Celyad Oncology S.A.

Thank you, everyone, for joining us today as we report the financial results of the first half year of 2023, and then provide an operational update. Joining me from the management team, in addition to myself and to our VP, Finance and Administration, David Georges, that you just heard with our Director of R&D, Eytan Breman.

We will start today's call with an operational update, followed by an overview of the financials and then discuss the key milestones we expect to achieve over the upcoming months. After this, the operator will open the line to provide you with the opportunity to ask questions.

Since the beginning of this year, we have communicated several corporate updates, which result from the strategic shift implemented in 2022, which I will summarize here. First of all, as you know, in April this year, I had the pleasure to be appointed as Chief Executive Officer of the company after more than 20 years of experience in pharma and biotech and science, business and C-level positions.

I also have a good understanding and knowledge of both the company and the CAR T field. As a matter of fact, between 2014 and 2018, I held the position of VP Business Development and Intellectual Property of Celyad.

I'm very happy to work again with this great team whose passion and vision I share. More recently, at the end of August this year, we have announced that the company has obtained commitments from Fortress, Tolefi and other long-standing existing shareholders to subscribe to a capital increase of EUR 9.8 million.

We're very happy at this financing round, especially in the current global financial context, and we would like to thank our investors for their renewed trust. This capital increase will be provided in 2 tranches: a first tranche of EUR 20 million, which was disbursed in the context of authorized capital as of September 4, 2023.

And the second tranche will be subject to the approval by the extraordinary shareholders meeting. Following this private placement, we believe that our existing cash and cash equivalents should be sufficient to fund the operating expenses and capital expenditure requirements until end of 2024.

We're now, therefore, entirely focused on developing next-generation CAR T-cell therapies and maximizing the potential of our proprietary CAR T-cell engineering platform, our innovative targets and our intellectual property. Celyad team is fully dedicated to tackle the main limitation of CAR T therapies and to broaden the range of this cancer indication that CAR T can target.

We clearly aim to be on the front runner as we always have been of the CAR T-cell development. With that, I will now turn the call over to Eytan Breman who will update you on the most recent development of our different platforms and programs.

Eytan?

Thank you, George, and thank you, everyone, again, for joining us today. I will start by sharing some news on our platform based on short hairpin ribonucleic acid and -- or our shRNA platform that we presented at 2 international meetings in April and in August.

We indeed developed a microRNA-based multiplex shRNA platform to enable the targeting of multiple targets simultaneously using our all-in-one vector system. This non-gene edited technology platform is designed for easy, efficient and tunable downregulation of up to 4 target genes simultaneously.

We have demonstrated the effectiveness of our approach by simultaneously knocking down several genes involved in different cellular processes such as alloreactivity, cell persistence, T-cell exhaustion or ligand-induced apoptosis in CAR T cells. In short, this multiplexing platform potentially allows us to generate CAR T-cell candidates with optimized features like increased persistence, efficacy or the ability to evade complex or immune-suppressive tumor microenvironment.

Furthermore, we showed that the downregulation of each target gene could be fine-tuned from a moderate downregulation up to a functional knock-out, without the need of gene editing, thereby avoiding associated potential safety issues. In addition, the plug-and-play design of our platform is designed to allow swapping of each target sequence without affecting the performance of the technology and streamlining of the generation of engineered adoptive T-cell therapy.

This clearly allows for a very broad therapeutic functionality, which is especially important in the context of solid tumors. In addition to our multiplexing platform, we're also working on CAR T-cells with multi-specific targeting capabilities.

And the reasons behind the possible failure of single targeting CAR T-cells are multifactorial, and included tumor microenvironment, antigen escape or loss, among others. With a multi-specific CAR, several antigens can be targeted together by the same CAR product, which reduces the risk of relapse or resistance.

At Celyad Oncology, we developed a multi-specific CAR platform based on the NKG2D receptor. The NKG2D receptor specifically targets NKG2D ligands that are induced by different stress responses.

And we have recently published in The Lancet Haematology the data from the Phase I THINK trial where we evaluated the first-generation NKG2D-based CAR T-cell candidate in patients with acute myeloid leukemia. This clinical data provides a proof of concept of developing NKG2D-based CAR T-cell therapy, targeting both NKG2D ligands and another more classical antigen, which offers a very different strategy from existing dual CAR T-cells that target similar antigens such as the lineage antigens, CD19 and CD20.

While targeting both NKG2D ligands together with a more classical antigen, a broader range of tumor cells can be targeted simultaneously, and thus, we're not limited to only 1 specific indication. The application of NKG2D-based multi-specific CAR T-cells is suitable not only in situations where antigen escape and/or loss may occur, but in situations where multiple organs are impacted, such as is the case of metastatic or advanced solid tumors.

We presented in June at the Immuno-Oncology Summit in Europe, our data on the development of multi-specific NKG2D-based CAR T-cells. We first developed different multi-specific CAR T-cells targeting CD19 and NKG2D ligands, utilizing both tandem construct that encompass an extracellular domain of the natural NKG2D receptor fused to an anti-CD19 scFv, or dual constructs where an NKG2D based CAR is co-expressed with an anti-CD19 CAR.

We have shown that the majority of our CD19/NKG2D ligand multi-specific CAR T-cell candidates were able to secrete cytokines, proliferate and eliminate acute lymphoblastic leukemia tumor cells lacking the CD19 antigen in vitro. Interestingly, some of these multi-specific CAR T-cells displayed a better in vitro functionality against wild-type leukemia tumor cells expressed in the CD19 antigen as compared to CD19 specific single targeting CAR T-cells.

This highlights the potential of our approach, not only against CD19 negative, but also against CD19 positive cancer cells. The first preliminary in vivo data suggest that our CD19/NKG2D ligand multi-specific CAR T-cell candidates have an enhanced anti-tumor efficacy against heterogeneous lymphoma tumors, as compared to currently existing treatment options.

We're now currently developing several NKG2D-based multi-specific CAR T-cells for the treatment of diverse solid tumors, where there is a high heterogeneity in antigen expression. We're very excited about our latest advancements, and we look forward to providing you more details of our platforms and new candidates in the near future.

With that, I will now turn over the call to David for an update on the financial statements for the half -- first half of 2023.

Thank you, Eytan. Turning to our financials.

I would just like to remind you all that our financial details are available on the Celyad Oncology website in both French and English languages. Research and development expenses were EUR 2.1 million in H1 2023, as compared to EUR 10.5 million in H1 2022, a year-over-year decrease of EUR 8.4 million.

The decrease in the company's R&D expenses is mainly driven by the company's decision to discontinue its manufacturing activities, as well as some preclinical and clinical programs after the company's decision to adopt and implement a new business strategy over the last few months of 2022. Furthermore, there has been a decrease of employee expenses, which is mainly related to headcount reductions through 2022.

General and administration expenses were EUR 3.7 million in H1 2023 as compared to EUR 6.2 million in H1 2022, a decrease of EUR 2.5 million. This decrease is mainly related to lower insurances costs and the decrease of employee expenses due to headcount reduction and management changes through 2022 to support the company's reorganization.

As of June 30, 2023, there was no change in fair value of the contingent consideration and other financial liabilities as management has determined that there has been no events such as firm sublicense or collaboration contract that increases the probability of the projected future cash outflow due to Celdara Medical, LLC and Dartmouth College, indicating that the probability is remote, similar to December 31, 2022. We posted net other income of EUR 2.1 million for the first half of 2023 compared to a net other income of EUR 1.6 million for the first half of 2022.

The net other income for the first half of 2023 is mainly due to the gain on the sales of certain fixed assets to Cellistic for EUR 1.1 million and grant income from the Walloon Region of EUR 0.8 million. Net loss was EUR 3.7 million, or EUR 0.17 per share compared to a net loss of EUR 14.1 million, or EUR 0.62 per share for H1 2022.

Net cash used in operations was EUR 8.3 million for the first half of 2023 compared to EUR 16.3 million for the first half of 2022. The decrease of EUR 8 million is mainly driven by the sales of the manufacturing activities in 2022 combined with global decrease on preclinical and clinical activities, insurance costs, headcount, management changes cost and associated impact on the change in working capital.

As of June 30, 2023, the company had cash and cash equivalents of EUR 5 million. On 24th of August 2023, Celyad has received EUR 9.8 million in private placement commitments from historical shareholders.

Based on our current scope of activities, we estimate that our cash and cash equivalents should be sufficient to fund operating expenses and capital expenditure requirements until the end of Q4 2024. With that, I will now turn over the call to George for closing statements.

Thank you, David. In closing, Celyad Oncology remains unwaveringly committed to its mission.

Despite the challenges we encountered over the past years, we firmly believe in the immense potential of our intellectual property portfolio to propel the success of CAR T-cell therapy. Thus, we remain determined in our dedication to pioneering groundbreaking therapies that offer great promise to patients in need.

As such, we look forward to announcing exciting upcoming milestones in the remainder of 2023, including more update from our shRNA multiplexing platform and our multi-specific CAR T platform in the second half of the year. Our goal is to develop CAR T-cell assets that will be eventually clinically evaluated either by Celyad or through strategic partnerships.

The company will take part in several international scientific and business conferences during the second half of the year, including the International Conference on Lymphocyte Engineering in Munich, Germany in mid-September, the Annual Congress of the Society of Immunotherapy of Cancer in San Diego in early November, but also the BIO-Europe and BioJapan partnering events in early and mid October. Finally, we wanted to share that we will relocate during the third quarter of 2023 into a brand new research facility, which fits better our current need.

The company will remain headquartered at the Axis Parc, Mont-Saint-Guibert, Belgium, but our new business location will move from Dumont 2 to Dumont 9. And with that, I will now turn the call back over to the operator in order to take your questions.

Thank you. Operator?

Thank you, operator. I would like to thank everyone for joining us today and for your interest in Celyad Oncology.

We remain steadfast in our mission to bring novel and innovative CAR T-cell therapies to cancer patients with unmet medical needs. We look forward to speaking to you all again very soon.

Thank you.

Thank you. Bye-bye.