Good afternoon, ladies and gentlemen, and welcome to the Ziopharm Oncology First Quarter 2019 Results Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Chris Taylor, Vice President, Investor Relations, Corporate Communications. Sir, you may begin.

Thank you, Bridget, good afternoon. Welcome to the Ziopharm Oncology conference call and webcast to review results for the first quarter of 2019. This afternoon, we filed our 10-Q and issued our Q1 news release, both of which are available in the Investors Section of our website, ziopharm.com. During the course of this call, the company will make 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 10-Q and within other filings that we may make with the SEC. Participating on the call today are Dr. Laurence Cooper, CEO of Ziopharm; and Dr. David Mauney, our company President. Each will provide commentary and we'll open the call for Q&A. Now I'd like to turn the call over to Dr. Mauney. Good afternoon, David.

Yes, thanks, Chris, and welcome aboard here at Ziopharm. And thank you for everyone -- thank you, everyone, for joining us today on the call. We are pleased to speak with you this afternoon to provide an overview of results for the first quarter of 2019, to provide you an update on our core programs and to highlight value-creating milestones we expect for this year. We extend a special welcome to those of you who have taken a new look at Ziopharm over the last few months. We benefit now from an increasingly strong and supportive base of shareholders, and we are pleased to see evidence of new support this year. We also welcome two new analyst on this call, each of them initiated coverage of Ziopharm in recent weeks. We began 2019 with significant corporate momentum. In addition to a reinforced corporate structure and balance sheet, we are now well-positioned to achieve multiple-critical and value-driving milestones this year, including being in the clinic with all of our filler programs, namely TCR-T, CAR-T and Controlled IL-12. We are pleased to report that all of the important clinical milestones articulated on our year-end call are on track, and today, we reaffirmed our timelines for attaining those events. With these milestones essentially upon us, the table is set for what we believe will be very a strong balance of the year. To accomplish our goals, we have established strong partnerships with those, we think, are the most recognized leaders in our field. For our solid tumor TCR program, our external clinical lead is Dr. Steven Rosenberg, Chief of the Surgery Branch and Head of the Tumor Immunology Section at the NCI. We spent increasing amounts of time at the NCI over the past quarter, and together, we agreed to extend our CRADA…

Thank you, David. And thanks to everyone for joining us today. Let me also thank Director Jim Cannon for his service to Ziopharm. He has provided terrific help and support to me and the company, and we wish him the best. Ziopharm aims to be a leading developer of immunotherapies to target cancers by harnessing the power of our 2 platforms: Sleeping Beauty and Controlled IL-12. I will provide an update on both, beginning with the Sleeping Beauty platform. One of the hottest areas in immunotherapy is centered on the use of T-cell receptors or TCRs, to target neoantigens for the treatment of solid tumors, the leading cause of cancer deaths in the United States. We believe the enthusiasm associated with TCRs today mirrors where CAR-T was several years ago, and we plan to be a leader in the category. So a key question, what sets us apart from others? There's 4 things: first, Ziopharm is focusing on the use of TCRs to target solid tumors as we believe chimeric antigen receptors, or CARs, will have limited commercial appeal. The evidence is that unless the T-cell therapy addresses antigens that are expressed within all of the patient's cancer cells, then that patient will progress or relapse due to the overgrowth of tumor cells that failed to express the targets; second, Ziopharm has developed a solution to enable the cost-effective production of T cells, expressing neoantigens specific TCRs. This is based on the use of DNA plasmids from the Sleeping Beauty system. The simplicity and elegance of this nonviral gene transfer technology sets us apart from the complexity and cost of genetically modifying T cells with virus; third, Ziopharm recognizes that there is currently no off-the-shelf cellular solution to generating T cells that express TCRs. This is because the TCR repertoire…

[Operator Instructions]. Our first question comes from the line of Ren Benjamin with Raymond James.

Can you hear me okay?

Yes.

Sorry about that. Thanks for taking my questions and congratulations on the progress. Maybe just to start off with the third generation CAR-T, Laurence, can you just remind us kind of where we are in the process of getting the trial started? And whether you've now been able to consistently sort of generate product above the viability threshold that's required by the FDA?

Yes. Thanks, Ren, and good to hear from you. The key concern from the FDA really was not associated with the Sleeping Beauty systems, so in other words, didn't penetrate the core nonviral approach. It really went to the idea that when you rapidly produce T cells, and we're talking doing this in 2 days or less from gene transfer, those cells essentially, are coming out of the electroporator and being delivered to the patient as a bulk product, if you would. So there's a mixture of cells that have gone through that physical process of viable and nonviable. The FDA guided us last year in June that, that essentially ratio had to be 70% in favor of viable cells. So what we've done, basically, since that time is develop a process to achieve that goal, in other words, achieve the critical threshold of 7-0, 70% viability. So by reiterating today that we are on track to open this trial in the second half of this year, I'm giving good guidance, I think, to The Street that the process engineers, who are based in Houston and we're very grateful to them, really have made significant progress in this area. And I'm really delighted by what I've been seeing behind the scenes if you would.

Got it. And just maybe as a follow-up and switching gears to the IL-12 program. The ASCO data, you have a poster, you have an oral presentation. Can you give us, just, any color as to how many patients in each of those presentations? How much follow-up should we be looking for? And what are the key endpoints that we should be focused on?

Sure. Thank you. So there is two presentations, a poster and an oral. The poster is going to really focus on the monotherapy and be able to start addressing the expansion cohort. Now as you'll recall, that expansion study has very rapidly accrued. In fact, we've actually completed the accrual. And so the data is locked in, but essentially, the stopwatch is going. And the reason I highlight that is that we hold ourselves to a high standard around the quality of data and that data is, do the patient survive, do patients who have basically a lethal diagnosis of recurrent GBM, will they survive longer than historical controls, that 6 to 9 months benchmark. So for that, essentially -- either to achieve that, we have to follow those patients out for the bulk of this year. So I think, the way that I would guide you and investors for that presentation is this will be an interim update. And I think it will be important for the investor community, but it's a story really this will unfold and continue to unfold this year. The oral presentation, obviously, we've got a lot of interest from the society, and the reason this is because we're the company that for really the first time is solving the problem of why PD-1 inhibitors, such as Opdivo or Libtayo, why they have had such a difficult track record in the treatment of GBM within use of monotherapy. And the reason is because the most GBMs are immunologically sterile. They aren't just T cells in there to essentially disinhibit or to engage with your PD-1 asset. Ziopharm has the answer, and we've published these data with you in the community showing that IL-12 can change that immunologic desert into one where it's now flush with T cells and those T cells will reside in that tumor for a long time. This has, I think, a lot of opportunity and a lot of upside and the abstract and the oral presentation will address that type of technology. So again, I think, it's really outstanding opportunity for the investors and for the scientific community to learn about how IL-12, really, for the first time, can be partnered with PD-1 in patients with brain tumor.

And our next question comes from Eric Joseph with JP Morgan.

I just wanted to follow-up to start maybe on -- walk on Rens' question regarding the NCI program. I'm just trying to get better visibility on the path to start of the clinical trial, and you -- just given the TCR program also being based on the Sleeping Beauty technology, the assay -- the IND, sort of, outstanding for the CD19 hematology program. Sort of, is -- are you -- do you -- I guess you'd be thinking about sort of a formal IND having been filed or in place for the CRADA program? Or they potentially exempt?

Yes. Sure. So the NCI follows the same type of procedures as any academic or any company. In other words, they would have approval through the FDA for this essentially first-in-human gene therapy trial.

Okay. Got it. Got it. And just on the hematology program with the CD19 Sleeping Beauty CAR. The -- just wondering, sort of, what the gating steps are. I know you guys are on track to providing key data feedback looks like in half of the year, but just what is -- any, kind of, clarity you can offer in terms of the remaining hurdles that can be overcome? I guess, particularly given that, the competitor is using a similar technology platform is currently in clinic. To what extent is your means of modifying the T-cell, unnecessarily to the CAR itself but modifying the T-cell potentially differentiated from other platform approaches that [indiscernible] through the approach?

Yes, I can't comment on others and what their program is. But you are talking to the team that invented the very rapid manufacturing of CAR-T. We understand not only what it is to essentially genetically modify these T cells in 2 days or less, but also essentially what the path is to get that trial open and accruing patients. So we are developed the solution to that. That solution is on track. It really is associated with the viability question. That's the primary thrust where we are working. And solutions that we've developed that are elegant, they're our own, and from the data I have seen, they are reproducible. So we're buoyant about our chances now and I think at this trial, not only of clinical hold but enrolling patients this year.

Our next question comes from the line of RK from H.C. Wainwright.

Regarding the combination study with Regeneron's drug, Libtayo, do you need to wait for the newer study to mature a little bit more before finalizing the protocols so that you can come up with a steady -- with better data from the initial combination study? And also, what sort of tumors are we looking at with the Libtayo molecule?

Sure. So, in terms of the package, if you would, about being able to move forward here, the Phase II study is actually really benefited from our work with Opdivo. This was a risk that Ziopharm took really last year starting a combination in June of 2018. And it may not have been apparent to The Street, but the reason why that risk is paying off is that we have essentially understood how IL-12 now can be combined with the PD-1 asset. We've gone through a number, and I just announced this is -- we've just enrolled into the third dosing cohort here. So that gives you a clear signal that we've been successful in essentially marrying IL-12 and the PD-1 asset and doing so, in a very careful way, such that we can achieve what we think are the correct doses. That data has been essentially transmitted to our partner at Regeneron and allowed us now to essentially get to a Phase II trial, which -- the signals are that that will also be essentially enrolling patients this quarter. In terms of the types of tumor, this really remains focused on recurrent GBM. Most patients with a diagnosis of GBM, it's something like 8 out of 10, 9 out of 10 of those patients will recur, and when they recur they die 6 to 9 months despite everything, that's currently commercially available. So those are the patients that are our heart goes out to, those are the patients that are interested in the trial, and I would just add that we have a waiting list for our therapies. Patients and providers see IL-12 and see the combination with PD-1 as really life-changing, and we want to be able to essentially execute on that enthusiasm.

And our next question comes from the line of I-Eh Jen with Laidlaw & Company.

Probably just a follow-up on the IL-2 part as well a little bit more. The first one is that there was a paper published about 2 years ago regarding why the PD-1 studies failed in the GBM and there's -- some hypothesis has been suggested. Do you feel that the combination now you have with IL-12 potentially could, sort of, overcome some of those potential hurdles, as has been mentioned in their publications?

Yes. Thanks, I-Eh. Thanks also for really being involved in our story. So the reasons for PD-1 failure, as I understand that, primarily is driven by the fact that in the GBM, and especially in the recurrent setting, is immunologically isolated. You can't get T cells in there. So even though the PD-1 asset can essentially activate those T cells by disinhibiting the PD-1, PD-L1 access. If you don't have T cells nested into and in with the tumor then those T cells essentially can't get to the problem. They're circulating if you would, and they're not intratumoral. So we are very buoyant on the idea that by IL-12 being intratumorally administered, will totally change the landscape of the tumor microenvironment, essentially using buzzwords, turning a cold tumor, hot, getting an immune signal and then getting T cells in there that essentially can be -- essentially activated with this PD-1 inhibitor. The data around monotherapy of PD-1, you said -- I probably saw the paper from a couple of years ago, I've also been recently updated in a series of monographs and in the Nature Medicine periodical. And those papers clearly guide around what I'm talking about. In other words, the immunological signature is critical, if you would, to understanding how well PD-1 will work and IL-12 essentially takes that immunological signature from a negative to what we think is going to be a positive.

Okay. Great. That's very, very helpful. Maybe just follow up a little bit on that. For the collaboration -- for the combo study with the Regeneron's PD-L1, just curious, what dose you might be starting will be repeating what you have, whether before or you are going to jump on maybe 1 or 2 dose starting with the higher dose?

Yes. That is an excellent question. So here, we're building up our data with Opdivo. So we have a dosing strategy that really is appropriate for a Phase II trial. I mean we are not going to be doing it, dose-finding study. We are pretty confident that we know what the sweet spot is for IL-12, and we are pretty confident, based on really the approval of cemiplimab or Libtayo that we know the dose for that asset. We know that we essentially can put those together because of all the dose-finding studies we've done where we had to incrementally creep up to where we think the sort of the inflection point is. So as we get ready to enroll, it will be a Phase II study, which would -- it should enroll rapidly because we're essentially pressure testing what we think is the correct dosing.

Our next question comes from the line of Thomas Flaten with Lake Street capital.

Great. Just a follow-up on the question about the IND at NCI. I heard you confirmed that they would be subject to the same rules, but could you confirm that the IND's actually been submitted to FDA? Or is that still outstanding?

Yes. Thanks, Thomas, and also thanks for being involved in our story. So our guidance here is that we're going to be open, essentially, mid-2019. As we were mentioning on the last -- really call just a few weeks ago, our intent here is to get away from the sort of day-to-day rhythm about regulatory processes. That, in the past, has essentially not updated the Street, nor served Ziopharm well. But to give you, essentially, confidence about what's going on here, when we are talking to the NCI, and when we are essentially working in partnership with them, they are giving us full confidence that they're on track to enroll patients mid-2019. And that should give you a good signal about the status of the regulatory process.

Yes. That's great. And then just a quick housekeeping follow-up. On R&D spend, there was a bit of an uptick from the fourth quarter, even though compared to first quarter last year, it was down. Is the first quarter R&D spend a good number for us to use going forward? Or should we be thinking about a different level of spend for the last three quarters of the year?

Sure. And we can all work with you offline a little bit if you need to hear some additional color there. I think the way to think about that is when we really went up on our own, we separated from what has been our primary partner Intrexon, they were taking care of a lot of the R&D for us. That was part of the agreement. As we know are independent, that R&D budget has to reflect essentially that we're in R&D shop as well as prosecuting our commercial assets. So I think that's part of the story, and I think, for the investors, the good news is that we are now fully in control of our assets. We are prosecuting our ideas essentially to the full extent that we can now because we are on our own, and I can see that together with my team, a clear opportunity for Ziopharm to essentially make inroads on a variety of ideas and cancer opportunities. And we're going to go full force on those. So yes, there may be a sort of a small uptick, but that essentially is, I think welcome news for the investors.

And we do have a follow-up from Ren Benjamin with Raymond James.

Yes. Just -- are you there? Can you hear me okay?

Yes. Thanks, Ren.

Yes.

Great. Just the Eden -- the joint ventures, can you just provide -- I know you mentioned it, can you provide some color as to where we are? When do you think we might be able to get into the clinic in China? Just sort of what your thoughts are? You now had several months. And then maybe just as a follow-up to that, there are several companies that are developing nonviral systems as you guys are aware of. But it seems like they're taking a different approach, which is partner the technology and there seems to be a lot of interest. Can you talk a little bit about maybe why you feel, or maybe others feel that Sleeping Beauty is really the best nonviral option that's out there? Or they're roughly the same and it's really just a race of who gets there first?

Sure. So first the Eden BioCell, I actually just got back from China. And while I can't tell you all of the insight scoop here I can certainly share the overview that it's dramatic progress, really from an accelerator going from 0, they're now going to 100. People are hired, infrastructure's in place, GMP is being essentially built out and it looks fantastic. I mean you would be proud of this operation if it was based here in Boston, it would essentially rival any other company. Those -- that essentially -- infrastructure essentially then is being married to really a set of clinicians, regulatory people and additional, sort of, if you would, sort of external infrastructure to be able to access greater China. And that really is remarkable in just a few short months. And they have now, essentially, the people, the money and our help to be able to now go after this rapid manufacturing of the CD19 asset. So in terms of the -- when they're going to be treating patients, I can't go much further than say it's all lining up beautifully, it's the right people, the right time and stay tuned because it's a rocket ride. The next part of your conversation is really around nonviral gene transfer. So it actually brings a smile to my face because a lot of time, the questions were "hey, Lawrence, how come you not doing virus?" What's special about Sleeping Beauty kind of thing because why are you doing nonviral when the world is doing viral? And I just sort of see a smile a little bit to myself because the questions now are coming, "Okay. We see that nonviral is the solution." And so we have been talking about nonviral ever since I got here, and actually, obviously,…

And I'm not showing any additional questions.

Okay. So thank you, operator. And thank you all on the phone. Have a great day.

Ladies and gentlemen, this does conclude the program. You may now disconnect.