Alaunos Therapeutics Inc (TCRT) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ZIOPHARM Second Quarter 2017 Earnings Call.

(Operator Instructions)

I would now like to turn the conference over to your host for today, Dr. Laurence Cooper, Chief Executive Officer.

You may begin.

Thank you very much, operator, and good afternoon, everybody, from ZIOPHARM.

Today with me in the conference room is Caesar Belbel, our Chief Operating Officer; and Dr. Francois Lebel, our Chief Medical Officer.

We'll begin as usual with our forward-looking statement.

I will not read this in total, but please refer to the ZIOPHARM website if you should have any additional questions or need information.

So Slide 3. This is titled "What has ZIOPHARM accomplished to succeed?" This is the slide that really differentiates ZIOPHARM from others in our space.

We have 4 technologies, which we have reduced into practice that clearly mark us as different and special from others.

In the upper left-hand side is our approach to gene therapy.

And this is based on the nonviral transfer of DNA plasmids that are coded from what's called the Sleeping Beauty system.

And this is an ability, therefore, for ZIOPHARM to insert genetic information into cells such as T cells and to render them capable of targeting cancer cells, for instance, CD19 on B-cell malignancies.

And as the yellow text in the box says, we've already achieved success in clinical trials.

So we've ticked that box, if you would.

On the right-hand side is the switch system that we're using to control gene therapy products after they've been administered.

Many of our competitors deliver cells or agents to the body and then hope for success.

With this type of switch system, we can guide for success using a drug or veledimex or small molecule called veledimex.

And this accesses the components of a switch system called the RheoSwitch system.

Also in yellow is that we've achieved success in clinical trials.

So again, we've checked the box there.

In the bottom left-hand side is the types of technologies that are disruptive that allow us to scale our technologies to achieve the growing demand for these types of very sophisticated and powerful cell and gene therapies.

And these hinge on 2 technologies, the so-called point-of-care, that I'm going to carefully explain in the coming slides, and also the off-the-shelf manufacturing.

Both of these have had success in our preclinical studies and both of these are now firmly on the ramp to being tested in the clinic.

And then on the bottom right-hand side is this new molecule that we're advancing where we can activate cells such as T cells with IL-15.

IL-15 is the cytokine molecule that works through a membrane receptor, a cytokine receptor, if you would, that activates T cells.

And in coordination with other molecules, like chimeric antigen receptors, or CARs, it can provide a fully active phenotype, in other words, a fully active cell that is capable of engrafting and then going to work on our demand.

And this membrane bound by IL-15 molecule, as I explained in prior calls and also as we've explained now in the literature, have achieved success in preclinical studies.

And we will be talking to you about this.

All of these 4 pieces: The Sleeping Beauty system, the switch, the novel approaches to manufacturing and this cytokine signaling all work in concert together to provide us a competitive advantage.

And they all work essentially to generate cells or to generate virus for the purposes of treating oncology.

So on the next slide, I'm going to share with you where we stand with how we are harnessing the Sleeping Beauty system and applying it with the IL-15 biology to implement a whole new approach to manufacturing where T cells, expressed in the chimeric antigen receptor, can be produced in under 2 days.

And just to kind of put that in context, many of you might have seen some presentations to ODAC, one of the advisory committees to the FDA, where our competitors are producing T cells that takes 20-or-so days.

We're going to be able to do this in under 2 days.

This is a major leap forward for the field.

But in order to leap, you have to essentially have the legs to do it, and we have put together essentially the program over these last months whereby we could share with you the success.

The first is a trial that (inaudible) started when I was back at MD Anderson as Head of pediatric transplant and -- we've since -- finished the trial.

And we wrapped this up essentially as the first generation technology in which the Sleeping Beauty system, this nonviral approach to gene transfer, was definitively shown to work in humans.

And we did 2 trials.

And for treating both patients with non-Hodgkin's leukemia -- lymphoma, excuse me and acute lymphoblastic leukemia, and this was published as you can see in the monograph in 2016.

In that data, amongst all of the findings were that the T cells survived after being infused, having been genetically reprogrammed with the Sleeping Beauty system and that the patients also survived.

And this is essentially the linchpin now that allows me to share with you that this approach to gene therapy works.

But that's an academic trial, if you would.

That's a trial that we worked on when we were at MD Anderson Cancer Center for the purposes of -- as a proof of principle of the Sleeping Beauty system.

What ZIOPHARM, and together with our colleagues Intrexon, have done is that we've taken that academic trial and we've now put it on a commercial footing.

In other words, we've gone to work on what are the core pieces of the technology that drive up the cost and undermine the control of CAR-T.

So to solve that, we've launched and are continuing to study a second generation technology.

And there are a number of technological advances in the second generation.

For instance, we've shortened the manufacturing time from 4 weeks to 2 weeks.

In other words, we're producing T cells now in 14 days.

And I share with you, and you can see the image on your screen, where patients who perceive this short and manufactured T cells, again, using the Sleeping Beauty system can have major responses.

For instance, there's a patient on the -- who has a scan, who's essentially has lethal -- acute lymphoblastic leukemia or ALL.

And then after giving the CAR-T, the patient goes into remission.

This second-generation trial though is a transit state for us.

This is a way in which we are working with our investigators at MD Anderson Cancer Center for the purposes of shortening the manufacturing time, understanding some of the regulatory complexities, developing new technology because where we are going and what will be transformative is on the third generation trial, which is schematized on the right-hand side.

And this is the trial that we've summarized as point-of-care, or POC.

In this trial, patient's blood is obtained.

For instance, the standard is where a patient undergoes leukapheresis or apheresis, and then we gene transfer in not just the CAR, but also the membrane-bound IL-15.

This formulation of IL-15 that we've generated such as that T cell can have 2 signaling capabilities.

The first is it can recognize the tumor, like CD19 on a cancer cell through the CAR.

And the second is that the cytokine molecule, IL-15, could give that T cell a proliferative advantage, a survival advantage, if you would, after being infused.

In the little #3, you can see on the right-hand side, is really where the magic happens because this type of technology can be accelerated to where we could essentially introduce the gene and then immediately, within 2 days, infuse those cells.

Those cells then go to work in the body and extend courtesy of the signaling through IL-15, which we can control.

So this generation of first to second to third generation is what we've been working on.

And this essentially is the update where we're now progressing steadily through these technologies such that we can launch the POC manufacturing and essentially test this in the humans.

On the next slide.

I share with you -- just a teaser, really, that we'll be updating the community in the coming months around both the first generation technology.

I'll be talking about the long-term survival of these patients because, again, as I alluded to on the prior slide, this trial was started when I was back at MD Anderson.

So we now have data on these patients that goes back a number of years.

And I think that there would be a lot of interest in that.

We'll also have an update on the current trial.

Where we are, I'll be able to update you on some of my thinking about the regulatory landscape.

In particular, as we transition then into the third generation technology.

In other words, this very rapid, our point-of-care approach to manufacturing T cells.

We continue to work on the preclinical data.

It's really coming to rest at this point, and we're now putting this together in the regulatory package.

And the reason that I have optimism about that is that we've learned a lot from the second generation trial that informs on the third-generation trial that will help us essentially navigate the regulatory pathway.

But again, if you would -- if you would, a teaser and just to kind of remind you of why these data are going to be so transformative to the industry, I just share with you the data that came from the lab in the pre-clinical modeling.

You can see in the graph there that there are 2 axes.

The vertical axis is the amount of tumor that's in a mouse.

And the x axis or the horizontal axis is essentially the days of life of that mouse or that group of mice.

When we infuse T cells into this mouse that's riddled with tumor, and you can look at the little black diamonds there, you can see that there is essentially 2 parts of the curve.

The first part of the curve is where there's essentially a rapid growth of the tumor.

And then there's a plateau essentially from days 16 to 30.

And then there's a diminution in the signal, the mouse goes into remission.

So what is happening there in those triangles?

Excuse, in those black diamonds.

What's happening is that we're infusing T cells, just as I've described, for the [cumen] clinical trial in which T cells have been genetically modified with the Sleeping Beauty system to express the CAR and the IL-15, and then there's no propagation.

Essentially, these T cells are gene transferred and then given to the mouse within 2 days.

So these T cells grow in the mice.

They then grow to the number that's needed to control the disease by day 16, and then by the 30, the mouse goes into remission.

And this, obviously, is in contrast to the control where the mice continues to suffer, for instance, if it only get the tumor and doesn't get any immunotherapy.

So again, the technologies that we're talking about here are really transformative for the industry.

I just want to put this in context on Slide 6. Really with, what I consider, where this type of point-of-care technology fits into the big picture.

And we're right now somewhere between the first and the second era, if you would, of gene therapies for the purposes of targeting CD19.

There's terrific excitement and optimism about targeting CD19 but most companies have focused on viral-based gene transfer.

And that has a whole headwind, essentially to commercialization, really because the difficulties of controlling the T cells after they're infused, there's a lot of cytokine storm associated with giving a virally-transfused T cell.

And the cost is inherent to having large GMP facilities and to having infrastructure wedded to reducing viruses.

What ZIOPHARM has done is considered that there are other alternatives, essentially, to doing gene therapy based on fixed infrastructure associated with viruses and GMP manufacturing.

And to move us through these various eras, if you would, one has to take advantage of this nonviral approach to gene transfer, which we have and which I've now documented, works.

And we have to also understand the fundamental signaling properties of T cells, which will allow us to generate T cells that have survival advantages, such that you can give low doses of T cells and you may be able to avoid issues of cytokines storm.

And you can get to a manufacturing solution -- if, in other words, sort of the final era, if you would, where these T cells can be made at multiple points of care without having to have large fixed structures, GMP facilities and having centralized manufacturing.

This is a very exciting and optimistic look at the future because it gets at the heart of the issues that are holding back the commercial success of CAR-modified T cells.

On Slide 7, it's not just CAR-modified T cells that we're talking about.

It's also the ability to generate T cells that have T-cell receptors.

So you might remember CAR, essentially, it (inaudible) tumor cells directly.

They form, if you would, a handshake or death grip with the tumor cells.

A T-cell receptor is more nuanced.

The T-cell receptor can peer inside a tumor cell courtesy of being able to look antigens decorated with what's call Class I or Class II HLA, or human leukocyte antigens.

This ability to peer inside tumor cells really opens up a repertoire of antigens that can be targeted by a genetically-reprogrammed T cell.

And the opportunities, therefore, go beyond hematologic malignancies and one can really now talk about targeting solid tumors.

And the reason that's important is that 8 out of 10 cancers -- in other words, the vast majority of cancers are derived from the epithelium.

They're also known as carcinomas.

These are tumors for which the TCR-modified T cell is perfectly designed to take advantage.

And the reason for that is that the T-cell receptor can peer inside the cell and recognize the Achilles' heel of cancer.

In other words, it can recognize what's called neoantigens -- or [neuantigens].

That are part and parcel of the reason why that particular tumor cell became carcinogenic in the first place.

So by being able to do this, one has to have the most efficient and the most cost-effective gene transfer technology.

And the reason for that is that unlike many other companies that are targeting what's called shared antigens, antigens that are in tumor cells that are in -- widely-expressed in tumor cells, we are going after neoantigens.

And the reason for that is that these neoantigens truly are the reason why these tumor cells became tumorgenic.

In other words, why they became cancerous?

So if you could target the actual lesion, you may be able to actually target all of that solid tumor.

But you have to do it on a patient-by-patient basis.

In other words, one person's T-cell receptor work for one person's tumor.

So in order to scale this and develop a technology that's commercializable, we're now harnessing essentially the Sleeping Beauty system and all of the other technologies that I've alluded to.

In other words, the point-of-care technology, to be able to generate T cells that are individualized for each patients so we can target solid tumors.

And this is not lost on the academic community.

Indeed, our colleague, Steve Rosenberg at the NCI, reached out to us and asked us to use the Sleeping Beauty system because he recognized that he needs to develop personalized immunotherapy to target the patients with solid tumors in his practice and he needed the most clinically-advanced system for doing so.

And he reached out to Intrexon and ZIOPHARM and we're delighted to partner with Steve on this.

In addition, we have also had a significant publication with him where we demonstrated the Sleeping Beauty system could indeed be used to reprogram T cells to target solid tumors.

You can see on the left-hand side the schematic, essentially, that allows you to understand, as I understand it, how we are approaching the therapy for solid tumors where, again, patients are screened for their neoantigens, these particular lesions that are associated with their malignancy.

We'd use the same Sleeping Beauty system that we've been using in the CAR programs to reprogram the T cells and then, we're going to be infusing these T cells in very short periods of time again, using the point-of-care technology.

So this is a pause here, if you would, a sort of a summary of the point-of-care solutions.

On the left-hand side, I have tried to capture where the field is, vis-à-vis, the competitive landscape.

So there's a patient who has 4 yellow tumor cells, just for schematic purposes.

And that patient will receive CAR-modified T cells.

But there's a number of -- essentially, of headwinds to the commercialization of that CAR-T cell therapy.

The first is that by having a centralized manufacturing solution and using virus, my competitors have to build in essentially, a tolerance for the variability in the system.

In other words, if you're propagating cells outside the body for weeks, there's going to be variation associated with that manufacturing solution.

And that variability is going to call into question the underlying reproducibility of the process and therefore, the product.

The second is issues around the scalability.

Can you, essentially, have enough space, enough technologies, enough manufacturing solutions to be able to handle the number of patients if you are fixed to the idea that you need a centralized manufacturing to be able to grow T cells?

And then ship and infuse them?

When you give those cells, and there's a whole world of safety concerns.

For instance, patients who had cytokine release syndromes and those types of adverse events.

And the last is the patients who had to receive lymphoid depletion as part of parcel of getting these CAR-modified T cells.

All of these add up, essentially, to uncertainty in the field.

And this is something that I have essentially addressed with the ZIOPHARM solution.

And the reason all of these works is that I've understood the issues why those headwinds are essentially slowing the field down and what we need to do as a company to solve all of these.

Well, the first is that we're essentially undoing the need to propagate T cells for large, long period of time outside the body.

As I've explained now, we can do this now in under 2 days in our preclinical models.

This allows for a major reduction in the cost and particularly, by avoiding the issue of needing lentivirus and just using simple DNA.

That's another major cost of savings.

We can improve scalability.

And the reason for that is that we're not growing T cells for long periods of time outside the body.

These are short pulses -- essentially, of manufacturing, where we can infuse the T cells.

We can deliver the cells when the patient needs them rather than when they're available.

This is a big issue right now because many patients have aggressive leukemias and those patient's underlying tumor can progress before they can get their therapy.

This is a solution for giving T cells, if you would, on-demand.

Furthermore, we can improve the safety of these technologies because we have switch systems that control the persistence of the T cells after they've been infused.

A major significant -- a major advancement is the role of IL-15.

As many of you know, IL-15 biology is important for the persistence of T cells and it's one of the reasons while lymphodepleting chemotherapy is given.

Patients get chemotherapy so they can free up their own body's IL-15.

If you're delivering T cells with IL-15 embedded into the T cells, then we can infuse T cells that may not need lymphodepleting chemotherapy.

Again, a major advantage.

And as I've just shared with you, this whole solution allows us to get into targeting solid tumors, which is a very large landscape, and again, gets at 8 out of 10 cancers.

So as we transition now to Slide 9. It's not only about what we're doing for CD19 and what we're doing for -- as we approach solid tumors.

We have made real headway in targeting tumors, such as AML, acute myelogenous leukemia.

And this is now on Slide 10.

So AML is an unmet need and something that the CAR-T cell can really address.

So we have developed technology to ask the question whether CD33 is a good target for patients who have refractory or relapsed AML.

And so we've generated CAR Ts that have the ability to dock with CD33 and to kill cells that express CD33.

And we have a switch technology.

Again, part of the programming language of the T cell so that we can eliminate the T cells, if we need to, essentially, if there's untoward toxicities.

And we're going to open this trial in patients who are both the adult as well as pediatrics and be able to do so in Q3, basically, in this next quarter.

And the reason we're optimistic about this is that we already have an IND that's been approved through the FDA based on, for instance, some of the data that I'm sharing with you on the right.

This is a mouse model, again, of AML.

And here are mice that are surviving, 100% survival, when they receive the CAR-modified T cells that are targeting CD33.

Whereas the irrelevant T cells, for instance, in this case, CD19 because CD19 is not on AML blast or you get T cells that don't have the CAR.

In that situation, the mice die precipitously.

So in this example, we're just delighted to be able to share with you that this trial will be open at the MD Anderson an investigator-initiated program.

And we will learn for the first time, at least in the United States, that CD33 is a good target.

And I think this will be really a great opportunity not only for ZIOPHARM and Intrexon but also of course our patients.

But AML is also, as you'll see on the next slide, susceptible to not just T-cell therapy but also natural killer cell therapy, or NK cell therapy.

So NK cell has some real opportunities here.

And the reason that we are interested in them is that they can be made in advance of their need and then put into the freezer and then thawed as the patient comes into the door and essentially infuse, right then and there, as the patient need it.

And you could generate NK cells that can directly target AML cells without any further genetic modification.

But the trick, you have to be able to understand, is how to grow out large numbers of primary NK cells.

These are not (inaudible) NK cells.

These are primary NK cells.

They don't have to be irradiated.

They can be directly infused.

And as you can see on the graphic on the top right-hand side, we can take one donor's NK cells, make a very large bank of these cells on our specialized feeder cells and then, infuse them into multiple recipients with AML.

One of the reasons that, if you would, off-the-shelf or third-party technology works is because NK cells lack what's called the T-cell receptor.

In other words, they lack the molecule that would cause toxicity.

I think this is a very important part because we, as a company, therefore, don't have to do any genetic editing at this point for the purposes of making an off-the-shelf therapeutic.

And then there's some data on the bottom right-hand side that may be a bit techy but I think it's important, on the x axis, on the bottom, is essentially a marker for T cells, it's called CD3.

And on the Y axis is a marker for NK cells called CD56.

And as you can see at the beginning, if you just take peripheral blood mononuclear cell, or PBMC, these PB -- this product has a mixed population of NK cells and T cells.

But as part of our manufacturing solutions in the feeder cells we've generated that have a special molecule on the surface called IL-21, we've been able to grow out a highly pure population of NK cells.

You can see 91% thereafter we've completed our manufacturing campaign.

And again, this bodes very well for the purposes of clinical conduct.

And we expect to open this trial so that we can understand how these off-the-shelf NK cells work in the -- really, the medically-fragile patients or the elderly patients.

And this is -- your heart has to go out to these patients because, often, they are last diagnosed.

They'll get AML and they won't be eligible for any of the standard intensive chemotherapy, and so we're going to offer them a potential solution with off-the-shelf NK cells.

So now we're going to leave the world of cell-based therapy and transition to our program, in which we are delivering adenovirus to instill IL-12 and control IL-12 for the purposes of treating brain cancer.

So this is Slide 13 now.

And this is the, really, the opening slide that shares with you the update of what we showed -- shared at ASCO back in -- a few months ago earlier this year.

So in the trial, which is now open across the United States, you can see the trial sites at the top there, where we have infused patients in 3 cohorts.

And I really want you to pay attention to the 20-milligram cohort because that's the cohort that we have signaled to regulators is the one we wish to take forward.

In the 20-milligram cohort, we are delivering adenovirus 2 x 10 to the 11th -- bio particle and then we're giving 14 days of veledimex after their neurosurgery.

So let's just pause for a second and look at the graph on the right.

So you can see there's a silhouette of a patient who has a syringe, here she has a syringe in the glioma.

So this patient has a recurrence of their glioma.

That's what make them eligible for the trial.

And then they receive, as part of their, essentially, their standard of care, they'll go to the operating room for a neurosurgical procedure to try and debulk some of the tumor.

That neurosurgical procedure is by no means curative.

Nobody comes out of the operating room cured of recurrent glioblastoma based on neurosurgery alone.

What does happen, though, and the reason why there's therapeutic optimism, is that during the neurosurgical procedure, the syringe of IL-12 is handed to the neurosurgeon.

And it's not just IL-12 as s recombinant protein.

It's IL-12 that is cleverly inserted into a viral vector.

And that viral vector then worms its way into the brain tumor cells, deposits the payload of IL-12 under control of the RTS, the RheoSwitch system.

And then on the far right-hand side, you can see the little pill in that person's stomach because that's what happens.

This patient now is out of the operating room, takes the veledimex daily by mouth.

In other words, that pill.

And then the contents of that pill, the veledimex, cross the blood-brain barrier and can find the RTS, the switch that's been deposited by the adenovirus in the brain tumor.

And that then turns on IL-12.

Now let's go back and look at the table for a minute, and now we can kind of take a look and begin to see, in the 20-milligram cohort, what happens to these patients.

So the -- first of all, these patients are highly motivated to go on this trial because they've had multiple prior lines of treatment.

In other words, on average, about 2.2.

And I would add here as an editorial note, this is different from some of our competitors.

Some of our competitors in the field essentially enroll patients with -- who may have only had one line of prior treatment.

We are taking, if you would, more advanced patients.

And as you can see, many of these patients have had multiple recurrences.

They really are in desperate shape.

But the reason why the 20-milligram cohort is to be accented here is you can see right at the bottom of the veledimex, dose incompliance, that the majority of patients on the 20-milligram cohort were compliant with their dosing.

In other words, could take the veledimex and receive the full beneficial effect of the IL-12.

So as we go on, we can now look to see, on the next slide, what happens to patients in which they've had, essentially, the 20 milligrams of veledimex, had essentially the exposure within their tumor to the IL-12, and did they have a benefit?

Did they essentially have a response?

And what's really remarkable, and I think highly encouraging about this Phase I trial, is that the answer appears to be yes.

Now you can see in the green line for those 15 patients now that the median overall survival is 12.5 months.

And this is now at a follow-up of about 9.2 months, as you can see in the text at the bottom.

So why is this significant?

And the reason is, is when you look back at the most mature literature, whether it'd multicenter trial or randomized trials, the 12.5 months stands clearly superior to all these other modalities.

So let's just take a look at a particular trial, for instance.

The lomustine versus bevacizumab trial, or Avastin.

In that situation, those patients essentially lived, on average about 8 months.

So we're doing much better than that.

We're already out to 12.5 months.

Or look, for instance, at the randomized trial, comparing the carmustine wafer, the (inaudible) way, if you would versus the polymer placebo-controlled.

In this trial, all the patients went to neurosrugery.

Everybody had some type of polymer.

But only half the patients had the chemotherapy carmustine in their polymer.

In other words, those 110 patients.

So basically, it didn't matter whether you had neurosurgery or neurosurgery plus the chemotherapy in your wafer.

All those patients, unfortunately, died somewhere between 5.5 to 7-or-so months.

So in other words, this is really the control arm for what happens when you have neurosurgery by itself.

It doesn't cure you.

You basically, unfortunately go on to die something like 5-or-so to 6 months after that neurosurgical procedure.

And again, just place that in contrast with the 12.5 months that you see in the green line on the top.

So those data are obviously exciting.

But what I think is really coming home and what is important update for this call is that we're beginning to understand the mechanism why this works.

So again, we're delivering IL-12 using this switch system.

We're controlling IL-12 with the small molecule, veledimex.

We give more veledimex.

We make more IL-12.

We give them less veledimex, we make no IL-12.

We stop veledimex and essentially, all the IL-12 goes away.

That IL-12 biology is predicted to have effects because we know from other human studies as well as in the mouse model that IL-12 works on the immune system.

So in other words, if the patients are surviving because there's an IL-12 effect, we should be able to understand the mechanism of why the IL-12 is impactful.

And we have 2 intriguing pieces of data that point in that direction.

The first is in the role of dexamethasone.

Okay, so dexamethasone is a steroid.

And it's a systemically delivered steroid, and it's given by neurosurgeons around the time of the surgery.

Now there's no standard of practice for dexamethasone.

Some investigators will give very little to no dexamethasone as part of their standard of care for patients and some neurosurgeons will give, for instance, a lot of dexamethasone, like over 100 milligrams.

ZIOPHARM is a witness to the amount of steroids that are being given to these patients.

We don't tell the neurosurgeons what to do.

They're doing their standard of practice according to their neurosurgical training.

But it's a natural history experiment.

And we are, essentially, have broken open the envelope and have now looks back in time and asked the question and said, "of all the patients who are on the trial who received 20 milligrams of veledimex, what type of steroid dosing did they have?" And as you can see here, it broke into 3 lines, 3 cohorts, if you would: There's the black, the blue and the purple.

The black had the least amount of steroids.

The blue had the intermediate amount of steroids.

And the purple had the highest dose of steroids.

And very nicely, essentially, it provides you data that shows you that the amount of steroids as it goes up, so the overall survival goes down.

But why does that fit the model?

It fits the model because steroids are not only useful for neurosurgeons and their practice, but they also have a crossover effect and they damage the ability of T cells to work.

And T cells as well as NK cells, are part of the effector mechanism.

Part of the reason why IL-12 works.

So in other words, if IL-12 is activated in the immune system to go after that person's brain tumor, then the IL-12 will work better when the handcuffs are off.

In other words, when the dexamethasone is at its lowest.

And of course, you can see some very intriguing data where we had 100% survival for the patients who had the least amount of steroids.

Again, it's a small number but again, I think it really points to the underlying biology, and it fits with the mechanism.

On the right-hand side is another piece of biology that also fits the mechanism.

Because as I've explained, IL-12 activates the immune system.

So you should have more cellular elements, more activated T cells in your body than the so-called regulator T cells.

So there's 2 ways you can look at that: One way is to look at the number of activated T cells based on CD8.

And the other way is to look at the number of suppressor T cells based on FOXP3.

These are technical measurements.

But you can, essentially now, paint in your mind CD8 for killer T cells and FOXP3 for suppressor or regulatory T cells.

And if ZIOPHARM is right, it should be either IL-12 drives up the number of killer T cells and drive down the number of regulatory T cells so that you'll have a ratio.

And that's just what we show in these patients.

And the ratio correlates with survival.

So in other words, the higher the ratio of the so-called CD8, the FOXP3 or killer to regulatory T cells, the longer the patient survives.

And again, these are retrospective data.

We collected these data and then broke open the envelope to take a look inside and could match these data now back against our survival curve.

And so not only, as I've shown you, that we got 12.5 months of medium overall survival, which is stands head and shoulders above what's available to patients currently in the formulary, but you also have a mechanism why these patients did well.

So if we go to the next slide.

Going to look now to the future.

And in fact, the future is here.

The future now, if you would, because we've gone on and opened up a arm of the study in which patients are being enrolled, where they're having the virus, the adenovirus deliver the IL-12 stereotactically.

In other words, a small hole and it opened up and then, a needle is inserted directly into the tumor and then we deliver the IL-12 by the adenovirus such that the patient then can have control delivery of IL-12 from within their tumor without having to have the so-called sort of neurosurgical procedure that I was talking to about before.

So why is that important?

That's important because we're going after 2 new major trials.

The first is that some patients, particularly children, develop tumors not in that -- in the thinking part of your head, but they devastatingly have tumors in their brainstem.

And I tried to show you an image, actually, on your slide there of what's called a pontine glioma.

And that white mass sits right in the midbrain or in the pons of that child's brainstem.

And there's no neurosurgical procedure there.

The child would die on the operating room table.

So the only way we can access that tumor is stereotactically.

This is going to be very, very exciting for the company and quite frankly, will place us head and shoulders above the competition because we're the only group that really can do this.

And then really -- the reason we have such excitement about it is that we've modeled this in the mice.

You can see the curves on the left-hand side where mice with pontine glioma have been treated with stereotactic insertion of the adenovirus into their pontine lesion -- in their midbrain lesion.

And we've had survivors in the mice.

So again, this really -- I think, generates enthusiasm for this pediatric study.

The other reason we've opened up the stereotactic arm is on the right-hand side because, as you can see, and I try, again, to show you representative image of a patient with a very large tumor in their head.

This tumor is simply not amenable to any type of neurosurgery, and no neurosurgeon will go in there, it's getting into the ventricle, it's disturbing critical elements of the brain.

So the only hope for this patient is to have instruments that would delicately place the virus into that surgical mass.

But the reason we're optimistic of that patient is not only are they going to get the IL-12, and the controlled amount of IL-12, but they're going to get concomitant therapy or combination therapy using PD-1 blockade, or anti-PD-1.

And the reason we're excited about that, again, goes back to the mouse models.

And as you can see, in the red triangles, when you combine IL-12 biology with anti-PD-1, you can have 100% survival in the mice.

And that obviously, is superior to giving essentially one or the other therapies by itself.

So again, we've opened up a stereotactic arm and this is the lead-in now to the pediatric study and into the combination study in adults.

So I'm just going to quickly summarize here the updated Phase I results and plans.

So as I shared with you veledimex regulates IL-12 in a dose-dependent manner by activating the RheoSwitch, there's a very good correlation -- and I've shared this data with you in the past.

I didn't do so to repeat today.

But again, we've had a very strong correlation between the amount of veledimex, its ability of this drug to cross the blood-brain barrier and then to proportionately create -- generate IL-12 and then kick off gamma interferon production.

As we reported at ASH at ASCO, we've had the -- all of the adverse events were related to IL-12 biology completely understandable, completely predictable and rapidly reversed upon discontinuing veledimex.

This has been remarkably a safe drug to be able to give to patients.

We've had no drug-related deaths.

We, as I've shared with you, our survival data continues to get stronger and appears to correlate now so we have a mechanism to help us understand why these patients are surviving.

I've alluded to the fact that there's a very intriguing subpopulation of patients who have low-dose steroids and have, actually, just wonderful survival.

And that the current and median overall survival rests at 12.5 months, which really is a favorable compared to historical controls.

So we'll have more to share with you in the coming months at SNO, and I look forward to updating you on the technologies.

As I've mentioned, we're enrolling the stereotactic group at the runway for the pediatric trial and the combo trial.

And then importantly, a lot of work has been done this year on moving us now to the Phase III trial.

We are currently working on a protocol design to open the pivotal trial.

We'll be open by the end of the year.

And we have the potential for a single-arm study, comparing the adenovirus with a controlled production of IL-12 and veledimex to historical controls in a subpopulation of patients with GBM.

And we'll have more to say.

And I'm sure there'll be some questions on this, but rest assured, this is a high priority for the company.

We will update you in due course and essentially, as we move through the international regulatory landscape, it just takes time to meet with all the regulators, particularly in Europe, for the purposes of getting a unified trial out the door by the end of the year.

And then I've also mentioned -- and again, I'm not going to tip my hand any further, but we are currently active in partnership opportunities and discussing the types of partnerships that are -- looking at, essentially, commercializing, I think, what's a very promising asset.

As we transition now to the end of my prepared remarks, we'll go through the financials and have a summary.

So here are we on Slide 19, which is the overall kind of snapshot, if you would, of the company.

I'm not going to read every one of these notes.

I'm just going to really say that I think the key part is our cash runway extends into Q4 of 2018.

And that we're really delighted, essentially, with our relationship with MD Anderson.

This is -- as an academic, having worked there for 10 years and now have been in industry for 2 years, this has really been a wonderful collaboration and it really has justified our investment in MD Anderson.

And as you can see there, we have significant resources that we've put into place at MD Anderson for the purposes of really punching out these trials: the point-of-care, the NK cells, the AML, the combo trial and more to come.

The milestones slide.

We don't have to spend too long on it together.

You can look at it at your leisure, but I'll just sort of pick off the highlights, if you would.

On the top, for the adenovirus, the Ad-RTS (inaudible) which of course IL-12, that top line there, obviously, we're heading towards the pivotal trial.

I talked about the stereotactic lead in, in a combo trial, in the pediatric trial.

Going into the CAR program, we've also talked about the updates we're going to have around the shortened manufacturing that are really a laser-like focus on the point-of-care technology, where we're advancing that to the clinic.

And as you can see, we're making great progress getting this through the regulatory landscape through the rest of this year, and then be open for clinical conduct next year.

The AML trial and CD33 is about to start.

I haven't been able to share with you, really, just for the interest of time, the Merck programs.

But again, those are really tracking well.

We've had, as you know, a press release on this, and they're delighted by the technology associated with the Sleeping Beauty system and the IL-15.

And all of that is really coming into focus for a clinical trial next year.

The NK cells also will have a trial.

It'll be tested this year, and I mentioned why, and we are really interested in testing the concept of off-the-shelf therapy.

And then the Sleeping Beauty system for the purposes of targeting TCRs, the clinical trial there will be launched through the NCI.

And again, we'll work with you and update you on that through the remainder of the year.

But so far, we're aiming for this year being in the clinic.

So the last slide in this synopsis is really just to kind of go back over our competitive advantages.

So I think as you've seen, as I started out, if you tick, if you would, those 4 boxes, we are really the company that's thought deeply about what it would take to commercialize gene and cell therapies.

The concept of point-of-care that's very rapid under 2-day manufacturing is really going to be a change for the field because it will get at the major problems associated with why CAR-Ts are perceived to be so expensive.

Furthermore, the switch system, the RheoSwitch system and the ability to control transcription using the veledimex will allow us to control products after they've been infused.

In other words, to control the fate of genetically-modified T cells so that we can prevent the cytokine storm.

The gene switch also has been applied, for the first time, to really show exquisite control of this very powerful cytokine IL-12, and that has had some terrific now data with related to the survival of patients and also the biology of how IL-12, when it's carefully controlled, can activate the immune system to generate these so-called killer T cells.

Our program in solid tumors continues to advance.

This is a terrific opportunity, as I've mentioned.

It -- the landscape for solid tumors really is much, much larger than the opportunity for CAR-T.

And the off-the-shelf NK cell program will be -- you'll see data this year.

And we're -- excuse me -- you'll see the trial start this year.

And I think, this is, again, a really interesting opportunity as we think about, again, the kinds of competitive advantages that are out there for ZIOPHARM as we develop new therapies for patients with cancer.

So thank you for bearing with me over the last 45 minutes.

That was my prepared remarks, and I'm now going to turn it back over to the operator and then we have about 15-or-so minutes for questions, if folks are interested.

(Operator Instructions) And our first question comes from Reni Benjamin of Raymond James.

Maybe just a couple of questions.

One, we had quite an eventful month this month with the Novartis panel.

Do you have any takeaways that you can provide from the panel?

Any learnings that you might be applying to your programs?

And in particular, I guess, differentiations in terms of manufacturing and the use of nonretroviral systems versus what the FDA focused on?

Sure, sure.

The way I think the -- yes, I mean, several, to be honest.

The first is the sort of sharing from Novartis about the heterogeneity of their product.

I think this was a moment that the FDA will have to contemplate.

Clearly, the clinicians in the room wanted this technology advanced.

And as I've -- I also as a pediatric oncologist.

I've taken care of patients with refractory ALL, and I am delighted that there are options like this that are available.

But it's one thing to have excitement around the clinical efficacy, but there's another set of concerns or, at least to say, headwinds that we'd have to contemplate with respect to the heterogeneity of the product.

The time it takes to make a product.

If I remember, it was 22 days.

That's a long time for a trial to wait, especially with ALL.

There was also concern about the -- this integration, pattern of integrations from the lentivirus system.

All of these can be addressed with a nonviral system.

The -- if you can get the manufacturing down to under 2 days, the heterogeneity is no longer part of the process, it's ascribed to the patient.

If you can get the used -- excuse me, if you can use Sleeping Beauty versus lentivirus, the pattern of integration is much different, and in fact, we published that in the J CI paper.

It's truly a random integration pattern, which is different from using a virus.

And if you can rapidly manufacture T cells, then that child -- or that patient can receive the T cells before their disease gets out of hand.

So this -- there's like a lot there, to be honest, to kind of dive into, and I think it's important that the FDA ruled favorably.

But I think as in many technologies, that's the first chapter.

It's the first era, if you would.

And I'm interested in moving us to what is, I think, a safe ground where there really is a commercialization anchor to the types of things we're doing.

And cause the elephant in the room is the cost, and that's really where we're going to make progress.

So that's a perfect answer tonight.

My follow-up, which is, when does the POC kind of hit prime time?

And what are the potential hurdles?

So for example, training somebody at the site of -- at the point-of-care?

What's involved there?

The variability of transfection outside of your hands and into these other institutions and anything else we might not be thinking about.

Sure.

So yes, those are excellent questions, and it's really the reason why ZIOPHARM has gone through these generations of technologies.

We -- I thought of point-of-care when I was first talking to the board about the job and joining ZIOPHARM.

And -- but it became clear that you couldn't just show up one day and say you're going to do point-of-care T cells.

You had to have essentially the elements in place.

You had to tick the boxes if you would.

So part of the answer to your question is that we've derisked the program all the way along like now that Sleeping Beauty is her to stay.

It works.

In the second-generation trial, I won't be able to share it with you in the public space but I can tell you that the regulatory learnings in the second-generation trial are the direct lead-in to having essentially the regulatory review at the point of care go well.

In other words, we're contemplating many of the regulatory release criteria in the second generation trial for what's needed in the so-called third generation trial.

But your point's good in the last one is that okay, ZIOPHARM, you get all this going.

You get it going at MD Anderson.

How do you scale it up?

And the reason it's scalable is that we have deliberately generated T cells that have their own ability to grow in a competitive environment.

I didn't want to develop technologies that so refined or nuanced that you had to essentially have just the perfect amount of T cells go into a patient for it to engraft.

I wanted to take advantage of T cell biology, T cell behavior, and the key there is the IL-15.

Because in our model, you can that low doses of T cells that have the IL-15 that's expressed.

And that -- those low doses of T cells can then engraft in those animals.

So you don't how to hit the nail on the head.

You just have to be in the proximity and let then you let the T cells, if you would, do the work for you.

And our next question comes from Tony Butler of Guggenheim Securities.

I do have several questions but I'll keep it to a minimum here.

One is on the Phase III your pivotal trial.

And I am curious because you won't be able to limit steroid use and if it's true, it will have an effect.

Why then move forward in a single-arm study because the real benefit would be illustrated in a comparative trial?

That's question one.

And back to point-of-care, one concern always is that you get T cells that end up having -- their exhausted.

And one could argue, if you rush it, they become increasingly exhausted at an increasing rate.

How can you actually keep it to a level where they're, if you will, more nascent?

Yes.

Okay.

So let's go to that first one first.

So the steroid piece.

So first of all, there are neurosurgeons in United States for instance whose standard of practice is to go very little-to-no steroids.

And because people have grown up, if you would, in an era where they now understand that steroids have a double-edged sword.

Back in the day, before people really understood that steroids were immune modulators, they were given them first use of edema, swelling off the neurosurgery.

Now I think sophisticated neurosurgeons recognize that the amount of steroids than can be given to patients can be reduced indeed.

We've had patients -- excuse me, we've had practitioners on our trial who have given no steroids.

So as we go through with the pivotal trial, we're going to give guidance about the steroid dosing.

We can't absolutely say what the dose would be because that's obviously a neurosurgical expertise.

But we can certainly give guidance.

And when we've talked to, and this is part of the reason why it's taken out while, when we've talked to our colleagues and our thought leaders, really around the world now to get this next pivotal trial going, they're very comfortable with us, very comfortable.

So it's not like given 100 milligrams of steroids is dogma.

There is a lot of flexibility in the system and I think a real understanding that low-dose steroids is completely acceptable practice.

The -- your other point about the single-arm trial versus a randomized trial, I guess I just want to just debate that with you, Tony, just a little bit because when I picture the single-arm trial, what I'm picturing is that the patients are enrolled and then after a period of time, the envelope is broken open, we see how well the patient survived vis-à-vis an established set of historical data.

As long as we have met that benchmark, we will be able to declare success.

We won't have to, if you would, sort of enroll patients on a spectrum of steroid doses.

So did I get that right, or did I misunderstand the question there?

Or he may have dropped off.

Okay.

I -- with permission, Tony I'm going to go to your second question.

Okay, the second question was sort to the evergreen phenomenon of T cells.

You're quite right.

So when T cells kill and rekill, they will differentiate into essentially a terminal programming event, and then eventually, they'll just simply give up and die of exhaustion.

One of the reasons they give up and die of exhaustion is that they don't get enough cytokines, they don't get enough juice, if you would, through their cytokine receptor.

And that's the major reasons why the IL-15 molecule, the membrane-bound IL-15 molecule works.

And in fact, not to get too technical, but in that PNS paper we published a few months ago, we showed that the signaling through the IL-15 molecule gave rise to a long-lived stemcell population of T cells.

And that's sort of an evergreen population of T cells that can give rise into killers and actually can keep going, if you would, in this sort of factory mentality, popping out further killer cells.

And that's why -- again, one of the reasons why the IL-15 biology I think has worked so well and will serve so well as the linchpin for the point-of-care technology.

And our next question comes from Keith Markey of Griffin Securities.

Laurence, I was wondering if you might -- I know it's a little bit early yet to talk in detail about the upcoming clinical trials that you plan for the second half of this year, but I was wondering if you might be able to give us a little bit of guidance on the sizes of those trials and/or perhaps talk about just how much of your credit that you have already with MD Anderson might be able to cover those costs?

Yes.

Certainly, Keith.

That's a good question.

So we're -- the 2 cell therapy trials, the CD 33 CAR trial and the NK cell trial will be both be run at MD Anderson.

They'll both be investigator-initiated trials.

And the money at MD Anderson that's there already, I think it's about $27.3 million, that is well essentially covers the cost of those trials.

So we're very comfortable there.

We're also going to open up as part of a number of trials sites but one of the trial sites will be MD Anderson for the combination trial, where we are giving anti-PD-1 and the adenovirus to control veledimex.

And that combination trial also can be well handled by the cash that's on hand at MD Anderson.

So I think, we see that cash position as a little bit of like a bank account, if you would, one in which we can draw down for not only the trials that I've described, but really, to be honest, for the years to come.

And that's really the reason why we're just delighted about working with MD Anderson.

They have the patients.

We have the infrastructure to do the trials, and we have essentially the cash position to make sure they're well-executed.

So if I can elaborate, perhaps interpret what you're saying, it sounds like the trials will be probably be relatively small?

Yes.

I mean, we haven't gone into great detail.

I mean, eventually you'll see it around clinicaltrials.gov and whatnot.

But yes, I mean, these are going to be Phase I self-therapy trials typically speaking, they come into to the sort of 10 to 30 range as a number of patients.

And our next question comes from Swayampakula Ramakanth from H.C. Wainwright.

A couple of really quick questions.

The first one being on the DIPG trial or the pediatric brain tumor trial.

I was wondering what kind of data would you need to provide to the FDA before you can start this trial in the pediatric patients.

Is there any anything on the preclinical side that you can either present at a public meeting?

Or you have already presented?

Sure.

I'll let Dr. Lebel answer that one.

Yes, so we're in the process of activating sites.

And I think we have communicated before that we -- for the pediatric trial, DIPG is a very rare disease.

But obviously, as Laurence has indicated, it's uniformly lethal for these children.

So we're working on the West Coast with UCSF, in Chicago (inaudible) at Northwestern and at Dana-Farber.

So we're -- we're actively now answering questions from IRBs.

So we anticipate -- and at the same time, we've opened the stereotactic arm in adults.

So we're really getting very, very close now to open the study.

And so far, the FDA have had no objection to our trial.

Okay, good.

The next question I have is on the -- what sort of data should we expect at the SIPC conference and also at the SNO conference later this year?

Sure.

So I'm just going to pin myself down for the SNO conference.

And we'll have updates on the clinical trial, the frontline trial, either with the -- leading into the pivotal.

And then we also have some preclinical data that I think you'll find very interesting.

And I'm not going to share with you the -- again because this it's embargoed.

But you'll essentially have those 2 major updates, the clinical and the nonclinical program for brain tumors.

And ladies and gentlemen, this does conclude our question-and-answer session.

I would now like to turn the call back over to Dr. Laurence Cooper for closing remarks.

Yes.

I'd like to say, just a brief closing, say thank you for listening and paying attention, and we look forward for another successful quarter.

Thank you.

Thank you.

Ladies and gentlemen, thank you for participating on today's conference.

This concludes today's program.

You may all disconnect.

Everyone, have a great day.