Adaptimmune Therapeutics - Q4 2022

Transcript

Operator (participant)

Welcome to Adaptimmune and TCR²'s joint webcast to discuss their strategic combination announced earlier this morning. I will turn the call over to Juli Miller, VP of Investor Relations and Corporate Affairs at Adaptimmune. Juli?

Juli Miller (VP of Investor Relations and Corporate Affairs)

Thank you, operator. Hello. This morning, we issued a joint press release with TCR² Therapeutics, announcing entry into an agreement for the strategic combination of our two companies. In a second press release, we provided our Q4 and full year 2022 financial and business updates. I would ask you to review the full text of the forward-looking statements. We anticipate making projections during this webcast. Actual results could differ materially due to several factors, including those outlined in our latest filings with the SEC, as well as our 10-K filing for the year ended 2022, which will be filed later today. Of note, we will share slides during this webcast, which are also available on the presentations tab of our investor relations website.

Adrian Rawcliffe, our Chief Executive Officer, and Garry Menzel, TCR² Therapeutics President and Chief Executive Officer, are here with me for the prepared portion of the call as well as Q&A. I'll turn the call over to Adrian Rawcliffe. Ad?

Adrian Rawcliffe (CEO)

Thanks, Juli. We're delighted to welcome you to this webcast to discuss the strategic combination of our two companies, which creates a preeminent cell therapy company to treat solid tumors. The details of the transaction are set out on the next slide. This is a stock-for-stock transaction by which Adaptimmune shareholders will own 75% and TCR² Therapeutics shareholders will own 25% of the combined company on closing. This is anticipated to extend the runway for the combined company into 2026 following closing and enabling a series of catalysts, which we'll come to later. I will be the continuing CEO, and we will have a strong board with members from both Adaptimmune and TCR², including Garry. We anticipate the transactions close in Q2 2023, subject, of course, to shareholder approval. That's the what of what we are doing.

The purpose of today's call is to tell you why we are doing it and why we are excited about this combination, particularly at this time in the evolution of cell therapy. Here are the five compelling reasons why this strategic combination is the right thing to do. First, we are two companies that have spent their entire history focused on solid tumors, the largest unaddressed opportunity for cell therapy. Second, we each have a strong clinical pipeline that has been highly focused on MAGE-A4 and mesothelin and has significant value-creating near-term catalysts, including the filing and potential approval of the first engineered T-cell therapy for a solid tumor indication. We also have medium-term pre-clinical pipeline focused on PRAME and CD70.

Third, together, we have an innovative next-generation toolbox designed to enhance the functionality of our products in the tumor microenvironment as we aim to develop cell therapies that are both curative and mainstream. Fourth, we have end-to-end capabilities because both companies have been entirely dedicated to discovering, developing, and delivering T-cell therapies, and both have knowledgeable and experienced teams who have successfully advanced these therapies into late-stage trials. Finally, and critically, this combination enables us to continue the focused development of this strong pipeline with an extended cash runway of approximately three years into 2026 due to significant operational advantages. We're now going to cover each of these five points in greater detail on the following slides.

Garry and I, along with our collective management teams, share the conviction that cell and gene therapy are about to have an impact on the therapeutics landscape comparable to that of monoclonal antibodies 25 years ago. We believe these therapies will transform the treatment of cancer. To do that, they clearly have to move out from the narrow confines of CAR-T and hematological malignancies, which nonetheless have realized nearly $3 billion in sales in 2022, because the significantly larger opportunity is in the solid tumor space. Treating solid tumors has been the life's work of the exceptional employees at Adaptimmune and TCR². The programs we have in clinical development are amongst the leading cell therapies for solid tumors, where we have already seen robust response rates in multiple cancer indications.

These T-cell therapies in the clinic and others coming behind will enable cell therapy to complete the transformation of this landscape, providing hope to people living with cancer. At a macro level, treating solid tumors with cell therapies is the ultimate value creation thesis for this industry. This is why our companies exist. Accessing this opportunity with a breadth of pipeline and a depth of runway is why this combination makes sense. Although hematological malignancies are only 10% of U.S. cancer deaths, the majority of cell therapies and all approved CAR-Ts are focused on these diseases. 90% of cancer deaths are from solid tumors, and this space is largely untapped by cell therapies.

We assert that as living medicines able to respond to the tumor and its microenvironment, cell therapies have distinct advantages to treat solid tumors. I believe that our combined company will have a strong leadership position in this rapidly growing and evolving field due to its complementary technology platforms, which Garry is gonna talk about now.

Garry Menzel (President and CEO)

Thanks, Ad. As Ad said, this is truly an exciting time for cell therapy focused on solid tumors, with many cancer patients already benefiting from treatments in clinical trials. Together, we have complementary platforms that will allow us to address a broad universe of both intracellular and extracellular protein targets with our SPEAR and TRuC T-cell therapies. Adaptimmune's proprietary SPEAR T-cell technology is based on the affinity enhancement and engineering of T-cell receptors or TCRs to specifically target peptide HLA complexes that are uniquely expressed on solid tumors. TCR²'s proprietary TRuC T-cell technology uses an antibody-based binding domain fused to TCR subunits to reprogram an intact TCR complex to recognize tumor surface antigens. Both technologies can be further leveraged in the combined company's allogeneic platform. With SPEAR T-cells and TRuC T-cells, we have an opportunity to increase patient access to cell therapy. Ad?

Adrian Rawcliffe (CEO)

Thanks, Garry. With these complementary platforms, we are prioritizing and focusing on key validated targets for cell therapy in the solid tumor space. Targets a wide range of tumors, targets that we know we can address with our T-cell therapies, and targets that are expressed in cancers that between them kill more than 300,000 people a year. We have the opportunity to make cell therapy a mainstream option for people with cancer through our focused pipeline against these targets. Our technologies against these targets have enabled a deep pipeline across multiple cancer types. Our lead programs will target MAGE-A4 and mesothelin in the clinic, and our preclinical development will focus on PRAME and CD70.

As Juli described, this pipeline is available for you on the website. I won't go into it in great detail because I wanna focus on the clinical data and the catalysts that we believe are gonna create near and midterm value. We have compelling clinical efficacy from our two lead franchises. With afami-cel, we're on track to complete our BLA submission for the treatment of synovial sarcoma in mid-2023, which would mean a possible approval in 2024, the first engineered TCR T-cell therapy for a solid tumor. Our next generation cell therapy targeting MAGE-A4, ADP-A2M4CD8, is delivering an overall response rate of 37% in our phase I signal-finding SURPASS trial across a range of solid tumors.

In ovarian, bladder, and head and neck cancer, we see a response rate of 52%, improving still further to 75% in patients with these tumor types who have received three or fewer prior lines of therapy. Going forward, we are initiating new cohorts in first-line head and neck and second-line bladder cancer in combination with pembrolizumab. A phase II trial, SURPASS-3, which we intend to become registrational for patients with platinum-resistant ovarian cancer. Gavo-cel and the next generation therapy, TC-510, target mesothelin, which is also expressed in a broad range of cancers. In the phase I dose-finding trial, there was tumor regression in nearly every heavily pretreated patient and an overall response rate of 22%. In patients with ovarian cancer, the response rate was almost 30%.

This type of joint development is one of the distinct operational advantages of this strategic combination. The phase II trial with gavo-cel is ongoing and includes options for multiple doses and combination with checkpoint inhibitors to potentially enhance response rates and persistence. The next generation product targeting mesothelin is TC-510, which incorporates a PD-1 CD28 switch designed to increase potency. The phase I trial is currently in dose escalation across a range of tumors. Touching on safety across our combined programs. Whilst more specifics are available in the materials, generally speaking, we see adverse events that are consistent with those associated with lymphodepletion and the administration of cell therapies, mainly CRS at various levels, which is typically manageable and reversible using existing approaches.

Overall, the benefit risk profile to date has been acceptable. On closing this transaction, the combined company will have anticipated funding into 2026. We expect to deliver multiple value-creating catalysts from these programs within that financed window. Here's a long list of what you can expect over the next 22 months. Of course, we will continue to optimize the combined portfolio, making data-driven resource allocation decisions and focusing on those programs that will deliver greatest value. I'm gonna touch on a number of these items. For afami-cel, it's all about BLA submission and the potential for approval. For the CD8 next-generation program, we have trials ongoing or initiated with the potential for readouts this year and next.

Firstly, for the combination in late-line patients with a checkpoint inhibitor, and then readouts from cohorts in front line head and neck cancer and second-line bladder cancer. For gavo-cel, later this year, we anticipate the first readout from the phase II portion of the trial in platinum-resistant or refractory ovarian cancer in combination nivolumab. We will also have a mid-year readout in mesothelioma patients who were enrolled before the focus was narrowed to ovarian, which will include key translational data speaking to the impact of checkpoint inhibitors. In 2024, we can expect additional readouts in the gavo-cel trial. For TC-510, the next generation version of gavo-cel, the trial is dose escalating, and we anticipate initial safety and then potential efficacy along with dose finding results in 2024.

For PRAME and TC-520, which target CD70, we'll be moving these to be IND-ready in 2023 and 2024, as both companies have previously outlined. Now I'd like to turn it over to Garry to explain some of our next-gen enhancements, some of which are already in use in our clinical trials.

Garry Menzel (President and CEO)

Thanks, Ad. Not only do we have compelling clinical data and exciting preclinical programs, we also have a toolbox to further enhance our T-cell therapies. When we think about how best to treat solid tumors with a T-cell therapy, several factors come into play. Trafficking of our T-cells to the solid tumor, persistence in the hostile tumor microenvironment, and killing effectiveness once they are there. Our CD8 and PD-1 switch next-generation technologies have already made it into the clinic as autologous therapies. We also have many others, such as IL-15 and IL-7, CCL19, that can be thrown into the fight. One of the most exciting aspects of our complementary technology platforms is the ability to target multiple antigens. Importantly, all of these approaches can also be used in our allogeneic platforms as well.

Not only does it take a technology toolbox, it takes a unique set of capabilities to make cell therapies work. With that, I turn it back over to Ad.

Adrian Rawcliffe (CEO)

Thanks, Garry. One of the realizations that both companies have had is that cell therapies are a truly unique class of medicines, and that to convert complex technologies into actual products that benefit patients requires a highly specialized set of capabilities that need to be tightly integrated in ways that are particular to cell therapy. Our combined companies has been wholly focused on cell therapy for solid tumors since the beginning. We have experienced teams who have a proven track record in this field. Between us, we've taken seven programs into the clinic. Five of those are ongoing, and the first BLA for an engineered TCR T-cell therapy will be submitted this year by us. The capabilities we've outlined in our U.S. and U.K. facilities on the right-hand side of this slide are not there by chance. They are not optional.

These are the capabilities that we have deliberately built from the ground up by each of the companies. As we bring together our complementary technologies, teams, and infrastructure, there will be significant operational advantages as we aim to transform the cell therapy landscape for solid tumors. When this transaction closes, we will have cash into 2026. This will enable us to finance the catalysts on the slide I showed you earlier. As a combined company, we will continue to focus on investing our balance sheet in a data-driven manner to create maximum value from the portfolio. I'd like to return to the key differentiators that make this strategic combination attractive. A shared focus on solid tumors, by far the largest opportunity for cell therapy. Compelling data and clinical progress in solid tumors with our existing clinical pipeline.

A deep preclinical pipeline focused initially on PRAME and CD70, backed up by our expert teams, specialized end-to-end capabilities, a decade in the making, and all made possible by our extended cash runway. We have the opportunity to deliver against our catalysts and against our ultimate goal of making transformative medicines for people with cancer. With that, I'll open up for questions. Operator?

Operator (participant)

Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Once again, anyone on the conference call who wishes to ask a question may press star then one now. Our first question comes from Marc Frahm of TD Cowen. Please go ahead.

Ernie Rodriguez (VP of Biotech Equity Research)

Hi, good morning. This is Ernie Rodriguez for Marc Frahm. Thank you for taking our questions.

Adrian Rawcliffe (CEO)

Hi, Ernie.

Ernie Rodriguez (VP of Biotech Equity Research)

Hi. Just to follow up, one is, if you can provide more color on the cash runway extension that you have once the transaction closes. Like, how much cash, what's the cash balance, I guess, and what are the assumptions that you have, you know, thinking about all the catalysts that you went over? What assumptions does that have for the cash extension? The second question is about the afami-cel BLA. Just wondering what the gating factors right now? What needs to be done in order for you guys to be able to complete it by mid-2023? Thank you.

Adrian Rawcliffe (CEO)

Okay. Thanks, Ernie. On the cash runway, both companies pattern is to give cash runway guidance, but not obviously detailed cash flow guidance. That's compounded in this case by two things. One, integration planning is obviously only just starting on the back of this. Two, we just put out our Q4 results, but TCR² have not done so. It's a bit early to be giving detailed forecasts on cash utilization, but you can anticipate more information in due course. I think the key thing is we are confident we are confident that the cash runway can be extended into 2026 and can deliver on those catalysts.

There's obviously a range of things that you could look for in terms of the advantages that this come from, both the operational advantages that I've talked about during the scripted portion of the discussion, such as the ability to jointly screen with for ovarian cancer, such as the obvious potential synergies over time associated with the manufacturing capabilities that Adaptimmune has created as we think about putting multiple products onto the market in due course. Obviously establishment costs. We have just simplistically two D&O policies, for example, which we won't have going forward. I think we need, we still need to go through the integration planning and between now and the close of the transaction.

Secondly, on the afami-cel BLA, we've laid out the pathway that we have agreed with the agency to submit the elements of the rolling BLA. Just to remind you, that was the preclinical module initially, which was submitted in December, the clinical module, which we anticipate going in shortly, then the CMC module, which will be the final piece, anticipated in mid-2023. The work to complete those is the gating item between now and getting that. We're compiling all the information for the clinical pieces as you, as we speak, and we will be doing the same for the CMC piece, and finalizing the work required to submit that with the information that we agreed with the agency.

Ernie Rodriguez (VP of Biotech Equity Research)

Thank you. That's very helpful. Thanks again.

Operator (participant)

Our next question comes from Mara Goldstein of Mizuho. Please go ahead.

Mara Goldstein (Managing Director and Biotechnology Analyst)

Great. Thanks so much for taking that question. I'm just hoping that you can maybe review for us a bit or perhaps even confirm that as the deal comes together, the TCR² pipeline and the expectations for that pipeline for this year, you know, that those will be consistent with what TCR² has previously guided to. Secondarily, I'm just curious about, you know, once you put the two companies together and you have greater scale, you know, what you think from a time perspective, I guess, where is the advantage, let's say, with TCR²'s TC-510 program, which is in a phase I at this point, and where can you bring synergy to bear there?

Garry Menzel (President and CEO)

Yeah. I guess I'll take that one. This is Garry speaking. First of all.

I think the guidance is similar to what we provided before, in the case of ovarian cancer, where we have a readout at the end of the year, for that particular cohort. On TC-510, the same. The difference, I think, is, in the new guidance provided today, is that in the middle of the year, we intend to showcase the mesothelioma patients that we treated in the phase II trial before we narrowed the focus to ovarian cancer. If you recall, we did let people know that if there was any excess manufacturing capacity, we would devote it to mesothelioma patients, and we now intend to release some of that, clinical data, including key translational data that speaks to the impact of checkpoint inhibitors, in the middle of the year. That's in terms of guidance.

In terms of where there are synergies, going forward, I think there are a number because we have several overlapping clinical sites between the two companies. We also have some unique clinical sites between the two. We have an ability, since both of us are focused on ovarian cancer, to co-screen for MAGE-A4 or mesothelin, which makes us a little more attractive to physicians who know that they'll get a cell therapy treatment for their patients if they work with us. I see synergies there, which may help us as we go into next year, move things along a little faster. TC-510 is more constrained because of the design. Remember, it's dose escalating. You have to move in a steady fashion, cohort by cohort as you move up each screening. I don't think we can move that along much faster than we're doing already.

Mara Goldstein (Managing Director and Biotechnology Analyst)

Okay. Thanks so much.

Adrian Rawcliffe (CEO)

Thanks for asking.

Operator (participant)

Our next question comes from Tony Butler of EF Hutton. Please go ahead.

Tony Butler (Senior Managing Director)

Thanks very much. Adrian, two questions. One is on the CDA program in ovarian cancer. The other cancers of head, neck, and bladder, there were first and second line patients. Are these later line patients in ovarian cancer that will be treated? That's question one. Question two, there was some statements about expanding the clean room space in the Navy Yard vis-a-vis manufacturing. I assume that is not necessarily a component of what is required to complete the CMC components, et cetera, as it relates to afami-cel. Even though the expansion would allow for more afami-cel to be created, I just wondered if you could provide a few words on that rationale. Thank you.

Adrian Rawcliffe (CEO)

Thanks, Tony. You are correct. Whilst the cohorts that we are initiating in the SURPASS trial in head and neck cancer and bladder cancer are designed to be in earlier lines, first and second line, roughly, in conjunction with standard of care, pembrolizumab. The patients in SURPASS-3 and the population where we believe we can develop that towards a registration is in the platinum resistant setting. Again, I just wanna touch on that trial has two arms to it, both monotherapy with cells alone and combination with pembrolizumab, both independently designed against historic controls, giving us potentially sort of two shots on goal there.

This is important because I think what we're doing now is we're transitioning out from, and we have been for some time in sarcoma, from the proof of principle of a technology into actually developing products in specific indications, taking account of the treatment paradigms in those indications, and that's why this makes sense in that ovarian setting. That's the ovarian study and the future for SURPASS. With respect to the manufacturing, you're correct. We built out our facility in the Navy Yard, expanded capacity, we did that over the course of the last year, hence the fairly heavy capital expenditures in the last year that won't be repeated necessarily going forward.

That gives us the ability to manufacture many more products. It doesn't really affect the afami-cel development, since the suites that we currently have open for afami-cel, where incidentally we manufactured all of the SPEARHEAD-1 patients and where we will be launching from. Those suites are likely to be able to cope with the capacity needs of afami-cel as a commercial product and for the continued clinical trials associated with afami-cel. It's more that as we get into larger patient populations in SURPASS, that that space becomes more useful with the manufacturing methods associated with SURPASS.

Tony Butler (Senior Managing Director)

Thank you, Adrian.

Adrian Rawcliffe (CEO)

Thanks, Tony.

Operator (participant)

Our next question comes from Michael Schmidt of Guggenheim. Please go ahead.

Michael Schmidt (Senior Managing Director and Equity Research Analyst)

Hey, guys. Good morning. Thanks for taking my questions. Just a modeling question perhaps. TCR² obviously did announce some cost reductions earlier this year. How should we think about the potential for additional cost synergies following the merger later this year? I had a partner question as well.

Adrian Rawcliffe (CEO)

Okay. Why don't I start with that just at a high level. Then Garry, if you wanna comment specifically on the, on the shape for TCR² to the extent obviously that we can. I think one of the challenges that you guys are gonna have modeling this is that both companies have actually gone from a larger cash burn in 2022 to a much smaller cash burn in 2023. Talking from the Adaptimmune side, you know, last year you'll see that our cash burn, net cash burn was, you know, approaching $200 million, $170 million net.

That's come down substantially on the basis of the decisions that we took, both to focus the pipeline onto the key assets where we've got a really strong signal and product opportunities, but also to reduce the size and shape of the company, which we've, we executed on over the course of the last few months. I know that the TCR² team have done similar, which makes it difficult to look at the 2022 numbers and project forward. That's partially why we've done some of that work in the run up to the combination that we announced today, in order to enable us to project forward into the runway into 2026.

As we continue with the integration work between now and the close of this deal, integration planning between now and the close of this deal, and obviously ultimately the integration work, we'll be able to say more about that in due course. Garry, anything to add to that?

Garry Menzel (President and CEO)

No, I think you got it right. The only thing I'd point you to, Michael, is that in an 8-K, I think we filed an updated cash position. There's a little bit of information in there. The reality is, not all of the impacts of the changes that we made at the beginning of the year are reflected in that. There are some other moving parts. Then of course, you layer in this transaction. sorry that we're not able to give you precise numbers, but, as we begin our integration planning, perhaps we'll be able to say more going forward.

Michael Schmidt (Senior Managing Director and Equity Research Analyst)

Okay. Sounds good. Thank you. Just on the ADP-A2M4 program, what else did we learn from the ongoing phase I study this year? I know the phase II cohorts will read out next year. Anything else we'll learn on the phase I in 2023? Thanks.

Adrian Rawcliffe (CEO)

Thanks. Thanks Michael. I think that, the phase I program for SURPASS, for CD8, the SURPASS trial itself, and the original cohort of that, which was recruiting across a basket of tumors types, all of whom are reasonably reasonable or high in MAGE-A4 expression in late stage patients, having heavily pretreated multiple prior lines of therapy obviously. That study has two parts. That piece has two parts to it. The monotherapy arm, where we reported 43 patients in monotherapy and that 37% response rate last year. We anticipate completing that arm. The guidance we've given is that we'll have ultimately 50-60 patients in it, and reading that out in 2023.

We're also recruiting in parallel a combination arm, again in those that range of tumor types and again, in late stage patients in combination with nivolumab. That arm we intend to enroll between 10 to 20 patients to give us experience using checkpoints in combination with ourselves as a precursor for all the other work that we're doing further downstream. That will also read out, we anticipate, this year, later on this year. Those that's what you can expect from the original. I just wanna make sure that everyone understands, though, the two cohorts in first line head and neck and first line bladder are also part of that SURPASS trial, albeit that they're separate cohorts in different patient populations.

Michael Schmidt (Senior Managing Director and Equity Research Analyst)

Great. Thank you.

Adrian Rawcliffe (CEO)

Thanks, Michael.

Operator (participant)

Our next question comes from Jonathan Chang of SVB Securities. Please go ahead.

Jonathan Chang (Senior Managing Director of Emerging Oncology)

Hi, guys. Good morning. Thanks for taking my questions. First question. How are you thinking about strategic priorities following the combination? More specifically for gavo-cel, is the focus still ovarian cancer? What would you need to see in the data by year end to continue for the development of the program in ovarian cancer? Second question, I guess just for emphasis, following up on the prior questions, can you give us more granular color on how we should be thinking about expenses of the combined company moving forward? We're just trying to make the model work. Thank you.

Adrian Rawcliffe (CEO)

Maybe I'll start on sort of the viewer strategic focus, then I'll ask Garry to comment on the focus in ovarian cancer with gavo-cel, and perhaps what a good signal looks like there. Then I'll come back, come back to the cost discussion. In terms of strategic focus, one of the things that you have is you have two companies who have already gone through a very significant portfolio rationalization as part of their becoming fit for purpose for the world that we find ourselves in.

For us, that was narrowing down our focus clinically to afami-cel for synovial sarcoma and for CD8 to the three indications at different stages, as we just talked about, for MAGE-A4 and focusing on MAGE-A4. In preclinical, that was us focusing really heavily down on PRAME in the short term and moving forward to IND with that. For the other, for TCR², the focus is on mesothelioma, focused on ovarian specifically for gavo-cel and then TC-510 in dose escalating trials. Again, first and second generation programs in one target, essentially in the clinic on each side. That's the narrowing of the focus.

Behind it for TC-510, obviously, TC-520 with the CD70 in preclinical. I think you've got a very nicely focused pipeline, two clinical targets, two preclinical targets. Within the clinical targets, focused out on indications. Nonetheless, we as a company will look to make rational, data-driven decisions as we go forward about how to develop this combined focused portfolio. And you can anticipate that not just immediately, but over the course of the entire financing window as well. You know, we are gonna focus the resources of the company on those areas where we feel as a combined company, we have the most opportunity to create real value and products for patients. That's that. Garry, do you wanna talk a little bit about specifically, gavo-cel focus and signals there?

Garry Menzel (President and CEO)

Yes, it's a good question, Jonathan. Good to hear your voice. Basically with gavo-cel, what we have been advised is that if we can maintain the objective response rate that we showed.

In phase I, which if you recall, was around 30% and demonstrate durability. That is a positive outcome. What's durability? It's basically being able to get responses that last six months or more, and then feeds ultimately into overall survival, since that's what the patient cares about more than anything else. We're obviously employing checkpoint inhibitors in order to help with that from the phase I and re-dosing strategies, as well as moving to earlier lines of therapy. There'll be some translational data presented in the middle of the year. We haven't decided exactly which conference, but we'll present that in the middle of the year. The goal, as I said, is to be able to showcase that the checkpoint inhibitors are indeed helping us with durability. That's the readout that we're looking for at the end of the year.

Adrian Rawcliffe (CEO)

Thanks, Garry. onto your last question, a request for increased granularity on the cash flow. The short answer is, we can't give increased granularity at this point in time, as I referred to previously. However, maybe I could say a couple of things that might be useful as you think about the modeling. I think the first is that both companies have executed a fairly significant downsizing. The 2023 spend looks nothing like the 2022 spend for both companies. That's first point. Second point, the financing, the profile of financing for Adaptimmune specifically, as we've talked about before, is historically and we anticipate being in the future, quite lumpy.

Specifically, we tend to spend the majority of the net cash burn in the first part of the year. Burn is then offset by both tax credits and payments from partners that we typically receive in the second half of the year. The combination of that makes the cash flow through the year quite, you know. Spiky. When we put all of this together and make reasonable assumptions about the levels of efficiency going forward, we believe that we are financed into 2026 with this combined portfolio delivering the catalysts that we have outlined previously.

Jonathan Chang (Senior Managing Director of Emerging Oncology)

Got it. Thank you.

Adrian Rawcliffe (CEO)

Nothing. Thanks.

Operator (participant)

Our next question comes from Asthika Goonewardene of Truist Securities. Please go ahead.

Asthika Goonewardene (Managing Director and Senior Biotech Analyst)

Hey, guys. Thanks for taking my question. All right, I get it. I know what's going on here. This is a secret, this merger is a secret plot for the British to take over cell therapy, isn't it?

Garry Menzel (President and CEO)

Sorry. Absolutely.

Asthika Goonewardene (Managing Director and Senior Biotech Analyst)

Okay. On a serious note, Ad and Garry, okay, a question I'd like for both of you to answer independently is, from a scientific standpoint, what technologies are being brought together from both your companies that you're most interested in putting into a single cell? A question on, you know, using the manufacturing capacity. When do you get to use when the TCR² wants to draw, get to use Adaptimmune's manufacturing capacity. Related to that, does the merger and closing in the second quarter allow you to build more capacity to treat lung cancer patients with gavo-cel rather than approach it on the opportunistically, how you outlined earlier, a la you'll treat a lung cancer patient if there's no ovarian cancer slots are being used? Thanks.

Adrian Rawcliffe (CEO)

Okay. Why don't I take a stab at what I'm most excited about, from a tech platform perspective. Garry, I think you could do the same. I'm actually gonna focus on three things that I think are really, really interesting, from this from a technical perspective. I'm gonna go with the first. First is, the combination of the fundamental platforms is actually really interesting. You know, we will then have access to the entire target universe. I will point out that TCR² are, I believe, the only company who have a robust efficacy signal with a mesothelin targeting, targeted, cell therapy.

I think that is indicative of the potential of the TRuC platform for cell surface antigens. Between the two of us, we then cover the entire target universe. Point one. Secondly, I think the combination of the next generation approaches has a lot of leverage associated with it. Yeah, I'm particularly interested personally, given in the clinic, in clinical development in the PD-1 CD28 switch that operates differently to most existing next generation approaches. I think that would be really interesting to see the applicability of this. Lastly, I think the opportunity to and this is obviously over the longer term, to take the broader pipeline and put it onto Adaptimmune's allogeneic platform as that matures, I think is also a really key long-term benefit of this combination. Garry?

Garry Menzel (President and CEO)

Asthika, since, Ad has basically managed to grab all of the innovations and, tell you about them I'm going to.

Adrian Rawcliffe (CEO)

Still got membrane-bound IL-15, Garry.

Garry Menzel (President and CEO)

That is very true. I guess I could throw that in there. I'll tell you what I'm, in some respects, most excited about. It's, perhaps a softer issue, but a really important one that almost gets to your first comment about, you know, is this the beginning of consolidation within the cell therapy space on the solid tumor side. That is that what I've observed is the leadership teams on the scientific side in these conversations have been excited about each other's technologies and begun riffing over what they might do together in the future. New ideas that will emerge from the combination of the company, the two companies into one combined entity. I really do feel that there's going to be a lot of innovation that comes out of that. This is a space where we do need continued innovation.

Beyond the items that were mentioned by Ad, which I fully endorse, I'm really excited about what the teams will create together going forward.

Adrian Rawcliffe (CEO)

Then your next question was on sort of manufacturing capability and manufacturing capacity and things like that, and access to that. I think there's an interesting balance that will need to play out over time. One of the things that I am really excited about is both of our companies are very pragmatic when it comes to developing cell therapies. I think developing cell therapies teaches you humility, and it teaches you pragmatism. We are going to need to make pragmatic choices about the development of these on the basis of the existing platforms that we've got. Largely, TCR² is on a Miltenyi Prodigy platform, and largely we are on other platforms that we've developed internally, two different ones for afami-cel and CD8.

Having said that, over time, there is obviously the opportunity to either bring the Miltenyi Prodigy platform into our capacity, our capabilities, and/or, as the pipelines evolve, move to common manufacturing processes over time. That's an obvious synergy. I just wanna point out something that's really interesting about these companies. As you think about putting the two together, I would encourage you to think about the fit of these companies because we are both solid tumor, both engineered TCR cell therapies. We both use a number of the same platforms and approaches. Just pick one, a lentiviral vector transduction to insert the genetic material into the cells. There you are. We're both on common platforms. We have for some of this.

Then we have other areas where we can, over time, combine and bring synergy. There's a great deal of intellectual synergy associated with the act of developing engineered T-cell therapies for solid tumors. At the same time, the engineering allows us to do different things because TCR² is focused on extracellular proteins, and we've been focused almost entirely on intracellular proteins and the expression on a peptide MHC complex and targeting that. It's this very unique combination where there's a lot of intellectual platform capability advantages. At the same time, it expands the universe of the things that we're able to address and builds a company that really has heft in the solid tumor space.

Asthika Goonewardene (Managing Director and Senior Biotech Analyst)

Great. Thanks for taking my question, guys.

Adrian Rawcliffe (CEO)

Thanks.

Garry Menzel (President and CEO)

Thanks, Asthika.

Operator (participant)

Our next question comes from Kelly Shi of Jefferies. Please go ahead.

Kelly Shi (SVP and Senior Research Analyst in Biotechnology)

Thank you for taking my question. I apologize if this has been asked. I'm curious, how do you align manufacturing for the combined business unit to supply future clinical and commercial demand? Should we expect a cost of savings on this front with the synergy across the companies? Thank you.

Adrian Rawcliffe (CEO)

Garry, do you want, do you want to have a go at that in addition to what I just said?

Garry Menzel (President and CEO)

I mean, I think from our side, Kelly, what excites me, many of the things that excite me about this deal, manufacturing is one of them. We have adopted a policy up to this point of relying on external agencies in order to do our manufacturing, and that's worked very well for us up to this point. Now we don't need to build internal capabilities because those exist already at Adaptimmune. It's great. That gives you greater control over your patient delivery supply chain, and I'm happy about that. For me, this is one of the major advantages of the combination.

Kelly Shi (SVP and Senior Research Analyst in Biotechnology)

Thank you.

Operator (participant)

Our next question comes from Soumit Roy of Jones' Research. Please go ahead.

Soumit Roy (Managing Director)

Good morning, everyone. Congrats on all the progress. One question on the MAGE-A4 ovarian side and the gavo-cel. Are trying to understand if this is gonna be competing products or they are mutually, they're gonna be exclusively developed or address the patient population? Is there any overlap in the expression of MAGE-A4 and mesothelin, or they're exclusively expressed in different patient populations, say, in ovarian or head and neck or any of the other indications?

Adrian Rawcliffe (CEO)

I think we have most insight into probably the ovarian space. Maybe I can just think about that and guide us how to think about that. We're actually really excited about the opportunity for developing these in parallel. I think it is in parallel because although I'm sure there are some patients who express both MAGE-A4 and mesothelin, we don't think that these. They're unlikely to be completely separate populations, nor is the overlap likely to be enormous given that both of these are expressed in a subset, and of the ovarian population. We think that there's a real opportunity to do a couple of things.

One and probably in sequence first is to look at how we screen patients onto the trials. It's obvious that if you could reduce the screen failure rate, increase the screen success rate by having both of the trials ongoing at a particular site, that would be a fantastic opportunity to capture a larger portion of the ovarian cancer patients. The second sort of piece of that is obviously then in commercial, you can offer a cell therapy to a broader commercial population as well.

Then the other piece is, I think longer term, scientifically, it will enable us to explore, well, what happens in those patients who do have overlapping expression? Is there the opportunity to either give the products in sequence or together to enable for that patient population an even deeper response? I would add to that PRAME is also has significant, it's not in the majority of patients, but significant expression in the ovarian cancer population. Actually, long term, you can think about MAGE-A4, gavo-cel, and PRAME all expressed in a minority of ovarian cancer patients.

But together, the opportunity to offer a cell therapy treatment to a larger population of ovarian cancer patients and to look at the patients with multiple antigens and think about whether there's the opportunity through multi-antigen strategies to be able to get to better outcomes for patients with multi-antigen strategies. Long term, of course, you think about all of that on the allogeniec platform as well, and the opportunities there. I just think there's a real opportunity over the long term to think about how to optimize this. In the short term, however, I think what we've got is MAGE-A4 CD8 in a phase II trial that we hope to become registration or SURPASS-3 that could become a product for us there. Gavo-cel in a trial in combination with checkpoint inhibitors with a readout this year. That's very pragmatically where we need to be focused in the short term.

Soumit Roy (Managing Director)

Got it. On the commercialization side, we see Cintia Piccina is leaving. Is there a reshuffling going on on the commercial team? How are you gonna combine the R&D team from these two different companies? Because they seem to be specialized in their own ways with their own products. Is that expense gonna be completely additive with probably 25% reduction on the TCR² side? Also the clinical team. It seems like everything is adding up rather than having a synergy there.

Adrian Rawcliffe (CEO)

I think we're just starting integration planning, so it's not appropriate for us to talk specifically about particular areas. However, I think for Cintia leaving as Chief Commercial Officer, Cintia's built a great team. That decision was associated with the reductions that we announced as an organization last year. Cintia's built a great team that will enable us to continue with the commercial planning and strategy for afami-cel in due course. In addition, Cintia will continue as a consultant for us in particular on commercial strategy associated with that program. That relates to the previous discussions that we've had and the decisions we made last year.

With respect to synergies, we're just at starting integration planning. We'll have more to say on that in due course. You know, clearly the balance of this is that there are unique skill sets on both sides that we will need to preserve and leverage in order to be able to realize our ambitions for this pipeline. At the same time, it's obvious that there are things like establishment costs, et cetera, that are duplicated between the two companies.

Soumit Roy (Managing Director)

Thank you. Well, thank you for taking all the questions. Good luck in 2023. It's gonna be a busy year for you guys.

Adrian Rawcliffe (CEO)

It certainly is. Thanks very much.

Operator (participant)

Our next question comes from Yanan Zhu of Wells Fargo Securities. Please go ahead.

Yanan Zhu (Senior Analyst of Biotechnology Equity Research)

Hi, thanks for taking the question. I just have a quick one on timeline to durability of response data for the respective ovarian cancer product candidates from both companies. Maybe from ADP-A2M4 if you could also comment on the IO combo, when might we see durability of response, when might we have a sense of the potential expansion of durability of response? Thank you.

Adrian Rawcliffe (CEO)

Okay. I think that's right. Specifically on the MAGE-A4, because I think we've answered that on the gavo-cel side, 'cause that's in progress at the moment. With respect to MAGE-A4, actually, with the reason that we designed the SURPASS-3 trial in the way that we did with an independent monotherapy and combination arm is because we want to assess the potential for the CD8 program as monotherapy to actually be a registrational program. That's why we did that. It's pretty obvious we think that from that there's a reasonable chance that the durability is sufficient to enable registration there. Otherwise we wouldn't have designed the trial in that way.

The add-on with PD-1 is to drive depth and durability and potentially number of responders in that setting. It's just worth pointing out that in ovarian cancer, checkpoint inhibitors typically do not have a significant efficacy signal. It's a real opportunity for synergy associated with the cells. In terms of timeline from that trial SURPASS-3, because that is a registration-oriented trial, we do not anticipate releasing data from that until we have fully enrolled that trial and that cohort. That won't happen until sort of tail end of 2024 when we've fully enrolled that registration-oriented trial.

I think the data from ovarian cancer will be in combination, will be related to a small number of patients that we have been able to recruit or will be able to recruit in the phase I study. Slightly different patient population in combination with nivolumab. That we would anticipate being probably tail end of this year or into early next year before we have durability data in that relatively modest number of patients.

Garry Menzel (President and CEO)

I think just to reaffirm on gavo-cel again, in ovarian cancer, you'll see clinical durability data at the end of the year. That's what our intent is to present. In the middle of the year, you'll see some translational data, which hopefully will provide a pathway to that clinical data at the back end of the year.

Yanan Zhu (Senior Analyst of Biotechnology Equity Research)

Great. Thanks. Thanks a lot. Also I have another kind of a related question. I think Adaptimmune had, you know, obviously is advancing the head and neck and urothelial cancer studies in earlier line setting. I was wondering if the on the mesothelioma side for the combined company, would exploring earlier line also potentially be a potential strategy from that side of the combined company. Thanks.

Adrian Rawcliffe (CEO)

I think I'll talk maybe in principle then maybe Garry you could touch on and thinking on from your side, on mesothelioma in earlier lines of therapy. In principle, we think that there are substantial advantages to moving into earlier line for cell therapies. In addition to the normal oncology development advantages that you get, which is healthier patients, fewer levels of pretreatment and a less advanced tumor. There's a really critical piece in cell therapy that everything that we know says that the earlier you can get cells from a patient, the more pristine those cells are, the less damaged by repeated assaults from chemotherapy or other therapeutic regimens. The earlier you can go, the better those cells are likely to perform.

This is the ultimate starting point, is that when we do work in patients who have cancer patients or healthy donors, the healthy donor cells typically grow better and produce fitter T-cells, engineered T-cells. Everything suggests that getting in earlier will be better for cell therapies. That's why we believe that there's this opportunity in head and neck and bladder cancer to go in these earlier settings and potentially transform those spaces with the response rates that we're seeing in very late stage patients replicated, potentially improved in the early line settings. Garry?

Garry Menzel (President and CEO)

I would just endorse that in our own dataset, we just don't have enough patients to be able to parse out lines of therapy versus dose escalations or use of checkpoint inhibitors or re-dosing or other strategies. The principle that's been shown, I think in many other studies in oncology is that the earlier lines of therapy give you a better shot at.

Are treating patients. If you think of afami-cel in phase I, we were treating a lot of patients who were either in or going to hospice, who had other comorbidities, just incredibly sick, you know, five, six, seven, eight lines of therapy before them, and it just makes it very difficult. Having healthier patients who can tolerate therapies more, and whose cells are likely to be more robust, logically, you would hope that that would lead to better clinical benefit. We just don't have the data to prove that out yet from our own studies.

Yanan Zhu (Senior Analyst of Biotechnology Equity Research)

Got it. Very helpful. Thank you.

Adrian Rawcliffe (CEO)

Thanks.

Operator (participant)

Our next question comes from Peter Lawson of Barclays. Please go ahead.

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Great. Thanks for taking the questions. Just going back to cash guidance, just curious if that includes commercial products from both Adaptimmune and TCR²?

Adrian Rawcliffe (CEO)

The only product that would be launching within that timeframe would be, afami-cel for the treatment of synovial sarcoma. It doesn't include revenue from those products, no. From that product, no, is the simple answer to that. That would be additive to that. We've said that we will comment more on our commercial plans, as we get through registration. It's inherently a conservative approach to, what we might do with afami-cel.

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Perfect. Thank you. I guess, a question for Garry, whether this was a competitive process, how long did this take, and is there any breakup fees for this?

Garry Menzel (President and CEO)

Last question, first, yes, there are breakup fees, fairly standard breakup fees. I would say, first of all, that there'll be an S-4 coming out that will provide full details of the dialogue. What I can tell you now, because you'll have to wait till then for that, is Ed and I have known each other for a couple of decades. Even before we were both specialized in cell therapy, we had an ongoing dialogue and of course, we've both been in cell therapy for a number of years. Now, not surprisingly, being at the forefront of our fields, we've had ongoing dialogue just in terms of our thought in the field.

In terms of this particular process, the fall of last year was when we began to have discussions in earnest, and you'll see more of that. In other words, this was a thoughtful process, and we're always talking to lots of people in the field. That's all I think we can say at this point.

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Good. Can you disclose the breakup fees, or do we have to wait for the filings?

Garry Menzel (President and CEO)

You'll have to wait for the filings.

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Okay. Just going back to the cash runway guidance, does that include potentially further rationalization of the combined pipelines? Is that something you foresee doing? Is that something we have to wait until 2Q, or is it kind of a data-driven thing, or should we just look at that pipeline as the go forwards?

Adrian Rawcliffe (CEO)

I think all of the above. Yes, it's a data-driven thing. The pipeline that we've put out there is the pro forma combined pipeline of the companies, and we will make data-driven. Based on the catalysts that we've outlined to you, those will be the data points when we'll be able to make decisions about development pathways for those assets.

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Perfect.

Adrian Rawcliffe (CEO)

Did that answer your question?

Peter Lawson (US Biotech Equity Analyst and Managing Director)

Thank you.

Adrian Rawcliffe (CEO)

Yep. No problem.

Garry Menzel (President and CEO)

I think that's the end.

Operator (participant)

This concludes the question and answer session. I will now turn the call back over to Adrian Rawcliffe for any closing remarks.

Adrian Rawcliffe (CEO)

I'd just like to close by referring you back to the five rationales for why this is a compelling transaction at this point in time. The solid tumor focus, the catalysts achievable within the extended runway, the deep innovative pipeline and the end-to-end capabilities that both companies have shown that I think between them in the combination will make this a compelling cell therapy company for the future. Thank you very much and look forward to catch up conversations with many of you in due course.