10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-33038

 

Alaunos Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

84-1475642

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

8030 El Rio Street

Houston, TX 77054

(346) 355-4099

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

TCRT

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

 

Accelerated Filer

 

Non-Accelerated Filer

 

 

Smaller Reporting Company

 

 

 

 

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 9, 2022, the number of outstanding shares of the registrant's common stock, $0.001 par value, was 216,182,042 shares.

 

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are all statements contained in this Quarterly Report that are not historical fact, and in some cases can be identified by terms such as: “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “target,” “will” and other words and terms of similar meaning.

These statements are based on management’s current beliefs and assumptions and on information currently available to management. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this Quarterly Report include, but are not limited to, statements about:

our ability to raise substantial additional capital to continue as a going concern, fund our planned operations and repay our existing indebtedness;
estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;
the development of our product candidates, including statements regarding the initiation, timing, progress and results of our preclinical studies, clinical trials and research and development programs;
our ability to advance our product candidates through various stages of development, especially through pivotal safety and efficacy trials;
the risk that final trial data may not support interim analysis of the viability of our product candidates;
our expectation regarding the safety and efficacy of our product candidates;
the timing, scope or likelihood of regulatory filings and approvals from the U.S. Food and Drug Administration, or FDA, or equivalent foreign regulatory agencies for our product candidates and for which indications;
our ability to license additional intellectual property relating to our product candidates from third parties and to comply with our existing license agreements;
our ability to enter into partnerships or strategic collaboration agreements and our ability to achieve the results and potential benefits contemplated from relationships with collaborators;
our ability to maintain and establish collaborations and licenses;
our expectation of developments and projections relating to competition from other pharmaceutical and biotechnology companies or our industry;
our estimates regarding the potential market opportunity for our product candidates;
the anticipated rate and degree of commercial scope and potential, as well as market acceptance of our product candidates for any indication, if approved;
the anticipated amount, timing and accounting of contract liabilities, milestones and other payments under licensing, collaboration or acquisition agreements, research and development costs and other expenses;
our intellectual property position, including the strength and enforceability of our intellectual property rights;
our ability to attract and retain qualified employees and key personnel; and
the impact on our business from a pandemic, epidemic or outbreak, including the COVID-19 pandemic.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Unless the context requires otherwise, references in this Quarterly Report to “Alaunos,” the “Company,” “we,” “us” or “our” refer to Alaunos Therapeutics, Inc., and its subsidiaries.

i


 

We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website names. We own the trademarks Alaunos™, Ziopharm® and hunTR™ as well as the graphic trademark found on our website. Other trademarks, service marks and trade names appearing in this Quarterly Report are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this Quarterly Report are listed without the ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

 

ii


 

SUMMARY OF SELECTED RISKS ASSOCIATED WITH OUR BUSINESS

 

Our business faces significant risks and uncertainties. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. You should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report. Some of the more significant risks include the following:

We will require substantial additional financial resources to continue as a going concern, continue ongoing development of our product candidates and pursue our business objectives; if we are unable to obtain these additional resources when needed, we may be forced to delay or discontinue our planned operations, including clinical testing of our product candidates.
Our plans to develop and commercialize non-viral adoptive cellular therapies based on T-cell receptor, or TCR, therapies can be considered as new approaches to cancer treatment, the successful development of which is subject to significant challenges.
Our current product candidates are based on novel technologies and are supported by limited clinical data and we cannot assure you that our current and planned clinical trials will produce data that supports regulatory approval of one or more of these product candidates.
We will need to attract, recruit and retain qualified personnel, and we will continue to rely on key scientific and medical advisors, and their knowledge of our business and technical expertise would be difficult to replace.
Our existing indebtedness, together with our other financial obligations and contractual commitments, could adversely affect our financial condition and restrict our future operations. For instance, we were required to deposit a significant amount of cash into an account to be held as collateral.
If we are unable to obtain the necessary United States or worldwide regulatory approvals to commercialize any product candidate, our business will suffer.
Our product candidates are in various stages of clinical trials, which are very expensive and time-consuming. We cannot be certain when we will be able to submit a Biologics License Application, or BLA, to the FDA and any failure or delay in completing clinical trials for our product candidates could harm our business.
Our cellular immuno-oncology product candidates rely on the availability of reagents, specialized equipment, and other specialty materials and infrastructure, which may not be available to us on acceptable terms or at all. For some of these reagents, equipment, and materials, we rely or may rely on sole source vendors or a limited number of vendors, which could impair our ability to manufacture and supply our products.
If we are unable either to create sales, marketing and distribution capabilities or enter into agreements with third parties to perform these functions, we will be unable to commercialize our product candidates successfully.
Our immuno-oncology product candidates may face competition in the future from biosimilars.
If we or our licensors fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish and our ability to successfully commercialize our products may be impaired.
Our stock price has been, and may continue to be, volatile.

iii


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (unaudited)

2

 

Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021

2

 

Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)

3

 

Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021 (unaudited)

4

 

Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)

6

 

Notes to Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

27

Item 4.

Controls and Procedures

27

 

 

 

PART II.

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

58

Item 3.

Defaults Upon Senior Securities

58

Item 4.

Mine Safety Disclosures

58

Item 5.

Other Information

58

Item 6.

Exhibits

59

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Alaunos Therapeutics, Inc.

BALANCE SHEETS

(unaudited)

(in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

37,807

 

 

$

76,054

 

Restricted cash

 

 

13,938

 

 

 

 

Receivables

 

 

2,911

 

 

 

1,111

 

Prepaid expenses and other current assets

 

 

849

 

 

 

1,666

 

Total current assets

 

 

55,505

 

 

 

78,831

 

Property and equipment, net

 

 

9,050

 

 

 

10,941

 

Right-of-use asset

 

 

2,247

 

 

 

4,420

 

Deposits

 

 

42

 

 

 

42

 

Other non-current assets

 

 

500

 

 

 

631

 

Total assets

 

$

67,344

 

 

$

94,865

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,984

 

 

$

1,368

 

Current portion of long-term debt

 

 

22,668

 

 

 

7,868

 

Accrued expenses

 

 

7,675

 

 

 

6,076

 

Lease liability, current

 

 

542

 

 

 

729

 

Total current liabilities

 

 

32,869

 

 

 

16,041

 

Long-term debt

 

 

 

 

 

16,250

 

Lease liability, non-current

 

 

2,334

 

 

 

4,518

 

Other non-current liabilities

 

 

28

 

 

 

 

Total liabilities

 

$

35,231

 

 

$

36,809

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock $0.001 par value; 420,000,000 shares authorized, 216,182,042 shares issued and outstanding at September 30, 2022 and 350,000,000 shares authorized, 216,127,443 shares issued and outstanding at December 31, 2021

 

 

216

 

 

 

216

 

Additional paid-in capital

 

 

903,365

 

 

 

900,693

 

Accumulated deficit

 

 

(871,468

)

 

 

(842,852

)

Total stockholders' equity

 

 

32,113

 

 

 

58,057

 

Total liabilities and stockholders' equity

 

$

67,344

 

 

$

94,865

 

 

The accompanying notes are an integral part of these financial statements.

2


 

Alaunos Therapeutics, Inc.

STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration revenue

 

$

2,911

 

 

$

398

 

 

$

2,911

 

 

$

398

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

7,893

 

 

 

14,521

 

 

 

19,411

 

 

 

41,427

 

General and administrative

 

 

3,282

 

 

 

8,173

 

 

 

10,217

 

 

 

25,469

 

Gain on lease modification

 

 

 

 

 

 

 

 

(133

)

 

 

 

Total operating expenses

 

 

11,175

 

 

 

22,694

 

 

 

29,495

 

 

 

66,896

 

Loss from operations

 

 

(8,264

)

 

 

(22,296

)

 

 

(26,584

)

 

 

(66,498

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(841

)

 

 

(444

)

 

 

(2,266

)

 

 

(444

)

Other income (expense), net

 

 

254

 

 

 

7

 

 

 

279

 

 

 

(15

)

Other income (expense), net

 

 

(587

)

 

 

(437

)

 

 

(1,987

)

 

 

(459

)

Net loss

 

$

(8,851

)

 

$

(22,733

)

 

$

(28,571

)

 

$

(66,957

)

Basic and diluted net loss per share

 

$

(0.04

)

 

$

(0.11

)

 

$

(0.13

)

 

$

(0.31

)

Weighted average common shares outstanding, basic and diluted

 

 

215,098,995

 

 

 

214,542,465

 

 

 

215,015,377

 

 

 

214,310,349

 

 

The accompanying notes are an integral part of these financial statements.

 

 

3


 

Alaunos Therapeutics, Inc.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands, except share and per share data)

 

For the Three Months Ended September 30, 2022

 

 

Common Stock

 

 

Additional Paid in Capital

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022

 

 

216,174,542

 

 

$

216

 

 

$

902,536

 

 

$

(862,572

)

 

$

40,180

 

Stock-based compensation

 

 

 

 

 

 

 

 

808

 

 

 

 

 

 

808

 

Exercise of employee stock options

 

 

26,250

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Repurchase of common stock

 

 

(18,750

)

 

 

 

 

 

 

 

 

(45

)

 

 

(45

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,851

)

 

 

(8,851

)

Balance at September 30, 2022

 

 

216,182,042

 

 

$

216

 

 

$

903,365

 

 

$

(871,468

)

 

$

32,113

 

 

The accompanying notes are an integral part of these financial statements.

 

For the Nine Months Ended September 30, 2022

 

 

Common Stock

 

 

Additional Paid in Capital

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

216,127,443

 

 

$

216

 

 

$

900,693

 

 

$

(842,852

)

 

$

58,057

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,651

 

 

 

 

 

 

2,651

 

Restricted stock awards

 

 

280,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled restricted common stock

 

 

(232,901

)

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of employee stock options

 

 

26,250

 

 

 

 

 

 

21

 

 

 

 

 

 

21

 

Repurchase of common stock

 

 

(18,750

)

 

 

 

 

 

 

 

 

(45

)

 

 

(45

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(28,571

)

 

 

(28,571

)

Balance at September 30, 2022

 

 

216,182,042

 

 

$

216

 

 

$

903,365

 

 

$

(871,468

)

 

$

32,113

 

 

The accompanying notes are an integral part of these financial statements.

 

4


 

For the Three Months Ended September 30, 2021

 

 

Common Stock

 

 

Additional Paid in Capital

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

215,559,148

 

 

$

216

 

 

$

896,390

 

 

$

(808,325

)

 

$

88,281

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,371

 

 

 

 

 

 

2,371

 

Restricted stock awards

 

 

875,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled restricted common stock

 

 

(288,344

)

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrants

 

 

 

 

 

 

 

 

788

 

 

 

 

 

 

788

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(22,733

)

 

 

(22,733

)

Balance at September 30, 2021

 

 

216,145,804

 

 

$

216

 

 

$

899,549

 

 

$

(831,058

)

 

$

68,707

 

 

The accompanying notes are an integral part of these financial statements.

 

For the Nine Months Ended September 30, 2021

 

 

Common Stock

 

 

Additional Paid in Capital

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

214,591,906

 

 

$

215

 

 

$

887,868

 

 

$

(764,101

)

 

$

123,982

 

Stock-based compensation

 

 

 

 

 

 

 

 

9,857

 

 

 

 

 

 

9,857

 

Exercise of employee stock options

 

 

363,109

 

 

 

 

 

 

1,037

 

 

 

 

 

 

1,037

 

Restricted stock awards

 

 

1,601,224

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

Cancelled restricted common stock

 

 

(410,435

)

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of warrants

 

 

 

 

 

 

 

 

788

 

 

 

 

 

 

788

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(66,957

)

 

 

(66,957

)

Balance at September 30, 2021

 

 

216,145,804

 

 

$

216

 

 

$

899,549

 

 

$

(831,058

)

 

$

68,707

 

 

The accompanying notes are an integral part of these financial statements.

5


 

Alaunos Therapeutics, Inc.

STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(28,571

)

 

$

(66,957

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

2,065

 

 

 

1,892

 

Amortization of financing costs

 

 

634

 

 

 

148

 

Stock-based compensation

 

 

2,651

 

 

 

9,857

 

Decrease (increase) in the carrying amount of right-of-use assets

 

 

2,306

 

 

 

(529

)

Gain on lease modification

 

 

(133

)

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

Receivables

 

 

(1,800

)

 

 

3,155

 

Prepaid expenses and other current assets

 

 

817

 

 

 

7,646

 

Other non-current assets

 

 

131

 

 

 

508

 

Increase (decrease) in:

 

 

 

 

 

 

Accounts payable

 

 

616

 

 

 

503

 

Accrued expenses

 

 

1,525

 

 

 

(3,169

)

Lease liabilities

 

 

(2,371

)

 

 

604

 

Other non-current liabilities

 

 

28

 

 

 

 

Net cash used in operating activities

 

 

(22,102

)

 

 

(46,342

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(100

)

 

 

(2,964

)

Net cash used in investing activities

 

 

(100

)

 

 

(2,964

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from long-term debt borrowing

 

 

 

 

 

25,000

 

Debt issuance costs

 

 

 

 

 

(75

)

Proceeds from the exercise of stock options

 

 

21

 

 

 

1,037

 

Repurchase of common stock

 

 

(45

)

 

 

 

Repayment of long-term debt

 

 

(2,083

)

 

 

 

Net cash provided by (used in) financing activities

 

 

(2,107

)

 

 

25,962

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(24,309

)

 

 

(23,344

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

76,054