Welcome, everyone, to Jefferies London Healthcare conference 2025. My name is Roger Song, one of the senior analysts covering CBT in the U.S. It's my pleasure to have the fireside chat with our company, Cabaletta Bio, Steven, Steve. Nice to see you. Great to have you. Thanks for having us. Awesome. We have a lot to cover today, and maybe we just get right into it. I think Cabaletta Bio is obviously the pioneer for the cell therapy in autoimmune disease. We just came out of the ACR 2025. Can you Can you give us some high-level overview of how the field is right now, given you're a leader for the auto CAR-T in autoimmune disease, as you see? Yeah. Sure. The ACR meeting and all of the clinical data that's come out across the industry in autoimmune directed therapies of all modalities, I think, has solidified the view that autologous CAR-T, whether it's from Bristol Myers Squibb, Novartis, Kyverna, ourselves, the data that's come out in October makes it clear that this is a therapeutic category that will be a drug. There will be multiple drugs going after different indications. I think the efficacy looked pretty profound across the industry. I think we have validated what Professor Schett first presented with more side effects than he showed across all of the companies. I think there are differential outcomes with regard to safety in each of the drugs with autologous CAR-T products. With that gold standard now set, the question is, I think two things evolve from that. One is, what else is out there that's going to eat our lunch? Because this is great, but it's not so great if some short period of time after we launch an in vivo or a bispecific product comes along and takes the day. And, with regard to all of the other modalities, I guess it's easiest to summarize, as a whole, there's just no data that suggests they are comparable in the outcomes that are seen. Off of all medicines, most, if not all, in some cases of the patients treated are achieving unprecedented outcomes. And so with bispecifics, I think even the companies that are developing bispecifics are now saying the quiet part out loud. That is to say, if we get 20% of our patients to a sleep-die response, that would be a home run for us, right? These are their words, not ours. We've always believed that would be the case because the bispecifics cannot get as deep a B cell reset as the autologous CAR-T products. The allogeneics, I think the fact that, frankly, most of them are not able to enroll tells you everything the market thinks of the allogeneic opportunity, and their data reinforces the reasons for that belief. The in vivos, I would say anything that has no data is perfect until it has data. Although the appearance of the ability to match the gold standard or to even come close on safety, efficacy, and durability for an off-the-shelf therapeutic of the sort that the in vivos are, whether it's LNPs or fully integrating approaches, the safety data alone is a challenge. We think there are major differences in non-human primates and normal humans versus patients. The only patient data that we've seen prominently discovered or, or displayed, is from EsoBiotec, where three out of four of their patients had a grade 3 CRS, something that no company in the industry is seeing in the autologous space. Ask yourself, why is that? Is it unique to them, or is there something about an in vivo approach that is transfecting 80%-100% of the cells, whereas Schett and others like us are transfecting anywhere from 30%-60% of the T cells, where we are using preconditioning, reducing the B cell burden in the autologous category so far. The in vivos claim that it's possible to do without preconditioning. We know that it's possible for us to do it too, but is it as safe? You're killing 100% of the B cells as opposed to maybe 30% of the B cells that are left after preconditioning. There's a lot to uncover with data when it comes. In the meantime, the autologous CAR-T products are moving ahead. We expect to file our first BLA in 2027, based on an aligned registrational protocol with 14 patients in myositis. In our most recent, in light of recent events, we went to a very deep disclosure in our most recent filings, our press release and our Q, I would urge you to look at, where FDA actually reviewed not just our conceptual framework for our pivotal, but our actual protocol. In August of this year, today's FDA reviewed that protocol and had some relatively modest comments on it, none of which affected any of the public statements around alignment with FDA that we have previously and we continue to make without any change. We feel very good about our path. By the end of this year, that is to say within the next six weeks, we expect to be able to align and announce alignment, perhaps as late as JP Morgan. We haven't made the final determination when we'll announce it, but by the end of the year, we will have alignment with FDA on both scleroderma and lupus, lupus nephritis. To the extent that we are able to achieve a single-arm, small N clinical study, we think that reads through directly to what today's FDA would say about myositis if we went to them with myositis de novo. The idea that we are being more efficient in our phase III programs, I think, is validated and can be validated by the scleroderma alignment that we may announce before the end of this year. Excellent. I think that this is a great overview, in terms of the advanced therapy, or novel therapy in the autoimmune disease, autoimmune space. Maybe, also, we can zero in a little bit more on the rese-cel, the Cabaletta, your lead program. How do you think rese-cel can compete in the autologous CAR-T space? What will be the winning factor? I think you mentioned a couple across modality, but just with, we, I think we all agree probably autologous CAR-T is setting the seating for the efficacy. Now, obviously, we still need to balance in the safety and the convenience, cost, everything. Just within the autologous space, you have a couple, you know, just like you mentioned, Bristol Myers Squibb, Novartis, and then a couple others. How do you think Cabaletta can stand out as the leader, continue the leader? Yeah. First, I don't think we have to be the leader to be highly valuable as a company. Second, without any compromise to the statement, we will be the leader. I was gonna say, I think we're the leader. I wanna be clear that being the leader is icing on the cake. If you're number two in a market that has 90,000-80,000 patients with myositis, 90,000 patients with scleroderma, and the total number of CAR-T administrations in cancer ever collectively over the years is on the order of those numbers. We're talking about huge market opportunities where the unmet need, I think, is very poorly understood by initially us, frankly, as well as now investors. Part of what we aim to do here and over the coming weeks at additional investor conferences is provide background on myositis, scleroderma, and lupus nephritis to a lesser extent where there is more familiarity. In myositis and in scleroderma, we are clearly, in our view, in the lead by substantial periods of time. I do not want to put a number on it, but I do not think it is months. I think it is far greater. It is because we made a choice in 2022 to go after myositis as the lead indication. We believed, and it turns out to have been true, that most everybody is going to go after lupus first because that is what investors know best. It turns out that was a terrible decision for most companies. They have been unable to enroll at pace. Our own experience with six different indications in the clinic, rapidly enrolling. We're doing, you know, an average history now shows of one or more per week enrolled patients in our program, which is as good as anybody. With about 75 or more patients, 80 patients enrolled to date, the one program that is enrolling four times slower than every other program is lupus. It's not because we don't have enough sites or the right sites. It's not because people don't like our drug versus others. There's just too many people. There's too many players. There are 35 INDs cleared for lupus. The way to win in an autoimmune population is launch where the unmet need is profound. IVIG at a cost of a quarter to a half a million a year is the only approved therapy. Argenx is on track to launch, Vyvgart by a little before the time that we launch. Their cost at the dose they're administering in their phase III is $440,000 per year. Their treatment efficacy on Vyvgart plus the background therapies is really a fraction of our data, a fraction of our efficacy. For that price, you can have Vyvgart annually. For a different price, you can have a one-time therapy that in the vast majority of patients could be curable therapy, functionally curable therapy off of all medicines. Our value proposition coming in, our timeline to launch in myositis, we think are profoundly valuable. A second indication to launch we'll announce, as I said, by JP Morgan. We think that will have a similar profile of first to market and profoundly valuable treatment responses and value to payers, patients, and providers. I think that's how you create a beachhead. Finally, the program at Cabaletta, in spite of the challenges of the valuation on our company, we have not diminished our breadth of indications because we think it is a strategically valuable asset to be the one product that the infusion specialist can reach for in just about every one of those autoimmune patients who's gonna show up. In a P&T committee discussion, the breadth of indication is going to become a key differentiator among players in the field. Our being first to market gets us our foot in the door. The breadth of indications keeps us there. The safety data that we have analyzed, and I would urge those who are interested in potentially investing or those who have invested, look at our safety database in the first 32 patients versus each of the three other major autologous CAR-T competitors. We like what we see a lot. At some point, I think the market will begin to appreciate the safety profile where efficacy is the same for everybody, but safety is going to matter, and we think we have an advantage there. Mind if I jump in on this? Because I have a couple of things to say about being, being first in market. Let me just kind of play off some of the points Steven was making. I think, before I came here, I was the Carvykti commercial development lead over at Legend, and I worked on the program over at Abecma, which is now the Abecma program. A couple of things that are compelling to me about this program, there are a number of them, but in terms of efficacy, the efficacy that we're seeing to date and the efficacy that we're projecting to be seeing as part of our pivotal, it kind of stands on its own with over 80% response rates. We expect to see well over a year in terms of durability data when we launch key metrics that our research is basically falling on in terms of more importantly what the market thinks, both providers as well as payers. This is exactly what they need to see. You've got the first mover advantage, the fact that you, and then you have a great efficacy profile to boot. One of the things I find interesting in this autoimmune space, however, is yes, you do see CRS, but it's very, very transient. It's very, very moderate. It's not the traditional CRS that I've seen with other more oncology, the oncology type programs that I was working on. It's an important differentiator because the patient population that we treat is much healthier, much more mobile. We wanna make sure that, like we did with my old program, we start making these CAR-T assets much more portable. To date, with the exception of my old program, which is now running about 50% of all administrations as outpatient, I don't know if you guys are familiar with that. We are going to basically be following some of that same playbook, but with a much easier patient population to do it with. The reason why that is uber important, and I think it's one of the key reasons why, quite frankly, auto CAR-Ts did very poorly in the market prior to Carvykti, is because so many of those patients, the overwhelming majority of these patients, whether it be CD19 or BCMA CAR-T drugs, they were all, these patients were all directly admitted in the hospital immediately upon administration. That was catastrophic for many hospitals, mostly because the patient population that they were treating were over the age of 65. They were medical, Medicare patients. About seven to eight out of 10 patients were falling under the inpatient DRG. We do not have that issue to deal with. These are patients that are largely commercially insured. Roughly 65%-70% of them will be commercially insured. Hospitals will no longer have to be doing all these gyrations to get patients into the clinic where they could get out of the DRG. The fact that they're there now doing it makes it much easier for us. I want to hit that with an exclamation point because it was one of the rate limiters for auto CAR-T drugs actually moving forward. Anyways, I'd just like to stop on that. We could continue it, but I just wanna make sure that everyone in the room understood that. Yeah. No, I think that's helpful. Maybe just to drill down a little bit in terms of the myositis. Yes, you are absolutely in the lead position, if not the entire kind of auto CAR-T space. Myositis. Given the alignment with the FDA on the pivotal design, how confident you are from the, you can translate the phase I data so far, very impressive data, to the pivotal. How should we think about different subpopulation and particular DM versus the ASyS? Because I know IMNM, you will kind of do a little bit more work on that. Maybe just tell us a little bit more about the strategy behind that as well. Yeah. Yeah. Let me start off by saying, dermatomyositis is 70% of the 80,000 patients. The remaining patients are ASyS and necrotizing or IMNM myositis. The IMNM myositis we have previously announced, we are not pushing forward to phase III or pivotal initially because we want more data to see how durable the treatment is. If we can parse out the patients who are responders versus non-responders before starting a pivotal program, we think it's important to know where we're going before we start to go there. Instead, we've redirected those resources to a no preconditioning lupus program, which we've announced previously based on our initial pemphigus data that was very promising, even at a low dose of rese-cel. We've reallocated towards accelerating our second product launch. We'll announce what that is. That's IMNM. The ASyS subtype is part of the DM ASyS cohort that we are advancing. In that cohort, we would expect the vast majority of patients are going to be DM patients just based on the population. We know the DM phase I/ II data, and the ACIS phase I/ II data, 100% of the patients who made it through, which is to be clear, four out of the four who made it through the 16-week primary endpoint hit that endpoint. We feel very good at the same sites, with the same drug, at the same dose, with the same investigators, and frankly, the same protocol, except you must have muscle weakness that is more than just minimal. You have to be a little more severe than you were in the phase I/II, in order that we can have some real improvement and hit our endpoint. That's the only difference. We think that it's sort of an open book test. Is the phase III or the pivotal protocol gonna be positive? We think it's pretty clear how this reads directly through to the phase III program, and that's why we've designed it the way we've designed it. Got it. Okay. Yeah, I, you know, I think, very good that you separate this cohort in the ACR, this ACIS phase I/II updates, focusing on the pivotal population. And then we know what's what you're gonna see. I do wanna point out the ACIS, ACIS population. You do see the durability, right? So, how should we think about that durability? I understand the regulatory endpoint is 16 weeks, which is great, right? How do you think about the commercial and then the, you know, the clinical adoption on that durability? What's the expectation for the durability? Durability is critical. At filing, we will have at least one year of follow-up in the vast majority of our pivotal program, our pivotal patients. That will be in our label. We fully expect we'll have the one-year durability. That said, if the ASyS population shows us that they are not as durable as the DM population, we can and we may select to file only the DM indication, right? 'Cause we wanna be a compelling opportunity. We must be a compelling opportunity for physicians, patients, and payers. The only way to do that is to demonstrate durable, reliable safety, efficacy, and really a compelling outcome off of all medicines. DM gives us that very reliably. ASyS so far variably across the industry, but we wanted to include that ASyS cohort on the belief that we're gonna see more, not fewer durable outcomes. If it's not sufficient, we don't have to necessarily ask for the indication on both. Got it. Do we have a specific end number? Because overall, I think DM and ASyS cohort is a 14 patient. You're aligned with the FDA. If you file only for DM, how many patients? If we look historically at how we've enrolled phase I/II, you would expect something on the order of 10 patients with DM and something on the order of four patients with ASyS. If you have that, we have previously disclosed in our queue and no time to cover here, but the background rate of those who would stop their medicines with myositis and suddenly get a major TIS response or a moderate TIS response, that doesn't occur. People don't stop their medicines when they have myositis. If they did, the registry might show something like less than 1% of the time they actually get to a curative type of an outcome, off of their medicines. Even on medicines, if you took that as the background rate and you assumed it was a quarter of all patients on medicines, given a placebo, would somehow get moderate TIS response, figure it's a quarter of the patients, so 10%, something in that range, we would need somewhere between five out of the 14 and eight out of the 14 to be positive in order to have a drug if those background rates were anywhere from 10%-25%. Even if you assume the, you know, extremely unlikely outcome, which is stop your medicines, you'll be fine, and assume it occurs that way in 25% of all myositis patients, we still have a profoundly positive study with only eight positive patients in the trial. More details in the queue if you're interested. Yeah. This is very critical. I think I totally get this efficacy requirement or efficacy bar for you to be positive, superior to the background therapy. Only need to fight to a patient, you know, with the, you know, basically the range of the expectation for the background rates. Also you can file, you can include the BLA for all the safety database you're already seeing. That's right. That's supporting the overall, the first BLA is that the. You know, the safety is a hundred patients are required, 35 with myositis. That will not be the rate limiting step for us to file. It is the 14 patients in the cohort. We've already enrolled close to 80 patients. I I don't know what the number is. It changes all the time, but I don't think that's gonna be the rate limiting. I do think where investors are focused from our one-on-one meetings is, this is all great. Your data's fabulous. Maybe you're in the lead, but honestly, nobody's ever made money in autologous CAR-T. It's not a business. There's another thing coming. It's in vivo. It's whatever is still on the minds of investors. Help me understand why it is that you think you have a business. I think that is a place where Steve can be really helpful in bringing us clarity. Exactly. What's the, what's the pricing strategy? What's the COGS and how are you gonna make this a viable business? Yeah. I lived through this thing too, so I think I could speak to it. Yeah. And I, quite frankly, agree with a lot of the sentiment out there. I think if you're launching auto CAR-T drugs for cancer, it's really difficult. You're launching into a patient population with T cells that are oftentimes not very viable. They've been banged up a lot by obviously prior chemotherapy, which leads to a lot of different, unfortunately negative things, especially high out of spec rates. There's a long list of things. I think most importantly, if you look at the cost, the cost of goods that we are going to be manufacturing at is in order of magnitude gonna be less than what a lot of the companies out there that are doing it in-house, mostly because there's a lot of capacity in market today through the CDMOs. That's gonna reduce cost quite a bit for us. Also, lentiviral vector costs have significantly declined in the market today. There's just inherent cost reductions that we're gonna benefit from. The other thing that I wanna make a point on is, and it does relate back to outpatient, is around, so that speaks a little bit in terms of improvement, in terms of cost reduction. The other piece of this is the challenge that many CAR- T products had when you're launching into an inpatient setting, and that's where the majority of your use is going there. You're a bit capped on what you can do in terms of potential pricing and price increases. Back to the DRG issue. Even though I might have data, compelling pharmacoeconomic data to talk about all this downstream cost reduction, therefore I might be able to then maybe take price up a little bit based upon a follow-on indication. The challenge that presented though is that the insurance reimbursement rates for hospitals for traditional CAR- T products is fixed. Even though you start penalizing the providers out there by taking price up, by being in the outpatient setting, you get out of that. It's an important component. Everybody is winning in that situation. And so again, improvement of the top line for sure in terms of more pricing flexibility. 'Cause I know there was, I think, some questions about how do we price differently with full, you know, for follow-on indications, how does that work? It's difficult to do when you're in the hospital only. When you work outside of the confines of the hospital in the outpatient clinics, it gives you a lot more flexibility to take advantage, and take value just from that data. For people who aren't as familiar. Yeah, yeah. Right. Inpatient, it's a DRG, $200,000 and some odd thousand dollars for your $500,000 CAR-T classically today. And you may get an NTAP payment. And if you're one of those 14 blessed hospitals, you get an additional payment for a couple few years, which is now being extinguished. That's it. How do you afford the drug, let alone the care of the patient? Inpatient, let's flip that. What about outpatient? Why did Steve launch Carvykti and stay with it for six whatever years as a company until December of this past year, generating what is today Carvykti outpatient use more than half of all patients? Why did they push for outpatient? Number one, throughput. The beds are available. It does not interfere with oncology treated patients who are needing inpatient therapy. It became a unique pathway. Number two, the reimbursement is not DRG bound. The reimbursement, and I think honestly people say, what are investors missing? I do not think they are missing anything. I think they are rating the company properly based on what they understand. We are hoping that people will begin to look more carefully at reimbursement and pricing. If you look at pricing and reimbursement outpatient, it is ASP plus 6%. If you are a hospital and we are charging you not one year of Vyvgart therapy, but two years for myositis, right? I think that goes for $440,000 per year to keep you on all your drugs and add Vyvgart and give you some modest benefit relative to what we would offer as a one-time therapy. Pick two years as an estimate. That would be $880,000. If that is your price point + 6%, as a hospital now, you can not only afford to buy the drug, but you are getting another 6% to take care of the patient. All of a sudden, this is a viable model that is really interesting, not only for the infusion specialists who have to figure out where the next bed goes. Do I lose money on this or do I make money on that is one of the things they'll have to consider. A viable infusion center requires that it be financially viable while it treats all the patients. I think we have a compelling opportunity, and frankly, anybody who treats outpatient has a compelling opportunity based on reimbursement and pricing opportunities in autologous CAR-T that frankly doesn't exist anywhere else and anywhere historically in autologous CAR-T. Let me make just one last point, guys, on this. Pricing was, I'm sorry, reimbursement was obviously a consideration. We were hearing from the market very loud and clear that there were challenges and they were reflecting on the challenges they were experienced with the CD19s when they launched. The thing, the premier challenge though right now, it's bed space and resources in these hospitals. You can't keep putting patients in these hospitals. You see it happening with the clinical trials. You see it happening commercially. There's simply not enough place to put these folks. I always judge myself in terms of all of these launches about my, it's not that my beating a competitor is, are you treating all the eligible patients that should get this drug? I think if you, and it's the reason why I think a lot of you and your peers have looked at these CAR-T drugs, you know what they missed. It's a fair point. I think the fact is they've missed, and I've lived through some of this, is because of all of these different dynamics. We were not treating that pure eligible patient population that was in all of our forecast for a number of different reasons. Like I said, with a product like this, the key thing that I keep hearing from the hospitals, we need products actually to improve their throughput. If the intent is to treat all the folks who deserve these drugs, we need to think of creative ways to do it outside of the hospital setting. If you can't, and that falls back on the toxicity profile, if your toxicity profile can't do it, it's gonna be dead on arrival. The interesting thing I find with this program, not only is the efficacy there, but it is CAR-T light when it comes down to toxicity. It is the first product that I've seen that really opens up real outpatient use in a very mobile patient population. I just want to make sure we talk about that because I think it's a very important point. Are we getting the hook? Yeah. Awesome. Time flies. We have to end this now, but I think we leave with the audience, say, rese-cel can be an outpatient CAR-T first leader for the myositis with a very viable business model. Thank you. I couldn't summarize any better. Thanks for being. Thank you. Thank you. Thank you, everyone. Thank you.