Alaunos Therapeutics, Inc. (TCRT) Q2 2020 Earnings Report, Transcript and Summary

Greetings, and welcome to the ZIOPHARM Oncology Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Chris Taylor, Vice President of Investor Relations and Corporate Communications.

Thank you, Operator. Good afternoon and welcome to the ZIOPHARM Oncology conference call and webcast to review results for the second quarter ended June 30, 2020. This afternoon we filed our 10-Q and issued our second quarter financial news release, both of which are available in the Investors section of our Web site, 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 Web site in the Investors 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 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. Participating on our call today for ZIOPHARM will be Dr. Laurence Cooper, Chief Executive Officer; and Sath Shukla, Chief Financial Officer. Following commentary from our management team, we will open the call for Q&A. In the interest of time, we kindly request that you ask one question and a follow-up as needed, and then please feel free to return to the queue. Thank you. And to get started, I'll turn the call over to Dr. Cooper. Good afternoon, Laurence.

Thank you, Chris, and good day everyone. We are pleased to update during on our progress this quarter, a summary of which is provided on slide number three. COVID-19 continued to dominate the new cycle and impact everyday life this quarter. We are working within the local and regional guidelines to keep our employees safe. We have adapted to the new paradigm, and we are executing on all fronts. We are mindful that the pandemic is ongoing, and may need to further adapt in the future to the changing landscape. First, I will provide a review of our programs, specifically at the NCI and MD Anderson. Starting with our TCR-T program, where we continue to advance towards the dosing of the first patient in this Phase 2 trial led by Dr. Steven Rosenberg at the NCI, all feel an urgency to begin dosing as quickly and safely as possible, and the NCI has informed us that laboratory functions are incrementally coming back online. As mentioned on earlier updates, we undertook engineering runs at our facility in Houston, while the NCI was shutdown, and have now relayed that information back to Dr. Rosenberg's team to help the NCI accelerate their enrollment plans as they reopen during the ongoing pandemic. In addition, they're beginning to proactively screen referrals for patients to neoantigens and T-cell receptors or TCRs to render them eligible for the trial. This is needed. As a result of the pandemic and resulting shutdowns, some of the patients who were anticipated to be treated were unfortunately lost due to progression of their malignant disease. We appreciate the NCI's strong support, and look forward to updating you on their progress. Now, turning to our TCR-T program that we are running from ZIOPHARM's facilities alongside the MD Anderson Cancer Center campus in Houston; our staff is establishing the laboratory and bioinformatics that are commercially-oriented to identify neoantigens and TCRs for the personalized TCR-T and library TCR-T programs. In addition to identification of TCRs from our internal program, we expect to continue to in-license additional TCRs from the NCI, thus further expanding the number of receptors in our library targeting shared neoantigens in hotspots. The added receptors are anticipated to improve the chance that a patient identified during the screening process can receive T-cells genetically modified using a TCR from the library. Thus, by enlarging the library through in-licensing or identifying ourselves, we are creating a powerful asset and database, which we will continue to grow over time. We have a jumpstart on the company's work in Houston, given the Investigational New Drug application or IND at the NCI, and the feedback from the FDA on our pre-IND package. Our teams are focused on generating the CMC, a non-clinical IND-enabling data for submission of ZIOPHARM's sponsored IND. In the FDA feedback received earlier this year, we obtained the helpful guidance that our planned IND submission could initially be utilized for the human application of multiple targets and multiple TCRS. This will save us time, and streamline our regulatory submission to target cancers such as gynecologic, colorectal, pancreatic, non-small cell lung cancer, and cholangiocarcinoma. This progress means that the company will likely submit its IND in early 2021 with anticipated enrollments beginning in mid-2021. Given the terrific momentum building our library, we plan to initially enroll to this TCR-T arm under our ZIOPHARM sponsored IND, and then enroll to the personalized TCR-T arm. As a way of highlighting the rapid pace of our work, we have progressed from licensing the core technology to anticipated dosing of TCR-T in the ZIOPHARM's sponsored clinical trial in approximately two years. Moving to our Controlled IL-04 program, we have dosed the first patient in our DIPG Phase 1/2 study in pediatric brain tumors at Lurie Cancer Center in Chicago under the care of Dr. Stuart Goldman. This trial builds upon our experience with Recurrent Glioblastoma or rGBM, and extends the asset into another disease type, thus building value of controlled IL-12 as a platform technology. Additional children are being evaluated, and we are targeting enrollment of 12 pediatric patients with DIPG in the initial portion of the trial, which is designed to evaluate the safety and tolerability of a single-intratumoral injection of Ad-RTS-hIL-12, given along with oral veledimex. Other referral centers participating in the trial are the Dana Farber Cancer Institute in Boston, and the University of California, San Francisco. DIPG provides another potential regulatory path in addition to targeting rGBM for commercial approval of controlled IL-12 with a timeline and economics that appear favorable for the company. In our Phase 2 combination study with Regeneron's Libtayo in patients with rGBM, we completed enrollment in Q2 as anticipated with 40 patients. Thanks to the ongoing dedication of our clinicians and trial sites. This study is designed to evaluate the safety and efficacy of controlled IL-12 in combination with a PD-1 inhibitor. The patients received IL-12 intratumorally at the time of surgical resection, plus 20 milligrams of oral veledimex for 14 days. As designed, patients are also receiving intravenous Libtayo every three weeks until documented progression or withdrawal from the study. Our scientific and clinical teams were pleased to present three posters at this year's American Society of Clinical Oncology Virtual Annual Meeting, and we expect additional data from all monotherapy and combination studies to be presented at one or more scientific conferences later this year. In our CAR-T program, the process for an IND filing in Taiwan is underway with TriArm Therapeutics, coordinating the clinical trial and IND activities. Eden BioCell, a joint venture between ZIOPHARM and TriArm has filed a preliminary IND package with the Center for Drug Evaluation or CDE in Taiwan for the assessment of a proposed clinical trial with our autologous CD19-specific membrane bound CAR, co-expressed with membrane bound IL-15, produced using Rapid Personalized Manufacturing or RPM. As a reminder, the RPM process enables CAR-T to be infused the day after gene transfer. This assessment by Taiwanese CDE is anticipated to facilitate and potentially expedite the approval of the final IND submission expected by the end of this year. This trial is anticipated to be one of the first CAR-T studies in Taiwan. Based on their expertise and extensive clinical trial network in Greater China, the TriArm team is actively considering additional clinical sites for autologous CD19 CAR-T program in the future. Regarding our CD19 specific CAR-T Program at MD Anderson, we have secured approval to commence enrollment in the study with allogeneic donor derived T cells in patients with CD19 expressing malignancies, who have relapsed after bone marrow transplantation, and we anticipate that those thing will begin shortly. This was accomplished as MD Anderson emerges from its COVID-19 shutdown and is validation of the importance of this study. We are pleased to have this trial open to enrollment and we are excited about the opportunity. To summarize, we and our partners that make clinical progress in the past quarter including, first completing enrollments in our Phase 2 controlled IL-12 combo study; second, dosing the first pediatric patient in DIPG study for controlled IL-12; third, presenting additional data on controlled IL-12 at this year's ASCO conference; fourth, undertaking regulatory filings in Taiwan for our autologous Phase 1 CD-19 specific CAR-T RPM study; and lastly initiating our allogenic Phase 1 CD19-Specific CAR-T RPM study at MD Anderson. On the corporate side, as we had announced at the beginning of the year, we continue to pursue opportunities to strengthen our board and management. The Board is currently deliberating upon the outcome of our recent annual meeting and the feedback received. Building on the search process, which had began earlier this year, our Directors are considering potential replacements and/or additions to the board. To this end, we were pleased to announce recently the addition of James Huang to our Board of Directors. We are also building out our Scientific Advisory Board or SAP, beginning with Dr. Carl June as Chair. As we look to other changes, we have previously discussed plans to recruit a Chief Medical Officer, and the search is ongoing. In addition, we also initiated a search for executives to strengthen the senior team reporting to me. This is an exciting time for ZIOPHARM, and the time is right to look for opportunities to strengthen our board and build out the senior team. The time is also right for an R&D day, providing an opportunity for shareholders, analysts and other members of the investment community to hear from our team, as well as leaders of our collaborative clinical programs. Dr. Rosenberg from the NCI and others had already agreed to participate for an event, which will be scheduled this fall. We are looking forward to sharing further details with you as the date approaches. This is also an appropriate time to showcase our technology and plans as we have accomplished so much since forging independence about 22 months ago. We are developing cutting-edge science and have rapidly and cost-effectively put in place the necessary support system, leading-edge technologies, and infrastructure to accomplish our goals. Slide four provides an overview of these events and to summarize briefly here. We separated from our foreigner partner in October 2018, and now operate as an independent company. The FDA has cleared an IND for a Phase 2 solid tumor trial, using the Sleeping Beauty platform infusing Sleeping Beauty modified T-cells targeting unique neoantigens. This is the first non-viral TCR-T technology utilized at the NCI under the direction of Dr. Steven Rosenberg. We established our internal TCR-T program in 2019 with a recruitment of key leadership licensing of TCR hotspot library from NCI. Forged and expanded relationship with MD Anderson added new independent space on the MD Anderson campus, and received important feedback from the FDA for our first ZIOPHARM sponsored TCR-T clinical trial. We are expeditiously building out the capabilities in Houston, to establish a commercial path for our TCR-T program. We completed the initial phase of the expansion, and the team has already made meaningful contributions such as providing data to the NCI. The team in Houston is supporting our planned clinical program at the MD Anderson, which left two arms; first, library TCR-T targeting shared neoantigens in hotspot, and second, personalized TCR-T targeting unique antigens similar to the trial of the NCI. Despite the ongoing pandemic, we have made significant progress as we prepare for our corporate IND in early our 2021. Next in the U.S. we recently initiated a new study at MD Anderson aimed at further validating our RPM platform targeting CD19 with CAR-T. We formed our joint venture in Greater China, called Eden BioCell with funding committed by our partner TriArm Therapeutics. Our partners have made rapid progress building out a fantastic team and first grade facilities and set up at aggressively pursuing a clinical path developing RPM technology in Taiwan. The team is on track to file that IND this year with additional clinical opportunities to follow-up. Next, we received FDA Fast Track designation for controlled IL-12 and have enrolled three trials evaluating both monotherapy in combination for rGBM. The team has generated encouraging clinical data, which has been presented at ASCO, SNO, and in published form in science translational medicine. Most recently, we completed enrollment in our Phase 2 combination study with Libtayo and those are first DIPG patient in a pediatric study. Furthermore, we repopulated most of our board, as we forged independence, with the additions of Doug Pagán, Scott Braunstein, and Elan Ezickson in 2018, followed by two additions last year, with Dr. Chris Bowden, and Heidi Hagen. As mentioned earlier, we recently added James Huang to the board. Also, we named Dr. Carl June as Chairman of our SAB, and are adding other key players to join this group. New sell side analysts have initiated coverage on ZIOPHARM, and lastly, we have worked with ZIOPHARM in a strong financial position to weather the ongoing COVID-19 pandemic and ensure visibility into key clinical data output in each of our programs. This is quite a list of accomplishment. We look forward to providing additional details during our R&D presentations in the fall. Our anticipated milestones for the remainder of 2020 had detailed on Slide number six. So, now let me turn the call over to Sath for a review of our financials.

Thank you, Laurence, and good afternoon everyone. Let me start with a quick review of our financial results for the quarter. As noted in our news release research and development expenses were $12.1 million for the second quarter of 2020, compared to $10 million for Q2 of 2019. The increase reflects increased headcount, including the recruitment of key personnel to expand our capabilities to support the growth of our cell therapy business, and an increase in gene therapy trial expenses and contracted support services. G&A expenses were $6.6 million for the second quarter of 2020, compared to $4.8 million for the second quarter of 2019. The majority of this increase reflects on increased recruitment of key personnel expanding our capabilities to support the growth of our business and to a lesser extent, other associated costs, such as legal and facilities expenses. On accumulative basis for the second quarter of 2020, we reported a net loss applicable to common shareholders of $18.6 million, or $0.09 per basic and diluted share, comparably in the second quarter of 2019, ZIOPHARM recorded net loss applicable to common shareholders of $14.6 million or $0.09 per share basic and diluted. Cash and marketable securities as of June 30 2020, was $153.5 million. In addition, we also had a prepayment balance of approximately $14 million for work to be conducted by the company at MD Anderson. Consistent with the prior disclosures, our cash position is forecasted to be sufficient to provide funding for our programs and infrastructure built into mid-2022. With that, I will turn it back to the operator for questions.

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Chris Howerton with Jeffries. Please go ahead.

Great. Thanks for taking the questions, and hope that all you are well on the ZIOPHARM team. So, I think for me, the key question would just be kind of when can we expect the next IL-12 data, particularly in GBM, and when can we start to kind of crystallize the regulatory path with -- in that indication for that asset?

Yes, thanks, Chris. So, for the IL-12 data, our practice has been for the last several years to present both at ASCO, which we did earlier this year, and then also at SNO, which is later in the year. Those two conferences offer an opportunity really to showcase our technology, and I think we'll still keep to that rhythm. We do have other opportunities in between that at investor conferences to provide other insights into the program. The regulatory path is important of course to us, and the monotherapy data that we reported out at ASCO really represents both the main study, as we call it, and the expansion study, and no more patients are being added to that dataset, and that data reported in at ASCO quite favorably with about 16 or so months of overall survival. That data therefore, we expect to continue to mature through the year, and continue to look good through the year. The combo data with OPDIVO, that's the sort of Phase 1 trial, and then the Phase 2 trial with Libtayo, those data are less mature, because they started after the monotherapy data. We reported an initial snapshot at ASCO with the OPDIVO data that actually looked again quite favorable with the median overall survival not being reached. We continue to track those patients, Chris, and then we'll report out how those patients are doing through the year, as I mentioned, a major conference being SNO at the end of the year. Once the company has that dataset, the monotherapy, which is basically there and the combo dataset, which has really now added value to the company, because the monotherapy looks so good, the company can then look at where the next steps are, and we'll have potentially two shots for regulatory approval. The first is the monotherapy dataset, and the second is the combination dataset, and I want to look at with my colleagues and with the Board, how the monotherapy stacks up versus the combination therapy, but again, just to emphasize, the company is feeling pretty good at this point because we already have that monotherapy data basically in hand and the combo, it looks to us only on an upside, if you would.

Yes, okay. That makes sense. Yes, and the maybe if I may, just one more question with respect to kind of what in your -- if you could describe the differences between what the NCI IND is and what your ZIOPHARM IND will eventually look like, and what kind of the key differences and gating factors to kind of get that in?

Sure. So, the IND with Steve Rosenberg is an IND that's sponsored by the NCI, and is an academic IND, and builds on Steve's work with us as a partner. Our IND is our own, essentially corporate-sponsored IND, and that IND, as I guided just on the call today, has some significant benefits for us, and that we can initially use that IND for multiple targets and multiple TCRs. Therefore, the CMC package that we are putting into that IND will cover both trials. In other words, the library trial where we're targeting shared neoantigens with, if you would, a set or a library of TCRs, as well as the personalized trials, in which, patients are receiving one or more TCRs for going after one or more of their own private mutations. So, that guidance here for the Street is actually a big advantage for us, and it's something that we can take advantage now within our corporate structure as we roll out these two trials, not one trial, but two trials, under our banner initially beginning with enrollment at MD Anderson.

Okay, all right. Well, very good, and again, thank you so much for taking the questions, and really, really great to see all the continued progress despite all the COVID stuff that we are all dealing with.

Yes, thank you so much, Chris. Yes.

Our next question is from Thomas Flaten with Lake Street Capital Markets. Please go ahead.

Good afternoon, guys. Thanks for taking the question, just a follow-up on the question about the IL-12 regulatory strategy. What's the recency of your conversations with FDA around that, and have they given you any guidance or hints as to what they would feel would be appropriate, or are they also waiting for the datasets, and so, this is a kind of mid-2021 activity from an FDA discussion perspective?

Yes, thanks, Thomas. So, we've had initial conversations with the FDA on the Phase 3 pivotal trial, and that initial conversation was based on us pushing our drug candidate or candidates, as I've mentioned against in a randomized trial against essentially best practices. As you know, the treatment in for recurrent GBM, it has basically very few therapeutic options and we have looked at that data. In other words, what are sort of the best available treatments that patients can get. And it ranges, it ranges from somewhere between six to 12 months depending on the study and the people reporting out the data, our current monotherapy beats all of that, 16 months of overall of median overall survival. So, as we look to the pivotal trial, if we're going to do a randomized trial, we feel pretty good about it because we now have a sizable number of patients in both the monotherapy as well as in the combination therapy, and certainly from the monotherapy data with the data now really maturing quite nicely, it looks good compared to quote, what would be a randomized control. So therefore, our initial thought about how we move forward is with that preliminary conversation with the FDA. I would say though, that the data has matured a lot. Since that conversation, we have MRI scans, we have increasingly a larger pool of patients, and I think there are opportunities to go back to the FDA and share with them some of our data and get essentially refinements about what that pivotal trial will look like.

Do you think though if we look across and I know it's a different disease states and different drugs, but if you look at the checkpoint inhibitors in particular, they've been getting away with very single arm open label studies in the small number of patients given unmet needs? Do you think there's an opportunity there to leverage some of the learnings from other drug classes and other disease states just to kind of advance the program more quickly?

Yes, I think ZIOPHARM has two opportunities to advance the program more quickly, the first just is your guiding Thomas and that is continued conversation with the regulators. And the second is our campaign for pontine glioma, DIPG, and there is unfortunately an opportunity because these children die so rapidly, and with so little available to them, there really is no opportunity to randomize in that setting. You can't randomize against nothing, kind of thing. So, there are opportunities in both camp, both by extending the program from a potential drug for GBM into a platform and then to essentially evaluate with the regulators how the drug might be on a faster track for that recurring GBM setting.

That's super helpful. Thanks so much.

Our next question is from Yale Jen with Laidlaw & Co. Please go ahead.

Good afternoon, and thanks for taking the questions. To follow-up a little bit on the previous one in terms of DIPG, given this is a pediatric indication, is there a difference in terms of treating the patient for instance, the [indiscernible] use or other factors will you take into the study design?

Yes. Thanks, Yale. That's a good question. So we learnt a lot from treating the adult patients with recurrent GBM particularly the role of steroids in the dosing of the IL-12 in veledimex, that learning has been applied to the pediatricians taking care of these children with DIPG. So they now have a essentially all of that data available to them. And we can work with the physicians to do just what you're suggesting and that is limit the amount of steroid use for these kids, so that they can get the maximum potential benefit from IL-12.

Okay, great. That's helpful. And maybe just tackle one more question here, which is that in MD Anderson, you do have this library, you suggest that, that could be a quicker way to solve the TCR-T study, and then, could you describe a little bit more in terms of the scope and potentially the size of this library at this point. I understand it's sort of growing situations sill stacked up to this moment?

Yes, Yale, I'm glad you mentioned it. The library is essentially a collection of TCRs that are against mutations in p53, KRAS and EGFR. That library was in-licensed from the NCI and we already have it in our arsenal, and in fact, it's of sufficient size to already begin enrollment. Because that library essentially has been gathered so quickly and now our team in Houston can essentially kick the tires on that library and make sure and authenticated does what we think is going to do. We can accelerate our program to put patients into the trial to benefit from that library of TCRs. We recognize of course, that the larger of the library, the better the chance of a given patient with for instance, p53 mutation or a KRAS mutation could benefit. So we're not only going to continue to in license the TCRs from the NCI, but also we have a whole program built out in Houston now to essentially expand the library under our own auspices, and that's an important part for the company and a way essentially to track progress for our company is the size of that library. You know, today, obviously for competitive advantage, we can't reveal the number of TCRs and so forth, but I can give reassurance that it's a sizable number, and indeed, it's sufficient to begin the trial and I can further go on and say that we're quite strategic about the way we are building this library. We know for instance, some mutations are more representative than others. We know certain HLA are more popular than others, and we can essentially use our resources carefully to build a library, so we have the maximum chance of enrolling a particular patient to this trial.

Okay, great, and again, congrats on the progress in this difficult time.

Thank you.

Our next question is from [indiscernible] with H.C. Wainwright. Please go ahead.

Thank you for taking my question. This is [indiscernible]. Just regarding the TCR-T trial both at the NCI and MD Anderson, could you guys remind us, do these also use their RPM technology or it's only applied to Sleeping Beauty?

Yes, that's great [indiscernible]. Thank you for a name we need to clarify. So the RPM technology, the rapid personalized manufacturer enables T cells to be genetically modified on one day and then simply infuse the next day. That technology is built off two pivotal pieces, the Sleeping Beauty System, and a molecule called membrane bound IL-15. We have tested both Sleeping Beauty and membrane bound IL-15 in the CAR and in the TCR space, and we can show in both essentially, a gene types if you would, that the technology works. We are initially testing, but RPM technology in the CAR-T space in clinical trial. So, in other words, we're doing our Phase 1 trial both in the United States and in Taiwan using the CAR-T RPM that learnings can then come back and inform on whether we're going to use the RPM in the TCR space, but again, I would emphasize that we've done a lot of the preliminary work and if the value of IL-15 for TCR looks pretty good as we showed a dash in publication last December.

Thank you for that and congratulations on the progress.

Ladies and gentlemen, thank you for joining. I would like to turn the conference back over to Dr. Cooper for closing remarks.

Thank you, Operator, and thank you everyone for joining us today. We certainly hope you're safe and well and look forward to updating you through virtual investor conferences over the next couple of months during our fall R&D event, and on our next quarterly call. Good day, everyone.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.