Good day and thank you for standing by. Welcome to the Alaunos Therapeutics' Second Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference maybe recorded. I will like to hand the conference over to your speaker today, Danielle Dudgeon, with Stern Investor Relations. Please go ahead.

Good morning, and welcome to Alaunos Therapeutics second quarter 2022 financial results conference call and audio webcast. With me today are Kevin Boyle Senior, Chief Executive Officer; Drew Deniger, Vice President of Research and Development; Abhishek Srivastava, Vice President of Technical Operations; and Mike Wong, Vice President of Finance. Earlier this morning, Alaunos issued a press release announcing financial results for the three months ended June 30, 2022. We encourage everyone to read today's press release, as well as the Alaunos quarterly report on Form 10-Q for the quarter ended June 30, 2022, which is filed this morning with the SEC. The company's press release and quarterly report will also be available one the Alaunos' Web site at Alaunos.com. In addition, this conference call is being webcast through the Investor Relations section of the company's Web site, 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 is accurate only as of the date of this live broadcast, August 15, 2022. Actual results could differ materially from those stated or implied by the forward-looking statements made today 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 ec.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 turn the call over to Kevin Boyle.

Thanks, Danielle. Good morning, everyone. Welcome to the Alaunos second quarter 2022 earnings call. Apologies for the frog in my voice here, I hit back to Mr. Rossi, my seventh and eighth grade Latin teacher, and I remember the phrase, tempus fugit, time flies. And time flies when you're having fun. I approach the one-year anniversary of joining the company, and I'm just so proud of are progress that's been made by our dedicated team. The rebuild team has formed a strong operational, manufacturing, and clinical foundation over the past year. Our TCR-T Library Phase 1/2 trial is continuing to actively enroll, and I'm pleased to say that we're moving ahead at the second dose level after consulting with our investigators and safety review board. At the same time, we're working to expand our manufacturing capacity to support future clinical expansion, and are very pleased to welcome Abhi, as Vice President of Technical Operations, to lead this effort. You will hear from Abhi in just a couple of minutes, but I wanted to say that we're very excited to have him on the team as we seek to expand and optimize our manufacturing capabilities. Small world that Drew and Abhi worked together at the NCI, and both are beneficiaries of the world-class training it offers. This quarter, we are very privileged to extend our CRADA into 2025, working with Dr. Rosenberg and the NCI to develop personalized cancer therapies using our novel TCR-T cell platform. In partnership with Dr. Rosenberg's team, we look forward to continuing our collaboration, generating proof of concept in this personalized approach. When combined with the Alaunos TCR-T Library Phase 1/2 trial and our R&D efforts, we believe that we have the right approach, the right expertise, and in my mind most importantly the right team…

Thank you, Kevin. I'd like to echo Kevin's sentiment. Our team has worked to transform our innovative research into meaningful clinical progress with great potential. The recent cancer immunology research in New England Journal of Medicine articles have further contributed to that confidence and help validate our approach targeting shared hotspot mutations. The cancer immunology research article highlighted the power of TCRs targeting TP53 mutations and their clear benefits compared to TIL therapy. This paper showed that TCR-T cells specific for one of the most common TP53 mutations, an HLA-A02, one of the most frequent HLAs in the United States, led to an objective clinical regression of advanced breast cancer including 55% tumor reduction and resolution of significant skin tumors by 60 days post infusion. The New England Journal article was a case study of pancreatic cancer, who was treated with TCR-T cells targeting KRASG12D mutation. This publication showed that the patient achieved a partial response of greater than 70% which is ongoing at six months of follow-up. Alaunos is the only company with these TCRs in its library in the clinic. Both publications validate our approach to target KRAS and T53 hotspot mutations with TCR-T. I am also thrilled that we've extended our corporative research and development agreement with the National Cancer Institute to 2025. We are honored to continue our work with Dr. Rosenberg, a pioneer in the development of effective immunotherapies for patients with advanced cancers. Under the amended CRTA, the NCI will work to generate proof-of-concept data for fully autologous personalized TCR-T cell therapies using our proprietary non-viral Sleeping Beauty technology. We strongly believe that Sleeping Beauty is ideal for this application and has clear fundamental advantages to competing gene transfer technologies. I was lucky enough to have the privilege to work under the mentorship of…

Thank you, Drew. Let me review our financials for the three month ended June 30, 2022. For the second quarter of 2022, we reported a net loss of approximately $9.9 million or $0.05 net loss per share, compared to a net loss of approximately $22.7 million or $0.11 net loss per share for the second quarter of 2021. Research and Development expenses were approximately $5.9 million for the second quarter of 2022 compared to approximately $13.6 million for the second quarter of 2021, a decrease of 56%. The decrease was primarily due to lower program related cost of $2 million as the focus on the TCR-T platform. A $5.2 million decrease in employee related expenses due our reduced headcount following our restructuring in the third quarter of 2021. And a $0.3 million decrease in consulting expenses. General and Administrative expenses were approximately $3.4 million for the second quarter of 2022, compared to approximately $9.1 million for the same period in 2021, a decrease of 62%. The decrease was primarily due to a lower employee related expenses of $5.4 million due to our reduced headcount following our restructuring in the third quarter of 2021 and a $0.2 million decrease in consulting and professional services expenses. As of June 30, 2022, Alaunos had approximately $60 million in cash and cash equivalents. We anticipate our cash runway to be sufficient to fund operations into the second quarter of 2023. Our operating cash burn for the second quarter of 2022 was $8.2 million, compared to $21.5 million in the second quarter of 2021, a decrease of $13.3 million or 62%. That concludes our financial update. I would now like to turn the call to Kevin.

Thank you, Mike. Now in financial update, you heard that we remained good steward of capital on behalf of our shareholders. We have made substantial progress advancing our TCR-T platform in this past year despite reducing our cash burn by over 60%. We were trimming expenses before it was the end all thing to do. We were trimming expenses because it was right thing to do. And we are focused on the activities that advance our programs through and into the clinic with singular goal of improving lives of cancer patients with solid tumors. Before we turn the call over to questions, I would like to introduce our newest member of the team, Abhishek Srivastava, our Vice President of Technical Operations. Abhi was most recently Vice President of Cell Therapy Development at Athenex. And previously, he was Assistant Professor at the University of Pittsburgh, where he led the process development and manufacturing of TILs. Abhi, would you like to say a few words?

Thanks, Kevin. And I am very excited to join Alaunos. It really reminds me my old days at NCI when I was working as a fellow and associated with this technology. So, I truly believe in this science and truly believe in this technology. And I am so excited to really be part of this team who is really bringing this advance technology to treat the patients who are really in need. With my manufacturing and product development background, I am really ready to support the team and really provide that manufacturing capability enhancement to drive this technology. With this, I would handover to Kevin.

Abhi, great to have you here. We are excited to have you as part of the team. So, with the appointment of Abhi, we are working diligently to execute against our multi-pronged manufacturing strategy to expand capacity. So, Abhi walked in Day one and he has plenty to do. And we have great confidence that he will be successful. So, I appreciate all of our dedicated Alaunos employees, our MD Anderson investigators, the patients, and shareholders for their support as we continue to make great strides across our entire business. As we prepare for the second-half of the year, we are working to consent and enroll additional patients in our Phase 1/2 trial and plan to present early data from the trial in the third quarter at a scientific conference. On the R&D front, we are excited to advance a personalized TCR-T cell therapy approach with NCI as well as continue to move our membrane bound IL-15 program towards an IND filling in the second-half of 2023. We look forward to updating you again soon as we continue our mission to improve the lives of patients suffering from solid tumor cancers. We will now open the call to questions. Michelle?

Thank you. [Operator Instructions] Our first question comes from the line of Prakhar Agrawal with Cantor Fitzgerald. Your line is open. Please go ahead.

Hi, good morning, everyone. Thanks for taking my questions, and congrats on the all the progress. So, maybe first question, if you can clarify, has the second patient being dosed or identified? And maybe Kevin and team if you can comment on and set expectations on how many patients will be presented in Q3? What data should we expect at this update and what's the bar for you? Thank you.

Prakhar, good morning, and glad to you are as excited as we are to share some information about our trial. We hope it's been received with welcome news that, not just in the second-half of this year that we'll be presenting a locator-only data, but, indeed, we'll be presenting in the third quarter, and that we'll be doing so at a scientific or medical meeting as well, so nice validation there too. Because of some of the restrictions of the conferences I'm not able to share much in the way of what data will be presented, but stay tuned. Only, what, six more weeks left in the quarter here, so we promise you we'll get that information out. And with regards to whether or not we've treated a second patient, again, please stay tuned on that front. We do not want to be in a situation where we're kind of giving patient-by-patient updated, we want to be more considerate about that. But what I will say is we're excited and encouraged by the number of patients that we are seeing interested in our trial. We're very encouraged that the safety review board and the investigators have put forth and allowed us to progress at the second dose level. So, again, we look forward to sharing the information as much as you look forward to receiving it, but we'll do so at some point in the next six weeks time, and we'll answer the questions that you have there. Thank you.

Thanks, Kevin.

And our next question comes from the line of Thomas Flaten with Lake Street Capital Markets. Your line is open, please go ahead.

Good morning, and thanks for taking the questions. Kevin, I was wondering if you could give us an update on the total number of patients that have been screened and what the match rate has been to the TCRs in the library.

Sure. Good morning, Thomas. We have screened to get over 500 lung and colorectal patients alone, so between those two indications we screened over 500 patients or prospective patients. And the match rate is over 5%, so we continue to be very pleased with the number of patients that we're screening, the pipeline, and the funnel that we are seeing. There's a very efficient, cost-effective means by identifying patients, and we continue to increase the number of patients that we are following on their treatment journey. So, we're very pleased with how that's progressing as well. And the other thing to highlight here, Thomas, is that with our Hunter platform moving forward, we fully anticipate that we will be adding TCRs to our library, that we'll be able to increase the addressable market, increase the -- since we have all the information that we're gathering of these over 500 patients in colorectal and lung, we'll be able to pick up new patients as we add TCRs, as we expand TCRs to our library and insert new TCRs that have either new mutations or new HLAs. So, we're very encouraged that we're going to be able to continue a nice pace of enrollment on this trial.

Fantastic. And then just I was wondering if you might be able to characterize the types of patients that are coming that are being screened by the folks at MD Anderson, is it typically salvage patients or have you started seeing maybe some second-line and third-line patients, just curious if you have some qualitative information around that?

It's a great question. We see it all. Sometimes these are patients walking in MD Anderson for the first time, and unfortunately may have just noticed a health scare or maybe came from out of state and were just recently diagnosed and are going to one of the best cancer treatment centers in the world. And as a result, we see patients of all size. Sometimes -- and that's why, sometimes a patient journey can last a while because these might be patients that have been recently diagnosed. And let's be honest, we're all in this to make sure that the patients get the care they need. So, there's really -- the human side of me says, I hope I never see these patients on our trial because that means frontline therapies are working for them. But if that's not the case and if, unfortunately, there is a failure in the frontline therapies that they're taking, then very much we are encouraged about our science and technology, and the ability to make a difference in their treatment plan, and to extend their life and improve their quality of life. So, we see all patients at all stages, some might be ready immediately to join our trial, some might take a little longer, some might never end up getting our trial because other therapies are working. The other thing worthy of nothing is it depends on the indication as well. So, some indications we might be earlier in line, and other indications there might be more approved therapies or treatments for them So, again, it's very much indication-specific as well. Hopefully that --

Appreciate that. Yes, that's great, thanks so much for taking the questions.

My pleasure. Thank you.

And our next question comes from the line of Yale Jen with Laidlaw & Company. Your line is open, please go ahead.

Good morning, and thanks for taking the questions. My question, to follow the previous one that based on the numbers of screened there and the matched, you might have roughly maybe 25 patients if my math is correct. Just curious whether that one of the gating factor or limiting factor will be the manufacturer capability -- capacity or other things that dictates how much -- how many patients you can start for -- or process for treatments?

Yale, good morning, and thanks for the question. The rate limiting factor in the near-term is not manufacturing, and that's why, again, we're getting ahead of the curve. As I said, we're following the old scout motto of, be prepared, that's, indeed, why we're investing and so excited to have Abhi come onboard, look forward to having him start to meet the broader investment community. But his background is about planning ahead for future manufacturing expansion, planning ahead for working on optimization. As we know right now, we have a manufacturing process that's a little shy of 30 days, that's fine for this early stage. But we certainly look forward to continuing to reduce that time, working in process development to find ways to optimize that and reduce the manufacturing. That by nature, in and of itself, will increase the throughput of our GMP suite. But, at this point, it is not manufacturing that is the rate-limiting step. And we are also working on cryopreservation, so I do want to highlight that too, that'll help as well with being able to produce cells for when the patient perhaps does progress and is ready for our treatment in our clinical trial.

Okay, great, that's very helpful. And maybe one more question -- follow-up question here is that what -- given that you can move to the second dose this rapidly, what are the factors or could you give us a little bit more color of the [measures] [Ph] dictates that you could move to the second doses? And lastly is that, what's the anticipated total patient to be dosed for the Phase 1/2 study? And thanks.

Thanks, Yale. So, let me touch on a few things. We are encouraged but not surprised that we are moving to the second dose level. That's why we designed the trial as we did, with this patient design. So, as a reminder, our approach targeting these hotspot mutations, we believe, is superior to other TCR companies because these mutations only appear in the tumor cells, nowhere on healthy tissues, and that's an important reminder. And that's what allowed us, in part, to start at a higher dose level. So, dose level 1 already based on a very broad literature review that was done by the team, efficacious dose levels begin at 1 billion TCR-T cells. And so, the fact that we're starting at 5 billion TCR-T cells, we're not starting at a throwaway dose level. Absolutely, in a Phase 1 trial safety is first and foremost the most important thing. And then we want to identify the recommended Phase 2 dose. But again, we're very encouraged because we are targeting things that these new antigens, these hotspot mutations only appear in the tumor, what's causing the tumor to survive, what's causing the tumor to thrive. And so, the fact that our TCRs can identify them and kill what is driving the cancer; we're going after the right target and we're doing so in a very safe manner because it's not honing to any kind of healthy tissue. And so, I just can't stress that enough. So, it is looking at the data of the [technical difficulty] patient or patients that were treated. And we did indicate on a prior call that the safety profile from the first patient looked very good, and that was going to be reviewed and assessed by the safety review board and by our investigators after the first patient. So, we did talk about that before and say that again, that we are very pleased with the safety profile that we saw in the first patient. And it is safety and the responses in the first 30 days after infusion that is evalued each and every time by our safety review board and the investigators as we determine the appropriate dose for the next patient to be treated.

And what will be the total numbers of patient you expected or planned for the Phase 1/2 study?

We're going to let the science tell us, Yale. So, we need to continually evaluate the patients as they get dosed and treated. And in part as well, it will depend, because we have the ability with the various indications and the various TCRs to move different things to a Phase 2 while still having the Phase 1 trial open since this is a Phase 1/2 trial design. And because of the Bayesian design as well, we're not locked into a predescribed formula. We're going to, again, let the science and statistics help us decide what the appropriate number of patients are to treat. So, we're very much scientifically guided and not artificially constrained by a poor trial design. We're very pleased with the forward-looking trial design that we have. And I think the fact that the FDA has worked very closely with us and is supportive and approved of this design is also very encouraging.

Okay, great. That's very, very helpful. And again, thanks a lot for the details.

Thanks, Yale.

Our next question comes from the line of Swayampakula Ramakanth with H.C.W. Your line is open, please go ahead.

Thank you, this is RK from H.C. Wainwright. Good morning, Kevin.

Morning, RK.

And for the manufacturing of these doses, how long does it take at this point, from bed-to-bed? And, as you progress and as you get more experience, are you seeing the possibility of reducing that manufacturing time?

Thanks, RK. Indeed there is positively a path forward in our process development activities to reduce the vein-to-vein time, bed-to-bed time, as you called it. Right now, it's approximately 30 days, that manufacturing timeframe. But our goal towards commercial efforts, if you will, is we see a path to be able to reduce that by about half. And so that's -- Abhi knows, that's his task and his challenge; he's up for it. And he will be working closely with Drew and the team. But we have a number of different process development initiatives that will facilitate that, that'll be incremental. So, we'll continue to provide updates as we refine our manufacturing process, optimize it, if you will, and reduce the number of days. And again, that will naturally be beneficial for many reasons. One, we get the treatment to the patient more quickly. Secondly, it'll naturally increase the throughput in our manufacturing suite. And so, for us, it's something that we'll updates here. I imagine Abhi is not going to let much grass grow under his feet, and in the next quarter or two we'll probably have further updates about the optimization of the process and how we're doing at that time.

Thanks for that. And the second and the last question for me is on the Solasia relationship. Do you have an idea when they could start commercialization? And could you remind us what the royalty terms are between you and the collaborator?

So, we'll let Solasia speak to their program, not for us to speak about. I think what's important that I wanted to guide is that we're talking about low single digits. So, this is not something that's going to be transformational from a capital perspective on the balance sheet. It's certainly helpful. Any kind of dollars that we receive, that's mailbox money, and we'll put it to good and smart use in our R&D efforts and our clinical efforts, but I just wanted -- the message I wanted to share is always great to put assets that we were not developing to work and to receive money for them, but the guidance that we have been given is that this will be -- there is a ramp-up anytime that a new product is released. And with regards with our royalty terms being in the low single digits, it's not something that will dramatically alleviate capital needs of the company forever.

Perfect. Thank you very much. And good luck.

Thank you.

Thank you. [Operator Instructions] And we have a follow-up question from the line of Prakhar Agrawal with Cantor Fitzgerald. Your line is open. Please go ahead.

Hi, thanks for taking the follow-up as well. So, may be Kevin, just a quick clarification. So, the safety review by MD Anderson and the decision to move to second dose, is it done at the 28 days follow-up for the first patient, or at a later time point? And I had one more question.

Sure. As a cook, I always appreciate when somebody wants seconds. So, that's a good sign to me, Prakhar. So, indeed you have to wait for at least the first 28 days safety window for the Safety View Board to gather. Clearly our investigators are following the patient on a daily basis and very much gathering information. But there are not any artificial constraints if that's what you mean or structural constraints that we would have to wait X number of days to review the information. So, perhaps that's helpful.

Yes, that's very helpful, Kevin. And maybe a question for Drew, if you can comment some of the recent publications or case reports in NEJM and Cancer Immunology Research which show TCR therapy had activity in KRASG12D and T53 patient? So, maybe it would be helpful if you can highlight the similarities and differences between your approach versus those mentioned in these publications? And thanks again.

Love to. We're really excited about these two validating case reports that's come out of academic institutions really showing the power of TCR-T cells targeting hotspot mutations and really showing some preliminary evidence of what we are trying to do in the clinic in our library TCR-T trial at MD Anderson. Both of these case reports are using retrovirally transduce TCR-T cells. We are using a Sleeping Beauty system which is non-viral. We think there is a number of advantages. We think that's very well-suited for what we are trying to do and very commercially appealing for the long term. So, we are really excited about testing that in our clinical trial. And then, there are some other minor differences in the lymphodepletion regimens with patients, especially the pancreatic patient didn't receive of the drugs because they didn't have -- they had previous TIL therapy and didn't respond well to it, that may be a minor difference. And then both patients received -- well, the pancreatic patient received high dose IL-2. And as a reminder, we do not use high dose IL-2 in our library trial. So, let's say that those are the two main differences looking in, but the papers are in-depth and would also highlight again that the Cancer Immunology Research paper highlights the benefit of TCR-T over TIL. I would encourage you guys to read that. So, thank you.

You may be modest, but he is one of the authors on that paper. And again we benefit greatly here at Alaunos from his expertise and many years working with TCRs, with Sleeping Beauty, and that's I think just a really important differentiators the value that Sleeping Beauty brings to the ability to manufacture these TCRs quickly, cost-effectively, and in a library approach.

Thanks again, and looking forward to the next update.

Thanks, Prakhar.

Thank you. And I am showing no further questions. So, ladies and gentlemen, this does conclude today's question-and-answer session. And it also does conclude today's conference call. Thank you for participating. You may now disconnect. Everyone -- [Audio ends abruptly]…