Autolus Therapeutics - Earnings Call - Q1 2025

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Autolus First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amanda Cray, Executive Director of Investor Relations. Please go ahead.

Amanda Cray (Executive Director of Investor Relations)

Good morning or good afternoon, everyone, and thank you for joining us on today's call. With me are Chief Executive Officer, Dr. Christian Itin, and Chief Financial Officer, Rob Dolski. I'd like to remind you that during today's call, we will make statements related to our business that are forward-looking under federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These may include, but are not limited to, statements regarding the status of the ongoing commercial launch of AUCATZYL in the U.S., Autolus' manufacturing, sales, and marketing plans for AUCATZYL, the market potential for AUCATZYL, and the status of clinical trials, development, and/or regulatory timelines, and market opportunities for AUCATZYL and our other product candidates.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements. For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and in our SEC filings, both available on the investor section of our website. Turning to slide three, you'll see the agenda for today's call. As usual, Christian will provide an overview of our operational highlights. Rob will then discuss the financial results, and Christian will conclude with upcoming milestones and closing remarks. We'll then take questions. With that, I'll turn it over to Christian.

Christian Itin (CEO)

Thank you very much, Amanda, and welcome everybody to our First Quarter 2025 results. First off, we had a great first quarter. The launch has been off to a really good start. We have seen a substantial level of interest by the physicians in the product profile. Clearly, there is a significant unmet need for the patients with relapsed refractory acute lymphoblastic leukemia, and we're very pleased to report $9 million in recognized revenue in the first quarter. Obviously, foundational to the ability to really reach the patients is that we have to be present in the respective clinical centers. As of yesterday, we have 39 centers that are authorized to deliver AUCATZYL.

This is a great accomplishment from our onboarding and market access team, and we're currently at a level of about 90% of total U.S. medical lives covered, which is a great position this early in a product launch. As of April 1, CMS also published the codes for in- and outpatient use for patients on government programs. With that, we have now an ability to get AUCATZYL also be eligible for reimbursement for patients on government programs, in addition, obviously, to the patients who have been covered and are covered through the commercial programs. This sets us up in a really good way leading into the second quarter, and we're excited about the initial momentum that we've seen in Q1 and see that very nicely carried over into the second quarter. With that, I'd like to move to slide number five.

When we look at the opportunities for growth, obviously, the first opportunity is in the U.S. One of the key things that we're planning to do from here on to the year-end is really increase the number of centers that are activated and in a position to deliver AUCATZYL therapy. We're going to go from what's now 39 centers to approximately 60 centers, which will give us approximately 90% access to patients across the U.S. That is obviously critical, and one of the key things that we're going to see as we go through the course of this year is also that we're looking to build additional momentum and drive and support the launch going forward, also with additional data updates.

A key update is planned for this quarter based on long-term follow-up from the FELIX study, which I believe will be very encouraging and very helpful to understand the impact that AUCATZYL can have as a single agent in this relapsed and refractory patient population. First push, obviously, in the U.S., also actually driving, certainly as we go into next year, to start expanding the market share for CAR-T products and then gradually build from there. The second layer of expansion that we're looking at is a geographic expansion. We reported about a good week ago that we have received conditional marketing authorization from the MHRA in the U.K. and are now in the process of engaging with NICE and the other relevant bodies in the U.K. to get the product actually through the reimbursement and access process and then into the launch in the U.K.

In Europe, we're progressing well, and we expect to receive a decision by the European agency in the second half of this year. From a European perspective, then, we will initially are planning to launch in Germany and then actually move gradually from there, obviously with various different processes that we have in Europe related to pricing and reimbursement, which has a big impact on, obviously, the sequence and how to actually progress in Europe. Now, looking beyond the immediate launch and the geographic expansion, we also believe that the product has additional opportunities in acute lymphoblastic leukemia. Right now, we have the data set in the relapsed/refractory population. This is obviously, these are obviously patients that have already gone through a very significant amount of exposure. They've been typically up to three years of frontline therapy, have gone through high-dose chemotherapy.

Many of them have received other agents, targeting agents, as well as might have received stem cell transplants. This is a very advanced population. What we do know from Obe-cel and AUCATZYL is that the product, when used in patients that are in the earlier stages of relapse or also patients that have lower tumor burden at the time of therapy, that patients do better with those profiles. We believe one of the key areas that I think is important to explore is the utility of the product ultimately in a frontline consolidation setting. We will start to explore exploration of frontline settings through investigator-sponsored trials, and we will certainly consider our steps in addition to those. In addition, when we look at the pediatric population, we are currently treating pediatric patients, and we are planning an update and results to be presented by the end of the year.

We will also review whether there is an opportunity for us to move Obe-cel forward in the pediatric setting and hopefully find a way to make the product accessible to patients in this setting as well. Now, moving to slide number six. Obviously, what we do have with Obe-cel is an ability to target the entire B-cell compartment, and there is quite a significant additional set of opportunities that we do have with the product that we can see beyond acute lymphoblastic leukemia. Moving to slide seven, briefly summarizing our current experience with Obe-cel across a range of indications. Obviously, you are all aware and you are very well familiar with the product profile in the relapsed/refractory adult population, as presented as well and published in the New England Journal for the FELIX study. We also have earlier data on pediatric patients as well.

What we do see across all these trials that we've conducted, both with our academic partners at UCL as well as in the subsequent trials, we do see consistently that the product actually achieves very deep MRD negative responses, or to put it differently, the product has an ability to reset the compartment in a very profound way. That profound way is also shown with the experience we had in the old CAR-19 study initially, where we have more than five years of follow-up, as well as the FELIX study, where we're going to, as mentioned, give an update on long-term outcome later this quarter. We're also obviously seeing the ability of the product to get a proportion of the patients into long-term remission, clearly indicating that we had an ability to make an extremely deep cut into the compartment and completely remove the acute leukemia cells.

Now, this is the experience in leukemia. We have very similar outcomes that we have observed in patients with non-Hodgkin's lymphoma, which is part of the old CAR-19 extension study. What we've seen in that setting is very high levels of metabolic complete remissions. When we look at the large B-cell lymphoma patients in those cohorts, those patients do actually have also the majority of those patients have long-term outcomes as well. Quite clearly, a very deep activity. What we also see is that the safety profile that we have in acute leukemia is very favorable. Remember, we did not actually have, we do not have an obligation for a REMS for AUCATZYL in relapsed/refractory adult ALL. When we then look into the lymphoma patients, the profile actually improves further.

We have no high-grade cytokine release syndrome in those patients, and we have not actually observed neurological toxicities or ICANS in that population as well. When we think about this profile and where we can actually, where a deep cut in the compartment can make a big impact on outcomes, there are sort of two key areas to focus on. One, I already mentioned, is the frontline consolidation in aggressive B-cell malignancies, where we aim for long-term outcomes while avoiding over-treatment of these patients. What we've seen so far is just add-on strategies, and we keep adding more and more toxicity in these patients. However, we start to see sort of diminishing returns and, in fact, at times, negative outcomes from adding additional toxicity. Getting to much more compact treatment, shortening treatment, and getting to long-term outcomes has to be an objective going forward.

The second area is obviously the wide range of B-cell mediated autoimmunity, where we've seen obviously some quite remarkable data from Georg Schep's team in Erlangen indicating that indeed, if you do have a deep cut in the compartment, you can actually transform the outcomes for these patients, and those outcomes appear to be sustainable. The goal in those indications is to really get sustained effects with a one-time intervention, and that obviously is a very attractive proposition in those disease settings.

With that, I'd like to just on slide eight briefly just talk about autoimmune disease and the fact that we're looking at, when we look at particularly advanced patients, we have on the one hand an inflammatory process where you have antigen and B-cell engagement as well as T-cell engagement that sort of form a loop of activity that actually is a very visual, forms a very visual cycle and continuously actually drives an inflammatory process in these patients. The autoreactive antibodies obviously have then an ability to recruit immune cells and complement onto tissue and into organs and actually start to create damage on that tissue. If that prolongs, you start to actually get scarring in the tissue. You get scarring and loss of function in those organs, and you can have very dramatic effects and issues that these patients do build up over time.

The treatment is basically various forms of immune suppression that you run in these patients that also in their own right actually have significant drive, significant adverse events. Unfortunately, for many of these patients, do not actually address the underlying disease in a way that allows these patients to live normal lives. When we look at the ability for B-cells to really target this type of therapeutic intervention, it gives you an ability to really block that cycle, crack it open, remove the B-cell component that carry memory, remove the plasma blasts which express the autoantibodies, and with that actually stop this vicious cycle of continuous activation and continuous damage in these patients. Now, the patients that we're looking for, particularly from a CAR-T perspective, are patients that do actually have disease that is advanced, disease that already actually shows impact on organs, particularly organs like the kidney.

These are patients that do have an element of structural damage. Now, when we think about the impact of the therapy, clearly we expect the therapy to have an immediate impact on the inflammatory process and the inflammatory parameters, as well as a lot of the manifestations that we see in these diseases. I'll talk on the next slide about the various types of forms of disease that these patients experience. You also would expect that gradually either have a stabilization of the underlying organ that's impacted, and if it is early enough in the progression of the disease, an ability to actually reverse the negative outcome on that organ. At least stabilize and in the upside improve the organ function.

With that as sort of a backdrop, what I'd like to do is really talk now briefly about the outcome that we have presented at the R&D event from our phase I CARLYLE study in patients with systemic lupus erythematosus. When we look at our patient groups that we have, and this is now on slide number nine, when we look at our patients, we do see that these patients actually are quite more advanced compared to the patients that were treated at the University of Erlangen by Georg Schep's team. These patients are older. They're 19-50 years of age, and they also had quite long disease histories. The disease history of these patients was at least three years, up to 23 years. These are patients that have been battling with the disease for a long period of time.

When you look at the SLEDAI scores, which are disease scores in these patients, you see them range from 16-28. This is a very severe population. In fact, all of those patients had kidney involvement. All of them actually had already signs of kidney damage when we looked at these patients closely. When we look at the patients, we do see that five or six of these five or six patients had class four disease, and four of the six also had class five components. These are patients that have gone through the standard of care, have also already gone through the challenges with regards to B-cell depleting agents as well as calcineurin inhibitors. What we're seeing is that in many of these patients, four out of six, we already had significantly impaired kidney function.

Now, when we look at the overall adverse event profile in these patients, we do see that the patients obviously had quite a lot of impact related to kidney damage leading to hypertension, etc. When we look at the immunological toxicity, we do see that the CRS that we're observing in these patients is that three out of the six patients have observed grade one cytokine release syndrome, but none of the patients has experienced neurological toxicity or ICANS. This is relevant because every approach that was tested, CAR-T approach that was tested outside of the experience at the University of Erlangen in patients with lupus nephritis have reported ICANS in their small data sets. With that, moving to the next slide. This is slide number 10. We're now looking at the individual profile that we're seeing in the patients based on the SLEDAI 2K scores.

The SLEDAI scores are scores that actually look at a composite of parameters related to the function of organs, antibody, autoantibodies in these patients, complement, but also looking at the experience related to other forms of the inflammatory diseases that these patients may see. Now, I'll focus first on patient number one. What you can see is this patient had a SLEDAI score of 28 at the start. In addition to obviously having very significantly impaired kidney function and obviously double-stranded DNA antibodies and low levels of complement, the patient actually had other manifestations of disease, including rash, arthritis, and alopecia. When you think about what are those, which ones of those types of parameters the patient actually can experience, those are in fact rash, arthritis, and alopecia. The lab parameters you can't sense, and the kidney function you can't really sense either.

The primary experience of the disease is around those inflammatory processes. What you can see is that very quickly, within a short period of time, all of these symptoms with these additional inflammatory processes actually have been removed. You see then a gradual improvement also on the kidney side. When you then look at the other patients, you see combinations of those various forms of manifestations of inflammation. You also see that all of these patients improve on the top line. We have three months of follow-up at least. On the bottom line, we have only one month of follow-up. With that, what I think is important to realize is that although this is a limited amount of time in terms of the follow-up, we had very quick improvements on those inflammatory processes.

We also started to already see that three of the six patients did actually achieve renal complete remissions. That is obviously very meaningful in this population. We expect those patients to sort of continue to improve over time. A very strong start gives us a very strong set of indication in terms of the ability of the therapy to actually improve the outcomes for these patients, obviously combined with a very good safety profile. When we look at the properties of the product, the properties actually are very, very consistent with what we have observed in the oncology setting. We see a comparable level of peak expansion. What we do see is shorter persistence. The persistency here is around three months, maybe for a few patients a little bit longer. When you see loss of persistence, you also do see B-cells coming back.

The B-cells that are coming back are predominantly naive B-cells, as you would expect, that then over time for those patients where we have that data at this point, start to differentiate into more differentiated forms of B-cells as we would have postulated. With that, we're going to move to slide number 11. Slide number 11 actually looks at the opportunity that we have in lupus in general with a particular focus on lupus nephritis. What we're looking to do here is really focus on the patient population with the highest medical need, which are the patients that are refractory to standard of care in the lupus nephritis group of patients. That's around 25,000-35,000 patients or about, give or take, 10% of the overall SLE population in the U.S.

The reason why we're focusing on lupus nephritis is, on the one hand, the medical need, but on the other hand, it is the importance of having an objective endpoint that you can follow. We just looked on the slide before on SLEDAI scores, and you could see the complexity of the scores. What you haven't seen is that some of those scores are actually based on either physician assessment or patient assessment. In other words, there is an element that actually is a much softer type of data that goes into these scores relevant to describe the disease, but much harder to actually think about statistical outcomes and be able to actually get to relevant data in a smaller data set. Going after lupus nephritis allows you to look at renal complete remissions and with that have a very clear endpoint that it can actually follow.

Now, moving to slide number 12. What we see in slide number 12 is basically the trajectory that we're planning for our development in lupus nephritis. What we're doing with our current study with the CARLYSLE study is actually establish a fixed dose for adult and adolescent patients. With that fixed dose, remember these were SLE patients with kidney manifestation factor, all categorized as lupus nephritis patients. Those patients actually, when we look at them, are the right kind of backdrop that we would also expect to include into the single-arm phase II study that it's as a pivotal character. This particular population is our patients that also have been already exposed to B-cell depleting agents. So these are typically antibody-based therapies, as well as a calcineurin inhibitor, and are past those two therapies. So it's a proper refractory lupus nephritis population.

The approach here is to have a compact opportunity for a compact study with an objective endpoint, and with that, have an ability to be first to market in this indication with a CD19 CAR-T product. We're then actually envisaging that from there on forward, there is an opportunity to consider moving into a somewhat earlier stage of disease where we're going to look at a comparative or randomized trial against standard of care. Clearly, the core of the approach is a fast-to-market strategy based on a refractory population with an objective endpoint. This study obviously is already getting started. We have gone through the regulatory process in the U.S. and interacted with the FDA on the design of the product and also have an open IND for lupus nephritis.

We're in the process, obviously, of going through the regulatory steps in other jurisdictions that we're planning to include in this clinical trial. With that, we're moving to slide number 13 and going to look at one of the opportunities we're very excited about, which is the opportunity in progressive multiple sclerosis. This is the part of the disease that really has the highest medical need. It's about 30% of the relapse-remitting of the total population. You have relapse-remitting about 700,000 patients, and you have progressive MS in about 300,000 patients. That is where we're planning to go. These are patients that have gone through, obviously, standard of care and progressed despite exposure to standard of care for at least six months. Now, when we think about MS, it's a disease that we know has a significant B-cell component.

They're obviously a disease where CD20 targeting monoclonal antibodies are effective. However, the disease itself obviously is driven not just by T-cells that are in the periphery and are reachable with a soluble agent that you infuse into the blood, but there are also B-cells that sit on the other side of the blood-brain barrier in the brain itself. Obviously, those cells are not reachable for conventional therapeutic approaches that are based on either proteins, T-cell engagers, etc. Now, what we do know about Obe-cel is that Obe-cel actually works very well across the blood-brain barrier. We have explored that in primary CNS lymphoma in a collaboration with our colleagues at UCL and could show that indeed the product had an ability when given systemically, so infused into the bloodstream, had an ability to cross the blood-brain barrier and actually lead to tumor reductions in the brain.

That obviously is what exactly the type of activity you would need in these MS patients. Getting at those B-cells, malignant B-cell, or B-cells that are sitting behind the blood-brain barrier is at the core of what we're looking to do. We believe Obe-cel is exceptionally well positioned to actually have that type of an activity. When we look at the approach that we're taking here, we're starting up a study in progressive MS. In fact, those are patients where we're going to run through a dose escalation. We know in the CNS lymphoma that 200 million cell dose was the cell dose that was active and gave us a proper activity in the brain. We're going to run through a dose escalation here, obviously higher levels of doses than the 50 million cell dose that we have used so far in the SLE patients.

We're going to look at a range of biomarkers as well as imaging. We're going to follow these patients to understand the clinical impact and outcomes that we could see in these patients and to see whether we can see an impact on the clinical disability progression of these patients. With positive data, we obviously would then move into randomized phase II and III study to drive towards a registration for this type of an indication. Very exciting program, and we're looking forward to updating you as we're making progress in this study. With that, I would like to hand over to Rob, who will walk us through the financial results.

Rob Dolski (CFO)

Thanks, Christian. Good morning or good afternoon to everyone. It's my pleasure to review our financial results for the first quarter of 2025, and I'll be referring to slide 16 in the presentation. For our first quarter of product sales, net product revenue for the three months ended March 31, 2025, was $9 million. We're off to a strong start with the U.S. launch of AUCATZYL. As Christian noted, as well as included in the press release earlier today, on April 1, CMS included AUCATZYL in their published coding determinations and outpatient payment rates, formalizing reimbursement for patients on government programs. The CMS Hospital Outpatient Prospective Payment System, or OPPS, splits the therapeutic dose of AUCATZYL into two administrations for coding and billing purposes. As a result, we are working with our treatment centers on implementing the coding and payment policy from CMS.

As well, we are internally assessing any potential impact on the timing of our revenue recognition moving forward. Moving on to cost of sales in the first quarter of 2025, cost of sales totaled $18 million. This amount includes the cost of all commercial product delivered to the authorized treatment centers, including product delivered but not yet administered to patients. It's worth noting here that the sales value of these products is not yet recorded as product revenue in the P&L, but is reflected as deferred revenue on the balance sheet. Additionally, cost of sales includes any canceled orders in the period, patient access program product, and third-party royalties for certain technology licenses. Our research and development expenses decreased to $26.7 million for the three months ending March 31, 2025, compared to $30.7 million during the same period in 2024.

This change was primarily driven by commercial manufacturing-related employee and infrastructure costs, shifting from R&D to cost of sales and inventory following the approval of AUCATZYL and the associated accounting change that occurs at that time. This was partially offset by an increase in Obe-cel clinical trial activity and supply costs. Our selling, general, and administrative expenses increased to $29.5 million for the three months ended March 31, 2025, compared to $18.2 million in the same period in 2024. This increase was primarily due to salaries and other employee-related costs driven by increased headcount supporting U.S. commercialization activities associated with the launch of AUCATZYL. Our loss from operations for the three months ended March 31, 2025, was $65.2 million as compared to $38.8 million for the same period in 2024.

Net loss was $70.2 million for the three months ending March 31, 2025, compared to $52.7 million for the same period in 2024. Our cash, cash equivalents, and marketable securities at the end of Q1 2025 totaled $516.6 million as compared to $588 million at the end of December 2024. The decrease was primarily driven by net cash used in operating and investing activities, but also impacted by a delayed cash receipt of approximately $20 million in R&D tax credit that we expect from the U.K. HMRC. We continue to believe that with our current cash, cash equivalents, and marketable securities, we are well capitalized to drive the launch and commercialization of AUCATZYL in relapsed/refractory B-cell ALL and to obtain data in the lupus nephritis pivotal trial and MS phase I trials that Christian just talked about.

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

Christian Itin (CEO)

Thanks, Rob. Moving to slide 18. First off, in terms of the activities that we're expecting on the HMONC side, first off, we're excited, obviously, to update you on the longer-term follow-up from the FELIX study, which we expect to be able to do towards the end of the second quarter. We also expect that for the second half of the year, the notification from the EU regarding the market authorization application decision for the patients with relapsed/refractory adult ALL. We are planning towards the end of the year to present initial data from our pediatric study, PY1. When we look on the autoimmune side, we're planning for an update and data presentation for the CARLYSLE study in the fourth quarter.

We also expect to be reporting first patient dosed for the phase II lupus nephritis study, as well as having first patient dosed for the progressive MS phase I study towards the second half, actually towards the end of 2025. Finally, we're also moving forward with our program AutoAid, the dual-targeting CD19 BCMA approach, where we're evaluating that product in light chain amyloidosis in a phase I trial together with our collaborators at University College London. With that, I get to slide number 19, which is a summary from what we covered today. First of all, we believe that Autolus is well positioned for value creation, and we're building on a very strong foundation with Obe-cel. Obviously, we talked about the AUCATZYL launch in the United States. We had a strong first quarter.

We're building towards 60 centers, which give us the vast majority of patients access in the U.S. We obviously have established infrastructure for manufacturing. You remember the nucleus that's shown on the picture on the right-hand side, as well as obviously our commercial infrastructure, which is executing very well. We're starting to move into other jurisdictions with the MHRA authorization that we have received, and we're preparing for launch in the U.K. We're also gearing up for the activities in Europe with an expected decision from the EU in the second half of the year.

When we look at Obe-cel in terms of the opportunity beyond the initial opportunity in adult ALL, we obviously are building on the unique mode of action with a fast off-rate CD19 CAR-T, which gives us obviously a very high level of activity as well as a very well-manageable and tolerable profile for the product. Remember, the product was the first one, the CD19 CAR-T product that was approved without a REMS obligation. As indicated, we're having long-term follow-up data coming relatively shortly, and then data sets from the PY1 study and the CARLYSLE study towards the end of the year. All of this is built on a strong cash position of $516 million at the end of Q1, and I think sets us up very well from an execution perspective.

I think we've reached the end of the presentation, and we'd like to open up for questions.

Operator (participant)

Thank you. As a reminder to ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile the Q&A roster. Your first question comes from the line of James Shin from Deutsche Bank.

James Shin (Director of Biopharma Equity Research)

Hey, good morning, guys. Thank you for taking my question. I have a couple. Firstly, I guess for the April 1 coding update for AUCATZYL and the $18 million of COGS, and there's associated deferred revenues. Can you say whether the $9 million of revenue recognition for 1Q25 was triggered upon initial dosing, or is revenue recognized only upon patients receiving their full split dose? Going forward, it sounds like there may be some impact from the April 1 coding update. I have follow-ups.

Christian Itin (CEO)

All right, James. First of all, thanks for joining. Before we actually, Rob will walk you through the red rick answer in detail, I think just to get started, all patients that we had in Q1 received both doses, so it did not matter from a practical perspective, but I'll have Rob talk you through the red rick approach that we're taking. Rob.

Rob Dolski (CFO)

Yeah, hi, James. Thanks for the question. Let's start maybe with the current guidance and approach that we had discussed previously was, in fact, kind of that full recognition with confirmation on the first administration. That is what's reflected in Q1. As Christian said, we've confirmed that all of those patients, in fact, have received both the first and second dose as well. We were really following the policy that we've kind of discussed before. As noted, CMS published, and this is effective April 1 on the OPPS side, so this is for outpatients, a split coding and billing into two administrations. As I noted, we're working with the centers to adjust things on their end. We are evaluating the implications on our own revenue recognition policy as well.

Unfortunately, we don't have a final answer here, but I think it might be important maybe to put a few data points here and put it into some perspective. When we look at the experience that we have, in particular in the FELIX study, with respect to patients that completed or didn't complete both administrations, 5.5% of the patients did not receive the second dose. That's before considering any inpatient outpatient setting in the commercial space. From a total number perspective, it's a smaller portion of the overall patient population. These also tended to be much more severe patients with median tumor burden at 80% or more. The next piece is to think about the timing corridor that we have here.

If you look at the timing corridor between first and second administration currently, in the U.S.PI, it is 10 days ±2 days. From a commercial experience year to date, it is early, but that average has been about 9 days. Given the number of patients that we are talking about here and certainly the timing between the first and second administration, while we are still evaluating the overall implications for kind of technical revenue recognition, we do not expect it to have a material impact on the full year sales. Hopefully that helps on that question.

James Shin (Director of Biopharma Equity Research)

Thank you, Rob. Secondly, I guess, Christian, I have one on tariffs. I totally understand CAR-T products were spared from the initial retaliatory tariffs via Annex II. I guess coincidentally, I believe 10:00 A.M. today, President Trump is expected to announce a tariff agreement with the U.K. We're also expecting pharma-specific tariffs maybe over the next week or so. I guess long-winded way of asking, any early color on Autolus' potential exposure to U.K. or pharma-specific tariffs?

Christian Itin (CEO)

First of all, I understand the question. I think we're operating on about as much information as you do. I think the bottom line is maybe a few points here. First of all, there's a good reason why blood products tend to be exempt from tariffs because literally it's a single individual patient's cells that you're actually going to tariff. So you're going to tariff a U.S. and American's patient's cells before that patient can receive the therapy. That in of itself is an interesting thing to think about. There's a good reason why typically those were excluded. We don't know where the administration comes out on this. We also don't know yet, obviously, what the deal is between the U.K. and the U.S. at this point in time.

What is worthwhile to remember, though, is that when you think about tariffs, what is relevant in terms of the value that's sort of used to actually calculate the tariff from is not the price of a product as the product is sold, but it is the customs value, which is typically linked to the manufacturing of the product itself and the manufacturing-related costs of the product. It has a few additional finer points to it, but basically that's kind of at the core of it. It is a limited amount. It's not the full amount that then actually would be the basis for the calculation of the tariff. We need to see where we end up. Obviously, there was initially talk of a 10% tariff corridor for the U.K. We're all no more in probably about 45 minutes from now.

James Shin (Director of Biopharma Equity Research)

Great. Finally, and this is quite fresh, any chance Dr. Vinay Prasad taking the reins at CBER may result in the FDA revisiting any already agreed-upon pivotal trial design, such as the phase II you have for lupus?

Christian Itin (CEO)

I mean, we don't know at this point in time kind of what's the impact on the FDA going forward of any of the fragile denominations and the changes that are in the works. Obviously, we had a full conversation with the FDA on the trial design, the patient population, the description of the patients, etc. This was not a sort of a loose sort of conversation. It's a very detailed conversation on the approach. That said, we don't know where there's going to be what changes might look like. I think in general, there's been sort of two kind of areas that I think we've seen. One is, I think, a clear statement from the administration to look to accelerate access and also to accelerate the approval processes. That's one dimension that we're hearing.

There are obviously various degrees and views on the individual measures and approaches that could be considered here. I think we'll need to wait and see. I don't think there's a good answer for this at this point in time. Obviously, from where we are at this point with regards to the product, I think the trial will give us a very clear answer on the utility of the product in this setting. These are very severe patients. These are not patients where you have actually other options that give them a good outlook. I think medical need will matter and will continue to matter going forward in those assessments.

James Shin (Director of Biopharma Equity Research)

Thank you so much, Christian. I'll yield to the floor. Thank you.

Christian Itin (CEO)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Matthew Phipps from William Blair.

Matthew Phipps (Group Head of Biotechnology)

Thanks for taking my questions. Congrats on a nice start out of the gate. Rob, could you give us any more breakdown of the COGS in the quarter as far as just maybe how much came from canceled orders or patient access programs? Going back to some of the data from the R&D day, I know not a ton of patients, but it does look like you're seeing greater persistence of Obe-cel than what others have seen in the autoimmune disease settings. I know that it's kind of consistent with maybe what you guys have obviously shown in adult ALL and other hematology indications. Do you think that's a differentiator in autoimmune disease or does it not matter in terms of driving that kind of reset?

Christian Itin (CEO)

Okay. Rob, do you want to go first?

Rob Dolski (CFO)

Yeah, I'll start on the cost of goods. Thanks for your question, Matt. Maybe stepping back a little bit just to clarify, in terms of overall high level, what's going through cost of sales obviously contains the cost of the product manufactured, also includes things like third-party royalty license and some other period expenses, distribution fees, for example, kind of flow through there, as well as period costs associated with idle capacity. We talked a little bit about that at the end of last year even. When we dig into the product cost itself in kind of the components there, the two majority and most significant drivers here is really the cost of the product that was sold and recorded as sales in the period, as well as what I refer to those orders that were delivered to the treatment center, but not yet booked as product sales.

They're showing up in deferred revenue on the balance sheet. That's going to make up the majority of the product costs related to patients. There are typical smaller pieces that are going to be associated with patient assistance programs or canceled or kind of scrap batches, for lack of a better word. We expect those to be there, consistent with kind of practice and what you would kind of put through cost of sales, but certainly not driving the vast majority of those costs. I don't think we'll get into specifics kind of patient by patient on that front. I think the other piece here too is just, again, to note the cost associated with all that is, in particular for the first quarter here, at a relatively inefficient level of utilization on the plant.

There are idle charges, as we even saw come through in the fourth quarter of last year when we kind of had to make that change on the accounting front following the approval of basically idle

James Shin (Director of Biopharma Equity Research)

capacity charges that are coming through on a period expense basis and cost of sales.

Rob Dolski (CFO)

I'll leave it there.

James Shin (Director of Biopharma Equity Research)

I guess we're able to disclose the deferred revenues because it's not broken out in the consolidated balance sheet on the income statement. I assume it'll come in the 10Q.

Rob Dolski (CFO)

Yes, that will be broken out. The amount was about $4.7 million, Matt. It'll be broken out on the.

Matthew Phipps (Group Head of Biotechnology)

Thanks, Rob.

Rob Dolski (CFO)

Yep.

Christian Itin (CEO)

All right. The second question was related to the profile that we've seen for Obe-cel in the CARLYSLE study. One of the key things that we're really pleased with from the study is the consistency on how the product did perform. There are two key parameters to sort of understand performance. One is the expansion that you do get with the product, which gives you a lot of information about the quality of the product and the consistency of the product. What we're seeing is a very consistent expansion and then also very consistent persistence, as Matt was pointing out, somewhat longer than I think what we have seen with some of the other CAR-T products. I think what is obviously very encouraging is that what we're seeing is very consistent with what our experience is for Obe-cel across all indications that we actually evaluated to date.

It is that consistency in the quality, higher levels of expansion than what others have been reporting, obviously in acute leukemia, exceptional persistence, but also here somewhat longer persistence that was observed with other programs. We think that is very important because obviously you need, it is a cell-based therapy in order to get a deep cut into the compartment. The cells actually have to stick around. They have to move around. They have to make contact. They have to eliminate physically each one of the B cells that are in that body. That is a job that takes a certain amount of time. You do need to have a certain amount of minimum persistence to actually complete the job. We believe the fact that we have a somewhat higher or longer persistence than what others have observed, I think is a good thing.

I think should give us a very deep, very consistent depletion of the B-cell compartment in these patients.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Asthika Sarith Goonewardene from Truist.

Karina Rabayeva (VP of Biotech Equity Research)

Hi guys. It's Karina from Asthika. Congrats on the great quarter. I have a question on the 20% quarter-over-quarter drop for Tecartus, which was reported by Gilead in 1Q. Can you quantify how many patients treated would have been eligible for Tecartus? Yeah.

Christian Itin (CEO)

Hi, Karina. Thanks for joining. Interesting question. Obviously, one that we cannot really have a good resolution for because when you think about the labels that go into the Tecartus sales, they include both the mantle cell lymphoma label as well as the ALL label. We do know that Breyanzi, obviously, has started to expand its use in mantle cell lymphoma, which is sort of actually quite a bit ahead of our own launch. It is very difficult to actually try to triangulate, I think, what might be a contribution on the ALL side versus the mantle cell side. I think it is reasonable to assume that the majority is probably coming from the mantle cell side that sort of contributed to the somewhat reduced level of sales that were reported.

Karina Rabayeva (VP of Biotech Equity Research)

Can you also comment on the median turnaround time so far and the manufacturing success rate?

Christian Itin (CEO)

Yeah. The turnaround time is very much in line with what we were targeting. Our target is to get to 16 days. Remember, our experience in the FELIX trial was around 21 days. We are tracking very nicely towards the 16. That is, I think, kind of what we were hoping for, kind of where we are. In terms of the success rate, that is something that I think is premature to talk about. Overall, I would say the fact that we have out of the gate, the way that we actually got out of the gate indicates that we have been firing on all cylinders with good quality products.

Karina Rabayeva (VP of Biotech Equity Research)

Okay. Thank you.

Christian Itin (CEO)

Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Gil Blum from Needham & Company.

Gil Blum (Senior Analyst)

Good morning, everyone. Allow me to add my congratulations for a strong first quarter. Maybe addressing the same topic in a slightly different manner, is it fair to assume that every single patient that was treated in the first quarter would have otherwise received a competing CAR-T, or do you think you're starting to see some levels of expanding on the potential patient pool?

Christian Itin (CEO)

It is a really good question, Gil, and thanks for joining. It feels like, particularly as you quite often when you launch a product, and depending on the experience of a center, if there is a center that does not have yet experience with your product, you typically get patients that are in pretty poor condition. There is a sense that there are probably patients in there that might not have been considered for a CAR-T therapy before. I think sort of on the worst end of the spectrum, we have certainly patients in there that were certainly part of that really difficult to treat category. Whether we are starting to see sort of patients on the upside, with low tumor burden or early in relapse, I think that is too early to call.

I think we're clearly having patients that probably would have not been considered for CAR-T therapy before in some of the centers that we had seen in Q1.

Gil Blum (Senior Analyst)

Okay. As it relates to your update that's upcoming for autoimmune disease, just remind us what the data is going to probably include here, number of patients, follow-up, and the increased dose as well.

Christian Itin (CEO)

Right. Obviously, at this point, we have six patients that are somewhere between one and eight months of follow-up. All of these patients, these six, will all be, I think, well beyond the five- to six-month range, all of those. I think that gives us a good understanding of the behavior of the product from a longer term and the recovery for the B-cell compartment in those patients. In addition, what we're currently doing is we're dosing three patients at a 100 million cell dose, so that's twice what we have used in the first six. We're planning to also treat three adolescent patients at the 50 million cell dose level. Hopefully, we have those patients included in the update by the end of the year.

Gil Blum (Senior Analyst)

Great. Thanks for taking our questions.

Christian Itin (CEO)

Thanks a lot, Gil.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Yanan Zhu from Wells Fargo.

Yanan Zhu (Senior Equity Research Analyst)

Great. Thanks for taking our question and congrats on the very strong launch of Tecartus. Sorry, AUCATZYL. I was wondering, can you remind us of the Tecartus current revenue? What percentage, by your estimate, could be coming from B-cell ALL? It feels as though that just in the first quarter of launch, you have achieved very significant market share in B-cell ALL, given that Gilead's current sales is only roughly $80 million, and at peak, it was only $100 million. Yeah, give us a sense of the proportion of B-cell ALL in there, the proportion of that that's B-cell ALL. Thanks.

Christian Itin (CEO)

Thanks, Yanan. Very difficult question to answer, actually, because it's never been properly broken out. With the dynamic we're seeing with Breyanzi moving in, it's kind of hard to tell where that split is between the indications. When we look back, probably a year, two years ago, it might have been somewhere between 20%-40% being ALL patients. It's a hard thing to actually estimate because there's not a real clear dataset that you could actually delineate it from. The majority of what we would have expected to be mantle cell patients, a minority to be ALL, but how that has moved now with the change of Breyanzi moving into the MCL side, very difficult to estimate. I don't think we can give you a good answer there.

Yanan Zhu (Senior Equity Research Analyst)

Got it. And then secondarily, given the information that $4.7 million is in a deferred revenue line, would be products that's delivered but not yet infused. Two clarifying questions. One, this $4.7 million will represent the cost and not the actual price that you will receive from the product, whether that's the correct impression. Two, typically, what is the time between reception of the product and then infusion? I imagine it's a pretty short turnaround. If that's the case, then this $4.7 million could already be translating to like $9 million. We're only early in the quarter. Just want to get a sense of those two questions. Thanks.

Christian Itin (CEO)

I'll answer the second question and then hand over to Rob for the first question. The time of dosing is quite variable in the commercial setting for these patients. There is, with a lot of these patients, quite a lot of variability in terms of the state, the condition that they're in. Some of these patients may have picked up an infection, and that was actually something you have to kind of go through. You have to treat. You have to get them back to a reasonable state before you dose. Other patients are in good shape, can be brought in, and can be dosed quickly. It is actually quite a wide range that we're seeing. I don't think we have yet a good feel of where kind of the sort of the bulk of the patients will be landing on.

It is variable based on sort of the underlying comorbidities of the patients and, frankly, the issues that they're encountering as a consequence of the advanced stage of their disease. It is variable, and it's more variable than what we have seen during the clinical trial. There is more variability there. I think as we sort of get more experience and probably have a few more quarters in, I think we start to probably have a better sense of kind of what the actual numerical ranges will be. At this point, clearly, it's somewhat larger than what we have observed in the FELIX study. With that, handing over to Rob for the first part of the question.

Rob Dolski (CFO)

Hi, Yanan. Yeah, let me clarify on the deferred revenue piece. The deferred revenue represents the sales value. It's not the cost of the product. The way to think about product that was delivered to the treatment centers that got administered, reflected in the P&L on the $9 million, the value of that product or the revenue value of that product, not yet recognized in the P&L, sits as deferred revenue. That's kind of the total piece to think about that. Now, the piece that's a little bit maybe counterintuitive is when you do start to think about the cost for that, all of the cost for both the deferred revenue amount and patients, as well as the P&L recognized amount, do sit in our Q1 cost of sales line.

The reason for that largely is once we deliver product to the center, we no longer really can hold that as inventory and it becomes kind of an immediate expense item once it is delivered. As Christian alluded to, there is some time and some variability around that. You also, for example, could have patients where we have delivered the product reflected in deferred revenue and, unfortunately, a patient passes away. That would actually still wind up having been accounted for in your cost of sales, but would be deferred revenue that you may not realize.

Yanan Zhu (Senior Equity Research Analyst)

Got it. This is all super helpful. Thank you for the explanation. Yeah. If I may, one last question, perhaps for Christian. Can you give us a sense in terms of your positioning in the competitive landscape for lupus nephritis with your planned dosing of first patient by year 2025? Where are you vis-à-vis other companies who also are interested or are already taking on lupus nephritis for AUCATZYL CAR-T? Thank you.

Christian Itin (CEO)

Thanks, Yanan. I think we're very well positioned. The combination, obviously, is of having a very compact study design, as well as obviously being well set up in many of the clinical centers in the U.S. We're obviously gearing up in the U.K. as well from a commercial perspective. I think what should set us up well is our ability to deliver the trial. We believe we're very well positioned with that. Many of the trials that have been in the lupus space more generally that have been sort of considered or are underway are randomized controlled studies with substantially larger patient numbers. Those types of studies have been notoriously challenging to recruit. If you look at the Benlysta, Cefnello, etc., experience in the space, the patient numbers are one to two patients per center per year that we're seeing.

Conducting these larger studies will take or can take a good amount of time.

Yanan Zhu (Senior Equity Research Analyst)

Very helpful. Thanks and congrats again on quarter.

Christian Itin (CEO)

Thanks a lot. Appreciate it.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Kelly Shi from Jefferies.

Evan Osheroff (Managing Director of Software Investment Banking)

Hi. This is Evan from Jefferies on behalf of Kelly. Thank you for taking my question and congratulations on a very strong Q1. I have a question on the lupus phase II trial. I'm wondering how many patients you expected to enroll in the phase II? More importantly, probably what's your expected patient follow-up to balance your strategy to fast to market? In the meantime, it can show the cell therapies potential in induced durable drug-free remission. Thank you.

Christian Itin (CEO)

Thanks for joining. We had indicated that at the R&D day that we're expecting the study to be at around 30 patients. It's a relatively compact study, as indicated. In terms of follow-up, when you look at other studies in the space, you do see that you have meaningful follow-up in these patients with a year follow-up. Obviously, you can obviously follow these patients further, but you get a pretty good sense within a year from a value perspective. The actual readout that we expect to be able to go for could be shorter than that, given the time and dynamic that we've seen in terms of the response development in these patients. I think one year is a reasonable period of time to consider.

Evan Osheroff (Managing Director of Software Investment Banking)

Thank you.

Operator (participant)

Thank you. This concludes today's Q&A session. I would now like to turn the conference back over to Christian Itin, CEO, for closing remarks.

Christian Itin (CEO)

Thanks a lot. Thanks, everybody, for joining. Fantastic to sort of give you the update. I know you're very keen to hear how we're doing for the first quarter. It was a great quarter. We're looking forward to keeping you updated as we go through the rest of the year. We're very excited about where we are, and we're going to push hard. Thank you very much.

Operator (participant)

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