Alaunos Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Financial amounts below are in U.S. dollars; unless otherwise noted, amounts are in millions.
Business context and reporting period
Alaunos was a clinical-stage oncology cell-therapy company with no product revenue. On August 14, 2023, it announced a strategic reprioritization, halted further development of its TCR-T Library Phase 1/2 trial, and began exploring strategic alternatives, including a merger, asset sale, partnership, or capital raise. Cantor Fitzgerald was engaged as strategic adviser. The company reported a workforce reduction of approximately 60% during Q3 and approximately 80% to date.
Key financial results and liquidity
| Metric | Q3 2023 / September 30, 2023 | Comparable 2022 / December 31, 2022 |
|---|---|---|
| Collaboration revenue | $0.0 for Q3; $0.004 for nine months | $2.911 for Q3 and nine months |
| Net loss | $8.476 for Q3; $27.297 for nine months | $8.851 for Q3; $28.571 for nine months |
| Net loss per share | $0.04 for Q3; $0.11 for nine months | $0.04 for Q3; $0.13 for nine months |
| Research and development expense | $3.656 for Q3; $15.346 for nine months | $7.893 for Q3; $19.411 for nine months |
| General and administrative expense | $3.578 for Q3; $9.791 for nine months | $3.282 for Q3; $10.217 for nine months |
| Cash and cash equivalents | $11.944 | $39.058, plus $13.938 restricted cash |
| Working capital | $8.2 | $15.7 |
| Total debt | $0.0 | $16.765 carrying value |
For the first nine months, operating cash use was $22.757, investing cash use was $0.157, and financing cash use was $18.138, mainly reflecting repayment of debt. Cash, cash equivalents and restricted cash decreased by $41.052. The company repaid its SVB debt in full on May 1, 2023. It reported no recurring operating revenue; operating margins are not meaningful in the absence of material revenue.
Material changes and unusual items
- Q3 net loss narrowed year over year by $0.375; nine-month net loss narrowed by $1.274. Nine-month R&D expense fell 21%, primarily due to lower staffing and clinical costs and a prior-year MD Anderson milestone payment that did not recur. Lower Q3 R&D spending also reflected the trial wind-down.
- Q3 included $0.419 of restructuring costs and $1.011 of property, equipment and right-of-use asset impairment charges related to the reprioritization. The company also recorded a $0.1 impairment of prepaid expenses in R&D expense.
- Interest expense was zero in Q3 2023 following debt repayment, compared with $0.841 in Q3 2022. Nine-month interest expense was $1.921 versus $2.266.
- The company recorded a $1.0 accrual at September 30 for a settlement reached with KBI Biopharma on October 20, 2023, resolving claims and counterclaims.
- On November 9, 2023, the company agreed to sell laboratory equipment for gross proceeds of $1.5; the equipment’s reported September 30 carrying value was also $1.5.
Outlook, risks and contingencies
Management estimated that cash resources would fund operations into the second quarter of 2024, but concluded they would not fund planned operations for at least one year from the financial statements’ issuance date. The filing states that substantial doubt exists about the company’s ability to continue as a going concern. There were no committed sources of additional capital, and continued operations depend on financing, a strategic transaction, or other events outside the company’s control.
The strategic review has no stated timetable and no definitive course of action had been approved. If no transaction is completed, the board may consider dissolution and liquidation; the amount potentially distributable to stockholders would depend on timing and reserves for obligations and contingencies. Management expected R&D expenses to decrease significantly, while G&A could increase due to legal, accounting and advisory costs. The company estimated $2.5–$3.0 of retention, severance and other termination-related costs from Q3 2023 through Q2 2024.
In the trial, eight patients were treated: one had a partial response and six had stable disease; the reported objective response rate was 13% and disease control rate 87%. No dose-limiting toxicities were observed. All patients had progressed or withdrawn, and no further intervention was planned under the protocol. The company stated it would not pursue further clinical-program development given the cost and financing environment.
The company gave notice to terminate its NCI CRADA, effective October 13, 2023, and on October 27 gave notice of intent to terminate its NCI Patent License, effective 60 days later. It also amended its Precigen license in April 2023, eliminating royalty and milestone obligations and reducing the annual fee to $75,000.
After quarter-end, Nasdaq issued a delisting determination on November 8, citing a closing bid below $0.10 for 10 consecutive trading days. The company intended to appeal; suspension was stated to be effective November 17 unless stayed through the appeal process. Nasdaq status and the outcome of the appeal remained uncertain. Other key risks include limited liquidity, the uncertain outcome and costs of the strategic review, potential dilution from financing, employee retention, and the possibility of liquidation.
Important facts for investors to verify
- Current cash, actual cash use, and whether the estimated runway to Q2 2024 remains achievable.
- Any financing, strategic transaction, asset sale, or board decision regarding liquidation, including terms and effects on stockholders.
- The status and outcome of the Nasdaq delisting appeal and the continued trading venue for TCRT.
- Final costs and payment timing for the KBI settlement, workforce restructuring, lease terminations, and strategic-review process.
- Whether the equipment sale closed and the amount of net proceeds received; also confirm the effective date and consequences of terminating the NCI license.