Alaunos Therapeutics, Inc. Q3 FY2022 Earnings Call

Good day and thank you for standing by. Welcome to the Alaunos Therapeutics Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Alex Lobo, with Stern Investor Relations. Please go ahead.

Thank you. Good morning. And welcome to the Alaunos Therapeutics third quarter 2022 financial results conference call and audio webcast. Please note that today’s webcast contains slides, which are available through the audio webcasting platform. A copy of the presentation will be available on our website after today’s call. Earlier this morning, Alaunos issued a press release announcing financial results for the three months ended September 30, 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 September 30, 2022, which was filed this morning with the SEC. The company’s press release and quarterly report will also be available on the company's website at alaunos.com. In addition, this conference call is being webcast to 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, November 14, 2022. Actual results could differ materially from those stated or implied by forward-looking statements made on today’s call 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 at sec.gov. 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 laws. With me today are Kevin Boyle Senior, Chief Executive Officer; Abhi Srivastava, Vice President of Technical Operations; Drew Deniger, Vice President of Research and Development; and Mike Wong, Vice President of Finance. With that said, I would like to turn the call over to Kevin Boyle. Kevin, you may begin.

Thank you, Alex. As we wrap up this Veterans Day weekend, I want to express my gratitude to all who have served our country. Good morning, everyone. We appreciate you being here for an update on the significant progress we've made over the past year. As shown on slide four, our team has been working hard to turn our innovative technology and research into real clinical results. We're excited to announce that we achieved the first confirmed partial response in a patient treated with Sleeping Beauty TCR-T cells during our clinical trial. It's particularly impressive that this response occurred at the initial dose level. We've made considerable progress in our TCR-T Library Phase 1/2 trial, collaborating closely with our investigators at MD Anderson to find patients who match one of the TCRs in our library. I'm happy to report that we expect to treat our next patients by the end of this year. In our manufacturing facility, we've revised our standard operating procedures and expanded our team to enable us to produce multiple products concurrently, enhancing our capacity within our advanced cGMP suite. We have consistently generated high-quality TCR-T cells at clinical scales, successfully manufacturing our product at the second dose level. We continue to drive our hunTR program, identifying new TCRs to expand our library and increase the market potential for our TCR-T cell therapy. We are committed to being strategic and careful with our cash expenditures, demonstrating our responsible management of shareholder capital while our dedicated team advances our programs at less than half the expenditure we had last year. On slide five, we highlight our pipeline. Our company's success does not hinge on a single product. Alaunos provides a robust solid tumor platform. We are distinct from other TCR-T companies because we focus on hotspot mutations using T cells transposed with TCRs through our proprietary non-viral Sleeping Beauty technology. Our primary program is the TCR-T Library Phase 1/2 trial, which is a basket trial aimed at hotspot mutations across six solid tumor types: lung, colorectal, endometrium, pancreas, ovary, and bile duct cancers. We are actively recruiting patients at MD Anderson Cancer Center with one of these six cancers who have matching mutations and HLA pairings available in our TCR Library, which currently includes 10 TCRs: four for KRAS, five for TP53, and one for EGFR. Three of these TCRs have shown confirmed partial responses in clinical settings, strengthening our confidence in the efficacy of TCRs in treating solid tumors. We will discuss shortly the confirmed partial response we observed in our trial at the first dose level for a patient treated with a KRAS TCR, and we'll provide an update on this patient at the six-month mark. Additionally, a second TCR from our library was featured in a New England Journal of Medicine case study involving a pancreatic cancer patient who also had a partial response to one of our KRAS TCRs. The third TCR that demonstrated a clinical response was reported by the NCI, involving a breast cancer patient treated with the same TP53 TCR as our second patient. Now let's shift to an update on our clinical program. We were honored to be invited to showcase early data from our Phase 1/2 trial during a proffered talk at the CRI-ENCI-AACR Sixth International Cancer Immunotherapy Conference, or CICON 22. As we move to slide seven, we want to share our enthusiasm about the early clinical data from this trial. The findings presented at CICON 2022 represent what we believe to be the first objective clinical response observed using a non-viral TCR-T cell therapy in a solid tumor. Our team is excited to be a leader in this field and is working diligently to accomplish even more. We're happy to share data from our first two patients treated at dose levels 1 and 2. This progression from dose level 1 to dose level 2 in the initial two patients showcases the robustness of our adaptive clinical trial design and the strength of our manufacturing platform. We identified a manageable safety profile in both patients, with no dose-limiting toxicities observed. We also detected persistence of TCR-T cells up to six months. Most importantly, our product proved effective, achieving a confirmed partial response in the first patient at the lowest dose level. This early clinical validation strengthens our belief that we are correctly targeting tumor-specific hotspot mutations utilizing our commercially scalable, non-viral Sleeping Beauty technology. We have demonstrated that our technology is safe, that the cells persist, and our product is efficacious. In my previous life in Horse Country in Louisville, Kentucky, we would call this a winning trifecta. We are thrilled about these promising results and the excitement generated by this early data, which is increasing interest from both patients and clinicians. We are actively collaborating with our investigators at MD Anderson to screen and enroll additional patients in the trial, with the next patient anticipated to begin treatment in the fourth quarter. I will now provide a more detailed overview of the results presented at CICON, along with a six-month follow-up from patient one. On slide nine, the first patient was diagnosed with non-small cell lung cancer and had previously experienced progression despite several treatments, including checkpoint inhibitors. This patient had HLA-A11 and a KRAS G12D mutation, matching one of the 10 TCRs in our library. The patient underwent standard Cy/Flu lymphodepletion before receiving an infusion at the first dose level of 9 billion TCR-T cells, produced by our team using Sleeping Beauty at our in-house cGMP facility. The potential effectiveness of our TCR-T cells is illustrated by scans showing complete resolution of the non-small cell lung cancer target lesion in the right lower lobe as indicated by the red circles at week 24. There was also significant and long-lasting reduction of non-measurable disease in the right lung, marked by the orange circles. Moving to slide 10, we see that the patient experienced sustained reductions in the right upper lobe lesion, also indicated in red circles through week 24. These images powerfully illustrate the potential advantages of our TCR-T cell therapy, evidenced by the notable clearance of the target tumor. On slide 11, we present the third set of images for patient one. The right hilar lymph node target lesion, highlighted in the red circle, showed reductions at all time points, even six months post-infusion. The patient also exhibited significant non-measurable disease in the right lung at baseline, shown in the orange circle, which also showed reductions up to week 24 compared to baseline. However, there appeared to be some growth in this non-measurable disease at week 24 compared to the 12-week scan, prompting the investigator to perform a biopsy confirming the presence of tumor cells in this non-measurable disease, resulting in the patient exiting the study. The overall progression-free survival for this patient was six months, an encouraging outcome for the first patient at the lowest dose level. As demonstrated on slide 12, the results from this initial patient are very promising. We believe they provide early insight into the potential of our TCR-T cell therapies to effectively target large established solid tumors, even at the lowest dose levels. The patient achieved an objective partial response with a regression of 46.3% in target lesions at six weeks, which improved to 51.2% at week 12, with the reduction remaining sustained at 46.3% at 24 weeks. We also noted persistence of TCR-T cells in the blood, representing approximately 30% of all T cells at 24 weeks. Additionally, we observed infiltration of both helper and killer TCR-T cells in the progressing tumor, suggesting that our TCR-T cells can locate and thrive within the tumor microenvironment. The KRAS G12D mutation and HLA-A11 were identified in the progressing tumor, indicating that the target remained intact and was not lost. These results collectively reinforce our belief that the patient derived significant clinical benefit from our TCR-T cell therapy. The six-month progression-free survival exhibited by this patient is competitive with the only approved KRAS-targeted therapy, which is a KRAS G12C specific small molecule with a six-and-a-half-month progression-free survival. Moreover, there are no approved targeted therapies for KRAS G12D or KRAS G12V mutations, both of which are included in our library and could significantly benefit a large patient population. Next, we will examine the second patient treated in our study, who had colorectal cancer. On slide 14, we provide a summary of patient two. This patient, diagnosed with colorectal cancer, had previously progressed despite standard-of-care treatment. They had HLA-A02 and a TP53-R175H mutation and received standard Cy/Flu lymphodepletion prior to an infusion at the second dose level of 64 billion TCR-T cells. The patient achieved a best overall response of stable disease at six weeks but was later found to have progressive disease at the 12-week scan and subsequently exited the study. We noted that TCR-T cell persistence was observed in the blood at approximately 20% of all T cells at 12 weeks, demonstrating the ongoing potential of our TCR-T cells. An independent radiology report determined that disease progression resulted from new lesions in the liver and lung. We were able to confirm the presence of the TP53 mutation in the progressing lesion, indicating the target was preserved. Notably, this TCR has previously been utilized by the NCI in a patient with metastatic breast cancer, resulting in a partial response with cell persistence lasting up to six months. Thus, we remain confident in our approach to targeting TP53 mutations and look forward to enrolling more patients with this and other TCRs from our library. Before turning the call over to Abhi for a manufacturing update and an overview of the product characteristics of the TCR-T cells for the first two patients, I want to reiterate why we feel so encouraged by the early clinical data. On slide 16, you can review some essential takeaways from this initial clinical data. In both patients, the TCR-T cell therapy demonstrated a well-tolerated and manageable safety profile with no dose-limiting toxicities. TCR-T cell persistence has been observed at relatively high levels until their last follow-up. The ability of our TCR-T cells to serve as a living therapy and remain in substantial concentrations is promising for the prospect of a lasting response. Most importantly, both patients exhibited evidence of efficacy, with signs of tumor infiltration, indicating our Sleeping Beauty produced T cells can endure in the challenging tumor microenvironment. Furthermore, this data provides proof of concept that we can effectively manufacture TCR-T cells for KRAS and TP53 mutations in sufficient quantities at our in-house cGMP manufacturing facility. Overall, we are extremely enthusiastic about these early results, highlighting the potential of Sleeping Beauty TCR-T cell therapy to achieve measurable tumor regression, even at the lowest dose levels. Based on these encouraging initial responses seen in the clinic, excitement is building among clinicians, and patients are being referred to MD Anderson for consideration of enrollment in this trial. We are closely collaborating with our investigators to continue screening and enrolling patients at the second dose level. We expect to begin treating our next patient in the fourth quarter and look forward to providing an update on the trial in 2023. Now, as I pass the call to Abhi to discuss our robust and reproducible manufacturing process, I want to express our appreciation for the great addition Abhi has been to Alaunos. His training at the NCI and familiarity with the TCR-T cell program have allowed him to contribute immediately. Abhi?

Thank you, Kevin, and good morning, everyone. Having joined Alaunos team three months ago, I want to begin by saying how thrilled I am to be part of this fantastic team and to be contributing to the incredible science and technology that we use to treat patients with solid tumors. I have a highly motivated and enthusiastic team who are continuing to improve patient manufacturing and expanding our production capabilities. I have enjoyed our very productive conversations with MD Anderson PIs who are fully engaged and motivated to place additional patients on our trial. And internally, I am thrilled to be working closely with the R&D team, led by Drew, whom I know from my old NIH days as we work together to expand our product pipeline. As mentioned earlier and highlighted in more detail on slide 18, we have treated two patients in our TCR-T Library trial. We have proven that we can manufacture patient cells for both KRAS and TP53 mutations in our in-house cGMP manufacturing facility. We easily met the acceptance criteria for both dose levels 1 and 2 with high rates of viability, purity, and percentage of TCR positivity. We are highly encouraged by our ability so far to consistently and reproducibly manufacture quality clinical products. Now turning to slide 19, as we noted earlier this year, our cGMP suite production capacity was approximately one product per month. This was sufficient to support our TCR-T Library trial through the early stages, and manufacturing has not been a limiting factor to enrollment. Now as momentum builds and we continue to screen and enroll additional patients in the trial, we are executing on a multi-pronged strategy to expand our manufacturing capacity. We have already implemented new SOPs that allow for simultaneous production of multiple products in our GMP suite. This includes successfully completing process qualification runs with cryopreserved TCR-T cells, which will add flexibility for patient scheduling and treatment. We expect to file an IND amendment to move from fresh to cryopreserved product by the end of 2022 and begin implementing this change in the first half of 2023. In addition, this process is expected to enable us to reduce the manufacturing process time from 30 days to 26 days, representing a 13% decrease. While we are very encouraged by our plan to bring manufacturing to 26 days, we will continue to prioritize our work on reducing the manufacturing time further. And finally, we have also expanded our team by hiring additional manufacturing staff to enable multiple shifts in our in-house suite. As a result of all these initiatives, I am happy to report that we have doubled our existing manufacturing capacity to produce two products simultaneously. This is a major step forward for our program and for patients who need our therapy. I am so proud of our fully committed team who has not turned down a single patient yet due to manufacturing limitations. Let me now hand the call over to Drew, who is going to highlight our ongoing R&D effort, as well as present on our hunTR platform at the 50th Annual Meeting starting on slide 20. Drew?

Thank you, Abhi. It’s great to have you on board and to work with you again. Good morning, everyone on the call. As you have heard from both Abhi and Kevin, we have been busy breaking new ground here at Alaunos. I am extremely encouraged by what we have observed in our first in-human experience with the Sleeping Beauty TCR-T and our developments with hunTR, which now sets us up to have an end-to-end program from TCR discovery to clinical translation. As we continue to receive additional information from the translational assessments, we anticipate these data will give us more insight into clinical experience at a deeper level. We are pleased by the observed safety persistence and potential efficacy of our Sleeping Beauty TCR-T cells. We are just getting started, but it’s been a validating and empowering time for the team to know that we have the right platform and the right cells to make a major difference in the lives of cancer patients. As we continue to enroll and treat additional patients in the clinical study, we have been diligently working on our R&D efforts, particularly in advancing our human neoantigen T-cell receptor discovery platform or hunTR. Now turning to slide 21, we believe hunTR is a differentiated platform that has multiple advantages relative to others in the TCR discovery space. Let’s start with the starting material. Traditional TCR discovery is typically done with healthy donor T cells with a limited number of HLAs and mutations. Because the healthy donor is not known to have the mutation, there is a question to whether the T cell really saw and reacted to the target in its natural context. Often this healthy donor approach can require further enhancement of the T cell receptor to make it recognize the tumor which increases the risk profile. In contrast, we do not manipulate the TCRs we find. They seem to both recognize the tumor and bind the target stronger, because they are found in tumor-infiltrating T cells, also known as TILs. This is likely because the TILs that we use for TCR discovery were presumably inside the cancer, trying to fight it and likely visualize the mutation in its natural context. We use these naturally occurring TCRs taken from the TILs in one patient and use them for the treatment as TCR-T cells in another patient with the same target. Another distinction of our program is the throughput. We can quickly screen many TCRs using our transposon system without having to grow the T cells in the lab. We also use a fast universal reporter cell that further increases our speed. Other competing systems typically rely on viral transduction of the TCR into donor T cells, which can be labor-intensive and time-consuming. Additionally, we do not limit ourselves to testing for specific HLAs or mutations based on common peptide prediction algorithms. The platforms that use this method may be limited in their searching capabilities. In contrast, we let the biology drive the discovery of the target and use an unbiased population of mutation and HLA combinations, meaning we can potentially search for and identify any possible T cell response to a mutation. We believe our hunTR platform maximizes the output of TCR discovery. Moving on to slide 22. Last Thursday we presented new data at the SITC conference that demonstrated the ability of hunTR to quickly identify and validate neoantigen-reactive TCRs. The poster is available on our website and we encourage you to have a look to see why we are so excited about this platform. Our goal in the presented study was to establish that our hunTR platform is robust and accurate before we move towards a hotspot mutation focused screening approach. To that end, we evaluated hundreds of thousands of HLA, mutation and TCR combinations in a high throughput setting with state-of-the-art proprietary technology to build our TCR discovery infrastructure. Nine patients with either colorectal, endometrial, or breast cancers were evaluated. All patients screened had at least one detectable neoantigen-reactive TCR, including one shared KRAS-Q61H mutation and 21 unique personalized mutations. Both CD4 and CD8 T cells were reactive, indicating that both helper and killer T cell populations could be sources for TCR discovery. Roughly one in eight TCR was reactive to a mutation and an average of three unique specificities were identified for patients. These data are being used to further define the important genes and characteristics of mutation-reactive T cells, which will continue to reduce the time and associated cost of TCR discovery. As we look ahead, we plan to expand the application of hunTR to grow the vibrant in a two-pronged approach. First, we plan to add more mutations to the existing KRAS, TP53, and EGFR mutations in the library. Second, we aim to add more HLA restrictions to the existing mutations. We believe this will expand the patient population who could benefit from TCR-T cell therapy. We have already begun our KRAS-focused approach against G12D and G12V. Indeed, two of the five initial patients we screened had TCRs reactive to KRAS G12V. These findings provide evidence of the ability of hunTR to discover exclusively owned hotspot mutation-reactive TCRs that could be added to the current clinical library. Our enthusiasm to screen specifically for hotspot mutations is further strengthened by these results and we are actively moving forward with numerous samples with KRAS, TP53, and EGFR mutations. Moving on to slide 23. During the past quarter, we pre-screened over 250 solid tumor samples for the presence of one of the hotspot mutations we are interested in studying. We also looked at HLAs, cell viability, relative proportions of tumor and infiltrating T cells, and other factors as part of the screening process. From the initial set of samples, we are continuing with roughly a quarter of them for full TCR discovery workup. This was an efficient and cost-effective way to find the best possible tumor in a short time period. The pool of samples currently under investigation comes from a diverse group of solid tumor indications that are representative of our treatment populations. We are looking at two EGFR mutations, L858R and exon 19 deletion, which are the dominant mutations in EGFR and are highly prevalent in lung cancers. We chose four KRAS mutations: G12C, G12D, G12V, and G13D based on their prevalence in solid tumors, especially gastrointestinal and lung cancer. Given our early efficacy signals in the clinic targeting KRAS G12D, we are encouraged to add more TCRs reactive to G12D and other KRAS mutations into our clinical program. TP53 is well known to be among the most commonly mutated genes in all of cancer, has been shown to be highly immunogenic in previous studies, including ones that I helped lead at the NCI. Even though TP53 is mutated in multiple locations, there are eight hotspots that we are focused on setting. We believe we will be successful in discovering TCRs reactive to mutated TP53 and that they will be applicable to a large number of patients in a broad range of cancer types. As we saw in our initial data set where all patients had a response to one of the mutations expressed by their cancer, hunTR may also be suitable for personalized TCR-T cell therapies for most solid tumors. The NCI under the leadership of Dr. Rosenberg is pursuing a similar approach for rapid TCR identification to decrease the time from discovery to treatment, and their system could be applied in conjunction with our Cooperative Research and Development Agreement or CRADA. We believe that the use of Sleeping Beauty transposition will further decrease the cost and time to treatment and could be critical for the commercial application of fully autologous personalized TCR-T cell therapy. I would now like to turn the call over to Mike Wong to review the financial results for the third quarter starting on slide 24. Mike?

Thank you, Drew. Let me review our financials for the three months ended September 30, 2022, which are highlighted on slide 25. For the third quarter of 2022, we reported a net loss of approximately $8.9 million or $0.04 net loss per share compared to a net loss of approximately $22.7 million or $0.11 net loss per share for the third quarter of 2021. Collaboration revenue was approximately $2.9 million for the third quarter of 2022, compared to approximately $0.4 million for the third quarter of 2021. The increase was primarily due to the achievement of sales-based milestones of darinaparsin in Japan by Solasia Pharma K.K. Research and development expenses were approximately $7.9 million for the third quarter of 2022, compared to approximately $14.5 million for the third quarter of 2021, a decrease of 46%. The decrease was primarily due to lower program-related costs of $3.6 million, mainly related to the winding down of our IL-12 and CAR-T programs, a $4.9 million decrease in employee-related expenses due to our reduced headcount and a $0.6 million decrease in consulting and facilities expenses. These decreases were partially offset by a one-time $2.5 million expense to MD Anderson following the achievement of sales-based milestones in Japan by Solasia. General and administrative expenses were approximately $3.3 million for the third quarter of 2022, compared to approximately $8.2 million for the same period in 2021, a decrease of 60%. The decrease was primarily due to lower employee-related expenses of $3.2 million due to our reduced headcount and a $1.7 million decrease in consulting and professional services expenses. As of September 30, 2022, Alaunos had approximately $37.8 million in cash and cash equivalents and $13.9 million of restricted cash. Our operating cash burn for the third quarter of 2022 was approximately $6.1 million, compared to approximately $9.6 million in the third quarter of 2021, a decrease of approximately $3.4 million or 36%. That concludes our financial update. I would now like to turn the call to Kevin for closing remarks.

Thank you, Mike. As we turn to slide 27, let’s talk about the upcoming milestones that we expect will be value drivers for the company in the near term. Our team has made significant progress across our business this year, focusing on our novel Sleeping Beauty TCR-T cell platform targeting solid tumors, and the team is poised for continued clinical progress treating more patients and generating additional valuable translational data. Our top priority is continued enrollment of patients into our Library TCR-T clinical trial and towards this end, we expect to dose the next patient in the fourth quarter. As we mentioned earlier, we have seen tremendous excitement building among clinicians and we have dozens of patients in prescreening that are being followed specifically for consideration of enrollment in this trial. We look forward to providing additional updates on the trial in 2023 at a major medical conference. We expect to file an IND amendment in the fourth quarter that we believe will be a big value driver for the company. First, the IND will add two new TCRs to our clinical trial, targeting frequent mutations and HLAs. This will greatly increase the addressable market for our therapy, and we will be able to increase the number of patients in the queue at MD Anderson. Secondly, the IND makes an important improvement in our manufacturing process as we move from fresh to cryopreserved TCR-T cell product. As Abhi mentioned, this will add flexibility for patient scheduling and treatment and reduce manufacturing time from 30 days to 26 days. We expect this new process to go into effect in the first half of 2023. I’d also like to briefly touch on the development of our membrane-bound IL-15 program. Earlier this year, we presented data at ASGCT that highlighted the ability of membrane-bound IL-15 TCR-T cells to specifically target and kill tumors, while also establishing long-lived tumor-specific TCR-T cells. We are continuing to advance this program towards an IND filing in the second half of 2023 and believe it has the potential to increase the survival of TCR-T cells in the harsh tumor microenvironment and deepen clinical responses. Lastly, we continue to work with the NCI to develop proof of concept with a fully autologous personalized TCR-T cell therapy using Sleeping Beauty. Dr. Rosenberg and team are some of the world’s experts in this field and bring significant experience to the CRADA and TCR discovery and clinical trials with T cell therapy. We believe that this personalized approach may be a broadly applicable strategy for cancer therapy in the future. Our team has been focused on delivering results this year and made significant progress across our business while simultaneously reducing our operating cash burn year-over-year. Before we open the call to questions, I want to express my gratitude to our team, partners, patients, and shareholders for their support. We remain excited about the progress we have made to date and look forward to building upon our successes in 2023. We are working to transform the way solid tumors are being treated and confidently expect our early success will lead to even greater accomplishments in the year ahead. We thank you for being a part of this journey as we continue our mission to improve the lives of patients suffering from solid tumor cancers. We will now open the call to questions. Liz?

Our first question comes from Prakhar Agrawal at Cantor Fitzgerald. Your line is now open.

Hi, good morning, everyone. Thank you for taking my question and congratulations on the progress and completion of the third quarter. My first question is regarding the second patient who was dosed in June, which means it has taken almost six months for the next set of patients to be dosed. Could you explain the reasons for this timing, the key challenges you are facing, and also comment on the dosage for the third patient? I have a couple of follow-up questions as well.

Hi, Prakhar. Thanks for the questions. So as you see in the early CICON data with the first confirmed partial response at the lowest dose, there’s really a lot of excitement and interest that’s building in this study. So the CICON proffered talk at the end of September was a really great accelerant to this trial and for enrollment. In fact, just recently, this data once it was presented at CICON was shared with all of the doctors on the stem cell transplant team over at MD Anderson, and the interest is really strong and the pipeline is building. And by adding these two new TCRs in the IND filing, that will even further expand the patient funnel and allow even more patients to be tracked and to benefit from this therapy. The cryopreservation also is going to increase the flexibility for scheduling and will further eliminate any hurdles whatsoever to enrolling patients on this trial. So I think there is a reason that we have been investing in increasing our manufacturing capacity as we expect enrollment to build and to treat many more patients in 2023.

Okay. Thank you, Kevin. And a couple of follow-ups, so maybe a question for Drew, for patient one, I think, the target was not lost and there are still persistent T cells at six months. So any color on the level of memory stem cells and/or if you could provide more details from your transformation work on possible reasons for progression at six months and how could PFS improve with higher doses?

Yeah. Thanks, Prakhar. Good morning. Thanks for the questions. We are very excited to see persistence in this patient up to six months in the circulation of over 30% of their cells, which is quite high and we were also encouraged to not only see it in the circulation, but also in the tumor from this biopsy that was taken from the right lung. So we know that the TCR-T cells are getting into this harsh tumor microenvironment. So it’s very encouraging. We are also encouraged that the KRAS G12D and HLA-A11 were both present in the tumor, so that they are all positives going forward. We are still looking at some of the characteristics of those cells for your question now. We don’t have the data at this point, but we are very interested in knowing what’s going on in the cells. We are very encouraged by the clinical results that the patient had and really looking forward to treating other patients.

Got it. And lastly, Kevin, this is a key question for investors. So if you can talk about the cash runway, I might have missed this and the possible financing avenues you think might make sense for the company given the next clinical catalysts sometime in 2023? Thank you.

Certainly, Prakhar. So our cash runway is still into the second quarter of 2023, and as a biotech, we are always exploring financing options. There is great interest based on this encouraging early data, which is giving us a lot of flexibility and options available to us. We appreciate our supportive and loyal shareholder base and have also been experiencing a lot of interest from new prospective investors who see the potential and power of our TCR-T cell therapy. Reminder, we do have the ATM in place, so that’s yet another option in addition to we worked very hard earlier this year to have the shelf in place as well. So we have many different options and have teed ourselves up to be able to fundraise in any number of fashions. So we are very confident in our ability to expand our cash runway and look forward to providing updates in the future.

Thank you.

Thank you.

Our next question comes from the line of James Shin with Wells Fargo. Your line is now open.

Hey. Good morning, guys. Thanks for taking my question. Just want to go back to patient number one real quick. It sounds like you are still doing work on things and it sounds like HLA and G12D were still present, tumor looks great. So will you be looking at any exhaustion signals to suggest that maybe that’s why the response is going to persist? And then related, when you guys move to the cryopreserved product, can you say what sort of changes you saw from the freeze process relative to the current warm cells?

Thank you, James. This is Drew. Good morning. I'll address the first question and then turn it over to Abhi for the manufacturing inquiry. Concerning patient one, we are very optimistic about the targets still being present and the infiltration of T cells into the tumor. We are assessing exhaustion markers since we have some viable cells from that tumor and are examining their responsiveness not only to mutations but also within an in vitro tumor system. We are looking into all of that with great encouragement and aim to utilize the clinical data to formulate hypotheses regarding the clinical observations. Now, I’ll pass it to Abhi for the question about the cryopreserved product.

Thanks, Drew. I want to start by saying that our manufacturing platform is very robust and reproducible. We have been able to produce high purity, high viability, and high TCR positivity in the cell product. When it comes to moving from fresh to cryopreserved product, there are no changes in our overall manufacturing process, except we have added a formulation for cryopreservation. We have completed a process qualification run, and based on that, we can confirm that our overall manufacturing process is very similar to that of the fresh product.

Thanks, guys. Appreciate it.

Thanks, James.

Our next question comes from the line of Chris Howerton with Jefferies. Your line is now open. Chris, you may be on mute.

We can move to the next caller, Liz.

Our next question comes from the line of Yale Jen with Laidlaw. Your line is now open.

Hello?

Good morning, Yale.

Hey, I didn’t hear my name. My first question is about the next patient you mentioned, which will be the second dose level. You noted that the last patient was at 64 billion cells. Should we expect the next one to be in the same range? I also have a follow-up question.

Right. Thanks, Yale. Yes. Indeed, the patient number three will be at the second dose level. That’s where we intend to treat the patient. As you are aware, there is a range for the dose levels, and so the dose level 2 is anywhere from approximately 10 billion TCR-T cells to 70 billion TCR-T cells. And so though we are not communicating on the exact number in that range, we would anticipate and that’s really the guidance of the treating physician where the dose level is.

Okay. Great. That’s very helpful. One more question here is that in terms of the two added new TCR-T, I didn’t get it quite clearly, could you just repeat what specifically those are the configuration of that dose two.

Yeah. Thanks, Yale. This is Drew here. We are very excited to add these new TCRs into the library. As part of the IND amendment that we are filing we haven’t gotten clearance from the FDA for that those TCRs just yet. So we haven’t announced the specific identity something, but we will once they have been cleared, and we anticipate that they will be cleared, because we have already expanded the library from six to 10 late last year. So that’s our expectation, but we don’t want to be presumptuous with the FDA, so taking a bit of caution here. We can say that we do think it’s going to make a significant increase in the number of patients that can be enrolled in the trial and that we can bring TCR-T cell therapy to as we move forward.

Okay. Great. That’s very helpful. Maybe the last housekeeping question here, regarding this quarter, you have $2.9 million in revenues from Solasia Pharma. Do we anticipate this being a one-time event or could it occur periodically going forward? Thanks.

Sure. Thanks, Yale. We are definitely very pleased on the regulatory approval and the achievement of the first commercial sale of darinaparsin in Japan, and this was the first non-dilutive funding for the company. We anticipate the upfront payment that we received from Solasia in the third quarter of 2022 will be the most meaningful payment that we will receive over the next few years.

Okay. Great. That’s very helpful and congrats on the progress.

Thank you.

Thanks, Yale.

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

Very thanks for taking the question. Drew, just back to the TCRs, I am assuming it’s safe to assume that they are within the three genes that you guys are already focused on, right?

Yeah. That is correct, Thomas. It will be within KRAS, TP53, or EGFR, and again, to reiterate that we are looking to add more mutations within the existing genes and to add more HLAs within the existing mutations. So it’s consistent with that thesis; it will be along those same lines.

Got it. And going back to the first question about enrollment pacing, if you look at the time that the lapse since patient number two enrolled, has it been availability of patients, or was there a manufacturing that kind of stood in the way of another patient enrolling sooner? I am just trying to get some more insight into that timeframe that has elapsed?

I can assure you that manufacturing has never been a rate-limiting step whatsoever. We have a very strong manufacturing platform and are simply building up the throughput capacity for anticipation of the enrollment to come. We all long anticipated that until we had an early data release, that enrollment might be at a slower pace than we would like. But we are now very excited with the proffer talk at CICON, the confirmed partial response at the lowest dose level is really building momentum. There have been a few patients that, unfortunately, these are patients that have just very tragic diseases with heavy disease burden. And as a result, there were patients that did match the HLA and TCR mutation, but unfortunately had other exclusion criteria because of their worsening health declining at a fast pace. So it’s unfortunate that when other therapies failed them, they did not meet the inclusion criteria from a health perspective, even though they matched one of our TCRs. And so what we are excited about with the two new TCRs coming in with the move from fresh to cryopreserved product, we believe that we will be able to produce cells even earlier in a patient’s journey, which will allow us to, we believe, treat more patients and I can tell you that the excitement, we have a lot of inbound inquiries, people coming from different geographies, people responding to the data that was presented at the conference and NCI. So, again, a reminder, three different TCRs on our clinical trial have been clinically validated by having confirmed partial responses. So we are very excited about the prospect of enrolling and treating many more patients in 2023 and anticipate the treatment pattern to increase quite dramatically.

I appreciate all that color. And just to confirm for me, and perhaps, I missed it, how many patients do you anticipate treating at dose Level 2 assuming no DLTs or ICANS?

We are going to let the science speak for itself there. So we are going to follow very closely working with the PIs to determine that. So we will certainly update as we go along. Thank you.

Our next question comes from Chris Howerton with Jefferies. Your line is now open.

Hi. This is Antea for Chris Howerton. Sorry about the audio issue earlier. Thank you for taking our questions and congratulations on a great quarter. We have two questions. First, is there any differences in the purity and viability of the TCR-T cells using the cryopreserved process? And second, what tumor types are you expecting to dose in your next patient and what the next data cut will be? Thank you.

Abhi?

Thank you for the question. Let me start by saying that first two patients, when we look at the characteristics of these two different cells, there is really high viability, purity, and TCR positivity that we compare with fresh versus cryopreserved products based on our early few qualifications around. We do not see any differences in terms of the better dispositions. We still maintain the same amount of viability, purity, and TCR positivity.

Great. And we have not disclosed what the indication will be from those patients ahead. We do anticipate presenting additional data in 2023 at a major medical conference, and at that time, they are much more translational data on the patients that we have and share additional information about the indication. So, again, we do reiterate that we have six different solid tumor indications that we are treating with our Phase 1/2 basket trial.

Got it. Thank you for taking our questions.

Thank you.

Thank you.

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