ZIOPHARM Oncology Inc

Greetings. Welcome to the ZioPharm Oncology, Inc. Second Quarter 2021 Corporate Update. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. Please note this conference is being recorded. I will now turn the conference over to your host, Adam Levy, Executive Vice President of Corporate Development and Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon and welcome to the ZioPharm Oncology conference call and webcast to review our updates for the second quarter ended June 30th, 2021. This afternoon, we issued our press release, which is available in the investors section of our website, ziopharm.com. Additionally, we posted a PowerPoint presentation to accompany today's commentary, which can also be found in the investors section of our website. Let me remind everyone that during the call, the company will make a number of forward-looking statements, including statements regarding the potential therapeutic candidates in our development pipeline, regulatory status, financial information, and business trends. Forward-looking statements are subject to numerous risks and uncertainties, as described in our most recent 10-K and 10-Q filings and within other filings that we may make with the SEC from time to time. On our call today, we have Heidi Hagen, Interim Chief Executive Officer, who will present a brief corporate summary. She will be joined by Dr. Rafael Abafa, Chief Medical Officer, who will present an update on our clinical programs. In addition, we are joined by Ellie DeGroote, our EVP and GM of Cell Therapy, and James Wong, our Executive Chairman, who will be available during the Q&A portion after our prepared remarks. And to get things started, I'll turn the call over to Heidi Hagen. Heidi, please go ahead.

Thank you, Adam, and welcome, everyone. Let me start by saying that I'm excited by the progress we have made across multiple fronts since our last call in May. Indeed, since the beginning of the year, we have truly transformed the company, and you can see the progress reflected on slide four of the deck we posted. This is a different company. Turning now to the details of our progress, which are summarized on slide six of the materials, since our last quarterly update, we have achieved several key milestones for our TCRT program. We successfully completed the commissioning of the CGMP Clinical Production Unit and completed aseptic process validation for the facility in Houston. These critical steps enable the facility to be used for our Phase I-II TCRT library trial. In addition, the team is completing process qualifications with healthy donor cells, which will support the use of the facility to manufacture TCRT cells for the clinical trial. We remain on track to dose patients in our Phase 1-2 TCRT library trial in the second half of 2021, and we are anticipating doing so in the fourth quarter. We have been emphasizing our strategy on our TCR program, and all of the company's efforts are being directed towards this program. We've never been more enthusiastic or optimistic. Raffaele will share more on this in a few moments. Moving now to the balance sheet. We ended the first half of 2021 with approximately $76.7 million, and today we announce that we have successfully executed a venture debt facility with Silicon Valley Bank for $50 million. with an immediate drawdown of initial $25 million tranche, which is not included in our end of second quarter cash balance. The $25 million initial tranche extends the company's cash runway into the fourth quarter of 2022, well beyond the time required to generate and assess the initial clinical data from our phase one to TCRT library trial. I want to make it clear that the company had and continues to have a multitude of options for financing and balance sheet fortification. The board and management team were deliberative on the best path forward and took into account both where the science is and where our cash runway brought us. The guiding principle, of course, was shareholder impact. We've done this in a smart way with minimal dilution. As we said previously, we have no intention of selling shares at the current stock price. which we believe significantly undervalues the company. And regarding our current market valuation, we understand the concern shareholders have expressed. We believe continuing to execute is the right way to demonstrate to the market that we are a leading oncology-focused TCR company. We firmly believe we are on the right track. The company is now operating from a position of strength with meaningful progress in our groundbreaking TCRT library trial enabling activity and in our efforts to strengthen the balance sheet. We are doing exactly what we said we would do earlier this year and we have growing momentum that is exciting to see. We are now in a position where the company will succeed or fail based on the science and the clinical data rather than operational considerations and challenges. Before I turn the call over to Raffaele, let me say a word on the search for a permanent CEO. As we mentioned in our press release, the board is very close to a decision, and we would expect an announcement in the very near future. A number of well-qualified candidates were considered, and we are looking forward to making an announcement. Let me turn the call over. Raffaele?

Thank you, Irene. Let me start by saying a few words regarding our progress in our pioneering TCST library program. As Ivy mentioned, we achieved another major milestone for our TCRT library program by completing the commissioning of the CGMP Clinical Production Unit, or CPU, as well as a safety process validation for the newly constructed TCR manufacturing facility in Houston. We remain on track to those patients in the Phase I to those finally starting in the second half of 2021. We now anticipate that that's occurring during the fourth quarter. The trial is initially targeting six individual solid tumor indications, cholangiocarcinoma, pancreatic, ovarian, endometrial, colorectal, and lung cancer, which were selected due to the frequency of KRAS and or TPCC mutations. These are just the initial tumor types as we plan to expand into additional indication in the future. We continue to qualify additional TCRs in our library and plan to amend the IND in the second half of this year to include these TCRs. This expansion will increase the potential utility, applicable patient population, and addressable commercial market for the library. It may include additional KRAS and or TPT mutations or other genetic hotspots associated with solid tumors, such as EGFR. We plan to provide updates on the library later this year. We know that there is an interest in our manufacturing strategy and capabilities, so let me say a word about this. We are disclosing today more details regarding the contrast manufacturer for our TCR-T cell product. During 2020, we successfully transferred the manufacturing process to KBI BioPharm, a contrast manufacturing organization with CGM-PCL therapy manufacturing facility in the Goodlands in Texas. TCRT batch data generated by KBI and our own laboratory were the basis for the CNC portion of our IND filing area this year. KBI is now working to complete the process qualification and aesthetic process validation to facilitate clinical manufacturing. Additionally, as Heidi mentioned previously, we have been implementing a strategy to build in-house CGMP clinical production capacity at our facility in Houston. We have done this to provide greater flexibility and control of these important aspects of clinical development. We are rapidly moving forward to establish our own manufacturing capabilities. The commissioning of our clinical production unit, or CPU, as well as the safety process validation, we have completed this past quarter. The team is completing process verification, which will support the opening of the facility to manufacture TCFT cells for the clinical trials. The ability to use both our facility and KBIs for manufacturing provides us a strong degree of risk mitigation and greater capacity as we scale up clinical trial activities. I want to remind everyone why we are so confident in our TCR program. As you may recall, we share exciting critical data area this year at the ACR annual meeting, where we presented the multiple TCRs could be stably expressed using creeping beauty transposition to redirect peripheral blood T cells towards tumors. These TCRs have unique specificity, targeting recurrent PPPT and KRAS substitution in frequent HLA archetypes. We plan on providing additional preclinical data, further demonstrating the strong science behind the program later this year at the scientific conference. Based on ongoing dialogue with investigators, we are very optimistic that we will consistently find the types of ASPR mutations Chile matches with our library within the target patient population. This, along with the complaining body of clinical data and progress on manufacturing, gives us a strong degree of confidence in the program. We expected those patients in the study during the fourth quarter with initial reach out during the first half of 2022. As we said previously, those results may occur at scientific conferences, but we will provide updates as soon as we have meaningful data to share. Let me also provide a brief update on our investigational CB19 RPM CAR-T cell therapy program being conducted in Taiwan by Eat and Buy Yourself, our joint venture with Triumph Therapeutics. We have included more detail both in our press release and our thank you, which were filed earlier today. Since the trial's initiation in March, two patients have been dosed and evaluated. No serious adverse safety events were reported in neither of these patients. Laboratory results continue to support, as previously published, the non-viral flip-infused gene transfer is effective in genetically modifying autologous T-cells. Patients were infused two days after gene transfer, thus shortening the turnaround time and providing a clear advantage over viral methods. Based on laboratory data for these first two patients, the Eden Biocell team, along with the lead investigator and with the support from the team at ZioPharm, concluded that further process development work is required to optimize and refine the manufacturing process in order to more consistently manufacture products in the desired clinical dose range seeking to be studied. Per the terms of the joint venture agreement, the TriArm Eden Biocell team will attempt to make the necessary process development improvements before infusing additional patients. The length of time to do is unknown. It may require up to two months. The ongoing COVID-19 outbreak in Taiwan presents added uncertainty to the timeline, as the operational activity in the manufacturing facility are currently slowed due to the employee restriction related to the pandemic. These restrictions are impacting clinical trials broadly in Taiwan. As we also mentioned in the first release and consistent with our strategic focus on TCR, the company is seeking and considering broader partnership to enable further development of the investigation of CB19-RPM CAR T-cell therapy. Several parties have expressed interest in such a partnership, including Triam Therapeutics. The company will carefully consider all options regarding the future of the joint venture, the technology, and the global development pathway in order to maximize shoulder value. It is important to note that the TCR and CAR-T processes are intrinsically different and have followed separate process development pathways. While both involve sleeping beauty gene transfer, the construct, manufacturing processes, and target indication are distinct. Additionally, the TCR-T clinical program is investigating the treatment over a range of solid tumors, whereas the CAR-T program has been focused on hematological malignancies. We do not believe that the findings from CAR-T read through to the TCRT program. You can find additional details on our pipeline and milestones in the materials we shared earlier today. Let me conclude by reiterating what makes the ZioFarming unique and why we are so excited. Slide 5 in the material is a great representation of what driver values for us, the right self, the right target, and the right class. With that, we now turn the call over to the operator, who will help us begin the QA. Operator?

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.

Apologies. We are having a slight technical difficulty.

Okay. Thank you for your patience. Our first question comes from Alethea Young of Cantor Fitzgerald. Please state your question.

Hi. This is Nanon for Alethea. Thanks for taking our questions. So for the Taiwan trial, can you please just discuss what the current manufacturing process was exactly and who runs it? And a second one, is there anything you can leverage from your own experience with manufacturing with TCRT to help with the EDEN BioCell program?

Thanks. Thanks, Nina. Let me maybe ask Ellie or Raffaele to comment on the manufacturing process in Taiwan.

Sure. I'll start. So the manufacturing process in Taiwan utilizes this rapid personalized manufacturing process or RPM process. So essentially it's a very simple process where Sleeping Beauty is used to do the genetic transfer and the cells are released shortly thereafter and infused immediately. So within two days of the gene transfer. This is quite different than the TCR process, which actually utilizes an ex vivo propagation, so a more kind of traditional type propagation process that allows the cells to grow to larger numbers. So you asked about who runs the manufacturing process. This is performed by the TriArm team, so the TriArm team in Taiwan. does the manufacturing at a CGMP facility on site at the National Taiwanese University. And certainly there are, you know, just in terms of the processes that have been developed and are continuing to, we continue to perform process research and process development to always improve the processes. There are obviously concerns things that one learns about improvements that can be made across the board. So I think just, you know, as the field in general progresses, there are learnings that can be made that will help us to improve the processes for, you know, the foreseeable future.

Rafael, please do that example. Yeah, if I may add, there is also a structural difference between the CAR and the TCR. They're completely different. So the size, the sequence, without going into the details, they are two different constructs, right? While the Sleeping Beauty, the gene transfer works very well with both systems. Keep that in mind. These are two different, you know, assets.

I would also add, this is Heidi, I would also add you asked a question about the TCR process and its reflection on the CAR T process. And yes, the TCR process is a more mature process that's had a couple more years in our hands in the laboratory and in facilities. And so there are opportunities to further improve the process and there are insights that we have gained And we know that our colleagues at Eden have also gained some insights, too, along those lines. So just to answer your second question is that there is experience and understanding that does reflect on the opportunities with that particular process and product.

Okay, that makes sense. Thank you.

Nina, anything else we can help you with?

No, thank you.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for additional questions. It appears there are no more questions at this time. I would like to now turn the call back to Heidi Hagen for closing remarks.

So our 10Q will be filed in the next several days, and I would like to thank everyone for joining us today. Have a great rest of your day, and it's been a pleasure talking with you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.