Good day and thank you for being here. Welcome to the Alaunos Therapeutics First Quarter 2022 Financial Results Conference Call. All participants are in listen-only mode. I will now hand the call over to our speaker today, Mr. Alex Lobo from Investor Relations. Mr. Lobo, please proceed.

Good afternoon and welcome to Alaunos Therapeutics first quarter 2022 financial results conference call and audio webcast. With me today are Kevin Boyle Senior, Alaunos Therapeutics' Chief Executive Officer, Drew Deniger, Vice President of Research and Development and Mike Wong, Vice President of Finance. Earlier this morning, Alaunos issued a press release announcing financial results for the three months ended March 31, 2022. We encourage everyone to read today's press release, as well as the Alaunos quarterly report on Form 10-Q for the quarter ended March 31, 2022, which is filed this morning with the SEC. The company's press release and quarterly report will also be available on the Alaunos website at Alaunos.com. In addition, this conference call is being webcast through the Investor Relations section of the company's website and will be archived there for future reference. Please note that certain information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Participants are cautioned that this conference call contains time sensitive information that is accurate only as of the date of this live broadcast May 16, 2022. Actual results could differ materially from those stated or implied by forward-looking statements made today due to risks and uncertainties associated with the company's business. Information on potential risks and uncertainties are set forth in our most recent public filings with the SEC. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this live webcast, except as may be required by applicable securities law. With that said, I would like to turn the call over to Kevin Boyle. Kevin?

Thank you, Alex. And welcome everyone to the Alaunos Therapeutics first quarter 2022 earnings call. Our team has been working diligently to advance our strategy of generating meaningful clinical progress and delivering shareholder value. I am proud of our team and the significant progress made since we last spoke. We recently announced the successful dosing of the first patient in our Phase 1/2 TCR-T Library trial. We expect to continue to enroll and treat patients in this trial in accordance with our manufacturing capabilities. We also have two posters that have been accepted at upcoming scientific conferences, namely ASGCT later today, and ASCO in early June. Drew will provide additional details on both posters in just a couple of minutes. I would like to focus today's call on our TCR-T Library trial. As you may recall, this Phase 1/2 study is a basket trial targeting hotspot mutations across six solid tumor indications: Non-small cell lung, colorectal, endometrium, pancreas, ovary, and bile duct cancers. We are enrolling patients at MD Anderson Cancer Center with one of these six cancers based on matching neoantigen HLA pairings that are available in our TCR-T library. Our library consists of 10 TCRs: four KRAS, five TP53, and one EGFR. Two weeks ago, we reported that we dosed the first patient in the trial. The patient has non-small cell lung cancer and is now clear of the 28-day safety window. The patient was treated with TCR-T cells targeting a KRASG12D mutation. The trial design calls for the first imaging at six weeks post-infusion. With the Bayesian trial design, it is possible that the second patient in the study will be dosed at the second dose level. That decision will be made at a later point in consultation with the investigators. As excited as we are to have treated the first patient, we are actively working to consent and enroll additional patients in this trial. In collaboration with MD Anderson, we have screened approximately 500 lung or colorectal patients for both tumor mutation and HLA. We have found more than 5% of the patients match one of the TCRs in our library. We expect to report initial data from the TCR-T library trial at a medical meeting in the second half of this year, potentially ESMO or the sixth annual CRI ENCI AACR International Cancer Immunotherapy conference. We do not intend to provide a patient-by-patient update or provide readouts before the chosen conference. Regarding manufacturing, the dose received by the first patient represents the first clinical product that has been fully manufactured using our in-house cGMP suite. This is a great accomplishment and a testament to our team's dedication over the last year in building out our in-house capabilities. As we noted on our previous quarterly call, our current anticipated capacity in the cGMP suite allows for the manufacture of approximately one product per month. We believe this will be sufficient to support our clinical efforts throughout the rest of this year. However, we recognize that as we expand the program, we will require additional capacity. To do this, we are implementing a three-prong strategy to expand our manufacturing capabilities, of which we are already working on the first two. First, we are working to implement SOPs that will allow for simultaneous production of multiple products. This includes further optimizing our manufacturing process by introducing cryopreserved cell product. Second, we are working to hire additional staff to support multiple shifts. And third, as we raise additional capital, we will investigate physically expanding our cGMP footprint. I'd like to turn the call over to Drew now to highlight our upcoming scientific presentations. Drew?

Thank you, Kevin. I'm so proud of our entire team who has helped us to get to this point. Dosing of this first in human patient for non-viral TCR-T cells targeting hotspot mutations in solid tumors is just the first step for us. We continue to expect to report initial data in the second half of the year at a major medical meeting, which we believe is the most credible forum to present clinical data. Later today, we will present preclinical data for our membrane-bound IL-15 program at the ASGCT annual meeting. As you may recall, IL-15 is a cytokine that has been observed to support the survival of T-cells and other immune cells. Today's poster presentation will highlight the potential ability of membrane-bound IL-15 TCR-T cells to specifically target and kill tumors. Furthermore, the study demonstrated the potential of membrane-bound IL-15 to establish long-lived tumor-specific TCR-T cells. Overall, we believe this has the potential to augment TCR-T cell therapy and deepen clinical responses targeting hotspot mutations expressed in solid tumors. We look forward to advancing this program towards an IND filing in the second half of 2023. In addition to presenting at ASGCT, we look forward to presenting a trial and progress poster at the 2022 ASCO Annual Meeting. The presentation will provide an in-depth look at our adaptive trial design, dosing regimen, and follow-up strategy. We are grateful to be able to share these details at such a respected forum. As we look to expand our pipeline, our research and development team continues to make progress in TCR discovery using our proprietary Hunter hunTR. Before I turn the call over to Mike, I want to provide an update on our Scientific Advisory Board. We have realigned and strengthened our SAB with key opinion leaders in TCR-T cell therapy. Our Chairman is Carl June from UPenn, a renowned physician-scientist who has been involved in all stages of cell therapy, including the commercialization of CAR-T cells. Matthew Porteus from Stanford and Kole Roybal from UCSF bring significant expertise in synthetic receptors, gene editing technologies, single cell sequencing, and next-generation strategies. We have also added Steven Feldman from Stanford, who has substantial experience in neoantigen, specific TCR-T cells and other cell therapies, especially in regards to cGMP, manufacturing and quality systems. We are confident that our Scientific Advisory Board will guide Alaunos along the cutting edge of TCR-T cell therapy. I would now like to turn the call over to Mike Wong to review the financial results for the first quarter. Mike?

Thank you, Drew. Let me review our financials for the three months ended March 31, 2022. For the first quarter of 2022, we reported a net loss of approximately $9.8 million or $0.05 net loss per share, compared to a net loss of approximately $21.6 million or $0.10 net loss per share for the first quarter of 2021. Research and Development expenses were approximately $5.6 million for the first quarter of 2022 compared to approximately $13.3 million for the first quarter of 2021, a decrease of 58%. General and Administrative expenses were approximately $3.5 million for the first quarter of 2022, compared to approximately $8.2 million for the same period in 2021, a decrease of 57%. As of March 2022, Alaunos had approximately $68.3 million in cash and cash equivalents. We anticipate our cash runway to be sufficient to fund operations into the second quarter of 2023. Our operating cash burn for the first quarter of 2022 was $7.8 million, compared to $15.3 million in the first quarter of 2021, a decrease of $7.5 million or 49%. That concludes our financial update. I would like to hand the call back over to Kevin for closing remarks. Kevin?

Thank you, Mike. I am honored to be a part of a dedicated and talented team that our hard work has transformed our innovative scientific research into clinical progress. Dosing of the first patient in our Phase 1/2 TCR-T Library trial is just the beginning. As we look at the year ahead, we will continue to work closely with MD Anderson to consent and enroll patients in this trial. We also plan to invest in a multi-pronged manufacturing strategy to increase capacity. Pre-clinically, we are working diligently to advance our membrane-bound IL-15 towards an IND filing in the second half of 2023, as well as identify new proprietary TCRs using our hunTR discovery platform. The effective use of capital is a critical element of our success. With a strategic restructuring and pipeline reprioritization completed last year, Alaunos took the necessary steps to right-size the organization well ahead of the challenging market conditions we face today. We will continue to be good stewards of capital as we work to maximize shareholder value. As I mentioned on our last call, we have reduced our expected operating cash flow for 2022 to between $40 million and $45 million, a significant reduction year-over-year. In addition, I believe that we now have the appropriately sized team of approximately 40 dedicated individuals that will allow us to execute on our focused pipeline. We are selectively hiring talented employees to join our team in Houston and have open positions posted on our website. I would like to reiterate my appreciation for our team, partners, the MD Anderson collaborators, and our shareholders for the unwavering support on this journey of developing cancer treatments targeting solid tumors. Before we open the call to questions, I would like to remind our shareholders of record as of April 22, that proxy materials were distributed in connection to our annual general meeting of shareholders taking place on June 13. More information can be found on our website. We will now open the call to questions. Chris?

Our first question comes from Swayampakula Ramakanth of H.C. Wainwright.

This is RK from H.C. Wainwright. And good morning, Kevin. A couple of questions here. For completing the TCR-T Phase 1/2 study, how many patients do you need to enroll?

Good morning. In part we will determine how many patients we enroll at given dose levels. Again, as this is a Bayesian design, it will depend on the number of patients that we enroll at the given levels, and what we find out. Directionally, I would say somewhere between 10 and 15 patients will likely be from an early Phase 1a perspective, the number of patients that we would likely see. There is a lot of information also to be gained by treating patients with different indications. And as a reminder, we do have a total of 10 TCRs currently targeting six different solid tumor indications. And there will be a lot of value and learning by treating patients with different indications and different TCRs. So that will in part determine how many patients we treat in this early part of this trial.

Okay, thanks for that. So the trial is designed such that you hit at least a couple of patients with each indication, or since it's an all-comers trial, is that part of the goal or is the goal more to make sure that you can evaluate all of the 10 TCRs irrespective of what indication it is?

The goal is not necessarily to use alternatives in TCRs. However, there is value in treating different patients across various indications and utilizing different TCRs. This will be an ongoing learning experience for us as we progress through the trial. At this point, it's too early to provide specific details because we haven't yet gathered all the necessary data. Nevertheless, our focus remains on safety during these initial stages, and I want to emphasize that. Additionally, we aim to determine the appropriate dose in this Phase 1 trial as we advance it in the clinic.

Thank you, since at the current time you can manufacture drugs enough for one patient per month. How does the logistics work, especially in terms of identifying a patient, manufacturing, and dosing, since some of these patients probably are well along their disease condition?

Well, we work very closely with our partners at MD Anderson to determine the timing of placing these patients on the trial. Many of these patients are progressing at different rates, or we talked about the protocol that has looked at approximately 500 patients. Many of those patients that have a matching TCR are not ready for treatment under this trial. They're just starting their journey and have not met the requirements for this clinical trial. So we have been able to identify patients at the appropriate time thus far. And we are working closely again with the PIs at MD Anderson to determine the appropriate patients to put on the trial at what time.

Okay, my last question is on the membrane-bound IL-15 program, what needs to be done before between now and filing of the IND in the second half of 2023?

Okay, I'll turn it to Drew to answer that.

Yes. So we have our poster presentation at ASGCT today, which will cover much of the preclinical data. So I'll point you towards that. And we'll have it on our website as well. We need to do the manufacturing runs and the regulatory strategy. And so that will take some time and puts us into the second half of next year. But we, as you'll be able to see on our poster presentation, the lion's share of preclinical data is completed and is very encouraging, especially with growing up these long-lived TCR-T cells, which we think can be clinically meaningful.

Our next question comes from Nick Abbott of Wells Fargo.

Hey, terrific, thanks for taking our questions. And congratulations on dosing that first patient. So for the Phase 1, Kevin, Phase 1/2, how should we think about the ability to expand the trial with the current GMP facility with successful implementation of those first two strategies? How many patients a month do you think you could treat?

Yes, it's a good question, Nick. And what I would say is, we will update folks later as we successfully execute upon those two initiatives. So not quite ready to share that right now. But I do think we need to look at our manufacturing capabilities, multipronged about how do we increase the throughput and to our existing footprint. And then what other levers do we have to expand either footprint ourselves or in partnership with a contract manufacturer to scale up our manufacturing capability. So I believe that we have many different strategies that we're looking at. And we will likely be in a position on the next quarterly call to provide some more context regarding increasing throughput at our existing facility. But I would like to reiterate that when we hire somebody, it is not an immediate plug and play; there is an on-ramping of that individual and a learning of the process, especially our non-viral approach to manufacturing these TCR-T cells. So there is a learning curve once we do hire individuals that is typically in the range of around three to six months.

Right, thank you. And then on IL-15, the abstract clearly suggests that including the membrane-bound IL-15 alters the T-cell phenotype. And so you have these 10 central memory, which obviously is highly desirable if you want to have kind of long-term production of these cells. But just a question, do you think there are situations where the non-memory bound IL-15 product would be preferred over the membrane-bound IL-15? Or do you think you'd move over to a membrane-bound IL-15?

Yes, it's a good question. And so we need to see both types of TCR-T cells in patients; they have different phenotypes, as you mentioned, we don't know which one is better. So we need to try both. Clearly, in mouse models, stem cell memory cells are way better than effector cells, but there's not sufficient data to show that in humans. So we have the capability to grow diverse pools of TCR-T cells in both programs. But with our membrane-bound IL-15, we get an extra boost of the younger cells, the stem cell memory cells, and we think that's something we're exploring. So the clinical data are going to have to drive that sort of decision, Nick.

Hey, thanks, Drew. And then the last one for me, probably also for you, and that is on hunTR. How should we think about output? I can see that there's no proven technology, there's prodding of tumors, but at some point, there'll be diminishing returns. And is that the point that you really begin to focus on unique neoantigens? So how do we think about hunTR in terms of shared neoantigen output and then also your thoughts on unique neoantigens?

Sure. So we have a very successful program in hunTR. We're able to find TCRs targeting neoantigens from most of the patients we screened, which is in line with what people have seen from the NCI and other places. So we're able to do that in-house. We are increasingly focused on TP53, KRAS, and EGFR in order to grow the library, especially with highly desired HLA types. As we find more and more TCRs, there may be a plateau to what is biologically there, but we're nowhere near close to that right now. I'll also point you toward our work that we've extended with Dr. Rosenberg at the NCI to look at personalized TCR-T. So we have some interest in the unique neoantigens as well as the hotspot neoantigens. So I don't think we're close to this diminishing returns point at this time.

And next we have Prakhar Agrawal of Cantor.

Hi, good morning, and thanks for taking my question. So my first question is, I think you mentioned the first patient cleared the 28 days safety hurdle; any more details on what hurdles that you had built in and how 28 days passed safety timeline versus your expectations? And as a follow-up to that, any further details you can give on the care given to the patient lines of therapy based on that you can share. And I might have missed this, for the dose that patient was on. And I had a quick follow-up.

All good questions. And thank you for them. As mentioned, we are going to provide additional data at the appropriate scientific conferences here in the second half of 2022. So at this point, we're just reiterating that the KRAS mutation was G12D, and it's the first dose level that we have, which is 4 billion to 5 billion T-cells at the first dose level.

Okay, thank you, Kevin. And for the remainder of the year, should we expect further expansion of the TCRs, or are you comfortable with the 10 TCRs that you have right now?

Well, we're certainly excited to have expanded it just in December from 6 TCRs to 10 TCRs. We will determine based on the progress that gets made with the hunTR platform. We are seeking to expand our TCR library continuously. So certainly an internal objective of ours is to continue to grow and expand the library. The exact timing will be determined based on what we find.

Got it. And just one final housekeeping question, you had previously communicated an operating cash burn of $40 million to $45 million, trying just to want to check if that is the case. And thanks for taking my questions.

Certainly, yes, I did reiterate that on the call today. If you look at the burn in the first quarter and multiply it times four, that doesn't get you to that range. But with the additional dosing of patients throughout the year and additional hiring to increase manufacturing throughput, we do anticipate and reiterate that guidance of operating cash burn between $40 million and $45 million here for 2022.

Our next question comes from Thomas Flaten of Lake Street Capital.

Good morning. Thanks for taking the questions. Kevin, I was wondering if you could characterize in a little bit more detail the patient pipeline you have. You mentioned 500 patients screened, greater than 5% match, but obviously some of those patients fall out. Do you have a pipeline in place now? Or can you just help us think through what that looks like?

Yes, what I would say is we do not have any concern with patient accruals coming from having MD Anderson as a single site. I think we're very pleased seeing the number of patients that we have going through the various trials that we have open. So we have a screening trial. So after we find patients that have a match to an indication in TCR in our library, they then progressed to a screening protocol that we have open at MD Anderson and more information can be found on clinicaltrials.gov on that, and then after the screening protocols then move on to the treatment protocol. Again, also with details available on clinicaltrials.gov. And we have been very pleased with both the diversity of the cancer types and potential patients to be treated and mutations as well. So we're very excited with regards to the throughput and potential for patient treatment here thus far in 2022.

And I know you want to hold off on sharing information about the first patient with respect to outcomes, I was wondering if you might be able to share something around, how long the entire process took for them from screening to being infused, and anything you can share around that?

Well, what I will say is, I'll reiterate that our manufacturing process is approximately 30 days. Every patient is a little bit different from when they get a freeze, how long it takes once they've been identified and consented for the trial to work through various insurance-related matters and administrative matters. So it's really quite variable in that regard. Where you do not ever have in a perfect world, and this is where I do want to set expectations where you roll out of manufacturing and then the next day you begin manufacturing for the next patient. That's not realistic. There is quite a bit of documentation that needs to be done by the team to make sure that we're keeping good order and good conditions as part of our manufacturing. So I think as we look ahead and think about the appropriate number of patients for 2022, setting expectations is that we will not be rolling out and other uses of our manufacturing suite. Whether it be for implementation of cryopreservation or membrane-bound IL-15 runs, there will be other things, aseptic process runs that need to take place. There will be other things that are happening in the manufacturing suite as well. So I do want to set expectations that we're not going to have a patient a month, that would be unrealistic here for 2022. But we are very pleased with the pipeline with the patient flow and excited to present data at one of the upcoming meetings here in September.

And just a quick final question, any expectations you can set around news flow for lack of a better term from NCI?

I can't speak to NCI. So, I appreciate your asking that question, but I do know with them kind of getting back up and running at all. I would not anticipate too much to be shared here in 2022. I think it's but ultimately it'll be up to NCI on their progress. And I'm seeing no further questions in the queue. This will conclude today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.