Alaunos Therapeutics Inc (TCRT) 2022 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Alaunos Therapeutics' Second Quarter 2022 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded.

I would like to hand the conference over to your speaker today, Daniel Yergin, with Stern Investor Relations. Please go ahead.

Good morning, and welcome to the Alaunos Therapeutics' second quarter 2022 financial results conference call and audio webcast. With me today are Kevin Boyle Sr, Chief Executive Officer; Drew Deniger, Vice President of Research and Development; Abhishek Srivastava, Vice President of Technical Operations; and Mike Wong, Vice President of Finance.

Earlier this morning, Alaunos issued a press release announcing financial results for the 3 months ended June 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 June 30, 2022, which was filed this morning with the SEC. The company's press release and quarterly report will also be available on the Alaunos website at alaunos.com.

In addition, this conference call is being webcast through the Investor Relations section of the company's website and will be archived there for future reference. Please note that certain information discussed on today's call is covered under the safe harbor provision 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, August 15, 2022.

Actual results could differ materially from those stated or implied by the forward-looking statements made today due to risks and uncertainties associated with the company's business. Information on potential risks and uncertainties are set forth and 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 webcast except as may be required by applicable securities law.

With that said, I would like to turn the call over to Kevin Boyle.

Thanks, Daniel. Good morning, everyone. Welcome to the Alaunos second quarter 2022 earnings call. Apologies for the frog in my voice here. I think back to Ms. Rossi, my 7th and 8th grade Latin teacher, and I remember the phrase tempus fugit, time flies. And time flies when you're having fun. I approached the 1-year anniversary of joining the company, and I'm just so proud of the progress that's been made by our dedicated team.

The rebuild team has formed a strong operational, manufacturing and clinical foundation over the past year. Our TCR-T Library Phase I/II trial is continuing to actively enroll, and I'm pleased to say that we're moving ahead at the second dose level after consulting with our investigators and Safety Review Board.

At the same time, we're working to expand our manufacturing capacity to support future clinical expansion and are very pleased to welcome Abhi to our -- as our Vice President of Technical Operations to lead this effort. You will hear from Abhi in just a couple of minutes, but I wanted to say that we're very excited to have him on the team as we seek to expand and optimize our manufacturing capabilities. Small world that Drew and Abhi worked together at the NCI, and both are beneficiaries of the world-class training it offers.

This quarter, we are very privileged to extend our CRADA into 2025 and working with Dr. Rosenberg and the NCI to develop personalized cancer therapies using our novel TCR-T cell platform. In partnership with Dr. Rosenberg's team, we look forward to continuing our collaboration, generating proof of concept in this personalized approach.

When combined with the Alaunos TCR-T Library Phase I/II trial and our R&D efforts, we believe that we have the right approach, the right expertise and in my mind, most importantly, the right team for Alaunos to be successful in the long-term and improve the lives of cancer patients with solid tumors.

Let me provide an update on our TCR-T Library trial. As a reminder, it's a Phase I/II basket trial, targeting hotspot mutations across 6 different solid tumor indications, non-small cell lung, colorectal, endometrium, pancreas, ovary and bile duct cancers. We are currently enrolling patients down the street at MD Anderson Cancer Center with 1 of these 6 cancers based on matching mutation HLA pairings that are available in our TCR-T Library, which consists of 10 TCRs. We have 4 KRAS, 5 TP53 and 1 EGFR.

As you may recall, we announced that we dosed the first patient in the trial in May at a dose level 1 or approximately 5 billion TCR-T cells. This patient has non-small cell lung cancer and the KRAS G12D mutation. The patient was treated with TCR-T cells targeting this driver mutation manufactured in our very own in-house cGMP facility.

Following discussion with our investigators as well as a review of safety data at MD Anderson, we're very pleased to be moving ahead at the second dose level of approximately 40 billion TCR-T cells. We remain encouraged by the progress in the trial and look forward to providing an early look at data at a medical meeting in the third quarter of this year.

We believe we're on the right track, but instilling even greater confidence in our approach using TCR-T cells to target hotspot mutations were 2 recent papers published by leading academic institutions. One was published in the New England Journal of Medicine and the other in Cancer Immunology Research. I'll let Drew go into more detail about the clinical findings of these papers, but I'd like to highlight that these case studies of patients with KRAS and TP53 mutations treated with TCR-T cells resulted in durable responses using TCRs that we have in our library.

Now we believe that we have a better, more cost-effective and commercially scalable approach using our proprietary Sleeping Beauty technology and we're actively testing these TCRs in our clinical trials. Now as much like the old scout model is being prepared, we're working diligently to execute on a multipronged strategy to expand our manufacturing capabilities.

Now while we believe we have sufficient capacity to support our Phase I/II study for at least the next year, this expansion will serve us well in the long-term as we continue our R&D effort with membrane-bound IL-15 and expand our future clinical pipeline.

First, we're implementing new SOPs that will allow for simultaneous production of multiple products in our cGMP suite. And this also includes work to further optimize our manufacturing process by introducing cryopreserved cell products.

Secondly, we are continuing to hire additional staff to support increased manufacturing capability. And lastly, having already successfully built 1 cGMP suite, we will investigate physically expanding our GMP footprint as the need arises.

Now before I turn the call over to Drew to touch upon our R&D efforts, I wanted to briefly highlight a collaboration agreement that we have with Solasia Pharma. This collaboration was initially formed right back in 2011 and granted Solasia an exclusive worldwide license to develop and commercialize darinaparsin, also known as DARVIAS. As part of this license agreement, we are eligible for sales-based cash milestones in percentage of any sublicense revenue generated by Solasia. Now Solasia will continue to be responsible for all costs related to manufacturing and commercialization.

In June of 2022, Solasia announced that DARVIAS has been approved for relapsed or refractory peripheral T-cell lymphoma by the Ministry of Health, Labor and Welfare in Japan. So we're excited for their team at Solasia as this represents a significant milestone for them.

Now we do not expect to receive significant capital for royalties on these sales, but the additional non-dilutive capital will certainly help to further support our own internal development programs.

Let me hand the call over to Drew to highlight our continued partnership with Dr. Rosenberg and the NCI and also expand on those supportive academic papers that were recently published. Drew?

Thank you, Kevin. I'd like to echo Kevin's sentiment. Our team has worked to transform our innovative research into meaningful clinical progress with great potential. The recent cancer immunology research and New England Journal of Medicine articles have further contributed to that confidence and help validate our approach targeting shared hotspot mutations.

The cancer immunology research article highlighted the power of TCRs targeting TP53 mutations and their clear benefits compared to TIL therapy. This paper showed that TCR-T cells specific for one of the most common TP53 mutations and HLA-A02, one of the most frequent HLAs in the United States led to an objective clinical regression of advanced breast cancer, including 55% tumor reduction and resolution of significant skin tumors by 60 days post infusion.

The New England Journal article was a case study of pancreatic cancer who was treated with TCR-T cells targeting KRAS G12D mutation. This publication showed that the patient achieved a partial response of greater than 70%, which is ongoing at 6 months of follow-up. Alaunos is the only company with these TCRs in its library in the clinic. Both publications validate our approach to target KRAS and TP53 hotspot mutations with TCR-T.

I am also thrilled that we're -- we've extended our cooperative research and development agreement with the National Cancer Institute to 2025. We are honored to continue our work with Dr. Rosenberg a pioneer in the development of effective immunotherapies for patients with advanced cancers. Under the amended CRADA, the NCI will work to generate proof-of-concept data for fully autologous personalized TCR-T cell therapies using our proprietary nonviral Sleeping Beauty technology.

We strongly believe that Sleeping Beauty is ideal for this application and has clear fundamental advantages to competing gene transfer technologies. I was lucky enough to have the privilege to work under the mentorship of Dr. Rosenberg for many years and I believe that we will be successful in developing personalized TCR-T cell therapies together. Both parties bring significant nonoverlapping expertise of the CRADA, and we believe our work together will help bring the vision of personalized TCR-T cell therapy to the commercial setting.

I would also like to briefly touch on our follow-on asset, the membrane-bound IL-15 program. In May, we presented new data at ASGCT that highlighted the potential 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. You can find these data on our website. We believe that this program has the potential to increase the persistence of TCR-T cells and deepen clinical responses. We are continuing to advance this program towards an IND filing in the second half of 2023.

Lastly, we continue to make significant progress using our hunTR platform to discover TCRs and we are further building out our infrastructure to increase throughput and decrease the cost of screening. We aim to increase the addressable market for our library TCR-T program using these proprietary TCRs. Our team has already demonstrated the ability to add TCRs to the clinical trial in parallel to the existing TCRs and with the amendment that occurred last year. Furthermore, hunTR has the potential to create licensing opportunities, generating non-dilutive capital. We anticipate sharing a more detailed update on the hunTR program in the fourth quarter.

I would like -- now like to turn the call over to Mike Wong to review the financial results for the second quarter. Mike?

Thank you, Drew. Let me review our financials for the 3 months ended June 30, 2022. For the second quarter of 2022, we reported a net loss of approximately $9.9 million or $0.05 net loss per share compared to a net loss of approximately $22.7 million or $0.11 net loss per share for the second quarter of 2021.

Research and development expenses were approximately $5.9 million for the second quarter of 2022 compared to approximately $13.6 million for the second quarter of 2021, a decrease of 56%. The decrease was primarily due to lower program-related costs of $2 million as we focus on the TCR-T platform, a $5.2 million decrease in employee-related expenses due to our reduced headcount following our restructuring in the third quarter of 2021, and a $0.3 million decrease in consulting expenses.

General and administrative expenses were approximately $3.4 million for the second quarter of 2022, compared to approximately $9.1 million for the same period in 2021, a decrease of 62%. The decrease was primarily due to a lower employee-related expenses of $5.4 million due to our reduced headcount following our restructuring in the third quarter of 2021, and a $0.2 million decrease in consulting and professional services expenses.

As of June 30, 2022, Alaunos had approximately $60 million in cash and cash equivalents. We anticipate our cash runway to be sufficient to fund operations into the second quarter of 2023. Our operating cash burn for the second quarter of 2022 was $8.2 million compared to $21.5 million in the second quarter of 2021, a decrease of $13.3 million or 62%. That concludes our financial update.

I would now like to turn the call to Kevin.

Thanks, Mike. In our financial update, you heard that we remain good stewards of capital on behalf of our shareholders. We have made substantial progress advancing our TCR-T platform in this past year, despite reducing our cash burn by over 60%. We were trimming expenses before it was the in-vogue thing to do. We were trimming expenses because it was the right thing to do. And we are focused on the activities that advance our programs through and into the clinic with the singular goal of improving lives of cancer patients with solid tumors.

Before we turn the call over to questions, I'd like to introduce our newest member of the team, Abhishek Srivastava, our Vice President of Technical Operations. Abhi was most recently Vice President of Cell Therapy Development at Athenex, and previously, he was assistant system professor at the University of Pittsburgh, where he led the Process Development and Manufacturing of TILs.

Abhi, would you like to say a few words?

Thanks, Kevin. And I'm very excited to join Alaunos. It really reminds me my old day at NCI when I was working as a fellow and was associated with this technology. So I truly believe in this time and truly believe in this technology and I'm so excited to really be part of this team who is really bringing this advanced technology to treat the patients who are really in need with my manufacturing and product development background, I'm really ready to support the team and really provide that manufacturing capability enhancement to drive this technology.

With this I will hand over to Kevin.

Abhi, great to have you here. We're excited to have you as part of the team.

So with the appointment of Abhi, we're working diligently to execute against our multipronged manufacturing strategy to expand capacity. So Abhi walked in day 1, and he has plenty to do, and we have great confidence that he'll be successful. So I appreciate all of our dedicated Alaunos employees, our MD Anderson investigators, the patients and shareholders for their support as we continue to make great strides across our entire business.

As we prepare for the second half of the year, we are working to consent and enroll additional patients in our Phase I/II trial and plan to present early data from the trial in the third quarter at a scientific conference.

On the R&D front, we're excited to advance a personalized TCR-T cell therapy approach with the NCI, as well as continue to move our membrane-bound IL-15 program towards an IND filing in the second half of 2023. We look forward to updating you again soon as we continue our mission to improve the lives of patients suffering from solid tumor cancers.

We'll now open the call to questions. Michele?

(Operator Instructions) Our first question comes from the line of Prakhar Agrawal with Cantor Fitzgerald.

Congrats on all the progress. So maybe first question, if you can clarify, has the second patient being dosed or identified? And maybe, Kevin and team, if you can comment on and set expectations on how many patients will be presented in Q3? What data should we expect at this update? And what's the bar for you?

Glad to hear you're as excited as we are to share some information about our trial. We hope it's been received with welcome news that not just in the second half of this year that we'll be presenting a look at early data, but indeed, we'll be presenting in the third quarter and that we'll be doing so at a scientific or medical meeting as well, so a nice validation there, too. Because of some of the restrictions of the conferences, I'm not able to share much in the way of what data will be presented, but stay tuned. Only, what, 6 more weeks left in the quarter here. So we promise you we'll get that information out.

And with regards to whether or not we've treated a second patient, again, please stay tuned on that front. We do not want to be in a situation where we're kind of giving patient-by-patient updates. We want to be more considerate about that. But what I will say is we're very excited and encouraged by the number of patients that we are seeing interested in our trial. We're very encouraged that the Safety Review Board and the investigators have put forth and allowed us to progress at the second dose level.

So again, we look forward to sharing the information as much as you look forward to receiving it, but we'll do so at some point in the next 6 weeks' time, and we'll answer the questions that you have there.

And our next question comes from the line of Thomas Flaten with Lake Street Capital Markets.

Kevin, I was wondering, if you could give us an update on the total number of patients that have been screened and then what the match rate has been to the TCRs in the library?

Sure. We have screened again over 500 lung and colorectal patients alone. So between those 2 indications, we've screened over 500 patients or prospective patients and the match rate is over 5%. So we continue to be very pleased with the number of patients that we're screening, the pipeline and the funnel that we are seeing. It is a very efficient, cost-effective means by identifying patients, and we continue to increase the number of patients that we are following on their treatment journey. So we're (inaudible) answer the question as well.

And the other thing to highlight here, Tom, is that with our hunTR platform moving forward, we fully anticipate that we will be adding TCRs to our library that we'll be able to increase the addressable market, increase the -- since we have all the information that we're gathering of these over 500 patients in colorectal and lung, we'll be able to pick up new patients as we add TCRs, as we expand TCRs to our library and in certain new TCRs that have either new mutations or new HLAs. So we're very encouraged that we're going to be able to continue a nice pace of enrollment on this trial.

Fantastic. And then just -- I was wondering if you might be able to characterize the types of patients that are coming that are being screened by the folks at MD Anderson. Is it typically salvage patients? Or have you started seeing maybe some second-line and third-line patients? So just curious if you have some qualitative information around that.

It's a great question. We see it all. Sometimes these are patients walking in MD Anderson for the first time. And unfortunately, may have just noticed a health scare or maybe came from out of state and were just recently diagnosed and are going to one of the best cancer treatment centers in the world.

And as a result, we see patients of all size. Sometimes -- and that's why sometimes this patient journey can last a while because these might be patients that have been recently diagnosed. And let's be honest, we're all in this to make sure that the patients get the care they need. So there's really the human side of me says, I hope I never see these patients on our trial because that means frontline therapies are working for them.

But if that's not the case, and if unfortunately, there is a failure in the frontline therapies that they're taking then very much, we are encouraged about our science and technology and the ability to make a difference in their treatment plan and to extend their life and improve their quality of life. So we see all patients at all stages, some might be ready immediately to join our trial, some might take a little longer, some might never end up getting our trial because other therapies are working.

The other thing worthy of noting is it depends on the indication as well. So some indications we might be earlier in line, in other indications there might be more approved therapies or treatments for them. So again, it's very much indication specific as well. Hopefully, that's (inaudible).

And our next question comes from the of I-Eh Jen with Laidlaw & Company.

My first question just followed the previous one that based on the numbers of screened and matched, you might have roughly maybe 25 patients. If my math is correct, I'm just curious whether -- that one of the gating factor or a limiting factor will be the manufacturer capacity or other things dictates how much -- how many patients you can start for process for treatment?

And thanks for the question. The limiting -- rate-limiting factor in the near term is not manufacturing, and that's why, again, we're getting ahead of the curve. As I said, we're following the old scout motto be prepared, and that's indeed why we're investing. I'm so excited to have Abhi come on board look forward to having him start to meet the broader investment community.

But his background is about planning ahead for future manufacturing expansion, planning ahead for working on optimization. As we know right now, we have a manufacturing process that's a little shy of 30 days. That's fine for this early stage, but we certainly look forward to continuing to reduce that time, working in process development to find ways to optimize that and reduce the manufacturing time.

That by nature in and of itself will increase the throughput of our GMP suite. But at this point, it is not manufacturing that is the rate limiting step. And we are also working on cryopreservation. So I do want to highlight that too. That will help as well with we're being able to produce cells for when the patient perhaps does progress and is ready for our treatment in our clinical trial.

Okay. Great. That's very helpful. Maybe one more question. A follow-up question here is that -- what -- given the -- you can move to the second dose this rapidly, what are the factors, or could you give us a little bit more color of metrics [dictates] that you could move to the second doses? And lastly is that what's the anticipated total patient to be dosed for the Phase I/II study?

So let me touch on a few things. We are encouraged but not surprised that we are moving to the second dose level. That's why we designed the trial as we did with this patient design. So as a reminder, our approach, targeting these hotspot mutations, we believe is superior to other TCR companies because these mutations only appear in the tumor cells, nowhere on healthy tissue.

And that's an important reminder. And that's what allowed us in part to start at a higher dose level. So dose level 1 already based on a very broad literature review that was done by the team efficacious dose levels begin at 1 billion TCR-T sales. And so the fact that we're starting at 5 billion TCR-T cells, we're not starting at a throw away dose level absolutely in a Phase I trial, safety is first and foremost, the most important thing, and then we want to identify the recommended Phase II dose.

But again, we're very encouraged because we are targeting things that -- these neoantigens, these hotspot mutations only appear in the tumor. What's causing the tumor to survive. What's causing the tumor to thrive. And so the fact that our TCRs can identify them and kill what is driving the cancer. We're going after the right target, and we're doing so in a very safe manner because it's not owning to any kind of healthy tissue. So I just can't stress that enough.

So it is looking at data of the (inaudible) patient or patients that were treated. And we did indicate on a prior call that the safety profile from the first patient looked very good and that was going to be reviewed and assessed by the Safety Review Board and by our investigators after the first patient. So we did talk about that before and say that again, that we are very pleased with the safety profile that we saw in the first patient, and it is safety and the responses in the first 30 days after infusion that is valued each and every time by our Safe Review Board and the investigators as we determine the appropriate dose for the next patient to be treated.

And what will be the total numbers of patients you expected or planned deploy in the Phase I/II study?

We're going to let the science tell us, I-Eh. So we need to continually evaluate the patients as they get dosed and treated. And in part as well, it will depend on because we have the ability with the various indications and the various TCRs to move different things to a Phase II, while still having the Phase I trial open since this is a Phase I/II trial design.

And because of the (inaudible) design as well, we're not locked into a predescribed formula. We're going to, again, let the science and statistics help us decide what the appropriate number of patients are to treat. So we're very much scientifically guided and not artificially constrained by a poor trial design. We're very pleased with the forward-looking trial design that we have. And I think fact that the FDA has worked very closely with us and is supportive and approved of this design is also very encouraging.

Our next question comes from the line of Swayampakula Ramakanth with HCW.

This is RK from H.C. Wainwright. For the manufacturing of these doses, how long does it take at this point from bid to bed? And as you progress and as you get more experience, are you seeing the possibility of reducing that manufacturing time?

Thanks, RK. Indeed, there's positively a path forward in our process development activities to reduce the vein-to-vein time, bid to bedtime, as you called it. Right now, it's approximately 30 days that manufacturing time frame. But our goal towards commercial efforts, if you will, as we see a path to be able to reduce that by about half. And so that's -- Abhi knows that his task and his challenge. He's up for it, and he will be working closely with Drew and the team, but we have a number of different process development initiatives that will facilitate that. That will be incremental. So we'll continue to provide updates as we refine our manufacturing process, optimize it, if you will, and reduce the number of days.

And again, that will naturally be beneficial for many reasons. One, we get the treatment to the patient more quickly. Secondly, it will naturally increase the throughput in our manufacturing suite. And so for us, it's something that we'll have updates here. I imagine Abhi is not going to let much grass grow under his feet and in the next quarter or 2, we'll probably have further updates about the optimization of the process and how we're doing at that time.

And the next and the second and the last question from me is on the Solasia relationship. Do you have an idea of when they could start commercialization? And could you remind us what the royalty terms are between you and the collaborator?

So we'll let Solasia speak to their program, not for us to speak about. I think what's important that I wanted to guide is that we're talking about low single digits. So this is not something that's going to be transformational from a capital perspective on the balance sheet. It's certainly helpful. Any kind of dollars that we receive that's mailbox money, and we'll put it to good and smart use in our R&D efforts and our clinical efforts.

But I just wanted the message, I wanted to share is always great to put assets that we were not developing to work and to receive money for them. But the guidance that we've been given is that this will be -- there's a ramp up any time that a new product is released. And with regards of our royalty terms being in the low single digits. It's not something that will dramatically alleviate the capital needs of the company forever.

(Operator Instructions) And we have a follow-up question from the line of Prakhar Agrawal with Cantor Fitzgerald.

So maybe, Kevin, just a quick clarification. So the safety review by MD Anderson and the decision to move to second dose. Is it done at the 28-day follow-up for the first patient or at a later time point? And I had one more question.

Sure. And as a cook, I always appreciate when somebody wants seconds. So that's a good sign to me Prakhar.

So indeed, you have to wait for at least the first 28-day safety window for the Safety Review Board together. Clearly, our investigators are following the patient on a daily basis and very much gathering the information. But there are not any artificial constraints if that's what you mean or a structural constraint that we would have to wait x number of days to review the information. So perhaps that's helpful.

Yes. That's very helpful, Kevin. And maybe a question for Drew. If you can comment on some of the recent publications of case reports in EJM and cancer immunology research, which showed TCR therapy had activity in KRAS G12D and TP53 patients. So maybe it would be helpful if you can highlight the similarities and differences between your approach versus those mentioned in these publications?

Love to. We're really excited about these 2 validating case reports that have come out of academic institutions really showing the power of TCR-T cells targeting hospital mutations and really showing some preliminary evidence of what we're trying to do in the clinic in our library TCR-T trial at MD Anderson. Both of these case reports are using retrovirally transduced TCR-T cells. We are using a Sleeping Beauty system, which is nonviral. We think there's a number of advantages. We think that it's very well suited for what we're trying to do. And very commercially appealing for the long-term. So we're really excited about testing that in our clinical trial.

And then there are some other minor differences in the lymphodepletion, regimens with the patients, especially the pancreatic patient didn't receive one of the drugs because they didn't have -- they had previous TIL therapy and didn't respond well to it. That may be a minor difference. And then both patients received -- well, the pancreatic patient received high-dose IL-2. And as a reminder, we do not use high-dose IL-2 in our library trial.

So I would say that those are the 2 main differences looking in, but the papers are in-depth and would also highlight again that the cancer immunology research paper highlights the benefit of TCR-T over TIL. I would encourage you guys to read that. So thank you.

Drew may be modest, but he's one of the authors on that paper. And again, we benefit greatly here at Alaunos from his expertise in many years working with TCRs, with Sleeping Beauty and that's, I think, just a really important differentiator is the value that Sleeping Beauty brings to the ability to manufacture these TCRs quickly, cost effectively and in a library approach.

Thank you. And I am showing no further questions. So ladies and gentlemen, this does conclude today's question-and-answer session, and it also does conclude today's conference call. Thank you for participating. You may now disconnect, everyone.