Alaunos Therapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited results; amounts below are in millions of dollars except per-share data. Alaunos is a clinical-stage oncology cell-therapy company developing non-viral TCR-T therapies. It has no product sales and continues to incur operating losses.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $2.911 | $0.398 | $2.911 | $0.398 |
| Research and development expense | $7.893 | $14.521 | $19.411 | $41.427 |
| General and administrative expense | $3.282 | $8.173 | $10.217 | $25.469 |
| Operating loss | $(8.264) | $(22.296) | $(26.584) | $(66.498) |
| Net loss | $(8.851) | $(22.733) | $(28.571) | $(66.957) |
| Basic and diluted loss per share | $(0.04) | $(0.11) | $(0.13) | $(0.31) |
| Cash used in operating activities | — | $(22.102) | $(46.342) |
Revenue was primarily from Solasia Pharma’s Japan-related sales milestones for darinaparsin, following its approval in Japan; it is not product-sales revenue. Research and development and G&A costs fell substantially year over year, mainly reflecting program wind-downs and reduced headcount. The Q3 2022 R&D expense included a one-time $2.5 million payment to MD Anderson. No gross margin was reported; conventional product margins are not meaningful given the company’s development-stage business.
Financial position and liquidity
- At September 30, 2022, cash and cash equivalents were $37.8 million and restricted cash was $13.9 million, compared with $76.1 million cash and no restricted cash at December 31, 2021. Cash, cash equivalents and restricted cash totaled $51.7 million.
- Working capital excluding restricted cash was $8.7 million, versus $62.8 million at year-end 2021. Total current assets were $55.5 million, including restricted cash, and current liabilities were $32.9 million.
- Debt carrying value was $22.7 million, all classified as current, versus total carrying debt of $24.1 million at year-end 2021. The $25.0 million SVB facility bears floating interest; the rate was 10.75% at September 30. Principal-and-interest installments began September 1, 2022, with all outstanding obligations due August 1, 2023. A final payment of 5.75% of original principal is also due.
- The company had deposited $13.9 million as debt collateral, restricting its use. Conditional releases of $2.5 million and $4.0 million may follow the eighth and tenth scheduled payments, respectively.
- Management expects available cash resources to fund operations into Q2 2023, but says current resources are insufficient to fund planned operations for at least one year from issuance of the financial statements. The filing therefore reports substantial doubt about the company’s ability to continue as a going concern absent additional financing.
Material developments, outlook and risks
- The company reported early results from two patients in its TCR-T Library Phase 1/2 trial. Both had manageable safety profiles and evidence of T-cell persistence. Patient 1 had a partial response and six-month progression-free survival, but later experienced progression and left the study. Patient 2 had stable disease at six weeks, then progression by week 12 and left the study. These small-sample interim observations are preliminary and do not establish efficacy.
- Management anticipated treating another patient before the end of 2022 and providing a trial update in 2023. It planned an IND amendment by year-end 2022 to add cryopreserved cells and two TCRs; the proposed process was expected to reduce manufacturing time from 30 to 26 days. The mbIL-15 program was targeted for an IND filing in the second half of 2023.
- The company entered a $50 million at-the-market equity distribution agreement in August 2022, with a 3% sales commission. No shares had been sold under it through September 30. No additional capital source was committed.
- R&D spending reductions reflect a strategic focus on TCR-T and the wind-down of IL-12 and CAR-T activities; the company continues seeking a partner for those programs. The Eden BioCell joint venture with TriArm had been agreed for dissolution in September 2021.
- Key risks include financing and refinancing needs, debt repayment and collateral restrictions, dilution from future equity issuance, early-stage clinical uncertainty, patient enrollment and manufacturing challenges, reliance on licensors and specialized suppliers, and competition. Management also cited possible variation in cash needs and the risk that financing may not be available on acceptable terms.
Important facts for investors to verify
- Whether Alaunos raises sufficient capital to extend its stated Q2 2023 cash runway and address the going-concern uncertainty.
- Debt repayment progress, the August 2023 maturity, interest-rate exposure, and timing and conditions for restricted-cash releases.
- Whether subsequent TCR-T trial patients confirm safety and meaningful, durable clinical benefit beyond the preliminary two-patient observations.
- Whether the planned trial protocol changes and manufacturing improvements receive regulatory clearance and perform as expected.
- How much future collaboration revenue is recurring versus milestone-related, and the funding or partnering prospects for the deprioritized programs.