Alaunos Therapeutics, Inc. Q2 FY2021 Earnings Call

Greetings. Welcome to the Ziopharm Oncology, Inc. Second Quarter 2021 Corporate Update. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Adam Levy, Executive Vice President of Corporate Development and Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, and welcome to the Ziopharm Oncology conference call and webcast to review our updates for the second quarter ended June 30, 2021. This afternoon, we issued our press release, which is available in the Investors section of our website, ziopharm.com. Additionally, we posted a PowerPoint presentation to accompany today's commentary, which can also be found in the Investors section of our website. Let me remind everyone that during the 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 most recent 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. She will be joined by Dr. Raffaele Baffa, Chief Medical Officer, who will present an update on our clinical programs. In addition, we are joined by Ellee de Groot, our EVP and GM of Cell Therapy; and James Huang, our Executive Chairman, who will be available during the Q&A portion after our prepared remarks. And to get things started, I'll turn the call over to Heidi Hagen. Heidi, please go ahead.

Thank you, Adam, and welcome, everyone. Let me start by saying that I'm excited by the progress we have made across multiple fronts since our last call in May. Indeed, since the beginning of the year, we have truly transformed the company, and you can see the progress reflected on Slide 4 of the deck we posted. This is a different company. Turning now to the details of our progress, which are summarized on Slide 6 of the materials. Since our last quarterly update, we achieved several key milestones for our TCR-T program. We successfully completed the commissioning of the cGMP clinical production unit and completed aseptic process validation for the facility in Houston. These critical steps enable the facility to be used for our Phase 1/2 TCR-T library trial. In addition, the team is completing process qualification with healthy donor cells, which will support the use of the facility to manufacture TCR-T cells for the clinical trial. We remain on track to dose patients in our Phase 1/2 TCR-T library trial in the second half of 2021, and we are anticipating doing so in the fourth quarter. We have been emphasizing our strategy on our TCR program, and all of the company's efforts are being directed towards this program. We've never been more enthusiastic or optimistic. Raffaele will share more on this in a few moments. Moving now to the balance sheet. We ended the first half of 2021 with approximately $76.7 million. Today, we announced that we have successfully executed a venture debt facility with Silicon Valley Bank for $50 million, with an immediate drawdown of an initial $25 million tranche, which is not included in our end of second quarter cash balance. The $25 million initial tranche extends the company's cash runway into the fourth quarter of 2022, well beyond the time required to generate and assess the initial clinical data from our Phase 1/2 TCR-T library trial. I want to make it clear that the company had and continues to have a multitude of options for financing and balance sheet fortification. The Board and management team were deliberative on the best path forward and took into account both where the science is and where our cash runway brought us. The guiding principle, of course, was shareholder impact. We've done this in a smart way with minimal dilution. As we said previously, we have no intention of selling shares at the current stock price, which we believe significantly undervalues the company. Regarding our current market valuation, we understand the concerns shareholders have expressed. We believe continuing to execute is the right way to demonstrate to the market that we are a leading oncology-focused TCR company. We firmly believe we are on the right track. The company is now operating from a position of strength with meaningful progress in our groundbreaking TCR-T library trial enabling activity and in our efforts to strengthen the balance sheet. We are doing exactly what we said we would do earlier this year, and we have growing momentum that is exciting to see. We are now in a position where the company will succeed or fail based on the science and the clinical data rather than operational considerations and challenges. Before I turn the call over to Raffaele, let me say a word on the search for a permanent CEO. As we mentioned in our press release, the Board is very close to a decision and we would expect an announcement in the very near future. A number of well-qualified candidates were considered, and we are looking forward to making the announcement. Let me turn the call over. Raffaele?

Thank you, Heidi. Let me start by saying a few words regarding our progress in our pioneering TCR-T library program. As Heidi mentioned, we achieved another major milestone for our TCR-T library program by completing the commissioning of the cGMP clinical production unit or CPU as well as the aseptic process validation for the newly constructed TCR manufacturing facility in Houston. We remain on track to dose patients in the Phase 1/2 dose-finding study in the second half of 2021. We now anticipate that occurring during the fourth quarter. The trial is initially targeting six individual solid tumor indications: cholangiocarcinoma, pancreatic, ovarian, endometrial, colorectal, and lung cancer, which were selected due to the frequency of KRAS and/or TP53 mutation. These are just initial tumor types as we plan to expand into traditional indications in the future. We continue to qualify additional TCRs in our library and plan to amend the IND in the second half of this year to include these TCRs. These expansions will increase the potential utility, applicable patient population and addressable commercial market for the library. It may include additional KRAS and/or TP53 mutations or other genetic hotspots associated with solid tumors, such as EGFR. We plan to provide updates on the library later this year. We know that there is interest in our manufacturing strategy and capabilities. So let me say a word about this. We are disclosing today more details regarding the contract manufacturer for our TCR-T cell product. During 2020, we successfully transferred the manufacturing process to KBI Biopharm, a contract manufacturing organization with a cGMP cell therapy manufacturing facility in The Woodlands in Texas. TCR-T batch data generated both at KBI and in our own laboratory were the basis for the CMC portion of our IND filing earlier this year. KBI is now working to complete the process qualification and aseptic process validation to facilitate clinical manufacturing. Additionally, as Heidi mentioned previously, we have been implementing a strategy to build in-house cGMP clinical production capabilities at our facility in Houston. We have done this to provide greater flexibility and control over these important aspects of clinical development. We are rapidly moving forward to establish our own manufacturing capabilities. The commissioning of our clinical production unit or CPU as well as the aseptic process validation were completed this past quarter. The team is completing process qualification, which will support the opening of the facility to manufacture TCR-T cells for the clinical trial. The ability to use both our facility and KBI's for manufacturing provides us with a strong degree of risk mitigation and greater capacity as we scale up clinical trial activities. I want to remind everyone why we are so confident in our TCR program. As you may recall, we shared exciting preclinical data earlier this year at the ACR Annual Meeting, where we presented that multiple TCRs could be stably expressed using Sleeping Beauty transposition to redirect peripheral blood T cells towards tumors. These TCRs have unique specificity, targeting recurrent TP53 and KRAS substitutions in frequent HLA haplotypes. We plan on providing additional preclinical data further demonstrating the strong science behind the program later this year at a scientific conference. Based on ongoing dialogue with investigators, we are very optimistic that we will consistently find the types of hotspot mutations that actually match with our library within the target patient population. This, along with the compelling body of preclinical data and progress on manufacturing, gives us a strong degree of confidence in the program. We expect to dose patients in the study during the fourth quarter, with initial readouts during the first half of 2022. As we said previously, those results may occur at scientific conferences, but we will provide updates as soon as we have meaningful data to share. Let me also provide a brief update on our investigational CD19 RPM CAR-T cell therapy program being conducted in Taiwan by Eden BioCell, our joint venture with TriArm Therapeutics. We have included more detail both in our press release and our 10-Q, which were filed earlier today. Since the trial initiation in March, two patients have been dosed and evaluated. No serious adverse safety events were reported in either of these patients. Laboratory results continue to support as previously published. The nonviral Sleeping Beauty gene transfer is effective in genetically modifying the autologous T cells. Patients were infused two days after gene transfer, thus shortening the turnaround time and providing a clear advantage over the viral method. Based on laboratory data for these first two patients, the Eden BioCell team, along with the lead investigator and the support from the team at Ziopharm, concluded that further process development work is required to optimize and refine the manufacturing process to more confidently manufacture products in the desired clinical dose range we seek to study. Per the terms of the joint venture agreement, the TriArm-Eden BioCell team will attempt to implement the necessary process development improvements before infusing additional patients. The length of time to do this is unknown and may require up to 12 months. The ongoing COVID-19 outbreak in Taiwan presents added uncertainty to the timeline as the operational activities in the manufacturing facility are currently slowed due to employee restrictions related to the pandemic. These restrictions are impacting clinical trials broadly in Taiwan. As we also mentioned in the press release and consistent with our strategic focus on TCR, the company is seeking and considering broader partnerships to enable further development of the investigational CD19 RPM CAR-T cell therapy. Several parties have expressed interest in such a partnership, including TriArm Therapeutics. The company will carefully consider all options regarding the future of the joint venture, the technology, and the global development pathway to maximize shareholder value. It is important to note that the TCR and CAR-T processes are intrinsically different and have followed separate process development pathways. While both involve the Sleeping Beauty gene transfer, the contract manufacturing processes and target indications are distinct. Additionally, the TCR-T clinical program is investigating the treatment of a range of solid tumors, whereas the CAR-T program has been focused on hematologic malignancy. We do not believe that the findings from CAR-T translate to the TCR-T program. You can find additional details on our pipeline and milestones in the materials we shared earlier today. Let me conclude by reiterating what makes Ziopharm unique and why we are so excited. Slide 5 in the material presents a greater overview of what drives value for us: the right cells, the right target, and the right platform.

Thank you. Apologies, we are having a slight technical difficulty. Okay, thank you for your patience. Our first question comes from Alethia Young of Cantor Fitzgerald. Please state your question.

Hi, this is Nina on for Alethia. Thanks for taking our questions. So for the Taiwan trial, can you please just discuss what the current manufacturing process was exactly and who runs it? And a second one, is there anything you can leverage from your own experience with manufacturing with TCR-T to help with the Eden BioCell program? Thanks.

Thanks, Nina. Let me maybe ask Ellee or Raffaele to comment on the manufacturing process in Taiwan.

Sure. I'll start. So the manufacturing process in Taiwan utilizes this rapid personalized manufacturing process, or RPM process. Essentially, it's a very simple process where Sleeping Beauty is used to do the genetic transfer and the cells are released shortly thereafter and fused immediately, so within two days of the gene transfer. This is quite different than the TCR process, which actually utilizes an ex vivo propagation, a more traditional type of propagation process that allows the cells to grow to larger numbers. So you asked about who runs the manufacturing process. This is performed by the TriArm team. The TriArm team in Taiwan does the manufacturing at a cGMP facility on site at the National Taiwanese University. And certainly, there are – just in terms of the processes that are – have been developed and are continuing to, we continue to perform process research and process development to always improve the processes. There are obviously things that one learns about improvements that can be made across the board. I think just as the field, in general, progresses, there are learnings that can be made that will help us improve the processes for the foreseeable future.

Yes. If I may add, there is also a structural difference between the CAR and the TCR. They are completely different. The size, the sequence, without going into the details, there are two different constructs, right? While the Sleeping Beauty, the gene transfer works very well with both systems, keep that in mind, these are two different assets.

I would also add – this is Heidi. I would also add, you asked a question about the TCR process and its reflection on the CAR-T process. And yes, the TCR process is a more mature process that's had a couple more years in our hands in the laboratory and in facilities. So there are opportunities to further improve the process and insights that we have gained. We know what our colleagues at Eden have also gained some insights along those lines. So just to answer your second question is that there is experience and understanding that does reflect on the opportunities with that particular process and product.

Okay. That makes sense. Thank you.

Nina, anything else we can help you with?

No. Thank you.

Thank you.

It appears there are no more questions at this time. I would like to now turn the call back to Heidi Hagen for closing remarks.

So our 10-Q will be filed in the next several days, and I would like to thank everyone for joining us today. Have a great rest of your day, and it's been a pleasure talking with you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.