Allogene: Leading The Allogeneic CAR-T Space, Again (NASDAQ:ALLO)

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Allogene (NASDAQ:ALLO) had that thorny clinical hold removed in January, but the stock acted nothing like a runaway rocket on that important positive news. It continued trading mostly sideways and downwards, which surprised us considerably. Since then, not a lot has happened to the company or its stock.

Meanwhile, the company came out with earnings in February, so the earnings call could give us some idea of where this stock is going in the next few months. But first, a brief background.

Allogene is developing cutting-edge allogeneic CAR-T therapies targeting mainly hematologic malignancies as well as some early-stage solid tumor programs. They also have a lymphodepletion agent in trial.

The clinical hold occurred for their ALLO501A product, which is in a phase 1 trial targeting NHL. One patient with a long treatment history developed pancytopenia, and eventually, it was discovered that she had an emergent chromosomal abnormality. There were reasons, discussed in my earlier articles, to think that the problem was treatment-emergent. Hence the clinical hold.

I must comment on how quickly the company managed to convince the FDA to lift the hold. The hold was announced on Oct 7, and by January 10, it was lifted. As CEO Dr. David Chang said in the earnings call:

In responding to and quickly resolving the hold, our team, under the deft stewardship of Rafael, demonstrated the quality of leadership, collaboration, innovation, and focus required to be a pioneer in the field of AlloCAR-T. I am incredibly proud of the manner in which our employees rose to this challenge. In retrospect, this experience provided us with the insight that we believe will give us a competitive edge as we look to lead the field of allogeneic cell therapy.

The company plans to publish the results of their investigation in a peer-reviewed publication. What we know now is that the chromosomal abnormality was “unrelated to Allogene’s gene editing or other gene manufacturing process and had no clinical significance.” The abnormality was not detected either in any of their manufactured products or in other patients. It seemed to have occurred after administration of the product, and whatever data Allogene produced was good enough for the FDA. Pending final discussions with the FDA, Allogene will initiate a pivotal Phase 2 trial of ALLO-501A in relapsed/refractory Large B Cell Lymphoma (LBCL) in mid-year 2022. Soon thereafter, they will start a registrational trial for the lymphodepletion program, ALLO 647.

The company is also rapidly progressing with its CMC manufacturing ability. It has a large in-house facility in the US, the Cell Forge 1, led by an industry veteran. Unlike monoclonal antibodies, CMC work is much more critical in cell therapies because these products move rapidly into registrational trials, and CMC needs to be prepared for quick response and rapid scalability. As ALLO501A moves near the approval stage, a proper manufacturing capacity will become very essential.

The delay, however, has enabled competitors like Crispr (CRSP) to almost catch up with their own allogeneic products. The question of durability still vexes the field, and while treatment success rate – the number of people who actually get the treatment – is higher given the allogeneic derivation, these therapies need to address the durability question clearly before they will be widely adopted. Perhaps the possibility of multiple dosing will help here.

Financials

ALLO has a market cap of $1.33bn and around $810mn in cash, and no debt. 2 years ago, when I covered ALLO, I recall they had a similar amount of cash, but nearly 3x the current market cap. Given that with time, a clinical-stage company like Allogene derisks itself, ALLO is even more attractive today than it was two years ago. Given ALLO’s roughly $350mn annual burn, this gives them a good 2+ years runway, time within which they should be very near their first approval.

Bottomline

Autologous CAR-T is a very successful therapy, theoretically, but it is still a process, not a product. Making it allogeneic will universalize it. Allogene is at the cutting edge of the effort to achieve this. The biggest concern with allogeneic production of CAR-T is immune rejection, or GVHD. In multiple trials, the company has shown that this may not be a major concern. In those same trials, Allogene has shown that its product is almost at par with autologous products in terms of efficacy, number and duration of response, and so on. These are great achievements.

By the end of this year, Allogene will have a pivotal trial running for ALLO501A, its lead product candidate. By mid-2024, this program should be nearing the approval process. Expect the product in the market no later than early 2025.

Allogene is led by David Chang, who was a major part of the team that developed Kite Pharma’s Yescarta. Allogene was initially funded by Pfizer (PFE) and led by Kite’s scientific team. The goal was to produce the next-generation allogeneic CAR-T product.

Given all of these angles, and the current low prices following the clinical hold, ALLO looks very attractive at this time.

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