Alaunos Therapeutics(TCRT) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited interim 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 detailed notes explaining the company's organization, significant accounting policies, debt, fair value measurements, related party transactions, commitments, and equity-related activities Balance Sheets Balance Sheet Highlights (in thousands): | Item | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $68,255 | $76,054 | | Total current assets | $69,772 | $78,831 | | Total assets | $84,991 | $94,865 | | Current portion of long-term debt | $13,993 | $7,868 | | Total current liabilities | $21,234 | $16,041 | | Total liabilities | $35,869 | $36,809 | | Total stockholders' equity | $49,122 | $58,057 | Statements of Operations Statements of Operations Highlights (Three Months Ended March 31, in thousands): | Item | 2022 | 2021 | | :---------------------------------------------------------------- | :----- | :----- | | Research and development | $5,580 | $13,336 | | General and administrative | $3,505 | $8,227 | | Total operating expenses | $9,085 | $21,563 | | Loss from operations | $(9,085) | $(21,563) | | Net loss | $(9,788) | $(21,554) | | Basic and diluted net loss per share | $(0.05) | $(0.10) | | Weighted average common shares outstanding | 214,946,569 | 213,954,665 | Statements of Changes in Stockholders' Equity Statements of Changes in Stockholders' Equity Highlights (in thousands): | Item | Balance at Dec 31, 2021 | Stock-based compensation | Cancelled restricted common stock | Net loss | Balance at Mar 31, 2022 | | :------------------------ | :---------------------- | :----------------------- | :------------------------------ | :------- | :---------------------- | | Common Stock Amount | $216 | — | — | — | $216 | | Additional Paid-in Capital | $900,693 | $853 | — | — | $901,546 | | Accumulated Deficit | $(842,852) | — | — | $(9,788) | $(852,640) | | Total Stockholders' Equity | $58,057 | $853 | — | $(9,788) | $49,122 | Statements of Cash Flows Statements of Cash Flows Highlights (Three Months Ended March 31, in thousands): | Activity | 2022 | 2021 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(7,770) | $(15,313) | | Net cash used in investing activities | $(29) | $(717) | | Net cash provided by financing activities | $— | $1,017 | | Net decrease in cash and cash equivalents | $(7,799) | $(15,013) | | Cash and cash equivalents, end of period | $68,255 | $100,056 | Notes to Unaudited Financial Statements - The Company changed its corporate name from ZIOPHARM Oncology, Inc. to Alaunos Therapeutics, Inc. on January 25, 2022[29] - The Company is a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapies, leveraging its proprietary non-viral Sleeping Beauty gene transfer platform and cancer hotspot mutation TCR library[29] - The Company has operated at a loss since its inception in 2003, with an accumulated deficit of approximately $852.6 million as of March 31, 2022[32] - Cash and cash equivalents were approximately $68.3 million as of March 31, 2022, anticipated to fund operations into the second quarter of 2023, raising substantial doubt about the Company's ability to continue as a going concern[32][33] - The Loan and Security Agreement with Silicon Valley Bank (SVB Facility) was fully drawn at $25.0 million as of March 31, 2022, bearing interest at 8.00%[48] - The SVB Facility maturity can extend from August 1, 2023, to August 1, 2024, if the Company achieves Amended Milestones by August 31, 2022, including receiving $50.0 million in net cash proceeds from equity sales and positive data in the first cohort of the Library TCR-T Trial[43][48] - The Company is required to cash collateralize half of the outstanding principal plus 5.75% of the original principal if Amended Milestones are not met by August 31, 2022[50] - Cash equivalents of $67.255 million (March 31, 2022) and $75.222 million (December 31, 2021) are classified as Level 1 assets[56] Potentially Dilutive Shares (as of March 31, in thousands): | Item | 2022 | 2021 | | :---------------------- | :----------- | :----------- | | Common stock options | $10,969,654 | $10,738,378 | | Unvested restricted stock | $993,879 | $1,074,606 | | Warrants | $22,922,342 | $22,272,727 | | Total | $34,885,875 | $34,549,044 | - The joint venture Eden BioCell with TriArm Therapeutics was mutually agreed to be dissolved in September 2021[63][117] - The Company has exclusive worldwide license agreements with PGEN Therapeutics, MD Anderson Cancer Center, and the National Cancer Institute (NCI) for various TCR, CAR, and Sleeping Beauty technologies, involving annual fees, milestone payments, and royalties[64][71][82] Stock-Based Compensation Expense (Three Months Ended March 31, in thousands): | Item | 2022 | 2021 | | :-------------------------- | :--- | :--- | | Research and development | $315 | $733 | | General and administrative | $538 | $1,464 | | Total | $853 | $2,197 | - Total unrecognized compensation costs related to unvested stock options amounted to $7.5 million, expected to be recognized over 2.08 years[102] - Total unrecognized compensation costs related to unvested restricted stock amounted to $1.5 million, expected to be recognized over 2.15 years[104] - Warrants outstanding include 2019 Warrants (17,803,031 shares, $7.00 exercise price), MD Anderson Warrant (3,333,333 shares, $0.001 exercise price, vests upon clinical milestones), and SVB Warrants (649,615 shares, $1.16 exercise price)[107][108][109] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the three months ended March 31, 2022, compared to the same period in 2021, highlighting the company's focus on TCR-T cell therapy, recent developments, and the ongoing need for additional capital due to significant net losses and limited cash runway - The Company is a clinical-stage oncology-focused cell therapy company developing adoptive TCR-T cell therapy, leveraging its proprietary non-viral Sleeping Beauty gene transfer platform and cancer hotspot mutation TCR library[125] - The Company is currently enrolling patients for a Phase 1/2 clinical trial (TCR-T Library Phase 1/2 Trial) evaluating ten TCRs for various solid tumor types, with the first patient treated on May 2, 2022, and interim data anticipated in the second half of 2022[125][131] - The Company incurred a net loss of $9.8 million for the three months ended March 31, 2022, and an accumulated deficit of approximately $852.6 million since inception[126] - A restructuring in September 2021 eliminated approximately 60 positions, extending the anticipated cash runway into the second quarter of 2023[129] - Management has determined that current capital resources are insufficient to fund planned operations for at least one year, raising substantial doubt about the Company's ability to continue as a going concern[146][147] Operating Expenses Comparison (Three Months Ended March 31, in thousands): | Expense Category | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------- | :----- | :----- | :--------- | :--------- | | Research and development | $5,580 | $13,336 | $(7,756) | (58)% | | General and administrative | $3,505 | $8,227 | $(4,722) | (57)% | | Other income (expense), net | $(703) | $9 | $(712) | (7911)% | - The decrease in R&D expenses was primarily due to winding down IL-12 and CAR-T programs and reduced headcount[140] - The increase in other expense, net, was primarily due to $0.7 million in interest expense associated with the Amended Loan and Security Agreement[143] Cash Flow Summary (Three Months Ended March 31, in thousands): | Activity | 2022 | 2021 | | :-------------------------------- | :------- | :------- | | Net cash used in operating activities | $(7,770) | $(15,313) | | Net cash used in investing activities | $(29) | $(717) | | Net cash provided by financing activities | $— | $1,017 | | Net decrease in cash and cash equivalents | $(7,799) | $(15,013) | - Working capital as of March 31, 2022, was $48.6 million, a decrease from $62.8 million as of December 31, 2021[161] - The Company recognized $0.3 million in license payments to the NCI for the three months ended March 31, 2022 and 2021[164] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Alaunos Therapeutics, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[169] Item 4. Controls and Procedures Management, including the principal executive and accounting officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022[170] - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the three months ended March 31, 2022[171] PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is not currently 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, 2022, there are no material legal matters that are likely to result in a material adverse effect on the Company's financial position, results of operations, or cash flows[174] Item 1A. Risk Factors This section outlines significant risks that could materially affect the company's business and financial results, including the need for substantial additional capital, challenges in developing novel cell therapies, regulatory hurdles, manufacturing complexities, commercialization difficulties, intellectual property disputes, and other company-specific risks such as stock price volatility and corporate governance issues - The Company requires substantial additional financial resources to continue as a going concern, with current cash resources anticipated to fund operations only into the second quarter of 2023, raising substantial doubt about its ability to continue[176][177] - Developing and commercializing non-viral adoptive TCR-T cell therapies is a new approach to cancer treatment, subject to significant challenges including regulatory approval, clinical trial design, manufacturing, and market acceptance[189] - The Company's product candidates are based on novel technologies with limited clinical data, and there is no assurance that current and planned clinical trials will produce data supporting regulatory approval[191][196] - The Company faces substantial competition from other biopharmaceutical companies in the TCR and CAR technology space, many of which have greater financial resources and experience[203][208] - Any termination of licenses with PGEN, MD Anderson, or NCI, or research and development agreements, could result in the loss of significant rights and harm the ability to develop and commercialize product candidates[210] - The Company is partly reliant on the NCI for research and development and early clinical testing, with limited control over the timing and progress of NCI's clinical trials, which have experienced delays[218] - Manufacturing cell-based therapy product candidates is complex, relies on limited vendors for specialized materials, and the Company has limited experience in large-scale production, posing risks to supply and clinical trial timelines[253][258][261] - The gene transfer vectors used in the Sleeping Beauty system carry a theoretical risk of insertional oncogenesis, potentially triggering new cancers or other adverse events[268] - Commercialization success depends on obtaining U.S. and worldwide regulatory approvals, establishing sales and marketing capabilities, achieving physician and patient acceptance, and securing adequate reimbursement from payors[273][276][278][280] - The market price for the Company's common stock is volatile, and failure to satisfy Nasdaq listing standards (e.g., minimum bid price) could lead to delisting, potentially requiring a reverse stock split[332][335][339] - The exercise of outstanding warrants (22.9M shares) and issuance of equity awards (11.0M options) may have a dilutive effect on the stock and negatively impact its price[353] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company did not report any unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported[358] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period - This item is not applicable[359] Item 4. Mine Safety Disclosures This item is not applicable to the Company for the reporting period - This item is not applicable[360] Item 5. Other Information The Company announced the resignation of Dr. Eleanor de Groot, Executive Vice President, Operations, effective May 13, 2022 - Dr. Eleanor de Groot resigned from her position as Executive Vice President, Operations, effective May 13, 2022[361] Item 6. Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate governance documents, certifications, and XBRL data files - Exhibits include Amended and Restated Certificate of Incorporation, Certifications of Principal Executive Officer and Principal Accounting Officer, and Inline XBRL documents[363]