Alaunos Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The company filed under the name Alaunos Therapeutics, following its January 2022 name change from Ziopharm Oncology. Financial comparisons below are with FY2020.
Business context
Alaunos is a clinical-stage oncology cell therapy company developing patient-specific TCR-engineered T-cell therapies for solid tumors. Its lead approach combines a library of T-cell receptors targeting KRAS, TP53 and EGFR mutations with its non-viral Sleeping Beauty gene-transfer platform. Its principal program is a Phase 1/2 trial, conducted with MD Anderson, spanning six solid-tumor types. The company had no approved products or product sales.
Financial highlights
| Metric | FY2021 / Dec. 31, 2021 | FY2020 / Dec. 31, 2020 |
|---|---|---|
| Collaboration revenue | $0.4 million | $0 |
| Research and development expense | $49.6 million | $52.7 million |
| General and administrative expense | $27.6 million | $27.7 million |
| Total operating expenses | $77.9 million | $80.4 million |
| Operating loss | $77.5 million | $80.4 million |
| Net loss | $78.8 million | $80.0 million |
| Basic and diluted loss per share | $0.37 | $0.38 |
| Cash used in operating activities | $61.5 million | $57.0 million |
| Capital expenditures | $3.3 million | $9.8 million |
| Cash and cash equivalents | $76.1 million | $115.1 million |
| Working capital | $62.8 million | $112.2 million |
The $0.4 million collaboration revenue came from a milestone under the Solasia agreement; it is not product revenue. Research and development costs fell 6%, primarily as IL-12 and CAR-T programs were wound down, partly offset by higher employee and facility costs. G&A was essentially flat. Net loss narrowed by about $1.2 million, while operating cash use increased by about $4.5 million. The filing does not present a meaningful product gross margin, given the absence of product sales.
Financing activities provided $25.8 million, primarily from a $25.0 million SVB term loan. The company reported $24.1 million of debt net of unamortized discount, including $7.9 million current and $16.3 million long-term. The loan carries a floating rate with a 7.75% floor; the reported rate at year-end was 7.75%. Substantially all assets other than intellectual property secure the loan. The company had $94.9 million in total assets, $36.8 million in liabilities and $58.1 million in stockholders’ equity at year-end.
Material changes and notable items
- Cash declined $39.0 million during 2021. The company said its existing cash should fund operations into the second quarter of 2023, based on current plans and cash management; it had no committed additional capital sources.
- In September 2021, Alaunos announced a restructuring that eliminated approximately 60 positions, more than half its workforce. FY2021 severance expense was $3.7 million. R&D spending was prioritized toward the TCR program.
- The company completed and validated its Houston cGMP manufacturing facility during 2021. It still relies on third parties for production of DNA plasmids and other specialized supplies.
- A change in plans for the Boston office led to a $0.7 million impairment charge. Alaunos vacated the office by year-end but remained subject to lease obligations and was seeking a subtenant or other resolution.
- Internal control over financial reporting had a material weakness identified at June 30, 2021, related to accounting resources and timely account reconciliation and review. Management said it was remediated in the fourth quarter; the filing says it had no impact on reported financial amounts. The external auditor did not provide an opinion on internal-control effectiveness.
Outlook, risks and contingencies
- The TCR-T Library Phase 1/2 trial opened enrollment in January 2022 and may enroll up to 180 adults with eligible tumor mutations and matching HLA types. The company expected to treat the first patient in Q2 2022 and provide interim data in the second half of 2022; these are forward-looking expectations, not reported results.
- The Controlled IL-12 program was being wound down, with a partner sought for further development. CAR-T activity was also reduced, and Alaunos and TriArm agreed to dissolve the Eden BioCell joint venture in 2021.
- Continued operations depend on additional financing, partnership opportunities or other funding after the projected runway. Failure to raise capital could force delays, reductions or termination of development programs. Equity financing could dilute shareholders.
- The SVB loan’s interest-only period runs through August 31, 2022. Extension of the interest-only period and loan maturity requires, among other conditions, at least $50 million in new equity proceeds and positive first-cohort trial data endorsed as a safe dose to proceed. Failure to meet the specified milestones can trigger a cash-collateral requirement. The loan matures August 1, 2023 unless the extension conditions are met, in which case maturity moves to August 1, 2024.
- Key risks include early-stage clinical evidence and uncertain safety or efficacy; patient enrollment and trial delays; cell-therapy manufacturing and supply constraints; regulatory approval; competition; dependence on licensed technology and research partners; and COVID-19-related disruption. Alaunos reported four families of pending owned patent applications and no granted patents of its own as of year-end.
- After year-end, Nasdaq notified the company that its share price had been below the $1 minimum bid price for 30 consecutive business days; the stated compliance deadline was September 13, 2022. The filing also disclosed the Chief Medical Officer’s planned departure effective March 31, 2022.
Important facts for investors to verify
- Whether the trial began dosing on schedule, the pace of enrollment, and the quality and durability of any reported clinical data.
- Whether cash burn remains consistent with management’s runway estimate and what financing or partnering plans are available before cash is exhausted.
- Progress against SVB’s equity and clinical milestones, including any resulting collateral requirement, loan extension or repayment implications.
- Whether the Houston facility and external suppliers can reliably manufacture patient-specific products at clinical scale and support trial timelines.
- Nasdaq bid-price compliance and potential dilution from future equity issuance, options and warrants.
- The status of partnership efforts for IL-12 and CAR-T, the Eden BioCell wind-down, and the company’s continuing license and diligence obligations.