[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) [Filing Details](index=1&type=section&id=Filing%20Details) Alaunos Therapeutics, Inc. filed this Annual Report on Form 10-K for fiscal year 2023, identifying as a Delaware corporation, listed on Nasdaq (TCRT), and classified as a Non-Accelerated Filer and Smaller Reporting Company - The registrant is Alaunos Therapeutics, Inc., incorporated in Delaware, with its common stock (**TCRT**) registered on The Nasdaq Capital Market[2](index=2&type=chunk)[3](index=3&type=chunk) - The company is classified as a **Non-Accelerated Filer** and a **Smaller Reporting Company**[4](index=4&type=chunk) Market Value and Shares Outstanding | Metric | Value | | :----- | :---- | | Aggregate market value of non-affiliate common stock (June 30, 2023) | $94,764,946 | | Shares of common stock held by non-affiliates (June 30, 2023) | 16,041,804 | | Closing price on Nasdaq (June 30, 2023) | $7.65 | | Shares outstanding (March 27, 2024) | 16,012,479 | [Documents Incorporated by Reference](index=2&type=section&id=DOCUMENTS%20INCORPORATED%20BY%20REFERENCE) [Proxy Statement Incorporation](index=2&type=section&id=Proxy%20Statement%20Incorporation) Portions of the 2024 Annual Meeting of Stockholders Proxy Statement are incorporated by reference into Part III of this Annual Report on Form 10-K - Portions of the 2024 Annual Meeting of Stockholders Proxy Statement are incorporated by reference into Part III of this 10-K[8](index=8&type=chunk) [Table of Contents](index=3&type=section&id=TABLE%20OF%20CONTENTS) [Report Structure](index=3&type=section&id=Report%20Structure) The Table of Contents outlines the Annual Report's structure into four main parts: Part I, Part II, Part III, and Part IV, followed by Financial Statements - The report is structured into four main parts: Part I (Items 1-4), Part II (Items 5-9C), Part III (Items 10-14), and Part IV (Items 15-16), followed by Financial Statements[10](index=10&type=chunk)[11](index=11&type=chunk) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section clarifies that the Annual Report contains forward-looking statements, based on current beliefs and assumptions, which involve risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements, identifiable by terms like '**anticipate**,' '**believe**,' '**estimate**,' '**expect**,' '**forecast**,' '**intend**,' '**may**,' '**plan**,' '**project**,' '**target**,' '**potential**,' '**will**'[15](index=15&type=chunk) - These statements are based on current beliefs and assumptions, involving risks and uncertainties that may cause actual results to differ materially[16](index=16&type=chunk)[17](index=17&type=chunk) - Key forward-looking statements include the ability to implement strategic reprioritization, raise capital, consummate strategic transactions, manage expenses, license IP, maintain collaborations, and remain listed on Nasdaq[19](index=19&type=chunk) [Summary of Selected Risks Associated with Our Business](index=5&type=section&id=SUMMARY%20OF%20SELECTED%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) [Key Business Risks](index=5&type=section&id=Key%20Business%20Risks) This section summarizes significant risks, including potential failure of strategic reprioritization, need for additional capital, Nasdaq delisting risk, and challenges in IP, regulatory approvals, and commercialization - The strategic reprioritization may not be successful, potentially leading to dissolution and liquidation if a strategic transaction is not consummated[21](index=21&type=chunk) - The company requires substantial additional financial resources to continue as a going concern, and raising funds may dilute existing investments[21](index=21&type=chunk) - Nasdaq issued a Delisting Determination in **2023**, and while addressed by a reverse stock split, the company remains under panel monitoring until **February 2025**, with risks of future delisting[21](index=21&type=chunk) - Other significant risks include potential litigation, failure to maintain effective internal controls, limitations due to the termination of NCI licenses, inability to commercialize product candidates, product liability lawsuits, cybersecurity incidents, and intense competition[21](index=21&type=chunk)[22](index=22&type=chunk) [PART I](index=9&type=section&id=PART%20I) [Item 1. Business](index=9&type=section&id=Item%201.%20Business) Alaunos Therapeutics, Inc., a former clinical-stage oncology cell therapy company, initiated a strategic reprioritization in August 2023, winding down clinical trials, reducing its workforce, and exploring strategic alternatives due to high costs and financing challenges - Alaunos Therapeutics was a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapies for solid tumors, leveraging its cancer hotspot mutation TCR library and proprietary Sleeping Beauty gene transfer platform[25](index=25&type=chunk) - On **August 14, 2023**, the company announced a strategic reprioritization, winding down its TCR-T Library Phase 1/2 Trial, reducing its workforce by approximately **95%**, and exploring strategic alternatives such as acquisition, merger, or sale of assets[26](index=26&type=chunk) - The decision to halt clinical development was made despite encouraging Phase 1/2 trial data, citing substantial development costs and the current financing environment[31](index=31&type=chunk) [Overview](index=9&type=section&id=Overview) Alaunos Therapeutics, a clinical-stage oncology company, initiated a strategic reprioritization in August 2023, winding down its TCR-T Library Phase 1/2 Trial, reducing its workforce, and exploring strategic alternatives - The company was developing TCR-T cell therapies targeting neoantigens from common tumor-related mutations (KRAS, TP53, EGFR) for various solid tumor types[25](index=25&type=chunk) - The strategic reprioritization included winding down the TCR-T Library Phase 1/2 Trial, a **95%** workforce reduction, and exploring strategic alternatives like acquisition, merger, or asset sale[26](index=26&type=chunk) - The company also provided notice to terminate the Cooperative Research and Development Agreement (CRADA) with the National Cancer Institute (NCI), effective **October 13, 2023**[26](index=26&type=chunk) [Our TCR-T Library Phase 1/2 Trial Approach](index=11&type=section&id=Our%20TCR-T%20Library%20Phase%201%2F2%20Trial%20Approach) The TCR-T Library Phase 1/2 Trial evaluated **12** TCRs targeting KRAS, TP53, and EGFR mutations, offering advantages over CAR-T and TIL therapies by targeting intracellular neoantigens with defined specificity - The TCR-T program targeted shared hotspot mutations (KRAS, TP53, EGFR) using a TCR library and the proprietary non-viral Sleeping Beauty Gene Transfer Platform[36](index=36&type=chunk) - Potential advantages over CAR-T included targeting intracellular neoantigens, and over TIL, defined target specificity from genetic engineering[34](index=34&type=chunk) - The hunTR® (human neoantigen T cell Receptor) Discovery Engine was used to rapidly identify new TCRs for the library[36](index=36&type=chunk) [Background on TCRs](index=11&type=section&id=Background%20on%20TCRs) The strategy involved targeting neoantigens, immunogenic peptides from tumor-specific mutated genes, presented by the HLA system, to overcome immune suppression and tumor heterogeneity using a banked TCR library - The strategy was to target genomic instability in cancer with TCRs, recognizing neoantigens presented by the HLA system[35](index=35&type=chunk)[37](index=37&type=chunk) - Neoantigens are derived from tumor-specific mutated genes, often unique to each patient, but driver mutations in hotspots (like KRAS, TP53, EGFR) are shared, allowing for a pre-prepared TCR library[40](index=40&type=chunk) [Our Approach to Targeting Neoantigens](index=13&type=section&id=Our%20Approach%20to%20Targeting%20Neoantigens) The approach involved genetically modifying peripheral blood-derived T cells to express tumor-specific TCRs, addressing inter-tumor and intra-tumor heterogeneity to overcome antigen-escape variants and limited patient eligibility - The approach involved genetically modifying peripheral blood-derived T cells to express TCRs specific to tumor-derived neoantigens[42](index=42&type=chunk) - The goal was to address inter-tumor heterogeneity (not all tumors express the target) and intra-tumor heterogeneity (not all cells within a tumor express the target) to prevent antigen-escape variants[41](index=41&type=chunk) - TCR-T cells included effector and memory T cells, with some being T memory stem cells, which have high growth potential and capacity for renewal[43](index=43&type=chunk) [Our TCR-T Manufacturing Process](index=14&type=section&id=Our%20TCR-T%20Manufacturing%20Process) The manufacturing process involved screening patients for neoantigens and HLA types, collecting white blood cells, and using Sleeping Beauty technology to modify and expand T cells into patient-specific products - The process involved screening patients for KRAS, TP53, and EGFR hotspot mutations and HLA alleles, then matching them to TCRs in the library[45](index=45&type=chunk) - Patient's peripheral blood T cells were genetically modified using the non-viral Sleeping Beauty technology and expanded to produce autologous TCR-T cell products[46](index=46&type=chunk) - The in-house cGMP manufacturing facility in Houston, Texas, was used for production, allowing for integration of R&D and potentially reducing time from discovery to clinical trials[45](index=45&type=chunk)[59](index=59&type=chunk) [Benefits of Our Non-Viral Sleeping Beauty Gene Transfer Platform](index=14&type=section&id=Benefits%20of%20Our%20Non-Viral%20Sleeping%20Beauty%20Gene%20Transfer%20Platform) The Sleeping Beauty platform offered scalability, reduced complexity, customizable therapies, accommodation of large transgenes, and potential for durable clinical benefits and increased T-cell persistence - The Sleeping Beauty platform offered scalability and reduced manufacturing complexity compared to traditional viral gene transfer, requiring only DNA plasmids as starting material[47](index=47&type=chunk) - It enabled customizable therapies by allowing a library of TCRs to address diverse mutations and HLA types, supporting both Library TCR-T and personalized TCR approaches[49](index=49&type=chunk) - Potential clinical benefits included durable anti-tumor activity, integration into genomic safe harbors, and increased T-cell persistence with membrane-bound interleukin-15 (mbIL-15) co-expression[53](index=53&type=chunk) [Preclinical and Clinical Development](index=16&type=section&id=Preclinical%20and%20Clinical%20Development) Preclinical studies validated TCR specificity, and the Phase 1/2 trial treated **eight** patients, showing general tolerability, no DLTs, and an objective partial response in one NSCLC patient, establishing proof-of-concept - Preclinical data showed selected TCRs specifically recognized mutated targets without off-target effects, and mbIL-15 co-expression increased in vitro survival of TCR-T cells[50](index=50&type=chunk)[51](index=51&type=chunk) - The TCR-T Library Phase 1/2 Trial treated **eight** patients with pancreatic, colorectal, and non-small cell lung cancers, showing general tolerability with no DLTs or ICANS[27](index=27&type=chunk)[52](index=52&type=chunk) - One NSCLC patient achieved an objective partial response with **six months** progression-free survival, and **six** others achieved stable disease, resulting in a **13%** overall response rate and **87%** disease control rate[28](index=28&type=chunk)[55](index=55&type=chunk) [Manufacturing](index=18&type=section&id=Manufacturing) In **2023**, the Houston cGMP facility manufactured TCR-T cells for early-stage trials, but was closed in **November 2023**, with personnel laid off by **September 2023**, as part of strategic reprioritization - The cGMP facility in Houston was operational in **2023** for manufacturing TCR-T cells for early-stage clinical trials, with DNA plasmids sourced from third parties[58](index=58&type=chunk) - The facility was closed in **November 2023**, and all manufacturing personnel were laid off by **September 2023**, following the strategic reprioritization[58](index=58&type=chunk) - The company had doubled manufacturing capacity in **2022** and filed an IND amendment to use cryopreserved products, aiming to reduce process time and increase flexibility[59](index=59&type=chunk) [IL-12 Program](index=19&type=section&id=IL-12%20Program) The Controlled IL-12 clinical program for recurrent glioblastoma multiforme was wound down, with assets returned to Precigen, Inc. on **April 4, 2023**, as part of a strategic shift - The Controlled IL-12 clinical program for recurrent glioblastoma multiforme was wound down[61](index=61&type=chunk) - On **April 4, 2023**, the IL-12 assets were returned to Precigen, Inc. via an Amended and Restated Exclusive License Agreement[61](index=61&type=chunk) [Intellectual Property](index=20&type=section&id=Intellectual%20Property) The IP strategy focused on patent and trade secret protection; as of **December 31, 2023**, **six** patent application families were pending, with no granted patents, relying on licenses from Precigen, MD Anderson, and formerly NCI - As of **December 31, 2023**, the company had **six** families of pending patent applications covering its TCR-T library, products, and processes, but no granted patents[63](index=63&type=chunk) - The company relies on trade secret protection and confidentiality agreements for unpatentable know-how and inventions[66](index=66&type=chunk) - Key license agreements included an exclusive license with PGEN Therapeutics (Precigen) for TCR products and Sleeping Beauty technology, and agreements with MD Anderson for various cellular therapy approaches[68](index=68&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) - The Patent License with the NCI for TCRs reactive to mutated KRAS, TP53, and EGFR neoantigens was terminated effective **December 26, 2023**[84](index=84&type=chunk)[89](index=89&type=chunk) - The Cooperative Research and Development Agreement (CRADA) with the NCI, aimed at advancing personalized TCR-T approaches, was terminated effective **October 13, 2023**[90](index=90&type=chunk)[96](index=96&type=chunk) [Governmental Regulation and Product Approval](index=26&type=section&id=Governmental%20Regulation%20and%20Product%20Approval) Alaunos Therapeutics, as a biopharmaceutical company, is subject to extensive FDA regulation for its biologic T-cell product candidates, involving rigorous preclinical testing, multi-phase clinical trials, BLA submission, and post-approval requirements, alongside complex rules for exclusivity, pricing, reimbursement, and healthcare fraud laws - Genetically engineered T-cell product candidates are regulated as biologics by the FDA, requiring compliance with cGMPs and submission of a Biologics License Application (BLA) for marketing authorization[98](index=98&type=chunk)[99](index=99&type=chunk) - The U.S. product development process involves preclinical testing, IND submission, multi-phase clinical trials (Phase 1, 2, 3), BLA submission, FDA inspections, and user fees[103](index=103&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Post-approval, products are subject to continuous FDA regulation, including record-keeping, adverse event reporting, and compliance with cGMP, with potential for product withdrawal or penalties for non-compliance[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Regulatory incentives include **12 years** of data exclusivity for reference biologics, pediatric exclusivity, and orphan drug designation for rare diseases, which grants **seven years** of market exclusivity[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - Commercial success depends on coverage and adequate reimbursement from third-party payors, which are increasingly challenging product prices and medical necessity[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The company is subject to federal and state healthcare laws, including the Anti-Kickback Statute, False Claims Act, HIPAA, and Physician Payments Sunshine Act, which regulate interactions with healthcare providers and can result in substantial penalties for non-compliance[137](index=137&type=chunk) - Healthcare reform efforts, such as the ACA and the Inflation Reduction Act (IRA), aim to contain costs and impact drug pricing and reimbursement, potentially affecting the pharmaceutical industry significantly[141](index=141&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) - International operations are subject to anti-corruption laws like the FCPA and U.K. Bribery Act, and trade control laws, with non-compliance leading to criminal and civil penalties[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) [Competition](index=40&type=section&id=Competition) The oncology market is highly competitive, with Alaunos' TCR-T cell therapies facing competition from various companies and institutions developing TCR, CAR, neoantigen vaccine, non-viral gene, and traditional cancer treatments, with efficacy, safety, administration, price, and reimbursement as key factors - The oncology market is highly competitive, with major pharmaceutical, biotechnology, and specialty cancer companies, as well as academic institutions, conducting research[152](index=152&type=chunk) - Alaunos' TCR-T cell therapies faced competition from companies developing TCR and CAR technologies, neoantigen vaccine platforms, non-viral gene therapies (including CRISPR), and allogeneic CAR-T therapies[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Competition also came from more common, cost-effective, and reimbursable non-cellular treatments like surgery, radiation, chemotherapy, and biologic therapies[156](index=156&type=chunk) - Key competitive factors for TCR-T candidates include efficacy, safety, ease of administration, price, and insurance/government reimbursement[157](index=157&type=chunk) [Employees and Human Capital Resources](index=42&type=section&id=Employees%20and%20Human%20Capital%20Resources) As of **March 1, 2024**, the company had only **one** full-time employee after a significant workforce reduction, with human capital objectives focused on recruitment, retention, and incentivization, amidst recent executive departures and consulting agreements - As of **March 1, 2024**, the company had only **1** full-time employee, following a significant workforce reduction[158](index=158&type=chunk) - Human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating employees, with equity incentive plans used for compensation[158](index=158&type=chunk)[160](index=160&type=chunk) - Key personnel changes included the termination of CEO Kevin S. Boyle, Sr. (followed by a consulting agreement), termination of Melinda Lackey (SVP, Legal and Administration) and Drew Deniger (VP, R&D) (both with separation and Lackey with a consulting agreement), and the resignation of Michael Wong (VP, Finance), replaced by Ferdinand Groenewald as VP, Finance via a consulting agreement[163](index=163&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) [Corporate Information](index=46&type=section&id=Corporate%20Information) Alaunos Therapeutics, Inc. was incorporated in Colorado in **1998**, re-incorporated in Delaware in **2005**, became Ziopharm Oncology, Inc. in **2005**, and changed to its current name on **January 25, 2022**, with principal offices in Houston, Texas - The company was originally incorporated in Colorado in **1998**, re-incorporated in Delaware in **2005**, and became Ziopharm Oncology, Inc. after a reverse acquisition in **2005**[175](index=175&type=chunk) - The name was changed to Alaunos Therapeutics, Inc. on **January 25, 2022**[175](index=175&type=chunk) - Principal executive offices are located at **2617 Bissonnet Street, Suite 225, Houston, Texas 77005**[176](index=176&type=chunk) [Available Information](index=46&type=section&id=Available%20Information) The company's website, **www.alaunos.com**, provides free access to SEC filings (10-K, 10-Q, 8-K), which are also available on **www.sec.gov** - Company's website (**www.alaunos.com**) provides free access to SEC filings (10-K, 10-Q, 8-K)[177](index=177&type=chunk) - SEC filings are also available on the SEC's website (**www.sec.gov**)[177](index=177&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including potential failure of strategic reprioritization, need for additional financing, Nasdaq delisting, challenges in clinical development, IP protection, and market competition, which could materially affect the company's business and prospects - An investment in the company's common stock is risky, and investors should carefully consider the risk factors[179](index=179&type=chunk) - Additional risks not currently known or deemed immaterial may also affect the business[179](index=179&type=chunk) [RISKS RELATED TO OUR STRATEGIC REPRIORITIZATION](index=47&type=section&id=RISKS%20RELATED%20TO%20OUR%20STRATEGIC%20REPRIORITIZATION) The strategic reprioritization, including clinical trial wind-down and workforce reduction, may not succeed, potentially leading to dissolution; substantial additional financing is required, which could dilute stockholders, and strategic alternative exploration is costly and uncertain - The strategic reprioritization, including winding down the TCR-T Library Phase 1/2 Trial and a **95%** workforce reduction, may not be successful or yield anticipated benefits[180](index=180&type=chunk)[188](index=188&type=chunk) - The company requires substantial additional financial resources to continue as a going concern, with current cash sufficient only into **Q3 2024**, and future funding may dilute existing stockholders[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - Failure to consummate a strategic transaction could lead to dissolution and liquidation, with uncertain cash distribution to stockholders[198](index=198&type=chunk) - The ability to complete a strategic transaction depends on retaining remaining employees and consultants, and the corporate restructuring may not result in anticipated savings or could disrupt business[199](index=199&type=chunk)[200](index=200&type=chunk) [RISKS RELATED TO OUR BUSINESS](index=53&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) Key business risks include Nasdaq delisting, lack of shareholder approval for a second reverse stock split, stock price volatility, challenges in TCR-T therapy development, personnel recruitment, internal controls, and the impact of NCI license terminations and potential loss of other agreements - The company received a Nasdaq Delisting Determination in **2023**, and while compliance was regained via a reverse stock split, it remains under mandatory panel monitoring until **February 2025**, with risks of future delisting[205](index=205&type=chunk)[206](index=206&type=chunk) - Delisting could adversely affect stock price, liquidity, and ability to consummate strategic transactions[207](index=207&type=chunk)[208](index=208&type=chunk) - The company lacks shareholder approval for a second reverse stock split, which may be needed if it fails to comply with the Minimum Bid Price Rule during the monitor period[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - The development of non-viral adoptive TCR-T cell therapies is a new approach with significant challenges, including regulatory approval, clinical trial design, and manufacturing[221](index=221&type=chunk) - The recent termination of NCI licenses and potential termination of agreements with Precigen or MD Anderson could result in the loss of significant rights and harm product development[225](index=225&type=chunk)[226](index=226&type=chunk) - The company has a limited operating history, making it difficult to evaluate business prospects and commercialization capabilities[234](index=234&type=chunk) - Reliance on information technology and the risk of cybersecurity incidents could compromise sensitive information and disrupt operations[243](index=243&type=chunk)[245](index=245&type=chunk) [RISKS RELATED TO THE CLINICAL TESTING, GOVERNMENT REGULATION AND MANUFACTURING OF OUR PRODUCT CANDIDATES](index=63&type=section&id=RISKS%20RELATED%20TO%20THE%20CLINICAL%20TESTING%2C%20GOVERNMENT%20REGULATION%20AND%20MANUFACTURING%20OF%20OUR%20PRODUCT%20CANDIDATES) Resuming clinical development faces hurdles like patient enrollment, costly regulatory processes, and early-stage trial risks; manufacturing challenges include sole-source vendors, limited large-scale experience, and gene transfer vector risks, while post-marketing products could face restrictions or withdrawal - Should clinical development resume, patient enrollment may be difficult due to competition, patient unwillingness, and the limited number of qualified investigators[249](index=249&type=chunk)[250](index=250&type=chunk) - Product candidates are subject to extensive, costly, and time-consuming regulation, with no guarantee of FDA approval, which can be delayed or denied for various reasons[252](index=252&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The company halted development early; resuming clinical trials is expensive and time-consuming, with no certainty of BLA submission or approval[258](index=258&type=chunk)[263](index=263&type=chunk) - Product candidates may cause undesirable side effects, potentially delaying approval, limiting commercial profile, or leading to post-marketing consequences like withdrawal or lawsuits[264](index=264&type=chunk)[265](index=265&type=chunk) - Manufacturing relies on sole-source or limited vendors for reagents and equipment, posing risks of delays or inability to supply products if activities resume[267](index=267&type=chunk)[268](index=268&type=chunk) - The company has limited experience in large-scale biopharmaceutical manufacturing, and difficulties in consistently producing products to specifications or in sufficient quantities could arise[273](index=273&type=chunk)[276](index=276&type=chunk) - The Sleeping Beauty gene transfer system carries a theoretical risk of insertional oncogenesis, potentially triggering new cancers or other adverse events[283](index=283&type=chunk) - Approved products could face post-marketing restrictions, withdrawal, or penalties for non-compliance with regulatory requirements or unanticipated problems[284](index=284&type=chunk)[286](index=286&type=chunk) [RISKS RELATED TO OUR ABILITY TO COMMERCIALIZE OUR PRODUCT CANDIDATES](index=75&type=section&id=RISKS%20RELATED%20TO%20OUR%20ABILITY%20TO%20COMMERCIALIZE%20OUR%20PRODUCT%20CANDIDATES) Commercialization of product candidates is highly uncertain due to lack of sales capabilities, uncertain physician/patient acceptance, limited market opportunities, and the adverse impact of healthcare reforms on pricing and reimbursement, alongside substantial penalty risks from non-compliance with fraud and abuse laws - Inability to obtain necessary U.S. or worldwide regulatory approvals would severely undermine the business by preventing product commercialization and revenue generation[288](index=288&type=chunk) - The company currently lacks marketing, sales, and distribution capabilities and may be unable to create them or enter into successful third-party agreements[290](index=290&type=chunk)[292](index=292&type=chunk) - Physician and patient acceptance of engineered T cells as cancer treatments is uncertain and depends on factors like efficacy, safety, cost-effectiveness, and reimbursement[294](index=294&type=chunk) - Product revenues will be diminished if products do not obtain coverage and adequate reimbursement from third-party payors, who are increasingly focused on cost containment[296](index=296&type=chunk)[298](index=298&type=chunk)[300](index=300&type=chunk) - Market opportunities may be limited to patients ineligible for or who have failed prior treatments, potentially restricting the addressable patient population[302](index=302&type=chunk)[304](index=304&type=chunk) - Healthcare legislative reforms (e.g., ACA, IRA) and increased scrutiny on drug pricing could lead to more rigorous coverage criteria and downward pressure on product prices[305](index=305&type=chunk)[306](index=306&type=chunk)[309](index=309&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) - Failure to comply with federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) could result in substantial penalties and materially adverse effects on the business[313](index=313&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) - Immuno-oncology product candidates may face future competition from biosimilars and new technologies, potentially shortening exclusivity periods[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [RISKS RELATED TO OUR INTELLECTUAL PROPERTY](index=85&type=section&id=RISKS%20RELATED%20TO%20OUR%20INTELLECTUAL%20PROPERTY) The company's success depends on protecting and enforcing IP rights, which is challenging due to uncertain patent prosecution and litigation, reliance on licensed IP, and risks from trade secret failure, infringement claims, and non-compliance with patent agency requirements - Failure to adequately protect or enforce intellectual property rights, or secure rights to others' patents, would diminish IP value and materially impair product development and strategic transactions[321](index=321&type=chunk) - The company is dependent on licensors (MD Anderson, Precigen) for patent preparation, filing, and prosecution, and cannot guarantee their comments will be solicited or implemented[322](index=322&type=chunk) - The patent position in biotechnology is highly uncertain, involves complex legal questions, and is subject to litigation and changes in patent laws, potentially narrowing protection[323](index=323&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - Inability to protect confidential information and trade secrets would significantly harm the business and competitive position[330](index=330&type=chunk) - Third-party claims of intellectual property infringement are costly, divert management, and could prevent product development or commercialization, potentially requiring substantial damages or licenses[331](index=331&type=chunk)[332](index=332&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) - Maintaining patent protection requires compliance with various procedural and fee payment requirements; noncompliance can lead to loss of patent rights[339](index=339&type=chunk) - Failure to obtain needed licenses or comply with existing license obligations could result in termination of licenses or claims for damages, materially affecting the business[342](index=342&type=chunk) - The company may be subject to claims of misappropriating third-party intellectual property or disputes over ownership of its own IP, leading to costly litigation[345](index=345&type=chunk)[346](index=346&type=chunk) [OTHER RISKS RELATED TO OUR COMPANY](index=91&type=section&id=OTHER%20RISKS%20RELATED%20TO%20OUR%20COMPANY) The company's stock price is volatile, influenced by strategic decisions and market conditions; anti-takeover provisions and exclusive forum clauses may limit stockholder actions, while dividend expectations are low, NOL/R&D credit usage may be limited, activist stockholders pose disruption risks, and 'smaller reporting company' status may deter investors - The company's stock price is volatile and can fluctuate significantly due to strategic decisions, operating results, market conditions, clinical trial outcomes, and analyst coverage[348](index=348&type=chunk)[350](index=350&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult, even if beneficial to stockholders[353](index=353&type=chunk) - Exclusive forum provisions in bylaws may limit stockholders' ability to obtain a favorable judicial forum for disputes[355](index=355&type=chunk) - The company does not expect to pay dividends, meaning investors will only realize income from selling shares at a profit[358](index=358&type=chunk) - The ability to use net operating loss carryforwards (NOLs) and research tax credits (R&D credits) to reduce future tax payments may be limited by ownership changes under Sections 382 and 383 of the Code[359](index=359&type=chunk)[360](index=360&type=chunk) - Activist stockholders could disrupt business operations and strategic plans, potentially making transactions more difficult[364](index=364&type=chunk)[366](index=366&type=chunk) - The exercise of outstanding warrants and issuance of equity awards may have a dilutive effect on common stock[367](index=367&type=chunk) - Concentrated ownership by principal stockholders, executive officers, and directors may prevent other stockholders from influencing significant corporate decisions[368](index=368&type=chunk) - As a 'smaller reporting company,' reduced disclosure requirements may make its common stock less attractive to investors, potentially leading to a less active trading market and more volatile prices[369](index=369&type=chunk) [Item 1B. Unresolved Staff Comments](index=97&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[373](index=373&type=chunk) [Item 1C. Cybersecurity](index=99&type=section&id=Item%201C.%20Cybersecurity) The company maintains a risk-based cybersecurity program with safeguards and an incident response plan, reporting to the Board; no material incidents have occurred, but timely detection and adequate security cannot be guaranteed due to evolving threats - The company has a cybersecurity program with safeguards like password protection, multi-factor authentication, and monitoring systems[374](index=374&type=chunk) - An incident response program is maintained, with designated personnel for assessing, containing, and remediating threats, and reporting to the Board of Directors[376](index=376&type=chunk)[377](index=377&type=chunk)[379](index=379&type=chunk) - As of the report date, no material cybersecurity incidents have affected the business, but the evolving nature of threats means timely detection and adequate security measures cannot be guaranteed[381](index=381&type=chunk) [Item 2. Properties](index=99&type=section&id=Item%202.%20Properties) The company's corporate office is in Houston, Texas, with existing facilities deemed adequate for current needs - The corporate office is located in Houston, Texas, and existing facilities are deemed adequate for current needs[382](index=382&type=chunk) [Item 3. Legal Proceedings](index=101&type=section&id=Item%203.%20Legal%20Proceedings) The company has no pending litigation with a material adverse effect; a litigation with KBI Biopharma, Inc. was settled for **$1.0 million** in **October 2023** - The company has no pending litigation that is reasonably likely to have a material adverse effect on its business[385](index=385&type=chunk) - A breach of contract litigation with KBI Biopharma, Inc. was settled for **$1.0 million** in **October 2023**, with all claims dismissed[386](index=386&type=chunk) [Item 4. Mine Safety Disclosures](index=101&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[387](index=387&type=chunk) [PART II](index=102&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=102&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (**TCRT**) trades on Nasdaq Capital Market, with approximately **167** record holders as of **March 18, 2024**; no cash dividends have been paid or are anticipated, and no unregistered sales or repurchases occurred in **Q4 2023** - Common stock trades on the Nasdaq Capital Market under the symbol '**TCRT**'[390](index=390&type=chunk) - As of **March 18, 2024**, there were approximately **167** record holders of common stock[390](index=390&type=chunk) - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future[391](index=391&type=chunk) - No unregistered sales of equity securities or repurchases of common stock occurred during the three months ended **December 31, 2023**[392](index=392&type=chunk)[393](index=393&type=chunk) [Item 6. [Reserved]](index=102&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[394](index=394&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=103&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews the company's financial condition and operations, detailing its history of net losses, the **August 2023** strategic reprioritization, decreased **2023** revenue and R&D expenses, increased restructuring and impairment costs, and substantial doubt about its going concern ability with cash projected only into **Q3 2024** - The company has incurred significant net losses since inception, with a net loss of **$35.1 million** in **2023** and an accumulated deficit of **$915.8 million**[398](index=398&type=chunk) - A strategic reprioritization in **August 2023** led to winding down the TCR-T Library Phase 1/2 Trial, workforce reduction, and exploration of strategic alternatives[399](index=399&type=chunk) - The company's cash resources are anticipated to fund operations only into the **third quarter of 2024**, raising substantial doubt about its ability to continue as a going concern[427](index=427&type=chunk)[428](index=428&type=chunk)[446](index=446&type=chunk) [Overview](index=103&type=section&id=Overview) Alaunos Therapeutics, a clinical-stage oncology company, initiated a strategic reprioritization in **August 2023**, winding down its TCR-T Library Phase 1/2 Trial, reducing its workforce, and exploring strategic alternatives due to persistent net losses and high operating expenditures - The company was a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapy for solid tumors[397](index=397&type=chunk) - In **August 2023**, a strategic reprioritization was announced, including winding down the TCR-T Library Phase 1/2 Trial and workforce reduction to extend cash runway[399](index=399&type=chunk) - The company has incurred significant net losses since inception, with a **$35.1 million** net loss in **2023** and an accumulated deficit of **$915.8 million**[398](index=398&type=chunk) [2023 Developments](index=103&type=section&id=2023%20Developments) In **2023**, the TCR-T Library Phase 1/2 Trial treated **eight** patients, showing proof-of-concept with an objective partial response, but was wound down due to high costs; strategic alternatives are being explored, the workforce was reduced, NCI agreements terminated, and Nasdaq compliance regained but remains under monitoring - **Eight** patients were treated in the TCR-T Library Phase 1/2 Trial, showing general tolerability and an objective partial response in one NSCLC patient, establishing proof-of-concept[400](index=400&type=chunk)[401](index=401&type=chunk) - The trial was wound down in **August 2023** due to substantial development costs and the financing environment, despite encouraging data[402](index=402&type=chunk) - The company discovered multiple proprietary TCRs through its hunTR® platform, targeting driver mutations[403](index=403&type=chunk)[405](index=405&type=chunk) - Strategic alternatives are being explored, and the workforce was reduced by approximately **95%** to streamline operations and extend cash runway[406](index=406&type=chunk) - The company regained compliance with Nasdaq's minimum bid price rule in **February 2024** after a delisting determination, but is subject to a mandatory panel monitor until **February 16, 2025**[407](index=407&type=chunk) [Financial Overview](index=105&type=section&id=Financial%20Overview) The company has no product revenue and anticipates continued net losses; collaboration revenue is recognized over performance, R&D expenses cover personnel, manufacturing, and clinical trials, G&A expenses include salaries and professional fees, restructuring costs are severance, and other income/expense includes interest and sublease income - No product revenue has been generated, and significant net losses are expected to continue[408](index=408&type=chunk) - Research and development expenses include salaries, contract manufacturing, facilities, reagents, and clinical trial fees[409](index=409&type=chunk) - General and administrative expenses cover salaries, benefits, stock-based compensation, and professional fees[410](index=410&type=chunk) - Restructuring costs consist of severance for terminated employees[411](index=411&type=chunk) - Other income (expense) primarily includes interest expense, interest income, and sublease income[412](index=412&type=chunk) [Results of Operations for the Fiscal Years ended December 31, 2023 and 2022](index=107&type=section&id=Results%20of%20Operations%20for%20the%20Fiscal%20Years%20ended%20December%2031%2C%202023%20and%202022) In **2023**, the company reported a net loss of **$35.1 million**, an improvement from **$37.7 million** in **2022**, with collaboration revenue significantly decreasing, R&D expenses down **35%**, G&A expenses also decreasing, but restructuring costs and impairment charges increasing due to strategic reprioritization Statements of Operations Summary (in thousands) | Metric | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Collaboration revenue | $5 | $2,922 | | Research and development expenses | $16,279 | $25,018 | | General and administrative expenses | $12,219 | $13,142 | | Gain on lease modification and termination | $(298) | $(133) | | Restructuring costs | $1,269 | $— | | Property and equipment and right-of-use assets impairment | $4,803 | $— | | Total operating expenses | $34,272 | $38,027 | | Loss from operations | $(34,267) | $(35,105) | | Interest expense | $(1,921) | $(3,154) | | Other income (expense), net | $1,048 | $529 | | Net loss | $(35,140) | $(37,730) | - Collaboration revenue decreased by **$2.9 million (100%)** in **2023**, primarily due to a non-recurring milestone revenue from the Solasia License and Collaboration Agreement in **2022**[414](index=414&type=chunk) - Research and development expenses decreased by **$8.7 million (35%)** in **2023**, driven by lower program expenses, a **$3.0 million** decrease in employee-related expenses, and a **$2.5 million** milestone payment in **2022** that did not recur[415](index=415&type=chunk) - General and administrative expenses decreased by **$0.9 million (7%)** in **2023**, mainly due to reduced headcount and lower insurance fees, partially offset by higher legal costs[417](index=417&type=chunk)[418](index=418&type=chunk)[419](index=419&type=chunk) - Restructuring costs of **$1.3 million** were incurred in **2023** due to severance expenses for terminated employees related to the strategic reprioritization[421](index=421&type=chunk) - Property and equipment and right-of-use asset impairments of **$4.8 million** were recorded in **2023** following the strategic reprioritization[422](index=422&type=chunk) - Total other expense, net, decreased by **$1.8 million (67%)** in **2023**, primarily due to lower interest expense and increased interest income from higher rates on cash balances[423](index=423&type=chunk) [Liquidity and Capital Resources](index=109&type=section&id=Liquidity%20and%20Capital%20Resources) The company, historically financed by equity and debt, has incurred net losses and negative cash flows; as of **December 31, 2023**, cash and equivalents were **$6.1 million**, projected to fund operations only into **Q3 2024**, raising substantial doubt about its going concern ability, with significant cash used for debt repayment and high operating cash usage, and most leases and NCI licenses terminated in **2023** - The company has not generated product sales revenue and has incurred net losses and negative cash flows from operations since inception[425](index=425&type=chunk) - As of **December 31, 2023**, cash and cash equivalents were **$6.1 million**, and resources are expected to fund operations only into **Q3 2024**, indicating substantial doubt about going concern[446](index=446&type=chunk) - Net cash used in operating activities was **$30.1 million** in **2023**, compared to **$29.2 million** in **2022**[439](index=439&type=chunk) - Net cash used in financing activities was **$18.1 million** in **2023**, primarily due to **$18.1 million** in long-term debt repayment, contrasting with **$6.4 million** provided in **2022** from equity issuance[441](index=441&type=chunk) - The company repaid all outstanding obligations under its Loan and Security Agreement with SVB on **May 1, 2023**[437](index=437&type=chunk) - All operating leases were terminated as of **December 31, 2023**, with no remaining lease commitments other than a short-term lease[452](index=452&type=chunk) - The Patent License with the NCI was terminated effective **December 26, 2023**, and the CRADA with the NCI was terminated effective **October 13, 2023**[454](index=454&type=chunk)[455](index=455&type=chunk)[457](index=457&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[463](index=463&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk)[466](index=466&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk)[471](index=471&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk)[474](index=474&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk) [Critical Accounting Policies and Significant Estimates](index=117&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) Financial statement preparation requires significant management estimates and judgments, particularly for R&D costs, collaboration revenue, stock-based compensation fair value, and income taxes, which are subject to change and could materially impact reported results - Significant estimates and judgments are required for research and development costs, collaboration revenue recognition, fair value of stock-based compensation, and income taxes[459](index=459&type=chunk)[461](index=461&type=chunk) - Accrued R&D expenses are estimated based on open contracts, purchase orders, and communication with vendors, with potential for adjustments if actual services or timing vary[460](index=460&type=chunk)[462](index=462&type=chunk)[464](index=464&type=chunk) - Revenue from collaboration agreements is recognized under ASC 606, involving identifying performance obligations, determining transaction price (including variable consideration like milestones), and allocating revenue based on standalone selling prices[465](index=465&type=chunk)[466](index=466&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk) - Stock-based compensation is measured at grant date fair value using the Black-Scholes model, requiring estimates for expected term, volatility, and risk-free interest rate[472](index=472&type=chunk)[477](index=477&type=chunk) - Income tax liability involves estimating current tax expense and assessing temporary differences for deferred tax assets and liabilities, with a valuation allowance established when realization is not probable[473](index=473&type=chunk)[474](index=474&type=chunk) [Recent Accounting Pronouncements](index=121&type=section&id=Recent%20Accounting%20Pronouncements) The company adopted **ASU 2016-13** effective **January 1, 2023**, with no material impact, and is evaluating **ASU 2023-07** and **ASU 2023-09**, effective for fiscal years beginning after **December 15, 2023**, and **2024**, respectively - Adopted **ASU 2016-13** (Financial Instruments: Credit Losses) effective **January 1, 2023**, with no material impact[607](index=607&type=chunk) - Evaluating **ASU 2023-07** (Segment Reporting), effective for fiscal years beginning after **December 15, 2023**[608](index=608&type=chunk) - Evaluating **ASU 2023-09** (Income Taxes), effective for annual periods beginning after **December 15, 2024**[609](index=609&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=121&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[476](index=476&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=123&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item incorporates financial statements and supplementary data from pages F-1 through F-25, with all share numbers and prices adjusted for the **1-for-15** reverse stock split effective **January 31, 2024** - Financial statements and supplementary data are incorporated by reference from pages **F-1** through **F-25**[479](index=479&type=chunk) - All share numbers and prices reflect the **1-for-15** reverse stock split effective **January 31, 2024**[479](index=479&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=123&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) There have been no changes in or disagreements with accountants on accounting and financial disclosures - No changes in or disagreements with accountants on accounting and financial disclosures[480](index=480&type=chunk) [Item 9A. Controls and Procedures](index=123&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of **December 31, 2023**, management concluded disclosure controls and internal control over financial reporting were effective, though inherent limitations mean reasonable, not absolute, assurance; no material changes occurred in **Q4 2023** - As of **December 31, 2023**, disclosure controls and procedures were evaluated and deemed effective[481](index=481&type=chunk) - Management maintained effective internal control over financial reporting as of **December 31, 2023**, based on the COSO framework[484](index=484&type=chunk) - Internal control systems have inherent limitations, providing only reasonable, not absolute, assurance against errors or fraud[485](index=485&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended **December 31, 2023**[489](index=489&type=chunk) [Item 9B. Other Information](index=125&type=section&id=Item%209B.%20Other%20Information) No director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during **Q4 2023** - No director or Section 16 officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during **Q4 2023**[490](index=490&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=125&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) There are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections[491](index=491&type=chunk) [PART III](index=126&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=126&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the **2024** Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the **2024** Proxy Statement[494](index=494&type=chunk) [Item 11. Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the **2024** Proxy Statement - Information on executive compensation is incorporated by reference from the **2024** Proxy Statement[495](index=495&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the **2024** Proxy Statement - Information on security ownership and related stockholder matters is incorporated by reference from the **2024** Proxy Statement[496](index=496&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=126&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the **2024** Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the **2024** Proxy Statement[497](index=497&type=chunk) [Item 14. Principal Accountant Fees and Services](index=126&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the **2024** Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the **2024** Proxy Statement[498](index=498&type=chunk) [PART IV](index=127&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=127&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and exhibits, including the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, Notes to Financial Statements, and a comprehensive exhibit list - The financial statements include the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements[501](index=501&type=chunk) - Financial statement schedules are omitted as they are not applicable or included in the financial statements and notes[502](index=502&type=chunk) - A comprehensive list of exhibits, including agreements, plans, and certifications, is provided[502](index=502&type=chunk) [Item 16. Form 10-K Summary](index=133&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[510](index=510&type=chunk) [Signatures](index=134&type=section&id=SIGNATURES) The report is signed on behalf of Alaunos Therapeutics, Inc. by Dale Curtis Hogue, Jr. (Interim CEO, PEO, PFO) and Ferdinand Groenewald (VP, Finance, PAO), along with other directors, on **April 1, 2024** - The report is signed by Dale Curtis Hogue, Jr. (Interim CEO, PEO, PFO) and Ferdinand Groenewald (VP, Finance, PAO) on **April 1, 2024**[515](index=515&type=chunk)[516](index=516&type=chunk) [Index to Financial Statements](index=135&type=section&id=INDEX%20TO%20FINANCIAL%20STATEMENTS) This section provides an index to the financial statements, including the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements - The index lists the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements[518](index=518&type=chunk) [Report of Independent Registered Public Accounting Firm](index=136&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) RSM US LLP issued an unqualified opinion on the financial statements for **December 31, 2023** and **2022**, but noted substantial doubt about the company's going concern ability due to recurring losses and capital needs; clinical trial accruals were identified as a critical audit matter - RSM US LLP issued an unqualified opinion on the financial statements for **December 31, 2023** and **2022**[521](index=521&type=chunk) - The auditors noted substantial doubt about the company's ability to continue as a going concern due to recurring losses and the need for additional capital[522](index=522&type=chunk) - The critical audit matter was identified as accruals for clinical trials and other research and development expenses, due to the complexity of estimation and potential delays in invoicing[527](index=527&type=chunk)[528](index=528&type=chunk) [Balance Sheets](index=139&type=section&id=BALANCE%20SHEETS) The balance sheets show total assets decreased from **$64.9 million** in **2022** to **$8.3 million** in **2023**, driven by reduced cash and impaired assets; total liabilities decreased from **$26.4 million** to **$2.0 million** due to debt repayment, and stockholders' equity decreased from **$38.6 million** to **$6.3 million** Balance Sheet Summary (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $6,062 | $39,058 | | Restricted cash | $— | $13,938 | | Total current assets | $8,261 | $53,799 | | Property and equipment, net | $2 | $8,460 | | Right-of-use assets | $— | $2,136 | | Total assets | $8,263 | $64,937 | | Accounts payable | $616 | $1,389 | | Current portion of long-term debt | $— | $16,765 | | Accrued expenses | $1,340 | $5,454 | | Total current liabilities | $1,956 | $24,166 | | Total liabilities | $1,956 | $26,382 | | Total stockholders' equity | $6,307 | $38,555 | - Total assets decreased significantly from **$64.9 million** in **2022** to **$8.3 million** in **2023**, driven by reductions in cash and restricted cash, and impairment of property and equipment[533](index=533&type=chunk) - Total liabilities decreased from **$26.4 million** in **2022** to **$2.0 million** in **2023**, primarily due to the repayment of long-term debt[533](index=533&type=chunk) - Stockholders' equity decreased from **$38.6 million** in **2022** to **$6.3 million** in **2023**, reflecting the net loss[533](index=533&type=chunk) [Statements of Operations](index=140&type=section&id=STATEMENTS%20OF%20OPERATIONS) The statements of operations show a net loss of **$35.1 million** in **2023**, an improvement from **$37.7 million** in **2022**, with minimal collaboration revenue in **2023** (**$5 thousand**) compared to **$2.9 million** in **2022**; operating expenses decreased due to lower R&D and G&A, but were offset by significant restructuring and impairment charges in **2023** Statements of Operations Summary (in thousands) | Metric | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Collaboration revenue | $5 | $2,922 | | Research and development | $16,279 | $25,018 | | General and administrative | $12,219 | $13,142 | | Gain on lease modification and termination | $(298) | $(133) | | Restructuring costs | $1,269 | $— | | Property and equipment and right-of-use assets impairment | $4,803 | $— | | Total operating expenses | $34,272 | $38,027 | | Loss from operations | $(34,267) | $(35,105) | | Interest expense | $(1,921) | $(3,154) | | Other income, net | $1,048 | $529 | | Net loss | $(35,140) | $(37,730) | | Basic and diluted net loss per share | $(2.20) | $(2.61) | | Weighted average common shares outstanding | 15,995,323 | 14,475,354 | - Net loss for **2023** was **$35.1 million**, an improvement from **$37.7 million** in **2022**[536](index=536&type=chunk) - Collaboration revenue decreased significantly from **$2.9 million** in **2022** to **$5 thousand** in **2023**[536](index=536&type=chunk) - Research and development expenses decreased by **35%** to **$16.3 million** in **2023**, while general and administrative expenses decreased by **7%** to **$12.2 million**[536](index=536&type=chunk) - Restructuring costs of **$1.3 million** and property/equipment impairment of **$4.8 million** were recorded in **2023**[536](index=536&type=chunk) [Statements of Changes in Stockholders' Equity](index=141&type=section&id=STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY) Stockholders' equity decreased from **$38.6 million** at **December 31, 2022**, to **$6.3 million** at **December 31, 2023**, primarily due to a net loss of **$35.1 million**, partially offset by **$2.8 million** in stock-based compensation and **$92 thousand** from common stock issuance Stockholders' Equity Summary (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------------ | :------------------ | | Common Stock (Shares) | 16,012,522 | 16,027,384 | | Common Stock (Amount) | $16 | $16 | | Additional Paid-in Capital | $922,058 | $919,166 | | Accumulated Deficit | $(915,767) | $(880,627) | | Total Stockholders' Equity | $6,307 | $38,555 | - Total stockholders' equity decreased from **$38.6 million** in **2022** to **$6.3 million** in **2023**[539](index=539&type=chunk) - The decrease is primarily due to a net loss of **$35.1 million**, partially offset by **$2.8 million** in stock-based compensation and **$92 thousand** from common stock issuance[539](index=539&type=chunk) [Statements of Cash Flows](index=142&type=section&id=STATEMENTS%20OF%20CASH%20FLOWS) Cash flows show a net decrease in cash, cash equivalents, and restricted cash of **$46.9 million** in **2023** (vs. **$23.1 million** in **2022**); operating activities used **$30.1 million**, investing activities provided **$1.3 million**, and financing activities used **$18.1 million** for debt repayment Cash Flow Summary (in thousands) | Metric | 2023 | 2022 | | :------------------------------------------ | :----- | :----- | | Net cash used in operating activities | $(30,142) | $(29,232) | | Net cash provided by (used in) investing activities | $1,346 | $(193) | | Net cash provided by (used in) financing activities | $(18,138) | $6,367 | | Net decrease in cash, cash equivalents and restricted cash | $(46,934) | $(23,058) | | Cash, cash equivalents and restricted cash, end of period | $6,062 | $52,996 | - Net decrease in cash, cash equivalents, and restricted cash was **$46.9 million** in **2023**, significantly higher than **$23.1 million** in **2022**[542](index=542&type=chunk) - Operating activities used **$30.1 million** in cash in **2023**, consistent with the prior year[542](index=542&type=chunk) - Investing activities provided **$1.3 million** in **2023**, primarily from the disposal of property and equipment, a shift from **$0.2 million** used in **2022**[542](index=542&type=chunk)[540](

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) This section provides basic identification details for Alaunos Therapeutics, Inc., including its filing type, incorporation state, and stock exchange listing [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details for Alaunos Therapeutics, Inc., including its filing type (Quarterly Report on Form 10-Q for the period ended September 30, 2023), incorporation state, principal executive offices, and stock exchange listing - The registrant is **Alaunos Therapeutics, Inc.**, a Delaware corporation, filing a **Quarterly Report on Form 10-Q** for the period ended September 30, 2023[2](index=2&type=chunk) Common Stock Listing | Title of each class | Symbol(s) | Name of each exchange on which registered | | :------------------ | :-------- | :---------------------------------------- | | Common Stock | TCRT | The Nasdaq Stock Market LLC | - The company is classified as a **Non-Accelerated Filer** and a **Smaller Reporting Company**[4](index=4&type=chunk) [Outstanding Shares](index=1&type=section&id=Outstanding%20Shares) As of November 9, 2023, the company reported 240,627,055 shares of common stock outstanding - As of November 9, 2023, the number of outstanding shares of the registrant's common stock, $0.001 par value, was **240,627,055 shares**[4](index=4&type=chunk) [Special Note Regarding Forward-Looking Statements](index=2&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements, which are based on management's current beliefs and assumptions but involve risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are identified by terms such as '**anticipate**,' '**believe**,' '**estimate**,' '**expect**,' '**forecast**,' '**intend**,' '**may**,' '**plan**,' '**project**,' '**target**,' '**will**' and other similar words[6](index=6&type=chunk) - These statements are subject to risks, uncertainties, and other factors that may cause actual results to be **materially different** from those expressed or implied[7](index=7&type=chunk) - Key forward-looking statements include the ability to implement **strategic reprioritization**, **raise additional capital**, **consummate strategic transactions**, and **maintain Nasdaq listing**[10](index=10&type=chunk) [Summary of Selected Risks Associated with Our Business](index=3&type=section&id=SUMMARY%20OF%20SELECTED%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) This section provides a high-level overview of significant risks facing the company, including the potential failure of its strategic reprioritization, the need for substantial additional financing, the impact of litigation, the halt in product development, intellectual property concerns, stock price volatility, and Nasdaq delisting - The **strategic reprioritization** may not be successful, and the company may fail to identify or implement any strategic transaction[12](index=12&type=chunk) - **Substantial additional financial resources** are required to continue as a **going concern**, and raising funds may **dilute existing investments**[12](index=12&type=chunk) - The company has **halted development** of its product candidates, which were in early-stage clinical trials, and faces uncertainty regarding future BLA submissions[12](index=12&type=chunk) - The company received a **Delisting Determination from Nasdaq**, which could negatively impact stock trading and strategic transactions[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed financial statements and management's discussion and analysis of the company's financial condition and results of operations [Item 1. Condensed Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Financial%20Statements) This section presents the unaudited condensed financial statements for Alaunos Therapeutics, Inc., including the balance sheets, statements of operations, statements of changes in stockholders' equity, and statements of cash flows, along with comprehensive notes explaining the company's financial position, performance, and significant accounting policies [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) The condensed balance sheets show a significant decrease in total assets and stockholders' equity from December 31, 2022, to September 30, 2023, primarily driven by a reduction in cash and cash equivalents and the accumulated deficit Condensed Balance Sheet Data | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :-------------------- | :----------------- | :---------------- | | Cash and cash equivalents | $11,944 | $39,058 | | Restricted cash | — | $13,938 | | Total current assets | $12,869 | $53,799 | | Total assets | $19,440 | $64,937 | | Total current liabilities | $4,676 | $24,166 | | Total liabilities | $5,540 | $26,382 | | Total stockholders' equity | $13,900 | $38,555 | | Accumulated deficit | $(907,924) | $(880,627) | - Cash and cash equivalents decreased by approximately **$27.1 million**, and restricted cash was fully utilized, contributing to a **$40.9 million decrease in total current assets**[17](index=17&type=chunk) - Total stockholders' equity decreased by **$24.6 million**, largely due to the accumulated deficit increasing by **$27.3 million**[17](index=17&type=chunk) [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) The condensed statements of operations show a significant decline in collaboration revenue and continued net losses for both the three and nine months ended September 30, 2023, compared to the same periods in 2022, reflecting the company's strategic reprioritization and wind-down of clinical activities Condensed Statements of Operations Data | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Collaboration Revenue | $— | $2,911 | $4 | $2,911 | | Research and development | $3,656 | $7,893 | $15,346 | $19,411 | | General and administrative | $3,578 | $3,282 | $9,791 | $10,217 | | Total operating expenses | $8,664 | $11,175 | $26,322 | $29,495 | | Net loss | $(8,476) | $(8,851) | $(27,297) | $(28,571) | | Basic and diluted net loss per share | $(0.04) | $(0.04) | $(0.11) | $(0.13) | - Collaboration revenue decreased to **$0** for the three months and **$4 thousand** for the nine months ended September 30, 2023, from **$2.9 million** in the prior year periods, primarily due to non-recurrence of revenue from the Solasia License and Collaboration Agreement[20](index=20&type=chunk)[156](index=156&type=chunk) - Research and development expenses decreased by **54%** for the three months and **21%** for the nine months ended September 30, 2023, mainly due to the wind-down of clinical activities and reduced headcount[20](index=20&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) [Condensed Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) The condensed statements of changes in stockholders' equity reflect a decrease in total equity, primarily driven by net losses, partially offset by stock-based compensation and minor common stock issuances Condensed Statements of Changes in Stockholders' Equity Data | Metric (in thousands) | Balance at Dec 31, 2022 | Stock-based compensation | Issuance of common stock, net | Net loss | Balance at Sep 30, 2023 | | :-------------------- | :---------------------- | :----------------------- | :---------------------------- | :------- | :---------------------- | | Common Stock Amount | $240 | — | $1 | — | $241 | | Additional Paid-in Capital | $918,942 | $2,550 | $91 | — | $921,583 | | Accumulated Deficit | $(880,627) | — | — | $(27,297) | $(907,924) | | Total Stockholders' Equity | $38,555 | $2,550 | $92 | $(27,297) | $13,900 | - For the nine months ended September 30, 2023, total stockholders' equity decreased from **$38.6 million** to **$13.9 million**, primarily due to a net loss of **$27.3 million**[25](index=25&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) The condensed statements of cash flows indicate a significant net decrease in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2023, primarily due to cash used in operating activities and a substantial repayment of long-term debt Condensed Statements of Cash Flows Data | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(22,757) | $(22,102) | | Net cash used in investing activities | $(157) | $(100) | | Net cash used in financing activities | $(18,138) | $(2,107) |\ | Net decrease in cash, cash equivalents and restricted cash | $(41,052) | $(24,309) | | Cash and cash equivalents, end of period | $11,944 | $51,745 | - Net cash used in operating activities increased slightly to **$22.8 million** in 2023, mainly due to changes in working capital[30](index=30&type=chunk)[182](index=182&type=chunk) - Net cash used in financing activities significantly increased to **$18.1 million** in 2023, primarily due to the full repayment of long-term debt[30](index=30&type=chunk)[185](index=185&type=chunk) [Notes to Condensed Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed financial statements, covering organization, financing, debt, fair value, net loss per share, related party transactions, leases, commitments, stock-based compensation, warrants, restructuring, joint venture dissolution, and subsequent events [Note 1. Organization](index=10&type=section&id=Note%201.%20Organization) Alaunos Therapeutics, Inc. is a clinical-stage oncology cell therapy company that announced a strategic reprioritization in August 2023, winding down its clinical trial and reducing its workforce, which, combined with an accumulated deficit and limited cash runway, raises substantial doubt about its going concern ability - **Alaunos Therapeutics, Inc.** is a **clinical-stage oncology-focused cell therapy company**, leveraging its proprietary non-viral **Sleeping Beauty gene transfer platform** and **cancer mutation hotspot TCR library**[32](index=32&type=chunk) - On **August 14, 2023**, the company announced a **strategic reprioritization**, winding down its **TCR-T Library Phase 1/2 Trial** and reducing its workforce by approximately **80%** to cut costs and extend its cash runway[34](index=34&type=chunk) - As of September 30, 2023, the company had **$11.9 million** in cash and cash equivalents and an accumulated deficit of **$907.9 million**, with cash resources projected to fund operations only into the **second quarter of 2024**, raising substantial doubt about its going concern ability[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 2. Financings](index=11&type=section&id=Note%202.%20Financings) This note details the company's financing activities, including the repayment of the 2021 Loan and Security Agreement with Silicon Valley Bank, the 2022 Equity Distribution Agreement for an 'at the market offering' (with no sales in 2023), and the 2022 Public Offering which generated $14.7 million in net proceeds - The company repaid its outstanding debt obligations under the Loan and Security Agreement with Silicon Valley Bank in their entirety on **May 1, 2023**[47](index=47&type=chunk) - Under the 2022 Equity Distribution Agreement, the company can sell up to **$50.0 million** in common stock through an 'at the market offering,' but no sales occurred during the three and nine months ended September 30, 2023[49](index=49&type=chunk)[52](index=52&type=chunk) - A 2022 Public Offering of common stock generated net proceeds of **$14.7 million**, with Cantor Fitzgerald & Co. acting as the sole underwriter[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=12&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) This note states that there have been no material changes to the company's significant accounting policies since the filing of its Annual Report on Form 10-K for the year ended December 31, 2022 - **No material changes** have occurred in the company's significant accounting policies since the filing of its Annual Report[56](index=56&type=chunk) [Note 4. Debt](index=12&type=section&id=Note%204.%20Debt) The company fully repaid its Loan and Security Agreement with Silicon Valley Bank on May 1, 2023, including principal, accrued interest, a final payment, and a prepayment premium, resulting in the debt balance being reduced to zero as of September 30, 2023 Debt Balances | Debt (in thousands) | September 30, 2023 | December 31, 2022 | | :------------------ | :----------------- | :---------------- | | Loan and Security Agreement | $— | $17,395 | | Unamortized discount | $— | $(630) | | Total debt | $— | $16,765 | - On **May 1, 2023**, the company fully repaid its outstanding obligations under the SVB Facility, including principal, accrued interest, a **$0.5 million** Final Payment, and a **$0.1 million** prepayment premium[60](index=60&type=chunk) - Interest expense, including amortization of issuance costs, was **$0** for the three months ended September 30, 2023, and **$1.9 million** for the nine months ended September 30, 2023, a decrease from **$0.8 million** and **$2.3 million** respectively in 2022[64](index=64&type=chunk) [Note 5. Fair Value Measurements](index=13&type=section&id=Note%205.%20Fair%20Value%20Measurements) The company's financial assets measured at fair value primarily consist of cash equivalents classified as Level 1. Following its strategic reprioritization in August 2023, the company recognized a $1.0 million impairment charge on property and equipment and a $0.1 million impairment charge on prepaid expenses due to changes in their intended use Fair Value Measurements | Description (in thousands) | Balance as of Sep 30, 2023 | Quoted Prices in Active Markets (Level 1) | | :------------------------- | :------------------------- | :---------------------------------------- | | Cash equivalents | $11,681 | $11,681 | - Following the strategic reprioritization on **August 14, 2023**, the company recorded a **$1.0 million impairment charge** on property and equipment (primarily lab equipment and leasehold improvements)[70](index=70&type=chunk) - An additional **$0.1 million impairment charge** was recorded for prepaid expenses and other current assets, recognized in research and development expenses[71](index=71&type=chunk) [Note 6. Net loss per share](index=14&type=section&id=Note%206.%20Net%20loss%20per%20share) Basic and diluted net loss per share calculations are presented, with potentially dilutive shares (options, restricted stock, warrants) excluded as their effect was antidilutive due to the net loss Potentially Dilutive Shares | Metric | September 30, 2023 | September 30, 2022 | | :----- | :----------------- | :----------------- | | Common stock options | 12,417,029 | 10,623,215 | | Unvested restricted stock | 437,500 | 940,000 | | Warrants | 22,922,342 | 22,922,342 | | Total Potentially Dilutive Shares | 35,776,871 | 34,485,557 | - The effect of computing diluted net loss per common share was **antidilutive** for all potentially issuable shares, leading to their exclusion from the calculation[73](index=73&type=chunk) [Note 7. Related Party Transactions](index=14&type=section&id=Note%207.%20Related%20Party%20Transactions) This note discusses the dissolution of Eden BioCell, a joint venture with TriArm Therapeutics, which was established to commercialize CAR-T therapies in Greater China and Korea, with the entity formally dissolved as of July 2023 - The Eden BioCell joint venture, formed with TriArm Therapeutics to commercialize CAR-T therapies in Greater China and Korea, was mutually agreed to be dissolved in **September 2021**[75](index=75&type=chunk) - The Eden BioCell entity was formally dissolved as of **July 2023**[75](index=75&type=chunk) [Note 8. Leases](index=14&type=section&id=Note%208.%20Leases) The company has undertaken several lease modifications and terminations, including reducing its Houston office space in April 2022, terminating its Boston office lease in April 2023, and further terminating Houston office and laboratory leases effective November 2023, resulting in gains on lease modifications and reduced lease liabilities - In **April 2022**, the company modified its Houston lease, reducing space and remeasuring lease liability and right-of-use asset to **$0.4 million**, resulting in a **$0.1 million gain**[76](index=76&type=chunk) - On **April 19, 2023**, the Boston office lease was terminated, incurring **$0.2 million** in termination costs but resulting in a **$0.2 million gain** on lease termination[77](index=77&type=chunk) - Further Houston office and laboratory leases were mutually terminated with MD Anderson, effective **November 15, 2023**, with a final payment of **$0.1 million**[80](index=80&type=chunk) [Note 9. Commitments and Contingencies](index=15&type=section&id=Note%209.%20Commitments%20and%20Contingencies) This note details the company's various license agreements with Precigen, MD Anderson, and the NCI, outlining changes in obligations, royalties, and milestones, and covers the collaboration agreement with Solasia Pharma K.K. and the settlement of the KBI Biopharma litigation for $1.0 million - The Amended and Restated Exclusive License Agreement with Precigen (**April 3, 2023**) eliminated royalty and milestone obligations, reducing the annual license fee to **$75 thousand**[85](index=85&type=chunk)[86](index=86&type=chunk) - The company provided notice on **October 27, 2023**, to terminate the Patent License with the NCI, effective **60 days** from notice, due to its own proprietary TCR discovery platform[103](index=103&type=chunk) - The Cooperative Research and Development Agreement (CRADA) with the NCI was terminated by the company, effective **October 13, 2023**, as part of strategic alternatives exploration[110](index=110&type=chunk) - The company accrued **$1.0 million** as of September 30, 2023, to settle all claims in the KBI Biopharma litigation[117](index=117&type=chunk) [Note 10. Stock-Based Compensation](index=19&type=section&id=Note%2010.%20Stock-Based%20Compensation) Stock-based compensation expense decreased for both the three and nine months ended September 30, 2023, compared to 2022, with fewer stock options granted in 2023 and unrecognized compensation costs for unvested options and restricted stock expected to be recognized over weighted-average periods of 1.70 and 1.48 years, respectively Stock-Based Compensation Expense | Stock-Based Compensation (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $90 | $145 | $446 | $673 | | General and administrative | $636 | $663 | $2,104 | $1,978 | | Total Stock-based compensation expense | $726 | $808 | $2,550 | $2,651 | - The company granted **10,000 stock options** (weighted-average fair value **$0.39/share**) in Q3 2023 and **3,695,167 options** (weighted-average fair value **$0.39/share**) for the nine months, significantly less than in 2022[119](index=119&type=chunk) - Total unrecognized compensation costs for unvested stock options were **$4.2 million** (expected recognition over **1.70 years**) and for unvested restricted stock were **$0.7 million** (expected recognition over **1.48 years**) as of September 30, 2023[121](index=121&type=chunk)[122](index=122&type=chunk) [Note 11. Warrants](index=20&type=section&id=Note%2011.%20Warrants) This note details the company's outstanding warrants, including the 2019 Warrants issued to investors (exercise price $7.00), the MD Anderson Warrant (exercise price $0.001, vesting upon clinical milestones not yet met), and the SVB Warrants (exercise price $1.16, fully vested upon issuance) - The company issued **2019 Warrants** to purchase up to **17,803,031 shares** of common stock with an exercise price of **$7.00**, expiring on the fifth anniversary of the initial exercise date[125](index=125&type=chunk) - The **MD Anderson Warrant**, issued in connection with the 2019 R&D Agreement, allows for the purchase of **3,333,333 shares** at **$0.001 per share**, vesting upon certain clinical milestones which have not yet been met[126](index=126&type=chunk)[128](index=128&type=chunk) - SVB Warrants for up to **649,615 shares** of common stock, with an exercise price of **$1.16 per share**, were fully vested upon issuance and expire on **August 6, 2031**; none have been exercised as of September 30, 2023[129](index=129&type=chunk) [Note 12. Restructuring](index=21&type=section&id=Note%2012.%20Restructuring) Following its strategic reprioritization announcement on August 14, 2023, the company reduced its workforce by approximately 60% in Q3 2023 and recorded $0.4 million in termination benefits as restructuring costs, which were fully paid by September 30, 2023 - On **August 14, 2023**, the company announced a strategic reprioritization and wind-down of its TCR-T Library Phase 1/2 Trial, leading to a workforce reduction of approximately **60%** in Q3 2023[130](index=130&type=chunk) - The company recorded **$0.4 million** in termination benefits as restructuring costs during the three and nine months ended September 30, 2023, which were fully paid by the end of the period[130](index=130&type=chunk) [Note 13. Joint Venture](index=21&type=section&id=Note%2013.%20Joint%20Venture) This note confirms the dissolution of Eden BioCell, a joint venture with TriArm, as of July 2023, where the company had accounted for its 50% equity interest under the equity method, as it did not have primary beneficiary control over the variable interest entity - The Eden BioCell joint venture, formed with TriArm Therapeutics, was mutually agreed to be dissolved in **September 2021** and formally dissolved as of **July 2023**[135](index=135&type=chunk) - The company held a **50% equity interest** in Eden BioCell and accounted for it under the equity method, as it was deemed a variable interest entity where the company was not the primary beneficiary[133](index=133&type=chunk)[134](index=134&type=chunk) [Note 14. Subsequent Events](index=21&type=section&id=Note%2014.%20Subsequent%20Events) The company has evaluated subsequent events through the issuance date of the financial statements and reported no material subsequent events other than those already described in other notes - **No material subsequent events** were identified that impacted the condensed financial statements or disclosures, beyond those already detailed in other notes[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting the strategic reprioritization, wind-down of clinical trials, workforce reduction, and ongoing exploration of strategic alternatives [Overview](index=22&type=section&id=Overview) Alaunos Therapeutics, Inc. is a clinical-stage oncology cell therapy company that has historically focused on developing adoptive TCR-T cell therapies. The company has incurred significant net losses since its inception, with an accumulated deficit of $907.9 million as of September 30, 2023. In August 2023, it announced a strategic reprioritization, winding down its TCR-T Library Phase 1/2 Trial, reducing its workforce by 80%, and exploring strategic alternatives - Alaunos Therapeutics is a **clinical-stage oncology-focused cell therapy company** developing adoptive TCR-T cell therapy for solid tumors, leveraging its **Sleeping Beauty gene transfer platform**[140](index=140&type=chunk) - The company has incurred significant net losses since inception, with a net loss of **$27.3 million** for the nine months ended September 30, 2023, and an accumulated deficit of **$907.9 million**[141](index=141&type=chunk) - On **August 14, 2023**, the company announced a **strategic reprioritization**, winding down its TCR-T Library Phase 1/2 Trial, reducing its workforce by approximately **80%**, and exploring strategic alternatives[142](index=142&type=chunk) [Recent Developments](index=22&type=section&id=Recent%20Developments) Recent developments include the wind-down of the TCR-T Library Phase 1/2 Trial despite encouraging data (13% objective response rate, 87% disease control rate), the discovery of proprietary TCRs through the hunTR® Platform, ongoing exploration of strategic alternatives, and a Nasdaq Delisting Determination due to the stock price falling below $0.10 - The TCR-T Library Phase 1/2 Trial treated eight patients, showing T-cells were generally well-tolerated with no DLTs or ICANS, and one patient achieved an objective partial response (**13% overall response rate**, **87% disease control rate**)[143](index=143&type=chunk)[144](index=144&type=chunk) - Despite positive trial data, the company will **not pursue further clinical program development** due to substantial costs and the current financing environment[146](index=146&type=chunk) - The hunTR® Platform has discovered multiple proprietary TCRs targeting driver mutations, including **KRAS** and **TP53**, with potential for a large patient population[147](index=147&type=chunk) - The company received a **Nasdaq Delisting Determination** on **November 8, 2023**, due to its common stock trading below **$0.10** for **10 consecutive days**, but intends to appeal to remain listed while exploring strategic transactions[149](index=149&type=chunk)[150](index=150&type=chunk) [Financial Overview](index=23&type=section&id=Financial%20Overview) This section outlines the components of the company's financial statements, including collaboration revenue, research and development expenses, general and administrative expenses, restructuring costs, and other income/expense - Collaboration revenue is recognized over the estimated period of performance, with **no product revenue generated to date**[151](index=151&type=chunk) - Research and development expenses primarily include salaries, contract manufacturing, clinical trial fees, and license payments[152](index=152&type=chunk) - Restructuring costs consist of severance provided to terminated employees as part of the strategic reprioritization[154](index=154&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) For the three and nine months ended September 30, 2023, collaboration revenue significantly decreased to near zero. Research and development expenses decreased due to clinical wind-down and reduced headcount, while general and administrative expenses saw a slight increase in Q3 2023 due to legal costs. The company recorded gains on lease modifications and incurred new restructuring costs and asset impairment charges related to its strategic reprioritization Results of Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (3M) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (9M) | | :-------------------- | :-------------------------- | :-------------------------- | :---------- | :-------------------------- | :-------------------------- | :---------- | | Collaboration Revenue | $— | $2,911 | $(2,911) | $4 | $2,911 | $(2,907) | | Research and Development Expenses | $3,656 | $7,893 | $(4,237) | $15,346 | $19,411 | $(4,065) | | General and Administrative Expenses | $3,578 | $3,282 | $296 | $9,791 | $10,217 | $(426) | | Gain on Lease Modification | $— | $— | $— | $(245) | $(133) | $(112) | | Restructuring Costs | $419 | $— | $419 | $419 | $— | $419 | | Property and Equipment and Right-of-Use Asset Impairment | $1,011 | $— | $1,011 | $1,011 | $— | $1,011 | | Other Income (Expense), Net | $188 | $(587) | $775 | $(979) | $(1,987) | $1,008 | - Research and development expenses decreased by **$4.2 million (54%)** for the three months and **$4.1 million (21%)** for the nine months ended September 30, 2023, primarily due to the wind-down of clinical activities and reduced headcount[157](index=157&type=chunk)[158](index=158&type=chunk) - General and administrative expenses increased by **$0.3 million** for the three months ended September 30, 2023, due to higher legal costs, but decreased by **$0.4 million** for the nine months due to lower employee-related expenses and insurance fees[160](index=160&type=chunk)[161](index=161&type=chunk) - A **$1.0 million impairment charge** on property and equipment and right-of-use assets was recorded in Q3 2023 following the strategic reprioritization[164](index=164&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company, which has not generated product revenue and incurs net losses, anticipates cash resources will fund operations only into the second quarter of 2024, raising substantial doubt about its going concern ability, while actively exploring strategic alternatives - The company has **not generated product revenue** and has incurred **net losses** and **negative cash flows** since inception, financing operations primarily through equity issuances and debt[167](index=167&type=chunk) - As of September 30, 2023, the company had **$11.9 million** in cash and cash equivalents, with resources anticipated to fund operations only into the **second quarter of 2024**, leading to substantial doubt about its going concern ability[169](index=169&type=chunk)[170](index=170&type=chunk) - Net cash used in operating activities for the nine months ended September 30, 2023, was **$22.8 million**, and net cash used in financing activities was **$18.1 million**, primarily due to the full repayment of long-term debt[182](index=182&type=chunk)[185](index=185&type=chunk) - The company is **actively exploring strategic alternatives**, including acquisitions, mergers, or strategic partnerships, and has engaged Cantor Fitzgerald & Co. as a strategic advisor[168](index=168&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies and estimates, identified in its 2022 Annual Report on Form 10-K, remain unchanged and relate to clinical trial and R&D expenses, collaboration agreements, fair value measurements for stock-based compensation, and income taxes - The **most critical accounting policies and estimates** include those related to clinical trial and other research and development expenses, collaboration agreements, fair value measurements for stock-based compensation, and income taxes[201](index=201&type=chunk) - There have been **no changes** to these critical accounting policies and estimates for the three and nine months ended September 30, 2023[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Alaunos Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is **exempt** from providing quantitative and qualitative disclosures about market risk due to its status as a **smaller reporting company**[202](index=202&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of its principal executive and accounting officers, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting during the quarter - As of **September 30, 2023**, the company's disclosure controls and procedures were evaluated and deemed **effective** by management[203](index=203&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended September 30, 2023[204](index=204&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses that the company is generally subject to legal proceedings in the ordinary course of business, specifically detailing the KBI Biopharma litigation, which was settled for $1.0 million as of October 20, 2023, with the amount accrued as of September 30, 2023 - The company settled the KBI Biopharma litigation for **$1.0 million** on **October 20, 2023**, and accrued this amount as of September 30, 2023[209](index=209&type=chunk) - KBI had initially sought unspecified monetary damages exceeding **$3.2 million** for alleged breach of a Master Services Agreement[209](index=209&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various significant risks that could materially and adversely affect the company's business, financial condition, and results of operations, categorized into those related to the strategic reprioritization, general business operations, clinical testing and government regulation, commercialization capabilities, intellectual property, and other company-specific factors - Risks related to the **strategic reprioritization** include the potential for the strategy to **fail**, the **inability to realize anticipated benefits** from transactions, and the **need for substantial additional financial resources**[211](index=211&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Business risks include the **Nasdaq delisting determination**, potential **reverse stock split**, and the challenges of developing non-viral adoptive TCR-T cell therapies[234](index=234&type=chunk)[240](index=240&type=chunk)[247](index=247&type=chunk) - Risks related to clinical testing and regulation involve **difficulties in patient enrollment**, extensive regulatory compliance, potential **undesirable side effects** of product candidates, and **reliance on sole source vendors** for manufacturing materials[274](index=274&type=chunk)[278](index=278&type=chunk)[288](index=288&type=chunk)[292](index=292&type=chunk) - Intellectual property risks include the **failure to adequately protect or enforce IP rights**, potential **claims of infringement** by third parties, and the challenges of **maintaining licenses** with key partners like MD Anderson and NCI[341](index=341&type=chunk)[351](index=351&type=chunk)[359](index=359&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report during the period - **No unregistered sales** of equity securities or use of proceeds occurred during the reporting period[388](index=388&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report - **Not applicable**; there are no defaults upon senior securities to report[389](index=389&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - **Not applicable**; mine safety disclosures are not relevant to the company's operations[390](index=390&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter, details retention agreements for Melinda Lackey and Drew Deniger, and notes their subsequent termination effective November 15, 2023 - **No directors or executive officers** adopted or terminated Rule 10b5-1 trading plans during the three months ended September 30, 2023[391](index=391&type=chunk) - Retention agreements were entered into with **Melinda Lackey** (SVP, Legal and Administration) and **Drew Deniger** (VP, Research and Development) on **August 14, 2023**, providing bonuses for continued service through the strategic alternatives exploration[392](index=392&type=chunk)[394](index=394&type=chunk) - Both Ms. Lackey and Dr. Deniger's employment was terminated '**Without Cause**' effective **November 15, 2023**, with expected severance and consulting agreements[397](index=397&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, retention agreements, certifications, and Inline XBRL documents - Exhibits include the **Amended and Restated Certificate of Incorporation**, **Amended and Restated Bylaws**, **Retention Agreements** for Melinda Lackey and Drew Deniger, and various **certifications** (e.g., Section 302, Section 906)[399](index=399&type=chunk) - **Inline XBRL documents** are provided for financial data tagging[399](index=399&type=chunk) [SIGNATURES](index=61&type=section&id=SIGNATURES) This section contains the signatures of the company's authorized officers, including the Chief Executive Officer (also serving as Principal Executive Officer and Principal Financial Officer) and the Vice President, Finance (Principal Accounting Officer), certifying the report's submission - The report is signed by **Kevin S. Boyle, Sr.**, Chief Executive Officer (also Principal Executive Officer and Principal Financial Officer), and **Michael Wong**, Vice President, Finance (Principal Accounting Officer)[402](index=402&type=chunk) - The report was dated **November 14, 2023**[402](index=402&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-33038 Alaunos Therapeutics, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 84 ...

Financial Data and Key Metrics Changes - For Q1 2023, the company reported a net loss of approximately $10 million, or a $0.04 net loss per share, compared to a net loss of approximately $9.8 million, or a $0.05 net loss per share for the same period in 2022, indicating a slight increase in losses [22] - Research and development expenses increased by 17% to approximately $6.5 million in Q1 2023 from approximately $5.6 million in Q1 2022, primarily due to increased manufacturing and TCR discovery activities [23] - General and administrative expenses decreased by 10% to approximately $3.2 million in Q1 2023 from approximately $3.5 million in Q1 2022, attributed to lower professional fees [24] - As of March 31, 2023, total cash balances were approximately $37.4 million, with an operating cash burn of approximately $9.4 million for Q1 2023, up from approximately $7.8 million in Q1 2022 [25][27] Business Line Data and Key Metrics Changes - The company is focused on advancing its TCR platform targeting solid tumors, with significant enhancements made to screening enrollment and manufacturing processes, facilitating faster patient accrual [3][4] - The TCR library Phase 1/2 trial is actively enrolling patients across six solid tumor indications, with expectations to treat between nine and twelve patients by the end of the year [5][6] Market Data and Key Metrics Changes - The company noted that investor engagement remains encouraging, with evidence pointing to supportive capital markets for companies with differentiated science [28] - The follow-on market has raised $7.3 billion by 60 follow-ons year-to-date, compared to $4.6 billion raised in 44 follow-ons at the same point in 2022, indicating a positive trend for biotech [36] Company Strategy and Development Direction - The company aims to become a Phase 2-ready company by the end of 2023, with recent corporate and capital changes supporting the belief in the upside potential of its TCR platform [1][6] - The amendment of the license agreement with Precigen eliminates all commercial sales-based royalties and milestone obligations, representing potential savings of over $160 million [7][9] - The company is expanding its TCR library through the Hunter platform, targeting more HLAs and new mutations to bolster its IP portfolio and pipeline [12][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of their TCR-T platform to transform cancer treatment, highlighting early clinical responses and accelerated patient enrollment [33][35] - The management team is optimistic about the upcoming interim results in Q3, which are expected to provide a more comprehensive readout of clinical data [5][39] Other Important Information - The company fully prepaid its term loan with Silicon Valley Bank, allowing for complete operational control over cash and eliminating additional interest expenses [9][27] - The company has implemented cryopreservation in its manufacturing process, increasing flexibility for patient scheduling and treatment [3][4] Q&A Session Summary Question: Update on ASCO data presentation - Management confirmed that the poster will include data on the first three patients treated, but further details cannot be disclosed until the embargo lifts on May 25 [50] Question: Change in target enrollment for Phase 1 - Management clarified that the guidance remains unchanged, with the nine to twelve patients expected to complete Phase 1 including those treated in 2022 [55] Question: Confidence in interim update financing - Management expressed confidence that the cash runway will extend to the next data readout, while remaining opportunistic regarding fundraising options [56][57] Question: Interim readout patient dosing levels - Management indicated that multiple patients will be included in the clinical update in Q3, with flexibility in trial design regarding dosing levels [60] Question: Manufacturing capacity for Phase 2 - Management discussed a multipronged manufacturing strategy to increase capacity for Phase 2, utilizing both in-house and external resources [62][64] Question: Cash balance clarification - Management confirmed that the $13.9 million of restricted cash is included in the total cash balance of $37.4 million as of March 31, 2023 [80]

[Form 10-Q Cover Page](index=1&type=section&id=Form%2010-Q%20Cover%20Page) This section identifies the company, filing type, and key corporate status details as of the reporting period - Alaunos Therapeutics, Inc. is filing a Quarterly Report on Form 10-Q for the period ended March 31, 2023[1](index=1&type=chunk)[2](index=2&type=chunk) - **Filer Status:** | Category | Status | | :--- | :--- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | | Emerging Growth Company | ☐ | - As of May 5, 2023, the number of outstanding shares of common stock was **240,627,055**[4](index=4&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=2&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements identified by terms such as 'anticipate,' 'believe,' 'estimate,' 'expect,' 'forecast,' 'intend,' 'may,' 'plan,' 'project,' 'target,' 'will' and similar expressions[6](index=6&type=chunk) - These statements are based on management's current beliefs and assumptions and involve risks and uncertainties that may cause actual results to differ materially[7](index=7&type=chunk)[8](index=8&type=chunk) - Key forward-looking statements include those regarding the ability to raise capital, estimates of expenses, timing of clinical programs, regulatory approvals, intellectual property, and the impact of external factors like pandemics[9](index=9&type=chunk) [SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS](index=4&type=section&id=SUMMARY%20OF%20SELECTED%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) This section outlines critical financial, operational, and developmental risks impacting the company's business and continuity - The Company requires **substantial additional financial resources** to continue as a going concern and fund product development; failure to obtain these resources could lead to delays or discontinuation of operations[12](index=12&type=chunk) - Development and commercialization of non-viral adoptive cellular therapies based on TCRs are **new approaches to cancer treatment**, subject to significant challenges and limited clinical data[12](index=12&type=chunk) - Other significant risks include the need to recruit and retain qualified personnel, the necessity of regulatory approvals, the high cost and time-consuming nature of clinical development, reliance on sole-source vendors for materials, and potential intellectual property issues[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed financial statements for Alaunos Therapeutics, Inc., including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies [Item 1. Condensed Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Financial%20Statements%20(unaudited)) This item provides the unaudited condensed financial statements for Alaunos Therapeutics, Inc., including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows for the periods presented, which are integral to understanding the company's financial health [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific dates - **Condensed Balance Sheet Highlights (in thousands):** | Item | March 31, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $23,496 | $39,058 | $(15,562) | | Restricted cash | $13,938 | $13,938 | $0 | | Total current assets | $38,184 | $53,799 | $(15,615) | | Total assets | $48,638 | $64,937 | $(16,299) | | Total current liabilities | $17,063 | $24,166 | $(7,103) | | Total liabilities | $19,129 | $26,382 | $(7,253) | | Total stockholders' equity | $29,509 | $38,555 | $(9,046) | - Cash and cash equivalents decreased by **$15.6 million** from December 31, 2022, to March 31, 2023[17](index=17&type=chunk) - Accumulated deficit increased to **$890.7 million** as of March 31, 2023, from $880.6 million at December 31, 2022[17](index=17&type=chunk) [Condensed Statements of Operations](index=7&type=section&id=Condensed%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenues, expenses, and net loss for specific periods - **Condensed Statements of Operations Highlights (in thousands):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Research and development | $6,504 | $5,580 | $924 | | General and administrative | $3,168 | $3,505 | $(337) | | Total operating expenses | $9,672 | $9,085 | $587 | | Loss from operations | $(9,672) | $(9,085) | $(587) | | Interest expense | $(853) | $(683) | $(170) | | Other income (expense), net | $477 | $(20) | $497 | | Net loss | $(10,048) | $(9,788) | $(260) | | Basic and diluted net loss per share | $(0.04) | $(0.05) | $0.01 | | Weighted average common shares outstanding | 239,679,352 | 214,946,569 | 24,732,783 | - Net loss increased to **$10.0 million** for Q1 2023 from $9.8 million for Q1 2022[20](index=20&type=chunk) - Research and development expenses increased by **$0.9 million (17%)** year-over-year[20](index=20&type=chunk) [Condensed Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in equity accounts, reflecting net loss, stock-based compensation, and stock issuances - **Changes in Stockholders' Equity (in thousands):** | Item | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Balance at December 31 | $38,555 | $58,057 | | Stock-based compensation | $910 | $853 | | Issuance of common stock, net of expenses | $91 | $0 | | Net loss | $(10,048) | $(9,788) | | Balance at March 31 | $29,509 | $49,122 | - Total stockholders' equity decreased by **$9.0 million** in Q1 2023, primarily due to the net loss[23](index=23&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities for the periods - **Condensed Statements of Cash Flows (in thousands):** | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,381) | $(7,770) | | Net cash used in investing activities | $(23) | $(29) | | Net cash used in financing activities | $(6,158) | $0 | | Net decrease in cash and cash equivalents | $(15,562) | $(7,799) | | Cash, cash equivalents and restricted cash, end of period | $37,434 | $68,255 | - Net cash used in operating activities increased by **$1.6 million** year-over-year[27](index=27&type=chunk)[166](index=166&type=chunk) - Financing activities used **$6.2 million** in Q1 2023, primarily for long-term debt repayment[27](index=27&type=chunk)[168](index=168&type=chunk) [Notes to Condensed Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and additional information supporting the condensed financial statements [Note 1. Organization](index=10&type=section&id=1.%20Organization) This note describes the company's business, its accumulated deficit, and the going concern uncertainty - Alaunos Therapeutics, Inc. is a clinical-stage oncology-focused cell therapy company developing adoptive TCR therapies using its proprietary non-viral Sleeping Beauty gene transfer platform[30](index=30&type=chunk) - The Company has operated at a loss since its inception in 2003, with an accumulated deficit of approximately **$890.7 million** as of March 31, 2023[34](index=34&type=chunk) - Management has determined that current capital resources are insufficient to fund planned operations for at least one year from the issuance date, raising **substantial doubt about the Company's ability to continue as a going concern**[35](index=35&type=chunk) [Note 2. Financings](index=11&type=section&id=2.%20Financings) This note details recent financing activities, including debt repayment and equity offerings - The 2021 Loan and Security Agreement with SVB was **fully repaid on May 1, 2023**[43](index=43&type=chunk) - The 2022 Equity Distribution Agreement allows the Company to sell up to **$50.0 million** in common stock via an 'at the market offering,' but no sales occurred in Q1 2023[45](index=45&type=chunk) - A 2022 Public Offering generated **$14.7 million** in net proceeds from the sale of 24,228,719 shares, with an additional 216,294 shares purchased by the underwriter in January 2023[47](index=47&type=chunk)[48](index=48&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=11&type=section&id=3.%20Summary%20of%20Significant%20Accounting%20Policies) This note confirms the consistency of the company's significant accounting policies with prior reports - No material changes have occurred in the Company's significant accounting policies since the filing of its Annual Report[51](index=51&type=chunk) [Note 4. Debt](index=12&type=section&id=4.%20Debt) This note outlines the company's debt obligations, including repayment details and interest expense - **Debt Obligation (in thousands):** | Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Loan and Security Agreement (carrying value) | $10,988 | $16,765 | - The entire outstanding debt under the SVB Facility, totaling **$10.4 million** in principal, plus accrued interest and a **$1.4 million** final payment, was repaid on May 1, 2023[56](index=56&type=chunk) - Interest expense, including amortization of issuance costs, was **$0.9 million** for Q1 2023, up from $0.7 million in Q1 2022[59](index=59&type=chunk) [Note 5. Fair Value Measurements](index=13&type=section&id=5.%20Fair%20Value%20Measurements) This note describes the fair value classification of cash equivalents and other financial instruments - **Fair Value Measurements of Cash Equivalents (in thousands):** | Description | Balance as of March 31, 2023 | Level 1 | | :--- | :--- | :--- | | Cash equivalents | $2,479 | $2,479 | | Description | Balance as of December 31, 2022 | Level 1 | | :--- | :--- | :--- | | Cash equivalents | $38,058 | $38,058 | - Cash equivalents are classified as **Level 1 assets**, reflecting quoted prices in active markets[63](index=63&type=chunk)[65](index=65&type=chunk) - No financial assets or liabilities were classified as Level 2 or Level 3 during the three months ended March 31, 2023[64](index=64&type=chunk) [Note 6. Net loss per share](index=13&type=section&id=6.%20Net%20loss%20per%20share) This note provides details on the calculation of basic and diluted net loss per share - **Net Loss Per Share Data:** | Item | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Basic and diluted net loss per share | $(0.04) | $(0.05) | | Weighted average common shares outstanding | 239,679,352 | 214,946,569 | - **Potentially Dilutive Shares Excluded from EPS (in thousands):** | Item | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Common stock options | 13,313 | 10,970 | | Unvested restricted stock | 898 | 994 | | Warrants | 22,922 | 22,922 | | Total | 37,134 | 34,886 | - The effect of potentially issuable shares from stock options, unvested restricted stock, and warrants was **antidilutive** and thus excluded from diluted net loss per share calculation[65](index=65&type=chunk) [Note 7. Related Party Transactions](index=14&type=section&id=7.%20Related%20Party%20Transactions) This note discusses transactions and relationships with related parties, including a joint venture - The joint venture Eden BioCell, formed with TriArm Therapeutics for CAR-T therapies in Greater China, was mutually agreed to be dissolved in September 2021 and is currently in the process of dissolution[68](index=68&type=chunk)[123](index=123&type=chunk) - James Huang, Chair of the Company's board, is also a managing partner of an investor in TriArm and a member of Eden BioCell's board[67](index=67&type=chunk) [Note 8. Leases](index=14&type=section&id=8.%20Leases) This note details the company's lease agreements, including a recent termination and associated costs - The Company terminated its Boston office lease on April 19, 2023, incurring **$0.2 million** in termination costs[69](index=69&type=chunk)[176](index=176&type=chunk) - The Boston office right-of-use asset was **$0.5 million** and the associated lease liability was **$0.8 million** as of March 31, 2023[69](index=69&type=chunk) - The sub-sublease of the Boston office space was assigned to the landlord as part of the termination agreement[69](index=69&type=chunk)[176](index=176&type=chunk) [Note 9. Commitments and Contingencies](index=14&type=section&id=9.%20Commitments%20and%20Contingencies) This note outlines contractual commitments, license agreements, and potential contingent liabilities - The A&R License Agreement with Precigen (April 2023) eliminated all royalty and milestone obligations, reducing the annual license fee from $0.1 million to **$75 thousand**[77](index=77&type=chunk)[180](index=180&type=chunk) - Under the A&R License Agreement, the Company retains **exclusive worldwide rights** for TCR products targeting neoantigens or driver mutations for cancer treatment[74](index=74&type=chunk)[76](index=76&type=chunk)[137](index=137&type=chunk) - The Company incurred **$0.2 million** in clinical expenses from MD Anderson and **$0.3 million** in license payments to the NCI for Q1 2023 under their respective agreements[85](index=85&type=chunk)[95](index=95&type=chunk) [Note 10. Stock-Based Compensation](index=18&type=section&id=10.%20Stock-Based%20Compensation) This note details the expenses and outstanding awards related to the company's stock-based compensation plans - **Stock-Based Compensation Expense (in thousands):** | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Research and development | $176 | $315 | | General and administrative | $735 | $538 | | Total | $910 | $853 | - **3,065,168 stock options** were granted in Q1 2023 with a weighted-average grant date fair value of **$0.39 per share**[107](index=107&type=chunk) - Total unrecognized compensation costs for unvested stock options and restricted stock were **$6.6 million** and **$0.9 million**, respectively, as of March 31, 2023[110](index=110&type=chunk)[111](index=111&type=chunk) [Note 11. Warrants](index=19&type=section&id=11.%20Warrants) This note provides information on the company's outstanding warrants and their potential dilutive impact - As of March 31, 2023, the Company had **22,922,342 warrants** outstanding[65](index=65&type=chunk) - The 2019 Warrants allow purchase of up to **17,803,031 shares** at an exercise price of **$7.00**[114](index=114&type=chunk) - The MD Anderson Warrant for **3,333,333 shares** at **$0.001 exercise price** remains unvested as clinical milestones have not been met[115](index=115&type=chunk) [Note 12. Joint Venture](index=20&type=section&id=12.%20Joint%20Venture) This note describes the status and accounting treatment of the company's joint venture - Eden BioCell, a joint venture with TriArm Therapeutics for CAR-T therapies in Greater China, was **mutually agreed to be dissolved in September 2021**[123](index=123&type=chunk) - The Company accounted for its **50% equity interest** in Eden BioCell under the equity method[122](index=122&type=chunk) [Note 13. Subsequent Events](index=20&type=section&id=13.%20Subsequent%20Events) This note confirms the absence of other material events occurring after the reporting period - No other material subsequent events were identified beyond those already disclosed in the notes to the condensed financial statements[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting its clinical-stage oncology focus, recent developments in its TCR-T Library Phase 1/2 Trial and hunTR platform, and a detailed analysis of operating expenses, liquidity, and capital resources [Overview](index=21&type=section&id=Overview) This section introduces the company's core business, clinical trial status, and critical financial outlook - Alaunos Therapeutics is a clinical-stage oncology company developing adoptive TCR-T cell therapies for solid tumors, utilizing its proprietary Sleeping Beauty gene transfer platform and cancer hotspot mutation TCR library[129](index=129&type=chunk) - The Company is currently enrolling patients in a Phase 1/2 clinical trial evaluating 12 TCRs for various solid tumor indications[129](index=129&type=chunk) - As of March 31, 2023, the Company had an accumulated deficit of approximately **$890.7 million** and anticipates cash resources will fund operations into the **fourth quarter of 2023**, necessitating additional financing[130](index=130&type=chunk)[131](index=131&type=chunk) [Recent Developments](index=21&type=section&id=Recent%20Developments) This section highlights key operational, clinical, and financial milestones achieved recently by the company - The TCR-T Library Phase 1/2 Trial is actively enrolling patients, with interim data expected in **Q3 2023** and Phase 2 readiness by the **end of 2023**[132](index=132&type=chunk) - Manufacturing processes have been enhanced to use cryopreserved cell products, improving flexibility for patient treatment[133](index=133&type=chunk) - The hunTR® platform is increasing screening throughput for TCR discovery, aiming to add **three new TCRs** to the library by the **end of 2023**[134](index=134&type=chunk) - The mbIL-15 TCR-T cell therapy program is targeting an IND filing in the **second half of 2023**[135](index=135&type=chunk) - The Company **fully repaid its outstanding debt** to Silicon Valley Bank on May 1, 2023, including principal, interest, and a final payment[136](index=136&type=chunk) - The Amended and Restated Exclusive License Agreement with Precigen (April 2023) eliminated royalty and milestone obligations and reduced annual license payments, while retaining **exclusive rights** to TCR products for neoantigens/driver mutations[137](index=137&type=chunk) [Financial Overview](index=22&type=section&id=Financial%20Overview) This section outlines the company's financial strategy, anticipated expenditures, and primary expense categories - The Company has not generated product revenue and anticipates continued significant operating expenditures and net losses due to R&D and clinical trial activities[130](index=130&type=chunk)[139](index=139&type=chunk) - Research and development expenses include salaries, contract manufacturing, facility costs, clinical trial fees, and license payments[140](index=140&type=chunk) - General and administrative expenses primarily cover salaries, benefits, stock-based compensation, and professional fees[144](index=144&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the changes in the company's operating expenses and other income/expense items year-over-year - **Operating Expenses (in thousands):** | Expense Category | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $6,504 | $5,580 | $924 | 17% | | General and administrative | $3,168 | $3,505 | $(337) | (10)% | | Interest expense | $(853) | $(683) | $(170) | 25% | | Other income (expense), net | $477 | $(20) | $497 | (2485)% | | Total Other income (expense), net | $(376) | $(703) | $327 | (47)% | - Research and development expenses increased by **$0.9 million**, primarily due to increased manufacturing activities for the TCR-T Library Phase 1/2 Trial and hunTR discovery efforts[146](index=146&type=chunk) - General and administrative expenses decreased by **$0.3 million**, mainly due to lower professional fees and reduced insurance/lease costs[148](index=148&type=chunk) - Other expense, net, decreased by **$0.3 million**, driven by higher interest income from increasing interest rates, partially offset by increased interest expense on the Loan and Security Agreement[149](index=149&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses funding sources, current cash position, and future capital needs to sustain operations - The Company has financed operations through **$729.2 million** from equity issuances and **$25.0 million** from debt since inception[151](index=151&type=chunk) - As of March 31, 2023, cash, cash equivalents, and restricted cash totaled **$37.4 million**, with restricted cash of **$13.9 million** related to the now-repaid debt agreement[153](index=153&type=chunk)[169](index=169&type=chunk) - Management projects current cash resources will fund operations into **Q4 2023**, but **substantial doubt exists** regarding the ability to continue as a going concern without additional financing[153](index=153&type=chunk)[154](index=154&type=chunk)[169](index=169&type=chunk) - **Working Capital (in millions):** | Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current assets | $24.2 | $39.9 | | Current liabilities | $17.0 | $24.2 | | Working capital | $7.2 | $15.7 | [Critical Accounting Policies and Significant Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) This section confirms the consistency of the company's critical accounting policies and estimates with previous reports - The Company's critical accounting policies and estimates, including those for clinical trial expenses, collaboration agreements, stock-based compensation, and income taxes, remain unchanged from the 2022 Annual Report[183](index=183&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Alaunos Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The Company is **exempt** from providing quantitative and qualitative disclosures about market risk as a smaller reporting company[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and accounting officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023. There were no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were **effective** as of March 31, 2023[185](index=185&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[186](index=186&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers non-financial information, including legal proceedings, a comprehensive discussion of risk factors related to the business, clinical development, commercialization, and intellectual property, as well as details on equity securities, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) As of March 31, 2023, the company was not subject to any material legal proceedings that are likely to have a material adverse effect on its financial position, results of operations, or cash flows - As of March 31, 2023, there are **no material legal proceedings** likely to result in a material adverse effect on the Company's financial position, results of operations, or cash flows[190](index=190&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section details various significant risks that could materially and adversely affect the company's business, financial condition, and results of operations. These risks are categorized into business operations, clinical testing and regulatory compliance, commercialization capabilities, intellectual property protection, and other company-specific factors [RISKS RELATED TO OUR BUSINESS](index=29&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) This section outlines fundamental risks concerning the company's financial viability, capital needs, and the novel nature of its therapeutic approach - The Company requires **substantial additional financial resources** to continue as a going concern, with current cash projected to fund operations only into **Q4 2023**, raising substantial doubt about its ability to continue[192](index=192&type=chunk)[193](index=193&type=chunk) - Future capital raises, particularly equity issuances, will **dilute existing stockholders' ownership**[198](index=198&type=chunk) - Developing and commercializing non-viral adoptive TCR-T cell therapies is a **new approach to cancer treatment**, subject to significant challenges and limited clinical data[203](index=203&type=chunk)[205](index=205&type=chunk) - The Company faces intense competition for qualified personnel and relies heavily on key scientific and medical advisors, whose loss would be difficult to replace[214](index=214&type=chunk)[215](index=215&type=chunk) [RISKS RELATED TO THE CLINICAL TESTING, GOVERNMENT REGULATION AND MANUFACTURING OF OUR PRODUCT CANDIDATES](index=31&type=section&id=RISKS%20RELATED%20TO%20THE%20CLINICAL%20TESTING%2C%20GOVERNMENT%20REGULATION%20AND%20MANUFACTURING%20OF%20OUR%20PRODUCT%20CANDIDATES) This section details risks associated with clinical trial execution, regulatory approvals, potential side effects, and manufacturing complexities for product candidates - Difficulties in patient enrollment for clinical trials, exacerbated by factors like the COVID-19 pandemic, could **delay clinical development and increase costs**[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) - The regulatory approval process for novel cell therapies is extensive, costly, and time-consuming, with **no guarantee of approval**, and can be delayed by unforeseen safety issues or regulatory changes[251](index=251&type=chunk)[253](index=253&type=chunk)[257](index=257&type=chunk) - Product candidates may cause undesirable side effects, potentially delaying or preventing regulatory approval, limiting commercialization, or leading to significant negative consequences post-approval[261](index=261&type=chunk)[262](index=262&type=chunk) - The Company relies on a limited number of **sole-source vendors** for critical reagents, specialized equipment, and materials, which could impair its ability to manufacture and supply products for clinical trials[264](index=264&type=chunk)[265](index=265&type=chunk) - Manufacturing patient-specific cell therapies is complex, requires significant expertise and capital, and faces challenges in scaling, quality control, and ensuring consistency from diverse patient populations[270](index=270&type=chunk)[272](index=272&type=chunk)[278](index=278&type=chunk) [RISKS RELATED TO OUR ABILITY TO COMMERCIALIZE OUR PRODUCT CANDIDATES](index=44&type=section&id=RISKS%20RELATED%20TO%20OUR%20ABILITY%20TO%20COMMERCIALIZE%20OUR%20PRODUCT%20CANDIDATES) This section covers risks impacting the company's capacity to market and sell its products, including regulatory hurdles, market acceptance, and reimbursement challenges - Failure to obtain necessary U.S. or worldwide regulatory approvals would **severely undermine the business** by preventing commercialization and revenue generation[285](index=285&type=chunk)[286](index=286&type=chunk) - The Company currently lacks marketing, sales, and distribution capabilities and may be unable to establish them or secure suitable third-party collaborations, hindering successful commercialization[288](index=288&type=chunk)[289](index=289&type=chunk) - Physician and patient acceptance of engineered T cells as cancer treatments is uncertain, and lack of acceptance would **materially impair revenue generation**[290](index=290&type=chunk) - The ability to commercialize products depends on obtaining sufficient coverage and adequate reimbursement from third-party payors, which is difficult to predict for novel gene and cell therapies[294](index=294&type=chunk)[296](index=296&type=chunk) - Market opportunities may be limited to patients ineligible for or who have failed prior treatments, potentially restricting the addressable patient population[298](index=298&type=chunk)[300](index=300&type=chunk) - Healthcare legislative reforms, such as the ACA and IRA, could lead to more rigorous coverage criteria and **downward pressure on drug pricing**, adversely affecting profitability[301](index=301&type=chunk)[305](index=305&type=chunk)[307](index=307&type=chunk) [RISKS RELATED TO OUR INTELLECTUAL PROPERTY](index=49&type=section&id=RISKS%20RELATED%20TO%20OUR%20INTELLECTUAL%20PROPERTY) This section addresses risks concerning the protection, maintenance, and potential infringement of the company's intellectual property assets - The Company's success depends on obtaining and maintaining patent protection and preserving confidential information, much of which is licensed from MD Anderson, NCI, and Precigen[314](index=314&type=chunk)[315](index=315&type=chunk) - Termination of licenses or research and development agreements with key licensors (MD Anderson, NCI, Precigen) could result in the **loss of significant rights** and harm the ability to commercialize product candidates[221](index=221&type=chunk)[226](index=226&type=chunk)[333](index=333&type=chunk) - The patent prosecution process is expensive and time-consuming, and there's **no guarantee that patents will be granted**, provide meaningful protection, or withstand challenges[316](index=316&type=chunk)[322](index=322&type=chunk) - Failure to protect the confidentiality of trade secrets and proprietary information could harm the business and competitive position[323](index=323&type=chunk) - Third-party claims of intellectual property infringement could lead to costly litigation, substantial monetary damages, and prevent or delay the development or commercialization of products[324](index=324&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) [OTHER RISKS RELATED TO OUR COMPANY](index=53&type=section&id=OTHER%20RISKS%20RELATED%20TO%20OUR%20COMPANY) This section covers risks related to stock price volatility, Nasdaq listing compliance, potential dilution, and significant stockholder control - The market price for the Company's common stock is **volatile** and can fluctuate significantly due to factors like clinical trial results, market conditions, and analyst coverage[340](index=340&type=chunk)[341](index=341&type=chunk) - Failure to satisfy Nasdaq listing standards, particularly the Minimum Bid Price Rule, could lead to **delisting**, adversely affecting stock price, liquidity, and financing ability[344](index=344&type=chunk)[346](index=346&type=chunk) - A potential reverse stock split, while intended to regain Nasdaq compliance, may not result in the intended benefits or improve stock liquidity[349](index=349&type=chunk)[350](index=350&type=chunk) - The exercise of outstanding warrants (**22.9 million shares**) and equity awards (**13.3 million options**) may have a dilutive effect on common stock[364](index=364&type=chunk) - Principal stockholders, executive officers, and directors collectively own **22.5%** of outstanding common stock, giving them substantial control over corporate decisions[365](index=365&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[368](index=368&type=chunk) [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities were reported[368](index=368&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[368](index=368&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This item states that there is no other information to report for the period - No other information was reported for the period[368](index=368&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This item lists the exhibits filed with the Form 10-Q, including the Amended and Restated Certificate of Incorporation, Bylaws, Amended and Restated Exclusive License Agreement with Precigen, various offer and severance letters, and certifications from executive officers - The exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), key agreements (Amended and Restated Exclusive License Agreement with Precigen), and executive certifications[370](index=370&type=chunk) [SIGNATURES](index=60&type=section&id=SIGNATURES) This section provides official signatures of the company's principal executive and accounting officers, certifying the report - The report was signed by Kevin S. Boyle, Sr., CEO and Principal Executive/Financial Officer, and Michael Wong, VP Finance and Principal Accounting Officer, on May 10, 2023[374](index=374&type=chunk)

Financial Data and Key Metrics Changes - In 2022, Alaunos reported a net loss of approximately $37.7 million or $0.17 net loss per share, a significant reduction of 52% compared to a net loss of approximately $78.8 million or $0.37 net loss per share in 2021 [42] - Research and development expenses decreased by 50% to approximately $25 million in 2022 from approximately $49.6 million in 2021, primarily due to reduced program-related costs and lower employee-related expenses [44] - Operating cash burn for 2022 was approximately $29.2 million, down from approximately $61.5 million in 2021, reflecting a decrease of approximately 52% [46] Business Line Data and Key Metrics Changes - The TCR library now consists of 12 TCRs, with the addition of two new TCRs targeting frequent mutations and HLAs, effectively doubling the eligible patient pool for the study [10][19] - The company anticipates treating between 12 and 15 patients in the Phase 1 portion of the trial, with a focus on solid tumors including non-small cell lung, colon, endometrium, pancreas, ovary, and bile duct cancers [12][9] Market Data and Key Metrics Changes - The company achieved collaboration revenue of approximately $2.9 million in 2022, a significant increase from approximately $400,000 in 2021, primarily due to sales-based milestones [43] - The IND amendment allowed for enhancements in the clinical trial design, facilitating and accelerating patient enrollment [23] Company Strategy and Development Direction - Alaunos aims to revolutionize solid tumor treatment through T-cell receptor therapies, focusing on targeting high-frequency driver mutations [2][3] - The company is committed to expanding its TCR library and exploring next-generation TCR-T cell therapies to deepen clinical responses [84] - The strategic focus includes multiplexing TCRs to increase the chances of achieving long-term durable remission of cancer [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growing interest from patients and physicians, which is expected to lead to greater accomplishments in patient treatment [81] - The company anticipates becoming Phase 2 ready by the end of 2023, with plans to initiate multiple independent indication-specific Phase 2 trials [82][83] - Management highlighted the importance of safety and identifying the maximum tolerated dose as key objectives for the Phase 1 trial [65] Other Important Information - Alaunos completed a follow-on offering in December 2022, raising approximately $15 million in gross proceeds, which will support ongoing R&D and clinical programs [14][15] - The company has implemented cryopreservation in its manufacturing process, reducing the manufacturing time from 30 days to 26 days, enhancing flexibility for patient scheduling [7][37] Q&A Session Summary Question: What is the status of patient enrollment and regulatory approvals? - Management confirmed that they are excited about the progress in patient enrollment and have received the green light from the FDA on the IND enhancements with no further regulatory approvals required [88] Question: Can you elaborate on the characteristics of the TCRs? - Management noted that the TCRs are showing limited exhaustion and retaining functionality against driver mutations, which is encouraging for future treatments [56][57] Question: What qualifies the company as Phase 2 ready? - Key qualifications include safety, identifying a maximum tolerated dose, and a recommended Phase 2 dose, with a focus on the unique trial design that allows for accelerated objectives [65] Question: How is the company managing its debt? - As of year-end, the outstanding debt balance was approximately $16.7 million, with expectations to fully repay it by August 2023 [63] Question: What are the plans for multiplexing TCRs? - Management expressed excitement about the potential for multiplexing, noting that roughly one in five patients matched more than one TCR, which could enhance treatment efficacy [52][54]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents Commission File Number 001-33038 Alaunos Therapeutics, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 84-1475642 (State or Other Jurisdiction of Incorporation or Organization) (IR ...

Alaunos Therapeutics, Inc. (NASDAQ:TCRT) Q3 2022 Earnings Conference Call November 14, 2022 8:30 AM ET Company Participants Alex Lobo - Stern Investor Relations Kevin Boyle Senior - Chief Executive Officer Abhi Srivastava - Vice President, Technical Operations Drew Deniger - Vice President, Research and Development Mike Wong - Vice President, Finance Conference Call Participants Prakhar Agrawal - Cantor Fitzgerald James Shin - Wells Fargo Yale Jen - Laidlaw Thomas Flaten - Lake Street Capital Markets Operat ...

Alaunos Therapeutics, Inc. (NASDAQ:TCRT) Q2 2022 Earnings Conference Call August 15, 2022 8:30 AM ET Company Participants Danielle Dudgeon - Stern Investor Relations Kevin Boyle - Chief Executive Officer Drew Deniger - Vice President of Research and Development Abhishek Srivastava - Vice President of Technical Operations Mike Wong - Vice President of Finance Conference Call Participants Prakhar Agrawal - Cantor Fitzgerald Thomas Flaten - Lake Street Capital Markets Yale Jen - Laidlaw & Company Swayampakula ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-33038 Alaunos Therapeutics, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 84 ...