Alaunos Therapeutics Inc (TCRT) 2018 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the ZIOPHARM First Quarter 2018 Earnings Conference Call.

(Operator Instructions)

I would now like to introduce your host for today's conference, Mr. David Connolly.

Sir, you may begin.

Thank you.

Earlier today, we released our financial results for the first quarter 2018 with a press release available on our website, ziopharm.com.

During today's call, representatives of the company will make a number of statements that are forward-looking, including statements regarding the potential of the therapeutic candidates in our development pipeline.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described in our SEC filings.

On the call today are: Dr. Laurence Cooper, our Chief Executive Officer; Dr. David Mauney, Executive Vice President, Chief Business Development Officer and Interim Chief Operating Officer; and Dr. Francois Lebel, Executive Vice President of Research and Development and our Chief Medical Officer.

Also, we have on the call [Brendon Doyle] and [Mike Biyega] from [The Chart Group], our new IR agency.

Thank you both.

We're excited to have you aboard.

And now Dr. Mauney will begin today's call, and he will be followed by Dr. Cooper and then we'll take questions as time allows.

With that, I turn the call over to Dr. Mauney.

Yes.

So thank you, Dave, and thanks to everyone who is joining us for this call today.

It's much appreciated.

We'll start with Slide 5. In the last several months, we have made considerable progress in multiple areas, and we now sit on the cusp of major value inflection points for our 2 key platforms, controlled IL-12 and Sleeping Beauty with point-of-care manufacturing.

Our story is resonating well with potential strategic partners with whom our dialogues continue.

These ongoing conversations have been critical in guiding our clinical, operational and financial plans going forward, and we are iterating those plans accordingly.

We do realize our shareholders are frustrated in that we have not recently closed on a third-party transaction.

We hear you, and this can be especially frustrating since we've seen strong M&A and investment activity in our sector.

The key point, though, is that the outside interest we have is real, but we're not going to simply do a deal to check that box.

We remain optimistic and confident as we plan to hit critical milestones across both of our platforms in the coming months, each of which has the potential to create immediate value.

In order to have financial flexibility to achieve a better position of strength with that data, our #1 priority has been to secure our balance sheet beyond 2018 with a development plan that resonates with our potential partners and is least dilutive to our shareholders.

As you saw in our press release, those plans are now in place, and our existing cash will last well into the second quarter of 2019, all of this with the benefit that we will be adding additional potential clinical markets at the same time.

Our controlled IL-12 platform is maturing and expanding.

We believe we are a leader in this field and expect to maintain that position and accelerate clinical activity into new tumor types in the coming months.

With regards to our Sleeping Beauty platform, we cannot be better timed in terms of its need and the public spotlight.

It's not only our politicians but also health care constituents who are laser-focused on drug pricing and the immediate need to significantly reduce expense.

The sky-high costs of current CAR-T therapies in particular are center stage, and our Sleeping Beauty point-of-care system is ideally suited to address these challenges.

Now let's turn to our controlled IL-12 platform for the treatment of solid tumors.

To repeat our theme, the idea here is to make immunologically cold tumors hot by calling in the body's T cells via the tunable control of IL-12.

Once these cold tumors are flushed with cancer-fighting T cells, the gates are now open to turbocharge the effects by adding in combination therapies like checkpoint inhibitors.

We want to remind our shareholders just how much clinical experience we have with this program.

In summary, we have treated more than 80 patients in total across 3 cancers: melanoma, breast cancer and glioblastoma.

We have tremendous experience also with our switch, which we believe is completely unique relative to its features of simplicity, control and tunability.

In fact, we have more than 1,000 days of veledimex dosing in total or switch activations in those 80-plus patients and have seen a very favorable safety profile to date across multiple doses.

As you know, we accumulated definitive biopsy data showing that our platform indeed makes cold tumors hot with functioning T cells and for extended periods of time.

This is an important data point and worth reminding in that we see T cell activity weeks to months after the veledimex was stopped, indicating a unique and sustained immunologic effect.

We believe these data, when taken together, represent an important clinical program that could ultimately benefit many patients with many -- multiple tumor types.

Additionally, from a business perspective, we have seen several recent transactions that suggest having an ability to make cold tumors hot across multiple tumor types, even with just Phase I data, drives tremendous value relative to pursuing just one indication.

We are now executing on a revised clinical plan for this technology, which is focused on delivering clinical data in multiple tumor types and in combination with checkpoint inhibitors as quickly and cash efficiently as possible.

Next slide.

Over the last several months, we have considered the best uses of our capital and internal resources, and with the additional feedback from potential partners, we have concluded that we should pause the planned pivotal trial for recurrent glioblastoma for now and focus on expanding the IL-12 program into new tumor types and with new combinations.

This effort greatly expands our addressable markets, it aligns us with what potential partners want to see in terms of clinical data and has the additional benefit of tremendous cost savings in the near term.

We view this as a positive pivot point for this platform, and executing on this plan will provide the information needed in the shortest time possible and for a fraction of the cost of a randomized controlled pivotal trial.

Of course, we keep all options open for this pivotal trial as the design is already framed, the budget and timelines established and the CMC issues being resolved.

We continue to have partner conversations with regards to glioblastoma and will obtain additional clinical data in this indication by expanding our Phase I study using some of the eligibility criteria that were established for the pivotal trial.

We are currently evaluating tumor types and budgets for our clinical expansion of this program in combination with our modulators of the immune system and will provide additional details in the coming months.

Perhaps, most importantly, our evolved plan immediately takes the pressure off of our balance sheet as our current cash will now last well into the second quarter of 2019.

This removal of a nearer-term financial overhang allows ZIOPHARM to move safely beyond key value-driving events such as the soon-to-be first CAR-T patient dosed under point-of-care, as well our first patients dosed with IL-12 in combination with checkpoint inhibitors, to name a couple.

As such, and not to steal too much of Laurence's thunder, we affirm our guidance to be in the clinic with our point-of-care platform for CAR-modified T cells, targeting CD19 in the second half of 2018, pending regulatory clearance.

This will be a significant achievement as we will be the first company to dose a patient with genetically modified CAR-T cells that are manufactured in 2 days or less.

In addition, it's important to remind you that these CAR-T studies, as well other preclinical and clinical efforts at MD Anderson, are fully funded beyond 2019, and these efforts do not impact our general cash burn.

We also affirm our guidance that based on feedback from the NCI, the Phase I trial to evaluate Sleeping Beauty modified T cells designed to target neoantigens and solid tumors is on track.

The potential opportunity for solid tumors dwarfs the market size of blood cancers.

The Sleeping Beauty platform should also translate into reduced costs for patient-specific TCRs targeting solid tumors, which we believe provides a potential competitive edge for ZIOPHARM.

Next slide.

Turning briefly to our financials.

As we detailed in our press release this afternoon, we have approximately $51.1 million in cash at ZIOPHARM as of the end of the first quarter, March 31, 2018.

In addition, we have $32.4 million of cash at MD Anderson, which we prepaid to cover our clinical and preclinical development work done there.

And again, those funds will currently last beyond 2019.

Again, with this cash on hand and the changes in operations and clinical plans I just highlighted, we have extended our cash runway into June 2019.

Next slide.

Now let me turn to a few key bullets from the operations side of things and the progress we are making.

First, a couple of quick points with regards to our board.

Currently, we have 7 authorized seats in the Board of Directors, and 2 of those seeds are vacant.

We are working with our Board of Directors to fill these 2 seats and possibly replace others.

We have active conversations with potential members as we look to add depth in areas like oncology drug development and commercialization experience, scientific leadership and finance.

We also expect our Annual Meeting to be held this summer, with the date to be soon determined and announced.

Internally, we continue to build our team.

For example, we recently onboarded a new in-house General Counsel in [Rob Hatfield].

Rob joins us most recently from the Longwood Fund, a health care venture capital firm in Boston, and prior to that, from Flex Pharma where he served as General Counsel.

Rob brings deep financial, biotech and legal experience with him to ZIOPHARM, and we're very excited to have him aboard.

We are also pleased to announce that we are expanding our Investor Relations expertise as we are onboarding [The Chart Group], a leading global Investor Relations and strategic advisory firm with significant experience in the life sciences industry.

And we expect to roll out our new website as well as social media efforts by the end of the second quarter.

To conclude, our primary focus remains very clear, and that is namely to make all moves necessary to drive up shareholder value.

And with that, I'll turn the call over to Dr. Cooper for his updates and for questions.

Thank you, David.

Thank you very much.

As I've been saying since January, 2018 is an important year for ZIOPHARM as the clinical development of cytokines and T-cell therapies are playing to our strengths.

We said that using IL-12 can make cold tumors hot, which essentially means we can create a new immune attack where one did not previously exist, and this will significantly advance the fight against solid tumors.

We believe that we are the leading company with regards to dosing IL-12, which is among the most powerful of the interleukins.

We also said expense, complexity and time to manufacture of genetically modified CAR-T cells with existing viral-based approaches would offer only limited access to patients at far too great a cost, and this script is clearly reading out over the recent months.

This year, we plan to be the first in the world to deliver autologous T cells to patients that were manufactured in 2 days or less with a simpler process and ultimately, a lower cost.

Finally, we said that CAR-modified T cells will have limited utility to target solid tumors.

And this is currently the case.

2018 is the year that our Sleeping Beauty platform will be adapted to generate TCR-modified T cells targeting solid tumors in a clinical trial in partnership with the National Cancer Institute.

Slide 10.

Let me address changes to the clinical platform plans regarding the IL-12 program.

Based on experience with the approximately 80 treated patients to date, we understand this platform in ways that allow us to expand into new tumor types and new combinations.

We know that more data in more patients and in more cancer types will help rapidly build value for this platform.

Recurrent glioblastoma remains an important indication for us and, importantly, for our patients.

While we have paused the pivotal trial, our work continues in this disease.

In addition to our expansion sub-study, we continue to evaluate stereotactic administration of IL-12 as well as our pediatric studies.

Our clinical studies in the 3 tumor types, melanoma, breast cancer and glioblastoma, has shown that we can recruit and sustain a T cell attack deep into the tumor site.

We see tumor shrinking, and we see expression of multiple checkpoints, including, but not limited to, PD-1.

These data demand action, mainly to combine IL-12 with immune checkpoint inhibitors.

This effort has commenced as we will treat our first patient with recurrent glioblastoma with IL-12 in combination with Opdivo this quarter.

We plan to add 1 new tumor type in 2018 in combination with checkpoint inhibitors.

Thus, by expanding the breadth of the controlled IL-12 platform, we believe we have opened a bigger door relative to potential partnerships.

We look forward to updating you with more data on the IL-12 platform this year, including a poster that has been accepted for presentation at the upcoming ASCO meeting.

Let's move now to Slide 11 and turn our attention to cell therapy.

First, our CD33 trial.

I'll remind you that we are currently using lentivirus to evaluate if this is a viable target for CAR-T therapy for AML.

We have treated patients and learned about developing an autologous product for these sick individuals and the demands that come with using a virus.

We'll make a decision on whether to move this target under the nonviral Sleeping Beauty platform instead of lentivirus later this year.

Based on conversations with Dr. Steven A. Rosenberg at the National Cancer Institute, we affirm that our TCR program remains on track to be initiated in the second half of this year.

This is such an exciting approach that leverages the Sleeping Beauty platform to genetically modify T cells with TCRs to target neoantigens in solid tumors.

We continue to advance our work with Merck KGaA, and who are also benefiting from our Sleeping Beauty platform.

Our second-generation trial, to evaluate CD19-specific CAR-T cells manufactured with the same Sleeping Beauty platform, continues to enroll and treat patients.

We have seen antitumor responses, and we have learned how to shorten the time to manufacture and release the T cells.

This is an accomplishment all by itself, but we have not stopped there.

Importantly, this study has laid the scientific and regulatory groundwork for our third-generation trial termed point-of-care.

As you recall, we intend to stop enrolling patients in the second-generation trial once the point-of-care study is ready to treat patients, and we'll provide an update on that second-generation trial at a medical meeting to be announced later.

Our third-generation clinical trial targeting CD19 remains on track to begin treating patients at MD Anderson Cancer Center, and pending regulatory clearance, we expect to dose the first patient in the second half of this year.

The application for an investigational new drug, or IND, has already been submitted to the FDA to initiate the Phase I trial undertaking the point-of-care technology for the investigational treatment of leukemia and lymphoma.

Next slide, Slide 12.

Government, academia and industry are increasingly focused on reducing costs associated with CAR-Ts as payers and health care systems struggle to absorb them.

We take seriously the message that industries should develop and commercialize drugs with a mind towards their cost.

Our point-of-care technology is well positioned to address issues of cost and scalability head on.

Breaking it down, we know that our DNA plasmids, the use of the electroporation and the avoiding of the need for investing in facilities and bioreactors will significantly reduce the cost of genetically modified T cells relative to all our peers.

Our approach to the very rapid manufacture of T cells under point-of-care strongly resonates with clinicians, hospitals and industry, all of whom are looking for ways to reduce the expense and time necessary for producing these lifesaving therapies.

And it resonates with the need to transition beyond CAR-T for blood cancers to generate T-cell therapies for solid tumors.

The only way I know how to target the majority of solid tumors is to genetically modify T cells to target their neoantigens, which are the Achilles' heel of cancer.

ZIOPHARM holds the key to this approach because we believe we have the fastest and least expensive technology, based on the Sleeping Beauty platform, to generate TCR-modified T cells.

In summary, the first patients treated under point-of-care later this year represents a major milestone in company history.

Now with our cash runway extended almost through the first half of 2019 and our work at MD Anderson fully funded beyond 2019, we enjoy an ability to move safely beyond the key value-driving events such as the first CAR-T patient dosed under point-of-care as well as our first patients dosed with IL-12 in combination with immune checkpoint inhibitors.

With that, I thank you for listening, and I'll now turn it back over to the operator for questions.

Thank you.

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

This is Bin Lu on for Ren Benjamin.

I have 2 questions on IL-12 program, if you don't mind.

The first one is -- a bit of high-level question is, just given the results we've seen with other cytokines, for example, IL-2 or IL-10, as well the big pharma's interest in cytokines -- in those cytokines, I was wondering if there are any learnings that you can glean for your IL-12 product.

And any similarities or differences in the underlying biology so that your IL-12 could deliver something similar or even better?

That's all, then I have a follow-up.

Sure, you asked a great question.

So there's no head-to-head comparison, for instance, IL-10 to IL-12 to IL-2.

But there's certainly important learnings from the literature.

And I can give you sort of the general sense that IL-12 is certainly a master regulator of immune response.

We know that IL-12 can remodel the tumor microenvironment.

For instance, there can be immunosuppressive factors that occur in the tumor microenvironment known in the -- known by immunologists as Th2 responses.

Those Th2 responses under essentially the control of IL-12 can be switched to Th1 responses, which are much more -- would give much more anticancer effects.

So that's a very important part of the story because essentially, you're changing the immunosuppressive qualities of a tumor microenvironment to the ability for T cells to act and react within the tumor under IL-12.

We also know that IL-12, for instance, can kick off IL-2.

So in other words, IL-12 is the dominant cytokine that then, in a feed-forward loop, results in a cascade of cytokines by these immunologic effector cells, IL-2 being one of those actors, gamma interferon being another.

So the key kind of top line sense is that IL-12 is the master regulator.

But just to kind of go on a little bit here, but -- IL-12 has been recognized as this master regulator for quite a while, but it's only ZIOPHARM that's been able to control IL-12.

Because you have to be able to tune the IL-12 dose basically to the patient's needs if the patient is going to benefit from this master regulator, and we have done that using the RheoSwitch system.

And then your last part of your comment is, what do we learn about big pharma, and that's exactly why we've made this pivot where we've paused the randomized controlled trial because we see what's going on in the field with the partnerships of companies that can make cold tumors hot.

IL-2 can make cold tumors hot.

IL-10 can make cold tumors hot.

And all importantly, IL-12 can make cold tumors hot.

And we think this, as I said in my thoughts, these will really open the bigger door towards potential partnerships.

Great.

That's very, very helpful.

And just one follow-up on IL-12 is, so you mentioned that across all trials or different tumor types, approximately 80 patients have been treated with this product.

So I was wondering -- on your hypothesis that this IL-12 can turn cold tumors hot, I was wondering how many patients have you biopsied to sort of test that hypothesis?

Yes.

So some of the clinical protocols allow for those biopsies.

And you have to also respect the wishes of the patients.

What I can say is that in each of the tumor types, melanoma, breast cancer and glioblastoma, in each of those examples, we have definitively seen that cold tumors go hot.

So for instance, in breast cancer, we treated the patient with about 1 week of veledimex following the administration of the virus to deposit the IL-12 under the control of the switch.

And then we waited 5 weeks.

And we went back into the patient, and we reexamined the tumor, and we can definitively see cold tumors going hot.

In other words, there's influx of T cells, and those T cells are not just there counting them on a slide.

They are there actively producing gamma interferon.

They are at war with the cancer cells.

We know they're biologically active.

And the same type of biology we saw in the glioblastoma.

We treated the patients in the recurrent setting with 14 days of veledimex after the injection of the adenovirus into the tumor.

The patient had the safe delivery of IL-12.

And then we waited months, in some cases, up to 6 months before going back into the area that we injected, and we saw just beautiful data, where we saw the T cells that were now invading into the tumor cranking up gamma interferon.

In other words, activated and angry, going essentially to battle with the glioblastoma cells.

In other words, definitively seeing that the cold tumor, the cold glioblastoma goes hot.

And our next question comes from the line of Eric Joseph from JPMorgan.

I'm just looking for a little more color around the rationale for pausing the pivotal GBM program.

Just wondering if you could talk a bit about sort of what the remaining CMC hurdles are that you outlined here and whether you have the ability to address those with the current processes you have in place or, in fact, the Phase III, we should think about that being more partnership-dependent?

And then I have a follow-up.

Sure, sure, thank you.

So yes, we actually talked about this at the conference back in January about our work in the -- essentially preparing the adenovirus for being a Phase III pivotal asset.

And the -- essentially, because we have rapidly gone from Phase I to Phase III, there was some additional work to be done on qualifying that virus for a pivotal trial.

It really went to the issue of potency.

And those studies, they're almost resolved now.

So it's really not a major issue, but it's sort of a procedural issue and a box to be checked for us.

Does that help, Eric?

Okay, got it.

Yes.

No, it does.

And then I just had a question about the TCR program, whether you can kind of shed some insight into if -- whether there are particular solid tumor indications that you and the NCI are focused on based on biology and unmet need?

Yes.

Yes.

I mean, let's -- I think the way to think about it is the NCI is the last stop for many of our nation's patients.

Really, the patients with the worst disease end up at the NCI for treatment and this is something that Steve Rosenberg really has an international reputation for.

So these are cancers that are going to be metastatic.

They're going to be epithelial.

In other words, they're going to be carcinomas, and they're going to be basically refractory to every other therapy.

So we are in the business to create life-saving therapy for these patients.

This is essentially the worst of the worst, but these are the patients who, I personally as an oncologist, and I'm sure all the people on this phone call, you really want to help.

And we're going to do so by generating T cells that are targeting essentially the mutations that gave rise to those patients' tumors using the Sleeping Beauty technology and essentially, personalizing the therapy for these individual patients.

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

I have -- I was wondering if you might be able to elaborate a little bit about the pediatric Phase I trial that's ongoing.

How many patients?

How many sites are involved, that sort of thing?

Yes, we haven't gone too far on that, Keith, yet.

And so sort of stay tuned is the answer to that question.

Okay.

And then do you have any -- or can you give us a sense as to what types of tumors you might explore with the upcoming Phase I -- I would assume, Phase I trial of IL-12?

Yes.

In combination?

So obviously, the first one that we got initiated was in recurrent glioblastoma.

And the company now is looking at other tumors.

And some of those conversations, Keith, are really driven by our potential partners because, as you can imagine, for instance, if we were to align with a company that delivers an immune checkpoint inhibitor, that company has a particular interest perhaps in a certain cancer, and we would want to align essentially with those needs.

And that also plays to our strengths because in 3 for 3 cancers, we can turn cold tumors hot.

So we know, in these 80 patients, these thousand doses now of veledimex across 3 cancer types, in every situation, cold tumors go hot.

And I think this is very appealing to potential partners as we consider what tumor indication to go after.

Being no more questions, that will be the end of the call.

Thank you, everybody.

Thank you so much.

Yes.

Thanks, everyone.

Ladies and gentlemen, thank you for your participation in today's call.

This does complete the program, and you may all disconnect.

Everyone, have a great day.

Thank you.