Q3 2019 Earnings Call
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I'd like to turn the conference over to Mr., <unk> Senior Vice President of Investor Relations and corporate Communications. Sir. Please go ahead.
Thank you operator, good afternoon, and welcome to the ZIOPHARM Oncology conference call a webcast to review results for the third quarter of 2019.
This afternoon, we filed our 10-Q and issued our third quarter news release, both of which are available in the investors section of our web site <unk> farm Dot com for informational purposes. We have also included in our web cast a set of Powerpoint slides to accompany today's commentary. These slides can also be found on our website.
In the investors section.
During this call the company will make a number of forward looking statements, including statements regarding the potential therapeutic candidates in our development pipeline regulatory risks 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.
See see from time to time.
Participating on our call today for ZIOPHARM will be Dr., Lawrence Cooper, Chief Executive Officer, Dr., David Mooney, President and South to close CFO .
Following commentary for management team, we open the call for acuity and the interest of time, we kindly request that you ask one question then a follow up and then please feel free to return to the queue. Thank you and to lead things off I'll turn the call over to David Rooney. Good afternoon, David Yeah, Thanks, Chris and good afternoon to everyone.
ZIOPHARM as a company with a very big vision.
Since late 2018, we have progressed, the we shifted our focus towards our TCR programs.
In an effort, where we believe we have the technology and building blocks to address the large market of solid tumor patients with individualize cancer therapy.
When considered in totality, we are unaware of any pier, who can rival us.
It starts with a clinically validated non viral gene transfer solution for which we have years of clinical experience.
We believe can be used to manufacture patient specific drugs that allow us to be agnostic to the target for the tumor type.
It is a technology platform that has been widely published and going into the clinic for the first time ever with TCR T with a world leading clinician and scientist at the end see a dr. Steve Rosenberg.
We didnt stop there as just last week, we partner with the largest cancer center in the world and have already confirmed broad interest in our platform across multiple oncology subspecialties.
We will now enjoy access to patients samples and the full punch of MD Anderson institutionally.
The economics of the deal our success based and paid in the future demonstrating the full confidence the institution places in our program going forward.
Additionally, we have a license what we believe is a world class library of relevant Tc ours and have recruited a key scientists from the NCR tied to help lead our clinical path for TCR T within the walls of ZIOPHARM.
We are building out our team in Houston rapidly and are proud to be recruiting highly successful and experienced industry leaders away from companies like Novartis for example to join ZIOPHARM.
Finally, the NCR is about to treat the first patients using our technology and TCR T. In a phase two trial.
As Lawrence will detail it goes without saying that we're pleased to go straight to phase two now as moving beyond phase. One will result in significant savings in terms of time and money.
Along with many others in the field and based on past clinical history, we believe that TC ours are the drug of choice and the genetically modified healthy peripheral blood T cells are the best cancer fighting warriors as compared to a patient's own pill or tumor infiltrating lymphocytes for example, and.
Fact, dr. Rosenberg own experience shows a continuum that has evolved from using a large number of tils to now genetically modifying peripheral blood T cells to express not one but multiple TCR.
It is our belief that a robust scalable non viral approach to manufacturing will always be cheaper and more practical with an eye towards commercialization as compared to a viral approach.
With regards to intellectual property and ownership rights would this clinical work being performed another creator.
We recently took the opportunity to make it abundantly clear that we have the right to our TCR program exclusively.
We reminded the market about ZIOPHARM IP and ownership rights under the NCR relationship by proactively following the credit agreement and an 8-K for all to see.
To briefly restate the facts.
ZIOPHARM controls commercialization of it sleeping beauty TCR program.
And importantly holds for commercial economic minus fees milestone payments and single digit royalties payable to its partners.
And the 2017 crater ZIOPHARM retains all rights to develop oncology products for sleeping beauty.
The NCR has rights to use sleeping beauty, but solely for the purpose of conducting research under the credo or said another way the M.C. I, specifically cannot commercialized sleeping beauty related products.
The May 2019, IP license agreement ZIOPHARM exclusively licensed in certain fields intellectual property from the NCR to develop and commercialize.
Talaga peripheral blood T cell therapy products engineered by transpose on mediated gene transfer to express Tcrs reacted to the families of mutated Congrats T. P 53, and EG fr hotspot.
The agreement also contemplates, adding additional TC ours in the same hotspot families to Thislife and something that we are already actively seeking to utilize.
Well, we haven't discussed it recently our activities outside of the company continue to be robust we have ongoing conversations with potential partners and we believe the clinical data will drive the most significant value.
Our initiatives to engage with potential new investors continues to ramp up.
We are speaking with a broader base of sophisticated biotech investors and continue to push for an expanded share base around what we think is a significant investment opportunity in terms of a risk reward spread.
We are adding exposure through additional investment banking conferences, such as Morgan Stanley and as a reminder, we will be presenting at Jefferies. Later this month in London.
As the company enters a period of significant growth towards developing and commercializing products in a highly promising oncology space, we recognize that not all parties will embrace our progress in fact, we will likely continue to have vocal detractors. It is worth highlighting the DC tractors are most often.
Misinformed and rest assured they only reinforce our desire to prove them wrong.
Of course, the best Elixir for all his execution and clinical data.
Where we are working aggressively to deliver on those milestones, which we control and provide proper assistance on those we do not.
We remain steadfast in crowd 13 months into our charter as an independent company and look forward to the clinical data that lies ahead.
To summarize over the last year, we have executed on a focused plan to expand and prioritize efforts around the TCR core assets for the largest untapped markets in solid tumors.
We licensed critical IP exclusively and we'll continue to further develop and license more IP, we continue to refine our technology, including efforts in screening bio informatics and in manufacturing.
We are building a team in a board aligned with skills to support this vision, we raise capital from a very smart and supportive investor base to assure that we passed critical clinical milestones and sign an agreement with the largest cancer center in the world to help US run the trials and build the library and now like you we wait.
The we await the first patient in a groundbreaking phase two trial.
Laurence his vision many years ago was to provide a rational scalable cost effective immunotherapy that could have an impact on not just some markets of cancer patients, but all of them is predictions are now playing out real time and the opportunities that lie ahead, our tremendous.
With that I turn the call over towards thanks, David and good afternoon, everyone. As mentioned one cornerstone desire from future is our TCR T program for solid tumors for which we had made significant progress even since our last call.
Let me start by updating you on our clinical work at the anti as a reminder, this trial evaluates infusion of T cells that are genetically modified with sleeping beauty system to express one or more TCR as targeting personal neoantigens.
The trial is under the control the Doctor Rosenberg and his team.
We are pleased that the idea with the anti is for a phase two trial, which is a positive change since our last quarterly call to highlight the primary endpoint now being tumor response rate.
The patients will be closely followed at the anti with participants seen in clinic every few months.
Well, we'll learn a great deal from each and every patient enrolled.
And associated data will likely be available in the weeks or months following the T cells infusions.
Recall that Dr. Rosenberg is enrolling patients with a range of solid tumors, which will reveal how T cells tackle a variety of Kansas, We will learn how each tumor types. The comes to the T cell infusions, we will learn how these T cells target to map, which includes persistence and trafficking to the sites of cancer.
On a provide you with a sense of the opportunity for ZIOPHARM based on our credo with the NCR.
Dr. Rosenberg estimates that T cell can recognize cancer antigens in over 80% of patients with tumors.
There are approximately 1.5 million new cases of solid tumors each year in the United States. The solution, we are developing with Dr. Rosenberg can target most 80% or so of these patients which put it represents a massive opportunity for us.
The sleeping beauty system.
With selected for this trial, given the significant human experience and clinical responses seen upon administration of the CD 19 specific car. Furthermore.
The rosenberg's team has demonstrated a published that the sleeping beauty system can be used to genetically modified clinical grade T cells to express Neoantigen specific TCR.
We're in close dialogue with Dr., both imbark. Unlike Q await the first patient does.
The next step is then opening enrollment to a broader number of patients and indications while diaphragm does not control the timing and release of VNC ice data, we do know that information on even a small number of patients can result in significant value creation.
It's important to note why we're so confident that this technology will work.
There are four important clinical data points in support of this asset station.
The first is that we know T cells can target solid tumors. This is primarily based on the infusion of tumor infiltrating lymphocytes or tails into patients with melanoma.
The second is the understanding that hills successfully targeting tumors do so by other T cell receptors RTC yards that recognize Kenseth neoantigens.
Third is that still which are not genetically modified typically run out of gas and struggle to target tumors other than melanoma.
And fourth on last is that the genetic engineering can insert the neo antigen specific T C arts into young T cells derived from the peripheral blood that can therefore recycle that Kelly.
ZIOPHARM built upon these clinical experiences using the following three scientific advances to create a leading TCR t. therapy for solid tumors. Firstly, we developed a scalable low cost non viral approach to genetic engineering T cells based on the sleeping beauty system.
Second we use this system to genetically modified T cells from peripheral blood, which overcomes infusing tired or exhausted T cells from till and third we harness the sleeping beauty system ability to scale to meet the needs of patients and the demand of commercialization.
For example, multiple TCR it will be needed whether for personalize T cell therapy targeting individual targets or infusion of T cells targeting hot spots.
This work beginning with our partnership at the NCR has resulted in an open I Andy for Phase two trial exclusivity to key intellectual property surrounding the TCR than T cell manufacturer independence to operate and now the relationship with MD Anderson to execute on our own clinical TCR trials.
This brings me to our next update on the TCR T program, which is the recently announced R&D agreement with Indiana.
This was months into making and we're delighted to strengthen our engagement with them.
The excitement is reciprocal as you have already secured bias from multiple oncology, south specialties, and leading investigators within Indiana send wanting to work with ZIOPHARM.
The agreement accomplishes the following three things for us.
Firstly with we are partnering with the largest cancer center in the world and we now enjoy access to more patients than we could at any other single center.
Secondly, it accelerates the expansion at the initial library of TC hours and hotspot in three important families of genes that really drive cancer biology in other words K RASK TP 53, Fr and lastly allows us to implement ZIOPHARM leg clinical trials for solid tumors.
We believe the initial Tcl library from the NC I already provides us a competitive advantage. This library covers multiple mutations and maps to white diversity of H. delay molecules in other words, the current library will enable us to enroll existing patients at MD Anderson and increasing the library.
Further broaden the application.
There are three additional points I'd like to make regarding TCR us from the library with respect to trial design.
Firstly, the TCR library allows us to simply screen patients for hotspot mutations, which will reduce the time to deliver cancer targeting T cells two weeks.
Secondly, we already have enough TCR ours in all library to begin a clinical trial at MD Anderson.
And lastly, the larger the library the greater the number of patients that can be treated and the greater the likelihood of success.
In addition to accelerating the pace of growth at the TCR Library. This new agreement with Indiana. Some provides the foundation for two news ZIOPHARM lead clinical trials. The first is the trial utilizing TCR assumed the library targeting hot spots in patients that are rapidly screened with the simple blood test.
The second is if the patient does not have a mutation in a hot spot that much like the NC I trial today, we will execute on a protocol to manufacture a personalized product individual neoantigens.
We're making great progress and look forward to providing more color on the timing of these trials early next year.
With regard to next generation technologies in TCR tea. We are also pleased to present preclinical data. This December at the American Society Hematology on the rapid personalized manufacturer or RPM TCR team, which is based on the co expression of TCR and membrane bound I'll 15.
Using the sleeping beauty system.
To achieve success in our path to cure a solid tumors, we must have a playbook being control of our development and be aligned with the leading cancer centers to run the broke groundbreaking trials. We have achieved all three over this past year.
Finally, a summary on our other two programs before I turn the call about assaf for our financial update.
Turning to our car T program.
This is our second T cell therapy program also built on the seeking beauty platform and it's based on the rapid personalized manufacture RPM of Cdnineteen specific carty. The goal of the program is to prove that we can dose cells with 70% viability operator as soon as the day after gene trend.
Extra and demonstrate that the cells grow under the control of membrane bound 15 to target tumor as they did in preclinical models.
Since we have the rights to the technology in the only approved car ticket, we think the fastest path to human data is the most important path as a result, we uncovered an opportunity in patients who have limited therapeutic options available to them wrote the R&D and obtain clearance all this year.
We announced on October 1st that the FDA cleared or 90 for phase one clinical trial, we will evaluate infusion a donor derived RPM car T in patients with Cdnineteen expressing leukemias and lymphomas, who have relapse softer allogeneic bone marrow transplantation. This study will be conducted at MD Anderson.
ZIOPHARM remains committed to our work for the autologous RPM program targeting Cdnineteen. In addition, eat Empire cell is also actively planning on an autologous trial in greater China has made steady progress establishing a clinical network of hospital sites under taking steps to facilitate.
Regulatory submissions.
Turning to our controlled IL 12 program.
In August we're pleased to report that supported data from the phase one monotherapy trial were published in science translational medicine, a link to that publication can be found on our website.
We have benefited from progress in the enrollment to our combination studies with both Opdivo and the tile and we continue to monitor those patients enrolled in the monotherapy expansion study.
The 12 additional patients in the Opdivo trial have now been enrolled the first six patients in the lets highest study had been a role and those patients are nearing the end of the required monitoring period before we resume enrollment.
We are preparing our two poster presentations for the society of Neuro oncology later this month as we did at ASCO early this year, we plan to present interim data for both the monotherapy study and the phase one combination study with Opdivo.
And now we'll hear from our CFO Saps you plan for the financial commentary related to Q3. Thank you Lauren.
The next fast paced initial three months for me ZIOPHARM and I'm very excited as we ramp up our efforts to build a great company to bring disruptive technologies to market throughout the organization. Our team is intensely focused on executing on our strategic plan to advance transformative to me.
Therapies for patients and achieved a milestones which will create value for the company and Florida investors.
Now turning to the specific financial results for ZIOPHARM third quarter of 2019.
As noted in on use of all these intend to research and development expenses was 8.6 million for Q3 of 2019 compared to 8.3 million off Q3 of last year.
Any expenses were 4.8 million for the third quarter of 2019 compared to 4.3 million for the third quarter of 2018.
On a cumulative basis.
According to a onetime noncash charge of $60.8 million.
Associated with the waters exercise from the financing be completed in Q3.
Flexing that noncash charge net loss applicable to the common shareholders for the third quarter of 2019 was 74 million or 43 cents per share compared to a net loss of 18.7 million or 13 cents push through for the put quarter of 20 team fine.
Formational purposes, only if we exclude the onetime noncash charge of 60.8 million net loss, which had been cooking point 2 million or eight cents per share in line with the net loss reported in the first and second quarters. This year.
On the financing site. During this last quarter, we announced that's a group of why investors led by MSP partners entered into an agreement to exercise existing warrants, providing more than 50 million and proceeds to the company.
The company ended the quarter with unrestricted cash resources approximately $88 million.
Additionally, we also have a prepayment balance of approximately 21.5 million for clinical and preclinical work to be conducted by the company MD Anderson cancer Center.
To summarize we significantly strengthened financial sheet balance sheet in detailed questions.
Combined with the prepaid capital to fund our work at MD Anderson, we have more than $100 million enough liquidity to put into our business and our cash takes us into the first half of 2020 one.
We believe we have sufficient capital to see quickly to data readout and each of our three core programs and now I will hand, the call back to lot in for any final part. Thank you and closing we're proud of all that has been accomplished in the past quarter and indeed, the past year, we're putting key pieces in place today to enable diaphragm to attain our mission.
Become a leading global commercial stage immuno oncology company.
With that or turn the call to the operator for questions.
Ladies and gentlemen, if you have a question at this time piece first and then the number one key on your touched on.
If your question has been answered or you wish to remove yourself from the Q. Please press the quality.
Your first question comes from David Novak premature your line is now open.
Good afternoon, and thanks for taking my questions today, so to kick it off I was hoping you might be able to provide us a bit of color around the new R&D agreement with MD Anderson to expand the TCR programs.
Specifically, how you will be prioritizing expanding the TCR library versus competing I'd, enabling studies and maybe some thoughts as to how to work MD Anderson will be differentiated from the work being done it and how it will complement the NCR development.
Yes, Thats great David Thank you so.
So in terms of the prioritization versus the completing the idea enabling studies they actually go hand in hand.
The the way I would like investors to think about this is that there's basically two parts to the up to the therapy. One part of the therapy is identifying the T cell receptors for instance, T cell receptors against the hotspot mutations and the second part is the genetic engineering of the T cells to express those T cell receptor.
As you'll recall that the I indeed at at the anti actually it's a playbook for the manufacturer for that second part of the public you would so when you talk about I envy, enabling studies those have been done we essentially have that playbook and we use a cassette based mentality.
Essentially it's a swap in different T cell receptors into the plasma sense that will allow us essentially to generate targets.
Or generate T cells for each particular target. So so the I Andy studies have that really robust foundation.
The the generation of the T cell receptors. The prioritization of that work. If you want at MD Anderson is really built on the tight relationship we have with them now under this R&D agreement. It really actually allows us to have the intellectual property associated with the discovery of those T cell receptors and employ.
Currently we have.
Relationships with key faculty member that really the leaders of the institution, who have access to many many patients with solid tumors that that essentially synergy between Austin the investigators allows than tissue to flow into law, the bar charts and as we mentioned in our press release.
We are actually expanding our footprint in Indiana send to add to handle this material and we can therefore using biologic samples. So essentially look for the T cell receptors that are either up quite a personalized basis or the would add to the library.
Going into the hotspot. So this is a way I think about essentially as a win because we have the we at the playbook for manufacturer we have the material to essentially from Indiana soon to be able to go after the T cell receptors on the whole thing has been jump started by the NCR.
Because were using their technology to discover the TCR is can we using essentially the the playbook. If you would all the manufacturing Esso peas, and whatnot to generate the T cells.
Excellent. Thank you and as a quick follow up going through Ash abstracts yesterday.
I came across two interesting ones detailing RPM of both cars and PCR co expressing membrane bound 15 as you highlighted in your prepared remarks.
I've received a number of questions around RPM viability and why the company believes that clinically engrafting sells at 70% viability should not be materially different from engrafting sells at 90% viability, yes. So maybe some comments around that and also some comments around the significant.
Member.
And I'll 15 to both drive in vivo persistence and tackle heterogeneity, yes, that's great. David So in terms of the viability. So the benchmark there as guided by the agency they say products have to be 70% or greater viability ZIOPHARM has achieved that threshold and that's really the basis our bar.
Our I Indy, whether the sells a 70% or 90% doesn't really make much difference in terms of the outcome in the preclinical models and we looked at actually that question.
And just are again just to kind of highlight this is a living drug so you're putting in cells that are 70% Bible those cells will be gap in a doubling cycle more sell them, then double again, and so forth and so on the will grow in the patient.
The reason, where we're able to say those statements with confidence is that we have that accelerated that membrane bound I'll 15 baked into the T cell the car modified T cell and now our TCR modified T cell that allows essentially for these cells when they go into the body to grow in the patient.
So it sort of get it heterogeneity question.
In my mind that actually trigger a slightly different thoughts I want to make sure I get your the thrust to your question here, David So for US when we are generating T cells using membrane bound I'll 15, we've deliberately and working very hard to shorten the manufacturing to really capture the heterogeneity of cell.
The come out of the bloodstream, especially for instance, the naive pool, because we think that that pool of cells has the greatest potential once it's put back into the patient. So unlike other companies that goes through a growth of their cells in the incubator those cells.
Can actually be restricted in their heterogeneity can be actually terminally, what we called differentiated and the door can be closed essentially on their ability to survive after infusion, whereas with our technology being so wrap it we essentially keep as if you would the full portfolio. The all the flavor as of the T cells that come out of the person's budgeting.
Return on the back to the patient soon thereafter.
Fantastic. Thank you very much and congrats on all the progress and I'll hop back in the queue. Thank you.
Thank you. Your next question comes from Southern of Lake Street Capital. Your line is now open.
Thanks, guys for taking the questions.
Specific to to MD Anderson, a question around the pre funding or the prepayment that already exists and then the commitment that you're expecting to to make a post 2021 can you talk a little bit about how that's going to be distributed against across the TCR as well the car T programs and how we should think about additional commitments required in advanced 2021.
Sure Yeah, I'd be happy too so that that a relationship about how we spend the mines is actually governed by what we call. The JSC Joint Steering Committee, which Indiana Sun is a member and also as I as far as a member and the steering committee than reviews programs.
And make.
Resources available.
Both essentially Indiana and ZIOPHARM, our invested in the car program.
As well as increasingly the TCR programs. So over time, what you're going to see is that funds available and put into play for building out our infrastructure and importantly for running and completing the two clinical trials I described around the TCR T. space.
Great and then do you have any or could you provide us with some sense of timing for the initiation of the the MD Anderson car T program.
Yeah. So we're working really hard to open that trial by the end of the here.
Great fantastic. Thanks, so much guys.
Thank you.
Your next question comes from Sean H.C. Wainwright. Your line is now open.
Hi, guys and thanks for taking my question Alan just a quick one on the car T program.
Notice that.
Our plenty good doing a donor derived study.
The U.S. while doing a.
Autologous study.
Joint venture with bio so I was wondering what's the rationale behind these two pivotal programs why not focus on one was the other for both studies. They sure. So thank you. So it's really a sequencing issue. So we start with the allogeneic.
RPM all rapid personalized manufacturer of T cells that really we saw the fastest path of the clinic and to really get.
A sense of the technology for the investors and patients alike, we're still committed.
To the at Tal I guess carty in both the United States and in greater China. So the way I would think about it for the purposes of at the Investor community is that we've essentially funded the work in greater China through our relationship.
Eden bias sell and that's it that's essentially now has money. It has people it has momentum and it's rolling and we'll have more to say essentially is at the trials them bubble up in terms of at the end the Edison agreement and the unit. The working I'd say that's also if you would somewhat prefunded because it really it's the money that's essentially at end BNS and that can be.
Used to run the car T programs.
Hi, Thanks for the additional color that's all.
Thank you at this time, we have no further questions and I will turn the call back to talk for Cooper for final remarks.
Yes, thanks, very much everyone and I wish everybody that Thanksgiving week to come and thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you. So much for participation you may now disconnect.