Business context and reporting period
This is Ziopharm Oncology, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2021—not a filing under the name Alaunos Therapeutics, Inc. Ziopharm was a clinical-stage biopharmaceutical company developing cell-based immuno-oncology therapies, principally non-viral TCR-T therapies for solid tumors. It reported no recurring product revenue and had operated at a loss since inception.
Financial results and liquidity
Amounts below are in millions of dollars unless stated otherwise.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $0.398 | $0 | $0.398 | $0 |
| Research and development expense | $14.521 | $13.968 | $41.427 | $38.725 |
| General and administrative expense | $8.173 | $6.353 | $25.469 | $18.862 |
| Operating loss | $(22.296) | $(20.321) | $(66.498) | $(57.587) |
| Net loss | $(22.733) | $(20.315) | $(66.957) | $(57.204) |
| Basic and diluted loss per share | $(0.11) | $(0.10) | $(0.31) | $(0.27) |
There were no product sales, so product gross margin was not applicable; the filing does not provide a meaningful operating margin. For the first nine months, operating cash use was $46.342 million, investing cash use was $2.964 million, and financing provided $25.962 million. Cash and cash equivalents fell to $91.725 million at September 30, 2021, from $115.069 million at year-end 2020. Working capital was $68.5 million, down from $112.2 million at year-end 2020. Accumulated deficit was $831.1 million.
In August 2021, the company borrowed $25 million under a Silicon Valley Bank term-loan facility. The debt’s carrying value was $24.211 million after discount, including $12.037 million classified as current and $12.174 million long-term. The loan bears interest at a minimum of 7.75% and includes a final payment equal to 5.75% of original principal borrowed. An additional $25 million tranche is contingent on funding and clinical milestones. Management projected cash would fund operations into Q2 2023, but reported no committed additional capital source.
Material changes versus the prior comparable period
- Nine-month net loss increased $9.8 million year over year; operating expenses rose $9.3 million. R&D expense increased 7% and G&A increased 35%.
- Q3 R&D included $2.2 million of restructuring charges; lower trial and consulting costs partly offset the increase. Nine-month G&A rose mainly because of employee-related costs, severance, and consulting.
- Revenue of $0.398 million was recognized under the Solasia collaboration; no collaboration revenue was reported in the comparable 2020 periods.
- Operating cash use increased to $46.3 million from $40.0 million. Financing cash flow was much lower than in 2020, when public and at-the-market equity offerings generated proceeds; 2021 financing primarily reflected the term loan and option exercises.
Outlook, management commentary, risks and unusual items
- Strategy and clinical outlook: Management prioritized the Sleeping Beauty TCR-T program. The company-sponsored Phase 1/2 library TCR-T treatment study had FDA IND clearance, but patient enrollment had not begun; management expected first dosing in the first half of 2022, subject to manufacturing readiness. The NCI-sponsored personalized TCR-T trial was suspended for reasons described as internal to the NCI and outside Ziopharm’s control.
- Restructuring: The company announced a reduction in force affecting approximately 60 employees. It recorded $3.537 million in severance expense, accrued at quarter-end and expected to be paid in Q4 2021. Management said the restructuring was intended to extend the cash runway.
- Portfolio changes: Ziopharm was winding down its Controlled IL-12 glioblastoma program while seeking a partner. TriArm and Ziopharm agreed to dissolve the Eden BioCell joint venture in September; two patients had been treated in its Taiwan CD19 CAR-T trial, with no serious adverse safety events reported, but further process development was deemed necessary. MD Anderson had closed its CD19 RPM CAR-T allogeneic Phase 1 trial and withdrawn the IND in June.
- Debt conditions: If the specified Equity Milestone was not achieved by December 31, 2021, the company was required to deposit cash equal to 50% of then-outstanding principal plus the associated final payment into an account pledged to the lender. Principal repayment was scheduled to begin April 2022 absent milestone-based extensions. The agreement also restricts certain corporate actions and includes default provisions.
- Controls and management: A material weakness in financial-reporting controls concerning timely account reconciliation and review remained unremediated at September 30, 2021. Management said remediation actions were implemented and testing would begin in Q4; it reported no effect on the amounts in the financial statements. Subsequent to quarter-end, the company terminated its interim CFO consulting agreement, designated CEO Kevin Boyle as principal financial officer, and named Michael Wong principal accounting officer effective November 9, 2021.
- Principal risks: The company warned that it would need substantial additional financing and might have to delay or reduce development if funding or partnerships were unavailable. Other key risks included early-stage clinical evidence, regulatory and manufacturing uncertainty, dependence on third parties and specialized supplies, COVID-19-related disruption, competition, intellectual-property and licensing exposure, and potential disruption from the workforce reduction. Management stated that no material legal proceeding was expected to adversely affect financial position, results, or cash flows.
Important facts for investors to verify
- Confirm the registrant and filing identity: the supplied filing is for Ziopharm Oncology, Inc., whereas the request metadata names Alaunos Therapeutics, Inc.
- Track actual cash burn and whether the stated runway into Q2 2023 remains achievable, particularly against clinical, manufacturing, and restructuring costs.
- Verify satisfaction of the SVB Equity Milestone and any resulting cash-collateral requirement, as well as eligibility for the additional $25 million tranche.
- Monitor TCR-T manufacturing qualification and timing of first-patient dosing, and updates on the NCI trial suspension.
- Check whether the financial-reporting material weakness is remediated and whether subsequent finance leadership changes affect reporting controls.
- Assess the operational and cash impact of the workforce reduction, IL-12 wind-down, and Eden BioCell dissolution.