Cartesian Therapeutics Stock

Good morning, everyone. My name is Gil Blum, and I am a senior biotech analyst here at Needham & Company, covering the immuno-oncology and gene therapy subsectors. It is my pleasure to have with me today Carsten Brunn, the CEO of Cartesian.

[Operator Instructions] And with that, Carsten, maybe a good place to start as an introduction, just briefly walk us through Cartesian's core technology.

Yes. Thanks, Gil, for having me. So Carsten is an mRNA cell therapy company focused exclusively on autoimmune disease. Our lead asset, Descartes-08 is currently in a Phase III in myasthenia gravis. We also have published very promising Phase IIb results where we saw a deep and [indiscernible] responses out to a year.

What makes us unique, we're truly designed to be used in an outpatient setting. So no lymphodepletion. This is given in an infusion clinic and go home the same day. It's a 2-hour procedure. There's no risk of CRS or ICANS, and we don't use integrating vectors. So there's no risk of secondary malignancies.

We're also running a Phase II currently in myositis, both adult myositis and juvenile dermatomyositis. And last but not least, we do manufacture in-house in Maryland.

Excellent. So maybe just somewhere to start with the mechanism of action of mRNA CAR Ts. How do you guys think they mitigate the side effects that we've seen with other cellular therapies?

Yes. So I think there's a couple of things. So first is the modality using mRNA, which is transient in nature. So the difference, as I said, upfront, we don't need to use lymphodepletion. So we give multiple doses at a therapeutic level. And the other kind of key differentiator is we're using BCMA as a target, which we think is a much more precision approach.

BCMA is expressed on the long-lived plasma cells, the cells that actually produce the pathogenic autoantibodies. And it's also actually expressed on so-called pDCs, [indiscernible] cells, which play a role in early inflammatory responses, kind of dual mechanism of action. I think that's unique.

So you have a much lower cell target to kill. But I think the reason we don't see CRS or ICANS is the fact that we use transient CAR T cells that they proliferate, but they lose the CAR signal. So there's never a risk of escalating CRS. You see mild fever, which is transient, doesn't have to be treated. That's really the difference from a short-term safety perspective. And then longer term, we don't have to follow those patients for 15 years.

As I said, we don't use indicating vectors. You don't have that risk of secondary malignancies as well. So it's a pretty safe modality when you hear kind of CAR T.

So targeting BCMA does and is associated with certain side effects that's actually considered pretty potent. A recent publication from you guys provided some insights as to the kind of therapeutic windows that you're seeing with Descartes-08. Maybe you can help us understand how you're kind of not seeing a complete wipe out of BCMA expressing cells.

Yes. Yes, you're right. I mean if you hear BCMA, and we started out 2 or 3 years ago, people heard BCMA say you guys are crazy. And it's really triggered by the DNA CAR Ts using BCMA, where you do see a wipe out of vaccine titers, reduction of IgG, but that's driven -- and they use lymphodepletion upfront and then the cells proliferate and wipe out pretty much a lot of the BCMA positive cells.

Now contrast this with our approach. So we don't do lymphodepletion. So naturally, the CAR Ts kind of migrate to lymphoid organs to the bone marrow where you want to go in the first place. And because they're transient in nature, they primarily act to go after activated BCMA positive cells.

So that means if you have a vaccine titer dose lung memory B cell, they're not activated, whereas if you have active MG, you're constantly exposed to the antigen. So those are BCMA positive activated or the so-called BCM high cells, and that we primarily target actually when we -- so it's -- number one, it's targeting the lymphoid organs. So you don't have a migration to lung and gut where most of the memory B cells actually sit.

And the other is kind of the preference for BCMA high cells actually because as I said, they're activated. And then combined with the transient nature, you don't see the, say, side effect profile that you mentioned, we don't see a significant reduction in vaccine titers. You don't have to revaccinate patients, which is obviously, much safer and more practical. And we don't see a real reduction of IgG as well, which kind of makes sense.

So just to clarify and make sure I understand, is this because the activated cells express more BCMA on their surface?

Correct. Yes, you have basically more BCMA expressed what I call BCM high cells because they're secreting auto antibodies. So they're activated, sort of an activated state, and they're easier to target for CAR T cells versus more plasing cells like a memory B cell for a vaccine titer, they're not really activated at this point.

I do want to switch gears and talk about Descartes-08 product profile. So maybe starting with the comp here. VYVGART sales continue to grow. Feedback that we've gotten from some physicians suggest that they see pretty good efficacy, especially if you can increase the number of doses beyond the label.

With new formulations, using at home injectors, how do you think other modalities compete as it relates to the Descartes-08?

Yes. So let me start by saying we're actually grateful of all the work that the FcR antagonists have done around creating awareness about the disease. But having said this, I think fundamentally, the FcR antagonists are symptomatic therapy.

So yes, you need more doses, you have control longer. But the moment you stop, you go back to baseline. And the longer you dose, you do have chronic immune suppression. That's basically what it is. And we had last year a patient ad board and patients, they were appreciative of FcR antagonist as a short-term symptom relief, but they're not disease modifying.

So there's still a large subset of patients that are looking for long-lasting symptom relief and you don't get that with an FcRn antagonist. And I don't think that's mutually exclusive, to be honest as well. I mean physicians always try different modalities. I think where we're kind of unique in terms of TPP is that with a single course of therapy, actually, you get deep and durable responses.

So you kind of -- from a patient perspective, it gives you kind of freedom because with an FcRn antagonist, you're constantly rotating into your neurologist's office. Even if you sell those at home, you still have to come back to get a script refilled. And so it's a very involved regimen versus with the Descartes-08 It's one course of therapy over 6 weeks and then you're good for a year. I think that's really the differentiator and the durability of response.

So looking at some of the other modalities, I mean, any concerns around the new regimen for Uplizna that they can give every 6 months?

Is there a reason -- any reason for competitive concern? And similarly, we recently saw an acquisition by Gilead of another BCMA CD3. Any thoughts on T cell engagers?

Yes. So I think Uplizna, I think it's definitely improvement every 6 months, but you know that you have to give every 6 months. So it's still a chronic therapy, whereas I think we believe that we don't have to give Descartes-08 chronically.

We do have patients from the Phase IIb who've been out for years with symptom control on a single course of therapy, I think. So I think there's still a significant unmet need. I think around the TCEs targeting BCMA, I think I welcome that the community now sees that BCMA is a viable target. We actually think all along that's a good target.

I would say it's early days. I think what's enticing primarily actually to investors is that it's off the shelf. But I think the data so far is fairly early, and they're often recycled oncology assets that come with side effects, target CD3. So you do see CRS, ICANS in a number of patients. It still has to be given at least initially in patients. So I think that's quite a journey.

But it's definitely validating BCMA as a target as kind of we kind of look at this as a positive that -- because when we started out, you remember 2 or 3 years ago, people said like why target BCMA. We're the only ones doing that. So I think that's helping us actually.

Okay. So circling back to Descartes-08 product profile itself, how much of a burden is the apheresis process? And have you guys done any market research on receptibility to Descartes-08 just given the dosing regimen, 6 weekly infusions and there is a potential redose.

I mean apheresis is not really a hurdle for patients or physicians. And yes, we've done proper market research with neurologists, even quantitative. And as I mentioned, we have done an ad board with patients.

I think for the neurologists, we're actually positively surprised about -- and that's based on a TPP in line of the Phase IIb data, about 1/3 of neurologists actually would use Descartes-08 ahead of a biologic, which surprised us because we haven't done any market conditioning at this point. And patients are still definitely looking for something that is more durable in terms of response.

So I think there's definitely a path to be a commercially viable product. There is -- there are, of course, challenges in terms of just getting the neurologist comfortable using a CAR T, [indiscernible] CAR T, they're thinking DNA CAR T. Our experience has been from the Phase IIb, once the neurologists use this, they're like, wow, this is basically like biologic like from a use perspective.

If you have an infusion clinic, you have somebody sitting in chair for 2 hours basically very similar to biologics. So you send them home the same day. And for the patient, they can continue to be working. They don't have to take time off. If you -- on a DNA CAR T, you have to take 2 or 3 weeks off, at least reserve the time in case something happens. So this is very doable. It requires education around the fact it's an mRNA CAR T.

And maybe looking back, we shouldn't have called it a CAR T, maybe it's more of a cell therapy, but it's definitely -- it's very doable both from a prescriber and from a patient perspective.

So this is a related question. What do you think is going to be your biggest challenge, assuming you launch in myasthenia gravis? Are we talking education pieces as you just mentioned, the payer, something different?

Yes. I mean payer will definitely play a role. But I think in order to have a successful launch, and we're kind of working through that right now, we definitely think we can pull this off ourselves. And we think this is a very targeted physician prescriber population.

There's about 2,000 neurologists. Out of that, probably 100 to 200 are already initial prescribers. So I think that the key is to focus on your centers that you have in your Phase IIb and we have in the Phase III that have used Descartes-08 that are familiar with the setup. I think that's going to be the biggest kind of hurdle or education around the practicality of this, like how do I actually -- how do I use this as a physician, right?

How do I get reimbursed? How do I set up my clinic to run this? I think the payer piece, if we -- we've done some initial payer research, we're looking kind of annualized pricing of an FcR antagonist. So I think that's acceptable. We don't think we have any access issues around that. We have to do more work for sure. But -- so I think it's going to be all about having a targeted launch and a clear patient profile as well.

The nice thing is that it's not that every patient out there has been dosed with a biologic. I mean I think the latest numbers, it's about 70% have been biologic naive. Maybe the number is a bit lower now given the penetration, but there's a huge pool of patients. You're not really directly competing head-to-head with the FcR antagonist. There is room for a new modality. And that's the other piece that we oftentimes hear. It's such a crowded market. Yes and no, it's competitive, but we have really unique modality that's differentiated and that's truly disease-modifying.

So this is a related question. Do you foresee a payer requiring a patient fail a biologic first? Or is just an open-end question at this point?

Yes. I mean we'll have to have that discussion. We don't think this is kind of a prior authorization kind of play. I think this is potentially more driven by physicians being more conservative. I think you always have early adopters in the launch. These are the guys that, hey, let's try this. This is exciting or I have done this. I've been part of the Phase III and keen to use this in the patient kind of as ahead of a biologic.

And there's others, they're like, I haven't been involved in this. I read the paper, it looks interesting, let me try this first and there's a patient who failed an FcR antagonist. If they see good results in Descartes-08 they might next time use it ahead of an FcR antagonist. So I think the reality is it's going to take time to establish a treatment paradigm. But I don't think per se that payers will require.

I think this is going to be a requirement if the DNA CAR Ts are successful, you probably have to fail in everything else and be a last resort and probably require kind of hospitalization already. I think that's going to be a bigger hurdle. I think for us, we don't think that's a requirement, at least at this point.

And how do you think payers are going to treat the potential for 2 dosing courses as it relates to reimbursement? I mean, would you reimburse for the entire treatment course, do you reimburse for both? Like how do you think this is evolving?

Yes. I mean I think it's too early to say. I think right now, we're kind of worrying about one course of therapy and getting a decent price for that. But I think the more data we have, I think we'll have to think through, I mean, is this truly a finite course of therapy?

So meaning maybe patients need 2 courses of therapy. I think -- but then once we have data, we can engage with payers and look at that. The nice thing is that from a manufacturing perspective, we do get up to 2 full infusion cycles out of apheresis, not in every patient. But that means that the second course is kind of 0 cost for us.

So I think it gives us some flexibility as well on the pricing perspective. But I would say we crossed that bridge once we're in the marketplace. I don't think there's going to be consideration at the time of launch.

And maybe kind of to go back to the pricing dynamics, as you mentioned prior. So it sounds like you're looking at treatment course for FcRns over a year as a comp. Is that fair?

Yes. I think I mean most payers think about 1-year cycles because patients do change plans every year. So I think that's kind of a natural. We have pretty compelling 12 months data. So I think we're going to walk into the conversation with 12 months data and assuming annualized costs of the FcR antagonist. And luckily, that pricing is almost oncology like. So it's a pretty high price point.

So I think it works from a business model perspective for us as well as we do have lower cost of goods because we don't use a lentiviral vector. We basically use electroporation, which is a lot cheaper, you just step the cells, simply speaking.

Great. I do want to shift gears and speak about -- a little bit about your Phase III, the AURORA study. So starting with kind of the basic stuff, any updates on enrollment, timing, anything that you can share?

Yes. So we are progressing nicely. We have all sites up and running. And just to remind everyone, this is a truly global study, U.S. and Europe, both EU and non-EU. We will give more detailed guidance probably by midyear, so probably next quarter, just when we have full line of sight, but the study definitely is on track. We're pleased with the progress.

We had guided in the past, and that's still standing that we have cash to mid-'27 and that we would have the readout ahead of that and still some cash to spare. So you can do the math when that needs to happen. And as I said, we'll give more guidance midyear to give investors more line of sight and then also provide an update on our myositis time lines as well.

Great. So what additional data disclosures do you think you're going to have from the Phase II, the open-label portion? If there's any timing you can provide or what kind of follow-up?

Yes. So I mean, we had a pretty comprehensive paper in Nature Medicine in January this year. So I think that was helpful, and we have a lot of inbound interest. I think the other piece that is interesting now, so I mean, so far, nobody had to redose the first 12 months. But we do have some -- we're going to have some redosing data.

So that's something we will hopefully be able to share the second half of this year and probably as part of a scientific conference. I mean I don't think this is a major data drop. But we've seen so far is very consistent. So I think I would look for some additional data that's kind of confirming the overall [indiscernible] of the data and specifically around redosing.

So maybe a question of comparability. So you have a few patients in the OLE who have maintained minimal symptom score for really long time unlike just a couple of treatment courses. Are there any examples of patients who received standard of care from a biologics that have shown such durable responses without chronic dosing? Is that the same?

Not that we have seen -- I mean, we have heard that patients have been on FcR antagonist for a long time. But the moment you take them off therapy, they're reverting back to baseline. So we haven't seen any publication. And it makes sense mechanistically, you're suppressing something. Once you take the foot off, it's going to go back to baseline. So we haven't seen any publication that any of those therapies are truly disease-modifying.

And you guys have an SPA. Can you elaborate on the benefits of having an agreed-upon plan with the FDA?

Yes. So we have -- we were one of the first -- I think the first company get RMAT designation actually for an autoimmune trial of a cell therapy. So we had -- and still have good access to FDA, and we took the decision to take the risk and do this under an SPA. It's always a risk because you can delay things.

So under an SPA, you basically tell FDA, look at the protocol and look at the statistical analysis plans, tell us, if you agree that study is positive, it's an approvable study. And the reason we did it was that it's a single study and an MG has been always 2 studies.

So we want to make sure that FDA is comfortable with that. And they are comfortable and actually, they didn't require any additional review time. That was the risk we took that they come back, hey, we don't like what you have and would have delayed the start of the Phase III. So we've taken somewhat calculated risk, but it was calculated because we knew from the interactions we have with the agency, they were quite positively inclined, and we have a very solid protocol and we use placebo.

And I think all the noise around cell therapy and FDA, I think the noise is really around using biomarker data versus -- we have a placebo-controlled study. I mean that's rock solid. So I think we're not concerned there. And it kind of derisks that the study is positive that you can file a BLA with a single study. So that was -- that's the rationale we went through an SPA.

And maybe just to remind our viewers the choice of the 4-month endpoint in the pivotal study. What kind of was the reasoning around this? And how does that relate to potential for placebo responses?

Yes. So we wanted to derisk the study further based on the Phase IIb data, and we've done 2 things. So one, we narrowed the patient population to AChR-patients. It has to do with the higher placebo response, the seronegative patients, which creates noise. So we have done that. And most MG players have done that. I mean, AChR-positive patients are about 80% of the patient population. I think that's kind of a key driver.

The second piece is that we pushed out the endpoint to differentiate even more versus placebo. And so we already saw that at month 3, the placebo response is almost back at baseline. So we thought that by pushing out another month, you buy yourself a bit more of a buffer actually.

So we think it's going to be definitely back at baseline. If you -- and people ask us why didn't we do like 5 or 6 months? The risk is that they're getting 6, 7 infusions and they're on no therapy for basically 4 months. I think you push it out further there's a risk you lose patients when they have no benefit basically. So we felt 4 months was the sweet spot and to really basically further derisk the study from a statistical perspective.

So the Phase III also includes an open-label extension of 16 weeks for both arms. So assuming redosing will be provided in nonresponding patients only, will there be another point in time in the OLE where patients losing response could be redosed?

Yes. I mean after 4 months, whoever loses response defined as an ADL over 6 can be redosed actually. So that's very similar to the Phase IIb as well, where we kind of had that option. And the nice thing on the Phase IIb is that none of the patients in the active arm had to be redosed the first 12 months. It's actually a slight improvement over the Phase IIa data where we had 2 patients at month 12 that had to be redosed.

So it's kind of a little bit unusual. It's a very small answer. I wouldn't read too much into it. It was just luck, but I think -- so it's not a likely event to occur. And I think the crossover of the placebo patients makes this attractive because you know once you sign up for this trial, you're going to be on therapy at one point, right?

So versus some of the other placebo-controlled studies, you're on placebo, you're kind of out of luck. But here, because you're producing a lot for every patient lots of placebo patient, you have a chance to get this after the primary endpoint has been reached.

Excellent. I do want to switch gears to myositis. Maybe starting with the rationale for moving into this indication.

Yes. So we had -- and maybe kind of going back a little bit, we had a study ongoing in SLE. And it was kind of -- we inherited somewhat. It was an ongoing study, and we looked closer at the market and the disease and felt like it's a good indicator. It's a tough indication. So it's like a very heterogeneous disease.

And what we liked about it is that in myasthenia gravis, it's mainly driven by pathogenic autoantibodies. SLE is driven by numerous pathogenic autoantibodies and by pDC. So where you have an [ interferent1 ] response, an inflammatory response. So mechanistically, we're interested in looking at SLE.

And we saw very good responses actually. But then decided we kind of had a tough look at like what's going on in SLE in Phase II and III. And I think there's 30-plus trials or 40-plus trials. So it's going to be very difficult to recruit. It's unclear endpoints. It's very crowded. We said what other indications actually do make sense.

And we always had myositis kind of on the radar as an interesting mechanistic carryover from SME. So in dermatomyositis, you also have pathogenic autoantibodies drive it, but also pDCs play a role as well. So we saw that kind of nicely translates. It's a more manageable patient population, similar size to MG, less competitive.

You have IVIg approved now, you might have [ Prebo ] approved later this year, like a daily oral JAK inhibitor, but it's a lot less crowded actually. So we felt -- and we had a lot of inbound interest in the last 2 years by the myositis community as well that we're pushing kind of for open access and now we said, okay, let's do a trial.

And then we also already had rare pediatric disease designation for juvenile dermatomyositis. So there's a lot of reasons actually go about after dermatomyositis or myositis larger indication.

Can you provide a little bit of detail as it relates to the clinical study, timing, kind of what should investors expect?

Yes. So we are -- so both studies -- both studies are basically getting up and running as we speak with sites getting ready. So in -- maybe let's start with JDM. I think that's been of a sleeper indication. I think people didn't really pay attention. I think this has become a lot more interesting now because if we have positive results and we get this approved, you are eligible for priority review voucher.

The program has been renewed by Congress. So I think there's value in that. I mean there's obviously a huge unmet need, but there's also a value in that. And also, we're going to dose 3 patients initially. So it's basically a dose escalation study. It's open label. So we might have data this year. So I think that makes it attractive. And these are patients 12 to 18 and the diseases, JDM and DM are very similar. So whatever you see, I think, are good indicators for the adult as well.

The adult -- and so the JDM study is called the HELIOS study. The adult study is called the TRITON study, kind of a seamless adaptive design where we're starting a placebo-controlled study with 10 patients and where we're going to look at the initial data and decide on that, how to progress. And we said we have funding for the first 10 patients. And hopefully, we'll be able to have that within our cash runway.

And as it relates to your competitors in the space, the DNA CAR Ts, why do we even see DNA CAR Ts in this sector? My understanding was that some myositis could be pretty severe, which is one of the reasons why they went into the space in the first place.

Yes. I mean it is -- I mean there are some more patients that have some lung involvement, maybe they're higher likelihood to be hospitalized. But we still think that the DNA CAR T is going to be last resort here as well. And I think we would go after less severe patients in an outpatient setting.

So we're not really concerned here similar to MG, I think maybe SLE is the better indication for DNA CAR Ts because you do have more patients in crisis, especially you have lupus nephritis, you might be in a hospital setting already. So there's a higher chance.

So I think the fundamental value proposition of Descartes-08 hasn't changed to actually go after earlier patients in an outpatient setting versus the DNA CAR Ts by definition, going to be more the train racks that are already in a hospital setting.

Great. I do want to spend a few minutes on manufacturing. You guys own your own manufacturing. You mentioned the differences in costs as it relates to DNA CAR Ts. Can you elaborate a little bit about capacity? I mean the doses that are provided for patients are pretty big.

They're pretty big, but maybe I want to step back a little bit and talk about the process actually how we make. So if you kind of look at DNA CAR Ts, and there's been a lot of innovation around manufacturing there as well. But fundamentally, you collect the T cells and then you transfect them with the lentiviral vector because it's very expensive and you try to grow them. And they don't grow them well because you just give them viral infection, right?

So that's kind of rate limiting. We take a fundamentally different approach. So we harvest the cells and then we grow them into the billions. And because you don't -- we don't transceiral infection, they actually grow much better. So you get billions of cells. And then at the very end, we transfect them with mRNA. And we use electroporation.

We basically run an electrical current to introduce the mRNA into the cell. So it's pretty simple. And then we [indiscernible], freeze it and ship it out. And we get up to 2 infusion cycles. It depends a bit on the age of the patient, the weight of the patient, not in every patient, but we're doing more process improvements.

And I think the big advantage having this in-house is that we control the process. It's our own operators. We don't have to pay a premium to transfer this to a CDMO at least initially. At the same time, the process is simple enough. We can transfer this to a CDMO. We have capacity for probably the first 2 years of launch. That's what you have to show FDA to get the site basically approved.

And -- but we see a potential to have a second site, maybe do a West Coast site or a European site through a CDMO potentially. So it's really to kind of have full control. The other advantage is you learn so much when you actually manufacture with your own operators. And we have an [ MSA ] function and continuous -- thus continuous process improvement. And so if you have your operators, you can share this directly.

You actually can work in real time to improve the process, and these are all changing to potentially implement post approval. So that was the key driver. And it was also a bit of luck as well. When people hear, you have your own manufacturing, I think this is a huge CapEx commitment. It's not actually. It's a leased building. We were somewhat lucky. We did a nationwide search about 1.5 years ago now.

And we found actually in our backyard with a Chinese CDMO in AAV gene therapy just invested in this building, they got caught up in the uncertainty around the BIOSECURE Act and kind of decided to step out and we -- with minimum investment, we're able to take on and lease that building. So it's not a huge CapEx cost, but it helps tremendously to have full control of the process, not compete with anyone else at CDMO.

So just given that this is a CAR T, what sort of quality assurance and release criteria do you anticipate here? I mean it's not as complex as a TIL therapy where your product numbers are really small, but any...

I mean it's pretty standard to other CAR T therapies actually. So there's nothing specific. I mean we're not using a lentiviral vector in the process that helps you actually just from a monitoring perspective. You don't have that kind of risk.

So I think it's pretty standard QA/QC. And we -- as I said, we're doing this under RMAT designation. We had -- and we have still significant and frequent interactions with the FDA. So I feel pretty confident that they're very comfortable. And also, I think we're the only cell therapy player that doesn't have the 15-year kind of monitoring requirement, which shows the FDA has realized that this is a different process. But I would say it is pretty standard in terms of QA/QC.

Excellent. So we're reaching a little towards the end here. Maybe a couple of really general questions. This has been a lot in the news. Any thoughts on potential risk for your product from the in vivo approaches?

Yes. So there's been a lot of noise in the marketplace. But I think I want investors to think rather that we actually are in a unique position that all those in vivo approaches use mRNA. And we do have proven payloads.

So we have demonstrated our payloads are safe. We have our data obviously in Phase III, and we have 3 patients with DC15. So -- and we think our payloads are probably agnostic to the delivery system. So we -- and I think we've been pretty open about it.

We don't want to distract from our autologous programs in the Phase III, which is a near-term value driver. But we are actively in a couple of NTAs with delivery companies to actually test our payloads with targeted LNP. So I think it's quite attractive. At the same time, it's still early days, I would say. We haven't seen a ton of data yet with some healthy volunteers.

We have seen some treated patients from China, but I would say this is still early days and not an immediate competition for us, but it's something that we're working on more of a longer-term life cycle management because we all agree that you want to do this off the shelf, if possible.

Excellent. And before we take audience questions, any information that you feel like we should share with the Street or anything we didn't cover here that you'd like to emphasize?

Yes. I think I just want people to pay attention that we do have a late-stage asset that is pretty much derisked and addresses a large patient population, something we can execute ourselves.

So I think people overlook the commercial potential here and oftentimes group us with the DNA CAR Ts, and I encourage everyone to do a bit more work and reach out to us and we can walk through the story that we just did.

Great, Carsten. At this moment, I will provide a full minutes for people to put down additional questions if they have them.

Not seeing anything particularly pertinent at this point. So with that, Carsten, I do want to thank you for joining us today.

Thanks for having me. Gil. Appreciate it.

So really quickly on disclosures. So for important disclosures, please see the Morgan Stanley research disclosure website. And if you have any questions, please contact your Morgan Stanley sales representative. So thank you all for joining us for the Cartesian fireside chat. I'm really excited to welcome Carsten and Milos Miljkovic, the company's CEO and the CMO.

Welcome, Carsten. Welcome, Milos. And I'm Ross Cohen, and I work in the health care investment banking at Morgan Stanley. So maybe just kicking off, for those of us who aren't, say, familiar with the Cartesian story, can you maybe just give us a quick background overview on the company and what you guys are up to?

Yes. So maybe just disclaimers as well. Forward-looking statements that might change in the future. Cartesian is an mRNA CAR T cell therapy company. We are focused exclusively on autoimmune disease. We have a lead asset in Phase III, it's called Descartes-08. What makes technology unique is that we use mRNA versus DNA, which allows us to dose in an outpatient setting without lymphodepletion. mRNA is transient in nature, so there's no risk of secondary malignancies. We see Descartes-08 as a pipeline in a product. We're also running a Phase II open-label study in SLE right now. And we have an IND allowed for a pediatric study as well. And the last thing I'd say, we manufacture in-house, which allows us to control costs. It's our own operators, we can make process improvements in-house.

Yes. And so maybe on DC-08 specifically, and it's engineered using mRNA and you're targeting BCMA specifically, which is a little bit different than the broader field. So what's kind of the unique combination, especially when you compare to more DNA-based CAR Ts within the space? And could you just kind of point us to those levels of differentiation and then specifically around the clinical profile for autoimmune disease?

Yes. So I think in essence, DNA CAR Ts are designed to treat cancer fundamentally. You have to lymphodepletion. This is done in an inpatient setting. There's toxicity associated with lymphodepletion. You can give a [ SUBLOCADE ] dose cell proliferate, they don't know when to stop. You have toxicity such as CRS, ICANS and you're on the risk of second malignancies, which is totally acceptable if you have a cancer and have weeks to live.

Autoimmune disease is very different. These are chronic diseases, oftentimes younger patients, not necessarily lethal, just chronic. So it's a different risk-benefit profile. So mRNA is uniquely suited to that because it's transit in nature. So as I said earlier, we don't have to lymphodepletion. We give it an outpatient setting. It's a 20-minute infusion, very much like a biologic and a physician doesn't have to track the patient for 15 years. So that's a fundamental difference around administration and the kind of patients you would attract to this or try to recruit. And then BCMA, we think that's actually the better mousetrap potentially. It's more targeted. BCMA is expressed on [ lung ] plasma cells. So the cells that actually make the pathogenic auto antibodies. So you got the root cause of the disease and also a second type called plasmacytoid dendritic cells, pDCs. They are myeloid lineage. They play a role in early inflammatory processes. So it's kind of a two-pronged approach, and you have fewer cells to go after where CD-19, you have a lot of bystander cells, not directly impacting or playing a role in the disease. So we think that combination makes us quite unique. We also -- we're agnostic to the antigen. We also have an early CD-19 asset, but decided actually not to take it into the clinic.

Yes. No, that makes sense. And then on that, earlier this year, you released 12-month Phase IIb data in myasthenia gravis specifically. So maybe can you just give us a little bit of background on the overall study and what that data looked like?

Yes. So it was a randomized placebo-controlled trial, where every eligible patient and there were patients with AChR antibody positive and seronegative myasthenia gravis was apheresis. So it's an autologous product to do leukapheresis. Everybody had a Descartes-08 lot and a placebo lot manufactured. And then they were randomized 1:1 to get one or the other once a week for 6 weeks. That's the dosing regimen we established based on open-label data, and that was blinded. Then they have blinded follow-up at month 2 and month 3 and month 3 was the primary endpoint readout where it was a very positive study. So we use a scale called MG composite for response. And we had around 70% responders in the Descartes-08 arm and 25% responders in the placebo arm.

So it easily cleared statistical significance. What's more important is that those responses deepened further in patients who got Descartes-08, so that at month 4, they had on average 5.5 improvement in MG-ADL, which is a scale used in myasthenia gravis. It's common across studies, across the field. And when you look at patients who never had prior complement inhibitors or FcRn inhibitors, those patients did even better. The MG-ADL improvement there was 7.1 at month 4. And those improvements carried over to month 12, so that, for example, that group with no prior biologics, they still had average 6.8 point improvement of MG-ADL by month 12.

Now I'm talking improvement in numbers. Patients don't know what 4.5 point improvement means. Many neurologists don't really think that way either. What they do know is who has or doesn't have symptoms. So there's something called minimum symptom expression. It means MG-ADL of 0 to 1, so no symptoms or almost no symptoms of ADL. And 1/3 of patients -- of all patients had minimum symptom expression on month 6. And in that no prior biologics group, 57% of those patients had minimum symptom expression by month 6, and all of them still had minimum symptom expression at month 12. So we were able to achieve no symptoms of MG-ADL in more than half of those patients and carry that over to month 12 after only 6 weeks of treatment.

That's amazing. And then that speaks, I think, to the efficacy point that's been pretty profound. And then maybe shifting gears to this on the safety side. It feels like the mRNA component of this is very uniquely differentiated from some of the DNA-based CAR-Ts that you alluded to. But maybe just go into more -- some more specifics around the data that you saw, specifically around ICANS and CRS, for example, and how that's so differentiated in terms of your platform versus the others?

Yes, absolutely. So we did not see any CRS cytokine release syndrome or ICANS in any of the patients either in this study or in prior studies, open-label studies. Everybody got treatment outpatient. There's no lymphodepletion chemotherapy. So there were no hematologic toxicities. There was no broad immunosuppression, no risk -- increased risk of infection, no hypogammaglobulinemia. People didn't need to get revaccinated. The only specific side effect that we saw were infusion reactions that happened 4 to 6 hours after infusion, and they're fevers that completely resolved within 24 hours. And we checked cytokines for those patients because you're always concerned that somebody develops a fever after a CAR T therapy, is it CRS. And the cytokine profile did not match CRS at all. And none of these patients received tocilizumab or steroids, but still were completely back to baseline within 24 hours.

Yes. And then in terms of, I guess, how that impacts your ability to dose patients in different settings? How does that play as well given where obviously you can avoid some of the certain infusion centers versus others? And how does that help you kind of from a commercial perspective, too?

That's a very important question because conventional CAR Ts still -- they've been approved for years now. They're still limited to academic medical centers, tertiary care centers and it's inpatient administration only. With Descartes-08, as I said, all the patients were dosed outpatient and about 20% of clinical trial sites in the Phase IIb were community clinics, where it was an outpatient infusion center, not tied to a big hospital, and they were able to administer it without any issues. And the patient experience is more like getting a biologic than getting conventional CAR Ts. So there's no chemotherapy. You get premedications, it's 30 minutes. The infusion is around 20 minutes, and there's 1 hour post-infusion observation time. So around 2 hours of infusion share time, that's same or better than the many biologics.

That makes sense. And so maybe shifting gears to back to the development. You recently initiated the Phase III AURORA study. Can you maybe just give us an overview of the design of the trial and also how the enrollment has been going so far?

Yes. So the design is very similar to the Phase IIb. I mean, even with a 30-patient study, we achieved statistical significance in the primary endpoint. So we tweaked it a bit more to have even more power. And it's around 100 patients. Again, it's a randomized placebo-controlled trial. Everybody gets a freeze. There's Descartes-08 lot in a placebo lot manufactured for everyone. It's AChR positive patients only. One thing we learned from the Phase IIb is that for seronegatives, this community clinics don't have the best diagnostic capabilities and you need an adjudication committee. There's a lot more overhead to get those patients and a lot more noise, and we want to go for as clean a signal as possible. And the primary endpoint is MG-ADL, which is a common primary endpoint across all myasthenia studies at month 4.

And we do have follow-up all the way through month 12 because it is important to demonstrate that durability. The FDA actually has reviewed the protocol and the statistical analysis plan, and we have an SPA, a special protocol assessment from them, meaning that it's been vetted and we really feel comfortable with the design and the statistical plan. We did start the study May of this year, and we haven't really talked about much about the enrollment pace. We want to make sure that the site activation and all of the other site activities are as planned to get a better hang of the enrollment curve. What we did say is that we feel comfortable with a similar pace to the Phase IIb trial, which took about a year to enroll, and it's a matter of just having more sites.

No, makes sense. And then maybe just double-clicking on the primary endpoint with MG-ADL at month 4. What are your expectations there? How should we think about that in terms of the endpoint? And what do you think will be required to have a competitive edge there?

So there are 2 different questions. So one is from a regulatory perspective, MG-ADL has been used. 2 points is considered clinically meaningful. We use a 3-point cutoff as criteria for response just to demonstrate the depth of response that we expect with Descartes-08, that's from a regulatory perspective. From demonstrating how Descartes-08 would be better than everything else that's out there, we're really focusing on the depth of response. So we are -- minimum symptom expression is measured by MG-ADL, and we are tracking that throughout the study and the durability of response. So we're really focusing on the 12-month data there as well to show that the responses that are achieved at month 4 are maintained to month 12.

Makes sense. And then assuming all goes well with the Phase III, what are the next steps in terms of the regulatory landscape and then also commercial as well?

Yes. So I think the path is very clear since we negotiated an [ SDA ], which basically means the FDA is comfortable with the endpoint with the statistical analysis plan. So it's a positive study. We can file a BLA basically. In terms of commercialization, the nice thing is there's always a perception that it's a very crowded field, MG, which it is and it isn't. I mean there's a lot of me-toos around complements and FcRn antagonist. I think our approach is really unique. We're truly disease-modifying. And I think that really kind of sets us up for a very different value proposition that we have both for physicians and for patients because on biologics, you basically have to treat chronically, and you can't do this because of immune suppression. So they're kind of on off therapy a lot.

And I think a single course of therapy and you're basically 6% are symptom-free for at least a year, I think that's a real differentiator. It's a fairly -- I would say it's a small physician population. It's still a rare condition. So we think we can definitely pull this off ourselves in terms of executing on this. And obviously, we're starting conditioning the market through the Phase III. We're creating more awareness. Maybe just one fun data point. We've done some quantitative market research because there's always a lot of anecdotal KOL one-offs. So we've interviewed 100 neurologists and with very little market conditioning, 1/3 of those physicians based on the Phase IIb data, actually would prescribe Descartes-08 ahead of an FcR antagonist or complement inhibitor. And that's without any prior market conditioning. I think that bodes well. But it's still a CAR T, and we have to work with the centers around so how do you handle this with apheresis and all of that. I mean there's definitely -- we need to explain this for sure. But it will be early adopters and many of the sites involved in clinical trial will be early adopters. And we still have ways to go in terms of timing to launch.

Yes. And so basically, as you look at the different protocols, the different KOLs effectively, there will be some people who maybe take it to first line, others may be taking to second line and that evolves over time. Is that how you think?

Yes. I think -- I mean, actually, interesting enough that physicians don't think first line, second line, they tailor it to patients, but there will be physicians, early adopters, they'll use it first. And there'll be others like, well, I'm going to give a biologic first. And then if they fail, I'm going to use it, have a good experience and then use it earlier. It will depend on our price as well, I think, adoption. I think the encouraging thing is that 70% of patients are biologic naive. So it's a pretty large pool of patients who benefit from this as kind of a first-line therapy.

Yes. No, makes a ton of sense. And so maybe going beyond MG, can you talk a little bit about your other clinical plans around DC-08? You have maybe top line coming up around SLE in the second half of this year and then you're planning a pediatric study. So maybe starting with SLE, what sort of data should we be expecting from you guys?

Yes. So first, we think SLE is a good second indication for kind of validation of the platform. SLE is driven by pathogenic autoantibodies, multiple, more complex than MG, but also pDCs play a role, the plasmacytoid dendritic cells. So if we see efficacy in SLE, this opens up a number of other potential indications. It's an open-label study. It's the same dosing regimen as in MG, so 6 weekly infusions. And then we have a range of endpoints, a lot more complex. One that seems to emerge a little bit as the benchmark is a dose response, so patients in full remission, but we're looking at [ SLAT-2Kase ], SRI, PGA. So there's a number of outcomes. And it's going to be a handful of patients. And it's -- as I said, it's kind of a signal finding and platform validating study. Yes.

And then maybe shifting gears on to the pediatric basket trial. Can you walk us through how you think DC-08 in kids makes sense as opposed to other cell therapy in autoimmune?

Yes. I think it's a reflection that the FDA is comfortable with our safety profile. So they allowed an IND in a pediatric basket in rheumatology and neurology. And it's basically the pediatric versions of diseases we're interested in. So there's pediatric MG, there's pediatric SLE. There's -- we're especially interested in juvenile dermatomyositis. We have a pediatric rare disease designation, which I think is attractive also financially. And the other thing that's nice is very few tertiary centers actually that treat. So you have to activate very few centers. Those patients are very concentrated. So there's a high unmet need, but also a pretty high price point. So I think it's a unique position that we can take that other the DNA CAR Ts can't from lymphodepletion.

Anything worth noting around the trial design specifically or any nuances there?

So it's an open-label study, and it's the same dose and schedule as we did in the myasthenia gravis and lupus studies. Because we are starting weight-based dosing on a lower weight, the first few patients will get a bit smaller doses. So we'll be extra cautious, the same way we did for the myasthenia study. So the first 3 patients had intrapatient dose escalation. But again, it's no lymphodepletion chemotherapy, and it will be only the first infusions that are administered inpatient with the monitoring, everything else will be outpatient. So it's not only we think FDA may be comfortable with the safety profile to allow it in the pediatric population, but parents, when you talk about, okay, what treatments are available, not having chemotherapy or somebody who doesn't have cancer, that's a pretty important point.

And then the schedule, those children mainly still go to school. So having a time-limited treatment that's 6 weeks potentially during summer vacation off school and then you're potentially set for the whole year, that gives the family a lot of freedom and flexibility rather than constant checkups with the rheumatologists or the neurologists on, okay, when is the next dose, what will the next treatment line be?

Yes. And I mean, it feels like it's very obvious from a patient standpoint. I guess how big do you think that opportunity could become?

I mean it's sizable. Once you combine all those, it's a pretty sizable population. And it's a pretty -- as I said, it's a targeted physician group that treat those. It's basically the same physicians. So it's -- I think from a commercial execution, it's a handful of MSL that can call on those. So I think it's an attractive, it's not the main focus, but it really speaks to the safety of this and it's something that -- it's a unique niche for us that's quite attractive and with high unmet need. Makes sense.

And then maybe shifting to DC-15, the next-gen product. So maybe just quickly touch on what the program is. It's on track in Phase I study in multiple myeloma, how is it differentiated and just a general overview.

Yes. So just maybe around the multi myeloma, we're not in oncology. We're doing the study in multiple myeloma because we can do the highest dose right away. So this is only intended for autoimmune disease, just to clarify. So DC-15 is a next-generation asset. It's at least in vitro 10x more potent. We've engineered a CAR protein. So it stays after killing cycle on the cell surface, goes through a couple of killing cycles. So at least in vitro is 10x more potent. We'll see how this translates. It's a small safety study, Phase I. We get safety data, some PK data, and we'll make a decision towards the end of the year, whether we move it forward.

And at the end, we have to prioritize our portfolio and see from a resource perspective, where does the investment make the most sense. The nice thing about Descartes-08 is we have accumulated a lot of safety data. So we have the opportunity to take it in multiple indications. The nice thing about autoimmune disease care is there are so many indications to go after. There's larger ones we could explore as well. But I think for now, we just guided we'll have Phase I data towards the end of the year, and we'll give further guidance when we go with the asset.

And then I guess if all goes well with the safety studies, are there any specific next steps? Obviously, you mentioned that you'll figure it out then. But anything that comes to mind [ initially ].

Yes. I mean it's the first piece is indication selection, what indications. And I mean, there are a lot of large indications actually that are underserved. RA, for example, is a great indication. They're fairly capital intensive. So we'll have to decide whether that's worth doing with DC-15. I think for now, we are kind of balancing what can we pull off ourselves, we manufacture in-house. And I think having DC-08 in multiple indications, a lot of advantages actually around scale. And DC-15 is a next-generation asset. We have more in the pipeline. And what you see is really a step change we're looking for. And we have a couple of follow-on assets as well with even better CAR constructs.

Yes. And maybe to that point, I guess, when you look at the next 12 to 18 to 24 months, what really gets you excited? What are you focusing on.

Yes. I mean we're obviously super excited to be in Phase III and executing that study. I mean a huge milestone. I think we're actually the first company to actually run a proper Phase III, a retooled Phase II study. So I think that's a big deal. I'm excited about the upcoming SLE data. I think that's an important milestone for us kind of validate the platform. And we're excited about the [ PEAK ] study as well that's kicking off.

And then maybe a little bit on the capital piece, current runway, projected runway. How do you think about capital raising and what does that look like?

Yes. So we're kind of in a good position. As of last quarter, we had $162 million cash on hand. We're extremely capital efficient. So that takes us into mid-'27. That includes completing the AURORA Phase III study in MG, includes in-house manufacturing. So that's kind of the guidance we have given. So we don't have to raise money before the Phase III. It's never prudent to wait that long, but we're not an immediate need to raise capital. It depends a little bit on the SLE data and what our plans are around that. So we'll have more guidance on that later this year as well.

Yes. On the manufacturing point, because in CAR T, that's obviously very critical to have a supply chain and trusted manufacturing. Can you kind of walk through what you have in-house and how your strategy has been around that?

Yes. So we have actually -- we have 2 GMP sites, both in Maryland. We have a Phase I, Phase II site kind of served the Phase IIb study. And we have a new Phase III/commercial site also in Maryland. And we've really made a strategic decision to keep it in-house versus going with the CDMO. We got somewhat lucky. We found actually a Phase III site pretty much with very little investment in our backyard. So that made it easier. But I think there's a huge advantage by owning the supply chain 100%. You control costs, your own operators, you can make process improvements. You're not competing at a CDMO with a big pharma. CDMOs have obviously high turnover. So I think that that was the rationale.

Our process is very reproducible. We can -- in the future, if we do co-commercial, if we go into Europe, we can go with the CDMO. We don't have to do it in-house. But we just felt for the first indication for the first product, it makes sense it's more capital efficient as well. The process itself actually is simpler than the DNA CAR Ts. What's very imaging with the DNA CAR Ts and quite from a cost perspective is the [indiscernible] viral vector actually. So we don't use an integrating vector. We also apheresis cells, we enrich them for CD8-positive cells, and then we grow them into the billions and then we transfect them at the very end versus DNA CAR Ts, they transfect them early on and they're harder to grow. And we get up to 2 full treatment cycles out of one apheresis that further reduces the cost. We have lower COGS to begin with, and we further reduce it if we get 2 apheresis -- 2 full infusion cycles out of apheresis.

Yes. And then on the redosing point as well, for example, you go a year and then a patient might need to be redosed, which is actually pretty unique to your platform. How does that work in terms of manufacturing? Are you able to recycle cells or how does that...

Yes. So when we harvest the cells, we aliquot them. So if we get in the best case, we get 12 aliquots. We ship 6 to the sites. They get infused over 6 weeks. We keep the rest. If the patient moves somewhere else, we can ship it to another site. So -- and we have multiple years of stability. So it doesn't seem to be an issue or a great limiting at this point.

Yes. Got it. And then maybe last point on -- you brought up Europe, for example. But how do you think about the ex U.S. market in all of this?

Yes. I mean we're running a global study. So we'll generate data in Europe. It's obviously more complex and cell therapies had a slower uptake in Europe, oftentimes driven by reimbursement challenges. But we definitely have the option through the study actually to have a Europe strategy. It's too early to say whether it's a go alone or a partnership. But I think the primary value actually is still for us in the U.S. But as I said, we run a global study, so it enables us to also move forward commercially in Europe in the future.

Yes. No, that makes sense. And that's really all I had. I guess are there any other topics you feel like we didn't hit that you want to close on?

No, I think the one thing I just want to bring up when we talk to investors and we talk to physicians, there's oftentimes a disconnect around the excitement. We often hear from investors, yes, I'm not sure CAR Ts make a ton of sense in autoimmune disease. We've talked to the physician community, they're extremely excited about this data. I mean we talk about functional cures. I mean this is transformational. I mean this is truly disease-modifying. And we had a couple of months ago an advisory board with the top KOLs in MG, and I walked away pretty excited actually. I mean they're just saying, this is really unique that you have a cell therapy profile in an outpatient setting administration. I mean that's really unique. So -- and I wish sometimes investors would appreciate that more. And -- but it gives us confidence that there's a huge unmet need and a willing prescriber base actually to use it in practice.

Yes. No, it's super exciting. And honestly, thank you for sharing it with [indiscernible] for joining us. And so Carsten, Milos, thanks for your time. I really appreciate it. And thank you all for joining us as well.

Thanks for having us. Appreciate it. Thank you.