ZIOPHARM Oncology Inc

Greetings. Welcome to the ZioPharm Oncology third quarter 2021 earnings conference call. 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 keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Alex Lobo, Stern Investor Relations. Thank you. You may begin.

Thank you. Good afternoon and welcome to ZioPharm Oncology's third quarter 2021 financial results conference call and audio webcast. With me today are Kevin Boyles, senior, ZioPharm's chief executive officer, and Rafael Abafa, ZioPharm's chief medical officer and executive vice president of research and development. Earlier this afternoon, ZioPharm issued a press release announcing financial results for the three months ended September 30th, 2021. We encourage everyone to read today's press release, as well as Zyre Farm's quarterly report on Form 10-Q for the third quarter of 2021, which has been filed with the SEC. The company's press release and quarterly report will also be available on Zyre Farm's website at zyrefarm.com. In addition, this conference call is being webcast through the investor relations section of the company's website and will be archived there for future reference. Please note, That certain information discussed on today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Participants are cautioned that this conference call contains time-sensitive information that are accurate only as of the date of this live broadcast, November 8, 2021. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. Information on potential risks and uncertainties are set forth in our most recent public filings with the SEC at sec.gov. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this webcast, except as may be required by applicable securities law. With that said, I would like to now turn the call over to Kevin Boyle. Kevin, you may begin.

Thank you, Alex. and welcome everyone to Zyafarm's third quarter 2021 earnings call. When I joined Zyafarm just over two months ago, I promised to be transparent with shareholders and share my observations and perspectives at the next opportunity. Today, I'd like to do that and highlight some of our recent accomplishments and lay out my vision for the next year. A month ago, we made the decision to strategically restructure the organization and focus our efforts on advancing our differentiated TCR T-cell platform. As a result, we took immediate action to right-size the organization with a focus on generating clinical data while maintaining a robust R&D discovery engine. I'm impressed by the quality, dedication, and resiliency of our team at XioPharm and am confident we possess the internal capabilities to advance our innovative scientific research into the clinic. We appreciate the importance of generating clinical data to validate our TCRT platform and are making excellent progress in that regard. We realized the fastest way to the clinic was not to rely on an external contract manufacturer, but to operationalize our in-house CGMP clinical production unit, or CPU. I am very proud to announce that we completed the necessary engineering and process qualification runs in October at our CPU. The Xifarm team did an excellent job working together in a cross-disciplinary manner to accomplish this important step. We remain committed to begin treating patients in the first half of 2022. Our TCRT platform is predicated on a robust research and development lab and team based in Houston. The R&D team is working on several different programs. First, we continue to support the lead program, our TCRT library trial, and are working to incorporate additional TCRs into this IND. Second, we are advancing the development of our membrane-bound IL-15 program and expect to have further updates on future calls. Third, we have devoted significant resources to generating our own TCR discovery platform. These activities will allow us to generate our own intellectual property and have exclusive use of the TCRs we identify. I'm impressed by the breadth and depth of our R&D team and TCRT platform, which holds the potential to meaningfully improve the lives of cancer patients. I will let Raffaele take a deeper dive into our upcoming TCRT library study but I want to elaborate briefly on our rationale for this program. Our TCRT library platform is enabled by our versatile non-viral Sleeping Beauty technology combined with our extensive library of TCRs. This gives us an advantage as we can target multiple solid tumor indications within this single trial. This enables a timely and cost-effective approach to potentially identifying several indications that could benefit from our TCRT platform and give us multiple paths forward once we have generated this initial data set. This is critical to our go-forward strategy, and we are focused on dosing our first patient in this study. I would now like to turn the call over to Raffaele, our Chief Medical Officer, to provide an update across our manufacturing, clinical, and R&D efforts. that will support our future growth and bring value to our stakeholders. Raffaele?

Thank you, Kevin. This past quarter, we have continued to make progress across all of our manufacturing, development programs, and R&D activities. And like Kevin said, all of us at XioPharm are committed to execution and generating clinical data in the next year. Let me start by highlighting the progress we have made at in-house CGMP manufacturing facility in Houston, Texas. We have built and are opening our own CGMP clinical production unit, CPU. Commissioning of the facility, as well as the safety process validation, were completed in the second quarter. And we recently completed engineering and process qualification grant in the CPU. We are committed to having terminal manufacturing capability operational to support the first patient dosing in the first half of 2022. Once operationalized, we expect to begin dosing patients in our Phase 1-2 TCRT library study in the first half of 2022. As Kevin mentioned, our TCRT library study is a basket trial. that will evaluate patients across six solid tumor indications, lung, colorectal, endometrial, pancreatic, ovarian, and bile duct cancer. Last month, we opened our screening study at the MD Anderson Cancer Center, and we are actively screening patients that will be enrolled on the Phase I-II treatment study based on matching neoantigen TCR-HLA pairing that are available in our TCRT library. Patients will then be infused with autologous T-cells that have been engineered to express T-cell receptors using our Sleeping Beauty Transposon Transcosase technology and that are reactive against such mutated neoantigen. The Phase I dose-finding portion of the study will evaluate patients at one of three dose levels. We believe that our adaptive trial design is an optimal approach to advancing our TCRT library forward as it will allow us to rapidly and cost-effectively first identify the recommended Phase II dose and then develop tumor-agnostic therapies across multiple indications. These give us the opportunity to move quickly in one or more registration trials, much to the genetic profile of the patient's cancer cells, as we seek to translate our research and development engine into meaningful clinical progress. As you may recall, Earlier this year, at the ACR Annual Meeting, we shared exciting preclinical data on our multiple TCRs. On Saturday, at the annual 2021 Conference of the Society of Immunotherapy of Cancer , we will provide an update on these TCRs with unique specificity targeting recurrent TP53 and KRAS substitution in frequent HLA applies. will further demonstrate the strong science beyond our TCRT program. Finally, to round up our go-forward strategy, we are continuing to qualify and validate new TCRs to further expand the potential utility and applicable patient population for our TCRT library. On this subject, we plan to file an IND in the next few months to include four additional TCRs into our upcoming TCRT library trial. Furthermore, we have developed an innovative platform with internal resources, including genomics, bioinformatics, and cellular immunology, to generate and validate proprietary TCRT targets that are exclusively owned by us. I would now like to turn the call back over to Kevin to review the financial results for the quarter. Kevin?

Thank you, Raffaele. For the third quarter of 2021, we reported a net loss of approximately $22.7 million, or an 11 cent net loss per share, compared to a net loss of approximately $20.3 million, or a 10 cent net loss per share for the third quarter of 2020. Research and development expenses totaled approximately $14.5 million for the third quarter of 2021, compared to approximately $14 million for the same period in 2020. an increase of 4 percent. General and administrative expenses were approximately $8.2 million for the third quarter of 2021 compared to approximately $6.4 million for the third quarter of 2020. Total operating expenses for the third quarter of 2021 were approximately $22.7 million compared to approximately $20.3 million for the same period in 2020, an increase of 12 percent. Cash and cash equivalents as of September 30, 2021, were approximately $91.7 million. Given our current development plans and continued cost management efforts, we anticipate our cash runway will extend into the second quarter of 2023. That concludes our financial statements. But before we open the call to questions, I'd like to close by saying that we are committed to building a leading TCRT company. we have created an organization that is appropriately capitalized and staffed for success. Over the next year, we will remain focused on transforming the innovative scientific research we have developed into clinical progress. We have made excellent progress on operationalizing our in-house manufacturing facility, and with existing cash sufficient to fund our operations into the second quarter of 2023, we are confident in our ability to enter the clinic with our TCRT library program and generate meaningful clinical data in 2022. With these clear and achievable strategic priorities in place, our entire team here at ZioPharm is focused on execution as we aim to bring value to our stakeholders and improve the lives of cancer patients. We will now open the call to questions. Hillary?

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 one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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. Our first question is from Alicia Young of Cantor Fitzgerald. Please proceed with your question.

Hi, this is Emily on for Alethea. Thanks for taking our question. I'm just curious what the gating factors are to starting the phase one such to study now that you've made the progress with the in-house manufacturing and then maybe also just comment on it now that you've done the restructuring. How do you kind of expect your operating expenses to change in the fourth quarter and maybe in 2022 as well? Thank you.

Right. Thanks, Emily. I'll start with the second one first. With regards to cash burn, we anticipate that our burn going forward will be less than $15 million a quarter. And so that's something that we will be reporting on our cash burn going forward as well. And some of the cash is associated with repaying the term loan that was put in place as well as we look in the future horizon. And so those terms of the term loan are spelled out into our 10Q But we do have a nice reduction in our cash burn while remaining the appropriate size team to execute on our goals. Now, with regards to treating patients in our trial, it's important that we have the all clear on our IND from the FDA. So the FDA review is probably the most important part to the next step, along with screening and enrolling patients. Rafael, anything you'd like to add to that?

Just as I said earlier that we already started screening patients, actively screening patients. So the, you know, we are already screening patients that can be enrolled on the phase one to treatment study.

Awesome. Thank you.

Thanks, Emily.

Our next question is from Arthur Hay of HC Wainwright. Please proceed with your question.

Good afternoon, everyone. This is Arthur Ng for RK. Thanks for taking my question. So I guess I just want to follow up on the TCRT trial. Could you give us more colors to see what else needs to be complete or to be qualified before you guys starting to dose the first patient in that trial?

Raffaele, do you want to reiterate what we said before to Emily?

Exactly. We are waiting for the FDA review, you know, and as Kevin mentioned earlier, and we are already screening patients that can be enrolled on the trial. Now, you have to keep in mind the frequency of the mutations and the JLA prototype, but we are selecting these patients, and we are ready, you know, to start. enrolling patients fairly soon, I would say. But in the first half of 2022. Okay.

Thank you. Thank you for that. And congratulations on the manufacturing part. I just want to know, for those manufacturing part, it's most likely more for the clinical trial or how about for the commercial manufacturing? What's your plan on that part? Thank you.

Yes, thank you. It's for the clinical part that we have our manufacturing capabilities. On the commercial side, that's quite a number of years away from right now, and we have not communicated what our strategy will be at that point.

Okay, sounds great. Thank you. Thank you for taking my question.

Thank you, Arthur.

Our next question is from Thomas Flatton of Lake Street Capital Markets. Please proceed with your question.

Yeah, good afternoon, guys. Thanks for taking the question. I was just curious, following the restructuring that you had, have there been any retention strategies put in place to keep the staff that's left behind? Have there been any other unforeseen departures? I'm just curious what impact that has had on the remaining staff.

Yeah, thanks, Thomas. We did put in an incentive stock option grant to make sure that we are all aligned with regards to creating value for our shareholders and at the same time motivating and incentivizing our team. And so that has been well received by the team and everybody has been working very hard, very much aligned. And we have not had any resignations that come as surprise. So we're very excited with the retention of our team. And, you know, it's a core team. We're very strategic with who we ended up keeping. And I just, reiterate the strength of the team that we have, the resiliency of the team, and the amount of effort and deliverables that are coming out of this team is quite impressive and really well positioned to get this clinical trial up and running and enrolling patients here in the first half of next year.

Thanks for that. I apologize if I missed this, but with respect to the IND clearance, Are you anticipating adding new TCRs to the IND prior to clearance, or will that be kind of an ongoing rolling exercise that you go through as you identify new TCRs?

Rafael, why don't you speak to that?

Yeah, so I wouldn't put a timeline or a time connection with the submission. But we are planning adding TCR in a rolling manner, not only for the four that I mentioned earlier, but additional TCR that will come the next year.

Great.

And then finally – I wouldn't link the things together, though.

Got it. No, no, understood. And then just one final question. Any word out of the NCI on how things are going over there?

So I believe that Raffaele and team will be visiting the NCI later this week as part of the CITSE visit, but we don't have any update right now to share with regards to the NCI.

Great. I appreciate taking the question. Thanks so much.

Thank you.

We have reached the end of the question and answer session. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation, and have a great day.