Cellectis - An update (Pivoting to in vivo)

Biotech is hard.

Cellectis pretty much dropped 50%+ following its update/pivot.

Remember it had two programs - Lasme-cel in pivotal trial and Eti-cel in phase 1 (about to go into pivotal in 2027).

It dropped the bomb a few weeks ago and decided to put these two programs on hold and pivot to become an in-vivo gene editing company (rather than an allogeneic CART co).

Why ? Its two CART are designed for blood cancers (such as B-ALL and NHL). The problem is other new drugs (non-CART) like bi-specifics and ADCs are catching up. As its drugs are designed for later line of treatment, as other drugs get better, its TAM is shrinking....

In addition, it struggled to recruit for its pivotal trial as more patients turned to other alternatives.

Given its financial runway, Cellectis bit the bullet and decided to pivot to the "new" field of in vivo gene editing.

What is in vivo gene editing ? See Pic 2. The googlygook for the product/drug is: " mRNA coding for a gene editor in a lipid nanoparticle". It is delivered via intravenous injection. In the indications Cellectis is targeting, the nanoparticles will travel to the liver and "gene edit" the liver cells in the body to deliver to outcomes it is after.

A simple way to think about the pivot is Cellectis is jumping from a "red" ocean (CART vs. all the new therapy options in a crowded field of liquid tumors) to a "less red" ocean. Whether it is a blue ocean remains to be seen.

Two things worth noting about its pivot. First, the two indications it is going after are Hypertriglyceridemia and Hypercholesterolemia. Second, it is extending its cash runway to 2H 2028.

Frankly, what it is looking to do is almost magick. In one case (Hypertriglyceridemia), it is using a base editor to change a letter/base in DNA. In another case (Hypercholesterolemia), it is performing a "gene surgery" to turn off the PCSK9 gene.

Also of note is these two indications are BIG market opportunities (1-2M patients each in US/EU).

Also important to note is the time line..... Cellectis has learnt its lesson (FINALLY). It is looking to generate data as fast as possible. It is initiating early preliminary trials (IIT) in China in 2027. First data expected in 2H 27 and 1H 28. Then it will roll into the traditional trials (1b/2) in USA/EU after the first batch of data from China. Another important point is Cellectis expects to find effective dosing level fairly quickly i.e. its China data will show efficacy data as well.

As far as I can tell, there are 2/3 other companies (including Crispr and Mammoth) targeting these 2 indications with gene editing technology already..Crispr is targeting a different gene target though... However, Cellectis thinks potentially it will be best in class. Guess we will find out.

What to make of the pivot ?

1. To be frank, over the years, most folks don't think much of Cellectis. Guess my variant perception is I am backing the rocket/gene scientists within Cellectis to eventually change the world.

2. Management made the tough call to scrap its two traditional CART programs and pivot. Crazy for sure. BUT Lasme-cel for me is always a niche market anyway.... So it won't be a monster with Lasme-cel alone.... Yet, it made the call to pivot. I wonder what did really it see in its R&D work to make that big call ?

3. Another key is how Cellectis has managed to extend its cash runway to 2H 28. Let's say if Lasme-cel goes well, it will need to raise capital in 2H 27... Stock will come under pressure then. By extending its runway to 2H 28, we have a chance to see if Cema-cel from Allogene will succeed in its phase 3 trial. If Cema-cel is eventually approved, Cellectis will receive over $300M as its milestone payment.

4. Cellectis now staking its claim in the new world of in vivo gene editing. It is looking to serve two very large indications. Peak sales for each drug will be multi-bn. In terms of stock market positioning, it is staking its claim as a next generation of gene editing company... If successful, the stock has a chance to re-rate ?

What to do with the stock ?

1. MV is €92M. Cash of $131M (runway to 2H 28)..... Market has written it off.

2. Kind of fair because we really have no idea if Cellectis will be successful with its pivot. Plus, even if it succeeds, it will be years before its new gene therapy will be approved.

3. What I think people are really missing about Cellectis ? Most folks see it as another early stage biotech.... BUT my take is we are paying nothing for a gene editing platform company. If/when Allogene succeeds with Cema-cel, Cellectis will earn milestones (over $300M) + say 10-12% sales royalty. And then it has similar agreement in place with AstraZ. Apparently, it is working on the next generation CAR-T with AstraZ... Plus another 3 targets (e.g. autoimmune, rare diseases)...... My case is I am comfortable with its science so it is better for Cellectis to leave the clinical work + commerecialisation to its partners....... The punch line is these are not small indications => these partnerships can be worth billions if successful. We are clearly not paying for them.

In summary => Still think my original thesis is "alive"..... One day Cellectis will change the world... It is just taking decades and many false starts/wrong turns to its eventual destination. Clearly, there are RISKS..... BUT upside is there if it is successful in staking its claim in this new world of in vivo gene editing. See Pic 1. It has a treasure trove of technologies at its disposal. It is a platform, not a point drug/tiny biotech.

PS... Not investment advice. Do your own research. Clearly, there are plenty of risks.