignancy. Now for those patients who are MRD positive.

We also can't really understand why a patient wouldn't at that point, jump at the chance to receive a dose of sema cell in consolidation for all the reasons that we've detailed. Importantly, there are no approved therapies right now available for patients who are [ emission ] at the end of frontline, but remain MRD positive. We believe that this will be a fairly significant competitive advantage for us during the enrollment and at the time of potential launch.

[Operator]

Please stand by for our next question. Our next question comes from the line of Salveen Richter with Goldman Sachs.

[Salveen Richter, analyst]

Into the sema cell data in CLL and year-end, could you just help us understand what you would view as a positive outcome here and where the clinical bar currently lies?

[Zachary Roberts, executive]

Thanks, Salveen. So we think that the bar here is still quite low as a matter of fact. And the unmet need here is only growing in this relapsed/refractory CLL population. As we mentioned during the prepared remarks, recent autologous CAR T product was approved on a fairly modest response rate and complete response rate. Importantly, we believe that the patients who derive benefit and to do so fairly quickly following an infusion of CAR T cells. So fast forwarding now to the end of this year. As we mentioned, we're enrolling the Phase I cohort now, and we expect to have that data shared at the end of this year. Now of course, there will be limited follow-up on those patients. However, we should be able to have response rate and some modest follow-up on some of those patients at least. So we expect that this data will be helpful for us as we're planning to make that go/no-go decision for pivotal next year.

[Operator]

Please stand by for our next question. Our next question comes from the line of Reni Benjamin with Citizens JMP.

[Reni Benjamin, analyst]

Congratulations on all the progress, especially getting the right back, and that's my question, mainly. Are you ready to move forward with sema cell commercialization in Europe by yourself? Or do you really feel that this is something that must be done with a partner? And I guess just related to that, in terms of manufacturing, is this something that you could do from here in the States and ship out? Or do you feel that you would have to create a manufacturing facility in Europe?

[David Chang, executive]

So Reni, this is Dave Chang. Let me answer that question. We are extremely excited to gain rights to European Union and U.K. I mean this is really big and increases the market potential of the sema cell significantly. The 2 questions that you're asking, the EU, how ready we are, I mean, we just signed a deal, give us a little bit of chance. I mean this is something that we have done in our previous experiences to place the clinical study and also prepare for regulatory filing and for commercialization. But right now, the ink is drawing. So give us a little bit of time before we outline how we plan to expand in Europe.

And as Jeff has also mentioned, this is also what I believe is an opportunity for partnership, which we believe can bring a significant upside to how much and how best we can expand the program in Europe.

The second question, that's a roughly simple one. I mean we have our own manufacturing facility, Cell Forge 1 across the bay. I think that's the San Francisco Bay. And that facility from the beginning was designed to meet the clinical as well as the commercial regulatory requirement for both U.S. and Europe. And yes, you're absolutely right, we can manufacture the product there and ship to Europe for clinical studies.

[Operator]

Please stand by for our next question. Our next question comes from the line of Luca Issi with RBC Capital.

[Luca Issi, analyst]

On the progress, maybe a quick one for you, Zach. Can you just talk about the powering assumption in ALPHA3. I think your prior corporate deck actually like 8 months as the expected median EFS for the control arm, but I no longer see that in your new deck, anything to read into that? And also how are you thinking about the [ media ] EFS for the active arm given you actually never tested that product in that setting. So any color there, I must appreciate it.

[Zachary Roberts, executive]

Thanks, Luca. So we haven't gone into details around the powering assumptions that we made for the overall study design. As you'll note, the sample size has remained consistent to 110 patients versus 110. As far as the timing of the EFS events on the control arm, so 8 months that we had previously featured really was counting from the initiation of R-CHOP. And actually, it's probably somewhere between 4 to 8 months, which will actually unfold in the context of the study. And that's based on a fair amount of public literature for patients treated with R-CHOP. The second question?

[David Chang, executive]

What we expect under control -- treatment.

[Zachary Roberts, executive]

Yes. So as far as what we control or what we're anticipating for the treatment arm, so again, this is going to get back to the powering assumptions, which we haven't guided to publicly. However, what we can say is that the experience that we have from the Phase I program suggests that patients who achieved a CR, do tend to do very well and they tend to stay in CR. That's point number one.

And point number two, I'll again refer to the growing body of literature to suggest that treatment with CAR T cells at relative low disease burdens does tend to lead to better efficacy outcomes. So while we don't have a hands-on experience in the MRD positive patient population, there's quite a bit of evidence to suggest that this actually will work quite well, and we'll be able to improve EFS significantly over the control arm.

[David Chang, executive]

And look, let me just add on by saying that this study is well powered for EFS event as well as PFS. And I would just ask you to look at the sample size, how big the study was in the second-line setting of the YESCARTA and [ Brian see ] that led to a successful atom and essentially bringing forward a treatment that changed the practice.

[Operator]

Please stand by for our next question. Our next question comes from the line of Asthika with Truist.

[Asthika Goonewardene, analyst]

I'll also offer my congratulations on saving the rights of sema cell from Servier and the financing that just announced. I'm going to spin off on [ Tyler's ] question. And I shared this in enthusiasm as well for Alpha 3. But I'm going to also ask, given the confidence you're going to have in the active arm, what's going to compel a patient to stay on the control arm when they know that they've been -- that they're under control [ under ]?

And then if I can squeeze another quick one in. In CLL, how much persistence is needed. We know with LBCL upfront tumor killing is what's really important. What do we know about CLL right now in terms of how much persistence is you needed?

[Zachary Roberts, executive]

Thanks, Asthika. So back to the question on the patients who get randomized to the control arm. So there's a couple of reasons that they would stay on the control arm. Putting [ my ] patient hat on, I think it's going to be quite reassuring for them to know that they're being followed very closely in the context of a clinical trial, at least as closely as they would be followed for standard of care and often because the focus on getting patients into the clinic and so forth is so much higher in the context of a clinical trial. Probably even closer follow-up. So if I'm a patient knowing that I'm getting the standard of care, but I'm going to be watched like a hawk, I think will go a long way to reassuring patients.

And then I'll reiterate that even if those patients decide to discontinue on the clinical trial, it's not as though they can find a physician who is going to treat them for their MRD disease. They're still going to have to wait for a relapse. There are no approved therapies for patients who are in remission with LBCL currently.

With the second question on CLL around persistence, I think the evidence is still developing there. And I think we have to sort of not dive too deep into that rabbit hole. We do know that these cells need to be around for a period of time. And we have been able to show in the context of LBCL that our cells can stay around for quite a number of months, in some cases, 6 months and beyond. So we do -- with our current FCA-based lymphodepletion regimen, we create a nice window of persistence for these cells to get in there and eradicate tumor.

[David Chang, executive]

And let me just add on that one comment, which I would like to make. Since the questions about how well this study will enroll and how the patients will behave once they are enrolled in the study. I mean at this point, yes, we have not studied the study, but the study designed with a significant input from the KOLs, both academic-based KOLs as well as community-based KOLs, and their opinion was unanimous about the design of the study, the randomized design as well as how to handle the control arm. So I think in terms of how the investigators will support the conduct of study, which we are relying a lot, given the enthusiasm that they have expressed, that's where we have a lot of comfort level about the projections that we are making about the study enrollment cadence.

[Operator]

Thank you. Our next question comes from the line of Brian Cheng with JPMorgan.

[Lut Ming Cheng, analyst]

On autoimmune, there is a question of whether lymphodepletion is essentially an optimizing CAR T expansion. Can you tell us your perspective on the likelihood of completely eliminating lymphodepletion. What are some of the key factors that bring that to reality?

[David Chang, executive]

Yes, Brian, let me take on that question. Again, as we have said, the [ ALLO-329 ] program that we are advancing in the autoimmune, IND is planned for the first quarter of 2025, and we are hoping to get the initial proof of concept communicated by the year-end.

The question of whether the lymphodepletion is needed or not. This is something that we have thought through very carefully, looking at the data that we have from ALLO-501A, this is our CD19 allogeneic CAR T program as well as ALLO-316, which is a CD70 CAR T program, where we have treated number of patients with the renal cell carcinoma.

So combining those data together and looking at all the translational data that we have seen is very clear when you have the Dagger technology, allogeneic CAR T cells expand remarkably well. And we know that in terms of how CAR T behaves depends very much on the expansion capability of the CAR T cells. So that's information, number one.

Number two, information is what we believe is necessary to reset the immune system in patients with autoimmune disorders. We do not, and also, this is the view of many KOLs as well, nobody believes persistence is required. One common theme is the depth of the depletion, initial depletion, that's important. But when we put all the information that we have together, we believe ALLO-329 will expand well. And with that, we will achieve the deep depletion of B-cells and [ XA ] T cells, and we believe that is critical to reset the immune system.

[Operator]

Please stand by for our next question. Our next question comes from the line of Sami Corwin with William Blair.

[Samantha Corwin, analyst]

I was wondering if you could clarify how many of the [ 204 ] patients being enrolled in ALPHA3 will be enrolled initially in the 3 arms versus after the interim analysis lymphodepletion selection. And then just kind of curious why you decided not to look at MRD negativity as a secondary endpoint in that trial? I just considering it does seem to be predictive of a long-term remission.

[Zachary Roberts, executive]

Thanks, Sami. Great questions. So we haven't really gone into detail around how many patients are going to be enrolled in that 3-way randomization. However, we have told have said that the hypothesis sort of control arm versus treatment arm will take place on approximately on 110 patients in each arm. So that can give you a little bit of an idea of how many additional patients we may need to enroll. It's a relative -- it's a fraction of the overall enrollment. And that number was selected to give us the right blend of statistical power to make the decision well informed on safety and efficacy and translational outcomes. But yet not enroll a large number of patients who would then go on to receive an [ LDH ] regimen that is not carried forward through the duration of enrollment.

As far as the question on secondary endpoint for MRD, we will be examining this MRD clearance as an exploratory endpoint. However, probably didn't make a lot of sense to do it as a key secondary endpoint, given that we were using the very same test to select the patients for enrollment in the first place. We are quite excited by the potential future for MRD clearance as a key endpoint in clinical trials, but we thought it best to stick to the traditional endpoints like EFS for this Phase III -- Phase [ II ] trial.

[Operator]

Our next question comes from the line of Jack Allen with Baird.

[Jack Allen, analyst]

I wanted to ask about Cell Forge 1. Are you planning on producing the material for ALPHA3 from Cell Forge 1 and ALPHA2 for the CLL patients? And then as we look out on our 3 and the reacquisition of global rights or the acquisition or should say, for ALLO-501A, could ALPHA3 become a global study in your view? Or are you really committed to running that so in the U.S.

[David Chang, executive]

Jack, great questions. The Cell Forge 1, this is our GMP facility, and that is fully optional and it's producing GMP materials that are necessary for us to conduct both CLL and ALPHA3 study. in terms of what we do with the clinical supply, I mean that's something that we don't go into the details. And the second question, Jack, can you just remind us the second question?

[Jack Allen, analyst]

Yes. I was asking about the reacquisition of the rates [indiscernible].

[David Chang, executive]

Yes. So yes, the -- in terms of rights that we have obtained from Servier is rights to Europe and the U.K. And obviously, with that, we are very interested in expanding clinical trial footprint as we prepare about commercializing in these extended territories. So on that, as I said, we just signed a deal. So I would ask you to stay tuned. We'll provide more information on what we are doing in those territories in future time.

[Operator]

Our next question comes from the line of John Newman with Canaccord.

[John Newman, analyst]

I'd like to add my congrats on all the progress as well. I had a question about ALLO-329 in the autoimmune setting. Some of your competitors are growing studies in the autoimmune area, but they're including dermatomyositis patients or they're running separate studies. My question is, are you considering including more patients in your study and might there actually be an interesting filing strategy there, given that it is an [ orphan ] disease?

[Zachary Roberts, executive]

Thanks, John. I think I'll ask you to stay tuned for further details on the clinical development plan as we kind of get a little bit closer to the IND submission. As we mentioned in the prepared remarks, we're going to be looking carefully at the existing proof of concept out there but also looking for opportunities for differentiation in the development plan. So please stay tuned.

[David Chang, executive]

And John, let me just add on. I mean ALLO-329 is a very exciting program. There is a lot of interest. And once we obtain the proof of concept, this is also a program that can expand into many different indications in autoimmune space. That includes not only the indications where CAR T has proven, initial proof of concept, but also indications where the T cell component may play a bigger role. As a reminder, one of the key innovation and differentiation that we introduced into ALLO-329 is having a dual CD70 CD19 and the CD70 component has the ability to bring the dagger biology as we have just talked about, but also address the activated T cells, which we believe has a pretty important role in the pathogenesis autoimmunity.

[Operator]

Our next question comes from the line of Kalpit Patel with B. Riley.

[Kalpit Patel, analyst]

This is sort of related to an earlier question, but do you think you'll need multiple doses of ALLO-329 initially to get that profound B-cell depletion that we have seen with auto CAR Ts in autoimmune diseases since you're planning to reduce the dose or the use of lymphodepletion.

[David Chang, executive]

Let me take the question. We are not -- we are planning to rely on single infusion to maximize the benefit of ALLO-329.

[Operator]

Our next question comes from the line of Samantha with Citi.

[Samantha Semenkow, analyst]

Just on ALLO-329, given you have the dual targeting approach, how are you thinking about the potential onset of the treatment associated hyperinflammatory response that you've observed in the TRAVERSE study? With the diagnostic and treatment algorithm that you developed, is that applicable to the autoimmune population as well? And can you just characterize a bit how you think that effect might be used [ by hematologists ].

[David Chang, executive]

Yes, Samantha, great question. Let me take that question. We have extensively reviewed the data that we have generated with the ALLO-316 program, where we are we have seen remarkable cell expansion after infusion. And like any CAR T, when there's a great cell expansion, there is hyper-inflammatory response that follows. That's really the pharmacodynamic effect of ALLO-329, which we intend to leverage heavily. How we see it is to address those questions, is one way to do it is not go up on the high cell dose. And when we think about the autoimmune space, this is a pretty large indication. And the scalability of the cell therapy is we view as very critical. So this is a situation where ALLO-329 from the manufacturing perspective and others can provide the number of patients that can meet the demand of autoimmune space. So if anything, the expansion capability that may come with the ALLO-329 will be leveraged to increase the capacity with which we can expand autoimmune programs with ALLO-329.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Kelsey Goodwin with Guggenheim.

[Kelsey Goodwin, analyst]

Congrats on all the progress. For 316, I guess, maybe could you just remind us the efficacy benchmark in RCC and what you'd need to see at the end of the year in order to advance this program further?

[Zachary Roberts, executive]

Thanks, Kelsey. So the relapsed/refractory RCC outcomes are still quite poor. There's been a recent approval there. However, it didn't really make much headway in terms of response rate or durability response over existing third-line agents approved here.

So we think that, that bar is still quite low. Some of the response rate somewhere around 20% is what the benchmark that we're looking at from the literature. And as you recall, when we shared data back at AACR last year, we were above that with a 30% response rate in patients whose tumors were known to express CD70. So we're pretty encouraged by that early sign of efficacy.

[Operator]

Please stand by for our next question. Our next question comes from the line of Laura Prendergast with Raymond James.

[Laura Prendergast, analyst]

One for me. Just your thinking about barriers for the community center readiness for sema cell and MRD testing versus what you might see at the academic center, any barriers you anticipate there?

[Zachary Roberts, executive]

Thanks, Laura, for that question. I'll start by saying that to the [ corner ], actually, what we're finding is these centers that we're approaching these community centers even those without hands-on CAR T experience are extremely well equipped to run this trial. And that's because these docs have been giving bispecifics to patients now for several months for this indication, of course, bispecifics for other indications as well. And so the toxicity profiles and the unique adverse events that T cell-directed therapies share across different modalities, I think has given both us and the [ enough ] confidence that they'll be able to handle the patients that are treated on this trial.

Of course, there is another category of barrier that I think has kept these centers from jumping into CAR T in the last decade, and that is a lot of the operational and logistical barriers that they just have not been willing to undertake at their centers. Because sema cell is off the shelf, it's shipped on band, and in many cases, can be administered as an outpatient. All of those logistical and operational barriers that these centers face go away. And so in fact, what we have found is actually quite an open and enthusiastic set of partners, even in those who don't have direct hands on CAR T experience.

[Operator]

Our next question comes from the line of Ben Burnett with Stifel.

[Carolina Ibanez-Ventoso, analyst]

Good afternoon. This is Carolina Ibanez-Ventoso for Ben Burnett. First, in the ALPHA3 trial, will you do a second MRD assessment after lymphodepletion, but before the administration of sema cell. And then separately, given the ALLO-316 and ALLO-329 based on the Dagger technology, would it be fair to look at the clinical update from the TRAVERSE trial later this year as a window for the initial safety expected with ALLO-329? Thank you.

[Zachary Roberts, executive]

Thanks, Carolina. So the first question, we tend to avoid going into specifics around the timing of the assessments that we'll be performing in the clinical trial. I will say that the dynamics of MRD generally speaking, are such that it does not tend to be a test that will turn negative in the matter of 5 days because the tumor is still there and not likely to be cleared in that short window of time. So the utility of such an assessment would be questionable.

The second question that you asked was around whether the efficacy update that we share later this year from TRAVERSE will offer a window to potential efficacy or outcomes I'll say that we looked very carefully at the biology of 316 in the TRAVERSE trial as we were designing ALLO-329 specifically for an AID population and we believe very strongly in the Dagger biology and the ability to propel these cells to good engraftment and persistence.

I wouldn't go much further than that. I think the requirements for cell persistence are different in AID versus oncology. This is a dual targeting CAR versus a single targeting CAR. So that I think there is sufficient differences in construct design and population that I don't think it's all that -- it's going to be all that instructive for us to scrutinize the 316 results and read into 329.

[Operator]

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to management for any additional comments.

[David Chang, executive]

Yes. Thank you, operator. We are very proud of how we continue to strengthen Allogene on all fronts and making sure we remain competitive today and in the future. We will continue to focus all our resources on advancing our core program. And with today's announced financing, we are well positioned to extend the cash runway into important data readout. And more importantly, we believe we are well positioned to change the CAR T treatment landscape for the benefit of patients. Our thanks to you for joining us on the call today and our sincerest gratitude to our investors for your continued support. Operator, you may now disconnect.

[Operator]

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.