Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Ziopharm Oncology Third Quarter 2019 Results Call. At this time all participants are in a listen only mode. Later we will conduct the question-and-answer session and instructions will follow at that time. [Operator instructions] As a reminder, this call may be recorded. I would now like to turn the conference over to Mr. Chris Taylor, Vice President of Investor Relations and Corporate Communications. Sir, please go ahead.

Thank you, operator. Good afternoon, and welcome to the Ziopharm Oncology conference call and webcast to review results for the third quarter of 2019. This afternoon, we filed our 10-Q and issued our third quarter news release, both of which are available in the Investor's section of our website, ziopharm.com. For informational purposes, we have also included in our webcast a set of PowerPoint slides to accompany today's commentary. These slides can also be found on our website in the Investor's Section. 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 risks, 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. Participating on our call today for Ziopharm will be Dr. Laurence Cooper, Chief Executive Officer, Dr. David Mauney, President, and Satyavrat Shukla, CFO. Following commentary from our management team, we will open the call for Q&A. In the interest of time, we kindly request that you have one question and follow-up and then please feel free to return to the queue. Thank you. And to lead things off, I'll turn the call over to David Mauney. Good afternoon, David.

Thanks, Chris and good afternoon to everyone. Ziopharm is a company with a very big vision. Since late 2018, we have progressively shifted our focus towards our TCR program, in an effort where we believe we have the technology and building blocks to address the large market of solid tumor patients with individualized cancer therapies. When considered in totality, we are unaware of any peer who can rival us. It starts with a clinically validated, non-viral gene transfer solution for which we have years of clinical experience that we believe can be used to manufacture patient specific drugs that allow us to be agnostic to the target or the tumor type. It is a technology platform that has been widely published. And going into the clinic for the first time ever with TCR-T, with a world-leading clinician and scientist at the NCI, Dr. Steve Rosenberg. We didn't stop there as just last week, we partnered with the largest cancer center in the world and have already confirmed broad interest in our platform across multiple oncology subspecialties. We will now enjoy access to patients, samples, and the full punch of MD Anderson institutionally. The economics of the deal are success-based and paid in the future, demonstrating the full confidence the institution places in our program going forward. Additionally, we have licensed what we believe is a world-class library of relevant TCRs and have recruited a key scientist from the NCI to help lead our clinical path for TCR-T within the walls of Ziopharm. We are building out our team in Houston rapidly and are proud to be recruiting highly successful and experienced industry leaders away from companies like Novartis, for example, to join Ziopharm. Finally, the NCI is about to treat the first patients using our technology in TCR-T in a…

Thanks, David and good afternoon everyone. As mentioned, one cornerstone to Ziopharm's future is our TCR-T program for solid tumors, for which we have made significant progress, even since our last call. Let me start by updating you on our clinical work at the NCI. As a reminder, this trial evaluates the infusion of T cells that are genetically modified with the Sleeping Beauty system to express one or more TCRs targeting personal neoantigens. The trial is under the control of Dr. Rosenberg and his team. We are pleased that the IND with the NCI is for a Phase II trial, which is a positive change since our last quarterly call. To highlight, the primary endpoint now being tumor response rate. The patients will be closely followed at the NCI with participants seen in clinic every few months, Thus, we will learn a great deal from each and every patient enrolled and associated data will likely be available in the weeks and months following the T cells infusions. Recall that Dr. Rosenberg is enrolling patients with a range of solid tumors, which will reveal how T cells tackle a variety of cancers. We will learn how each tumor type succumbs to the T cell infusions. We will learn how these T cells target tumor, which includes persistence and trafficking to the sites of cancer. I want to provide you with a sense of the opportunity for Ziopharm based on our CRADA with the NCI. Dr. Rosenberg estimates that T cells can recognize cancer antigens in over 80% of patients with tumors. There are approximately 1.5 million new cases of solid tumors each year in the United States. The solution we are developing with Dr. Rosenberg can target most, 80% or so, of these patients, which represent a massive opportunity for…

Thank you, Laurence. It's been a fast paced initial three months for me at Ziopharm and I am very excited as we advance our efforts to build a great community to bring our disruptive technologies to market. Throughout the organization, our team is intensely focused on executing on our strategic plan to advance transformative immunotherapies for patients and achieve the milestones, which will create value for the company and for our investors. Now, turning to the specific financial results for Ziopharm's third quarter of 2019. As noted in our news release and 10-Q, research and development expenses were $8.6 million for Q3 of 2019, compared to $8.3 million for Q3 of last year. G&A expenses were $4.8 million for the third quarter of 2019 compared to $4.3 million for the third quarter of 2018. On a cumulative basis, we recorded a one-time, non-cash charge of $60.8 million associated with the warrant exercise from the financing we completed in Q3. Reflecting that non-cash charge, net loss applicable to the common shareholders for the third quarter of 2019 was $74 million, or $0.43 per share, compared to a net loss of $18.7 million or $0.13 per share for the third quarter of 2018. For informational purposes only, if we exclude the one-time, non-cash charge of $60.8 million, net loss, which had been $13.2 million, or $0.08 per share, in line with the net loss reported in the first and second quarters of this year. On the financing side, during this past quarter, we announced that a group of our investors, led by MSC Partners, entered into an agreement to exercise existing warrants, providing more than $15 million in proceeds to the company. The company ended the quarter with unrestricted cash resources of approximately $88 million. Additionally, we also have a prepayment balance of approximately $21.5 million for clinical and preclinical work to be conducted by the company at MD Anderson Cancer Center. To summarize, we significantly strengthened our financial sheet -- balance sheet in the third quarter. Combined with the prepaid capital to fund our work at MD Anderson, we have more than $100 million of liquidity to put into our business and our cash takes us into the first half of 2021. We believe we have sufficient capital to see critical data readouts in each of our three core programs. And now, I will hand the call back to Laurence for a final thought.

Thank you. In closing, we are proud of all that has been accomplished in the past quarter, and indeed the past year. We're putting key pieces in place today to enable Ziopharm to attain our mission to become a leading global commercial stage immune-oncology company. With that, we'll return the call to the operator for questions.

[Operator Instructions] Your first question comes from David Novak of Raymond James. Your line is now open.

So to kick it off, I was hoping you might be able to provide us a bit of color around the new R&D agreement with MD Anderson to expand the TCR program, specifically how you will be prioritizing expanding the TCR library versus completing IND-enabling studies. And maybe some thoughts as to how the work at MD Anderson will be differentiated from the work being done at NCI, or how it will complement the NCI development?

So in terms of the prioritization versus completing the IND-enabling studies, they actually go hand-in-hand. The way I would like investors to think about this is that there's basically two parts to the therapy. One part of the therapy is identifying the T cell receptors. For instance, T cell receptors against the hotpot mutations. And the second part is the genetic engineering of the T cells to express those T cell receptors. You'll recall that the IND at the NCI actually is the playbook for the manufacture, for that second part of the puzzle, if you would. So when you talk about IND-enabling studies, those have been done. We essentially have that playbook and we use a cassette-based mentality essentially to swap in different T-cell receptors into the plasmas that allow us essentially to generate targets -- generate T-cells for each particular target. So the IND studies have that really robust foundation. The generation of the T cell receptors, the prioritization of that work, if you will, at MD Anderson, is really built on the tight relationship we have with them now under this R&D agreement. It really actually allows us to have the intellectual property associated with the discovery of those T-cell receptors. And importantly, we have relationships with key faculty members there, really the leaders of the institution who have access to many, many patients with solid tumors. That essentially synergy between us and the investigators allows, then, tissue to flow into our laboratories. And as we mentioned in our press release, we are actually expanding our footprint in MD Anderson to handle this material. And we can therefore use these biologic samples to essentially look for the T cell receptors that are either on a personalized basis, or that would add to the library going into the hotspots. So this is a way I think about, essentially as a win. Because we have the playbook for manufacture. We have the materials essentially from MD Anderson to be able to go after the T cell receptors. And the whole thing has been jumpstarted by the NCI because we're using their technology to discover the TCRs and we're using essentially the playbook, if you would, or the manufacturing SOPs and whatnot to generate the T cells.

And as a quick follow-up, going through ASH abstracts yesterday, I came across two interesting ones detailing RPM of both CARs and TCRs, co-expressing membrane bound IL-15, as you highlighted in your prepared remarks. I've received a number of questions around RPM viability and why the company believes that clinically in grafting cells at 70% viability should not be materially different from in grafting cells at 90% viability. So maybe some comments around that. And also, some comments around the significance of membrane bound IL-15 to both drive in vivo persistence and tackle heterogeneity?

So in terms of the viability. So the benchmark there is guided by the agency. They say product has to be 70% or greater viability. Ziopharm has achieved that threshold and that's really the basis of our IND. Whether the cells are 70% or 90% doesn't really make much difference in terms of the outcome in the preclinical models. And we've looked at actually that question. And just, again, just to kind of highlight, this is a living drug. So if you're putting in cells that are 70% viable, those cells will begat, in a doubling cycle, more cells, and then double again, and so forth and so on, that will grow in the patient. The reason we're able to say those statements with confidence is that we have that accelerator, that membrane bound IL-15 baked into the T cells, the CAR modified T cell, and now, our TCR modified T cell, that allows essentially for these cells when they go into the body, to grow in the patient. So to get at the heterogeneity question, that's -- in my mind that actually triggers a slightly different thought. So I want to make sure I get the crux of your question here, David. So for us, when we're generating T cells, using membrane-bound IL-15, we've deliberately and worked very hard to shorten the manufacturing to really capture the heterogeneity of cells that come out of the bloodstream, especially for instance, the naive pool. Because we think that that pool of cells has the greatest potential once it's put back into the patient. So unlike other companies that go through a growth of their cells in the incubator, those cells can actually be restricted in their heterogeneity, can be actually terminally what we call differentiated. And the door can be closed essentially on their ability to survive after infusion. Whereas with our technology being so rapid, we essentially keep, as if you would, the full portfolio, all the flavors of the T cells that come out of the person's bloodstream and we return them back to the patient soon thereafter.

Your next question comes from Thomas Flaten with Lake Street Capital. Your line is now open.

Specific to MD Anderson, a question around the pre-funding or the prepayment that already exists and then the commitment that you're expecting to make post-2021. Can you talk a little bit about how that's going to be distribute against -- across the TCR as well as the CAR-T programs and how we should think about additional commitments required in advance of 2021?

So that relationship about how we spend the money is actually governed by what we call the JSC, the Joint Steering Committee, of which MD Anderson is a member and also Ziopharm is a member. And the steering committee then reviews programs and makes resources available. Those -- essentially MD Anderson and Ziopharm are invested in the CAR program as well as increasingly, the TCR program. So over time, what you're going to see is that funds available and put into play for building out our infrastructure and importantly, for running and completing the 2 clinical trials I've described around the TCR-T space.

And then do you have any -- or could you provide us with some sense of timing for the initiation of the MD Anderson CAR-T program?

Yes, so we're working really hard to open that trial by the end of the year.

Your next question comes from Sean Lee of H.C. Wainwright. Your line is now open.

Just a quick one on the CAR-T program. I noticed that you are planning to do a donor-derived study in the U.S., while doing an autologous study in joint venture with Eden BioCell. So I was wondering what's the rationale behind these two parallel programs? Why not focus on one or the other for both studies?

So it's really a sequencing issue. So we start with the allogeneic RPM or rapid personalized manufacture of T cells. That really we saw as the fastest path to the clinic and to really get a sense of the technology for the investors and patients alike. We're still committed to the autologous CAR-T in both the United States and in greater China. So the way I would think about it for the purposes of the investor community is that we've essentially funded the work in greater China through our relationship in Eden BioCell. And that's essentially now has money, it has people, it has momentum, and it's rolling. And we'll have more to say essentially as the trials then bubble up. In terms of the MD Anderson agreement and the work in the United States, that's also, if you would, somewhat prefunded. Because really, it's the money that's essentially at MD Anderson that could be used to run the CAR-T programs.

Thank you. At this time, we have no further questions and I will turn the call back to Dr. Cooper for final remarks.

Thanks very much everyone and I wish everybody a good Thanksgiving week to come and thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you so much for participating. You may now disconnect.