Autolus Therapeutics plc (AUTL) Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the Autolus Therapeutics Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Executive Director of Investor Relations, Amanda Cray. Please go ahead.

Thank you, Dede. Good morning and good afternoon, everyone, and thank you for joining us on today's call. With me are Chief Executive Officer, Dr. Christian Itin; and Chief Financial Officer, Rob Dolski. I'd like to remind you that during today's call, we will make statements related to our business that are forward-looking under federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These may include, but are not limited to, statements regarding the status of ongoing commercial launch of AUCATZYL in the U.S. and U.K., Autolus' manufacturing, sales and marketing plans for AUCATZYL, the market potential for AUCATZYL and the status of clinical trials, development and/or regulatory time lines and market opportunities for obe-cel and our other product candidates. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and in our SEC filings, both available on the Investors section of our website. On Slide 3, you'll see the agenda for today's call. As usual, Christian will provide an overview of our operational highlights. Rob will then discuss the financial results, and Christian will conclude with upcoming milestones and closing remarks. We'll then take questions. With that, I'm happy to turn it over to Christian.

Thanks, Amanda, and welcome, everybody, to our second quarter call. We're moving to Slide #4. We had a very positive second quarter with strong AUCATZYL sales growth in this -- in our second year of launch now. When we look at the AUCATZYL revenue in the second quarter, we're at $45.7 million, which is a substantial increase over the $26 million that we had in the first quarter. For the first half of the year, we reached $71.9 million, which is close to the full year number that we had for our first year of launch last year. We see that the positive experience that the physicians are having with the product in the centers that we're active in, which is also reflected in the data that was collected by the ROCCA consortium and the real-world database that was presented at the TANDEM meeting. It builds a very strong foundation for the adoption of the product, and I think the continued positive momentum that we're seeing in the market. We also obviously have continued to grow our presence from a center perspective. We had indicated at the beginning of the year that we would reach in the range of 80 centers for the full year. We're now at the midyear point, and we're above 80 centers already, and we continue to add centers in the second half of the year as well. When we look to the U.K., we started the launch at the beginning of the year. We do see a strong initial adoption, and we obviously continue to also add treatment centers as we go through the remainder of the year. With that, we're going to move to Slide #5. I think we are on a very good path here and show very good momentum for the goals that we have set for ourselves for 2026. When we look at the net revenue projection that we had for the year that was originally set at $120 million to $135 million, we're now at a point where we can actually increase our guidance to $140 million to $150 million for the full year. The gross margin development, we've seen a very nice move as we're going from the first to the second quarter. The first quarter was just positive on the gross margin. We now made a very positive step in the second quarter, which is driven by increased volumes in terms of batches that we manufactured at our plant at the Nucleus in the U.K., but also a lot of the improvements that we made on the operational -- the operations as well, both at the manufacturing side as well as the commercial side. All of that actually supports the gross margin development here. That obviously is a key driver towards the company moving towards profitability for this part of our business. When we look at the commercial expansion, we're now in more than 80 centers, as indicated. We continue to grow. We're particularly going to look at areas that may be underserved where distances to centers are still relatively wide or large. And we want to make sure so that patients have adequate access and have centers within a reasonable -- within reasonable reach. As we're looking across the U.S., we do see that we actually have a very good distribution across the U.S., and we'll continue to add obviously, additional centers in some of the states where we may not be active yet at this point. Moving to Slide #6. I think as we're sort of moving through the ramp-up here on the launch, it was very important that we're obviously driving towards a very stable delivery of the product. And with that, over time, as we're improving our margins of the product, reach profitability for our business in the relapsed/refractory B-ALL indication. When we look back into last year, the first objective was to really get us to a place where we have very robust, consistent high-quality product supply and services that we can provide to the centers. We achieved that within the first probably 6 to 9 months during the course of the first year of launch last year. We then started to shift our focus on to starting to optimize the processes and really drive for efficiency as well as obviously increasing the volumes. Together, those 2 parameters are really the key drivers to improve margins. And that's ultimately what gets us to a place where we expect to be in the not-too-distant future to get us to a place where our gross profit margin is going to reach somewhere in the range of 65% to 70% for the ALL business. Now when we look at the development of gross margins, we're still negative in the fourth quarter last year. We were just on the other side, on the positive side in the Q1 this year, and we now have a healthy step-up to a 55% gross margin in the second quarter. We obviously expect to continue to drive the improvements, the optimizations, the drive for efficiency, which obviously are key drivers for the company to reach profitability in this line of business. Moving to Slide #7. I would like just to briefly summarize kind of where we are from a pipeline perspective. We see, obviously, a very strong foundation with obe-cel or AUCATZYL in the adult ALL setting. But it obviously also gives us a lot of opportunity in other B-cell-mediated diseases, both on the oncology but also the autoimmune side. As we're sort of going through the news flow that we're expecting for the upcoming periods, I would start out with kind of the key news flow that we're expecting for the end of this year, which is really focused first on the update for the CARLYSLE study at the ACR conference, which gives us an opportunity to really give us a longer-term view on the data and a clear understanding on the durability of the effect that we have seen in the systemic lupus patients. We will then look into additional updates coming from the FELIX study, where we have a few additional analysis planned to be presented by the end of the year. And as we're going into the next product opportunity with AUTO8, which is a BCMA CD19-targeting product where we have an initial trial ongoing in light-chain amyloidosis, we expect initial data to become available by the end of the year as well. As we're sort of looking into the first part of 2027, the key focus there is going to be on the first data from our BOBCAT study in progressive multiple sclerosis patients. This will be the first data set out of that study. We expect a second data set to become available second half of next year, where we expect longer follow-up, more patients and longer follow-up in that indication. Both, obviously, important data points as we go through the course of next year. When we then look to the end of next year, we're at the point where we expect to have the first data coming from the pivotal study, the CATULUS study in pediatric ALL. That study is enrolling very well. We expect that study to actually be -- reach the end of enrollment by the end of the year. And then obviously, we're getting into the follow-up and then the workup of that data, hopefully, towards the filing by the end of next year, early 2028. And then in -- when we look a little further out into 2028, we do expect then the Phase II data from the LUMINA study in patients with lupus nephritis. So there's quite a full set of data that we expect from the various studies going beyond the adult ALL opportunity, which we obviously continue to update you on as well. When we then look briefly on Slide #8, what to expect with regards to the BOBCAT study in progressive MS, we have in Q1 next year targeting the ACTRIMS meeting, which is obviously one of the key venues for MS data. We would, at that point, expect to have a total of 12 patients that we can report data from. We're going to look at safety at the PK/PD data, biomarker data and certainly early clinical experience. And then looking for the second half of next year with a total of expected 18 patients, we will then have an opportunity to look at clinical response, particularly with the longer-term follow-up. So we'll expect to have imaging data as well as expanding safety, PK/PD, biomarker data. And certainly, we'll, at that point, look at potential next steps for the program. So we believe that when we look at this opportunity in MS, obviously, the key clinical scores or EDSS scores, those obviously do contain elements that are either patient or physician-reported. And that is also why I would actually like to have about 12 months of follow-up for patients to understand that indeed, the response is a true reflection of the product activity, and we don't have an overlay of potential outcomes that are reported that might actually have a component that might be more placebo type of effect. So with that, I would like to actually move over to Slide #9 and hand over to Rob for the financial results.

Thanks, Christian, and good morning or good afternoon to everyone. I'm pleased to review our financial results for what was a strong second quarter of 2026, and I'll be referring to Slide 10 in the presentation. Our total net product revenue for the second quarter of '26 was $45.7 million. That's compared with $20.9 million in the second quarter of 2025 or compared to $26.2 million in the first quarter of 2026. This quarter reflects sales in both the U.S. and U.K. markets. While the U.K. market is showing strong adoption, it is still early in the launch and contribution from the U.K. was relatively minor when compared to the U.S. As Christian noted, based on the recent performance, we've increased our net product revenue guidance, and we now expect full year AUCATZYL revenue of between $140 million and $150 million. We were also pleased to see further improvement in gross margin during the quarter to 55%, up from 6% in Q1 and negative in all prior quarters of 2025. The improvement was driven by a combination of increasing commercial production volume, operating model efficiency and cost reduction initiatives that we undertook beginning earlier this year. We also began for the first time, clinical production in our Nucleus facility in the second quarter, further improving our cost per batch economics. We expect gross margin to continue to improve towards a peak estimate of 65% to 70% in the adult ALL market. Underlying the gross margin, our cost of sales in the second quarter totaled $20.5 million as compared to $24.4 million in the same period in 2025. The decrease was primarily driven by the improvements just mentioned as well as lower inventory reserves and write-offs in the quarter. Our research and development expense was roughly flat at $27.9 million for the second quarter of '26 compared to $27.4 million during the same period in '25. Selling, general and administrative expenses increased to $41.2 million for the second quarter of '26 compared to $30.3 million in the same period in 2025. The increase was primarily due to employment-related costs and professional fees supporting commercialization activities in both the U.S. and U.K. In addition, the quarter also includes certain onetime items such as termination-related expenses related to the strategic operational efficiency and cost reduction initiative that we announced back in April of this year. Our loss from operations for the second quarter was $43.8 million as compared to $61.2 million for the same period in '25. And finally, net loss was $39.1 million for the 3 months ending June 30, 2026, compared to $47.9 million for the same period in 2025. Last week, we announced that we entered into a strategic financing with Perceptive Advisors for the sale of notes of up to $250 million in aggregate principal amount as part of a 5-year interest-only senior credit facility. As part of the transaction, an initial $75 million in principal amount was drawn at closing and an additional $25 million will be available at our option for up to 6 months post closing date. An additional $150 million of subsequent capital may become available in separate tranches upon achievement of certain prespecified revenue milestones. This financing provides us with additional capital to support key inflection points for the business, including clinical data milestones in our oncology and autoimmune development programs that Christian just walked through. We'll have a meaningful opportunity to expand into new and larger markets, which we view as significant growth drivers and the potential additional tranches provide optionality and flexibility as we advance these pipeline programs. Our cash, cash equivalents and marketable securities at June 30, 2026, totaled $201.6 million. This excludes the initial drawdown on the Perceptive credit facility, which closed in July. This balance, combined with the anticipated net revenues and the first and second tranches of the credit facility totaling $100 million, provides us with cash runway into the second quarter of 2028. I'll now hand back to Christian to wrap things up with expected milestones and conclusions.

Thanks, Rob. We're moving to Slide #12 for the conclusion. We believe Autolus is well positioned for value creation. We have, on the one hand, the opportunities on the commercial AUCATZYL product in relapsed/refractory B-ALL patients on the adult population. We have shown very strong execution. We've seen a very positive market expansion, reached $71.9 million in net revenue for the first half of the year. This has allowed us to increase the guidance for the fiscal year 2026 to $140 million to $150 million in net product revenue. We believe there's a significant opportunity to grow the CAR T market share in this indication. And we're building on very strong physician interest, which is also, I think, exemplified by the interest to investigate obe-cel in the first-line setting in ALL in investigator-sponsored trials, which actually have already started, and we're looking forward to obviously seeing the results of those trials in the upcoming periods. When we then look in terms of the additional opportunities beyond the adult ALL population, we obviously have 2 pivotal studies ongoing. We have the pediatric ALL study ongoing, the CATULUS study, which is expected to read out by the end of next year. And we have also the pivotal study, the LUMINA study in lupus nephritis ongoing, which is expected to deliver data in 2028. Finally, with the opportunity beyond the classical rheumatology indications in the lupus setting, we're also looking at the opportunity in progressive multiple sclerosis, which gives us, I think, a shot at potentially getting to a very substantial commercial opportunity beyond what we are currently targeting in the oncology setting. This program is ongoing in a Phase I study. It's the BOBCAT study. And as indicated, we expect to provide data updates during the course of 2027. With that, we believe we actually have a set of interesting data catalysts and updates during the course of 2027, which will set us up well for then the expected opportunity for a launch in pediatric ALL in 2028 and subsequent launches in 2029 on the lupus side. When we look in terms of the overall setup of the company, obviously, the foundation that we built is a very strong foundation, both from a manufacturing and from a commercial capability perspective. And obviously, having now experience in more than 80 centers, authorized treatment centers across the U.S. and approaching 20 authorized treatment centers also in the U.K., which provides a very strong foundation for all the new indications that we're also planning and are developing here as well. So with that, I'd like to actually conclude and open up for questions.

[Operator Instructions] And our first question comes from Salim Syed of Mizuho.

Congrats on the progress. Just one from us on the guide. So Christian, Rob, when you look at the high end of the guide, it would imply a slight decline versus the 2Q $45 million revenue. Is that just conservatism on your part? Or are you expecting some sort of seasonality or other one-timers to affect the 3Q and 4Q revenue?

Very good question. So when we look at the -- obviously, the first half of the year, we see obviously a pretty significant step-up in Q2. We believe that is in part driven by the positive data that was reported from the real-world experience at the TANDEM meeting and certainly did drive a very significant increase in registrations onto the program in the second half of the first quarter. And those -- obviously, those patients obviously were driving to quite an extent, I think, the very positive outcome we've seen in Q2. So we think that creates a very good foundation for the rest of the year. There is certainly going to be elements of seasonality that we would expect during the course of the year. And so given that, certainly, we've seen that to some extent last year. It is an element that we're considering. And we believe that the guidance that we're providing is reasonable and certainly has an element of prudence as well.

And our next question comes from Matt Phipps of William Blair.

This is Madeleine on for Matt Phipps. On gross margins, could you provide any color on how we should think about the trajectory for the rest of the year and maybe comment on potential timing to achieve that target of 65% to 70%, given we're at 55% now?

Thanks, Madeleine. Obviously, a very good question. It's an area of significant focus from our side. Elements that obviously contributed to this substantial step-up in gross margin in the second quarter were, on the one hand, obviously, the number of batches that were manufactured through that period. Obviously an increase, as you could see on the commercial side, but we also did actually consolidate our clinical trial manufacturing into the Nucleus. So there is a larger amount of volume that we pushed through both on the commercial as well as the clinical side. That obviously helps a lot in terms of the key base cost that we have in the operation, the fixed cost within the operation and obviously allows us to sort of actually get to a broader number of batches that can support that. In addition, we've been very active on reviewing our entire operating model and looked at every aspect along the manufacturing process to ensure that we actually gain efficiency in the entirety of the manufacturing process, both production as well as product release. Those activities will continue, but we've made some significant changes during the course of the second quarter that we expect to actually have beneficial impact as we continue the rest of the year. So those are kind of the key areas that actually impact and actually did drive this very positive development that we've seen. We're guiding to 65% to 70% for kind of the more mature ALL business, which we expect to reach somewhere in the range of about 12 to 18 months. That's kind of the ballpark that we're currently seeing in terms of development. And those we will continue to update you on that, but obviously, an important step that we've taken now and which allows us to actually build a very strong foundation for the business.

And our next question comes from Yanan Zhu of Wells Fargo.

Congrats on a great quarter. So on the sales side, I was just wondering about your confidence about the next quarter or 2, given what you -- what visibility you might have into the third quarter. What's the confidence for another quarter with strong sales, given that you have this 74% jump from the first quarter to the second quarter. So the main question is ability to maintain continued sales at the new foundation, similar, I guess, along the lines of a prior question. And if you can comment on market share within the CAR T category and whether you are -- whether the growth is from switching patients or taking share or growing the market in a way?

Yes, Yanan, thanks for joining. I think when we look at the kind of future growth, I think this is very much growing the overall CAR T market share is kind of the key area of focus for us. And so that's sort of where really most of the drive is to sort of make sure that, that's kind of where we're headed with the product. We see -- I think most of the dynamic we've seen so far has been both obviously, within kind of the patient pool that already had prior access to CAR T, but it also included also patients that were kind of somewhat outside of the group of patients that were considered to be suitable for CAR T therapy. And that's already visible in the data that was presented by the ROCCA consortium at TANDEM when you look at the patient composition. So I think we're seeing a very positive dynamic. I think we have good -- we see good continued activity and demand. We expect that obviously to continue for the rest of the year and then continue to build momentum in 2027. So we're, I think, in a very good place there. As Salim asked before, there's going to -- probably going to be some elements of fluctuations that we may see between the quarters, but we're very confident with the guidance we're giving for the full year, and I think we're very optimistic for 2027 as well.

And our next question comes from Gil Blum of Needham & Company.

Also, I'd like to add my congratulations on a very strong quarter. Just a couple of quick ones from us. As it relates to the updated sCR for lupus nephritis, we're assuming it's the same number of patients just with longer follow-up, if you have any additional color to give there? And as a follow-up, you guys are already at 82 centers and you're thinking about 80 (sic) [ 90 ] centers by year-end. How should we think about how many centers you may have by year-end?

Thanks, Gil. Really appreciate the question. With regards to the CARLYSLE study, obviously, we're going to have a substantial portion of the patients that will have 12 months and longer follow-up, which we believe is going to be very meaningful and give us a real sense for the quality of the reset that I think we've seen early evidence for in our last data update for the CARLYSLE study. But this obviously gives us substantially longer view on those patients and believe that this is actually going to be there. So I think very helpful to understand sort of the magnitude of the clinical benefit that we may be able to induce in the severe lupus patients. So that's going to be, I think, the key focus is really the longer-term follow-up and the impact on the clinical outcomes. With regards to the centers, as you rightly pointed out, we kind of hit the goal midyear of being at 80 centers or above. I would assume we're going to be at the 90-plus centers by the end of the year. And obviously, that gives us a very good reach, and I think will allow us to make sure that the product is properly accessible across the entirety of the U.S. And so this is really kind of one of the key areas we'll continue to work on.

And our next question comes from Simon Baker of Rothschild & Company.