Autolus (AUTL) Q1 2026 Earnings Transcript

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DATE

Thursday, May 14, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Christian Itin
• Chief Financial Officer — Robert Dolski
• Executive Director of Investor Relations — Amanda Cray

TAKEAWAYS

• Product Revenue -- $26.2 million in net product revenue, a near threefold increase from $9 million in the same period of 2025; this includes both U.S. and early-stage U.K. sales.
• Commercial Centers -- 73 U.S. treatment centers were active, with a goal to surpass 80 by year-end, expanding patient access and geographic reach.
• Gross Margin -- Positive gross margin achieved for the first time at $1.6 million, compared to losses in prior quarters, reflecting increased volume and operational improvements.
• Cost Structure -- 13% reduction in force completed, leading to anticipated annualized savings of $15 million starting in 2027, after one-time restructuring effects are absorbed.
• Peak Profitability Target -- ALL business projected to reach 65%-70% gross profit margin at peak, with profitability in the ALL segment expected in 2028.
• Guidance Maintained -- Full-year 2026 net product revenue guidance for AUCATZYL remains at $120 million to $135 million, with no adjustment following Q1 results.
• Cash Position -- $229.4 million in cash, cash equivalents, and marketable securities as of March 31, 2026, sufficient to fund operations into Q4 2027 under current plans.
• Expense Trends -- Research and development expenses declined to $21.2 million (from $26.7 million) due to decreased clinical manufacturing and trial activity; SG&A increased to $39.9 million from $29.5 million, tied to commercialization efforts and one-time termination costs.
• Pipeline Milestones -- Initial data from the BOBCAT Phase I study in progressive multiple sclerosis and ALARIC Phase I data in light chain amyloidosis are expected by year-end.
• Patient Demographics -- Expansion into older and more comorbid patients, as well as those with limited tumor burden, is now observed in the commercial setting.

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RISKS

• Loss from operations remained significant at $59.5 million, down only slightly from $65.2 million in 2025, indicating ongoing operational losses despite revenue growth.
• Net loss for the quarter was $71.6 million, comparing unfavorably to $70.2 million in the prior year, reflecting persistent capital consumption.
• Cash, cash equivalents, and marketable securities decreased by $71.3 million since December 31, 2025, primarily from net cash used in operating activities.
• CFO Robert Dolski stated, "this quarter also included one-time termination-related expenses related to the operational efficiency and cost reduction initiatives" affecting quarterly SG&A spending.

SUMMARY

Autolus Therapeutics plc (NASDAQ:AUTL) delivered $26.2 million in net product revenue for the quarter, with commercial progress attributed to increased utilization within existing U.S. centers and the initiation of treatment in more than 10 U.K. centers. Management reiterated full-year revenue guidance and highlighted its newly achieved positive gross margin, alongside a projected path to ALL segment profitability by 2028 after operational restructuring. Cash on hand is projected to fund the company into Q4 2027, with the business maintaining a focus on both ongoing commercial execution for AUCATZYL and advancement of pipeline milestones in progressive multiple sclerosis and other indications.

• CEO Christian Itin noted expanded real-world AUCATZYL use among patient groups typically challenging to treat, such as older or comorbid individuals.
• Initial UK revenues were described as "minimal" with specific breakout deferred until a more mature sales ramp later in the year.
• Management described an expectation to cover approximately 80% of eligible U.S. patients by reaching more than 80 centers in 2026.
• Christian Itin explained that the "majority" of Q1 growth originated from increased adoption at existing centers, evidenced by more physicians per site dosing patients.
• Operational enhancements included doubling of expected product output in 2026 versus 2025 with stable or lower staffing.
• Key pipeline events by year-end include BOBCAT (progressive MS) and ALARIC (AUTO8, amyloidosis) initial data, with longer-term results and pediatric extension data anticipated in subsequent periods.
• Ongoing cost optimizations are expected to further improve gross margin, with no specific margin guidance for year-end 2026 stated during the call.
• Management is actively evaluating manufacturing partnerships, with Cellares feasibility data anticipated before formal expansion decisions.

INDUSTRY GLOSSARY

• ROCCA Consortium: Multi-center group collecting real-world clinical outcomes data for patients treated with AUCATZYL.
• CRS: Cytokine Release Syndrome, an acute systemic inflammatory response associated with CAR-T cell therapies.
• ICANS: Immune Effector Cell-Associated Neurotoxicity Syndrome, a neurological complication of CAR-T cell therapy.
• MRD: Minimal Residual Disease, measure of leukemic cell presence post-treatment.
• The Nucleus: Autolus’ proprietary manufacturing facility referenced in operational and capacity discussions.
• KOL: Key Opinion Leader, typically a leading clinician or academic referenced in data presentations and advisory sessions.
• B-cell depleting antibodies: Therapies targeting B cells, referenced as part of the standard of care in lupus nephritis.
• MFN: Most Favored Nation pricing policy, referenced in context of European market access discussions.

Full Conference Call Transcript

Operator: Good day, everyone, and welcome to Autolus Therapeutics First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to the Executive Director of Investor Relations, Amanda Cray. Please go ahead.

Amanda Cray: Thank you, Carmen. Good morning or good afternoon, everyone, and thank you for joining us on today's call. With me are Chief Executive Officer, Dr. Christian Itin; and Chief Financial Officer, Rob Dolski. I'd like to remind you that during today's call, we will make statements related to our business that are forward-looking under federal securities laws and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These may include, but are not limited to, statements regarding status of the ongoing commercial launch of AUCATZYL in the U.S. and U.K.; Autolus manufacturing, sales and marketing plans for AUCATZYL; the market potential for AUCATZYL and the status of clinical trials, development and/or regulatory timelines and market opportunities for obe-cel. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations and reflect our views only as of today. We assume no obligation to update any such forward-looking statements.

For a discussion of the material risks and uncertainties that could affect our actual results, please refer to the risks identified in today's press release and in our SEC filings, both available on the Investors section of our website. On Slide 3, you'll see the agenda for today's call. As usual, Christian will provide an overview of our operational highlights. Rob will then discuss the financial results, and Christian will conclude with upcoming milestones and closing remarks. We'll then take questions. With that, I will turn it over to Christian.

Christian Itin: Thanks, Amanda, and welcome, everyone, to our first quarter update. Moving to Slide #4. We had a very good first quarter, and we see nice traction building both in the U.S. and obviously, in our early launch in the U.K. as well.

In Q1, we had $26.2 million in revenue booked, and we do see a very nice penetration and deepening with the positive physician experience that was highlighted at the Tandem meeting as part of the ROCCA Consortium presentation, where we had approximately 60% of our commercial patients represented in that data set, and we had discussed the data at the full year update, which is gave a few weeks ago and also was further analyzed and reviewed in the context of a KOL call we did in the early part of April. When we then look into the U.K., we do see a very good start in the U.K. We have more than 10 centers already active.

We're going very strong in the U.K. with regards to not only center onboarding, but also start to see early patients come in and actually become treated under the NHS access program. Now when we look into the 2026 overall outlook, we do see that we have a very nice continued momentum. We're currently from a perspective of U.S. centers already at around 73 centers, and we're increasing beyond 80 centers by the end of the year. Our year-end guidance -- full year guidance is unchanged at $120 million to $135 million.

And for the first time this quarter, we did see a shift to positive gross margin, which is important because, obviously, this is one of the key metrics that we're looking at during the course of this year to start to actually see that the overall commercial base and our ability to ultimately drive proper cash flow into the company increase over time. So first time positive gross margin and obviously, a lot of that impacted by, on the one hand, an increase in volume, but also operational improvements that we made to the overall operation of the company, but in particular, the operation of the manufacturing plant that we're running.

So this is where we are with regards to the overview from a commercial perspective for AUCATZYL. Very good dynamic, and we believe very strong momentum as we go into Q2. So with that, we're going to Slide #5. I would like to start on the right-hand side and just briefly talk about the journey that we're on with regards to moving the product to a place where indeed we have a profitable ALL business. The foundation was really laid during the first year of launch.

And what we had to establish during that first year of launch is consistent and high-quality product supply and services so that we have a strong foundation, we serve our patients properly, and we can generate very strong outcomes in these patients. And you've seen all of that actually presented as part of the ROCCA Consortium's experience, which had more than -- actually almost all patients that were intended to be treated actually receive treatment. And we also did see that, that treatment actually translated into a very positive safety profile with no high-grade CRS, only 3% high-grade ICANS and more than 90% overall response rate in the patients.

So a remarkable outcome in the hands of the physicians in the real-world setting. And we're also starting to see that we already start to see branching out of the patient pool into patients that actually are older, have more comorbidities, typically tend to be considered difficult to treat. That's one expansion that we've seen, but also an expansion into patients that have very limited tumor burden. And with that, obviously, what we have seen in our prior studies certainly have a good opportunity to sort of get a more pronounced benefit over time. So we've seen an expansion already in terms of the patient pools.

That is very important because based on that behavior as well as the good safety profile, we do expect that, that forms a very strong foundation, and we see that translate actually already in the first few months in 2026. The second stage now as soon as we actually have established consistent high-quality product supply and services, that is actually when we switched gears and really started to drive optimization, improve efficiency as well as at the same time, obviously increase the volumes that actually we're driving through the overall operation. And with that, have an ability to actually get our overall cost down for the products.

We expect the peak -- at the peak ALL business to be around 65% to 70% gross profit margin, which gives us a very healthy business for the ALL side of our AUCATZYL. Now the optimization we ran through, obviously, also was not just an optimization in processes, but also with that, obviously, we have run through a reduction in force at the company of 13%. And we also, at the same time, driven up the efficiency that we're running within the operation.

And you'll see that in a very simple metric, we expect to produce twice as much product this year compared to last year with overall staffing that is at or below the levels that we had last year. So that gives us a very clear understanding of why indeed these gross margins are moving into the positive and will continue to improve as we go through the course of this year. Now overall, as once the one-time effect of the restructuring is taken care of, and you'll see that pass through, and Rob will talk to that briefly, we expect for 2027 a net impact of a savings of $15 million on an annualized basis.

When we then look on to the development side and leveraging the exceptional profile that we now not only are seeing in clinical trials, but see it translated also in the real-world setting, we're obviously building on that set of properties into a range of additional indications. The first one clearly to extend the treatment from the adult population into the pediatric population. And we have the Phase II expansion of the CATULUS study ongoing. Data is expected towards the end of 2027, and we have aligned with the FDA on the protocol design and support for potential registration. The second study, obviously, that is progressing well.

We expect actually data during -- additional data towards the end of this year is the CARLYSLE study, where we have added additional patients, and we're also -- obviously, we will have substantial more follow-up in that patient population. And I think that will give us a very good understanding of the type of benefit that indeed a CARLYSLE or obe-cel can induce in indications now beyond oncology in this case, in a refractory form of lupus -- systemic lupus. The next study that is actively enrolling is the LUMINA study, which is in lupus nephritis.

This is the Phase II study, where we have agreement with the agency to -- based on this study, aim for a registration in refractory lupus nephritis. The study is active in certain countries in Europe as well as the U.S. and we're expecting data from the study in 2028. Finally, the study that will get us into neurological diseases is the progressive multiple sclerosis study that we're conducting, which is the BOBCAT study. This study is continuing to enroll, and we expect initial data at the end of this year and then full data during the course of next year.

When we look a bit more broadly, we also obviously will have additional data collection through the ROCCA Consortium, which is actually continuing to collect information from patients treated with commercial product and actually starting to look at quite a range of questions related to the performance of the product and the properties of the product with a clear view from the real-world setting.

In addition, and this was also part of the KOL call that I referenced before, we're seeing investigator-sponsored studies starting that actually are looking at the use of obe-cel in frontline consolidation setting, which is ultimately aiming to explore whether indeed an abbreviated frontline treatment might be possible, and we're obviously very interested to see how the product performs in those settings. And we expect our investigators to report in upcoming conferences on their studies. With that, I'm at the end of the introductory remarks, and I will hand over now to Rob for the financial results.

Robert Dolski: Thanks, Christian, and good morning or good afternoon to everyone. It's my pleasure to review our financial results for the first quarter of 2026, and I'll be referring to Slide 8 in the presentation. Total net product revenue for the first quarter of 2026 was $26.2 million compared with $9 million in the first quarter of 2025. This quarter reflects sales in the U.S. and our first quarter in the U.K. market. Though given it is early in the launch, contribution from the U.K. was minimal. As Christian noted, we're pleased to shift to a positive gross margin during the quarter with $1.6 million compared to losses in prior quarters in 2025.

With the combination of increasing product revenue and our cost reduction initiatives that Christian mentioned that are underway, we expect the margin expansion to continue as we move forward. Underlying that gross margin, cost of sales in the first quarter totaled $24.6 million. That's compared to $18 million for the same period in 2025. The increase primarily reflects costs related to higher AUCATZYL sales period-over-period. Our research and development expenses decreased to $21.2 million for the first quarter of '26 from $26.7 million during the same period in 2025. This change was primarily due to a decrease in development activities, including clinical trial and clinical manufacturing supply costs as well as capacity mobilization costs, mostly all related to obe-cel.

Our selling, general and administrative expenses increased to $39.9 million for the first quarter of 2026 compared to $29.5 million in the same period of 2025. This increase was primarily due to salaries, other employment-related costs and professional fees supporting commercialization activities in both the U.S. and U.K. In addition, this quarter also included one-time termination-related expenses related to the operational efficiency and cost reduction initiatives that we announced last month in April. Loss from operations for the 3 months ending March 31, 2026, was $59.5 million as compared to $65.2 million for the same period in '25.

And finally, net loss was $71.6 million for the 3 months ended March 31, 2026, compared to $72 or $70.2 million for the same period in 2025. Our cash, cash equivalents and marketable securities at March 31, 2026, totaled $229.4 million as compared to $300.7 million at December 31, 2025. This decrease was primarily driven by net cash used in our operating activities. As Christian noted, we are reiterating financial guidance issued in January that we expect between $120 million and $135 million in AUCATZYL net product revenue in 2026, including contribution from both the U.S. and U.K. markets.

And finally, based on our current operating plans, including the anticipated AUCATZYL net revenues, we expect that current and projected cash, cash equivalents and marketable securities will be sufficient to fund our operations into Q4 '27. I'll now hand back to Christian to wrap up with a brief outlook on expected milestones. Christian?

Christian Itin: Thanks, Rob. So when we look at the -- towards the end of this year, we have updates from three of our programs. We have the longer-term follow-up from the CARLYSLE study. We have initial clinical data from the BOBCAT Phase I in progressive MS. And we expect to have initial clinical data from the ALARIC Phase I study, that's the AUTO8 trial in light chain amyloidosis, which we're collaborating on with UCL also by year-end of this year. Full data then expected for the BOBCAT study during the course of 2027. The pediatric Phase II data readout is expected for year-end 2027 and the LUMINA Phase II data in lupus nephritis is expected in 2028.

Those are the key updates and key milestones. And with that, we're opening up to questions.

Operator: [Operator Instructions] One moment for our first question, it comes from Gil Blum with Needham & Company.

Gil Blum: Congrats on the progress. So you're saying you're seeing some level of market expansion, older patients, maybe a bit patients for consolidation, that sort of thing. It didn't seem to change the guidance for this year. So I'd appreciate your commentary on that. And then I have a follow-up.

Christian Itin: Yes. First of all, thanks a lot for joining, Gil. The dynamic we're seeing in the market is very positive. But obviously, this is -- we're still early in the year. I want to see the dynamic obviously play out into the -- into fuller aspect as we go through the course of the year. The guidance at this point, we believe, is reasonable, and there's no -- frankly, no reason for us to change the guidance at this point. But obviously, we'll keep monitoring the development and -- if indeed, we see a different trajectory, we obviously will update the market.

Gil Blum: Very helpful. As it relates to the LUMINA study, we just saw another registrational study come up, again, in lupus nephritis kind of like in a similar line of therapy. Are you guys seeing any potential challenges in enrollment? I mean, is it a little crowded?

Christian Itin: Thanks, Gil. So the population we're going after is a proper refractory population that are post the standard of care, which is based on B-cell depleting antibodies as well as calcineurin inhibitors. So it's a very -- that's a pool that's currently not served by the standard of care, you beyond that. And the trial size that we need to recruit is very limited. We're looking at a 30-patient trial. And from that perspective and also given that we're running the study both in the U.S. and outside the U.S., we believe we're in a good position to enroll the study. So we're not worried about that.

Gil Blum: Excellent. And maybe a last one on the multiple sclerosis. Can you remind us what level of data you think you may have in 2026?

Christian Itin: So the BOBCAT study looks -- first of all, it's a dose escalation study. So we're starting at 100 million with an ability to go further up. So that's the basic design of the study. We expect to have initial information on the behavior, obviously, of the product with regards to safety, but also the dynamic, the cellular dynamics that we're seeing, which is important. You want to understand the ability of the product to expand in the periphery, but also look at the presence of the product in the CSF, obviously, on the other side of the blood-brain barrier.

And then certainly, we'll record the various types of markers that we have available here that actually monitor both either the inflammation -- inflammatory state of the disease as well as potential damage to tissue that you can monitor both with biochemical markers as well as with imaging. So we'll have early data in terms of the behavior. And then I think as we look into next year, I think we start to have more data points that look at the actual disease scores and the ability, obviously, and frankly, any potential impact on disease scores going forward.

For that, you want to have several data points and a longer observation time to make sure you're not actually monitoring potential placebo effects or other types of impact that you might have given that part of those assessments are either physician or patient reported. So hard measures for this year, mostly on the actual behavior and safety. Behavior from a pharmacodynamic perspective and pharmacokinetic markers, but also then as we go into next year, looking into the actual disease scores themselves.

Operator: Our next question comes from Simon Baker with Rothschild & Company Redburn.

Simon Baker: Two, if I may, please. Christian, I just wonder if you could give us a little bit more detail on the mechanics of the U.K. rollout. And as I believe there are 20 CAR-T centers that, in principle, could administer AUCATZYL. What's the cadence of rolling those out in terms of getting centers on board? How does this compare with the experience in the U.S.? Any color on that would be helpful. And then on the R&D expense, it was lower than expected in the quarter because of clinical trial activity. I just wonder if you could give us any more color on the evolution of R&D spend as the year goes on.

Christian Itin: Okay. Thank you. Thanks a lot for joining. With regards to the U.K. rollout, we actually see a dynamic that we think is at least as quick as what we saw in the initial phase in the U.S. It might actually be quicker. One of the things that is positive about the U.K. system is that the decision whether or not a patient would actually go on a CAR-T therapy or not is actually centrally made, which actually accelerates decision-making. That's actually a benefit of the way that is organized rather than individual center by center, physician-by-physician decision that is normal in other health care systems.

So there are elements actually that are allowing us to probably move even a bit faster than we were able to do in the U.S. And we see very positive dynamic, very positive messaging also around from the NHS. NHS gave -- there were interviews held on television in the U.K., et cetera. So there was quite a lot of presentations and work that the NHS itself did, frankly, increasing the awareness of the product and the opportunity for this new treatment modality for patients.

So I think from an awareness perspective as well as from a drive perspective that we see in the center base and then the initial decision-making process or the internal decision-making process basically being going through a single body to take the decisions, I think, is actually very helpful, and we expect a good rollout here in the U.K. With regards to R&D expense, I think I'll start, and then I'll hand over to Rob.

I think what's important on the R&D expense, obviously, there is some changes as we see our activity with regards to clinical trials as you transition from one trial phase to another trial phase that usually slows down a little bit the enrollment in that process. There can be some fluctuations. But also if we look back into last year, obviously, there was still quite a lot of work that was ongoing related to the longer-term follow-up of the FELIX study that actually that work will be reduced over time as we're sort of obviously ramping up some of the other clinical activities. So there are quite important trade-offs there that we have on actual clinical trial activity.

And then the other area is really the mobilization of additional capacity at The Nucleus, which we're obviously kind of taking on as we're sort of ramping now the demand in the U.S. And we also had some activities still ongoing during the course of last year. Those activities will substantially be reduced or pretty much are coming to a stop. And so we actually have now an ability to -- obviously, we'll have certain of those activities, which are also R&D-related costs as you mobilize the activity will start to obviously be reduced, while at the same time, we start increasing, obviously, our clinical trial costs.

So we expect all in all, that there's going to be very helpful trade-offs and also we'll keep overall that R&D expense at a fairly steady level. Rob, do you want to add anything?

Robert Dolski: Yes. I mean the only additional thing I can add, Simon, I think Christian covered it really well. Another example I'd throw out there certainly was our pediatric study, where it was at a stage where we had that kind of first cohort enrolled and was still active at sites. That was part of the data presentation that happened at the end of last year. But in terms of getting this next wave up and going, we're more in kind of a valley and now we're in the enrollment for the expansion cohort.

And certainly, as we start treating more patients, both in the clinical programs, even on some of the investigator-sponsored trials that we have out there that Christian mentioned, you will see more clinical supply-related costs that will come in. But this is going to kind of move kind of up and down a little bit. We're not projecting any significant add of infrastructure, et cetera, on the R&D side.

Operator: One moment for our next question that comes from Salim Syed with Mizuho.

Salim Syed: Congrats on the quarter. Just one for us on the data that we're expecting this year, Christian and Rob, it sounds like for the MS, the more important data set is going to be coming in '27. I don't know if you sort of interpret the same way for ALARIC. I'm just trying to balance how important do you guys deem these data sets coming at year-end? Are we expected to get any sort of bogey or how you guys are deeming what is the successful outcome on these year-end measures? I'm just trying to balance that with just the cash runway here of 4Q '27.

Christian Itin: Yes. So when we look at the nature of the MS study, obviously, we're collecting data points on disease score. And in order to actually get, I think, a good sense of the trajectory of the disease score, you need to have a certain amount of observation period. We obviously collect the data. We'll have an initial view on that. But to actually be -- make a strong statement about the trajectory that you'll see after a few months is probably not sufficient. I know there is a temptation to do that, and there is certainly -- we see that sometimes in the market that's been done.

But we believe with those types of data points, we actually want to have a little further out a view. And with that, I think that more stable data. On the ALARIC study, I think what we do have is certainly an initial good understanding of the level of activity we have in this disease setting. We haven't actually reported on that before. And I think that should give us a good feel for the level of activity that we're seeing and the impact we're seeing in these patients.

So I think that's certainly going to be a data point that we're obviously -- I think will be very helpful and will certainly from a readout perspective, I think will certainly be interpretable in a clear way. And -- but the other aspect, I think, is also getting back to the MS program. I think one of the things to sort of be clear about is that the importance here is, on the one hand, in the short for the data point at the end of the year, is the ability to demonstrate that indeed the product actually can be -- give us a safe product profile in these patients, which I think is very important for these patients.

But also then actually have -- be able to actually show that indeed, the product is active in the CSF and with that in the central nervous system. I think that actually is a key piece of the information and it really goes to the foundation of the rationale for using the cell-based product because that allows us to actually get into the -- across the blood-brain barrier and with that, have an [ ability ] for activity.

And just as a reminder for some of you, if you haven't actually been able to listen to the KOL call, Lori Muffly did present one of her patients that had explosive ALL or filled up bone marrow, the disease strongly, frankly, intruding into the brain and into the CSF and frankly, putting pressure onto the spine directly leading to the patient becoming paraplegic. What she described is that she treated the patient with AUCATZYL, which she thought was the only treatment she could give the patient that would be actually safe enough.

And what she was seeing is that the patient within 28 days had actually the leukemia taking care of MRD negative in the periphery, but also obviously, clearance in the CNS and the patient actually recovered mobility and control over her body. So that tells you a lot about the ability of the product to cross the blood-brain barrier to be very active and remove CD19 positive cells, in this case, also leukemic cells in the brain to a point where indeed there is massive improvement that could be seen in the patient.

But that's really at the heart of the feature, which is unique to this type of a therapy, and that's really what we're building on for the BOBCAT study in progressive MS.

Operator: One moment for our next question. It comes from the line of James Shin with Deutsche Bank.

James Shin: First one, I appreciate AUCATZYL achieving positive gross margin this quarter. And pending AUCATZYL's top line growth and with the RIF in place, could we see Autolus becoming profitable on a company level basis by, say, late '27? And second question, between Besponsa and Blincyto, is Blincyto the main bridge before patients receive AUCATZYL? And does the bridging tend to align with AUCATZYL's manufacturing turnaround time?

Christian Itin: Thanks, James. Very good question. So the first related to kind of the trajectory for the ALL business. What we're projecting for the ALL business is that we're going to cross the line to profitability in the ALL business in 2028. Whether or not the company will actually be profitable at that point also depends on the reinvestment rate that we'll have in the upcoming 1.5 years towards that time point. So that's going to be the key driver whether or not we're going to be -- can be profitable as a company or not by that time point. But as an ALL business, we expect to cross that line in 2028.

With regards to the bridging therapies that are employed for AUCATZYL, typically, you would use for bridging either chemotherapy or inotuzumab or Besponsa, you would not use Blincyto. And the reason for Blincyto is this is when a treatment when you started, it should go for -- it's basically a continuous IV infusion for 4 weeks, which is actually longer than the manufacturing turnaround time for these patients, and that actually wouldn't make sense. So we don't actually see the use of Blincyto for bridging in -- with our product. It's mostly driven by chemotherapy and/or inotuzumab.

Operator: And we continue to the next question, it comes from Matthew Phipps with William Blair.

Matthew Phipps: I guess could you maybe characterize a little bit of the growth that you've seen this quarter? Is it from greater utilization at current centers? You mentioned expansion in older patients? Or is it mainly expansion into new centers? I guess what percent of the market do you think you'll have covered when you reach the 80 centers by the end of this year?

Christian Itin: Thanks, Matt. So when we look at the growth, we see that actually, given that we already have 73 centers on when you compare to the beginning of the year, we were at about 65. The majority obviously comes from the centers that were already active. And that's where you see the repeat use and you see that build up. The new centers obviously gradually build on, but their initial activity is going to be limited. There's going to be 1 or 2 patients, initial experience gained and then that eventually translates further. So we see a lot of good positive momentum out of the centers.

One of the metrics we're looking at is also not just the centers themselves because when you look into the centers, what you do see initially is that typically, it's a small number of physicians that might actually use product. And what you really want to do is you want to see actually the group of physicians using the product increase per center. So one of the metrics we're looking at is obviously the physicians that are actually using the product, and we actually see very nice progression in terms of the numbers of physicians using the product and actually dosed the patient.

So we kind of track that as one of the key metrics, and we clearly see that dynamic. And for the most part, that expansion actually is within the centers we're already active in, and we're starting to see broader adoption. And that's really how ultimately you will build market share. It's the use of the product by most of the physicians at each given center across the range of the indication and the label, and that gives you really the ability to grow that market share. Overall, we do believe we see very good dynamic in terms of increasing the market share, obviously, as we're going forward.

And based on just our guidance, you would expect that we would have a substantial increase in the overall market share that we're projecting, obviously, for 2026, and that's the guidance we have reiterated.

Operator: One moment for our next question please, it comes from Emily Bodnar with H.C. Wainwright.

Emily Bodnar: Maybe a follow-up from the prior question. Can you kind of comment on what contribution U.K. revenue had on growth in the first quarter and how you're kind of expecting that to play out for the remainder of 2026? And then maybe on the data update for SLE and LN later this year, if you can kind of talk about what level of durability you're hoping to see in the updated data and also response rates for the 100 million dose.

Christian Itin: All right. Thanks a lot, Emily. Thanks for joining. So for U.K. sales, given that the U.K. is obviously a fraction of the size of the U.S. we decided not to actually break out U.K. sales numbers, certainly initially in the launch because frankly, it doesn't make much sense. It is too early in the process. We expect to break it out likely towards the end of the year. But for the first quarter, that doesn't actually make much sense at this point because obviously, a lot of the products would still be -- patients would roll in, you start to produce initial products and then you start to actually see the momentum translated into actual sales numbers.

With regards to the LN update, obviously, we have patients that will have about 12 months or more follow-up in terms of the initial cohort. I think that is going to be very meaningful because it tells us a lot about not just the initial safety and the initial reset, but then also whether -- how the B cell compartment sort of reconstitutes over time. And with that, then also the ability to see sustained response in these patients going forward, which is one of the key elements and metrics that we're looking at. And then obviously, for the other patients, which include a higher dose cohort as well as adolescent patients, we're obviously going to have a limited follow-up.

So that's going to be mostly around the initial response, the safety, the initial response and initial kind of recovery of the B-cell compartment. But obviously, that will have a limited follow-up compared to what we will have from the first cohort, where we're going to be certainly beyond the year of follow-up.

Operator: One moment for our next question that comes from Jacob Mekhael with KBC Securities.

Jacob Mekhael: I have a few, if I may. First of all, just on the gross margin. You mentioned in one of the slides earlier that you expect it to be 65% to 70% at peak. Curious, do you plan to provide peak sales guidance at some point in the future? And when would be the right time to do that in your view? That's the first one. And then maybe I have a follow-up on the -- on your agreement with Cellares for the manufacturing. Is there a timeline by which you need to have a formal agreement in order to incorporate that into the new manufacturing process for the pivotal program in autoimmune.

Christian Itin: All right. Well, first, thanks for joining, Jacob. First, with regards to the gross margin reference on peak sales, I think what we have been pointing out with regards to the overall opportunity in the relapsed/refractory setting in the U.S. is that we have approximately 1,600 to 1,800 patients. And we have seen certainly with other agents before that you can get with a good profile up to about 60% penetration, which we expect or market share, which we expect kind of the upper end of the range is in the relapsed/refractory setting. So that's kind of where we are and I think where we sort of see the opportunity.

I think to guide towards a more formal peak sales, I think that's premature at this point in time. But I think it gives you a good understanding of kind of the overall size of the market and the overall opportunity that we're sort of identifying for the product. With regards to the Cellares timing, we're in the midst of a feasibility study. So we want to understand where the product actually produced on that technology platform versus the platform we're using at The Nucleus today, how the products compare. And so that's a key analysis that we're running. That's what we're really going to be focusing on this year.

And if that data turns out positive, that's I think the timing -- the time point to actually take the next steps. In terms of being in time, we believe that the key area where I think that technology, I think, could be attractive to us is if we're sort of getting to a step change in the need for product. we believe that, that step change certainly could come from an indication like progressive MS. And I think that's sort of where we're looking to sort of actually work through and make sure that we have an option there that would allow us to actually scale production in a reasonable and economical way as well.

So that's sort of where -- frankly, the elements that are being connected. But for this year, it's really around making sure we get the clear data from the feasibility and our understanding that whether this quality of the product we're getting actually is comparable.

Operator: Our next question comes from Roger Song with Jefferies.

Xiaotong Jia: This is Fiona on for Roger. Just a couple from us. On the AUCATZYL revenue, how should we think about the near-term and long-term growth driver? And any active measures you're taking to further the penetration in the U.S. versus ex U.S. dynamics? And just another one, understanding that you're going to switch to a positive gross margin from this quarter. Do you see any further optimization needed moving forward? Or do you want to see the impact of the cost reduction play out?

Christian Itin: Thanks a lot, Fiona. First with regards to the revenue drivers. Clearly, what -- there's two key elements here. There's sort of getting to a large percentage of the patients that -- or the market you can cover in terms of access -- patient access to centers, we believe that we're in this 80-plus center range, we're getting to certainly in the range of 80% of the patients that we can actually cover from that perspective, which I also believe is an add-on answer to what Matt was asking as well before.

What really drives the ability for -- to drive the market share up, and this is in any jurisdiction that you're active in, is really getting the physicians at a given center to use the product consistently, gain experience and gain confidence. And with that, starting to use the product in the first place for typically a limited number of patients, which is sort of typically patients they think they cannot serve with the standard of care that they have experience with, gain experience with the product and then actually start to apply the product much more widely across the full range of the label.

We've seen that play out actually during clinical trials, and we see it play out also now in the marketplace as well. So that is really what drives ultimately the market share is the conviction of the physicians that this product actually allows you to treat a wide range of patients. And again, Lori made these types of comments actually also at the call that we had organized. And what she was talking about is the ability to actually have an option with AUCATZYL that irrespective of modality actually gives you a safe way of treating patients and actually allows us to treat patients she would not have even considered treating before.

And that was actually not a differentiation between CAR-T products, but across the range of product options and modalities that she has available. That's kind of an expression of that level of confidence. And I think that is where we see, I think, the biggest growth is for physicians to get to that place. That's also where the ultimate decision-making resides is obviously with the physician. The patients receive the product once. It's a one-time experience for the patient. It's a repeat experience for the physicians. And that's really what's your foundation and what's really driving this. And this is true whether this is in the U.S. or it's in the U.K. or elsewhere.

With regards to the opportunity to sort of expand beyond the U.S., obviously, we're active in the U.K. at this point. We continue conversations in Europe. And we're navigating market access and MFN topics in Europe. And obviously, we need to make sure we get to reasonable places there. At this point, we're not guiding for European sales. We're obviously approved. We continue those conversations. And we'll certainly, once we actually get through market access in first European countries, we'll obviously inform everyone on that. But this is an ongoing process and certainly somewhat delicate also with the policy changes that we see across the board that we need to take into account. And then finally, optimization.

The final question, I think you had was on optimization. Actually, optimization certainly from a manufacturing process is a continuous process. It's not just a one-off. But we made some very significant changes in our operating model that are now implemented, and we continue to improve as we go through literally every step along the way of the manufacturing process. And what we're really aiming for is to make sure that the hours of work that go in to produce every single product can be minimized. And so it's really a drive to minimize the work spent per product.

At the same time, obviously, we want to reduce the overall contribution from the fixed cost, and that's really -- that particular aspect is driven by the volume of products you run through the facility. And those are the two key metrics that actually are driving ultimately your cost down per product. One is the total volume and with that, a reduction of the fixed cost allocation and then also a reduction of -- a reduced number of work hours per product. And that's really what we're driving at, and we'll see a very significant steady impact as we go over the upcoming probably 2 years.

Operator: And our last question comes from Shyam Kotadia with Goldman Sachs.

Shyam Kotadia: Just two from my end. So on the gross margin that reached positive this quarter, how should we think about that cadence for the rest of this year? Should we expect a steady improvement? And what is your target gross margin, I guess, for full year '26? And also on that peak margin you mentioned, when are you expecting to reach that? That's the first one on gross margin. And then the second one on multiple sclerosis. I know it's early, but I just wanted to see if you guys could provide any color on your commercialization plan there? Are you planning to go at this yourself? Or would you look to partner or in-license for this indication?

Christian Itin: Thank you very much. So with regards to the gross margin, we expect to actually see continuous improvement over the growth of the gross margin as we go through the course of this year. We obviously have implemented significant improvement in the operating model in the first few months this year. They will start to actually have impact in terms of the cost as we get through the remainder of the year. I think we'll see sort of an increased impact over time. And at the same time, we'll see, obviously, and we expect an increase in terms of the volume of product that we're running through the facility as well.

And those two parameters will actually be supportive to really see a continuous improvement of the gross margin. We haven't given guidance on where we expect to be by the end of this year. But obviously, it's a metric that we continuously report, and I think you'll start to get a good understanding and feel for the dynamic as we go through the next few quarters. So that's the first part of the question. The second is, when do we expect peak typically to get through to peak sales in indications like ALL, that's probably taken between 4 and 5 years.

But the main impact that you will see from a gross margin perspective is likely going to be somewhat earlier because the -- if you get to a certain level of volume of product you run through the facility, the amount of improvement you get on the fixed cost contribution obviously becomes limited. You're running an asymptotic line. And obviously, the big gains that we expect on productivity and with that reduction of labor cost is expected to happen actually during the course of this year.

And then there may individual elements where we might actually introduce particular improvements on technology that can actually lead again to a step change, but those will not be -- those obviously will take time and will not be in a straight line, but obviously will then give us sort of individual discrete steps that we expect to see. But for the time being, I think most of it is really just the actual improvement on the work hours and the impact of the changes in the operating model, which will likely have the single biggest contribution that will be made through that. And then there are a number of much smaller initiatives that over time will add to that.

And then with regards to the MS commercialization question. What we're seeing in MS is obviously a population of patients that obviously are much more -- first of all, it's a much larger population. They're much more distributed. But there also -- it's also a patient group that's extremely motivated, and we see that also even in the conduct of the clinical study, where we see even a different dynamic even to acute leukemia, where you know this is a disease that can actually quite likely may kill you, there's still actually a higher degree, I think, of dynamic that we're seeing with MS patients. So that is sort of one side of the equation.

But then there's a sheer volume question in terms of if you have some product that actually impacts these patients, it's a very substantial patient population. And so from that perspective, it does make sense to consider certainly a commercial approach where you would operate in collaboration with a partner, and that's certainly one of the areas that we're exploring.

Operator: Thank you. And this concludes our Q&A session for today.

Christian Itin: Very good.

Operator: Thank you so much.

Christian Itin: Thanks, everybody, and have a great...

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