Lyell Immunopharma, Inc. (LYEL) Earnings Call Transcript

Okay. Good morning, everyone. My name is Daina Graybosch. I'm a senior equity research analyst here at Leerink Partners. I cover mostly immuno-oncology companies. And in that, I'm really thrilled to be hosting the CEO of Lyell, Lynn Seely, as one of the -- we were just talking, cell therapy company, still dedicated and focused on oncology indications.

And I think we'll start. You had some news this morning. So maybe everybody has been busy. They haven't seen it. You could just give us a quick overview of the news, and then we'll get into the programs.

Sure. So I think everybody knows Lyell Immunopharma is focused on next-generation CAR T-cell therapies for large B-cell lymphoma, and we also have a new novel CAR T cell program for metastatic colorectal cancer. Today, we had 2 big news items. First and foremost, we hired our new Chief Financial and Business Officer, Smital Shah, who's joining us with significant experience in the financial and business development areas. And then we also announced the -- taking -- the hitting of a clinical milestone and allowing us to take a second $50 million tranche from a PIPE that we did in July of 2025 at a price of $25.61. So a big day for Lynn all around.

That's great. So let's talk about -- since we only have 30 minutes, the first program, Ronde-cel. Is that how you say it? Ronde-cel?

Ronde-cel, yes.

Which is your bispecific CD19/CD20 auto CAR T. One, can you just tell us more about Ronde-cel and why you believe it has a best-in-class profile?

Yes. We believe Ronde-cel is going to be first-in-class and also has a best-in-class profile. It is a dual targeted CD19/CD20 CAR T cell. It was really meticulously designed to have full potency at either CD19 or CD20. It's a tandem CAR. And it was designed very specifically to bring more complete responses because some malignant B cells, for example, don't have CD19 or express low levels of CD19. And so patients don't go into complete response with CD19 CARs. It also -- because there are 2 antigens, it's much more difficult for a cancer to escape from 2 antigens than it is to 1. So we expect that dual targeting also to help with longer persistence and duration of response. And then finally, the other very special thing we do is in our manufacturing, where we do something called CD62L selection or enrichment. And this is to make our cell product very high in naive and central memory T cells, which have been really shown retrospectively in other trials to help with better outcomes for patients. So we at Lyell are very much excited that we are -- have 2 pivotal clinical trials ongoing for Ronde-cel. So we believe we're going to be first to the market and then with a best-in-class profile, both with high complete responses, durable responses and then really a safety profile, which is very amenable to outpatient administration.

Let's talk more about the differentiation, the CD62L because that's quite distinct from your competitors. What gives you confidence in that approach versus a lot of the other competitors have gone down the shorter manufacturing or Kite, which is the other company that says they're going to do a head-to-head study like you in second line? So maybe they're the most similar competitor so far in terms of their clinical strategy, they employ the split co-stimulation. So the CD62L versus shorter and split co-stimulation?

Yes. So there's a lot packed in there. I would say Lyell has already initiated our pivotal head-to-head trial. We treated the first patients in February. So we're off and running with many sites up and active and more to come. So we're really excited about that. Our CAR construct and our cell manufacturing is quite unique. And as I said before, we very specifically wanted to have a tandem CAR. This was meticulously engineered. And so if you're going to have a tandem CAR, which means there are 2 binders on a single CAR, it has full potency at either CD19 or CD20. This is actually very good for the cells. It's a much lower, should we call it, metabolic stress for the cells to express 1 CAR. It's much easier from a transduction perspective and a manufacturing perspective to get nice, consistent expression of a single CAR as opposed to trying to express 2 CARs. And so this was very intentionally designed by Dr. Yvonne Chen at UCLA to be a tandem CAR and not 2 separate CARs, to get better transduction, higher expression of both the CAR on the cells compared to what might happen if you try to express 2. So we think the design of the tandem CAR is really exceptional and gives us a great advantage there. And then this is coupled and has been from the beginning with the CD62L selection. We had an oral translational presentation at ASH, where we demonstrated that this CAR has 3x higher cell expansion in patients, both Cmax and AUC, so persistence than axi-cel or liso-cel, for example. And we believe this has a lot to do with the CD62L expression. We were also able to show for the first time, persistence. We can take CAR T cells from the peripheral blood of patients 2 months after they've been infused, co-culture them ex vivo with cancer cells and show cancer cell killing. Nobody else has ever been able to show that, to our knowledge, because you can't get enough cell expansion and enough persistence.

Cancer cells you took from the patient initially or just like cancer cell lines?

Just cancer cell lines, yes. But the CARs from the patients 2 months after infusion. So they're not only present, they are functional. So this is, we believe, the real advantage of the Ronde-cel design.

So clinically, it's really hard to compare the outcomes of these studies. It's really hard. So we have yours, we have the Kite one. We have one from J&J AbelZeta, and then we have the sort of homebrew Miltenyi version. What do you -- and all the designs are a little bit different, which we find Bill, my associate and the team, and I have tried really hard, and it's almost impossible. So what outcomes do you look at to give you confidence that this translational profile is translating to a great clinical profile compared to the others?

Yes. So I would say, first and foremost, outcomes in patients with large B-cell lymphoma treated with CAR are very much impacted by the patient demographics and disease characteristics. So you have to know who you're treating before you can start to look at outcomes. So really a deep understanding of the types of patients and their disease is important. Most of the data out there are single-arm studies. So if you really understand who's enrolled, then you can get a good idea about what you're looking at. We are really competing against CD19 CARs, right, that Lyell's in the lead with Ronde-cel, our intention is to displace CD19 CARs. And if you look at the single-arm data that they got approved with in the third or later line, we have a very competitive profile. Our overall response rates are 93%, data we presented at ASH, versus the 70% by the CD19 CARs. Our complete response rate, 76% versus 70%. And really importantly, the median progression-free survival we presented at ASH last year was 18 months in the third or later line compared to 6 to 7 months with the CD19 CARs. So this gives us great confidence as we move into these 2 pivotal trials, the single-arm study and the third or later line. And in the second line, we also are very confident because historically, with BREYANZI and axi-cel, the third-line data translated very effectively into the second-line data. When you look at our second-line data, it really is the data that experts in the field get the most excited about because we enrolled the hardest-to-treat patients in the second line. These are patients that don't even respond to first-line therapy, known as primary refractory disease patients. And if you kind of look in the literature, you don't see much from BREYANZI or YESCARTA on those patients because they're so difficult to treat. They were reported in the PILOT study for BREYANZI, the primary refractory subset with a 42% complete response rate. In our primary refractory patients, we showed a 61% complete response rate, again, much better. So we know these patients don't do well and yet in our trial, they are doing well. So we have great confidence not only because of what's known about the biology, but also because of the emerging data profiles.

So you said it's important to know like the patient you're treating. I find it hard to compare to the initial third-line studies of the CD19 CAR T because that's a long time ago. Like, what kind of patients are being put on those studies versus the patients that are being put on your third-line study? Do you think there's a trend towards better or worse prognosis and then there's an impact of all the physicians know how to use CAR Ts now? So could your indirectly better CR rate simply be a difference of who those patients are and better treatment at the centers?

Yes, of course, the problem with single-arm studies. So one of the reasons we are leaving no doubt, we are running the pure test of the head-to-head study in the second line. So we will know that answer, full stop. But be that as it may, every sign we have is that our drug -- our product is performing very well in the third or later line. I mean these aren't small benefits, right? These are large benefits that we're seeing over the third-line patients. And remember, if you go back to those BREYANZI and YESCARTA trials, they didn't enroll anybody over the age of 75. We have no upper age limit. We're allowing patients to come in. We've treated 87-year-olds, with good outcomes. And so this tells you that we're not -- we're treating, if anything, because physicians are so much more comfortable with CAR today, sicker patients than were treated back then because we know how to treat the side effects. The other thing is in the YESCARTA trials, they didn't allow bridging therapy, right? So that if you were progressing so rapidly, you couldn't wait for CAR, you couldn't come on their trials. Well, we allow bridging therapy because that's what's done in the real world. So when you look at the patients enrolled in our trial, you'll find that they are quite comparable, and we believe, in some ways, even sicker because they're older.

Yes. So even though physicians are more used to it, that's expanded this population. So you have these 2 dynamics overall and that gives you confidence. Can you talk about bridging therapy? It's been very interesting because Kite always only allowed steroid and I think targeted radiation, whereas you did see some bridging therapies allowed in the BMS and Novartis studies. And I think you were allowing it.

We are.

And how important do you think bridging therapy is? And is that going to be differentiating potentially for these bispecifics if you allow bridging and Kite again does not?

For the CAR T cells? Certainly.

Yes.

Well, real world, they use bridging therapy. So we would want to replicate those standard-of-care practice as much as possible. So we're allowing bridging therapy. The other thing we know is that bridging therapy is often used with patients that are progressing rapidly, right? So that may disadvantage them and not make their data set as translatable to real-world. So we feel like we're in a good position. And the other thing I might say while we're on this topic is that we're very happy with our fast-to-market approach in the third or later line because we think there are more patients who have had 2 regimens of chemotherapy prior to CAR. Yes, patients want -- or physicians want their patients treated second line, but very often, they have to be referred in to a CAR treating center -- they have to get their fares in order, get that apheresis chair. And so very often, they get a second regimen of chemotherapy. And we believe there are 6,000 to 7,000 patients that are available in the third or later line. So we think this is a substantial market and being first is going to be a real advantage for us.

Are you allowing prior CAR T in that study?

So we are not evaluating CAR experienced patients because the much bigger market, the better place for Lyell to invest our development dollars, is in the CAR-naive population. We intend to displace the standard-of-care CD19 CARs, not go after them.

Yes. I think one difference in the clinical is on the safety side. I think Ronde-cels, you did -- you started in the whole cohort of pretty high ICANS, 12%. You implemented prophylaxis, and you brought that down, I think, to 4%, grade 3, but that's still looking a little bit higher than some of the competitors. But can you just help us understand that? Is that a fair comparison? And with that rate of ICANS, is that going to just always limit you a little bit to be able to go to more community centers?

Yes. So first and foremost, Ronde-cel has never had any grade 3 or higher cytokine release syndrome. So when you think about the 2 key side effects for CAR T-cell therapy, there's cytokine release syndrome. We've had no grade 3 or higher CRS. And then there's this neurotoxicity of ICANS. And by far and away, the highest rates of ICANS observed are with the approved YESCARTA. And when you talk about the data that we've shown, we now, with dexamethasone prophylaxis, have seen less than 5%. We have treated patients and are treating patients in the outpatient setting. We think our safety profile with no cases of grade 3 CRS, less than 5% ICANS is exactly what patients and their physicians are looking for and gives great confidence to treat in the outpatient setting. So if anything, this is going to expand the ability to get our CAR T-cell therapy into the community centers. When you think about it, the whole value proposition for patients is changing, right? It used to be, you had a flip of a coin, 50% chance in the third or later line, of going into complete response. Now you have a 76% chance assuming our data hold. You used to have to go in the hospital and have to worry about CRS and ICANS. Now you're treated as an outpatient. You only have to stay around the site for about 2 weeks. So it's a much better opportunity for patients.

So we've mentioned it a couple of times, but you have a really bold strategy. You're doing the first head-to-head versus approved auto CAR T study in second-line large B-cell lymphoma, actually aligns with Dr. Prasad's JAMA vision that was published in December, to do these head-to-head studies. So I mean, what -- I think you've talked about what gives you confidence already, that you can beat CD19 head-to-head. But can you just talk about it, not only are you product to product, you're process to process? And what gives you confidence as a small company with a more naive manufacturing that you can actually -- you're going up against the Kite commercial and BMS commercial processes?

Well, we're obviously very confident. Otherwise, we wouldn't be doing this. And I think, first, we're very confident in the biology behind our product. We're very confident in the clinical data, both the efficacy and the safety profile, as we've already spoken about. And we're very confident in the manufacturing. So Lyell has its own life manufacturing center. It's a state-of-the-art facility that was designed specifically to enable commercial launch. It's fully digital. It's state-of-the-art. And we have a -- it's a very semi-automated low-touch process. It's highly reliable and predictable. And quite frankly, it's easier than the BREYANZI process for sure. And we have a greater than 95% success rate, a median vein to site time of 16 days. So it is really a state-of-the-art process. We're highly confident in it. Some people think the CD62L enrichment might add time, it might add complexity, but it really doesn't. And it's very simple. We have never had a failure due to the CD62L enrichment. And again, the whole process works quite smoothly.

How does that work in terms of reimbursement? Because I think you're having payers in the U.S. pay for the standard of care in the control arm and then you'll pay for patients on the active arm. But how do you make sure that you're not introducing bias one way?

Well, if you think about it, it's really just the opposite, isn't it? This is very much exactly what happens on a patient's journey. They come into the center, they get approved, right, because you want to have proof of from your payers, whether it's Medicare or commercial insurance. And so we're doing that, and patients get randomized once a commercial or Medicare insurance has been approved, and then they get randomized either to Ronde-cel or to YESCARTA or BREYANZI, physician's choice. So it's a very real-world experience and directly relatable to what's happening to them today in their process. So we think it's actually a good part of the trial design. It obviously helps us with our -- manage our cost. And we're able to do this trial in the U.S. where we have really a large percentage of the highest enrolling centers, whether it be MD Anderson or Moffitt or all of Sarah Cannon Research Institute. So a really nice footprint. So I think it works out well, but we're also able to do this in Australia and Canada.

Got it. You're going to have a very real-world study. You allow bridging, standard of care choice, and you do the reimbursement.

And there's no upper age limit. You can be primary refractory, you can be early relapsers, you can be late relapsers. We designed this trial very specifically to -- if you're eligible for CAR, you can be evaluating the study. It's as real-world and as a direct comparison as we can make it. So you won't be able to say afterwards, the patients are going to be stratified, so the risk should be spread evenly as we can across the 2 arms. So it's a beautiful test, and we're doing it because we're very confident in the profile of our product.