Alaunos Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Alaunos is a clinical-stage oncology cell-therapy company developing personalized TCR-T therapies using its non-viral Sleeping Beauty platform. It reported no product revenue and has no recurring operating revenue.
Key financial metrics
| Metric | Q2 2022 / June 30, 2022 | Comparable period / prior balance |
|---|---|---|
| Revenue | No product revenue; no collaboration revenue reported in the periods discussed | No product revenue |
| Research and development expense | $5.9 million for Q2; $11.5 million for first half | $13.6 million and $26.9 million, respectively, in 2021 |
| General and administrative expense | $3.4 million for Q2; $6.9 million for first half | $9.1 million and $17.3 million, respectively, in 2021 |
| Net loss | $9.9 million for Q2; $19.7 million for first half | $22.7 million and $44.2 million, respectively, in 2021 |
| Net loss per share | $0.05 for Q2; $0.09 for first half | $0.11 and $0.21, respectively, in 2021 |
| Cash and cash equivalents | $60.0 million | $76.1 million at December 31, 2021 |
| Operating cash flow | $(16.0) million for first half | $(36.8) million for first half 2021 |
| Debt | $24.5 million carrying value: $20.1 million current and $4.5 million long-term | $24.1 million carrying value at December 31, 2021 |
| Working capital | $34.6 million | $62.8 million at December 31, 2021 |
| Stockholders’ equity | $40.2 million | $58.1 million at December 31, 2021 |
Margins are not meaningful because the company reported no product revenue. The first-half cash balance decreased by $16.0 million; operating cash use was partly offset by lower spending and noncash items. The company reported an accumulated deficit of $862.6 million.
Material changes versus comparable periods
- Q2 and first-half operating expenses fell substantially year over year, primarily following the 2021 restructuring and reduced headcount, as well as winding down IL-12 and CAR-T program activities. Lower expenses reduced the reported net loss.
- Interest expense rose to $0.7 million for Q2 and $1.4 million for the first half, reflecting the SVB loan; no interest expense was reported in the 2021 comparison periods.
- Working capital fell from $62.8 million at year-end 2021 to $34.6 million at June 30, 2022. Current debt increased to $20.1 million from $7.9 million, reflecting the loan’s repayment classification.
- A second-quarter lease modification reduced the MD Anderson leased area from 18,111 to 3,228 square feet and produced a $0.1 million gain.
Outlook, risks and notable developments
- Liquidity and going concern: Management estimated that cash would fund operations into the second quarter of 2023. It also concluded that available capital would not fund planned operations for at least one year from the financial-statement issuance date, raising substantial doubt about the company’s ability to continue as a going concern. Additional financing is not assured; management may need to curtail development or operations if funds are unavailable.
- Debt conditions: The $25.0 million SVB facility bears floating interest, reported at 9.25% on June 30, 2022, and was scheduled to mature August 1, 2023. The maturity and interest-only period could extend to 2024 and August 2023, respectively, only if specified equity-raising and clinical milestones were met by August 31, 2022. Failure to meet the milestones could require cash collateral equal to half of outstanding principal plus the specified final-payment amount. The filing does not establish that the milestones were met.
- Potential equity financing: On August 12, 2022, the company entered into an at-the-market agreement allowing up to $50 million of common-stock sales, subject to a 3% commission. As of the filing date, no shares had been offered or sold under it; proceeds were therefore not yet available from this program.
- Clinical program: The company reported treating its first patient in the TCR-T Library Phase 1/2 trial on May 2, with a KRAS G12D-targeting product for non-small cell lung cancer. Following a safety review, it said it was proceeding to the second dose level and expected to present early data in Q3 2022. Trial outcomes, enrollment, manufacturing and regulatory progress remain uncertain.
- Other programs: Alaunos reported preclinical results for its membrane-bound IL-15 TCR-T program; these are not clinical efficacy results. Solasia announced Japanese approval of darinaparsin for relapsed or refractory peripheral T-cell lymphoma; Alaunos may be eligible for sales-based milestones and sublicense revenue, but reported no collaboration revenue for the periods presented.
- Research commitments and risks: The NCI collaboration was extended through January 9, 2025, with Alaunos agreeing to contribute $1.0 million annually beginning in Q1 2023. Key risks include dependence on additional capital, early-stage clinical evidence, trial and manufacturing execution, specialized suppliers, competition, licensed intellectual property and the SVB covenant and collateral requirements.
Important facts for investors to verify
- Whether the SVB equity and clinical milestones were met by August 31, 2022, and the resulting loan maturity, interest-only period and collateral obligations.
- Whether the $50 million ATM program generated proceeds after the filing date, and the resulting dilution and cash runway.
- Subsequent clinical-trial enrollment, safety findings, dose escalation and data; early or interim results may not predict final outcomes.
- Actual cash burn and financing needs relative to management’s Q2 2023 runway estimate and the going-concern uncertainty.
- Whether the darinaparsin approval produces any milestone, royalty or sublicense receipts for Alaunos; none were reported for the periods presented.