Alaunos Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Financial statements are unaudited. The August 14, 2023 strategic reprioritization and restructuring were announced after quarter-end.
Business context and results
Alaunos was a clinical-stage oncology cell-therapy company developing TCR therapies using its Sleeping Beauty platform and hunTR discovery platform. It had no product revenue and reported only $4,000 of collaboration revenue in the first half of 2023.
| Metric ($ millions, except per-share data) | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration revenue | 0.004 | — | 0.004 | — |
| Research and development | 5.186 | 5.937 | 11.689 | 11.518 |
| General and administrative | 3.045 | 3.429 | 6.213 | 6.935 |
| Net loss | 8.773 | 9.932 | 18.821 | 19.720 |
| Net loss per share | $0.04 | $0.05 | $0.08 | $0.09 |
Q2 operating expenses were $7.986 million, including a $245,000 gain on lease modification; the operating loss was $7.982 million. First-half operating expenses were $17.657 million and operating loss was $17.653 million. No meaningful operating margin is indicated by the filing given the negligible collaboration revenue and continuing losses.
Cash, debt and liquidity
- Cash and cash equivalents were $18.317 million at June 30, 2023, down from $39.058 million at December 31, 2022. Restricted cash declined from $13.938 million to zero.
- Working capital was $13.7 million, versus $15.7 million at year-end 2022. Total assets were $27.927 million; total liabilities were $6.277 million.
- No debt remained at June 30. Alaunos repaid its SVB facility in full on May 1, 2023; first-half financing cash outflow included $18.105 million of debt repayment and $125,000 of extinguishment costs.
- First-half operating cash use was $16.383 million, compared with $15.957 million in 2022; investing cash use was $158,000. The total decrease in cash, cash equivalents and restricted cash was $34.679 million, including debt repayment.
- Management expected cash to fund operations into Q4 2023, but concluded resources would not fund planned operations for at least one year after issuance of the statements. The filing states substantial doubt exists about the company’s ability to continue as a going concern.
Material changes, outlook and risks
- On August 14, after quarter-end, Alaunos announced it would prioritize the hunTR TCR discovery platform and wind down its TCR-T Library Phase 1/2 trial. It planned to reduce its workforce by approximately 60% and was evaluating strategic alternatives, including a sale, merger, partnership or financing. Cantor Fitzgerald was engaged as strategic advisor; no transaction or definitive course of action was assured.
- The company estimated $2.5–$3.0 million of retention, severance and other termination-related costs in Q3 and Q4 2023. It also expected lower R&D costs but potentially higher legal, accounting and advisory costs related to the strategic review.
- Before the subsequent reprioritization, eight patients had been treated in the trial and six were evaluable; the company reported an 83% disease-control rate among evaluable patients and generally good tolerability. These are early results from a small, early-stage trial, which the company subsequently announced it would wind down.
- Alaunos gave notice to terminate its NCI CRADA effective October 13, 2023. Possible consequences include reimbursing outstanding and termination costs, providing materials and, in specified circumstances, continued personnel funding or rights for the NCI.
- KBI Biopharma sued Alaunos in Texas state court, seeking unspecified damages in excess of $3.2 million for alleged breach of contract. Alaunos denied the allegations and asserted counterclaims; trial was set for May 2024.
- The company transferred its listing to the Nasdaq Capital Market in July and had until January 2, 2024 to regain compliance with the $1 minimum bid-price requirement. A reverse stock split was an available option; the filing cautions that compliance and continued listing are not assured.
- Other key risks include obtaining additional capital with no committed funding source, failure to complete a strategic transaction, possible liquidation if none is completed, workforce-retention and execution risks, and potential dilution from future financing.
Important facts for investors to verify
- Current cash balance, actual spending and runway after the workforce reduction and trial wind-down; assess whether funding or a transaction is secured.
- Progress and costs of the strategic review, including any definitive agreement, financing terms, or decision regarding liquidation.
- Final restructuring charges and any additional NCI termination costs or CRADA obligations.
- Status and potential exposure of the KBI litigation, including any settlement or change in the May 2024 trial schedule.
- Nasdaq bid-price compliance status and whether the company implements a reverse stock split.
- Any further clinical data or hunTR platform developments, recognizing the reported trial results were preliminary and the trial is being wound down.