Alaunos Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Alaunos is a clinical-stage oncology cell-therapy company developing personalized TCR-T therapies using its non-viral Sleeping Beauty platform. It changed its name from ZIOPHARM Oncology, Inc. on January 25, 2022. The company has not generated product revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $5.6 million | $13.3 million; down 58% |
| General and administrative expense | $3.5 million | $8.2 million; down 57% |
| Total operating expenses | $9.1 million | $21.6 million |
| Net loss | $9.8 million | $21.6 million |
| Net loss per share | $0.05 | $0.10 |
| Net cash used in operating activities | $7.8 million | $15.3 million |
| Cash and cash equivalents, quarter-end | $68.3 million | $76.1 million at December 31, 2021 |
Expense reductions primarily reflected the wind-down of IL-12 and CAR-T activities and lower headcount following the 2021 restructuring. There is no meaningful operating margin to report given the absence of revenue and the company’s development-stage operations. Q1 2022 other expense was $0.7 million, primarily interest expense on the SVB loan.
At March 31, 2022, total assets were $85.0 million, total liabilities $35.9 million, and stockholders’ equity $49.1 million. Working capital was approximately $48.6 million, down from $62.8 million at year-end 2021. Debt had a $24.3 million carrying value, against $25.0 million of principal: $14.0 million was classified as current and $10.3 million as long-term.
Business developments and outlook
The company’s lead program is a Phase 1/2 TCR-T Library trial evaluating TCRs directed at KRAS, TP53 and EGFR mutations in several solid tumors. After quarter-end, Alaunos announced that the first patient was treated on May 2, 2022; it expected to present interim data in the second half of 2022. The company also reported preclinical findings for its membrane-bound IL-15 TCR-T approach in May; these are early research results, not clinical efficacy evidence.
Management forecast cash sufficient to fund operations into the second quarter of 2023, but stated that current resources would not fund planned operations for at least one year from the financial statements’ issuance date. The filing therefore identifies substantial doubt about the company’s ability to continue as a going concern. Alaunos had no committed additional financing and said it may need to curtail development or operations if it cannot raise capital.
The SVB facility bears floating-rate interest; the rate was 8.00% at March 31, 2022. Interest-only payments ran through August 31, 2022. Loan maturity was August 1, 2023, extendable to August 1, 2024 if specified milestones were met. Those milestones required at least $50 million in net equity proceeds and positive, safety-monitoring-committee-endorsed first-cohort data by August 31, 2022. Failure to meet them could require cash collateralization equal to half of then-outstanding principal plus 5.75% of original principal. The loan is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
Risks, contingencies and other notable items
- Continued operations depend on obtaining additional capital; equity financing could dilute shareholders, and debt or partnering may impose restrictions or require giving up rights.
- Clinical, regulatory and manufacturing risks include uncertain safety and efficacy, patient enrollment, trial timing, specialized supply availability and the company’s limited experience scaling cell-therapy manufacturing.
- The company is winding down its Controlled IL-12 program and seeking a partner; it also reported that it and TriArm agreed to dissolve the Eden BioCell joint venture. No commitment to fund Eden BioCell remained.
- Nasdaq notified the company in March 2022 that it was below the $1 minimum bid price requirement. The stated compliance deadline was September 13, 2022; a reverse split proposal in a 1-for-5 to 1-for-15 range was under consideration.
- The filing reported no material legal matters likely to have a material adverse financial effect. Management concluded disclosure controls were effective as of March 31, 2022.
- After quarter-end, an executive vice president notified the company of her resignation, effective May 13, 2022.
Important facts for investors to verify
- Whether the company raised sufficient capital to extend its runway and address the going-concern uncertainty.
- Whether the SVB clinical and equity milestones were achieved, and the resulting loan maturity, repayment and cash-collateral requirements.
- Progress, safety and interim data from the TCR-T Library trial, including whether early findings are confirmed in later data.
- Nasdaq listing compliance status and any reverse stock split action.
- Whether the company secured partners or other support for the de-prioritized IL-12 and CAR-T programs.