All right, good morning, everyone. Welcome to the Fireside Chat format here on the Stifel Therapy Day. I'm Stephen Willey, one of the senior biotech analysts here at Stifel, and glad to have with us from Carisma Therapeutics, the CEO, Steven Kelly. Steve, thanks for joining us this morning. My pleasure. Not sure if there's any opening statements you want to make, just in terms of who Carisma is and what it is Carisma is trying to do. Yeah, sure. So Carisma is really the pioneer in engineered macrophages. We've been in business now for 6-7 years and built a tremendous platform on how to engineer macrophages and direct them to therapeutic applications. So we've started off in oncology. We have two programs in oncology, an ex vivo program that is a CAR-M that targets HER2, an in vivo program that we've partnered with Moderna, and we're targeting GPC3 with that program. And thirdly, on a non-oncology space, we're looking at fibrosis as another application. So three different distinct product opportunities and pretty meaningful value inflection points as we look forward over the next 12-18 months. Okay, perfect. Those are all things that I want to dig into here. So maybe we can try to tackle those in order, starting with the HER2 program. So you started off evaluating CT-0508, which is a first-gen CAR-M acrophage in patients with refractory HER2 solid tumors, both as a single agent in combination with Pembro. You've since deprioritized CT-0508. You're now actively evaluating CT-0525, which is this first-gen CAR-M onocyte in a very similar patient population, very similar trial design. I guess before we get into any of the real specifics, can you just speak broadly about why you think a macrophage monocyte represents a better vehicle for engineered cell therapy and solid tumor applications relative to T and NK cells? And maybe speak to some of the inherent biological advantages that you're specifically looking to leverage here. Yeah. So no one can question CAR-T is fantastic in heme malignancies. I think that they're exquisite killers. They're easy to access. Heme malignancies as they're bloodborne in most respects. And so I think that that is well understood. Not the same for solid tumors for a number of reasons. Solid tumors are difficult to access physically. So your cells have to extravasate, leave circulation, and become tissue resident. There's a physical barrier to access. There is a sort of immunosuppressive environment if the cells should get in there, so blunting their activity. And then there's, unlike with heme malignancies, antigen heterogeneity is a real problem. So our approach is really designed to overcome all three of those. So a CAR-M approach will leverage the natural biology of a monocyte or macrophage and then direct it to therapeutic application. So the challenges, tumor access, macrophages and monocytes are actively recruited into a tumor. So they're definitely going to get into the tumor. They're the most common immune cell in the tumor overall. They also are involved in cytokine production. So tissue homeostasis is a central function of the macrophages. And so what we've done is we've actually polarized the cells towards an M1 phenotype, a pro-inflammatory phenotype. And so what they do is they remodel the tumor microenvironment. We produce cytokines that make it a warm environment. And they also produce chemokines that recruit in other effector cells. And so we see this influx of T cells that have had a hard time getting in. And then lastly, they're professional antigen presenting cells. And so as they're eating through the tumor, killing through phagocytosis, they're also going to process and present various secondary antigens unique to that patient out to the T cells that recruited in, a concept known as epitope spread, and drive a true broad adaptive immune response to that patient's tumor. So they're quite distinct in terms of mechanism. The outcome is that we eventually get T cells that are designed to kill the cells that we've identified and targeted through that antigen presentation approach. So it is different. And we've learned a lot in our clinical program so far that supports each of those mechanisms. Okay. Well, maybe we can jump to some of those learnings, specifically with the CT-0508 experience. And I guess as you think about some of the data that's been generated there to date, what are some of the positives that you were able to take away from that development effort? And what are some of the deficiencies that you identified which you think can be better addressed with CT-0525? And I guess secondary to that question, I know that you also disclosed a new ctDNA analysis from the CT-0508 trial this morning. And maybe you can also, in answering that question, kind of highlight those key takeaways from the positive perspective and then maybe any read-through that this might have for the CT-0525 program. Yeah, absolutely. Yeah. So CT-0508 was the first in-man engineered macrophage. And so what we wanted to do is, one, demonstrate feasibility of making cells, and two, safety of administering those cells. We have a whole host of translational analysis and clinical assessments that go towards mechanism of action and clinical benefit. So going through each of them specifically, one, feasible. Yes, we can make these cells. They're M1 polarized. They express CAR at a high level. They are highly pure and they're viable. It's an 8-day manufacturing process, and we're able to make about 1.5 billion cells, a little bit more than that. So feasibility check. Next is safety. We were able to demonstrate that we can administer an engineered macrophage with limited CRS. So I guess to start off, we had no lymphodepletion, so it's safe going in. We saw limited CRS, grade 2, grade 1. We saw no ICANS and no neurotoxicity. We saw no major systemic organ toxicity and no on-target, off-tumor toxicity. So a very clean safety profile that also suggests that we can dose escalate because it is so clean. Then mechanistically, some of the things we saw are, one, the ability to traffic to the tumor. So we showed the presence of CT-0508 in the tumor. Now, it was relatively low numbers of cells. And so that's something I'll circle back to with CT-0525 in just a moment. Secondly, we were able to, through serial biopsies, show that they probably stuck around in half the patients. We were able to show the presence four weeks later. So there is a small problem with persistence as well. Again, I'll come back to that in a moment. Some of the other things that we saw were remodeling the tumor microenvironment. So just as I suggested, a number of cytokines that are pro-inflammatory cytokines are produced. There is recruitment and activation of CD4 and CD8 positive T cells. We saw evidence of antigen presentation. That's through an increase in T cell clonality. So we're able to show that we are presenting antigen. Now, we don't know specifically what tumor antigens that are being or mutations are being presented, but we are showing that we can drive a T cell response unique to that patient's tumor. Some of the challenges we saw, again, low cell numbers getting into tumor, relatively low persistence. And so remember, these patients are probably 6 lines plus up to 13 lines of prior therapy. And so they do have a pretty beat-up immune system. We did go from the monotherapy into a combination therapy where we added pembrolizumab. We have demonstrated anecdotally that we've seen the ability to have activity even in the presence of exhaustion markers, and we've shown increased T cell clonality. Then, as you suggested, or you brought up, we do have some additional data. We continue to analyze our data set. One of the things we batched recently is looking at ctDNA. Now, ctDNA is a marker. It's often used in so at resection, you show that if you can knock down ctDNA or circulating tumor DNA, and that's evidence that you've removed the tumor around surgery. Then you can track it as it goes up. We showed that after administration of our cells, that we saw a dramatic reduction in ctDNA across a majority of patients that were treated, especially when we're looking at HER2 3+ patients. So we know we have an anti-tumor effect occurring. And then we saw a rebound that started coming back up after about four weeks or so. So the thing that we know from that data is that it is active, but it looks like the durability is short-lived. So all that assembled together and directed towards the rationale for CT-0525 is that CT-0525 is a CAR-M onocyte. Monocytes are the cell type that run up in the lineage that is typically found in circulation. And those cells will leave the circulation and become tissue resident and differentiate into macrophages. So in our hands, what we've done is we made a CAR- Monocyte. And those CAR-M onocytes will circulate. They'll extravasate, and the tumor will turn into a CAR-M acrophage. The benefits that we've seen are, one, an increased cell number. We can make 5x the cells that we can on the macrophage approach. They are able to get into the tumor more efficiently. It's along a chemokine gradient. They have greater levels of a receptor called CCR2. Tumors produce CCL2, and so they're pulling them in. So we're seeing about a 40-fold improvement in getting into the tumor. And third, we're looking at we're seeing increased persistence in our animal models. So a 10x increase in persistence. So if you think about what our challenges were, they were cell number and decreased persistence. Monocytes will directly overcome that. So we're in a study right now with CT-0525 that is looking at one dose escalation, and then we'll look at what the right dosing regimen is and whether or not we should include pembrolizumab or a T cell checkpoint inhibitor. Okay. So I guess in comparing the two, I would imagine the cell number yield advantage with CT-0525 is really just a function of being able to extract more of these circulating monocytes from the apheresis product as it pertains to CT-0525. And you may have mentioned it with respect to receptor expression, but what do you think is responsible for the improved tumor infiltration that you're seeing with this product, as well as persistence? And how translatable do you think these preclinical models in which you're seeing these step-fold improvements will be to patients? Sure. Yeah. So absolutely. The cell number is a function of the manufacturing process. So we're able to isolate CD14+ monocytes. With the macrophage approach, we differentiate those cells into macrophages and then transduce. With the monocyte approach, we directly transduce right upon isolation. So our cell number goes up dramatically, and we don't take any losses during that differentiation process, which are significant. So we're able to get a higher number of cells immediately. And it's a one-day process. We cryopreserve, send back to the site for administration. So that cell number is a function of overcoming the cell loss, most likely through the differentiation process. Now, the ability to get into the tumor is, there's a couple of thoughts behind it. One, these cells are small spherical cells as compared to macrophages, which are large sticky cells. And so they're able to travel through peripheral blood much more efficiently. That's what they're designed to do. The other thing that we would highlight is there's a different chemokine profile. And so tumors are producing CCL2, and monocytes have a greater level of that receptor, CCR2. And so they're being pulled in more efficiently. So they're more cells, they traffic better, and they're recruited more efficiently. So that goes to why we see a much higher level of accumulation in tumor. With respect to persistence, that was a little bit of a surprising outcome. So our thought process are a couple fold. One, we know that cells that are outside the body for a longer period of time, and this is not just the macrophages or monocytes. People have seen it in T cells. The longer they're outside the body, the less robust they are in terms of longevity. We think that it's a one day versus a week. That makes a difference. The other thing we've speculated about is there are likely shear forces in circulation. So if a macrophage is in there, it's sticking to the cell walls, and it's really not designed. They're not spherical cells. It's not designed to be in circulation. So we think that they're beaten up a little bit in the circulation under IV, whereas the monocytes are not. So we've seen an increase in the half-life from five to seven days with macrophages up to 45 days with a monocyte approach. So those are important findings preclinically. We believe that they directly translate into humans as well. The cell number, obviously, but we think that we're expecting to see a higher cell number accumulating in tumor. Just biologically makes a ton of sense, and we're expecting to see persistence significantly longer as well. Okay. Maybe a bit of a naive question, but how do you get CT-0525 to specifically differentiate into an M1 pro-inflammatory state? And how do they remain durably in that state? Is this just a feat of engineering, or is this just leveraging natural biology? Yeah. So it's a combination of that. So one, we transduce with the same vector we use with the macrophages and Ad5F35 chimeric adenovirus. And we use that because it can very efficiently transduce macrophages and monocytes. And we get high CAR expression, 90% or so. So we're able to do that. It just turns out that also the macrophages see this a little bit like an infection. And so they start to polarize towards an M1 phenotype. And it turns out that that locks in. And when CAR is engaged, it further supports the M1 polarization. So there's a feedback loop within the macrophages or monocytes that is initiated through an Ad5F35 vector. Now, we're fortunate. We do have ways that we could polarize and maintain that polarization, but the vector itself accomplishes that. Okay. And I know with CT-0508, you looked at both fractionated and bolus dosing. I think you're looking at just bolus dosing, at least in the initial part of the CT-0525 trial. Does the improvement in persistence that you get with CT-0525 make the interrogation of a dosing schedule somewhat obsolete here? I don't think so. So maybe go back to why we did that fractionated dosing. It was really a safety check, first-in-man study. And what we did is we did an intrapatient dose escalation up to the maximum cells we could produce. We started with 500 million cells. And then if that was clean two days later, up to 1.5 billion cells. And if that was clean, up to 3 billion cells. And then the final dose just turned out on day one, we were able to go up to 5 billion cells. So it was simply a safety check as we went through. And there wasn't anything specific about doing that aside from a first-in-man study wanting to show that it's safe. Now, with the monocytes, we are going similarly through a dose escalation, 3 billion cells on day one. And then the second cohort, once that proves safe, will move to up to 10 billion cells on day one. Now, all that said, I think that we do need to interrogate what is the best way to administer the product. So if it is a Cmax effect, then 10 billion cells on day one makes a ton of sense. Alternatively, and we've seen this in obviously a ton of different oncology-directed therapies and even some CAR-T approaches and allo etc., if you want to maintain that therapeutic pressure over time, we actually have the flexibility with 10 billion cells to do repeat dosing or cycles of therapy. So as an example, if we have 10 billion cells to start with, we could do five cycles of 2 billion cells separated every three weeks or so, again, maintaining that pressure all the way through almost four months. We do believe that after the dose escalation, there is some element of what is the ideal regimen. Our goal is to get to the ideal phase two regimen by mid-next year. Okay. And then I know that you will be providing some update on this preliminary CT-0525 trial before the end of the year, correct? Yeah. So our goal is to, by the end of the year, have data on the first two cohorts. So again, 3 billion cells monotherapy, 10 billion cells monotherapy. And our objective is to have an immediate transition at that point into our cohort 3, which again, we're still working through exactly how we're going to design it. And of course, we'll have to submit an IND amendment and protocol amendments through IRB, etc. But it's likely to be a function of either dosing frequency and/or the addition of pembrolizumab. Okay. So we know that you've looked at pembrolizumab via these sub-studies with CT-0508. Can you talk a little bit about the role that you think T cell exhaustion might be playing here? And I think when I think about some of the better-known HER2-positive solid tumors, whether it's breast or gastric, those solid tumors specifically in the relapse refractory setting haven't really proven to be overly sensitive to PD-1 inhibition. So do you think that pembro alone, in addition to CT-0525, can sufficiently impact the TME in the way that you want it to? Yeah. No, absolutely. So anti-PD-1s, pembrolizumab, and others are really not used Enhertu positive malignancies in a relapse refractory setting. If you look at sort of the data and there are a number of studies, KEYNOTE study, I've got the exact number of the KEYNOTE study, the outcomes are pretty low. And so as a single agent, pembrolizumab doesn't have a great outcome and is very low levels of usage. There are some subsets like high microsatellite instability in gastric cancer where it is used. But generally speaking, anti-PD-1s are not used. Now, we believe that as we're looking at these patients, they're heavily pretreated. We've seen high levels of exhaustion, T cell markers of exhaustion. And the use of a CAR-M actually further exacerbates that. And so we are seeing a greater T cell exhaustion. Now, what we've seen preclinically is the addition of an anti-PD-1 to a CAR-M has synergistic outcomes. So even in models where they're CAR-M resistant and PD-1 resistant, you still are able to see activity. And what we think is that CAR-M gets into tumors, they're able to recruit and activate T cells. Anti-PD-1 can disexhaust T cells, but they can't get in. So the combination is where we can recruit disexhausted T cells with PD-1. So there is synergy. And we've seen that in the combination data with CT-0508+ pembro. And there's a case study where we have a patient that had high levels of exhaustion markers. These are the same patients that you would say that these are progressors in the monotherapy. And what we saw is stable disease even out of those patients. So we have a hint of activity that anti-PD-1 can add to positive clinical benefit in combination with a CAR-M approach. And so we believe that there's a role for anti-PD-1, especially in a later stage patient population. Just remains to be seen whether our goal is to move further upstream in terms of the treatment paradigm, not stay at sixth-line and later move up to post-anti-HER2, for example. And will their T cell, will their immune system be robust enough to have single agent activity, or will they benefit from having an additional checkpoint inhibitor? Okay. So we have followed a lot of the companies that are looking to develop novel versions of HER2-directed therapy. I know investors are always asking us where each of these modalities will gain longer-term traction in what's obviously a pretty crowded landscape. So let me ask you the same question. In what tumor types and in what lines of therapy do you think that CT-0525 could ultimately prove to be commercially competitive? Yeah. When we started this 5, 6 years ago, I don't think the landscape was quite as crowded as it is today. For a long time, it was Herceptin, right? I think they launched in what, 1998? That was central to the approach. Then there have been subsequent antibodies, TKIs, and now the ADCs, T-DM1 first, and now Enhertu. There is a lot, and I think that people have looked at this. Despite all of those advances, this is an incurable disease. HER2+ malignancies, in some ways, it's a palliative outcome. You need to have something post the different approaches. Breast cancer, of course, gastric cancer, a number of other cancers along the GI tract, salivary, esophageal. We're looking at cholangiocarcinoma. There's some low-level HER2 expression in colon. There's also some other sites, ovarian, etc. There is a large patient population that can benefit with anti-HER2-directed therapy. We know nothing is curative at this point. Even though there are other additional ADCs that people are working on, additional antibodies, etc., we have a distinct modality that seems to have an effect even post-HER2, for example, now. Our goal is to move it up, so demonstrate clinical benefit, define the exact regimen that we're going to use, and try to move further upstream in the course of therapy. I think it would be unusual at this stage of the game to have a tumor-agnostic approach. So we do have to look at what is the right tumor type. And the ones that stand out are breast and gastric. Those are probably the largest patient populations and have pretty much the structured approach. And so our early thoughts are that we would come in as Enhertu becomes a second or third line that we would be immediately following them until we can demonstrate a sufficient set of data, and maybe we can move further afield. But right now, we're thinking at third and fourth line in probably breast or gastric. Okay. So maybe switching gears to the Moderna collaboration. You guys just announced the first development candidate, the first development candidate. This is a GPC3 targeting CAR-M. I think thematically kind of interesting on the back of the GPC3 CAR-T data that was just presented with some enthusiasm at ASCO. Why do you think that this is a good first test case for this collaboration? Yeah. No, it's a good question. So we're really excited about the collaboration with Moderna, something we put in place about two and a half years ago. We're looking at up to 12 antigen targets, and we are able to leverage our ability to engineer myeloid cells and their ability to target and direct the genetic material. They do that through a lipid nanoparticle encapsulating mRNA that expresses our CAR-M. And so the concept made a ton of sense, and we put the collaboration in place. I think we're both really excited. And I think as we demonstrate a proof of concept first with HER2, that's not part of the collaboration, but we did it as we have a model system to show it. We showed very good tumor control and the ability to repeat dose and maintain those positive outcomes. So we're very excited. GPC3 is a great target. Hepatocellular carcinoma is the primary tumor type. 75% of HCC expresses GPC3. We're excited about it. One, we know that macrophages will traffic through liver. That makes a ton of sense as our first indication to go after a liver cancer. That's really important. I think that the excitement around a CAR-T targeting GPC3 is really good. I think that it's, I guess, it's supportive evidence that GPC3 is a good target for cell therapy. Now, certainly, there's a T cell approach, but mechanistically, we're quite distinct. It's a validated target for our cell therapy approach, but we can still leverage all the things that I had talked about, the ability to get into tumor, the ability to remodel the TME, and the ability to present antigen and drive that adaptive immune response. All of that can occur with our first in vivo CAR-M targeting GPC3. Yeah. Yeah, no, I agree. I think the liver serving as a depot for macrophages is also very interesting here. Maybe you can just speak to the collaboration itself, I guess, how it's structured from just a responsibility and economic perspective, and then just timelines regarding an IND submission for the GPC3 candidate and just other development candidate nominations. Yeah, absolutely. So yeah, so 2.5 years ago, we put the collaboration in place. It was an upfront $80 million in cash and equity. And then we have over a 5-year period, up to 12 antigen targets that can be nominated. And on the back end of this deal is about $3 billion in milestone payments as both development and commercial milestones, and then a good royalty. So that's the sort of the business aspect. In terms of the operational aspect, we have so far, well, we have our one development candidate targeting GPC3. We have four additional antigen targets that have been nominated. And in terms of roles and responsibilities, we're responsible for the design and optimization of those candidates. Moderna is responsible for the manufacturing and clinical development. So when we achieved the development candidate nomination for GPC3, that's really the handoff. So we've done all the optimization. We hand it off to them. They do some final talks work. They do manufacturing, GMP manufacturing, protocol development, and IND filing, and then we'll move forward. In terms of the timelines, I think we've met our goals in terms of timelines. It does hand off to them. And I think that at the appropriate time, we'll share exactly when the IND filing would be. I think it's premature to say exactly, but think of it as typical drug development timelines. Then what happens is that we sort of pivot back to the next antigen target and so start working on that. So just think of it like a bubble moving through the work that Carisma does. All that work is funded through the collaboration. Moderna funds about 25 FTEs in the company. As we move it through, we get milestone payment for development candidate. They start small and they start to escalate through subsequent typical milestones, clinical, etc., and then approval and commercial. Okay. And then maybe just last question here. You mentioned it at the outset, but can you talk about the potential role that you see for engineered macrophages and liver fibrosis, why you think this makes biological sense, and what the preclinical data you've generated to date tells you thus far? Yeah. So this is pretty exciting. So we've been very much an oncology-focused company. I think as we were looking at everything we've learned from a biology and engineering perspective on myeloid cells, how else can we direct the cells? And so one early idea is fibrosis. And the early thoughts were, well, macrophages can eat anything you tell them to eat. And so should we be looking at resolving fibrosis that way? So that was like a couple of years ago. Since we've refined our approach, and we've also seen some data out of Edinburgh where an investigator had administered 1 billion unengineered macrophages and had a positive outcome in liver fibrosis. We looked at that data. We looked at how we could engineer the cells, and we know that macrophages will traffic to liver. And so what we did first is we looked at, okay, what can we put into a macrophage to enhance its activity? So macrophages themselves have healing properties, but if we add an antifibrotic and an anti-inflammatory, can we have a better outcome? And so we put in an antifibrotic called relaxin. It's a hormone that is actually produced in childbirth, and it relaxes the uterine tissue so they can go through a childbirth. But it's a very, very short half-life drug. But we can put it in a macrophage and have it produce it on a regular basis. We also put in IL-10 as an anti-inflammatory. And the preclinical data that you mentioned, there's two things that we looked at. One is a model of liver fibrosis using a toxin, a liver toxin, carbon tetrachloride, where over a six-week period, we deliver this toxin, and then we had a single dose of engineered macrophages. What we saw is a complete resolution within two weeks when we looked at it, a complete resolution from a single dose of macrophages that brought the liver back to healthy. So they're indistinguishable from the pre-toxin and the post-toxin. That was really exciting. We took it one step further and looked at a high-fat diet plus toxin model, which is more representative of MASH. Here, we used the same product. It was six months. We had some pretty robust mice at the end of the six months or so. Then we administered our cells. And again, we were able to show a resolution of fibrosis, about a 44% improvement relative to an untreated mouse. So directionally, we're really excited that we can use a macrophage to repopulate the liver of defective macrophages, produce antifibrotic and anti-inflammatory, and have a clinical benefit. And so right now, what we're working on is what is the ideal construct for that macrophage. We have about a dozen different things we're looking at. And our goal is to, by Q1 next year, have a development candidate. We'll also be looking at the modality. And we think in this case, autologous, while it would work, we think that it also lends itself because it's not a CAR-based approach. An allo approach would make a lot of sense here. And so we're evaluating that. And in vivo as well, we'll look at that. All right. Well, I know we're a few minutes over, but Steven, I really appreciate the conversation. Best of luck here for the second half of the year, and I'm sure we'll be in touch. All right. Thank you for having us today.