Alaunos Therapeutics, Inc. (TCRT) Q1 2021 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Ziopharm Oncology, Inc.'s First Quarter 2021 Earnings Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Adam Levy, Executive Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you, operator. Good afternoon, and welcome to the Ziopharm Oncology conference call and webcast to review results for the first quarter ended March 31, 2021. This afternoon, we filed our 10-Q and issued our financial news release, both of which are available in the Investors section of our website, ziopharm.com. For informational purposes, we have also posted a set of PowerPoint slides to accompany today's commentary. These slides can also be found on our website 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-K and 10-Q filings and within other filings that we may make with the SEC from time to time. On our call today, we have Heidi Hagen, Interim Chief Executive Officer, who will present a brief corporate summary and financial overview; and Dr. Raffaele Baffa, Chief Medical Officer, who will present an update on our clinical programs. In addition, we are joined by Jill Buck, our EVP of Operations and Strategy and GM of Gene Therapy; Ellee de Groot, our EVP and GM of Cell Therapy; and James Huang, our Executive Chairman, all of whom will be part of the Q&A, which we will open up after the formal remarks by Heidi and Raffaele. And to get started, I'll turn the call over to Heidi Hagen. Heidi, please go ahead.

Thank you, Adam, and welcome, everyone. I am pleased to provide an update on our progress this quarter. The first quarter was one of focus and execution as we emphasize building shareholder value over the long term. I would like to give an overview of several achievements and moves we have made reflecting this focus as we prioritize our portfolio, strategically guided by capital allocation. During the first quarter, the first patient was infused in the CD19 RPM CAR-T Phase I trial being conducted by our joint venture partner, Eden BioCell. We look forward to providing updates on this important trial in the second half of the year. We made meaningful progress expanding our infrastructure during the quarter. We completed construction of our cell therapy GMP facility, and we'll be qualifying and validating the facility over the summer. This will be followed by qualifying the process in the facility and adding the facility to the TCR IND to supplement our CMO's partners capabilities with our own GMP manufacturing for the TCR Phase I trial at MD Anderson. This will allow the company to control our own destiny and expand patient capacity as we continue to progress our TCR-T work. We have made the difficult decision announced today to accelerate and complete the wind down of our existing IL-12 clinical trials. We have not taken this decision lightly, but the management team and Board agree that capital and resources can be better deployed elsewhere. We remain open to partnerships and continue to believe in the potential benefits of this experimental therapy. In addition, as we explore next-gen technologies, we have begun evaluating synergies between our IL-12 program and cell therapy program. We anticipate a small number of layoffs through the end of 2021 associated with the closure of the existing IL-12 program. These reductions represent approximately 15% of our total headcount. We will be reallocating capital and human resources to support our growing TCR clinical program over the remainder of the year. Also, we anticipate the closure of the CD19 RPM CAR-T allogeneic Phase I trial. Our focus and our investor focus should be on our CAR-T program in Taiwan, being conducted by our joint venture partner, Eden BioCell. We ended quarter 1 with cash of $100.1 million, giving us a runway into late quarter 2 of 2022, and management believes this could be further extended. Management and the Board are working diligently and smartly to define the best approach for future capital needs. As we have discussed previously, we are committed to shareholder value as we consider and implement our capital raising approach. We will have more to say on this in the near term. Other details on our financial performance during the first quarter can be found in our press release and 10-Q, both of which were issued earlier today. Regarding our search for a permanent Chief Executive Officer, the Board seeks an individual who can continue to drive execution and deliver success for all our stakeholders. I am pleased to report that the Board has made good progress on identifying a strong initial set of candidates. We will continue to update you on this as it progresses. Before I turn the call over to Raffaele, I want to remind investors that we will hold our annual shareholder meeting on May 19. This will be a virtual meeting, and we look forward to shareholder participation as we continue to execute on our strategy. With that, I will now turn the call over to our Chief Medical Officer, Dr. Raffaele Baffa. Raffaele?

Thank you, Heidi. Let me begin with saying how pleased we were to have had the chance to share a detailed overview of our cell therapy programs during our R&D Day held in March. Materials from that event are posted on our website. Given the deep dive at that event, today, I will provide a very brief update. At AACR annual meeting last quarter, we presented a poster highlighting work evaluating the ability of the nonviral Sleeping Beauty transposon/transposase gene transfer system to redirect the specificity of T cells toward TP53 and KRAS neoantigens and to characterize the resultant engineered TCR-T cell populations for specificity and function. This data give us increased confidence in our TCR neoantigen work. And the poster and abstract are available on our website. Heidi mentioned the difficult decision the company has made to accelerate the wind down of the existing IL-12 clinical program. We will continue to monitor and report back at the appropriate time on the patients already enrolled. In our CD19 rapid personalized manufacturing CAR-T trial in Taiwan, we were pleased Eden BioCell announced first patient dose using our RPM technology. This trial is progressing, and we anticipate sharing data in the second half of this year. It is important to know the advantages of our system that we believe have the potential to differentiate us in this space. For example, patients are refused 2 days after transfer of the CAR genetic material into the patient T cells. Turning to our TCR library trial. Our internal team is making good progress, and we are pleased to have the IND clearance in the first quarter. We are now focused on streams of activity on both through the manufacturing side and on the clinical enrollment side. We continue to anticipate treating patients in the second half of this year. As we have previously guided, we would expect the first data on this trial to read out in 2022. In our preclinical research area, we continue to explore a variety of next-generation enhancements to our TCR technology, notably the inclusion of membrane-bound IL-15, and to pursue the in-licensing of additional TCRs to our library to expand the treatable patient population. We have provided an updated pipeline slide that reflects our ongoing progress in the materials posted today as a reference. With that, I will now open the call for questions. Operator?

[Operator Instructions] The first question is from Alethia Young from Cantor Fitzgerald.

Congrats on the progress. This is [ Nina ] on for Alethia. So as you prepare to start the company library TCR-T trial in solid tumors, what are the remaining steps to get that study up and running? And at MD Anderson, are clinical trials running relatively normally in light of COVID?

Thanks, Nina. Let me maybe ask Raffaele and Ellee to comment on that one?

Yes. So thank you for the question. So I can tell you that we are moving forward. It would be -- we'll open actually the trial fairly soon at MD Anderson. And the worst from the COVID has passed beyond that. That's what we hope. And MD Anderson is really starting enrolling patients at the speed, let's say, pre-COVID. So we are confident we're going to start enrolling, as we have announced earlier in the year, in the Q3 of this year. Ellee, do you want to add something?

Sure. Thank you. So the 2 remaining steps then to really -- and which is our -- the focus of our team are: a, to complete the final manufacturing qualification batches at our contract manufacturer in preparation for opening the trial and being able to do that clinical production and then, as Raffaele said, identifying patients. So those are the 2 major focal points of the team, and those activities are moving along nicely and give us confidence that we'll be able to enroll patients by the end of the year as we projected.

And I'd like to add that we started the prescreening process already for the patients for this trial.

The next question is from Chris Howerton from Jefferies.

So I guess for the -- as you think about the wind down of the activities of the IL-12 program, what can we expect in terms of some of the changes, if any, to the R&D line there? And I guess, over time, basically, what should we look like over -- for the next of the year -- rest of this year, excuse me. The second question I have is just maybe just a clarification. So what exactly is the CRO now that is manufacturing the cells for the TCR-T program and doing the qualifying? And how is that different than the facility in Houston?

Thanks, Chris. Maybe, Heidi, you want to take the first one and then, Raffaele, the second. The first question, Heidi, was on the outlook for R&D spend given the IL-12 shutdown.

Yes. Thank you for the question. And so as we have discussed before, we're really pivoting and focusing on our cell therapy programs and very much our TCR program. So we are focused on getting our manufacturing up and going and appropriately ready to dose the first patient, as Raffaele kind of stated some of the steps to getting towards that from a clinical perspective. And so we're really looking towards moving our capital allocation in that direction and then expanding it at a speed that we feel like will enable us to really test that platform and move forward quickly. So you can expect that that's where R&D focus will be going forward, which has been consistent with what we've talked about in the past, just an opportunity now to take some of that other capital allocation we've had in the past and focus and put it towards that program at this point. And I guess, Raffaele and Ellee, do you want to comment on our CMO and our GMP manufacturing for the question?

Yes. So first, we are not disclosing at this time the name of the CMO. What I can say is that our internal manufacturing CPU is going to be supplementing the CMO. So we have double facility we're doing this way.

And that will enable us to really think about how we want to expand and do future work in TCR as we go forward into 2022. So it gives us a lot of optionality, having 2 streams of manufacturing.

Okay. And maybe if I could just add a clarification. So obviously, there'll be OpEx put towards the programs as you described. But is there any significant capital expenditures that we should expect? Or is that basically done at this point for your facility?

That is now complete.

Yes. Thank you, Ellee.

Yes. So that is now complete. So we have completed the construction and the installation of the equipment. And as Heidi outlined in her summary earlier, we are marching through the qualification of the facility and the batches that it will be required for demonstrating that we can perform the process for the clinical trial.

So just to maybe ask the question very plainly. There's no more capital expenditures expected for the facility or meaningful ones at this point?

I would say for the capacity that we're talking about now, which would be for our Phase I trial, we will look towards as we move -- hopefully moving the TCR program forward in the future years. We would obviously be expanding into Phase II and Phase III. And so we may have opportunity at that point. We would expect to expand our capacity further. But at this point, we're very comfortable with the capacity we have between our CMO partner and our facility that we have built thus far, and then are the means to qualify.

The next question is from David Novak of Raymond James.

Just one for me. On the auto CAR-T program. Could you guys help us frame up expectations for the preliminary look we're expecting in the back half of this year? I mean based on current enrollment rates since March, could you speak broadly to something like patient numbers or maybe timing of disclosure? Like is ASH a reasonable forum for this data? Anything you can help in terms of just framing up that expectation would be helpful.

Thanks, David. Raffaele, do you want to comment on that? And then Ellee, you can add additional color.

Sure. As we -- I said actually at the R&D Day, the expectation is to have 5 to 6 patients by the end of the year. Now if ASH is the right place, maybe. It depends how many patients we have. I believe they moved up actually the submission deadline. Definitely will be a good fit. I'm not sure we are going to make it for ASH. That's all I can say. But it's going to be right after ASH that we're going to submit for a conference. Ellee, do you want to add something?

I don't really have anything further to add. I think you covered it.

Yes. Thank you.

Thanks, David. Anything else?

That's it from me. Thanks so much.

The next question is from Yale Jen from Laidlaw & Company.

In terms of allogeneic CAR-T that you're going to close down, was that -- what's the next sort of potential possibility? Would that be out-licensed or other alternatives?

I think as we've discussed in...

Heidi...

I'm sorry. Go ahead there, Adam. As we discussed, I think, in some of the releases in what we put out today is really we're asking folks to focus on our auto CAR-T trial, where we're really putting a lot of effort to look at the Phase I more. And so the closing of that trial, we feel like it's just one step in terms of us focusing towards that. And that leaves us options and considerations for the future, but we really are putting most of our effort in that direction.

Okay. Maybe just one more question here, which could you update us in terms of the status of the library at this point? Is there any more targets being added to the library since last time the R&D Day? And what those might be?

Ellee, do you want to talk about the library?

Sure. So as we outlined an R&D Day, we started our IND with 6 TCRs, 6 of our most promising TCRs, and submitted that to the FDA. And so the trial will be initiated with those TCRs. But we also, as we outlined, have in-licensed a number of TCRs from the NCI. So I think it's well over 40 TCRs against 18 different targets. And so we are working through the evaluation of those TCRs and selecting which ones we want to add to the IND next and are actively working towards that goal, and we anticipate doing that through the year.

The next question is from Thomas Flaten of Lake Street Capital Markets.

Great. Just to follow up on the auto CAR. There was some preliminary data presented on 6 patients from the compassionate use and investigator-initiated activity going on in Asia. Is there any -- do you have any updates on that? Any outcomes of those patients? Are there more patients added? Is there anything you will be sharing in the near term with respect to how those patients are faring?

Thanks, Thomas. James, do you want to provide some comments on that?

Sure. Thomas, we'll continue to monitor patients. We don't have the update at the moment. We're working through some of the policies, some of the changes, and then the law related to the data information under a generic law there. So we're in the process of setting up a domestic legal structure in order to address that. Short of that, we have new data and information on the patients, share with you.

Great. And then with respect to clinical trial enrollment, it sounds like things were up and running at MD Anderson. Any update on what's going on over at NCI and how things are looking for the TCR study over there?

Heidi, do you want to comment on NCI and then Raffaele or Ellee can add?

Sure. So as we think we stated before, we don't control that facility or the patient enrollment there. We're a great supporter of Dr. Rosenberg. But they're still, I think, working on their technical issues to bring their facility back in and do the work there. So we continue to talk with them and advice that it's really outside the bounds of our process and our protocol and our technical side of it. So it really resides within them. We expect them and hope that they will be coming up soon with patients and manufacturing soon in the future, but it is outside of our concerns.

Ellee, anything you want to add on that, on NCI?

And so the only thing I'll add is just that we have said before that the issues that are going on at the NCI with regard to kind of the trials being suspended are really unrelated to our own technology. And so we're in close collaboration and speaking with them regularly, but we're really not at liberty to discuss the details of those, and we're hopeful to move that forward.

This concludes the question-and-answer session. I would like to turn the conference back over to Heidi Hagen for any closing remarks.

We really want to thank everyone for joining us today, and we look forward to speaking with you again at our next quarterly call. Have a great day, and wish everybody well.

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