Cellectis S.A. (CLLS) Q1 2024 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reveals strong financial improvement, with a significant turnaround from a loss to a profit, which is a positive indicator. The collaboration with AstraZeneca and the potential for new programs provide further optimism. The Q&A section highlights ongoing developments and market expansion potential, especially in the EU. Although management avoided some specifics, the overall sentiment remains positive due to the financial recovery and strategic partnerships.

Key Financial Performance

Cash and Cash Equivalents $143 million as of March 31, 2024, down from $156 million as of December 31, 2023, a decrease of $13 million due to cash payments to suppliers, wages, bonuses, social expenses, lease debt, and loan repayments.

Consolidated Net Income $5.6 million or $0.08 income per share for Q1 2024, compared to a $30.1 million loss or $0.58 loss per share for Q1 2023, a difference of $38.2 million primarily driven by increased revenues, decreased stock-based compensation, a significant change from net financial loss to gain, and reduced operating expenses.

Consolidated Adjusted Net Income $6.5 million or $0.09 income per share for Q1 2024, compared to a net loss of $28.1 million or $0.55 loss per share for Q1 2023, reflecting a significant turnaround in financial performance.

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Operating Highlights

New Product Development: Cellectis continues to focus its development efforts on the BALLI-01, AMELI-01, and NatHaLi-01 studies, which are core clinical trials.

Clinical Trial Updates: The BALLI-01 trial showed a higher preliminary response rate of 67% at dose Level 2 with UCART22-P2 compared to 50% with UCART22-P1. The NatHaLi-01 study reported all patients responding at day 28, with one partial and two complete metabolic responses. The AMELI-01 study is currently enrolling patients after lymphodepletion.

Market Expansion: Cellectis announced a strategic collaboration and investment agreement with AstraZeneca, which includes an initial investment of $105 million and an additional $140 million.

Market Positioning: AstraZeneca now owns approximately 44% of Cellectis' share capital and 30% of voting rights, enhancing Cellectis' market positioning.

Operational Efficiency: Cellectis' cash runway is expected to fund operations into 2026, allowing for continued focus on clinical trials.

Financial Performance: Cellectis reported a consolidated net income of $5.6 million for Q1 2024, a significant improvement from a $30.1 million loss in Q1 2023.

Strategic Shift: Cellectis is focusing on advancing its core clinical trials while building the next generation of genomic medicine in partnership with AstraZeneca.

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Risk or Challenges

Financial Risks: Cellectis reported a decrease in cash and cash equivalents from $156 million to $143 million, primarily due to cash payments to suppliers and operational expenses. This raises concerns about cash flow management and operational sustainability.

Regulatory Risks: The company is subject to regulatory scrutiny regarding its clinical trials and product development, which could impact timelines and costs.

Competitive Pressures: Cellectis faces significant competition in the gene therapy and cell therapy markets, particularly from established pharmaceutical companies and emerging biotech firms.

Supply Chain Challenges: The reliance on external suppliers for research and development could pose risks related to supply chain disruptions, affecting the manufacturing and delivery of clinical products.

Economic Factors: Economic fluctuations and changes in healthcare policies may impact funding, investment, and overall market conditions for biotech companies.

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Guidance & Outlook

Strategic Collaboration with AstraZeneca: Cellectis announced a strategic collaboration and investment agreement with AstraZeneca, which includes an initial investment of $105 million and an additional equity investment of $140 million, bringing AstraZeneca's total ownership to approximately 44% of Cellectis.

Focus on Clinical Trials: Cellectis will concentrate efforts on advancing its core clinical trials: BALLI-01, NatHaLi-01, and AMELI-01, while also developing next-generation genomic medicine.

Cash Runway: Following AstraZeneca's additional investment, Cellectis expects its cash runway to fund operations into 2026.

Financial Outlook: Cellectis believes its cash and cash equivalents will be sufficient to fund operations into 2026, ensuring at least 12 months of operational funding following the publication of interim financial statements.

Net Income: Cellectis reported a consolidated net income of $5.6 million for Q1 2024, compared to a loss of $30.1 million in Q1 2023.

Adjusted Net Income: The consolidated adjusted net income for Q1 2024 was $6.5 million, compared to a net loss of $28.1 million in Q1 2023.

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Shareholder Return Plan

Equity Investment by AstraZeneca: AstraZeneca made an initial investment of $105 million, composed of an $80 million equity investment for 16 million ordinary shares at $5 per share and a $25 million upfront payment under the joint research collaboration agreement.

Additional Equity Investment by AstraZeneca: Cellectis announced the closing of an additional equity investment of $140 million by AstraZeneca, which included subscriptions for 10 million Class A convertible preferred shares and 18 million Class B convertible preferred shares at $5 per share.

Share Ownership by AstraZeneca: Following the additional investment, AstraZeneca owns approximately 44% of the share capital of Cellectis and 30% of the voting rights.

Cash Runway: Cellectis expects its cash runway to fund operations into 2026, supported by the recent investments.

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Key Q&A

Q:Is there any strategic change regarding the strategy from a Cellectis perspective with AstraZeneca on board?

A:The strategy on our wholly owned asset has not changed. We're still pushing 22, 20x22 and 123 very hard. The big change is we are going to be doing novel programs with AstraZeneca across a wide range of indications in the cell and gene therapy space.

Q:How much access will AstraZeneca have to your manufacturing capability in New Jersey and Paris?

A:Under the collaboration, AstraZeneca can leverage our manufacturing capabilities for up to 10 cell and gene therapy programs.

Q:What is the status of the enrollment for both BALLI-01 and NatHaLi-01?

A:We expect to have data disclosure at the end of the year for both studies.

Q:How many sites are active for UCART20x22 and will you be able to identify RP2D by year-end?

A:We have sites open in the U.S. and in the EU, currently enrolling. We hope to declare RP2D by the end of this year.

Q:Can you provide any further granularity on the cadence of readouts across the program this year?

A:We will complete escalation for 22 and 20x22 and discuss data results later this year.

Q:What are the expectations for the year-end updates from BALLI-01 and NatHaLi-01 as it relates to durability?

A:The bars for success are well set, particularly for relapsed/refractory ALL and NHL.

Q:Do you see a scenario where the dose expansion studies could convert to registrational studies?

A:Yes, these could potentially be pivotal expansions, but will require discussions with regulatory authorities.

Q:What do you think the target population would be for a registrational trial?

A:For 22, we're talking about relapsed/refractory ALL, including patients who have received prior CD19-directed CAR T cell therapy.

Q:What dose level has been planned for the studies?

A:For 22, we were at 1 million cells per kilo at dose Level 2, and for 20x22, we were at 50 million cells flat dose.

Q:Any color on the safety data from the patients beyond ASH update for these two studies?

A:So far, both products were very safe and well tolerated with no DLTs related to the cells.

Q:Can you elaborate on the potential of 20x22 in the EU market?

A:There is a need for this in the EU as there is less competition compared to the U.S.

Q:Review of Unclear Management Responses

A:Management avoided giving a direct answer regarding the timeline for the first program announcement with AstraZeneca, stating only that discussions are ongoing and updates will be provided when it makes sense.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

CLLS Transcript

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The earnings call summary presents a mixed picture. Financials show a cash decrease, but the cash runway is secure until 2027. Product development updates are promising, with regulatory alignment and no barriers to Phase II trials. However, uncertainties remain, such as the Servier arbitration decision and lack of milestone payment details. The Q&A session did not reveal major negative sentiments but highlighted cautious optimism from management. The overall sentiment is neutral, as positive product development is offset by financial and legal uncertainties.

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The earnings call reveals a strong financial position with significant investments from AstraZeneca and stable cash reserves. The Q&A section highlights confidence in upcoming data releases, suggesting positive future developments. The collaboration with AstraZeneca is fully reimbursed, reducing cash burn. Despite competitive pressures and supply chain challenges, the overall sentiment leans positive due to strategic partnerships and financial strength.

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The earnings call presents mixed signals. The AstraZeneca collaboration and strong cash position are positive indicators, but supply chain challenges and intense competition in cell and gene therapy pose risks. The Q&A reveals management's cautious approach to prioritizing projects and lack of clarity on future datasets. Additionally, deprioritizing UCART123 raises concerns. Despite these issues, the partnership with AstraZeneca provides a financial buffer, mitigating some negative impacts. Overall, the sentiment is neutral as positives balance out the negatives.

Cellectis S.A. (CLLS) Q1 2024 Earnings Call Transcript

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CLLS Report

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