Alaunos Therapeutics, Inc. (TCRT) Q2 2019 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Ziopharm Oncology Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Chris Taylor, Vice President of Investor Relations and Corporate Communications. Sir, you may begin.

Thank you, Bridget, good morning and welcome to the Ziopharm Oncology conference call and webcast to review results for the second quarter of 2019. This morning, we filed our 10-Q and issued our Q2 news release, both of which are available in the Investors Section of our website, ziopharm.com. During this call, the company will make a number of forward-looking statements including statements regarding the potential therapeutic candidates in our development pipeline, regulatory status, financial information and business trends. Forward-looking statements are subject to numerous risks and uncertainties, as described in our 10-Q and within other filings that we may make with the SEC from time-to-time. Following commentary from Ziopharm’s management team, we will open the call for Q&A. In the interest of time and to allow all to ask questions, please ask one question and a follow-up and then feel free to return to the queue. Thank you. Leading our call today is Dr. Laurence Cooper, Chief Executive Officer of Ziopharm. Good morning, Laurence.

Hey. Thanks, Chris, and good morning to everyone joining us on the call. We had a tremendous second quarter at Ziopharm and update the efforts that built value for our company and its shareholders. We will work to continue this momentum and have a clear road in front of us as we build a leading immunotherapy company. Impart, these milestones are attained and value created by having first rates experienced and driven colleagues and the Ziopharm team we are assembling along with our Board of Directors is excellent. Today, we are pleased to introduce you to two of the newest members of Ziopharm’s management team, Chief Financial Officer, Sath Shukla and the Director of our TCR program, Dr. Drew Deniger. We are delighted to have them aboard and even though they’ve only been with us officially for a couple of weeks, we are pleased that you will hear from them directly today. Additionally, we want to extend a special welcome to Heidi Hagen, a biotechnology executive who joined our Board of Directors in June. Heidi’s extensive knowledge in drug development and operations management at Immunex and Dendreon, her entrepreneurial experience as Co-Founder and Chief Strategy Officer of Vineti, as well as her leadership and strategy skills will greatly benefit Ziopharm. This appointment represents the fifth new Board Member for Ziopharm in the past year and we have one remaining seat that we look forward to filling soon. And with those introductions, I’d like to turn the call over to Dr. David Mauney, Ziopharm’s President for some highlights of the second quarter. David?

Yes, thanks, Laurence and good morning to everyone joining us on the call. Let me start by saying that we have made significant and very meaningful advancements in literally every aspect of our business since our last call. First, in terms of strengthening our management team, we said throughout the year that we are working to build out our team in meaningful ways and we are incredibly proud to welcome Sath and Drew to Ziopharm and pleased to have them introduce themselves to you today. I will introduce Sath in a few moments, and I think you will agree that with his background, he is a tremendous addition. And while Laurence will introduce Drew later, I can tell you I’ve gotten to know Drew myself over the last year and of course he brings world-class scientific acumen to our team, but he is also a great person and his commitment to us is tangible and easily measured by his willingness not only to depart the NCI, but also in his agreement to relocate his family to Houston which is clearly becoming a geographic epicenter to our TCR-T efforts. I would be remised I also didn’t mention the additional headcounts we have added in a variety of roles throughout our Houston and Boston facilities. The sum result is we now enjoy an excellent core team and we’ll continue to build it out over the months and years to come. Second, regarding the financial strength of the company, we often express how grateful we are that Ziopharm has such a strong and supportive shareholder base. Last week, that support was in full view when we announced that a group of our investors led by MSD Partners had entered into an agreement to exercise existing warrants far ahead of their expiration date providing approximately $45 million in proceeds to the company. It is critical to note that combined with the prepaid capital to fund our work and MD Anderson, we now have more than $100 million of liquidity to put into the business and our cash takes us now into the first half of 2021. We have consistently pursued creative and opportune ways to secure the balance sheet over the last year and now believe we have sufficient capital to see critical data readouts in each of our three core programs, each readout having the potential for substantial value creation. Next, we made tangible progress across all three of our core programs in the second quarter. Our TCR program took a dramatic leap forward with two major milestones. One, we received clearance from the FDA for our NCI-led clinical trial in solid tumors and two, we announced an exclusive licensing agreement with the NCI for IP and three of the most important hot spot families in KRAS, P53 and EGFR. This alone changed the footprint of our TCR library overnight. Looking at our Sleeping Beauty CAR-T programs, which we are advancing in the U.S. through a collaboration with MD Anderson Cancer Center and in Greater China through our joint venture Eden BioCell, we continue to make excellent progress. Laurence will provide more specific updates, but I can tell you having come back from my second trip to China, just last week, things have ramped nicely since our last trip in May. The GMP facility is near complete. Our team on the ground has expanded and we had the opportunity to meet with clinicians and hospitals who share in our enthusiasm for the CAR-T program, each of who are eager to begin clinical development of Sleeping Beauty generated CD-19-specific CAR-T. The momentum for our controlled IL-12 program in recurrent glioblastoma has also increased considerably. To put it in perspective, in the last 13 months, we have dosed 36 patients in the monotherapy group and nine patients in the OPDIVO combination cohort. These 45 new patients enrolled are now being followed for overall survival. We will also treat about another twelve patients in the OPDIVO maximum dose cohort due to strong clinical interest and as we said, we will treat approximately 30 patients in a Phase 2 study with Libtayo at full dose. And as an update today, we are pleased to report that we have commenced enrollment in this trial. We expect these additional cohorts to efficiently enroll giving us a total of 87 new patients since June of last year, 30 of which are Phase 2. As the survival data matures for these 87 patients, we will have increased confidence that our controlled IL-12 platform will emerge as a therapeutic options for patients with recurrent glioblastoma. We believe this dramatic change in enrollment rates and inbound clinical interest in both the monotherapy and combination therapies, sends a strong signal about the need for new and improved therapies in this dreadful disease. And we look forward to seeing the data mature which will occur well within the balance of our current cash. And finally, as you may have seen in a separate news release earlier today, we are pleased to announce the EMA Committee for orphan medicinal products has adopted a positive opinion recommending controlled IL-12 for designation as an orphan medicinal product for the treatment of glioma. You’ll recall that the FDA previously granted orphan drug status for the controlled IL-12 program and recurrent GBM. And early in Q2, Ziopharm announced that FDA granted fast track designation for our controlled IL-12 program for the treatment of recurrent GBM in adults. We have worked very hard at trying to improve Ziopharm’s business execution and you can tell from the longest of updates, our team has been quite busy in the past quarter. Finally, it gives me great pleasure to turn over the financial updates to our highly credential CFO, Mr. Sath Shukla. I am really pleased to introduce Sath, who started with us officially on July 22nd. Let me first give you some insights on why we are so thrilled to welcome him to our leadership team. With twenty years of strategic corporate and financial leadership experience, Sath joins us following seven years with Vertex Pharmaceuticals, where he was Vice President and Global Head of Corporate Finance. Having witnessed firsthand the growth of a company, first valued in the mid-single-digit billions when he started, now all the way to more than $40 billion where it resides today. In his most recent role there, he directed financial planning analysis, budgeting, and led the long range planning process encompassing Vertex’s entire portfolio and operations across more than 30 countries. These are experiences that are critically important as we look to build a world-class immunotherapy company with a global presence. Here at Ziopharm Sath will direct all financial planning, analysis and reporting, treasury and tax functions and will take on a key leadership role in the company’s capital strategy development, business development initiatives, and investor relations activities. I have gotten to know Sath quite well in the past few months and I can tell you the difference he has already made is comparable for all of us. Welcome Sath.

Thank you, David. Hello to everyone on the line. I know that there are many on the call whom I have worked within the past and many others I look forward to speaking with and meeting in the quarters ahead. I am truly delighted to join the team at such an important time in Ziopharm’s history and I am very excited by the growth prospects for our company. In my own due diligence, I became convinced that Ziopharm is now well positioned to achieve its objective of bringing transformative immunotherapies to the market. The signs are compelling and with strengthened talent and financial resources, the management team is laser-focused on executing a strategic plan to advance therapies for patients and create value for the company and our investors. Now, turning to the financial results for Ziopharm’s second quarter of 2019. Net loss for the quarter was $14.6 million, or $0.09 per share, compared to a net loss of $17.5 million, or $0.12 per share, for the second quarter of 2018. The decrease in net loss resulted primarily from the elimination of approximately $5.5 million of dividends to preferred shareholders caused by the cancellation of preferred stock in October 2018. Research and development expenses were $10 million for Q2 of 2019, compared to $7.5 million for Q2 of last year. The increase was primarily due to milestone payments under our patent license agreement with the NCI and increased non-clinical R&D to support our Cell Therapy programs. G&A expenses were $4.8 million for the second quarter of 2019, slightly below the $4.9 million for the second quarter of 2018. The company ended the quarter with unrestricted cash resources of approximately $43.6 million. This is the primary funding source for our Controlled IL-12 platform, our work with the NCI, as well as the G&A support for our business. As a reminder, we also had a prepayment balance of approximately $24.2 million at the end of Q2 for clinical and pre-clinical work to be conducted by the company at MD Anderson Cancer Center under the current CD19 Research and Development Agreement. And as David mentioned, just last week we announced that the company raised approximately $25 million through the exercise of existing warrants. We believe that these aggregate liquid resources of more than $100 million will be sufficient to fund planned operations and execute our strategy into 2021 and allow for visibility into key clinical data readouts for each of our core programs. This encapsulates our forward-looking financial management strategy. To prioritize and enable our R&D efforts, while staying disciplined on our G&A OpEx ensuring optimal capital allocation. In summary, I am excited to be here and I look forward to getting to know many of you in the months and years to come as we build a truly great company. Over to you Laurence.

Thank you, Sath. It’s wonderful to have you on Board. Reflecting on the list of recent milestones the news items we have made considerable progress on both the Sleeping Beauty and Controlled IL-12 platforms. Operationally, we have important new additions to the team and now enjoy a significantly strengthened balance sheet. It was certainly a busy first half of the year for Ziopharm and the pace does not appear to be slowing at all as we look ahead. As the year progresses, we are sharing our vision in greater detail for the future of Ziopharm with the investment community. In broad terms, Ziopharm aims to be a leading developer of immunotherapies to target cancers by harnessing the power of our two platforms, Sleeping Beauty and Controlled IL-12, along with the associated three programs. Let me start with the TCR-T program. One of the most exciting areas in immunotherapy is built on the use of the T-cell receptors or TCRs to target neoantigens for the treatment of solid tumors. The leading cause of cancer deaths in the United States and a major opportunity for us globally. We refer to the infusion of T-cells expressing introduce TCRs as “TCR-T”. Ziopharm is developing a solution for TCR-T using the Sleeping Beauty system, which we believe is the most clinically advanced, non-viral gene therapy platform and enables the production of clinical-grade T-cells expressing neoantigen-specific TCRs. The simplicity and elegance of this non-viral gene transfer technology sets us apart from the complexity and cost of genetically modifying TCR-T cells with virus. We are emerging as a leader in a non-viral manufactured genetically modified T-Cell and as Drew will highlight, we have years of knowhow in generating TCRs to neoantigens. We believe this expertise, along with our recently licensed IP creates barriers to entry for our competitors. The foundation of our solid tumor TCR-T program is a Co-Operative Research and Development Agreement or CREDA with the National Cancer Institute under the direction of one of the most recognized leaders in the field, Dr. Steven Rosenberg. We made two announcements related to our relationship with the NCI in the past quarter. These underpin what I refer to as our two shots on goal for the TCR-T program, which will enable us to expand beyond the NCI. First, the FDA cleared an IND submitted by the NCI for a clinical trial in solid tumors to evaluate TCR-T utilizing Ziopharm’s Sleeping Beauty platform. This trial can be characterized as from the patient and for the patient. As autologous T-cells are genetically modified using TCRs obtained from the patient to target of suite of their own tumor-specific neoantigens. This is a superb example of personalized immunotherapy. This trial is under the control of the NCI and Dr. Rosenberg’s team is already working to detect neoantigens to be targeted isolating the TCRs and identifying the patients. In other words, while the NCI completes final internal site activities, they are at the same time facilitating their ability to enroll patients on to the clinical trial which makes the trial more efficient over the longer-term. The second major event which is Ziopharm exclusively licensed intellectual property from the NCI for the development and commercialization of TCR-T for cancer including TCRs against neoantigens in the important hotspots KRAS, P53 and EGFR for transpose on technology. This license immediately created a second clinical path for our company to use a broad collection or library if you would of pre-prepared TCRs targeting these hotspots. These hotspots are important as they are pan cancer, in other words they occur in multiple types of tumors. This increases the commercial appeal of the TCR library as it expands the eligibility of patients to have a range of solid tumors and to have rapidly deliver the Sleeping Beauty modified T-cell products. We refer to this trial as from a donor for multiple patients. This terminology highlights that the specificity of patient derived T-cells is redirected to hotspots targeted, targets by expressing TCRs withdrawn from the library that were generated from third-parties in this case, starting with the NCI’s library. We are working on the infrastructure and partners to leverage the NCI’s experience, so that Ziopharm can continue advancing the TCR-T technologies. You will hear more about this in the coming months, but one important piece is the hiring of experienced scientists and other personnel to Ziopharm as we execute on this program. From the slides presented during our webcast, we cited publications about work that has been undertaken to evaluate and validate the Sleeping Beauty platform, a prominent author of those publications is Dr. Drew Deniger who has worked closely with Dr. Rosenberg at the NCI since 2013. He served as a lead investigator for the Group’s efforts in three initiatives; identifying hotspot neoantigens and the associated TCRs for T-cell therapy, targeting neoantigens in cancers and preparing for the start of the upcoming clinical trials using the Sleeping Beauty platform to generate TCR-T targeting neoantigens. In July, we announced that Drew was joining Ziopharm to lead our TCR-T efforts targeting neoantigens for personalized immunotherapy of solid tumors. He will be based in our Houston offices, collaborating closely with Dr. Ellee de Groot, our EVP and GM of Cell Therapy and while Drew could not be with us in Boston today, we are delighted that he can join us by phone. So, welcome Drew.

Thank you, Laurence for the generous introduction and kind words. Good morning everyone. I am thrilled to be joining Ziopharm in such an important time in the company’s history. As Laurence noted, evaluating and validating the Sleeping Beauty platform has been a research priority during my six years of work directly with Dr. Rosenberg at the NCI. It is clear to me that utilizing the Sleeping Beauty genetically modified T-cells as a compelling path to treat - treating solid tumors and I am excited to be able to join Laurence, Ellee and the Ziopharm team as we advance TCR-T into the clinic with two important shots on goal. First, Ziopharm is planning a trial that can broadly enroll recipients with multiple types of tumors as the TCR is targeting multiple neoantigens are made from and for the patient, similar to our experience targeting patient-specific neoantigens with TCR modified T-cells at the NCI. Second, is a TCR-T trial referred to as from a donor for multiple patients treating with the library of TCRs that target shared neoantigen hotspots. Thus, I will lead our efforts to expand the library of TCRs reactive to neoantigens with commonly mutated cancer genes including KRAS, P53 and EGFR. I participated in growing the hotspot library, TCR library at the NCI and Ziopharm’s broad license with the NCI gives the company a very powerful and differentiating starting point. The initiation of the NCI trial is eminent. This trial is a culmination of several years of work for Laurence, Dr. Rosenberg and me, as well as a large group of supportive people at NCI and Ziopharm. The NCI is completing the necessary final internal steps to activate the trial. As the final NCI boxes are being shut, we stand ready to execute on our own efforts to replicate the NCI process for commercial use and the later phase clinical trials. I’ve spent many years at the NCI working on this project and it’s very exciting to see the clinical trial is so close to opening and treating patients with solid tumors who are in serious need of effective therapy. The NCI would not have submitted the IND and we would not be going forward unless they had a very robust and scalable approach based on the work I have up to them. As I was thinking about the opportunity to speak with you today, I anticipated three questions you might have. So let me walk through my answers. First, how does Sleeping Beauty, how does this Sleeping Beauty approach compared to other genetic transfer technologies that we have seen or worked with for TCR-T? And my answer to this question is direct and brief. This is the path forward. The infusion of T-cells is the answer for eliminating solid tumors. They will likely visit by genetic modification and targeting of the tumor through an introduced immune receptor. TCRs have an amazing ability to servile all parts of the tumor such that the entirety of the cancers open the targeting by T-cells. Sleeping Beauty has a unique advantage over competing technologies, because it only requires plasma DNA for genetic transfer of the TCR. That simplifies the process, lowers to cause some speeds up to throughput by which we can do business. Sleeping Beauty and mutated neoantigen TCRs are the perfect marriage and my excitement level could not be higher. Ziopharm’s technology and approach to TCR-T is years in the making and I believe we have a considerable lead in terms of what we have learned to-date and with what Ziopharm has recently licensed. The second question is, based on summarizing my work with Dr. Rosenberg at the NCI. Some of our new accomplishments are worth noting. I was able to adapt the Sleeping Beauty system to efficiently express neoantigen-specific TCRs and then went on to lead the development of a manufacturing process to produce clinical-grade T-cells that were genetically modified with the TCR transpose on and to target neoantigens. This process was further adapted to generate populations of T-cells with several specificities expressing multiple TCRs, which addresses the complexity of the tumor antigen space and which is the basis of the recently cleared IND. This work also provided the impetus for me to further adapt the Sleeping Beauty system to take advantage of a library of TCRs that I was uncovering which is now the basis of the planned hotspot trial. By joining Ziopharm, I will now be able to advance this work toward the commercialization of TCR-T as warrants us envisioned. The third question is what is special about Sleeping Beauty TCR-T trial at the NCI? The NCI has an unmatched ability to quickly identify T-cells with specificity to patient-derived neoantigens and to isolate their mutation reactive TCRs and time for therapy. They are blueprint moving forward and I will implement the best of their practices at Ziopharm to move us towards commercialization of personalized TCR cell therapy. The Sleeping Beauty clinical trial at the NCI is unique as it is the first non-viral TCR protocol in their esteemed history. This protocol also lays the groundwork for future Ziopharm clinical trials and establish critical infrastructure especially with regulators and logistical considerations. Moreover, we will continue to collaborate with Dr. Rosenberg and NCI in future Sleeping Beauty trials to advance his and our mission to eradicate cancer. Again, my confidence is high and I believe the core technology at Ziopharm indeed represents a potential game-changer in the treatment of solid tumors. Our foundation is in place. And I look forward to my part in building a great company. It is a real pleasure to be here and I thank you all for the chance to speak today. I am awaited to be here in Houston and look forward to all that lies ahead. Laurence, back to you.

Thank you, Drew. We appreciate you sharing your experience and perspectives. It is fantastic to have you here at Ziopharm. We would like to you drop from the call, so that you can get back to the team in Houston. In summary, the advancements and additions we have made to our TCR-T program underscores the prominent role Ziopharm expects to play in this evolving space. We are working with the right team with Dr. Rosenberg at the NCI and Drew and colleagues here at Ziopharm and we are targeting the right targets neoantigens inside and outside hotspots with the right tool, the Sleeping Beauty system to genetically modify patient-derived T-cells. Combined, this creates two compelling clinical paths or two shots on goal for Ziopharm to pursue in the future. I will now touch upon our other two programs. Let me turn to the CAR-T program. Our second program also built on the Sleeping Beauty platform is the Rapid Personalized Manufacturer or as we refer to as RPM of CD-19 specific CAR-T which we are advancing in collaboration with MD Anderson cancer center in the United States and through our joint venture, Eden BioCell for Greater China. The technology associated with Rapid Personalized Manufacturer is designed to generate CAR-T within two days of gene transfer. We reiterate our plan to commence a third-generation Phase 1 trial for rapid personalized manufacturer of Sleeping Beauty CD-19 specific CAR-T with membrane bound IL-15 later this year with colleagues at MD Anderson. With independence from our former partner, we set two challenges for ourselves. The first was to improve the manufacturing process and the second was to evaluate the CAR-T space for unrecognized needs from a clinical and perhaps competitive viewpoint. Let me now share with you the three learnings from these past ten months. The first is that we remained focused on the only approved CAR-T target which is of course CD-19. Recall that Ziopharm among other milestones renegotiated its past relationships last October gaining exclusive rights for CD-19 and one other unnamed CAR targets. Our two CAR targets have been validated to work in the clinic with the hurdles of cost and manufacturing complexity rob investors and patients of achieving their potential. We cannot justify the work required to validate and develop new untested CAR-T targets, given the expense and time needed while competing in the crowded TCR – excuse me – in the crowded CAR-T space. However, what is needed and what Ziopharm seeks to provide is an approach to reduce the cost and complexity for the two existing CAR targets that have commercial appeals. Furthermore, our top-line strategic plan is based on our findings that TCRs will be greatly superior to CARs for the T-cell targeting of solid tumors. As this is largely untapped territory, it represents another significant opportunity for us. Secondly, during the past ten months of work, we have understood how to produce T-cells to achieve the threshold of 70% viability as required by the FDA. This gives us great confidence in moving forward with clinical trials. Thirdly, we have identified an opportunity for CD-19 specific CAR-T that we believe is special to Ziopharm’s efforts. We base this on the time-honored knowledge that the only established care for patients with acute lymphoblastic leukemia or ALL is allogenic, bone marrow transplantation. This is why many patients who currently received CD-19 specific CAR-T from commercially approved therapies go on to receive a transplant as treating physicians are justifiably concerned about relapse. This just in case mentality further drives up the cost for these patients as they now want to go not one but two expensive procedures. CAR-T and bone marrow transplantation. This represents an opening for Ziopharm which we wish to seize by infusing our very rapidly manufactured CAR-T in patients who relapse after allogenic bone marrow transplantation. While transplantation is established as a cure for some patients with ALL, a sizable number still relapse. This is a death for a clinical situation as there are no approved therapies and Ziopharm will now step into fill this void. Thus, we have prioritized these patients who appear to go unnoticed as a path forward. We expect to file an investigational new drug application with FDA later this year to treat recipients with CD-19 expressing leukemias and lymphomas who relapse after transplantation. Thus, Ziopharm will deliver a product consisting of healthy donor-derived or allogenic T-cells that were proved this year the concept of Rapid Personalized Manufacturing of CAR-T. The trial design will also help assess whether a lymphoid depletion is needed and whether we can favorably impact the rates of relapse particularly for patients who progress with CD-19 negative leukemia, which is currently undermining the effectiveness of commercially available CAR-T. While we have prioritized this effort, we will continue to advance our autologous CD-19 program to allow us to address the entire continuum of patients with CD-19 expressing malignancies. With regard to Eden BioCell, we returned from Asia following productive meetings regarding our joint venture with our partner the Triumph Therapeutics to develop CD-19 specific CAR-T based on our rapid personalized manufacturer. In Shanghai, we toured their GMP facilities and met with the leadership team to advance our plans for clinical development. This trip reinforced why our partner the Triumph are ideal for this joint venture as they have in Greater China excellent relationships with frontline positions and officials at leading hospitals and regulatory bodies, a commitment to conduct high-quality trials and state-of-the-art facilities. Finally, a few words on our Controlled IL-12 program. Ziopharm can precisely regulate the production of human interleukin12 which activates the immune system to recruit cancer-fighting T-cells into solid tumors. This powerful switch technology is the basis for developing IL-12 as a drug for the treatment of recurrent glioblastoma. By advancing controlled IL-12 as monotherapy and in combination with immune checkpoint inhibitors, in our clinical studies, we have demonstrated an apparent improvement in overall survival, which is likely based on IL-12’s ability to recruit and sustain a T-Cell response within the tumor. These T-cells upregulate PD1 which provide the compelling rationale to combine our controlled IL-12 with immune checkpoint inhibitors. Let me quickly emphasize a couple of clinical points regarding our recent news. Firstly, in our Phase 1 combination study with OPDIVO, we completed enrollment in the third dosing cohort during the second quarter. Based on a favorable safety profile, our trial investigators requested and received approval to expand this study. We now expect to enroll up to 12 additional patients at the highest dosing level. Next, we have begun enrollment in our Phase 2 combination with Regeneron’s Libtayo in June. With about ten sites enrolling to this approximately 30 patient study and the same strong patients and clinician interest level we have seen in the OPDIVO study, we anticipate that this trial will briskly enroll. Next, as per AACR last June, we expect to provide another interim data update for monotherapy and combination therapy trials at the Society of Neuro-Oncology Annual Meeting in New Orleans, this November. And lastly, as announced just this morning, we are delighted that the program received a positive opinion for the orphan drug designation in Europe. In closing, the past quarter has been one of if not the most productive periods during my tenure at Ziopharm. Our efforts to reshape, restructure and refocus the company beginning in the fourth quarter of last year with transformational and we have work to build on that momentum ever since. Over these past ten months, Ziopharm has emerged as a tangibly different company. We are executing on our timelines. We have secured our balance sheet and we continue to attract and welcome new talent throughout the organization. We have the vision, the data, resources and partnerships to continue to deliver on the expectations of our shareholders, the needs of our patients and the high standards we set for ourselves. And with that, we turn the call over to the operator for questions.

[Operator Instructions] Our first question is from David Novak with Raymond James. Your line is open.

Good morning. Thanks for taking my questions and congratulations on the outstanding progress in the quarter. So, two questions from me. Starting with the third-generation CAR-T program, could you update us as to where the Houston engineers currently are in terms of viable, non-viable cell ratio? And maybe a bit of color into what type of protocol tweaks have been are being implemented to drive higher viability?

Yes, thanks very much. So, the question around really what process development and the goal post of achieving 70% viability, as you and the listeners on this call know, that was one of the major feedbacks from the FDA regarding the whole – for this clinical trial. My comments today were really designed to give a reassurance that that 70% benchmark can be achieved. So, this is really what we’ve been working on in a lot over these past months, essentially since we reshaped our relationship with our former partner. And it really involves an engineering solution that the team in Houston have executed on. I don’t want to go into too many details for obvious issues of competitive intelligence, but suffice to say, it is both elegant and within the conscience of the rapid personalized manufacturing process. So it could be readily accomplished within the two days that we designed for this procedure.

Excellent. And just for a follow-up, maybe moving on to the controlled IL-12 program, I think the highest OPDIVO dose we’ve seen to-date is 3 mgs per kg q2w if I remember correctly, in the – starting dose with Libtayo is 315 mg, q3w. Could you just walk me through the rationale and establishing the starting dose of Libtayo versus the max dose tested in the Phase 1 combo with OPDIVO?

Yes. Thank you for the question. And it’s actually very good that – to clarify this. So, the Phase 1 study with OPDIVO accomplished several goals. The first was – for the first time, IL-12 was combined with an immune checkpoint inhibitor and targeting PD1 for patients with brain tumor. That learning was accomplished by series of cohorts in which the IL-12 dosing and the PD1 or OPDIVO dosing were stepped up. We announced that essentially we have achieve maximal dosing for both the IL-12 and the OPDIVO and now we are expanding that study. So, that playbook if you would for the Phase 1 trial gave us the insight, the maximal dosing of PD1 inhibitor was safe. We then translated that data into the Phase 2 trial with Regeneron’s asset LIBTAYO. We now can enroll to a Phase 2 trial without having to do this step function, because we can give essentially the maximum dose of the LIBTAYO with what we also know to be the maximum dose that appears to be efficacious of IL-12. So, in sum, the Phase 2 trial really builds up the Phase 1 trial, because LIBTAYO comes in at that maximum dosing.

Got you. Perfect. Well, thank you very much for the color and congrats again on the progress and I’ll drop back in the queue.

Thanks.

Thank you. And our next question is from Thomas Flaten with Lake Street Capital. Your line is open.

Thank you. Good morning. Just to follow-up on the question about the CAR-T program. Can you give us some color on the ongoing discussions with FDA and the timing of resolution of the hold?

Yes. Thank you. We have prioritized the allogenic trial over the autologous trial. So let me just walk through that terminology. We see white space for patients who relapse after allogenic bone marrow transplantation who had CD-19 specific allergies. That is to be frank, a death sentence for those patients. But it’s a real opportunity now for Ziopharm because with our rapid manufacturing process, we can infuse donor-derived T-cells in that context and as I mentioned in my prepared remarks, ancillary questions could be answered around lympho depletion and relapse rates. The playbook if you would for that is based on dialogue with the regulators. The guidance that we will submit a new IND and that’s an important part of the puzzle, but it should not disturb the investor base, because it doesn’t disrupt our timelines. As we have said all along, we will be in the clinic with this program. We will initiate a trial in this program this year. The hold issues associated with the autologous CAR-T really allows to know what the FDA needs to hear in this new IND. So, all the process developments that we have done in the autologous trial if you would is being applied to this new IND, hence I can get essentially confidence about the timelines. Let me just add one other, I think, framing statement. One quarter ago, Ziopharm had one shot on goal for TCR program, that was really from the patient and for the patient. And one shot on goal in the CAR-T program and that was the autologous CAR-T therapy. By one quarter later, this quarter, we have now essentially given two shots on goal for both of those programs. In the TCR-T program, we have – from the patient, for the patient and from a donor for multiple patients, that’s the hotspot trial. And in the CAR-T program, we’ve expanded essentially beyond the autologous cell therapy setting to now include its allogenic cell therapy program which we think will be I think special to our technology.

That’s great. And to confirm the allogenic study, will that be done in collaboration with MD Anderson as well, or is that separate from the agreement you have with them?

No, that’s within the compliance of the agreement at MD Anderson.

Got it. Thank you. I’ll get back in the queue.

And our next question comes from the line of I-Eh Jen with Laidlaw. Your line is open.

Good morning and thanks for taking the questions and congrats for all the advancements. I have two questions basically, so far related to ASP. First one is for the TCR-T program and the NCI. Could you give us little bit more color regarding what might be the activity over the next 12 months in terms of the study, Phase 1 study? And also, how would you guys prioritize between the hotspots and individual or de novo neoantigens, was that based on patient indication? Or any other criteria?

That is a great question, I-Eh. Thank you. So in terms of the NCI activity over the next 12 months, the investor base who were really good benchmarking us on the clinical trial data. That’s obviously where we are heading and that we expect to be able to share in the next 12 months. It’s a process. It starts essentially with Drew. All his fine work. It then bubbles up through the IND, regulatory gates that we’ve now passed. It’s been executing on that IND, the NCI going through essential their internal processes and then it’s beginning the trial, this for the patient, from the patient, identifying the neoantigens, identifying the TCRs and manufacturing the process. This is what the NCI is superb at. So, as essentially this engine engages with our Sleeping Beauty system over the next 12 months, you will start seeing the data pumps out from the NCI. And of course, those learnings will then translate into Ziopharm’s activities as we build out our own internal programs. So let me transition now to your other question which is also very perceptive and that is, how will Ziopharm manage essentially or prioritize between the two trials, from the patient, for the patient, that idea that we are harvesting the patients’ own TCRs and delivering them back against a suite of targets and then the hotspot trial from a donor for multiple patients in which patients are being screened and then libraries are being extracted from the shelves to make their product. That’s essentially two opportunities can run in parallel and given the number of patients quite frankly with solid tumors, there is easily enough demand for both of those trials. However, there is also opportunity for patients to naturally progress through essentially the two trial designs. Imagine for instance a patient who comes in tomorrow into Ziopharm, he or she to be screened essentially and the TCRs to be identified, but at the same time, we could also look to see if they have a hotspot mutation and we have a TCR on the shelf. So we can make a decision really in the patient’s best interest. Do they have a hotspot TCR, if so, boom. They got right on the trial. Or are they part of the broader population for which they don’t have a TCR in that library and then we have essentially their requisite and quite frankly, preeminent technology to develop their own T-cell receptors for that particular patient.

Okay, great. Thanks a lot. I have one more – one follow-up question , which actually came from investors. This is related to the CAR-T studies in Houston. And you would like it, I know you mentioned about a 70% threshold by the FDA. The question is, how could you ensure the consistency and the reproducibility of the way you try to achieve that? And also, by achieving that, could that potentially have any other adverse sort of lot of patients which will be impacting other aspects of the CAR-T?

Yes, that’s a really good question, as well. So, just in case, there is some difficulty on the line, I’ll repeat it back for the audience, so, I-Eh’s question really went around the consistency at the process to achieve that 70% benchmark with respect to the production of the CAR-T. So, one solution is, we’ve repeated this a lot of times, and that’s really you know, what’s expected I think of a first-class drug developer. So we have set a data that allows us to essentially have a confidence into both around that 70% benchmark. But there is also underlying sophistication is your question, and that is around the heterogeneity of patients. I mean, sitting around this room, people look different and that’s not just their outside appearance, but inside they are different. In other words, people have different types of T-cells in terms of quality, and quantity. But Ziopharm is soul for that, because the first is, by having a very rapid manufacturing process, you’ve essentially limiting the variability that’s introduced during the growth of the T-cells. Other companies, for instance, viral producing, viral using companies have a pretty lengthy production process and variability creeps in during those days to weeks to manufacture. And the second way, essentially to smooth out the heterogeneity between people is the use of IL-15. This is such a powerful signal for T-cells to go and grow. If patients have for instance, poor quality T-cells, that IL-15 heals that and allows those T-cells essentially then to execute their function inside the body.

Okay, great. That’s very, very helpful. And again, congrats on the progress at multiple fronts.

Thank you.

And our final question is from Sean Lee with H.C. Wainwright. Your line is open.

Good morning guys. And thank you for taking my questions. My first question is on the controlled IL-12 program. Could you give us some estimates on the expected timelines for the currently enrolling cohorts? When do you expect them could be fully enrolled? And when can we see some updates on the results?

Yes, thanks very much, Sean. So, the expansion study, which is that monotherapy study, really designed to drill in on what we think is the optimum dose of veledimex 20 milligrams with the right environment, in other words, low-dose steroids. That expansion cohort is already approved. And we did it very rapidly and we now have those additional 36 or so patients that we are added to the prior Phase 1 dataset and that’s now maturing and we will start to see that data towards the end of the year as I indicated Society of Neuro-Oncology would be one byte of that data and then into next year. The two combination trial, the first being a Phase 1 trial with OPDIVO and the second being the Phase 2 trial with LIBTAYO, those trials are both running in parallel but they are slightly different, because the Phase 1 trial with OPDIVO essentially had completed its dosing when achieved the maximum dose level, but we had demand for that trial and put on an additional about 12 patients. So, we will have essentially an oversubscribed dataset that will again readout the initial byte being around Society of Neuro-Oncology November of this year and then into next year. And then lastly, the combination trial with cemiplimab or LIBTAYO, that’s a Phase 2 trial we’ve just announced today around the enrollment. David made that announcement in his prepared remarks. So we are accruing and quite frankly, given the – excuse me, given the patients and the providers’ enthusiasm, it really should go very briskly. I would think it will be done roughly by the end of this year. So, you’ll start to see that clinical data then percolate out in 2020.

I think also this is a good example, a good question to demonstrate the importance of the financing we just closed and the idea that our datasets in all three programs will provide us a maturity level that we think will be value creating. So, if you assume that we would have the potential to have all of our patients enrolled during the calendar year this year, and then you secondarily assume that any follow-up greater than nine months is meaningful in the rGBM space. The dataset in 2020 would be extremely powerful for us for the IL-12 program.

Great. Thank you for the clarity on that. My second question is on the Eden BioCell venture. In the prepared remarks you mentioned that the GMP facility in China is almost complete. I am just wondering what are the next steps planned for that program?

Yes, so, thanks very much. So, it’s just remarkable what can be accomplished in Greater China. We visited at the beginning of the year and then just a few short months later, it’s gone from a work in progress to work that has really now maturity. People have been hired, infrastructure is established, GMP is coming online. This now enables us with our partner Eden BioCell to essentially begin the regulatory process to get the CAR-T trial going. So that’s where we are with them. It’s technology transfer from them. And they are hailing what we’ve learned and they are getting ready to execute on that trial for Greater China.

I see. And that’s all I have. Thank you again for taking my questions.

Thanks, Sean.

Thanks very much. So, just as a summary and closing from me, this has been an amazing last few months for us. I just thank my team for all the incredible hard work and for the support of our investors and our patients on our trial. So, thank you very much everyone.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone, have a great day.