Autolus Therapeutics plc Stock

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.

Two quick ones, if I may, please. I wonder if you could give us any help on OpEx run rate. It seems that we've had a fairly similar performance in the last 2 quarters on SG&A. R&D has fluctuated a little bit. I'm just wondering how Q2 or H1 works for those 2 cost lines as an indicator for the second half?

And then secondly, on -- a question on capacity. The guidance for this year implies probably about 300 patients treated. Given the -- given that volume and given the clinical trial material, which will obviously only increase going forward, I just wonder if you could give us an update on where we are for capacity at Nucleus as it stands. And we know it's a very modular facility, how that can evolve over the coming years?

Thanks, Simon. Very good question. I'll start with the capacity question and then hand over for the OpEx question to Rob. On the capacity side, we're very well set up from a capacity perspective. We have an ability, we believe, at this point to fully serve the ALL market with our current setup and our current -- which is both the actual physical setup as well as from an operator and process perspective.

So we're very well set up from a capacity perspective. And we have an ability to obviously take on license additional clean rooms and as we're getting ready to really substantially increase beyond the ALL, which includes both adults and peds where we're very well set up today. Going beyond, obviously, we can mobilize additional clean rooms at the facility. You don't want to do that too early because at that point, it would actually increase your overall cost of goods, which you don't want to do because your operating costs go up with more capacity than in that case might be idle and not properly used.

But we have adequate levels of capacity we can mobilize beyond where we're currently set up. But for -- from an ALL perspective, we're fully set up for both adults and pediatrics in the territories we're active in and can actually very well manage that. But it also gives you a good sense for the level of improvements we're expecting to see. And with that, obviously, what's ultimately going to drive as we're increasing the number of batches through the facility, will actually how this is going to help us drive down the overall cost per batch, but also increase, obviously, the margins overall for the products. With that, I think we're headed over to the OpEx question, and I think this is one for you, Rob.

Yes. Thanks for the question, Simon. I'll give you maybe a little bit more color. When you think about our R&D line, it's been -- if you look at last year, even it's probably on average of kind of mid- to high $20 million per quarter. What you'll see here is some variability around clinical production and when that actually hits in terms of the actual quarter of production and delivery to the sites. You saw a step-up from Q1 to Q2 this year that was largely driven by kind of enrollment in studies more than anything in some of the clinical production.

This associated with that, it's kind of like a onetime event within the study itself. But other than that, I think it's fair to say that we're not expecting any other kind of significant ramp-up or decrease. We're in the middle of executing a lot of this next wave of studies that Christian's kind of walked through.

On the SG&A line, the one thing I would call out is predominantly in the first quarter and second quarter of this year, we also were taking some of these onetime charges associated with the restructuring that we announced back in April. So that is incorporated on this line for the total company. Again, if you look to kind of exit last year, we were in kind of a mid- to high [ 30 ] range. And so when you kind of adjust for some of those things, we're kind of still in that ballpark with some very typical kind of year-over-year inflation increases and those kind of things.

But fairly stable from that standpoint. Again, we're not expecting any significant kind of ramp-up for decrease other than some of those onetime items, which are largely behind us now with the second quarter.

And our next question comes from Sebastiaan van der Schoot of Kempen.

Congrats on the excellent quarter. I was wondering whether you could provide some insights into those 80 activated sites. How many of those have actually already treated and have had experience with AUCATZYL? And do you see an acceleration of the time between activation and first patient treatment? And then regarding the capacity, you're also evaluating an automated system. When would you implement such a system? Is it already in the -- for adult ALL indication? Or would that only be if you also get approvals in autoimmune?

Thanks for that, Seb. With regards to the 80 sites, the majority -- vast majority of them actually have already treated a patient. So we do see that actually that transition from getting activated and actually treating patients tends to be fairly quick. Quite often, actually, the activation is sort of motivated by 1 or 2 patients that are suitable for CAR T therapy at the center. And that's really driving the process and obviously, I think is a key part of the motivation also for centers to get authorized and to get online.

So we're seeing a very positive dynamic there. And obviously, depending on the level of familiarity with obe-cel, most of the centers, obviously, that we now actually are adding are -- have not been part of clinical trials with obe-cel before. So that obviously is going to be then the first time that we're going to be using the product. So that is certainly, I think, the dynamic that we're seeing at the stage that we're at.

Obviously, early on, we had a lot of centers that already had experience, and we basically had always a seamless roll forward in terms of the experience from the development to the commercial side.

Now most of the centers we're adding on are centers that actually where obe-cel is going to be probably a new product that hasn't been actually used at the center before. And that also, obviously, certainly, as the centers start building, doesn't lead to an acceleration, but a pretty steady pace that we're seeing across these centers from here on forward. That's sort of the expectation.

With regards to the capacity question, obviously, as I indicated before to Simon, we're very well set up. Our manufacturing process is actually to quite a significant extent already automated. We're going to expect to do another significant change on our current platform probably over the next 12 to 15 months, which will get us to a very, very high level of automation on the system.

And then obviously, we're looking at additional technology for future opportunities. But in terms of the ALL setup, we're very well set up. And we're basically getting a lot of the gains out of the operational improvements that we're doing in the facility, not just on the actual manufacturing process, but the entirety of the whole chain of events that from the input into the facility, products coming in to all processes through testing, through release and then obviously the products reaching or being sent back to the treatment centers.

Every one of those steps actually is currently being evaluated, and we're working on improvements and efficiency gains. It's been quite significant progress that we've already been able to actually realize and build into the operation at this point in time.

And our next question comes from Rajan Sharma of Goldman Sachs.

I realize it's early, but just could you help us understand what the U.K. contribution was to AUCATZYL revenues in the quarter and what the initial feedback has been on the launch there? And perhaps if you could just help us understand also how we should think about contribution for the remainder of the year and where you are in terms of center activation.

Yes. Thanks a lot, Rajan. Really good question. So when we look, obviously, at the U.K., the U.K. has about, give or take, 60 million people, which is about 1/6 of the U.S. population. So I think that's a ratio, I think, that sort of gets to sort of what's the potential ultimately and what's the ultimate patient numbers that you're going to have. There's certainly going to be about that ratio in terms of differential that we're going to expect.

We are -- we do see a very positive initial momentum. Obviously, we've been active in a substantial number of clinical trials over the years in the U.K. So there's an element of familiarity with the product across a number of the academic centers. And we now obviously have activated already a good number of them. We expect to be at around 20 or so by the end of the year. And that gives us, we believe, a good footprint across the U.K.

Now at this point, when we talk about the U.K., we're really talking about predominantly the England. We're in the process of market access in Scotland. That will obviously then expand to the full size of the U.K. as well. So there is -- we're in, I think, on very good footing there. We have very good momentum. And we do expect that, that will actually continue going forward for the second half of the year.

So from, I think, an initial, I think, perspective, we do believe that we actually have seen very nice momentum. But given the difference in just the population size, we're looking at substantially less than 10% of U.S. sales that we're sort of seeing at this point in time. So that eventually, I think we'll sort of probably get beyond that. But it's an early part of the launch, and we just have completed the second quarter of the launch in the U.K.

And our next question comes from Emily Bodnar of H.C. Wainwright.

Congrats on the quarter as well. Maybe can you frame the ALARIC readout for us by year-end and what you're kind of looking to see response rate-wise versus BCMA CAR T to maybe want to move this program forward?

Thanks, Emily. On the ALARIC study, this is a study we're conducting with our colleagues at UCL. And we are evaluating, obviously, the use of the BCMA program here in the light-chain amyloidosis setting. What we're interested in is to see obviously a good level of activity, a good safety profile, which is important in these patients and sort of with that, I think, build the foundation for the program. I think at this point, it's probably too early to guide on how we might want to consider taking the program forward.

We're in this Phase I study, which is not complete at this point. This is the first data set coming out of the study, and certainly a bit premature to sort of actually get a good feel for how the program might stack up. I think it's worthwhile keeping in mind that the activity that you expect in this indication is very high, and it's probably not going to be straightforward to actually look at differentiation based on response rates in this indication, certainly not in small patient numbers. But I think we're going to see a very solid response rate in these patients and a good safety profile. I think those are the 2 hallmarks and the 2 pieces of information we're looking for.

And our next question comes from Roger Song of Jefferies.

This is [ Fiona ] on for Roger. Congrats on an amazing quarter. Just following up on the question regarding the activated centers and physician adoption. Can you comment on the utilization and repeat behavior from physicians among the centers that is more active or you have more visibility into? Is it more concentrated in certain centers? Or is it more widely distributed? And I'll hop back in the queue.

Thanks a lot, Fiona. So when we look at the centers that we've been active in for a longer period of time now, we do see a very positive adoption across those centers. They do report the patients slightly differently depending on the center. So you might actually have centers that report predominantly through one name, but actually what you -- what's happening behind that name is actually the broader team that's actually utilizing the product and actually employing it.

Other centers actually report on the individual physician basis, and we have better visibility. So we see -- but in general, we see a very nice level of adoption across, obviously, all the CAR T users at the centers. And one of the key things that we're obviously looking at and we're certainly working on is to see that we can expand ultimately the number of CAR T users in those centers to really get a much broader adoption in each one of the centers. That's one dimension. The other dimension that we're certainly looking at very carefully is, obviously, the referral patterns into the centers and obviously to look for ways to support the referrals into the centers as well.

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Christian Itin for closing remarks.

Well, thank you very much for joining us for our Q2 update. Obviously, a very positive quarter, a lot of good momentum, and we're looking forward to keeping you updated and talk to you at the latest at our next quarterly update, but most likely meet in between. Thank you very much, and have a great day.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Good day, everyone, and welcome to Autolus Therapeutics First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to the Executive Director of Investor Relations, Amanda Cray. Please go ahead.

Thank you, Carmen. Good morning or 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 status of the 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 timelines and market opportunities for obe-cel.

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 will turn it over to Christian.

Thanks, Amanda, and welcome, everyone, to our first quarter update. Moving to Slide #4. We had a very good first quarter, and we see nice traction building both in the U.S. and obviously, in our early launch in the U.K. as well. In Q1, we had $26.2 million in revenue booked, and we do see a very nice penetration and deepening with the positive physician experience that was highlighted at the Tandem meeting as part of the ROCCA Consortium presentation, where we had approximately 60% of our commercial patients represented in that data set, and we had discussed the data at the full year update, which is gave a few weeks ago and also was further analyzed and reviewed in the context of a KOL call we did in the early part of April.

When we then look into the U.K., we do see a very good start in the U.K. We have more than 10 centers already active. We're going very strong in the U.K. with regards to not only center onboarding, but also start to see early patients come in and actually become treated under the NHS access program.

Now when we look into the 2026 overall outlook, we do see that we have a very nice continued momentum. We're currently from a perspective of U.S. centers already at around 73 centers, and we're increasing beyond 80 centers by the end of the year. Our year-end guidance -- full year guidance is unchanged at $120 million to $135 million. And for the first time this quarter, we did see a shift to positive gross margin, which is important because, obviously, this is one of the key metrics that we're looking at during the course of this year to start to actually see that the overall commercial base and our ability to ultimately drive proper cash flow into the company increase over time.

So first time positive gross margin and obviously, a lot of that impacted by, on the one hand, an increase in volume, but also operational improvements that we made to the overall operation of the company, but in particular, the operation of the manufacturing plant that we're running. So this is where we are with regards to the overview from a commercial perspective for AUCATZYL. Very good dynamic, and we believe very strong momentum as we go into Q2.

So with that, we're going to Slide #5. I would like to start on the right-hand side and just briefly talk about the journey that we're on with regards to moving the product to a place where indeed we have a profitable ALL business. The foundation was really laid during the first year of launch. And what we had to establish during that first year of launch is consistent and high-quality product supply and services so that we have a strong foundation, we serve our patients properly, and we can generate very strong outcomes in these patients. And you've seen all of that actually presented as part of the ROCCA Consortium's experience, which had more than -- actually almost all patients that were intended to be treated actually receive treatment.

And we also did see that, that treatment actually translated into a very positive safety profile with no high-grade CRS, only 3% high-grade ICANS and more than 90% overall response rate in the patients. So a remarkable outcome in the hands of the physicians in the real-world setting. And we're also starting to see that we already start to see branching out of the patient pool into patients that actually are older, have more comorbidities, typically tend to be considered difficult to treat. That's one expansion that we've seen, but also an expansion into patients that have very limited tumor burden. And with that, obviously, what we have seen in our prior studies certainly have a good opportunity to sort of get a more pronounced benefit over time.

So we've seen an expansion already in terms of the patient pools. That is very important because based on that behavior as well as the good safety profile, we do expect that, that forms a very strong foundation, and we see that translate actually already in the first few months in 2026.

The second stage now as soon as we actually have established consistent high-quality product supply and services, that is actually when we switched gears and really started to drive optimization, improve efficiency as well as at the same time, obviously increase the volumes that actually we're driving through the overall operation. And with that, have an ability to actually get our overall cost down for the products. We expect the peak -- at the peak ALL business to be around 65% to 70% gross profit margin, which gives us a very healthy business for the ALL side of our AUCATZYL.

Now the optimization we ran through, obviously, also was not just an optimization in processes, but also with that, obviously, we have run through a reduction in force at the company of 13%. And we also, at the same time, driven up the efficiency that we're running within the operation. And you'll see that in a very simple metric, we expect to produce twice as much product this year compared to last year with overall staffing that is at or below the levels that we had last year. So that gives us a very clear understanding of why indeed these gross margins are moving into the positive and will continue to improve as we go through the course of this year. Now overall, as once the one-time effect of the restructuring is taken care of, and you'll see that pass through, and Rob will talk to that briefly, we expect for 2027 a net impact of a savings of $15 million on an annualized basis.

When we then look on to the development side and leveraging the exceptional profile that we now not only are seeing in clinical trials, but see it translated also in the real-world setting, we're obviously building on that set of properties into a range of additional indications. The first one clearly to extend the treatment from the adult population into the pediatric population. And we have the Phase II expansion of the CATULUS study ongoing. Data is expected towards the end of 2027, and we have aligned with the FDA on the protocol design and support for potential registration.

The second study, obviously, that is progressing well. We expect actually data during -- additional data towards the end of this year is the CARLYSLE study, where we have added additional patients, and we're also -- obviously, we will have substantial more follow-up in that patient population. And I think that will give us a very good understanding of the type of benefit that indeed a CARLYSLE or obe-cel can induce in indications now beyond oncology in this case, in a refractory form of lupus -- systemic lupus.

The next study that is actively enrolling is the LUMINA study, which is in lupus nephritis. This is the Phase II study, where we have agreement with the agency to -- based on this study, aim for a registration in refractory lupus nephritis. The study is active in certain countries in Europe as well as the U.S. and we're expecting data from the study in 2028.

Finally, the study that will get us into neurological diseases is the progressive multiple sclerosis study that we're conducting, which is the BOBCAT study. This study is continuing to enroll, and we expect initial data at the end of this year and then full data during the course of next year.

When we look a bit more broadly, we also obviously will have additional data collection through the ROCCA Consortium, which is actually continuing to collect information from patients treated with commercial product and actually starting to look at quite a range of questions related to the performance of the product and the properties of the product with a clear view from the real-world setting. In addition, and this was also part of the KOL call that I referenced before, we're seeing investigator-sponsored studies starting that actually are looking at the use of obe-cel in frontline consolidation setting, which is ultimately aiming to explore whether indeed an abbreviated frontline treatment might be possible, and we're obviously very interested to see how the product performs in those settings. And we expect our investigators to report in upcoming conferences on their studies.

With that, I'm at the end of the introductory remarks, and I will hand over now to Rob for the financial results.

Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the first quarter of 2026, and I'll be referring to Slide 8 in the presentation. Total net product revenue for the first quarter of 2026 was $26.2 million compared with $9 million in the first quarter of 2025. This quarter reflects sales in the U.S. and our first quarter in the U.K. market. Though given it is early in the launch, contribution from the U.K. was minimal.

As Christian noted, we're pleased to shift to a positive gross margin during the quarter with $1.6 million compared to losses in prior quarters in 2025. With the combination of increasing product revenue and our cost reduction initiatives that Christian mentioned that are underway, we expect the margin expansion to continue as we move forward. Underlying that gross margin, cost of sales in the first quarter totaled $24.6 million. That's compared to $18 million for the same period in 2025. The increase primarily reflects costs related to higher AUCATZYL sales period-over-period.

Our research and development expenses decreased to $21.2 million for the first quarter of '26 from $26.7 million during the same period in 2025. This change was primarily due to a decrease in development activities, including clinical trial and clinical manufacturing supply costs as well as capacity mobilization costs, mostly all related to obe-cel.

Our selling, general and administrative expenses increased to $39.9 million for the first quarter of 2026 compared to $29.5 million in the same period of 2025. This increase was primarily due to salaries, other employment-related costs and professional fees supporting commercialization activities in both the U.S. and U.K. In addition, this quarter also included one-time termination-related expenses related to the operational efficiency and cost reduction initiatives that we announced last month in April.

Loss from operations for the 3 months ending March 31, 2026, was $59.5 million as compared to $65.2 million for the same period in '25. And finally, net loss was $71.6 million for the 3 months ended March 31, 2026, compared to $72 or $70.2 million for the same period in 2025. Our cash, cash equivalents and marketable securities at March 31, 2026, totaled $229.4 million as compared to $300.7 million at December 31, 2025. This decrease was primarily driven by net cash used in our operating activities.

As Christian noted, we are reiterating financial guidance issued in January that we expect between $120 million and $135 million in AUCATZYL net product revenue in 2026, including contribution from both the U.S. and U.K. markets. And finally, based on our current operating plans, including the anticipated AUCATZYL net revenues, we expect that current and projected cash, cash equivalents and marketable securities will be sufficient to fund our operations into Q4 '27.

I'll now hand back to Christian to wrap up with a brief outlook on expected milestones. Christian?

Thanks, Rob. So when we look at the -- towards the end of this year, we have updates from three of our programs. We have the longer-term follow-up from the CARLYSLE study. We have initial clinical data from the BOBCAT Phase I in progressive MS. And we expect to have initial clinical data from the ALARIC Phase I study, that's the AUTO8 trial in light chain amyloidosis, which we're collaborating on with UCL also by year-end of this year. Full data then expected for the BOBCAT study during the course of 2027. The pediatric Phase II data readout is expected for year-end 2027 and the LUMINA Phase II data in lupus nephritis is expected in 2028. Those are the key updates and key milestones.

And with that, we're opening up to questions.

[Operator Instructions] One moment for our first question, it comes from Gil Blum with Needham & Company.

Congrats on the progress. So you're saying you're seeing some level of market expansion, older patients, maybe a bit patients for consolidation, that sort of thing. It didn't seem to change the guidance for this year. So I'd appreciate your commentary on that. And then I have a follow-up.

Yes. First of all, thanks a lot for joining, Gil. The dynamic we're seeing in the market is very positive. But obviously, this is -- we're still early in the year. I want to see the dynamic obviously play out into the -- into fuller aspect as we go through the course of the year. The guidance at this point, we believe, is reasonable, and there's no -- frankly, no reason for us to change the guidance at this point. But obviously, we'll keep monitoring the development and -- if indeed, we see a different trajectory, we obviously will update the market.

Very helpful. As it relates to the LUMINA study, we just saw another registrational study come up, again, in lupus nephritis kind of like in a similar line of therapy. Are you guys seeing any potential challenges in enrollment? I mean, is it a little crowded?

Thanks, Gil. So the population we're going after is a proper refractory population that are post the standard of care, which is based on B-cell depleting antibodies as well as calcineurin inhibitors. So it's a very -- that's a pool that's currently not served by the standard of care, you beyond that. And the trial size that we need to recruit is very limited. We're looking at a 30-patient trial. And from that perspective and also given that we're running the study both in the U.S. and outside the U.S., we believe we're in a good position to enroll the study. So we're not worried about that.

Excellent. And maybe a last one on the multiple sclerosis. Can you remind us what level of data you think you may have in 2026?

So the BOBCAT study looks -- first of all, it's a dose escalation study. So we're starting at 100 million with an ability to go further up. So that's the basic design of the study. We expect to have initial information on the behavior, obviously, of the product with regards to safety, but also the dynamic, the cellular dynamics that we're seeing, which is important. You want to understand the ability of the product to expand in the periphery, but also look at the presence of the product in the CSF, obviously, on the other side of the blood-brain barrier. And then certainly, we'll record the various types of markers that we have available here that actually monitor both either the inflammation -- inflammatory state of the disease as well as potential damage to tissue that you can monitor both with biochemical markers as well as with imaging.

So we'll have early data in terms of the behavior. And then I think as we look into next year, I think we start to have more data points that look at the actual disease scores and the ability, obviously, and frankly, any potential impact on disease scores going forward. For that, you want to have several data points and a longer observation time to make sure you're not actually monitoring potential placebo effects or other types of impact that you might have given that part of those assessments are either physician or patient reported. So hard measures for this year, mostly on the actual behavior and safety. Behavior from a pharmacodynamic perspective and pharmacokinetic markers, but also then as we go into next year, looking into the actual disease scores themselves.

Our next question comes from Simon Baker with Rothschild & Company Redburn.

Two, if I may, please. Christian, I just wonder if you could give us a little bit more detail on the mechanics of the U.K. rollout. And as I believe there are 20 CAR-T centers that, in principle, could administer AUCATZYL. What's the cadence of rolling those out in terms of getting centers on board? How does this compare with the experience in the U.S.? Any color on that would be helpful. And then on the R&D expense, it was lower than expected in the quarter because of clinical trial activity. I just wonder if you could give us any more color on the evolution of R&D spend as the year goes on.

Okay. Thank you. Thanks a lot for joining. With regards to the U.K. rollout, we actually see a dynamic that we think is at least as quick as what we saw in the initial phase in the U.S. It might actually be quicker. One of the things that is positive about the U.K. system is that the decision whether or not a patient would actually go on a CAR-T therapy or not is actually centrally made, which actually accelerates decision-making. That's actually a benefit of the way that is organized rather than individual center by center, physician-by-physician decision that is normal in other health care systems.

So there are elements actually that are allowing us to probably move even a bit faster than we were able to do in the U.S. And we see very positive dynamic, very positive messaging also around from the NHS. NHS gave -- there were interviews held on television in the U.K., et cetera. So there was quite a lot of presentations and work that the NHS itself did, frankly, increasing the awareness of the product and the opportunity for this new treatment modality for patients. So I think from an awareness perspective as well as from a drive perspective that we see in the center base and then the initial decision-making process or the internal decision-making process basically being going through a single body to take the decisions, I think, is actually very helpful, and we expect a good rollout here in the U.K.

With regards to R&D expense, I think I'll start, and then I'll hand over to Rob. I think what's important on the R&D expense, obviously, there is some changes as we see our activity with regards to clinical trials as you transition from one trial phase to another trial phase that usually slows down a little bit the enrollment in that process. There can be some fluctuations. But also if we look back into last year, obviously, there was still quite a lot of work that was ongoing related to the longer-term follow-up of the FELIX study that actually that work will be reduced over time as we're sort of obviously ramping up some of the other clinical activities. So there are quite important trade-offs there that we have on actual clinical trial activity.

And then the other area is really the mobilization of additional capacity at The Nucleus, which we're obviously kind of taking on as we're sort of ramping now the demand in the U.S. And we also had some activities still ongoing during the course of last year. Those activities will substantially be reduced or pretty much are coming to a stop. And so we actually have now an ability to -- obviously, we'll have certain of those activities, which are also R&D-related costs as you mobilize the activity will start to obviously be reduced, while at the same time, we start increasing, obviously, our clinical trial costs. So we expect all in all, that there's going to be very helpful trade-offs and also we'll keep overall that R&D expense at a fairly steady level. Rob, do you want to add anything?

Yes. I mean the only additional thing I can add, Simon, I think Christian covered it really well. Another example I'd throw out there certainly was our pediatric study, where it was at a stage where we had that kind of first cohort enrolled and was still active at sites. That was part of the data presentation that happened at the end of last year. But in terms of getting this next wave up and going, we're more in kind of a valley and now we're in the enrollment for the expansion cohort. And certainly, as we start treating more patients, both in the clinical programs, even on some of the investigator-sponsored trials that we have out there that Christian mentioned, you will see more clinical supply-related costs that will come in. But this is going to kind of move kind of up and down a little bit. We're not projecting any significant add of infrastructure, et cetera, on the R&D side.

One moment for our next question that comes from Salim Syed with Mizuho.

Congrats on the quarter. Just one for us on the data that we're expecting this year, Christian and Rob, it sounds like for the MS, the more important data set is going to be coming in '27. I don't know if you sort of interpret the same way for ALARIC. I'm just trying to balance how important do you guys deem these data sets coming at year-end? Are we expected to get any sort of bogey or how you guys are deeming what is the successful outcome on these year-end measures? I'm just trying to balance that with just the cash runway here of 4Q '27.

Yes. So when we look at the nature of the MS study, obviously, we're collecting data points on disease score. And in order to actually get, I think, a good sense of the trajectory of the disease score, you need to have a certain amount of observation period. We obviously collect the data. We'll have an initial view on that. But to actually be -- make a strong statement about the trajectory that you'll see after a few months is probably not sufficient. I know there is a temptation to do that, and there is certainly -- we see that sometimes in the market that that's been done. But we believe with those types of data points, we actually want to have a little further out a view. And with that, I think that more stable data.

On the ALARIC study, I think what we do have is certainly an initial good understanding of the level of activity we have in this disease setting. We haven't actually reported on that before. And I think that should give us a good feel for the level of activity that we're seeing and the impact we're seeing in these patients. So I think that's certainly going to be a data point that we're obviously -- I think will be very helpful and will certainly from a readout perspective, I think will certainly be interpretable in a clear way. And -- but the other aspect, I think, is also getting back to the MS program. I think one of the things to sort of be clear about is that the importance here is, on the one hand, in the short for the data point at the end of the year, is the ability to demonstrate that indeed the product actually can be -- give us a safe product profile in these patients, which I think is very important for these patients. But also then actually have -- be able to actually show that indeed, the product is active in the CSF and with that in the central nervous system. I think that actually is a key piece of the information and it really goes to the foundation of the rationale for using the cell-based product because that allows us to actually get into the -- across the blood-brain barrier and with that, have an [ ability ] for activity.

And just as a reminder for some of you, if you haven't actually been able to listen to the KOL call, Lori Muffly did present one of her patients that had explosive ALL or filled up bone marrow, the disease strongly, frankly, intruding into the brain and into the CSF and frankly, putting pressure onto the spine directly leading to the patient becoming paraplegic. What she described is that she treated the patient with AUCATZYL, which she thought was the only treatment she could give the patient that would be actually safe enough. And what she was seeing is that the patient within 28 days had actually the leukemia taking care of MRD negative in the periphery, but also obviously, clearance in the CNS and the patient actually recovered mobility and control over her body. So that tells you a lot about the ability of the product to cross the blood-brain barrier to be very active and remove CD19 positive cells, in this case, also leukemic cells in the brain to a point where indeed there is massive improvement that could be seen in the patient. But that's really at the heart of the feature, which is unique to this type of a therapy, and that's really what we're building on for the BOBCAT study in progressive MS.

One moment for our next question. It comes from the line of James Shin with Deutsche Bank.

First one, I appreciate AUCATZYL achieving positive gross margin this quarter. And pending AUCATZYL's top line growth and with the RIF in place, could we see Autolus becoming profitable on a company level basis by, say, late '27? And second question, between Besponsa and Blincyto, is Blincyto the main bridge before patients receive AUCATZYL? And does the bridging tend to align with AUCATZYL's manufacturing turnaround time?

Thanks, James. Very good question. So the first related to kind of the trajectory for the ALL business. What we're projecting for the ALL business is that we're going to cross the line to profitability in the ALL business in 2028. Whether or not the company will actually be profitable at that point also depends on the reinvestment rate that we'll have in the upcoming 1.5 years towards that time point. So that's going to be the key driver whether or not we're going to be -- can be profitable as a company or not by that time point. But as an ALL business, we expect to cross that line in 2028.

With regards to the bridging therapies that are employed for AUCATZYL, typically, you would use for bridging either chemotherapy or inotuzumab or Besponsa, you would not use Blincyto. And the reason for Blincyto is this is when a treatment when you started, it should go for -- it's basically a continuous IV infusion for 4 weeks, which is actually longer than the manufacturing turnaround time for these patients, and that actually wouldn't make sense. So we don't actually see the use of Blincyto for bridging in -- with our product. It's mostly driven by chemotherapy and/or inotuzumab.

And we continue to the next question, it comes from Matthew Phipps with William Blair.

I guess could you maybe characterize a little bit of the growth that you've seen this quarter? Is it from greater utilization at current centers? You mentioned expansion in older patients? Or is it mainly expansion into new centers? I guess what percent of the market do you think you'll have covered when you reach the 80 centers by the end of this year?

Thanks, Matt. So when we look at the growth, we see that actually, given that we already have 73 centers on when you compare to the beginning of the year, we were at about 65. The majority obviously comes from the centers that were already active. And that's where you see the repeat use and you see that build up. The new centers obviously gradually build on, but their initial activity is going to be limited. There's going to be 1 or 2 patients, initial experience gained and then that eventually translates further. So we see a lot of good positive momentum out of the centers.

One of the metrics we're looking at is also not just the centers themselves because when you look into the centers, what you do see initially is that typically, it's a small number of physicians that might actually use product. And what you really want to do is you want to see actually the group of physicians using the product increase per center. So one of the metrics we're looking at is obviously the physicians that are actually using the product, and we actually see very nice progression in terms of the numbers of physicians using the product and actually dosed the patient. So we kind of track that as one of the key metrics, and we clearly see that dynamic.

And for the most part, that expansion actually is within the centers we're already active in, and we're starting to see broader adoption. And that's really how ultimately you will build market share. It's the use of the product by most of the physicians at each given center across the range of the indication and the label, and that gives you really the ability to grow that market share. Overall, we do believe we see very good dynamic in terms of increasing the market share, obviously, as we're going forward. And based on just our guidance, you would expect that we would have a substantial increase in the overall market share that we're projecting, obviously, for 2026, and that's the guidance we have reiterated.

One moment for our next question please, it comes from Emily Bodnar with H.C. Wainwright.

Maybe a follow-up from the prior question. Can you kind of comment on what contribution U.K. revenue had on growth in the first quarter and how you're kind of expecting that to play out for the remainder of 2026? And then maybe on the data update for SLE and LN later this year, if you can kind of talk about what level of durability you're hoping to see in the updated data and also response rates for the 100 million dose.

All right. Thanks a lot, Emily. Thanks for joining. So for U.K. sales, given that the U.K. is obviously a fraction of the size of the U.S. we decided not to actually break out U.K. sales numbers, certainly initially in the launch because frankly, it doesn't make much sense. It is too early in the process. We expect to break it out likely towards the end of the year. But for the first quarter, that doesn't actually make much sense at this point because obviously, a lot of the products would still be -- patients would roll in, you start to produce initial products and then you start to actually see the momentum translated into actual sales numbers.

With regards to the LN update, obviously, we have patients that will have about 12 months or more follow-up in terms of the initial cohort. I think that is going to be very meaningful because it tells us a lot about not just the initial safety and the initial reset, but then also whether -- how the B cell compartment sort of reconstitutes over time. And with that, then also the ability to see sustained response in these patients going forward, which is one of the key elements and metrics that we're looking at.

And then obviously, for the other patients, which include a higher dose cohort as well as adolescent patients, we're obviously going to have a limited follow-up. So that's going to be mostly around the initial response, the safety, the initial response and initial kind of recovery of the B-cell compartment. But obviously, that will have a limited follow-up compared to what we will have from the first cohort, where we're going to be certainly beyond the year of follow-up.

One moment for our next question that comes from Jacob Mekhael with KBC Securities.

I have a few, if I may. First of all, just on the gross margin. You mentioned in one of the slides earlier that you expect it to be 65% to 70% at peak. Curious, do you plan to provide peak sales guidance at some point in the future? And when would be the right time to do that in your view? That's the first one. And then maybe I have a follow-up on the -- on your agreement with Cellares for the manufacturing. Is there a timeline by which you need to have a formal agreement in order to incorporate that into the new manufacturing process for the pivotal program in autoimmune.

All right. Well, first, thanks for joining, Jacob. First, with regards to the gross margin reference on peak sales, I think what we have been pointing out with regards to the overall opportunity in the relapsed/refractory setting in the U.S. is that we have approximately 1,600 to 1,800 patients. And we have seen certainly with other agents before that you can get with a good profile up to about 60% penetration, which we expect or market share, which we expect kind of the upper end of the range is in the relapsed/refractory setting. So that's kind of where we are and I think where we sort of see the opportunity. I think to guide towards a more formal peak sales, I think that's premature at this point in time. But I think it gives you a good understanding of kind of the overall size of the market and the overall opportunity that we're sort of identifying for the product.

With regards to the Cellares timing, we're in the midst of a feasibility study. So we want to understand where the product actually produced on that technology platform versus the platform we're using at The Nucleus today, how the products compare. And so that's a key analysis that we're running. That's what we're really going to be focusing on this year. And if that data turns out positive, that's I think the timing -- the time point to actually take the next steps.

In terms of being in time, we believe that the key area where I think that technology, I think, could be attractive to us is if we're sort of getting to a step change in the need for product. we believe that, that step change certainly could come from an indication like progressive MS. And I think that's sort of where we're looking to sort of actually work through and make sure that we have an option there that would allow us to actually scale production in a reasonable and economical way as well. So that's sort of where -- frankly, the elements that are being connected. But for this year, it's really around making sure we get the clear data from the feasibility and our understanding that whether this quality of the product we're getting actually is comparable.

Our next question comes from Roger Song with Jefferies.

This is Fiona on for Roger. Just a couple from us. On the AUCATZYL revenue, how should we think about the near-term and long-term growth driver? And any active measures you're taking to further the penetration in the U.S. versus ex U.S. dynamics? And just another one, understanding that you're going to switch to a positive gross margin from this quarter. Do you see any further optimization needed moving forward? Or do you want to see the impact of the cost reduction play out?

Thanks a lot, Fiona. First with regards to the revenue drivers. Clearly, what -- there's two key elements here. There's sort of getting to a large percentage of the patients that -- or the market you can cover in terms of access -- patient access to centers, we believe that we're in this 80-plus center range, we're getting to certainly in the range of 80% of the patients that we can actually cover from that perspective, which I also believe is an add-on answer to what Matt was asking as well before.

What really drives the ability for -- to drive the market share up, and this is in any jurisdiction that you're active in, is really getting the physicians at a given center to use the product consistently, gain experience and gain confidence. And with that, starting to use the product in the first place for typically a limited number of patients, which is sort of typically patients they think they cannot serve with the standard of care that they have experience with, gain experience with the product and then actually start to apply the product much more widely across the full range of the label. We've seen that play out actually during clinical trials, and we see it play out also now in the marketplace as well. So that is really what drives ultimately the market share is the conviction of the physicians that this product actually allows you to treat a wide range of patients.

And again, Lori made these types of comments actually also at the call that we had organized. And what she was talking about is the ability to actually have an option with AUCATZYL that irrespective of modality actually gives you a safe way of treating patients and actually allows us to treat patients she would not have even considered treating before. And that was actually not a differentiation between CAR-T products, but across the range of product options and modalities that she has available. That's kind of an expression of that level of confidence. And I think that is where we see, I think, the biggest growth is for physicians to get to that place.

That's also where the ultimate decision-making resides is obviously with the physician. The patients receive the product once. It's a one-time experience for the patient. It's a repeat experience for the physicians. And that's really what's your foundation and what's really driving this. And this is true whether this is in the U.S. or it's in the U.K. or elsewhere.

With regards to the opportunity to sort of expand beyond the U.S., obviously, we're active in the U.K. at this point. We continue conversations in Europe. And we're navigating market access and MFN topics in Europe. And obviously, we need to make sure we get to reasonable places there. At this point, we're not guiding for European sales. We're obviously approved. We continue those conversations. And we'll certainly, once we actually get through market access in first European countries, we'll obviously inform everyone on that. But this is an ongoing process and certainly somewhat delicate also with the policy changes that we see across the board that we need to take into account.

And then finally, optimization. The final question, I think you had was on optimization. Actually, optimization certainly from a manufacturing process is a continuous process. It's not just a one-off. But we made some very significant changes in our operating model that are now implemented, and we continue to improve as we go through literally every step along the way of the manufacturing process. And what we're really aiming for is to make sure that the hours of work that go in to produce every single product can be minimized. And so it's really a drive to minimize the work spent per product. At the same time, obviously, we want to reduce the overall contribution from the fixed cost, and that's really -- that particular aspect is driven by the volume of products you run through the facility. And those are the two key metrics that actually are driving ultimately your cost down per product. One is the total volume and with that, a reduction of the fixed cost allocation and then also a reduction of -- a reduced number of work hours per product. And that's really what we're driving at, and we'll see a very significant steady impact as we go over the upcoming probably 2 years.

And our last question comes from Shyam Kotadia with Goldman Sachs.

Just two from my end. So on the gross margin that reached positive this quarter, how should we think about that cadence for the rest of this year? Should we expect a steady improvement? And what is your target gross margin, I guess, for full year '26? And also on that peak margin you mentioned, when are you expecting to reach that? That's the first one on gross margin. And then the second one on multiple sclerosis. I know it's early, but I just wanted to see if you guys could provide any color on your commercialization plan there? Are you planning to go at this yourself? Or would you look to partner or in-license for this indication?

Thank you very much. So with regards to the gross margin, we expect to actually see continuous improvement over the growth of the gross margin as we go through the course of this year. We obviously have implemented significant improvement in the operating model in the first few months this year. They will start to actually have impact in terms of the cost as we get through the remainder of the year. I think we'll see sort of an increased impact over time. And at the same time, we'll see, obviously, and we expect an increase in terms of the volume of product that we're running through the facility as well. And those two parameters will actually be supportive to really see a continuous improvement of the gross margin. We haven't given guidance on where we expect to be by the end of this year. But obviously, it's a metric that we continuously report, and I think you'll start to get a good understanding and feel for the dynamic as we go through the next few quarters. So that's the first part of the question.

The second is, when do we expect peak typically to get through to peak sales in indications like ALL, that's probably taken between 4 and 5 years. But the main impact that you will see from a gross margin perspective is likely going to be somewhat earlier because the -- if you get to a certain level of volume of product you run through the facility, the amount of improvement you get on the fixed cost contribution obviously becomes limited. You're running an asymptotic line. And obviously, the big gains that we expect on productivity and with that reduction of labor cost is expected to happen actually during the course of this year. And then there may individual elements where we might actually introduce particular improvements on technology that can actually lead again to a step change, but those will not be -- those obviously will take time and will not be in a straight line, but obviously will then give us sort of individual discrete steps that we expect to see. But for the time being, I think most of it is really just the actual improvement on the work hours and the impact of the changes in the operating model, which will likely have the single biggest contribution that will be made through that. And then there are a number of much smaller initiatives that over time will add to that.

And then with regards to the MS commercialization question. What we're seeing in MS is obviously a population of patients that obviously are much more -- first of all, it's a much larger population. They're much more distributed. But there also -- it's also a patient group that's extremely motivated, and we see that also even in the conduct of the clinical study, where we see even a different dynamic even to acute leukemia, where you know this is a disease that can actually quite likely may kill you, there's still actually a higher degree, I think, of dynamic that we're seeing with MS patients. So that is sort of one side of the equation. But then there's a sheer volume question in terms of if you have some product that actually impacts these patients, it's a very substantial patient population. And so from that perspective, it does make sense to consider certainly a commercial approach where you would operate in collaboration with a partner, and that's certainly one of the areas that we're exploring.

Thank you. And this concludes our Q&A session for today.

Very good.

Thank you so much.

Thanks, everybody, and have a great...

Good day, everyone, and welcome to the Autolus investor event, Spotlight on Acute Lymphoblastic Leukemia, ALL, Program. [Operator Instructions]

Now it's my pleasure to turn the call over to Amanda Cray. Please proceed.

Thank you, Carmen. Good afternoon or good evening, everyone, and thank you for joining us for today's presentation. With me are Chief Executive Officer, Dr. Christian Itin; and Chief Development Officer, Dr. Matthias Will.

Before we get started, 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. These may include, but are not limited to, statements regarding the status of development plans, clinical trials and market opportunities for obe-cel. 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.

Also, please note that in today's presentation, we will discuss AUCATZYL, which is indicated for the treatment of adults with relapsed or refractory B-cell precursor acute lymphoblastic leukemia or B-ALL. The safety information of AUCATZYL includes a boxed warning for cytokine release syndrome, neurologic toxicities and secondary hematological malignancies. Please refer to the full prescribing information for additional important safety information.

With that, I'm pleased to turn it over to Matthias.

Thank you, Amanda. Welcome to our ALL business update day today. I have the pleasure to introduce our team panel of speakers, none of them really needs an introduction because they're international renowned researchers and clinicians in the field of ALL, but here we go.

The first speaker will be Dr. Jae Park who is the Director of the adult ALL program and Chief of Cellular Therapeutics at Memorial Sloan Kettering Cancer Center. Dr. Park was also an investigator on the FELIX trial, and he will speak today about ALL treatment landscape and the unmet medical need.

He will be followed by Lori Muffly, she is a professor of medicine, blood and bone marrow transplantation and cellular therapeutics at Stanford University. And while she is leading multiple national clinical trials and investigations, she will speak today about the real-world experience of obe-cel in adult ALL.

Dr. Muffly will be followed by Dr. Eli Jabbour, who is a professor at the Department of Leukemia at MD Anderson Cancer Center in Houston, Texas, and he also serves as the Section Chief of Acute Lymphoblastic Leukemia. Dr. Jabbour was also an investigator on the FELIX trial, and will speak today about the investigator-sponsored trial efforts to evaluate obe-cel in frontline adult ALL.

And last but not least, we are joined by Dr. Michael Pulsipher, who is a leading pediatric hematologist, oncologist at the Huntsman Cancer Center in the University in Utah, and he serves as the Division Chief of Pediatric Hematology and Oncology and also directs major research initiatives, including those with the Children's Oncology Group. He will be speaking today about the pediatric medical unmet need in ALL as well as the ongoing Autolus study, CATULUS, in relapsed/refractory pediatric ALL.

And with that, I turn it over to Dr. Park.

Okay. Well, thank you for having me here. So I think we're seeing Slide 5, and then I'll be going rather briefly and just highlighting and setting the stage for unmet needs in relapsed/refractory in adult patients with B-cell ALL. Go to next slide, Slide 6.

So adult relapsed/refractory B-cell ALL, these are -- we have about the roughly 1,800 new relapsed/refractory cases annually diagnosed in the U.S. 5-year overall survival for those who have relapsed disease with a frontline chemotherapy-based approach is less than 40%. Of the relapsed patients, roughly about 50% of the patients might be ineligible or decline allogeneic transplant for different reasons. In the current state, and those are the patients we're targeting for CAR T-cell therapy, including those patients who relapse after transplant. But in average prior therapy lines of treatment before CAR T-cells or at the time of CAR T-cell infusion is about two lines of a treatment.

The clinical reality where we stand with an adult B-cell ALL is the first, they are different than pediatric B-ALL in terms of biology and then outcomes tend to be poor, unfortunately, in adult patients compared to children. Median overall survival after first relapse is about 6 to 9 months with the prior immunotherapy such as blinatumomab and inotuzumab, including with bone marrow transplant afterwards. So there is a continued unmet need to develop to target those patients to improve the outcome of relapsed ALL patients and hopefully, even without the need to proceed to post a CAR-T bone marrow transplant.

Next slide, please. For the relapsed/refractory ALL treatment pathway, as we kind of briefly walked through, there is a cascade of attrition those patients who do get to CAR-T. And these are some of the clinical unmet need that we will need to address. But among the realized/refractory B-ALL patients, about half -- a little over half of the patients will achieve a complete remission to blinatumomab or inotuzumab or any salvage therapy. Subset of those patients will then proceed to allogeneic transplant. But not all those patients, again, remain relapsed, and there are patients who don't get to bone marrow transplant, and these are the patients where there is CAR T-cells are applicable and appropriate for those patients. That still leaves a large proportion of the patients who can benefit from the new therapies, such as CAR T-cells.

So on the right side, there are some -- unmet need concentrates. We talked about transplant-ineligible and we can probably include transplant-declining patients as there are more and more patients who are opting for less life-altering kind of the treatment options with fewer kind of chronic long-term side effects. The patients who relapsed after blinatumomab and other immunotherapy are still unmet need for those patients, especially now that blinatumomab is incorporated into the frontline treatment.

For those patients with Philadelphia chromosome-positive ALL, which is a subset of a B-ALL patients who typically do receive concomitant tyrosine kinase inhibitors, TKI, for those who do fail those agents are an unmet need. And lastly, for those patients who have a central nervous system disease, and including extramedullary disease are an unmet need because those patients also tend to do poorly with the conventional and the monoclonal-based antibody immunotherapy that we do have and chemotherapy.

Next slide, please. So in the FELIX study, which is a study to studied the obe-cel for adult patients with the relapsed/refractory B-cell ALL, it reported 77% overall response rate across all patients. And there are subset of the patients who got durable remissions, which means greater than 3 years of a sustained remission without bone marrow transplant after receiving CAR T-cell therapy. The patients who had a lower disease burden at the time of CAR T-cell infusion did expect better compared to those patients who had a higher disease burden or leukemic cells in their bone marrow.

Majority of the responses were MRD-negative, meaning undetectable disease by NGS or flow-cytometry post-CAR T-cell infusion. And then as we know, the obe-cel does have a different CAR T-cell binder or the binder to CD19 that is, again, distinguishing itself from the other -- the CD19 CAR T-cell that's out there for [ ALL ] lymphoma patients.

On the right side, it just kind of briefly highlighting that disease burden at infusion is important, which we have seen in other CAR T -- prior CAR T-cell studies, including our own previously. It also turns out to be true in the context of FELIX study with an obe-cel in the relapsed/refractory patients.

The other encouraging finding and trend is that with the 2- and 3-year follow-up that has recently been presented that about roughly about 40% of the patients are remaining in remission without a bone marrow transplant after CAR T, suggesting that some of this patient -- for some of these patients, CAR T might be a definitive treatment without requiring subsequent bone marrow transplant. And there are some emerging data that has been presented the product phenotype, the cell phenotype might matter as much as cell dose of achieving a good optimal outcome after CAR T-cell infusion.

Next slide is where is the current limitations and some of the unmet need currently. The one is the toxicity profile of a CAR T-cell therapy. Previously, adult ALL patients suffered the most severe toxicity in terms of cytokine release syndrome, neurotoxicity that had limited applying this type of a treatment to older patients, frail patients or patients with different medical comorbidities. Now with obe-cel with a better safety profile with a less severe CRS and ICANS, so neurotoxicity rate, it allows application of such therapy to those patient populations.

CAR-T product fitness and manufacturing reliability has been pretty successful in the real-world setting and post launch, which has been encouraging that the majority of the patients are able to get the manufacturing and get delivered in a timely manner for them to receive the treatment.

We're also seeing the long-term persisting CAR T-cells, which might be -- correlated with a better durable response, at least in the context of FELIX study, the obe-cel patients. So that is an encouraging trend as we are further monitoring the CAR T-cell persistence and might be available commercially in the real-world setting.

Then lastly is the access to vein-to-vein time, operational barriers are not just unique to obe-cel, but it's kind of unique to this field in general as we continue to work to increase potentially appropriate patients to receive CAR-T and distance and the logistics not being the major reason for these patients not to receive CAR-T is a continued area that we should focus on.

The next slide. So what is some of my assessment as to kind of where the field is heading, which will be touched upon in the subsequent presentations, is that we have seen the CAR T-cell therapy does work very well, getting high initial response rates in the relapsed/refractory setting, but we also do know that T cells -- these CAR T-cells do work better when patients receive them in the lower disease burden in earlier line of a therapy. So that suggests that CAR T-cell therapy might be more efficacious and might be most beneficial in terms of as a definitive therapy without needing a bone marrow transplant in the earlier line or frontline setting as a consolidation in MRD-positive or MRD-negative remission in first remission setting.

The product biology might be important and suggest that having a low side effect profile, toxicity profile, CRS and ICANS is certainly encouraging, which might be driven by the different biology, different product phenotype of the cells as we are learning from not only in ALS setting, in the myeloma settings as well.

Third is that manufacturing speed and reliability are key clinical outcomes for sure for cell therapy because reliability manufacturing is everything for these patients once the cells are taken away and they're receiving back. So timely manner of receiving and high turnaround time and manufacturing success is key. So there has been encouraging sign for this and other products as well, too.

So lastly is that the single-agent CAR T-cell therapy might be beneficial for most patients. However, there are some subsets that they -- who do experience relapse after CAR-T, were not getting as durable outcomes. And for those patients, I think the future studies will address combination or enhancing further CAR T-cell efficacy and product modification.

So next, lastly, just ending this, what -- how I define the success and what we need for patients are pretty simple, but not always easy to deliver, that we need a powerful enough product to achieve very deep remission for ALL patients, these leukemic patients, it also needs to be safe enough to deliver to most patients. It also needs to be fast that we can deliver and administer the cell products in a timely fashion when we want to deliver and not limited by the kind of the turnaround time. And then lastly, we all want the durable CAR T-cells that we don't need a subsequent treatment or maintenance is certainly in a bone marrow transplant for this to be kind of definite stand-alone treatment.

With that, I will turn it over to Dr. Muffly to talk about the next topic.

Thank you, Dr. Park. It's my pleasure to be here today talking about the real-world experience of obe-cel. And I will start with the next slide, introducing the audience to our real-world consortium in the United States, studying CAR T-cell therapy in adult acute lymphoblastic leukemia. So our consortium has the name of ROCCA. And this group, which is denoted in part on the map, comprises now approximately 50 U.S. CAR T-cell therapy and leukemia centers.

We make up approximately 60% of U.S. commercial products, and that is actually growing as more sites are coming on. And this consortium allows us to study real-world questions regarding new commercially-approved cellular therapy products. And I think there's really great strength in this approach.

The first data presented regarding the use of obe-cel in the United States in the commercial setting was presented both at ASH and the TANDEM Meeting this past year. We included patients for this initial analysis if they were apheresed for obe-cel between November 18, 2024, and the data cutoff, which was January 8, 2026.

Next slide, please. So in this initial analysis, 96 patients were apheresed for obe-cel within just approximately 1 year and included in the consortium. 91 of the 96 the patients received their first infusion of obe-cel. The five patients that did not receive their infusion were mostly dropped out due to progressive disease and one had lost CD19 expression.

Importantly, between first and second dose of obe-cel, there was no drop off. So all patients who received first dose went on to receive second dose. And the median follow-up at the time of this presentation, which was in February, at the TANDEM Meeting was 137 days between the first CAR T-cell infusion and follow-up, 84 patients were evaluable for day 28 response at this point. And again, the data represented 60% of U.S. commercial patients treated in total.

Next please. So this table shows the cohort of patients who were included in this initial consortium presentation, N=96, versus the 127 patients treated on the FELIX trial, which led to the approval of obe-cel. I think it's important to recognize that FELIX required certain characteristics and had strict inclusion-exclusion just like any clinical trial, whereas patients treated in the real world, in the U.S., really represent an array of different features, and you can see this when comparing the two.

The first notable thing is that the patients treated in the real world are just a bit older and a larger proportion of them are frailer with ECOG performance status of 2 or higher. We also see that patients treated in the real world had increased or more lines of prior therapy, were more likely to have adverse genetics with the Ph-like signature. And as you can see here, 68% of patients treated in the ROCCA consortium has three or more prior lines of therapy prior to obe-cel versus 35% in FELIX.

Patients in the real world were highly likely to have received prior blinatumomab, inotuzumab. And then the final thing is that the blast percentage was higher for patients treated in the FELIX trial, but that is because one of the inclusion criteria for most of the cohorts of the trial required 5% blast or greater in the bone marrow, whereas in the real world, many of these patients are being treated in a low disease burden setting, as you just heard from Dr. Park.

Next slide. The next slide shows the snapshot of the results from this initial real-world cohort of approximately just under 100 patients. And I think it's quite encouraging. I'm going to point out what I find to be most important as a treater. So the first is that this is really the only CAR T-cell therapy I'm aware of where the rates of CRS are approximately 50% in the real world. And this is very important because it allows us to treat these patients safely outpatient. There are no instances of higher-grade CRS.

The other thing is that if you look at the ICANS, the ICANS rate in the real world with this product, any grade ICAN is under 20%. And the vast majority is Grade 1 or 2 and really Grade 1. So only 17% of patients experienced ICANS, which is, again, really sort of bring this outside of the typical CAR T realm and into a more comparable to a very safe treatment that we would give to leukemia patients irrespective of CAR T.

And then finally, the efficacy. So we only have day 28 response rates because this is a relatively short follow-up time for this first data cut. But what you can see is that the response rates overall are nearly 95%. Over 70% of patients achieved an MRD-negative CR, which is actually superior to what was seen in the trial.

So in summary, we see that in the real word setting, we are treating patients with lower disease burden, but they do tend to be older and more frail. The safety and efficacy look comparable or superior to what was seen in the trial. The safety is really, like I just said, quite phenomenal, 3% high-grade ICANS and 17% overall ICAN. And we believe that the -- based on the FELIX trial that the response rates will only deepen with time. Remember, this is a split dose product. So day 28 is a bit of an early outlook.

Now my summary from just looking at this initial data, which you can see on the next slide is that, again, really, this product's minimal side effect profile along with the efficacy profile allow us to treat patients who wouldn't otherwise be receiving CAR T cell therapy and also at some centers to treat patients exclusively in the outpatient setting. You can see that we're using obe-cel to treat a variety of disease burdens from MRD negative all the way to high-burden disease. And we're also treating patients with both medullary and extramedullary leukemia, which I'll show you on the next slides.

And really, our strategy, I think, at many of the high-volume centers is to offer obe-cel or at least consider obe-cel for all patients with relapsed/refractory B-ALL. We do typically use bridging for patients with high-burden disease or high-level MRD. And increasingly, we are not routinely offering transplantation following obe-cel as we think that a fairly sizable proportion of these patients will be cured with the cellular therapy.

On the next two slides, I like to profile to patients who, I think, probably would not have received this therapy in the adult setting if it weren't such a safe and effective CAR T-cell. There first -- and these happen to be both my patients and clinics. So these are real stories. So the first is a 33-year-old woman with Down Syndrome. She is minimally-verbal patient, but very active with Ph-negative B-ALL that was refractory to three prior lines of therapy.

At the time I met her, she went from being a happy, bubbly woman to really being unable to move or do any of the things that gave her pleasure due to her leukemia. We decided to take her to obe-cel. She had both extramedullary disease and bone marrow and circulating disease at the time of leukapheresis. She did receive two doses of inotuzumab as bridging. And post-bridging, she had persistent extramedullary disease as well as 5% bone marrow involvement. She got standard obe-cel, both doses were given inpatient due to her developmental needs functional needs. She had grade-2 CRS, got one dose of tocilizumab, one dose of dexamethasone. No ICANS.

And I'm very, very happy to say that her day 28 response assessment showed an MRD-negative complete remission. She's now just crossed 1 year. She spends most of her time at Disneyland with her family, which is her favorite place. And she is fully functional. This was absolutely a life-saving treatment for her and she had persistence of CAR T-cells with no return of normal B-cells.

The second patient is another really interesting case of a 26-year old woman with multiple relapsed/refractory Ph-positive ALL who had involvement of the spinal cord and was paraplegic at the time that we decided to move forward with obe-cel. I will say that we would not have given any other CAR T-cell product to this patient, but we did go out on a limb with obe-cel given its side effect profile. This patient, as I said, was paraplegic and catheter dependent in terms of her bladder function at the time of obe-cel. She was also treated inpatient. She had grade-1 CRS, which was treated with supportive care only and grade-1 ICANS for which we received a single dose of dexamethasone.

She also achieved an MRD-negative CR. And on PET and MRI, her spinal lesions have entirely resolved. And she just crossed her 6-month point. She is walking. She is urinating independently. And really, this has been probably one of the biggest success stories I've ever been in my career.

Finally, I'd just like to wrap up by again going back to the consortium. So this is a really vibrant and growing community of researchers and clinicians that treat patients with adult ALL with CAR T-cell therapies. And there's a whole bunch of domains that we are currently and will be studying, and you can see here some of the areas of interest, including healthcare utilization with different CAR T-cell products, including obe-cel; correlative analyses using samples to try to understand T-cell phenotypes and persistence. And a whole array of, I think, really interesting and important questions that we can answer through this elaboration.

With that, I'd like to turn this over to Dr. Jabbour.

Thank you very much, Dr. Muffly, and good afternoon, everybody. I'm so fortunate to be here today. To be part of this journey where we will cure cancer, we'll cure ALL and not only we'll cure ALL...

[Technical Difficulty]

Ladies and gentlemen, please stand by. We're having some audio difficulties. Gentlemen, please continue to stand by. We're having some audio technical difficulties. Please stand by. Dr. Jabbour, please continue.

I'm very sorry for this technical issues. So I was saying I'm very fortunate to be part of a journey where we're going to cure ALL. And curing ALL is not only by giving therapy for a lifetime or for 3 years, we have a unique opportunity today to cure ALL with immunotherapy and obe-cel as a frontline consolidation.

And the reason -- next slide, why, the reason why I'm so confident in what is the rationale behind it. What we know and what you have heard so far from my colleagues that obe-cel and CAR T in general work better in somebody with low tumor burden. Means if you have a minimal disease or even less, you can have a better outcome that has been shown in the FELIX.

And what we know today with our frontline therapy, we're inducing a high MRD-negativity remission by NGS approaching 70%. Furthermore, when you get somebody in frontline, the T cells are well fit. So when you give CAR-T in a multiple relapse setting, you're going to have a T cell at best, they don't have great fitness. So here, we have fit cells where we collect them at the beginning. And finally, CD19 expressed on all these patients. There's no short of CD19 expression.

So we have a full target express. We have a low tumor burden. We have a very fit T cells. And therefore, I think it's a major opportunity today to consider collection at the beginning and give obe-cel as a consolidation.

We published back in 2025 in multiple reviews highlighting our hypothesis and where we're going. In Houston, we pioneered the work of blinatumomab in the frontline. We were the first to have a trial with blinatumomab in a Ph-negative in the [indiscernible], and we've shown that the integration of immunotherapy upfront can deepen the response and improve survival.

The next question is, we give therapy for lifetime, we give allotransplant. By adding CAR T-cell upfront, can we further deepen the response and spare it from transplant? And second, can we shorten the treatment duration from 3 years to 6 to 7 months or 1 year. And now in U.S.A., a lot of patients cannot complete the therapy because allo therapy require a lot of time and investment. So if we can offer something quite effective, inducing a deep sustained remission, then we can change the outcome for all our patients in U.S.A. today and hopefully worldwide.

Next slide, please. So how the frontline landscape is changing, how it's being redefined today? What we know for 30 years, we've used chemotherapy. And we had hyper-CVAD in Houston, and we had a 5-year survival at 40% altogether. Of course, all the patients did worse. The revolution came when we had a TKI for Ph-positive ALL and then the immunotherapy therapy. And we designed in 2016, the blina and ponatinib strategy in a Ph-positive ALL that was transformative to alleviate the need for chemotherapy.

So we add chemotherapy and ponatinib, and [ blinatumomab ] and hyper-CVAD. But then we added -- we moved to purely immunotherapy upfront in Ph-positive ALL where we have blina and TKI having a survival of 90%. And then in a Ph-negative ALL, we pioneered the work with the blina and inotuzumab combination, we improved the survival to 80%, 90%. But then there's still work to do.

And that is where in 2025 -- in 2024, to go back with the collaboration with Autolus, where we designed the first obe-cel consolidation in the frontline. The idea is we take high-risk patients where transplant is offered, and we will replace allotransplant with a CAR T-cells in the vast majority of our patients who are defined by high risk, MRD-positive and those who cannot afford transplant.

Now what we know is -- and why obe-cel? We picked obe-cel because it works so well in minimal disease. It will be a great continuum to our frontline strategy. In the frontline, you cannot afford to have any safety concerns. Obe-cel has the lowest rate of adverse event grade 3 and 4 ICANS and CRS, make it ideal for the frontline combination.

We know furthermore that obe-cel can lead -- so when you infuse, the cells are persistent via the 4-1BB domain, and therefore, that will act as surveillance. And today, if we design a study based on MRD, MRD has become an integral part of our management of ALL, and it's recommended by every society where we must tailor our therapies on MRD. And therefore, CAR-T will be great fit. And post CAR-T, we can measure MRD and persistence and make a decision whether to pursue treatment or not.

Next slide, please. So I mentioned why obe-cel because of the mechanism of action being fast off, leading to less toxicities and less grade 3 and 4 ICANS and CRS. We've seen obe-cel quite effective in the relapsed/refractory setting with a 77% response rate. We've seen and I reported at ASH that those high MRD-negativity rate and those who respond, they can become MRD negative if they have a low risk of relapse and the outcome is highly predictable.

We've seen as well from the obe-cel experience that when you give the obe-cel, you have memory preservation and these cells act as surveillance towards any leukemic cells present and therefore, having somebody having NGS MRD negativity and having persistence, you can predict the greatest outcome at the long run where you have a plateau for survival and the manufacturing has been very reliable. And furthermore, in a frontline setting, we collect on day 1 myself. I schedule my infusion. Therefore, it's elective and therefore, vein-to-vein time is very manageable, very short, and that is not an issue. For these reasons, we select obe-cel as our partner to be used as a consolidation in a frontline setting.

Next slide, please. Now who are these patients who may benefit from this approach? Ideally, I'd like to give everybody obe-cel in frontline. Every patient get obe-cel frontline and improve their outcome. Now we started by selecting patients at high risk, Ph-like, CRF2-positive, KMT2A [indiscernible] mutation, complex hypodiploidy. We know these patients have a very poor outcome and require transplant and even with the transplant, they do not do so well. We know that blina may not work so well on hypodiploidy, and we believe CAR-T can have -- via their independence of action can offer a remedy for the patients at high risk.

We will take patients who are MRD positive. We know the patient who has a blina front MRD positive, they have persistent disease, and we know Obe-cel will offer the optimal approach for these patients with minimal disease to improve their outcome. We will take patients who are not fit for transplant because of the nature of the disease, all the people are not transplant candidate.

And finally, I get so often patients coming to Houston. They will tell me, "Doctor, I've seen Dr. so and so and they offer me transplant. I'm coming to see you because you have a trial where you can spare me the transplant." And I said, "Okay, great." And I had several patients treated who came to me just because they didn't want to get transplant elsewhere and they want to get something else and we offer them obe-cel consolidation, and we measure MRD post obe-cel persistence and if it's MRD negative and persistent, then the deal is done.

So here the schema of our trial, where we get everybody getting immunotherapy-based regimen upfront being Hyper-CVAD or mini-hCVD, depends on the age of the patient with ino-blina. We assess them after cycle 1 and cycle 2. And here, we have two risk factors, dynamic based on MRD and static based on biology. We will collect patient after cycle 1. We engineer the cells and we continue our bridging therapy or our chemotherapy plan. The cells already, we infuse the cells. We measure post-CAR T-cells persistence and MRD negativity. If patient is persistent and MRD negative, then the game is over. It's done. We cross our fingers for cure. If not, then we consider strategy to escalate among them stem cell transplantation.

We believe this will be transformative and will shorten therapy in ALL from 3 years to 6, 7 months. If we're successful here, which we hope it will be, and so far, we opened the study in December of this year, and we've enrolled 15 patients so far. And of course, too early to tell, but I can tell you the excitement and the results are so far promising, but still too early. I believe this will be transformative and will change the way we see ALL forever.

Next, please. So we went from a deadly disease in ALL Ph-positive and same for Ph-negative ALL to a curative disease. We went from cure rate of 10% in a Ph-positive to 90% today. In a Ph-negative, we went from 40% to 80%, 90%. Yes, we rely on immunotherapy and transplant. And today, we have the opportunity to write the next chapter by offering obe-cel frontline to our patients and cure ALL with 6 and 7 months of therapy and make the treatment the best for all ALL diagnosed in the U.S.A., in the world. So the biology favors CAR-T upfront. Obe-cel is the safest product and the best because of upfront because of safety, because of the persistence of action. And finally, this will be an unmet need that will fill the need of patients worldwide with ALL.

With that, that's all what I have to share with you today, and I'll next pass it back on to Dr. Pulsipher to go over his presentation. Thank you for this opportunity.

Thank you. It's a great opportunity to be able to share the pediatric perspective of this data with you. Hopefully, you all hear me well. If you could advance to the next slide.

What I'd like to do today is share with you a few things. One thing that's important to understand is that CAR T-cells targeted at CD19 are really a mainstay. The approval for children occurred in 2017 with a different product, and it has come to be something that we are using very significantly. And we're very excited to get obe-cel on board. We have a number of research gaps and challenges that I'm going to briefly review with you. And then what I'd like to do is to share some of the early results of the CATULUS Phase Ib, which is the first experience of this specific product in children. And then finally finish by talking about our plans moving forward in order to get regulatory approval.

Next slide, please. So currently, CAR T-cells really are used extensively in children, but mainly used in children who have refractory or relapsed disease. As I mentioned earlier, the original approval of Tisa-cel occurred in 2017, and this was the first approval actually in -- and it was done in children before adults. This particular approval has, over the years, been refined and what we've learned with using a 4-1BB based CAR T-cell targeted at CD19 for pediatric ALL is that we can have better outcomes when we use low burden and use it earlier in the disease course.

The use has increased every single year over the last several years. The last data that we -- a year that I have data from is 2022. But one thing that's occurred over that time period is an interesting shift more toward earlier-phase patients, it used to be patients who had relapsed multiple times. And almost 70% of the initial patients that were treated had relapsed after transplant. And now it's being used much more for primary refractory or secondary refractory patients.

The other thing that has come up as an issue is trying to understand exactly when CAR T-cells should be followed by transplant in children in order to maximize outcome. And we've developed a few assays that may give us some insight to really understand who can be rescued just with CAR T-cells and who may want to be able to -- who may need additional therapy. But one key thing to understand about all of this is that these very high-risk patients who initially had a survival of less than 10%, now have an overall survival greater than 5 years that is greater than 60%.

Next slide, please. There are a number of research questions that we need to understand better in children, adolescents and young adults, and some of those are going to be addressed with the obe-cel trial.

The first is that we know that early first relapse of ALL in children have dismal outcomes. In children, the landscape is a little bit different. We can cure a lot of patients with chemotherapy. And although we're all working hard to try to move CAR T-cells into a very upfront therapy, we have such good outcomes that we're not able to approach it yet. What we're trying to do though is get CAR T-cells to be used at first relapse. And we know that almost all patients who relapse end up having very poor outcomes. So our hope and goal is to move it into first relapse.

We also know that MRD level after consolidation, when patients are initially treated, means that they generally need to move to transplantation. And our hope is to use CAR T-cells instead in that population in order to avoid transplantation and improve outcomes.

We also have a wide variety. Dr. Muffly showed a really nice example of a woman with Down Syndrome. We have many special populations that really need CAR T-cell early in therapy, including Down Syndrome; frail patients who have multiple complications of chemotherapy, organ damage and infection; specific genetic subtypes that Dr. Jabbour mentioned, they're highly susceptible to have complications and problems associated with intense therapy and infants who have very high-risk B-ALL and a very poor prognosis.

Next slide, please. This has led -- these things are being partially addressed by some of the early studies with obe-cel. And I want to go over that with you briefly. Move to the next slide, please.

This was presented at ASH this past year with a follow-up presentation at TANDEM. And what this is essentially is a brief overview of the trial. This was a single-arm open label trial. All patients had to be true pediatric, less than 18 years of months -- excuse me, less than 18 years old, and they had to be relapsed/refractory. They were collected, given bridging therapy and treated as per standard CAR-T procedures.

Next, please. 23 patients received obe-cel at the target dose. And all of their products were within specification with no manufacturing failures. And of the 23 patients who were treated, what you can see is they got various things to bridge them, most with chemotherapy, some with immunotherapy as well.

Next, please. Our safety, as with the adults, was really much, much better than we're used to with other CAR products with exceptionally low rates of grade 3 or above CRS. In fact, we only had two patients who experienced grade 3 or above and one was a highly refractory, very challenging patient. We also had very little infection. In addition, much lower infection rates than we're used to seeing in these patients as well.

Next slide. What you can see here is neutrophil recovery. And this is quite remarkable. Generally, having studied this extensively using other CAR products, a vast number of patients have significant neutropenia at day 28, which is then prolonged with 30% having it at 3 months and up to 20% having prolonged neutropenia later. And as you can see here, we're getting much more rapid recovery of counts than what I would expect.

Next, please. The efficacy is really outstanding with the 21 of 22 patients having a response, CR achieving -- CR achieved in 20 of those patients. All responders were MRD negative. And these responses have continued. So again, a really excellent outcome.

These are early results, but the outcome is outstanding, which has really set us up, next, please, to move into the next phase. Now this final slide that I want to show you about this just shows pharmacokinetics and pharmacodynamics. And what we see here is persistence with excellent expansion and persistence of this CAT for extended periods of time.

Next, the conclusions I'll mention just briefly, and that is essentially a great safety profile, extremely high response rate. And while longer follow-up is needed, this really gave us encouragement to move forward with regulatory approval studies.

Next, please. That leads into what's currently going on in order to get this product approved in children. Working carefully with the Children's Oncology Group, the initial group that did this study is bringing in several more centers, but we decided to do a joint study along with the Children's Oncology Group to have more rapid accrual.

What you can see here is a little bit of background that focuses on that first relapse group that I mentioned to you. In a study, 1331, that we performed in the Children's Oncology Group a short while ago, patients were treated with induction followed by blinatumomab followed by transplantation. And what was noted was extremely high rates of toxicity and very poor outcomes in that 40% of patients didn't even go into remission to go on to get blind or randomization and came off study. And the overall intent-to-treat relapse from the beginning of the study was only 25%. There are no current indications for CAR T-cell therapy use in first relapse in children, and this is a really critical need.

Next, please. Our planned expansion is, of course, working with the Children's Oncology Group and the centers that were already participating in the Phase Ib and adding an additional 30 ALL patients for a total of 54 with at least 15 slots for high-risk first relapse. And the reason for that, of course, is we want to list it on the FDA indication that high-risk first relapse can be traded in this way.

What you can see there is a number of secondary endpoints that we think are very important. Our study design is almost identical to the initial study with screening enrollment, bridging therapy is needed followed by lymphodepleting chemotherapy and infusion.

The expansion, again, includes that first relapse, and this is bolded in the next slide where you can see our inclusion criteria. Primary refractory, as defined as what you can see; first relapse and then the higher-risk patients in second or greater relapse or relapsed after transplantation.

Next please. These are some exclusions, which I won't dwell on. But essentially, we are treating almost all patients that we can with this group.

The study was activated in the Children's Oncology Group. It's been activated and open and three patients have accrued so far on the Phase II portion of it. The study is currently open at CHOP, Primary Children's in Utah and Methodist in San Antonio. And you can see eight additional COG sites that are in the process of opening. So our hope, of course, is to move rapidly forward with this study.

The next slide shows acknowledgment of a number of individuals who've helped develop this. And I want to just move to the next slide to open this up for any questions that the group would like to ask of our group.

Thank you, Dr. Pulsipher, and thank you to all of our speakers. We are happy to take questions via the webcast platform. I have a few queued up here so we can jump right in.

First is, any comments on other forms of toxicity in the ROCCA study? This may be important given older patients being treated.

Thanks a lot, Amanda. I think, Lori, that would be clearly one for you. Obviously, you're focused on particularly the immunological toxicities with CRS and ICANS. But clearly, these patients do experience other adverse events. I think it would be great to get a perspective.

Yes. Thank you. We -- in our initial look of the data that were presented this past winter, we did not dive into other side effects very deeply such as infections. We did an analysis looking at recovery -- hematologic recovery and found overall, the rates of hematologic recovery really mirrored other CAR T-cell therapies in this space. But I think as time goes on and our numbers grow as obe-cel becomes the sort of most -- the CAR-T of choice in this country, I think we'll have an opportunity to delve a little bit deeper. I will tell you anecdotally, I think because of side effects -- immunologic side effect profile is so favorable, we are seeing fewer and fewer infections and fewer related issues in the clinic.

Thank you, Lori. Next question, is there any potential downside for long-term obe-cel surveillance in patients getting frontline consolidation?

That's obviously a very interesting question. I think, Eli, when you think about kind of the frontline treatment, obviously, these patients are very heavily treated today and they're monitored for long periods of time. How would you see kind of the inclusion of obe-cel into that upfront treatment, how that would impact in terms of the need for long-term follow-up and surveillance.

[Audio Gap] FELIX. That earlier use of obe-cel has been associated with a better outcome when it comes to MRD negativity, sustained fitness, less relapses. And that will translate into the frontline as well where you get somebody in a frontline with a very fit T cells. You give them the obe-cel early on with minimal disease or no disease. Therefore, fitness is preserved. The cells are persistent and expanding, and we monitor by NGS for MRD thereafter.

The way I foresee the future is that instead of giving therapy for 3 or 4 years, in ALL, we have an opportunity here to give therapy for 6 months, for example, give obe-cel and monitor these cells that are very fit for persistence and MRD activity and cure the disease. I don't see any downside of this. I think nothing but great outcome.

Now of course, we need to have a long-term follow-up. And what you've seen so far from obe-cel with 3 and 4 years of follow-up, there are no adverse events, nothing major, significant. The most adverse events were encountered in the first month or 2. And in fact, we know from FELIX 3 years of follow-up, there was no adverse events. We have to watch for infections, B-cell aplasia and that is routine practice to give a little replacement, if needed, an antibiotic, monitor CD4, but nothing out of this...

Thank you.

Thanks, Dr. Jabbour. Next question, for frontline consolidation, what would be considered positive in terms of MRD-negative rate and durability of CR or MRD?

What we have so far when we gave blina upfront, our MRD negativity rate by NGS, 10 to minus 6, is around 70%, 75%. But here, there's one caveat that time to MRD matters too, we know that high risk do not get into MRD negativity at the beginning, and that is detrimental. And of course, they require transplantation. So we can improve on that because we know today from obe-cel given in a frontline or our own real-world data or from the FELIX that most of the patients can get into MRD negativity early on at month 1 post-CAR T. So I think improving MRD is feasible, it's granted.

I think the point -- the second part of the question is how durable this will be. So the primary [ endpoint ] of the study is relapse-free survival to see if we can really induce sustained MRD negativity rate that can translate into a cure. And today, for the FDA, for example, such an MRD negativity rate sustained can be surrogacy for approval of new drugs. So, so far, what we've seen when extrapolated from the FELIX that patients who had less disease treatment, low tumor burden, MRD was highly predictable for a long-term outcome, and therefore, patients were durable.

So we extrapolate from the FELIX salvage one to the frontline. If you get into 90% MRD activity, which higher at 1 month post obe-cel infusion, this based on historical evidence should be sustained in a vast major of the patients. And of course, we monitor them. In case of patients who do not achieve the response or any time with molecular conversion into positivity, we can go for transplantation. But again, extrapolating from FELIX, that is very reassuring, and that's what the hypothesis to go into the frontline.

Thank you very much. Amanda, any additional questions?

Yes, just a couple more, Christian. Can you remind us about the path to getting frontline consolidation onto the label and potential timing and next data presentation?

Okay. Great question. This study is IST and Dr. Park with me, and Dr. Muffly will have another study with Dr. [ Andrew ] as well. It's ongoing.

So we have a patient -- 30-patient study. And with their study, we can have good evidence to go into NCCN and make this product available to the all U.S.A. patients. Of course, that will not be worldwide available. And then the next step will be to discuss with the agency based on this evidence, if we can run into a single-arm trial solid enough to get approval or a randomized trial, but that will be discussed down the road once we get these studies conducted and completed. From my side in Houston, I think we can complete the study this year, in 2026 and have a long-term follow-up for a year or 2, and then it should be part of NCCN in 2027.

Thank you. ROCCA data looks pretty good, and we can see where there is evidence beyond FELIX. How has this changed the uptake of AUCATZYL in your practice? Or how do you envision it changing your usage in the 2026 or 2027 time frame?

Christian, would you like me to take that?

Yes, please.

Sure. Yes. So I think that the -- that's a great question. I think that the ROCCA data as well as the lived experience of these now 50 centers that participate suggest that the transformation to using obe-cel as the best-in-class CAR-T for adult ALL has already happened. We see the numbers increasing in our consortium. And our next data output will be at ASH, this coming ASH, but I think the data, of course, help, but they're not surprising to those of us that use this product because it's just -- it's very, very easy to use. I agree with what Dr. Jabbour said and I think that there is an enormous opportunity to move this into the frontline and to move this into children.

But really using obe-cel, and this is what I tell my team, which we are a large CAR T-cell center, is that this is -- we really -- this is a CAR-T, but you don't need to think about it like a CAR-T. These patients can remain at home. They really do not require nearly the same amount of side effect management. So it's just a really nice, smooth, easy therapy. And I think that the use -- the increase in use in this coming year will reflect the toxicity profile that we're seeing in the real world.

Thank you, Dr. Muffly. Final question here. Can you put into context the risks from transplant-related mortality compared to CAR-T tox?

That may be a question for Jae.

Sure. The transplant-related mortality, typically in an average -- national average has been about 20% to 25%, although it depends on comorbidities and type of a transplant and disease status they do get, but that's the national statistics, some are a little bit lower in the experienced centers.

The CAR-T, the treatment-related mortality or those are extremely low for -- especially within obe-cel because of the CRS and ICANS rate or the infectious complications, which are the predominant reasons that some of these patients die within a few weeks of receiving CAR T-cell therapy. So I think the data from the FELIX study has been very encouraging with a very, very low rate. It's certainly much, much better than the transplant, which is exactly the reason why that we are excited about moving to frontline setting that we would not have done it, obviously, if the risk of a transplant-related or treatment-related mortality was very high.

Thanks, Dr. Park. Christian, that concludes the question. So happy to turn it back to you.

Very good. Thank you very much. I'm just going to wrap up briefly on Slide 47. Obviously, what we wanted to do with you today is look at what we've achieved so far with the product and the initial launch of the product. And I think the data coming from the ROCCA consortium was a real reality check for how the product actually performs and is frankly, giving us an opportunity to broaden the patient population that can actually be considered for CAR-T therapy.

Ongoing in terms of immediate next steps, obviously, the work that Michael Pulsipher was going through looking at the pediatric work that we've been doing. We have obviously good initial evidence for the activity that is based on the data that we presented at ASH at the end of last year on the CATULUS PY1 study. We're now obviously enrolling the Phase II portion. We had very good momentum also over the last month in the study, and we think we're going to be able to drive this study with a good momentum.

The idea here is really to get obe-cel to a place where it becomes a treatment for any relapsed/refractory patient across the entire age range. And that is obviously what the medium term and the ongoing activity is. And then as we look forward, as you heard from Eli, but also to Jae Park and Lori Muffly engaged with their study to look at the ability to consolidate patients in the frontline setting with the drive towards the definitive consolidation and ultimately an abbreviated treatment in that important patient group.

Moving to Slide 48. This is just a brief summary on how AUCATZYL and obe-cel actually have an ability to get activity across refractory, first relapse, second-line plus relapse across the age groups based on the clinical work that we're doing currently in the peds and expanding with that the utility that we already have achieved on the adult side.

Moving to Slide 49. This sort of tacks on to what Eli was describing on the frontline approach. What we see in this data set is that really it's the older patients, the MRD-positive patients, the patients with complex genetics tend to actually still after all the intensification of the frontline therapy that we've seen over the last probably 15, 20 years, still actually have limited outcomes and there is a real opportunity to improve outcomes for those patients.

The first step, as we go to the last slide, Slide 50 is really to obviously drive and generate initial data and collect experience through the ISTs. With that, I think we start to get a good understanding of the profile of the product in the frontline setting and then take it from there. And with certainly the aspirational goal to ultimately move the product fully into the frontline setting as well.

With that, I'd like to wrap up here. I would like to thank our fantastic speakers, Dr. Jae Park, Dr. Lori Muffly, Dr. Eli Jabbour and Dr. Michael Pulsipher for fantastic presentations. Thank you for sharing your insights with us. And we're looking forward to, obviously, continue the interaction with all of you and looking forward to making a real contribution here to moving the ALL field forward. Thank you very much.

Thank you. This concludes our conference. Thank you for participating, and you may now disconnect.

Good day, and thank you for standing by. Welcome to the Autolus Fourth Quarter 2025 and Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amanda Cray, Executive Director of Investor Relations. Please go ahead.

Thank you, Kevin. Good morning or 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. On Slide 2, 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 status of the 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'll turn it over to Christian.

Thank you, Amanda, and welcome, everyone, to our Q4 and full year update. As we have communicated in January, we had a very good first year of launch with AUCATZYL in the U.S. with $74.3 million in revenue recognized in 2025. By the end of 2025, we had 67 centers activated and are building on positive physician feedback and reliable high-quality product delivery for our second year.

We are reiterating our guidance for 2026 with net revenue of $120 million to $135 million, a shift to positive gross margins in 2026 and increasing our commercial footprint, targeting more than 80 activated centers by end of 2026. Regarding gross margins, larger volumes will drive down fixed costs and improvements in the operating model will reduce variable cost per batch.

By the end of 2025, we had also achieved regulatory approvals in the EU and in the U.K. and achieved market access in the U.K. and have initiated the launch at the very beginning of this year.

On Slide 5, alongside the launch in the U.S., the ROCCA Consortium, which stands for real-world outcomes collaborative of CAR T in Adult ALL, collected data from all patients treated with AUCATZYL within participating institutions. Overall, 96 patients were apheresed. Of those, 91 actually achieved the infusions.

And 5 patients did not receive an infusion due to medical reasons, either due to progressive disease or a combination of progressive disease and infection or a lineage switch of the disease and loss of CD19. Of the 91 patients that received the dosing, both infusions were received in all of those patients. And by the time of the analysis at the beginning of this year, 84 patients were evaluable for a day 28 assessment for response.

The median follow-up is obviously relatively short because this was the first year of launch. So the median follow-up was 137 days from first CAR T cell infusion.

Moving to Slide #6. What we're seeing in terms of the outcomes, we're looking here at both the outcome of the ROCCA Consortium in the real-world setting, and we actually juxtapose our prior clinical trial experience in the FELIX study. What is worthwhile realizing that the 96 patients that were actually collected in the database approximate about 60% of the U.S. commercial patients that were treated during the course of the first year of launch.

When we look in terms of the patient population, we do see that we see a wide range of age with a median age of about 50 years comparable to what we had in FELIX and a very wide range, including patients that were very much on the elderly side already.

Now what was very encouraging was to also see that when moving to the real-world setting that we actually were able to maintain the safety profile that we have seen with AUCATZYL or obe-cel in the FELIX study. So the real-world observation was from a CRS perspective, from a cytokine release syndrome perspective, is that about 59% of the patients had a cytokine release syndrome of Grade 1 or Grade 2, but no patient experienced a Grade 3 or higher cytokine release syndrome.

Similarly, when we're looking in the -- on to the ICANS side, we had 17% of the patients that experienced Grade 1 or Grade 2 ICANS and only 3% experienced Grade 3 ICANS in this -- in the real-world setting. When you then look at the -- and compare that to the FELIX experience, you do see that, that actually does translate very well.

We had in FELIX on CRS, a slightly higher level overall of cytokine release syndrome observed. And we also had a small proportion of 2% of the patients with high-grade cytokine release syndrome. And similarly, on the neurological toxicity side on the ICANS, we had in the FELIX study, 23% of the patients experiencing ICANS and about 7% experienced high-grade ICANS. So overall, a very nice reproduction of our clinical experience now in the actual real-world setting.

Now when we look at the efficacy side, obviously, this is early data. So the -- what was available is the tumor assessment at day 28. Further data may become available at later time points, but that is what so far has been analyzed and what was presented at the ASGCT meeting in an oral presentation this year in Salt Lake City.

What you see is, again, on the left-hand side, the data from the real-world setting. And you can see that overall, we have about 92% overall complete remission rate in the real-world setting, which actually is quite similar to what we've seen overall from a picture perspective with the mature FELIX data at 3 months, and it looks somewhat improved over the day 28 assessment in the FELIX study.

But this, again, is a very nice, I think, confirmation of the data and the observations we had in our clinical trial now in a real-world setting and in patients that were obviously now treated in the normal standard of care environment that obviously at times can differ from clinical trial environments. So what is important is, obviously, the data is very nicely aligned with what we have prior observed. Very nicely corroborating the data that we have presented in the past.

But what we also do see in the patient population that there is also a wider range of patients included from a tumor burden perspective, as you would expect in the real-world setting, where once you have evidence of disease coming back, you wouldn't wait treating the patient until the patient had high disease burden, but you would intervene at an earlier time point.

It's reflective of the actual standard of care that we're seeing in the disease setting. So very encouraging observation of the first year. I think for us, quite a remarkable coincidence that indeed it was -- the Consortium was ready to collect the data practically from day 1 that we were able to make product available.

And with that, get a real-time view of the performance of the product, both from a manufacturing, from a supply perspective, but also from an outcomes perspective.

So with that, I'd like to move to Slide #7. And just a brief word on the overall activities that we have, in particularly around obe-cel oral capsule. Obviously, we have now a very strong foundation in the Adult ALL segment with our first label and the product in the market and performing well in the market.

And we're now obviously building on that to actually broaden the utility of the product across a range of additional indications. And obviously, one of the first indications that is natural -- it's very natural to add is actually to aim for an ability to offer the product across the entire age range within acute leukemia.

And hence, we started the work on the CATULUS study, and I'll briefly show you the data in the upcoming 2 slides. But what we're doing with the CATULUS data is really looking to actually get a data set that allows us to also get to a label for pediatric patients. We had started with a Phase 1 data set, which was presented at ASH just at the end of last year. And based on that data and discussions with the agency, we agreed on a path to expand the study and with that expanded study should have the data as a pivotal study to support a future label in this particular pediatric population.

The second study that obviously we've been very active in, and we also reported data on at the end of last year, first at ACR and then in an oral presentation at ASH is the first experience that we gained in the autoimmune setting, and this is in systemic lupus with very advanced patients. It's the CARLYSLE study. This is a Phase 1 study where we evaluated the activity of the product and the safety of the product in this group of patients.

And we have reported initial data based on that data and also interaction with the agency, we designed then the LUMINA study, which is focusing on lupus nephritis patients that are advanced patients, and we're in the process of actually enrolling that study. So that study is off the ground and running. And we expect data in 2028 for the lupus nephritis population. We have alignment with the FDA on the design and also as the design as a pivotal study to get us to enable the approval of the product if the data obviously can be generated.

In addition, we're looking at progressive MS as sort of an exploratory study. That's a Phase 1 study called the BOBCAT study, which is currently enrolling. We treated the first patient in October last year. So that's enrolling, and we expect to have full data for this Phase 1 experience during the course of 2027 and hope to have early data by the end of this year to get a first view.

Overall, when you look at the flow from the pivotal study perspective, the pediatric ALL study, we expect to have data by the end of 2027. The LUMINA study, again, pivotal data in '28. And in '26, we expect, obviously, a longer-term update and data update from the CARLYSLE study, which is planned for the end of the year.

Now in addition, there are additional opportunities that we see with the products that we actually have obviously, on the one hand, a continuation of data collection that we expect to see from the ROCCA Consortium and sort of more of that experience being frankly, collected and analyzed in their hands. And then on the other hand, there is a substantial interest for investigator-sponsored studies with a particular focus on the opportunity in frontline patients to see whether you could actually develop a definitive consolidation and have data in that -- from that -- in that space to see whether indeed there is activity in that early setting as well.

So there's quite a lot of interest, obviously, to explore a broader opportunity base here for the product. And also when we look at our internal studies, I think a very nice news flow as we go through '26 and '27 into '28 with very meaningful data updates and hopefully, data sets that will enable a broadening of the opportunity commercially as well for the product.

With that, I would like to actually, on the next 2 slides, briefly summarize the data that was presented at the ASH conference for the pediatric experience. These are all relapsed/refractory patients.

And I would like to start on Slide #8 with just a brief view on the safety data as it was presented at ASH. And what you can see when you go through the safety data set is you see this is consistent with what we have seen in the adult population in terms of immunological toxicity infection risk as well as neutropenia, which is very well characterized in this population.

When we then go to Slide #9, what you can see here is a swim plot. First, I think, to observe is that, in fact, almost all patients managed to actually achieve a complete remission, either a CR or CRi. Overall, we do see that it was a CR/CRi level at the 95% level and the CR level in just around 91% of the patients.

So clearly confirming the very high level of activity, consistent, obviously, with what we're seeing in the adult population as well.

And we start to see a good duration of responses, as you sort of see the swim plot here in front of you. Obviously, the follow-up is still relatively early in this population. We have a median follow-up of 8.8 months.

With that, I'd like to just briefly look on Slide #10 on how we're actually moving forward on the pediatric side. So we have decided to add an additional 30 patients for the Phase 2 portion of the study. It's an international study. So we have centers in the U.S., U.K. and in Spain active.

We have developed the approach in collaboration with the Children's Oncology Group, the key group for pediatric oncology in the U.S. And in terms of the age range, we include patients between 0 and 18 years of age. You remember that our label in the U.S. is 18 years and older.

And we have stipulated a minimum body weight, to 6 kilogram. Remember, the way we dose in pediatric patients with a single infusion with 1 million cells per kilogram.

In terms of the population that we're including, obviously, these are relapsed/refractory patients, and we have a particular focus on the patients that have in the first line, a high-risk relapse and that -- first -- sorry, first line high-risk relapse population, which is actually populations currently excluded from access to CAR T therapy.

I want to make sure there's an opportunity also for those patients to benefit from CAR T therapy. And hence, we're including that population in addition to obviously the broader range of relapsed/refractory patients.

So this is where we are on the pediatric ALL side. As I mentioned, we expect to have data by the end of 2027.

Moving to Slide 11 and the advanced SLE population that we have studied in the CARLYSLE study. We have determined the recommended Phase 2 dose in that study, which is a 50 million single infusion after the dose. When we look at the patient population that we have in the Phase 1, it was patients that had to the large extent, significantly impaired kidney function as well as quite a wide range of additional manifestations of autoimmune disease that you would actually then see represented in the SLEDAI-2K disease scores. And in fact, we're having overall a population with very high levels of disease scores, which obviously represent a very challenging to patient population.

We have now 11.4 months of follow-up in the 50 million cell dose cohort. We achieved in 5 out of 6 of those patients, a DORIS response, achieved in 3 of 6 a complete renal remission. The product was overall well tolerated. We saw no ICANS and we had no high-grade CRS in these patients.

And we start to get a good feel for some of the key biomarkers. And just to give you just a quick snapshot on the data, if you go to Slide #12. This is actually from the actual ASH presentation and starting on the left-hand upper side, the summary of the safety data. Obviously, the key there is overall very good, very well tolerated product and minimal immunological toxicity that we have picked up in the form of CRS and ICANS.

Below that, you see the SLEDAI scores. You see in different colors, the different manifestations of autoimmune disease that are shown on the legend on the right-hand side of that panel. And you can see that these patients do improve over time. The blue color that you see is actually the renal scores in these patients. And obviously, some of these patients already had very advanced, very challenging disease.

If we go to the right upper panel, you do see kind of a depiction of the DORIS remissions. And you see that 5 of the 6 patients actually converted into a DORIS response. The DORIS response actually looks at both the manifestation of the disease as you would actually have it depicted in the SLEDI score. So you need to have the SLEDI score improvement.

But you also want to see that the patients are getting down to low levels of corticosteroids of no more than 5 milligrams per day or less. And so it is both a measure, obviously, of the improvement overall, but also the fact that, that is now a state that the patients are in where they get what's typically referred to as physiological levels of steroids. Now at the bottom on the right-hand side, we see basically took a look at both the persistence and the recovery of the B cell compartment. When we look at persistence, we do see that the median persistence is 3 months for the product. And when we look at the time to recovery, the median time to recovery for the B cells, we see that is at 6 months.

We've seen very deep remission, a reset, a naive state after the B cells start to reappear and then obviously, over time, differentiation of these cells from there on forward. But this is clearly a deep cut and a nice sequence of loss of persistence followed by recurrence of B cells, as you would expect from a mechanism of action perspective.

When we then go to Slide 13, this is a quick look at the way that we are developing in lupus nephritis. We've obviously done the CARLYSLE study. We selected the dose. We actually also have included now in the CARLYSLE study and report at the end of the year also teenagers, patients 12 years and older and include that population as well because we believe it's a particular medical need and quite often a very aggressive course of the disease in these teenagers and young adults. Based on this data, we're moving or have moved into the LUMINA study, which is a single-arm, 30-patients study in patients that have gone through B cell depleting antibodies.

And Calcineurin inhibitors failed on both and are now basically outside the approved standard of care in this -- for that stage of the disease. The study is enrolling, and we're actually are active in the U.S., in the U.K., in Spain, and we're likely going to add 1 or 2 additional countries on top.

When we then think forward, obviously, there is an opportunity once you actually create a foothold in the indication to then think about the ability to broadening the use of the product in a wider set of patients, and that's going to be sort of the second step once we sort of achieved our first approval in the indication.

We expect data for the LUMINA study, as indicated in 2028. And then finally, on Slide 14, just as a reminder, the progressive MS study that we're conducting in the BOBCAT study. And obviously here, really what we're looking at is both the safety or obviously, the safety profile on the one hand, the clinical impact from a disease score perspective as well as a range of biomarkers and imaging measures to understand the activity of the product in these patients and obviously, depending on outcome, we'll move from there.

So with that, we're getting to the financial results section, and I'm handing over to Rob.

Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the fourth quarter of 2025, and I'll be referring to the information on Slide 16. Before diving into the specific numbers, I would like to note a refinement to the accounting treatment related to our product revenue and cost of goods sold that are reflected in the results that we'll discuss today.

Importantly, this change has no material impact on our existing or anticipated AUCATZYL revenue and has a practical benefit of better aligning the timing of revenue and cost of sales. On a full year 2025 basis and moving forward, we plan to recognize both the full value of product sales and the associated cost of goods sold upon confirmation of the second dose administration for AUCATZYL.

From a revenue perspective, this means we will no longer recognize a 50-50 split across the first and second dose confirmations. This also eliminates the previous deferred revenue accounting and earlier cost of goods recognition associated with those deferred revenues.

The accounting for personalized cell therapy products is an emerging area. And during our year-end reported review process, we and our auditor concluded on this refined position within the accounting standards and again, with no material impact on the financial statements.

Now on to the results. Net product revenue for the fourth quarter of 2025 was $23.3 million, bringing us to a total of $74.3 million for the first full year of AUCATZYL sales. I'll also note that we also recorded a $1 million license revenue component in Q4 2025, related to the achievement of a clinical milestone under our license and option agreement with Moderna.

Combined, this gives you the $24.3 million in total revenue for the fourth quarter. Cost of sales in the fourth quarter totaled $25.3 million, and that's compared to $11.4 million for the same period in 2024. This change was primarily driven by having a full quarter of sales in 2025 and having only a partial quarter of commercial manufacturing activity expense recognition upon FDA approval back in November of 2024.

Additionally, cost of sales in Q4 2025 includes canceled orders in the period, patient access program product, inventory reserves or write-offs, third-party royalties for certain technology licenses. As discussed on our full year guidance, we expect to shift to positive gross margin this year based on increasing patient volume, improving overall plant utilization, together with executing on operational efficiencies.

Moving on, our research and development expense was $35.6 million for the fourth quarter of 2025. That compared to $30.8 million during the same period in 2024. This change was primarily driven by an increase in research and development activities, including some of our new clinical trial start-up and a reduction in the period-over-period U.K. R&D tax credit.

This was partially offset by commercial manufacturing-related employee and infrastructure costs that have now shifted to cost of sales and inventory. Our selling, general and administrative expenses increased to $35.8 million for the fourth quarter of 2025 compared to $33.7 million in the same period in 2024.

This increase was primarily due to salaries and other employee-related costs, driven by the increased headcount supporting the commercialization activities.

Our loss from operations for the 3 months ended December 31, 2025, was $72.5 million as compared to $75.9 million for the same period in '24. And finally, net loss was $90.3 million for the 3 months ending December 31, 2025, compared to $27.6 million for the same period in '24. Our cash, cash equivalents and marketable securities at December 31, 2025, totaled $300.7 million.

Hello, Rob? Rob are you still there? SP1 Pardon me, Amanda, can you hear me?

This is Christian. I can hear you.

Okay. Looks like we might have just lost Rob. . [Technical Difficulty].

Okay. I think I'm going to take over.

Sorry about that.

Are you back? Okay.

Okay. I'm going to pick up on the -- our cash and cash equivalents and marketable securities at the end of '25 totaled $300.7 million as compared to $588 million at the end of December 2024. That decrease was primarily driven by net cash used in operating activities and impacted by a delayed receipt of approximately $18.6 million related to the 2023 R&D tax credit that we are expecting from the U.K. HMRC. As Christian noted, we are reiterating financial guidance issued in January that we expect between $120 million and $135 million in AUCATZYL net product revenue in 2026.

This includes contribution from both the U.S. and U.K. markets. Finally, based on our current operating plans, including anticipated AUCATZYL net revenues, we expect that current and projected cash, cash equivalents and marketable securities will be sufficient to fund our operations into Q4 2027.

I'll now hand back to Christian to wrap up with a brief outlook on expected milestones. Christian?

Thanks, Rob. All right. So going to Slide 18, upcoming milestones. We're actually just about 2 weeks away from a Virtual KOL Event that will be focused on acute leukemia and the opportunity there. I'll talk a little bit more on the next slide about that. We then actually have -- if you look into '26, we expect towards the end of the year, longer-term follow-up from the CARLYSLE Phase 1 trial. We also expect first data from our AUTO8 program in collaboration with UCL on light chain amyloidosis.

Name of the trial is ALARIC and early data from the BOBCAT Phase 1 trial in progressive MS. The full data for BOBCAT is then expecting during the course of 2027. And we also, by the year-end of '27, expect the full Phase 2 data for the CATULUS study, which obviously is designed as a pivotal study.

And then the second pivotal study, the LUMINA study in lupus nephritis is expected to read out in 2028. So with that, just a quick look on Slide 19, the event that we're planning for April 8. We got a great group of speakers who will talk through the landscape and the opportunity. It starts with Dr. Jae Park from Memorial Sloan Kettering, who will talk about the Adult ALL treatment landscape and unmet medical need. Dr. Lori Muffly from Stanford will talk through the ROCCA real world experience with AUCATZYL. Dr. Elias Jabbour from MD Anderson will look at the opportunity in the earlier lines of treatment in ALL and particularly through the lens of investigator-sponsored trials. And then we will get to the pediatric population with Dr. Michael Pulsipher from Utah University Huntsman, who will look at the medical need in the pediatric patients and the initial data that we have from the CATULUS study.

The event, obviously, is going to be webcast and also will be recorded. And we're looking forward to hopefully many of you being able to join us, a great group of speakers, and I think a very nice direct feedback and sense for where the disease setting is and where the opportunities are and also, obviously, their perception of how AUCATZYL fits into this landscape.

With that, just to finish and to wrap up, the focus for 2026, clearly drive market share for a AUCATZYL, improve the gross margins for the product and expand the utility of obe-cel with the clinical trial programs, development programs that we have ongoing that are designed to give us overall a broader range of indications ultimately to be able to serve with obe-cel.

With that, I think we're at the end of the prepared remarks, and we're happy to take questions.

[Operator Instructions] Our first question comes from James Shin with Deutsche Bank.

I have a couple. For the 2026 guide of $120 million to $135 million, Christian, can you -- or Rob, can you guys help us with how much might come from U.K. and other ex-U.S. regions?

Secondly, what's the latest on more EU adoption or reimbursement for AUCATZYL? And then Christian, given we're pretty much through 1Q '26, can you shed any light on how AUCATZYL uptake has trended?

Yes. Well, first of all, thanks a lot for joining, James. So with regards to the U.K. guidance, as Rob said, this includes both the U.S. as well as the U.K. We're not planning to break that out. Obviously, we're early on in the launch. The U.K. is a substantially smaller country than the U.S. and much smaller population.

So we're going to be actually presenting the data in the aggregate. And we do not expect a major contribution yet from the U.K. given that this is obviously very early in the process. So at this point, I think too early to tell and probably too early and frankly, too early to break out.

With regards to other EU countries, we do not expect in 2026 any contributions from other -- from EU countries. As you remember, we have an approval in the EU, and we're actually in conversation with market access authorities in Europe to see whether there's appropriate path here for us to take.

I think what is very clear for us is that obviously, we need to be able to enter a market in a way that actually is economically sensible. And different from maybe some of the larger players, we cannot afford actually taking a loss doing that.

So we're in the process of evaluating, and we certainly will keep you updated as we learn more and we get a better understanding of the dynamics here. But for 2026, we are not actually guiding to any revenue coming outside of the U.S. and U.K.

And with regards to Q1, obviously, we're not going to break out individual quarters. We've given you the full year guidance as we had actually at the beginning of the year and now reiterated. I think in overall, when you look during the course of last year, what we certainly saw were elements of seasonality that we're picking up.

And certainly, in the -- as you sort of go through in the summer with vacation periods that is clearly visible as well as kind of the year-end holidays do have an impact on patients, particularly those patients that are -- have an ability to, frankly, buy some time or bridge some time and obviously are interested to sort of spend time with their families, particularly over Christmas, New Year's.

So there's elements there that we see over the years. But overall, we're not going to give, I think, any sort of particular guidance per quarter because, frankly, there's too much variability in those numbers, but we're confident on the aggregate for the full year.

Our next question comes from Gil Blum with Needham & Company.

So very nice ROCCA results. Do you think this is going to influence physician behavior? Is this sufficiently socialized? I mean feedback that we've gotten is most physicians already view AUCATZYL as a preferred therapeutic?

Thanks for joining, Gil. Obviously, we're very pleased with the observation, the real-world observation. And I think what's important to understand in this disease setting is that, obviously, this is an incidence-driven disease. It's a onetime therapy. And so what's really at the core of your ability to actually build market share is the continued buildup of confidence, experience and confidence that the treating physicians have.

So that's a critical component in that, obviously, the ROCCA data, which is the physician's own data, obviously, is very important. Now we have to understand when we look into kind of the physician groups that actually are treating ALL patients, this is not just the transplanters or CAR T therapists that actually are treating ALL patients, but the wide range of hemato-oncologists who are treating them and particularly in the frontline and early relapse setting.

So there's a lot of work that we do to sort of expand, obviously, the adoption of the product across the range of stem cell transplanters and CAR T therapists, but also increase the awareness within the group of those physicians that tend to do the frontline therapy. So those are kind of the key dimensions that we're working on. And obviously, the data is very important because this is their own data, their own experience in many of the centers for many of the centers that are very relevant for the treatment of ALL patients.

So we think the data is very important, but there is a substantial amount of work that we have ahead of us to sort of go from a market penetration that is probably somewhere around the 10% range to really start driving that towards the levels of penetration that we're seeing with Blincyto, which is what we believe actually the actual potential would look like.

And are there any insights you can provide on how the LUMINA enrollment is going?

So the LUMINA study, as I indicated, is taking place in several countries. We started out in the U.K. and obviously building on the initial experience from the CARLYSLE study. So that is starting to get -- I think, to start to gain good momentum. We're in the process of adding U.S. centers, and we expect U.S. centers to come online in the upcoming quarter.

And with that, I think we're going to start to see, I think, a very nice sort of development in the disease setting and in the enrollment characteristics. So far, we're seeing kind of what we had expected to see in the indication and then seeing the type of flow of patients consistent with what our expectations were.

All right. And one last one for Rob. So now that we're recognizing revenues and costs on the second dose, how should we view patients only receive one dose?

Yes. Thanks for the question, Gil. So maybe just as a reminder on that, I mean, if you go back to the experience in the clinical study or even commercial experience last year, we're talking about a relatively small number of situations in patients. So they don't get the second dose. So the cutoff will be certainly, if there's a first dose towards the end of a quarter, that patient may still get the second dose, that revenue won't be recognized.

But if they get the second dose in the second -- in the next period would be recognized then. If the patient only ever gets the first dose, that's going to be a situation where there's a number of factors that will feed in, depending on the type of patient in terms of the split CMS reimbursement or credits according to the trade policy that may apply.

But eventually, what will happen there is we will wait until cash receipt to recognize that revenue on that individual patient. Whether it's a full reimbursement or a 50% reimbursement, it really depends on the patient characteristics.

Our next question comes from Salim Syed with Mizuho.

Congrats on the progress. Just one for us on cadence of catalysts for this year. So I know we're getting a lot of data here at the year-end of '26. But a lot of these trials like BOBCAT, LUMINA, et cetera, I think even ALARIC are all open-label studies with -- I presume you're going to be looking at data through the course of the year.

Is there any potential here on these studies for potential early disclosure? And can you just remind us specifically on BOBCAT, the intervals that you'll be measuring disability progression?

Yes. Really good question. Thanks for joining us. With regards to CATULUS the -- on the CARLYSLE study, obviously, we have presented sort of the baseline data at the end of last year. So what the next real question for that study is really kind of the longer-term outcome in these patients and obviously also the additional experience in the adolescent patients. We don't think we're going to make sense to actually to piecemeal that data. I think you want to give a proper update with a comprehensive review of the data, which is what we're planning to do.

With regards to the ALARIC study, so that's the first data cut we're going to do in that study. Obviously, you want to have enough patients and also from a dose level perspective, have enough experience to actually look at the data and understand kind of what the impact of the treatment is.

With regards to BOBCAT, one of the key things that obviously you'd like to understand is, on the one hand, the pharmacodynamic markers that you can look at and some of the imaging markers. But you also want to obviously see whether there is actually any sign of clinical activity eventually, and that will actually take time to build.

So in a way, it's tempting to look very early, but the thing is you will not actually have any understanding whether or not there is a clinical -- anything you could link to a clinical outcome. And I think ultimately, that's ultimately what we would like to do is to be able to sort of make these connections. But even if you look at the pharmacodynamic markers, you need a certain number of data points that you collect, so you understand what trends are to actually get a good sense of what it is you're looking at.

The individual data points, I think, are tricky, particularly early on and can be misleading. So we're not planning to actually come early with data from BOBCAT that doesn't make sense because I think the data probably would be not interpretable as much as we can get excited about individual patients and individual observations.

So we're planning to come towards the year-end, but we're not expecting to come earlier than that because I don't think it's helpful.

Okay. And same on LUMINA, I presume there'd be no potential early disclosure here that's open label.

Well, it's open label, but it's also a pivotal study. So the thing you don't want to do is you don't want to actually start to put information out that may actually impact the trial itself. And that's particularly tricky in single-arm studies and open-label studies. So that's something you absolutely would not do. And remember, we didn't do -- we didn't do that with the FELIX study either. Because you start to risk actually the integrity of the study.

Our next question comes from Matt Phipps with William Blair.

On the progressive MS study, you were kind of hitting on this, but just, I guess, a follow-up. Stanford recently presented data on 6 patients at ACTRIMS. And a couple of patients maybe saw some improvements by 6 months in ES scores and CSF oligoclonal bands. I guess any thoughts on this data and then how that makes you think about what you could present at BOBCAT later this year?

And then for AUTO8 and AL amyloidosis, similarly, I mean, cilta-cel has shown very high response rates in that setting. What do you think the CD19 aspect of AUTO8 gets you as far as differentiation from cilta-cel?

Yes. Very good questions. Thanks, Matt. So with regards to the data that was presented at ACTRIMS from the Stanford team, I think overall, encouraging data. They're showing certain correlations between pharmacodynamic markers, and there's early observations on the disease score in these patients.

The challenge, and this is goes back to the answer I gave to Salim before, the challenge is that obviously part of those disease scores also include patient assessment and physician assessment, which obviously can be more subjective. And that actually creates some of the challenges in the interpretability of that data, particularly if you look at it early on.

Overall, what you look -- what you'd like to see is probably some congruence between pharmacodynamic activity and some early indication of activity. And we think that stage, we're probably going to reach sometime next year in '27 with a longer-term follow-up and more stability in the data.

I think early on, you'd be looking more at some of the pharmacodynamic markers and general presence and product properties, persistence, presence of the product in CSS, those types of assessments that you'd be looking at and then obviously, B-cell depletion data and so on. But I think in terms of going from there forward and sort of concluding whether or not you might actually have the type of clinical outcome, I think, would be premature in the early time point I think we get a better sense for that during the course of next year, but it takes a longer observation time to start to be able to have put some weight on that. What was encouraging with the Stanford data was it suggested that the patients did improve. But again, it's early data and it's early days, but definitely worthwhile, obviously, pursuing and frankly, figuring it out.

And then with regards to the ALARIC data, so that's obviously light chain amyloidosis, predominantly a plasma cell disorder. And what we're looking at there is we're actually looking predominantly at the action of the BCMA component of the product. And then we're going to see whether or not the CD19 component adds to that or not. But the fundamental activity, we expect, obviously, very clearly to be driven by the BCMA either predominantly or maybe even exclusively.

Our next question comes from Roger Song with Jefferies.

This is [ Fiona ] up for Roger. Congrats on the quarter. So I understand that you will shift to a positive gross margin this year. And how should we think about the near-term on involvement of gross margin once it turns positive? And with your partnership with Soliris platform early this year, how quickly can this automated platform be integrated into your commercial supply chain? And what's the magnitude of cost reduction do you expect from this approach?

Yes. Very good questions. Thank you. So let me start out with just -- what we're doing in order to actually drive down overall production costs and also with that improve gross margins for the product. The 2 key areas. One is quite obvious, which is you run more products through the infrastructure. And with that, the fixed cost obviously can be broken down to a large number, a larger number of products. And with that, the contribution of fixed costs becomes reduced on a product per product basis. That's very straightforward.

The second aspect, which is really critical, though, is that we're also doing a lot of work in optimizing the operating model that we have in our facility and really are optimizing every step along the way. And between those 2 elements, the optimization on the one hand and the higher level of volume through the facility, we actually can drive the cost down substantially over time.

Overall, that is going to be the key trajectory we're going to be on and will be the key driver to get us to an economically attractive place. The Soliris opportunity is obviously one where we do a feasibility study to see what the comparability of the data between the 2 different manufacturing setups, which is from an operating setup slightly different.

But obviously, the biology that you're running is the same biology in the 2 systems. For us, the particular interest is actually in -- for situations where we might actually have to scale substantially because of a new indication that we might be able to unlock that may require us to actually set up a substantially larger manufacturing capacity.

And so the -- when we look at Solaris, this is much more an ability to scale to a substantially higher level of volume rather than actually to drive down costs. the primary focus is actually on the ability to scale. And the reason why we're looking into it is that we obviously do not know where the out where we're going to come out on some of the new indications, particularly also on MS, but assume a positive outcome in MS, that could actually drive substantial demand and substantial need to be able to stand up capacity.

And that is sort of the context under which we're actually looking at this, and we're looking doing the feasibility work because we believe that could be an attractive way to actually scale and scale in an economical way. It doesn't actually take anything away from what we're doing at our own facility at the Nucleus facility, which is obviously really focused on delivering for the ALL patients and the smaller subsets of the autoimmune patients, which is what the facility is designed to support.

Our next question comes from Yanan Zhu with Wells Fargo.

Just maybe a follow-up to the primary MS study questions earlier. The study has 3 dose cohorts at the year-end readout, can you talk about how many dose cohorts could we expect and whether a signal of efficacy can be discerned from kind of dose response on some of the metrics? And if you could be a little more specific on powerful success, that would be very helpful. And I have a follow-up as well.

Okay. Thanks for joining Yanan and all really good questions. Obviously, this is an exploratory study, which means that we expect this is a study where we will actually learn quite a bit along the way. We've designed it as a dose escalation study. What we do know is that the product obviously does give us an ability to penetrate the blood-brain barrier and be active in the brain. We've seen that with acute leukemia patients with CNS involvement. We've seen it also in primary CNS lymphoma patients. So we know the product has the right properties. It has an ability to do that. What the sort of the appropriate dose level is, is something we're evaluating in this study.

We started at 100 million cell dose. We have an ability to either step up or step down, both is possible. And obviously, one of the key things we're going to be looking at is the presence of CAR T cells in CSF as sort of a measure of the ability to actually cross the blood-brain barrier and going to the compartment that we know that systemically applied therapeutics typically cannot actually get to and typically cannot be active in.

So that's where the mechanism helps a lot and gives us sort of a differentiation here. Now in terms of where -- what we're sort of working through is obviously working through the dose levels. We need to have with each one, I think, a reasonable level of follow-up. So by the end of the year, I think it would be really very early data from our initial dose cohort to get a feel for what that data might look like. And it will be, as I indicated, predominantly around the product properties in terms of expansion, the safety profile, obviously, the ability to sort of actually access the CSF -- and then I think, additional sort of typical pharmacodynamic markers, including B-cell depletion and so on.

And then we're going to obviously record all the typical other parameters that you can record both biochemicals, imaging parameters. And we'll see whether there's any correlation between any of these parameters. I think it will be very -- it will be too early to actually understand where there are true connections and where there's a link to outcome. I think that is just not enough observation time.

But we believe as we go through the course of next year that, that we start to get to a place where we actually have a longer observation time with that have an opportunity to start looking more at clinical impact and hopefully can put more emphasis, but also more trust in the data that we're collecting on the clinical side, just given the inherent variability that, that data can actually represent. So that's where we are. So it will be very -- an early peak, but then the much more relevant data during the course of 2027.

Great. That's super helpful. Then on the B-ALL launch for AUCATZYL, can you comment on whether there's any use in earlier line setting such as MRD-positive consolidation? And also, we see there is a Sloan Kettering ITT that just opened for MRD-negative consolidation. Can you share your thoughts on how that could be leveraged in expanding the opportunity?

Right. So in terms of the actual use, current use, what we're seeing is that -- and this was what was presented at the ASTCT meeting, and Laurie will talk more specifically to it. But what we're seeing is similar to what we've seen with other products in the relapsed/refractory setting that patients can be included that actually have mineral residual disease or low disease burden at the time of inclusion. They're still relapsed/refractory. So it's the same setting, but it's basically inclusion at a time when the disease hasn't actually grown quite to the level of morphological disease.

So that we do see in the data, we see maybe about 1/3 of the patients, give or take, in that bucket, which is frankly what you would expect to see. This is the standard of care. This is the way these patients are being assessed and the intervention is done when you see when you have evidence of relapse.

And as I mentioned, none of the physicians will wait for things to get worse for a patient when they already have evidence of the disease coming back. So we do see that, which is very expected in terms of the real-world setting. I don't think we have patients that actually are in a frontline MRD setting at this point. I don't think we do. But that's something that we'll need to sort of look at and sort of see more kind of data coming back from the Consortium to see whether indeed that might happen over time. It's not something that we expect to see for the time being.

Now what you've picked up with the memorial entry in clinicaltrial.gov is a trial that's done in connection with other centers across the U.S. and there's a second study as well in the U.S. that are currently looking for as an investigator-sponsored studies where those investigators are interested in exploring the use of obe-cel in frontline patients that have gone through the initial frontline treatment and then actually have either evidence or no evidence of disease in the studies where it differ in terms of their designs in that regard to then do a consolidation, but do, in essence, have an ability and look at a population or patients that were treated not for the full extent of frontline treatment, which is like an 18-months treatment with quite a range of therapeutics and then at the end, put the CAR T, but rather actually look at an abbreviated initial therapy and aim for a definitive consolidation.

That's the thought process that these investigators have sort of brought forward and what they're interested in looking at. And also it's an area we're very interested in. And from a fundamental perspective, certainly if you think about it from a patient perspective, would be desirable to find therapies that actually can actually reduce the overall treatment time and reduce the overall amount of toxicity that the patients do get exposed, particularly in the frontline treatment.

So we understand that there could be real benefit in those settings. And I think we'll learn from those investigators experience, and we'll get a sense for the profile of the product in those patients.

Our next question comes from Emily Bodnar with H.C. Wainwright.

I guess how much additional follow-up and durability data should we expect from the CARSLYLE trial later this year for the 50 million and 100 million cell doses? And what are you kind of looking to see to gain additional confidence in the LUMINA trial?

Yes. Thanks a lot for joining, Emily. So the CARSLYLE study, I did mention we had 8.8 months of follow-up for the data cut at ASH. I would assume for that -- and that's the initial cohort of the 50 million cohort. I would assume we have 12 more months between 6 and 12 more months, depending when the exact data count happens.

So we're looking at somewhere in the range of 1.5 years to close to -- well, probably around 1.5 years of follow-up for the 50 million cohort. And the 100 million cohort will probably be just under probably a year of follow-up at that point in time and probably half a year follow-up for the adolescent patients.

So that's kind of the ballpark in terms of follow-up that we expect. And in terms of the LUMINA study, the difference with the LUMINA study is that the population is slightly different. In the CARSLYLE study, it was SLE patients with organ involvement. Happens to be that the vast majority of these SLE patients had pretty significant kidney damage and kidney involvement.

So they had a lupus nephritis component to their disease.

What we're having here in the LUMINA study is more precisely defined the population and it's defined by the prior lines of treatment that the patients went through. In this -- in the LUMINA case, it's a CD20 or other B-cell depleting antibodies and calcineurin inhibitors being after those [ 2 lines ].

And at that point in time, you actually get sort of outside the approved therapeutics from a label perspective. And so it's more defined, it's more defined population. And then there's obviously a range of kidney -- level of kidney damage and a requirement for the inflammatory process to be ongoing. So indeed, this type of an approach has an ability to improve the outcome.

So it's a different definition of the patients. Obviously, very similar overall properties, but it's a different way of defining the patient population as the basis to then actually have a definable primary endpoint that would be interpretable from a pivotal perspective.

Ladies and gentlemen, we've reached the conclusion of the Q&A portion of today's conference. I'd like to turn the call back to Christian for any further remarks.

Well, first of all, thanks, everybody, for joining. We're looking forward to hopefully seeing or hearing from most of you on April 8 when we have the KOLs talk to us about the ALL disease setting of the opportunities. And obviously, after that, it's not far out, and we're going to be meeting again for the Q1. So thank you very much for joining today, and I wish you all a good time.

Thank you, ladies and gentlemen. This does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

Good day. Thank you for standing by. Welcome to Autolus Therapeutics' Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded.

I will now hand the conference over to your first speaker, Amanda Cray, Executive Director of Investor Relations. Please go ahead.

Thank you, Olivia. Good morning or 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 status of the ongoing commercial launch of AUCATZYL in the U.S., 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'll turn it over to Christian.

Thank you very much, Amanda, and let's move to Slide #4. Welcome, everybody, and thank you for joining us at the third quarter financial results. We had a very good quarter, and I think we're off to an excellent launch with AUCATZYL in the U.S. treating or targeting patients with relapsed/refractory B-ALL. We managed, in the first 9 months, to achieve market leadership, broad market access and coverage and established reliable product delivery.

We also believe that there is a significant opportunity to grow the CAR-T market in this indication, and we're very pleased with the feedback we're receiving from physicians using the product and the interest expressed in conducting investigator-sponsored trials in frontline settings in ALL as well.

We're now at the point where we have achieved a significant amount of stability in our operation and our ability to deliver product in a timely and high-quality manner. And we're now actually focusing on optimizing our operation and really leveraging the investments that we've made in our infrastructure and our systems and have now an opportunity with a lot of data that we collected along the way in these first 9 months to optimize our processes, and with that, drive efficiencies going forward.

Importantly, in parallel, we're expanding the opportunity that we believe we have with obe-cel, AUCATZYL, and are looking to build a pipeline in a product and we are working on 3 current indications. The first one is in pediatric ALL, where we're initiating a potential pivotal study. a Phase II study in lupus nephritis also with an intent to drive towards the label and an exploratory Phase I study in progressive multiple sclerosis. In short, we're focusing on driving market share in ALL, improve the margins and expand beyond ALL.

Moving to Slide #5. Quick view on the performance that we have to date in our launch of AUCATZYL in the U.S. We have achieved $21.1 million in net sales in the third quarter, and we have deferred revenue of $7.6 million, indicating that there is a good number of products currently sitting at the centers at the end of the third quarter, not yet infused and ready for infusion in the fourth quarter. The 9 months ended September 30; we achieved $51 million in sales for the product.

When we look at how we're executing on product delivery and patient access, we're tracking very well. We had, at the beginning of the year, told you that we're targeting to authorize 60 centers by the end of this year. We achieved that goal. So, we're at 60 centers today, and we will keep adding additional centers to fill out the geographic gaps that we're having across the U.S. and with that, minimize the travel distances for patients to access therapy.

The manufacturing success rate is well above 90%, and we have attained patient access for more than 90% of U.S. covered lives. So, this gives us a very strong foundation, both from a rollout perspective, but also from a dynamic perspective as we start looking into the fourth quarter and into 2026.

Moving to Slide 6. We believe there's a significant opportunity to increase the penetration and grow the CAR-T market share. When we look at the level of CAR-T use before our product entered commercialization in 2024, we're seeing about 15% market share for CAR-T therapies in this indication. When we look in the treatment centers, the 60 treatment centers that we're active in now, which actually cover the vast majority of the relapsed/refractory ALL patients, we believe that the market share within that group of 60 centers at this point is probably around 20%.

This gives us an opportunity for substantial growth within the centers that we're already present in and the footprint we already built. This is about relationship building and deepening those relationships to really drive the uptake further and actually drive towards the types of levels of uptake that we've seen a few years ago, Blincyto achieve in this particular indication.

The importance, I think, of the experience that the physicians are making with the product are, really, cannot be overstated. The actual hands-on experience is critical here, and we believe that the way that we're seeing the product perform and also what we're seeing being reported or planned to be reported at ASH from the ROCCA Consortium indicates that there is a very positive experience that the physicians are making with the product, consistent with the experience that we have gained through our development, and in particular, also within our registration study, the FELIX study.

Moving to Slide #7. We're going now focusing -- we had a quick look at the launch. We're now focusing on the key approaches here that we're looking to optimize our operation and really improve the overall margins and efficiencies.

When we look at Slide #8, first, a quick look at changes that we have made within the leadership team. We have 3 new key members in the team that joined us over the last -- during the course of the third quarter.

First off, Miranda Neville, who some of you may actually have met in the past, has been actually with the company for about 5 years and initially worked on the planning and setup of the Nucleus facility, then actually took over the overall program team for obe-cel and drove the program through the registrations and getting us the approvals in the U.S., in Europe and also in the U.K. now actually returns back to product delivery in the role of Chief Technology Officer, leading the entire team.

Cintia Piccina has taken over from Brent Rice as the U.S. Chief Commercial Officer and Country Manager and has an extensive set of experience in oncology, in immunology, but most importantly for us, in cell and gene therapy. She has an extensive experience launching products in this space, and we believe is extremely well positioned to actually grow the opportunity for AUCATZYL from here forward.

And then Patrick McIlvenny, who's taken over from Andrew Mercieca as the Chief Accounting Officer reporting into Rob Dolski. Patrick joins us from Horizon Pharma, where he's been going through the very significant growth that, that company went through and also increasing complexity and believe has an excellent background to really help us actually go through the next phase of optimization and also of growth for the company.

Now I would like to sort of highlight also the 3 members of our team that actually handed over their responsibilities to Miranda, Cintia and Patrick. Dave Brochu, who's been the Chief Technical Officer handing over to Miranda has done an excellent job building out our product delivery team and building also the Nucleus facility, taking it into operation and launching the product. It was a huge accomplishment to actually go through that entire growth phase and building that entire part of the operation from the ground up, and there's a huge thanks that goes to Dave for that incredible achievement.

Brent Rice, a predecessor of Cintia has done a fantastic job building a very strong commercial team, the systems required and actually executed an excellent launch of the product and getting us really rolling now, I think, in a way that is quite remarkable and gives us, I think, a great outlook as we're sort of looking into 2026 now under the leadership of Cintia.

And also, Andrew Mercieca had built obviously a lot of the infrastructure pieces from a corporate side perspective that Patrick has now taken over and also great thanks going to Andrew as well.

So, with that, I'd like to move to Slide #9. And just a few thoughts in terms of the ability to really drive efficiencies and cost savings. I think where we are is that we have now built a very strong foundation through the strong launch performance with a highly reliable product supply. That's been the critical piece that we had to actually build and establish this year and frankly, has been a very significant challenge for most companies launching cell therapy, and in particular, CAR-T products.

Having established that now gives us an ability also with all the learnings that come out of that experience to really streamline the processes. The training wheels can go off, and we can now focus on making sure that we're just simple -- that we're as simple as possible, as straightforward as possible in terms of the processes that we run. Take those processes that we decided that are necessary, optimize them and automate them to the extent we can. and importantly, innovate.

And one of the 2 key areas that we're planning to, and we're focusing to innovate on, is really on manufacturing, where there's a lot of activity going on, on technology and on automation, but also on the biology side and on market access to make sure that we can actually increase the footprint, the geographic footprint for the product and the ability to actually serve a substantially larger group of patients going forward.

So, with that, I'd like to go to Slide #10, and we're now actually moving forward, looking at the opportunities to expand the potential for, and realize the potential of obe-cel in additional sets of indications.

With that, heading to Slide 11, a quick overview of the clinical trials that are ongoing to expand the use of obe-cel in additional sets of indications. We're starting with the pediatric B-ALL study called CATULUS that is ongoing. We are reporting the Phase I portion of that trial at ASH. And we also have just received, a few weeks ago, an RMAT designation for the program as well. We're in the process of starting up the Phase II portion of this trial, and we're excited about the opportunity, and obviously, the opportunity to share the initial experience from our Phase I.

The second study is the CARSLYLE study in severe systemic lupus patients. We had initial data presented at ACR, and I'll briefly talk about that in the upcoming slides, and we're planning for an oral presentation at ASH with a slightly expanded data set.

Lupus nephritis is the focus for our first pivotal study in autoimmune disease. The study is called LUMINA, and we expect to have the first patient in the study before the end of the year. And then finally, our exploratory Phase I study in progressive multiple sclerosis called BOBCAT. BOBCAT started in the third quarter, and we had our first patient dosed in October.

Now, in addition to the internal studies, we obviously are going to support the investigator-sponsored trials exploring the use of AUCATZYL in frontline settings. But also -- obviously we'll follow the real-world experience that the ROCCA Consortium is collecting for obe-cel in relapsed/refractory adult ALL, and it's truly a reflection of the real-world experience of our customers collected by them and analyzed by them.

So, with that, we're going to Slide #12. And just a few words on the data that we actually presented at the ACR conference in Chicago just at the end of October. We did present the experience that we had with the product at the 50 million fixed dose level that we have evaluated in 6 patients. These patients are patients with very advanced disease, very high SLEDAI scores at inclusion, very significant impact on their kidney function.

We have at least 6 months of follow-up with the patients that we reported on. And we have seen that 5 out of the 6 patients achieved DORIS remission. We have 50%, so 3 of 6 achieved a complete renal remission, and we have no evidence of new disease activity up to 40 months of follow-up and the patients do not receive any lupus-directed therapy. Also, obviously, when you have -- are in DORIS remission, the steroid levels that patients may receive are at or below 5 milligrams per day.

The safety profile of the product was very positive. The patients had no ICANS, no high-grade cytokine release syndrome, no DLTs at 50 million cell dose level. PK and biomarkers, we showed a quick B cell depletion after infusion. We saw then obviously that at the point when the CAR-T cells stopped persisting that the B cells started to recover, and we do see a predominance of naive B-cells reconstitution. More of that data is expected to be shown at ASH.

When we look in terms of now the next steps with the study, there are 2 directions that we're going to go -- that we're sort of exploring further. One is actually at 50 million cell dose adolescent patients aged 12 to 17, for a lot of these patients with early onset of lupus, they have a particularly challenging course of the disease, and there's a very significant medical need. In fact, when you look at the population, the highest medical need is in the young patients.

So, this will be explored at 50 million cell dose, which is obviously equivalent to, as you may remember, the pediatric level that we reduce and just translated into a fixed dose level. And we're also exploring 1 additional dose level on the adult side to sort of round out the experience in the SLE patients. The recommended Phase II dose is already defined as 50 million cells.

Moving to the next slide, Slide 13. This is a more detailed look at the safety for the product. And as you can see, it's a very good safety profile, no ICANS. We only had observed Grade 1 CRS in half of the patients and a relatively short period of neutropenia following lymphodepletion, which was resolved by day 22. No high-grade infections that we have observed in the patients and not unusual for patients that have significant kidney involvement. We have seen patients -- 5 patients with transient hypertension; 3 had preexisting hypertension of the 5.

When we now look on Slide 14, this is a view of the SLEDAI scores and the progression of the SLEDAI scores over time, looking at each individual patient. And what we're looking at, if you look at the screening bars, which are on the left-hand side of the respective charts, you can see that every one of these patients had a significant kidney component. This is the blue part of the bar. And then the other colors actually relate in part to increased DNA binding as well as low complement, which is the black and the yellow. And the other colors are linked to other forms of autoimmune manifestation and inflammatory processes, whether this would be mucosal ulcers, rashes, arthritis, alopecia that we have seen in these patients.

So, as you can see, these patients have not just actually a renal component, they have a multitude of disease manifestations. And you can see as these patients progress over time, these manifestations actually are very quickly reduced, and we then actually see with a bit of a lag also in the majority of the patients, a reduction of the renal signal as well. So, all very encouraging. What's important is, again, none of these patients actually had any form of relapse or flare.

So, moving to the next slide. This is Slide #15. This is a quick look at the DORIS assessment that you can see that 5 out of 6 patients had a median -- achieved a

DORIS remission with a median onset of 5 months. And again, in terms of the steroid dose that by month 6, all patients had steroids tapered to less than or equal at 5 milligrams per day and no other lupus medication, of course.

Now, when we look at the upcoming data presentations on Slide 16. In oncology, pediatric ALL, poster presentation Phase I experience from the CATULUS study. Adult ALL, first, an oral presentation from the FELIX trial looking at the impact of the product cell phenotype so the actual features of the product and the linkage to the longer-term outcome in these patients. And then second, a poster, which is looking at CAR-T cell persistence at month 3 and the ability to actually predict outcome based on that data for these patients, the longer-term outcomes, again, experience from the FELIX study.

On the Autoimmune side, as mentioned, we have an oral presentation for the CARLYSLE trial. And we just want to highlight the fact that the ROCCA Consortium has several presentations, one of which looks at the patient characteristics, toxicity response after real-world administration of both obe-cel and brexu-cel alongside the same time horizon within those centers, which, at least to my knowledge, is probably the first time we're seeing basically data collection of 2 CAR-Ts in the real-world setting in parallel.

With that, we're heading to financial results and heading over to Rob.

Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the third quarter of 2025. I'll be moving in the slide deck to Slide #18.

In the third quarter, net product revenue for the 3 months ended September 30, 2025, was $21.1 million compared with $20.9 million in the second quarter. Our deferred revenue balance at the end of Q3 was $7.6 million compared to $2.1 million in Q2. As a reminder, the deferred revenue balance represents products delivered to the authorized treatment centers, but not yet infused for the purposes of revenue recognition in the P&L.

Moving on to cost of sales in the third quarter. That amount totaled $28.6 million. As we've discussed previously, this amount includes the cost of all commercial products delivered to the authorized treatment centers, including the product delivered but not yet administered to patients, essentially the manufacturing costs related to that deferred revenue I just mentioned.

Additionally, cost of sales includes any canceled orders in the period, patient access program product, inventory reserves or write-offs, third-party royalties for certain technology licenses as well as idle capacity. Our expectation is to see cost of sales improvements as volumes increase and as we improve efficiencies in our own manufacturing operations, as Christian spoke about earlier.

Moving on, our research and development expense was $27.9 million for the 3 months ended September 30, 2025. That's compared to $40.3 million during the same period in '24. This change was primarily driven by the commercial manufacturing-related employee and infrastructure costs that has shifted from R&D into our cost of sales and inventory accounting.

Our selling, general and administrative expenses increased to $36.3 million for the 3 months ending September 30, 2025, and that's compared to $27.3 million in the same period 2024. This increase was primarily due to the salaries and other employee-related costs driven by increased headcount supporting our commercialization activities.

Our loss from operations for the 3 months ended September 30, 2025, was $71.6 million as compared to $67.9 million for the same period in '24. And finally, net loss was $79.1 million for the 3 months ended September 30, 2025, reduced from a loss of $82.1 million for the same period in 2024.

Our cash, cash equivalents and marketable securities at September 30, 2025, totaled $367.4 million as compared to $588 million at the end of December 2024. This decrease was primarily driven by net cash used in operating activities and also impacted by a delayed cash receipt of approximately $20.1 million in our R&D tax credit from the U.K. HMRC. We continue to believe that with our current cash, cash equivalents and marketable securities, we are well capitalized to drive the launch and commercialization of obe-cel in relapsed/refractory adult ALL and to generate data in the 2 pivotal trials in lupus nephritis and pediatric ALL as well as the exploratory Phase I trial in MS.

I'll now hand back to Christian to wrap up with a brief outlook on expected milestones. Christian?

Thanks, Rob. Moving to Slide 20. We expect 2, obviously, key data points from our key trials at ASH related to the pediatric study and the SLE CARLYSLE study. Also, there's the additional 2 presentations I already mentioned coming from the FELIX study. We then actually are in the start-up, obviously, of 2 additional trials, the LUMINA trial in lupus nephritis, our Phase II study; and the ALARIC trial in patients with light chain amyloidosis, which we're doing in collaboration with UCL, both of those programs expected to have their first patient before year-end.

So, with that, moving to Slide 21. The focus is clearly for us to drive market share in adult ALL, improve margins and expand beyond ALL.

And with that, I think we're ready to open up for questions.

[Operator Instructions] First question coming from the line of Asthika Goonewardene with Truist.

I got a simple one. Can you maybe talk just a little bit about the patient flow that you're getting in here and the anticipated patient flow going forward? What proportion of these patients do you think are patients who might have been at -- who were -- in the near term were planned to give Tecartus and -- or maybe had a treatment decision change by the physicians to give AUCATZYL?

Okay. I'm not quite sure whether we can have -- whether we have that level of resolution. What we do know is, first of all, that we have a good proportion of patients that clearly were not initially considered for CAR-T therapy. And this is I think we're seeing -- part of that we're seeing expansion already of the prior market penetration in the space.

Overall, we see, I think, very consistent access of the product, and I think very consistent use across the centers. And we're looking forward to obviously getting with the additional centers that are opened and also preparing -- running through this quarter but also preparing for 2026. And I think very excited with the dynamic we're seeing. And I think we'll have a nice, I think, reception of the additional data that we're expecting at ASH, including the real-world experience with the program.

And our next question coming from the line of Gil Blum with Needham & Company.

Just maybe a quick one on competitive positioning for obe-cel in pediatric patients. Is this a similar concept to what we're seeing in the adult relapsed/refractory patients, meaning differentiating on safety? Or how are you thinking about this?

Yes. Thanks, Gil. Good question. So, I think the first part is to look at the actual patients that are eligible, pediatric patients that are eligible for CAR-T therapy. And one of the key groups of patients that are actually not eligible for CAR-T therapy are high-risk patients. So, the patient population that we're focusing on, it certainly includes the high-risk patients as well.

What we do obviously know, and you've seen that from our prior publications going all the way back to the CARPALL study in 2019 is that we do have, obviously, also in children, a very good safety profile and a very good efficacy profile. I think having consistent, reliable access to product is absolutely critical with pediatric patients and expanding the access to patients who are high-risk patients, I think, is particularly important because that's the group that currently has very limited options.

So that's kind of the key focus for the program and is frankly reflected also by, frankly, the physician interest that we have seen and received that were behind the decision that we took here also to move into the pediatric setting, understanding that there is a very significant need that they see for a product with the properties that they see for obe-cel.

Our next question coming from the line of Salim Syed with Mizuho Group.

Congrats on the progress, guys. Christian, Rob, maybe just I'll ask one and then a follow-up as well. I guess the first one, just I'm thinking about 3Q over 2Q performance of AUCATZYL. Was there something in particular that drove the more or less flattish, especially since ATC has ticked up quite meaningfully quarter-over-quarter? Are you starting to see some seasonality in the business with holidays, et cetera? And how does this relate -- onto 4Q is there a pent-up demand there? I know there's deferred revenue. So that's question one.

And then just on the follow-up question on gross margins. Rob, curious how you're handling D&A in the COGS. We learned from Iovance this quarter that they had loaded a bunch of D&A into their COGS. They are now stripping it out to at least optically improve gross margins. Curious how much of your COGS is D&A or how you're exactly handling that?

Alright. Well, thanks a lot. First off, questions related to sort of the sales numbers and possible seasonality in the fourth quarter. So, as you remember, as we went through the second quarter, one of the things that we reported on is the fact that CMS had changed precedents in terms of their reimbursement policy. And that required us to actually change our trade policy, adjust that, and it did lead to a reduction of patients enrolled in the second quarter, which meant that as we went into third quarter, we had a limited amount of product waiting to be infused and ready to go.

And so, we had an impact from that CMS decision and sort of the subsequent work-up that in the second half of the second quarter, but also going through the first half of the third quarter because obviously, the patients that were not involved, they have not yet been manufactured. And obviously, that have contributed to the performance that we're seeing for the third quarter as well. And we did highlight that also at the Q2 call that this is likely going to be the dynamic we're seeing.

What is obviously very encouraging is, when you look at the deferred revenue is that obviously, we have had a very healthy amount of patients that actually got manufactured for and were actually -- that were ready also then for infusion into the fourth quarter. So that's kind of, I think, tells us what kind of behind that impact we have from CMS, which was sort of bridging between the second and the third quarter.

In terms of seasonality in the fourth quarter, I think this is going to be our first fourth quarter we're going to be running. And so, at this point, I don't think we can easily judge what the impact, what it might look like, if there is impact and what it would look like. We're obviously going now into the Thanksgiving week in a short while, ASH conference, which obviously impacts a number of the physicians that we're working with, but also then obviously the Christmas break.

I think, at this point, it's hard to actually estimate. And we'll need to sort of actually go through that and actually gain that experience. I don't think there's something that's easy to sort of actually sort of estimate or adjudicate at this point. With that, I'm handing over to Rob for the gross margin question.

So, Salim, thanks for the question. So currently, with respect to any kind of depreciation and amortization, it's kind of very typical accounting treatment. So, you absolutely see depreciation from the Nucleus, the manufacturing facility, flowing through cost of sales. There are kind of non-cash stock-based comp that's also in there as well as some commercial milestone amortization that occurs in the cost of sales line.

So, we haven't broken that out. I think it's -- certainly, as we look into next year, we're already starting to think about how do we adjust or how do we think about communications for next year. And so, it might be something that we can think through a little bit more. But right now, it's kind of presented in a very typical, standard way.

Our next question coming from the line of Yanan Zhu with Wells Fargo Securities.

I was wondering if you could talk about the CAR-T share growth a little more as you alluded to in your prepared remarks, where do you think the share growth will come from in the current kind of treatment landscape in B-ALL? And also, if you could comment on any frontline consolidation use that you see in the real world?

And maybe as a follow-up, in terms of autoimmune diseases, can you give us an updated thinking on the lay of land based on new data from various CAR-T players as well as bispecific players? And how does that affect the positioning of obe-cel going forward?

Okay. Thanks, Yanan. I think these are 3 questions. So, I'll try to tackle those in one go. So, first of all, the question of growth, where can growth come from? I think what's important to understand is that when we look at the CAR-T penetration at this point in time in the relapsed/refractory adult ALL setting, at the centers that we're already present in, it is at approximately 20%.

To put it differently, the majority of the patients at this point are not yet receiving CAR-T therapy. And that gives you a significant opportunity for growth in the current centers that we're already active in. And that has to do, obviously, in the change of practice because obviously these patients get treated today typically with either transplant or other therapeutic modalities. And so, there is a significant opportunity to keep growing for the centers to gain experience, for the physician to get comfortable with the treatment modality and to grow from there into the broader set that's captured in our label. And that is currently at this point, many of these patients receiving other types of treatment.

Obviously, what's very helpful here is the fact that the product is well manageable, has obviously good safety profile. It's well manageable, and that builds confidence. So, the experience that we think actually -- well, one of the key elements of experience is obviously the safety, which is the immediate experience. But the second part is also that these centers have obviously started treating -- the early centers started treating patients in the first half of this year. They now start to actually get a feel for the longer-term outcome of these patients and the efficacy, not just the responses, but also the longer-term outcome.

And we also believe that, that visibility for those centers and the physicians of their own patients reaching longer-term outcomes, I think will actually have a reinforcing effect. And so those are the key parameters that we're working on. And it's not just the way that we're thinking about it, it's also when you look at the abstract from the ROCCA data are also then we'll see the actual presentation, you'd start to get a good sense of indeed that, that's actually also reflecting very much of what the physicians are seeing and how they're thinking about the product.

Those physicians that actually have already gained substantial experience are thinking actually already quite a bit beyond the current setting, and they're considering running investigator-sponsored trials in the frontline consolidation setting. So that's already happening, which tells you something about what the perception is of these physicians where the product actually should go in their view.

What we do not see, and I wouldn't expect to see is actually any form of frontline use for an extended period of time because obviously, we do not have data in frontline setting nor do we have the label in frontline setting. So, it's not something that we expect to see for the upcoming period ahead of us. And certainly, with more experience and potentially changes in guidelines, that may change over time, but that will take time to develop.

And then the last question is related to the competitive landscape in autoimmune disease. I think it was very interesting to see the data that was presented in the -- at the ACR conference. I think encouraging that there's been -- obviously, there's a good overall, I think, shared view [ around data ] that indeed the CAR-T therapies, irrespective of the nature of the CAR-T therapies do give a positive outcome, a positive outcome for patients with autoimmune disease.

However, when you look at the data more closely, you do see there's a lot of differences within the data sets and there is differences in terms of the patients and the severity that the patients actually have with their respective disease. And then we see differences in safety. We see flares coming up in independent programs and so on. So, it's worthwhile taking a closer look and actually look at that -- look at the data and keep following the data as it evolves.

But the sense that we have from our own data set is that we're actually stacking up very well with our data, both on safety as well as on efficacy and believe we're very well positioned in the indications that we've chosen to move into.

In terms of other modalities beyond CAR-T, there's very little data that was actually published. I would expect to see more data emerge during the course of next year. And it will be interesting to see where some of that data lands. I would assume part of it will certainly be our programs sort of looking to position against monoclonal antibodies and try to sort of basically go into that space.

As you remember, the way that we're positioning our product is actually after the patients have gone through monoclonal antibody therapy and sort of relapsed and have recurring disease after that. And so, it is a more advanced group of patients that we're looking at. The patient that has actually, at this point, no approved treatment options. So, it's a different form of severity and level of severity that we're actually developing in. And so, we may see different modalities at slightly different places as we see it today with going -- starting with steroids going to antimalarials, going to monoclonal antibodies. We see that whole range and then calcineurin inhibitors.

We see that whole range actually evolves and position across the severity grade and the development of the disease. We're focusing on the most severe patients where we think we can have very profound impact. That's the initial approach. And then obviously, once we have data in that setting, we'll certainly consider to broaden that.

And our next question coming from the line of James Shin with Deutsche Bank.

This is Sam on for James. I'm just wondering if you can provide more color on the data you're expecting at ASH.

Yes, happy to do that. Sam, thanks for joining. So, I did mention on the pediatric ALL study, that is obviously the Phase I experience. So, we have around 20 patients worth of data in that data set that we're going to be presenting in a poster. Obviously, had longitudinal data, response data, safety data. So, I think they'll give us a good view. And I think it will be, I think, very clear why we decided to actually move forward into the second stage of that study, the Phase II stage of that study.

With regards to the CARLYSLE study, the CARLYSLE study, obviously, we had the data presented in a poster at ACR that I just referenced earlier in the prepared remarks. We're going to expand on that data, certainly look at additional pharmacodynamic recovery data, et cetera, to sort of actually round out the picture. And I think I'll, frankly, go through, one, the impact on the disease, but then also the ability of the immune system to reset without obviously the disease to recur.

So that's going to be a key part of the focus of that presentation. And then when we're looking at the product profile versus longer-term outcome, obviously, an analysis we've done where we looked at a range of product parameters to see which one of these product parameters actually are tracking with long-term outcome. And I think that's going to be an interesting oral presentation because it obviously has a substantial data set behind it. With that, meaningful, I think, learnings from that analysis.

And then the final part is obviously the -- when you actually induce a response in the ALL patients, you obviously would like to know whether -- or would like to have early information or indication about the likelihood that the patient will remain in remissions going forward. And so, the teams and the physicians have been looking at various parameters to see what might actually track. And one of the areas that they thought was interesting is to actually look at the persistence of the product at 3 months and act as an indicator.

And so, we'll need to see, obviously, there's more analysis that -- or is being conducting, but that's going to be a part of the focus of a particular poster presentation. So those, I think, are the key parts of the presentation. And then as I pointed out, please go have a look at the various presentations from the ROCCA Consortium. I think very insightful, and I think gives you a good sense for what the actual reception is of the product and why it resonates the way it does.

Our next question coming from the line of Matt Phipps with William Blair.

Matt, I can't hear you.

And our next question coming from the line of Clara Dong with Jefferies.

So, one for me. So, you mentioned the potential pivotal studies in pediatric ALL. So just wondering whether you've had any regulatory dialogue or what kind of interactions have you had with the FDA in terms of this pivotal trial and what would be the requirement for your trial to be pivotal?

Yes. Thanks a lot, Clara, for joining. Much appreciated. Yes, of course, we had -- we reviewed the Phase I data with the agency and reviewed with them the trial design, which is a trial design that we have developed with COG, the Children's Oncology Group, the leading oncology group in the U.S. And there's been agreement that, first of all, the medical need in the high-risk patients are obviously significant and that it would be beneficial to actually have a product that actually could include these patients in therapy and provide a therapeutic option.

So, very clear conversation around the patient population, the type of data that we need to have as well as the size of the study. So, very consistent and this was only after we have those conversations and we have clarity on the path forward that we actually communicated that indeed this is what we're going to do, which I think is what we did for the first time at the Q2 call.

Next in queue is Matt Phipps from William Blair.

Can you hear me now?

Yes, we can.

Great. Sorry for the technical issues. This is Madeleine on for Matt. For the pediatric opportunity, do you have any rough timelines at this point for completing the pivotal cohort? And then, related to that, what do you think is sort of the total market opportunity across both adult and pediatric ALL patients?

Thanks, Madeleine, for joining. So, with regards to the pediatric opportunity, we do believe that the -- when you look at the current sort of medical need segment, it's about 1,000 patients all in between Europe and U.S. So, it's about 500 in the U.S. And there is -- a good proportion of these patients are in the high-risk category, and they're currently not being treated or not actually having direct access to CAR-T therapy.

So, we expect that we'd be able to sort of capture and support that part as well as having an opportunity to sort of actually broaden out the use of the product more broadly across the population. I think at this point, I think it's not quite straightforward to give you a number. But what we're seeing in general is I think there's an opportunity for a few hundred patients that could be actually reached through that type of a label.

In terms of the study itself, we're starting up the Phase II portion of the study. We have certainly the Phase I seen a good rate of enrollment, and we hope that, that will continue, and we expect that, that is something we can actually build on in the Phase II so that we should actually be in a follow-up period -- or get into the follow-up period in 2027 and hopefully have data maybe at the end of '27 or early '28.

Our next question coming from the line of Shyam Kotadia with Goldman Sachs.

Shyam here from Goldman Sachs on behalf of Rajan. So, I just had a question on AUCATZYL dynamics for the remainder of '25. So, you mentioned already the CMS coding impact that impacted 3Q '25. So, I just wanted to get a bit more color. Were you expecting revenues to be flat quarter-on-quarter or was this above your expectations? And therefore, given that the CMS lag was expected to be resolved in 4Q '25, how should we think about AUCATZYL sales for 4Q? Should we still expect to see some upside to 3Q or would it likely be broadly flat? So that's the first one. And then a follow-on, going forwards, you mentioned that you're entering a new phase of growth. So, how should we think about the AUCATZYL trajectory for 2026?

Thanks a lot for joining, and thanks for the question. So, in terms of the Q3 dynamic, we did highlight already at the Q2 call that we expected to have an impact for -- in terms of the recovery from the CMS event and actually going through that. And we did guide to, I think, relatively flat trajectory at that point in time because we did know that there clearly was a lag in patients that were actually coming into the third quarter, which obviously will have a -- it was clear that would have an impact on the overall dynamic in the third quarter.

We saw that actually in the second half of the quarter actually being fully reversed and actually the second half of the quarter actually running at the expected clip. For Q4, I don't think we're going to give guidance on Q4. The basic reason, as I mentioned before, is that it's the first time we're going through the end of the year stretch with certainly Thanksgiving week, which leads to a slowdown typically at the clinics. ASH tends to have an impact and then obviously the holiday season.

So, it's something that I think we just need to experience. We don't think that we have a good way to handicap that at this point and give a good sense around that what to expect at this point. We're still in the first year of launch. There's a steep learning curve. And I think the fourth quarter certainly will be important to sort of understand the dynamic we're seeing there in the market, which is too early to call.

Our next question coming from the line of Simon Baker with Rothschild & Co Redburn.

A one related two-parter, if I may, please. Just going back to the question of revenues and deferred revenues. Well, I think you said it was -- the deferred revenue balance was about $7.6 million. Could you just give us any idea as to how typical that is, if there are any factors in there? I'm just trying to get an idea of, is this simply effectively the timing at the back end of the quarter just from when you book, it just gets into the next whether there are any other factors within that, just really from a modeling perspective.

And then related to that, clearly, at this stage, the cost of goods line is understandably noisy. But I just wonder if you could give us an idea of the underlying sequential trends here. Are you -- is it too early to be seeing an underlying improvement in gross margin? And over what time period do you expect to see an improvement in the gross margin?

Yes, very good question, Simon. I'll start and then I will hand over to Rob just to add to that. So, first of all, with regards to revenue and deferred revenue, obviously, one of the, I think, characteristics of this type of a therapy is that you obviously have quite a time period between the inclusion of a patient and apheresis of a patient and the actual dosing.

And what that does is that as you get towards the end of the quarter, you obviously continue to actually include patients, you manufacture for those patients. The products actually get released and then get shipped to the centers. Typically, when the product is at the centers, there's still scheduling to be done to get the patient in. You may have situations where the patient may have actually picked up an infection. If that's the case, then the patient first needs to sort of get rid of the infection before you could actually start the lymphodepletion and then the treatment.

So, there is a gap there. It's a lag between -- and depending on the condition of the patients, you may actually have a set of products that actually are shipped but not yet dosed. And so, they sit basically at the center and they're in the process of scheduling the patient or managing the patient through a crisis the patient may have experienced before the patient actually can receive the product. And it's only when the patient actually gets the product infused, and in fact, obviously with the first and then the second infusion, that in fact the full payment actually becomes through, and the revenue will be recognized in our numbers.

So that's why there is a lag there and why you have a build-up towards the end of the -- end of the quarter you have a good proportion of products that is either still finishing manufacturing or has already finished manufacturing and has been shipped and it's that portion of the ones that are finished and shipped and received at the centers that go into the deferred revenue bucket. So, that's the dynamic. And I think that's a dynamic we're just going to see and it's sort of a reflection of sort of the continuous flow of activity that we see from one quarter into the next quarter.

The COGS, to your point, obviously, are noisy, and that's true. And obviously, one of the key elements, particularly as you start -- as you launch is that your launch obviously initially have a number of patients going through your manufacturing setup, that is not obviously anywhere close to the setup that you actually designed for the larger opportunities.

In other words, there is a significant portion of the infrastructure that is not actually utilized for commercial supply, particularly early on in a launch and into -- early on is still -- certainly within the first year of the launch. And as you obviously then keep on growing the opportunity and you run more product through the facility, that's actually where you actually -- where sort of your overhead cost, your overall cost for the facility obviously gets divided by a larger number, you see a decrease over time. So that's one dynamic.

So, volume is one of the key drivers that actually will reduce the actual cost of goods line overall and improves the ratio between revenue and cost of goods. And the other part is actually the improvements in the actual operations itself. So, in other words, in very simplistic terms, there's work that goes in, which are work hours and there is materials that go in. And then there is some operating costs in terms of running the clean rooms.

But time and the cost of materials are key elements. Cost of materials obviously is one of the drivers that you actually drive down and you get more efficient. But one of the biggest elements that you actually look at and you look to improve on is the time you spend per product released. And that has a lot to do with experience, with optimizing your operating model and actually it really take all the experience we've now gained and take that and actually create -- develop a more efficient operating model over time.

And so that's a significant improvement process you're going to run through, and we are going to run through. And that gives us an ability to actually reduce on a per batch basis the actual cost that is driven by actually producing this particular batch in terms of the work and the materials that go in. So, those are the key parameters that impact. So, we expect to actually see as we increase sales during the course of next year, we actually expect that we also see a decrease in the ratio of COGS that we have or cost of sales versus what we're seeing in the first year of launch. So that's the dynamic we're looking at.

And I'm handing over to Rob to sort of add on maybe some of the more technical accounting points.

Yes. Thanks, Christian, and thanks, Simon. The only thing I might add, I think Christian covered it very well. But I think you made the point, these are 3 quarters, 3 data points. And I would say that there's still a little bit of noise, and we've got to get to a more steady pattern, so to speak. So, to the CMS issue into the Q2 and Q3 quarters that Christian talked about, the CMS really impact at the end of the Q2, early Q3. You actually saw that play through from a treatment perspective, even in some of the deferred revenue balance there, right? So that's the difference between the finish that we have in Q3.

With Q3, that deferred revenue, we've recognized a much larger quantity. In fact, really quarter-to-quarter, the main difference in our gross margin was driven by the amount of deferred revenue that we had to recognize the cost for, but that's also going to kind of give us a nice load, so to speak, with sales and gross margin coming into Q4.

We still have to play out the rest of the year. And again, Christian mentioned going through the first time with the holidays in ASH. So, I really think that we need some more time and data point here to really see more of a smoothing effect in more of these quarter-over-quarter dynamics.

I will now turn the call back over to Dr. Christian Itin for any closing remarks.

Well, thank you very much for joining us today. We're really looking forward to seeing you either at ASH through one or the other of the many data updates or then at the latest early in the year in San Francisco. I hope you're doing well and looking forward to connecting with you in one of those venues. Thank you. Bye-bye.

This concludes today's conference call. Thank you for your participation and you may now disconnect.