Alaunos Therapeutics, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 7, 2023. This is an annual report, and the supplied filing text does not provide a standalone fourth-quarter income statement.
Business context
Alaunos is a clinical-stage oncology cell-therapy company developing patient-specific TCR-T therapies for solid tumors using its non-viral Sleeping Beauty gene-transfer platform and a library of T-cell receptors targeting KRAS, TP53 and EGFR mutations. Its Phase 1/2 trial with MD Anderson covers six cancer types. The company has no approved products and has not generated product revenue.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Collaboration revenue | $2.9 million | $0.4 million |
| Research and development expense | $25.0 million | $49.6 million |
| General and administrative expense | $13.1 million | $27.6 million |
| Operating loss | $35.1 million | $77.5 million |
| Interest expense | $3.2 million | $1.2 million |
| Net loss | $37.7 million | $78.8 million |
| Basic and diluted loss per share | $0.17 | $0.37 |
| Cash used in operations | $29.2 million | $61.5 million |
- Revenue in 2022 was primarily a Solasia milestone payment following the Japanese approval of darinaparsin, a licensed asset; it is not revenue from Alaunos product sales.
- Lower operating expenses mainly reflected the wind-down of IL-12 and CAR-T activities and reduced headcount following the 2021 restructuring. These are not evidence of product-level profitability. Gross margin is not applicable to reported product sales because there were none.
- At year-end, cash and cash equivalents were $39.1 million and restricted cash was $13.9 million, totaling $53.0 million. Restricted cash was pledged under the SVB loan and unavailable for ordinary operations. Working capital excluding restricted cash was $15.7 million, versus $62.8 million in 2021.
- Total debt carrying value was $16.8 million, classified as current. The SVB facility carried a 12.0% interest rate at year-end, with outstanding obligations due August 1, 2023. The company paid $8.3 million of principal in 2022 and reported $3.2 million in interest expense.
- Total assets were $64.9 million, total liabilities $26.4 million and stockholders’ equity $38.6 million. Accumulated deficit was $880.6 million.
- The November 2022 public offering raised $14.7 million net before the underwriter’s partial option exercise in January 2023. Shares outstanding rose from 216.1 million at year-end 2021 to 240.4 million at year-end 2022; 240.6 million were outstanding as of March 2, 2023.
Material changes and operating developments
- Net loss narrowed by $41.0 million year over year as R&D and G&A spending fell; collaboration revenue increased by $2.5 million. Interest expense rose by $2.0 million, partly offset by higher interest income.
- The company enrolled and dosed three patients in its TCR-T Library Phase 1/2 trial by year-end. The first patient had a partial response, with target lesions reduced by more than 50% at week 12, and TCR-T cells persisted in blood through 24 weeks. Disease progression was later observed at week 24, and the patient left the trial. The second patient had stable disease at six weeks but progression at week 12 and left the trial. Both patients’ treatment profiles were described as manageable, with no dose-limiting toxicities reported; these early observations are not evidence of established efficacy.
- A third patient was dosed in December 2022. The company submitted an IND amendment in the fourth quarter to add two TCRs, with the stated potential to expand the addressable patient population. It also reported screening matches above 10% among more than 700 patients screened at MD Anderson.
- Manufacturing capacity was doubled in 2022 to allow two products to be produced simultaneously. The company planned to transition from fresh to cryopreserved product in 2023, which it estimated could reduce manufacturing time from 30 to 26 days.
- The company continued winding down its Controlled IL-12 program and was seeking a development partner. It also planned an IND filing for an mbIL-15 TCR-T program in the second half of 2023.
Outlook, risks and unusual items
- Going concern: Management said year-end resources were expected to fund operations into the fourth quarter of 2023, but were not sufficient for at least one year from the financial-statement issuance date. Management and the auditor reported substantial doubt about the company’s ability to continue as a going concern. No additional capital source was committed.
- The SVB loan’s August 2023 maturity creates a near-term financing obligation. Failure to meet specified milestones required $13.9 million to be held as collateral; the loan is secured by substantially all assets other than intellectual property, which is subject to a negative pledge.
- Management expected multiple trial enrollments in the first half of 2023, an interim clinical update during 2023, and the trial to be Phase 2-ready by year-end 2023. These are forward-looking targets, not assured outcomes.
- Key risks include limited clinical evidence, patient enrollment and manufacturing challenges, reliance on specialist suppliers and collaborators, regulatory uncertainty, competition, intellectual-property and licensing exposure, and the need to raise additional capital. The company reported no pending litigation considered materially adverse by management.
- On January 4, 2023, Nasdaq notified the company that it was below the $1 minimum bid-price requirement; the stated compliance deadline was July 3, 2023. A reverse stock split was among the options under review.
- Auditors issued an unmodified opinion on the financial statements and included a going-concern emphasis. Management stated disclosure controls and internal control over financial reporting were effective as of December 31, 2022; the auditor was not engaged to opine on internal-control effectiveness.
Most important facts for investors to verify
- Whether Alaunos secured financing or a partner sufficient to fund operations beyond the disclosed runway, and how it addressed the August 2023 loan maturity and restricted cash.
- Subsequent trial enrollment, safety, response durability and final verified data, particularly given that the first two patients progressed and left the study.
- Whether the added TCRs, planned library expansion, cryopreservation transition and manufacturing improvements were implemented on schedule.
- Nasdaq listing status and any reverse stock split or other action taken to regain bid-price compliance.
- Potential dilution from future equity financing and outstanding warrants and options; at December 31, 2022, warrants covered 22.9 million shares and options covered 10.4 million shares.