JNJ - Allogene: I Am Less Sanguine About Allogeneic CAR-T's Prospects Than Before

2023-07-26 19:30:39 ET

Summary

• Allogene Therapeutics, Inc. is the leading developer of allogeneic CAR-T.
• There was a time when its logic appealed to me.
• Lately, however, I have increasingly become disillusioned about its prospects.

Lest we forget with all the C-suites leaving, Allogene Therapeutics, Inc. ( ALLO ), as its name implies, is a leader in the development of allogeneic CAR-T therapies, or life-saving cell therapies developed off-the-shelf and ready to use.

CAR-T therapies offer functional cures by using the patients' own T-cells against their cancers. This autologous process is cumbersome, requiring patients to give T-cells from their body, which are then reengineered and put back. The process is also expensive, with therapies sometimes costing millions of dollars. This is not a viable solution for ordinary people.

The way out lies in allogeneic CAR-T, where healthy donor cells are previously harvested and can be given off-the-shelf to patients. This process is less cumbersome and less expensive, but its problem is that the human body rejects these cells as foreign bodies, causing graft versus host disease. If lymphodepletion is done to make the body more accepting of foreign CAR-T, numerous other side effects can occur.

This is the problem Allogene Therapeutics, Inc. is tackling - how to make allogeneic CAR-T therapy more acceptable to the body?

In the FDA's 2021 war against cell therapies, Allogene was one of the companies hit with a clinical hold, for its ALLO501A product for its phase 1 Non-Hodgkin Lymphoma ((NHL)) trial. In Jan. 2022, the hold was lifted. After this, as I noted last year, the company has started enrolling in the ALLO-715 and ALLO-605 trials in relapsed refractory multiple myeloma and ALLO-316 in advanced or metastatic renal cell carcinoma.

They also began a pivotal trial of ALLO-501A. This is the ALPHA2 trial, which is the first phase 2 trial of an allogeneic CAR-T product, and is potentially pivotal. This is a small, 100 patient trial, and duration of response, for lack of which compared to their autologous counterpart these allogeneic therapies are notorious, will be a key metric to observe.

Of note, the previous ALLO501A trial saw a 9 out of 14, or nearly 65%, complete response, which is a strong number; but these responses have to be durable to enable allogeneic therapies to replace autologous ones. If they don't, they may get to the market, but neither patients nor insurers will prefer them, because even if autologous costs more per therapy, the much better duration will ultimately reduce costs.

Allogene's key problem is going to be non-inferior efficacy compared to autologous CAR-T. Here, data presented last year at ASH showed that ALLO-715, a phase 1 asset, had a mere 17% CR rate in multiple myeloma, while autologous assets like Legend Biotech ( LEGN ) and Johnson & Johnson's ( JNJ ) Carvykti (ciltacabtagene autoleucel) had a 70-80% response rate. Which physician is going to risk allogeneic therapies, even if less expensive, if the autologous varieties are so much better? The only scenario, besides affordability, where allogeneic CAR-T may trump is when a patient does not have time to wait for the 7-8 weeks it takes to get autologous CAR-T ready. However, efforts are being made to reduce the waiting period, so even that edge is getting eroded.

On top of all that, in the last few months, the R&D chief as well as the Chief Financial Officer have left the company. However, the replacement R&D head is Zachary J. Roberts, who has worked with Gilead's Kite Pharma unit and understands CAR-T development well. So this may not be an entirely bad thing. Recently, they also appointed Cell Therapy Pioneer Timothy Moore as Chief Technical Officer. Mr. Moore previously worked at Kite, and has experience on the manufacturing side as well.

In other development, Allogene is also developing CAR-T for solid tumors. At AACR this year, they presented interim phase 1 data from ALLO-316 in Renal Cell Carcinoma. Data showed that 3 out of 10 patients achieved a partial response on a single infusion. These patients had progressed after standard therapies, including an Immune Checkpoint Inhibitor and a VEGF-Targeting Therapy.

Risks

Allogene Therapeutics, Inc., Servier and Cellectis had a complicated agreement which Servier canceled. I discussed this at length earlier. The upshot is that there is some constraint placed now on Allogene with respect to their CD19 CAR-T ALLO501A, which was developed using Cellectis technology.

Financials

Allogene Therapeutics, Inc. has a market cap of $720mn and a cash balance of $514mn. Research and development expenses were $80.2 million for the first quarter of 2023, while general and administrative expenses were $18.9 million. At that rate, they have a cash runway into Q2 2025.

ALLO stock is largely held by institutions, followed by PE/VC firms. There is very little retail presence. Key holders are FMR LLC, Pfizer (PFE), and Arie Belldegrun, the founder of Kite Pharma. ALLO stock is regularly sold by insiders.

Bottom Line

Looking at the data, I am not getting the feeling that allogeneic CAR-T therapy is likely to compete with autologous therapy in efficacy or safety. It has two competitive benefits - lower costs and quicker delivery. On the delivery front, first, autologous therapy is making efforts to increase speed, and two, not everyone is unable to afford to wait a few extra weeks for autologous therapy, especially if its benefits are so much better. Thus, like Baird's analysts noted the other day, allogeneic therapy is going to serve a niche market only - those patients who do not even have time to wait. Thus, I am not going to invest in Allogene Therapeutics, Inc., because that market is too small.

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