ZIOPHARM Oncology, Inc.
Q2 2018 Earnings Call Transcript

Published: 9 Aug 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the ZIOPHARM Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to introduce your host for today’s conference, Mr. David Connolly, Vice President of Corporate Communications and Investor Relations. Sir, you may begin.

[David Connolly:]

Thank you. Earlier today, we released our financial results for the second quarter 2018 with a press release that is available on our website. During today’s call, representatives of the company will make a number of statements that are forward-looking, including statements regarding the potential of therapeutic candidates in our development pipeline. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control including the risks and uncertainties described in our SEC filings. And with that, I will turn the call over to Laurence Cooper, our CEO.

[Laurence Cooper:]

Thank you, David, and thank you all for joining me today. So we’ll begin on Slide 3. Let me first go over the agenda and the speakers for the call. Initially, I’ll provide updates on the CAR-T programs, including the current status of the FDA hold on the third-generation trial targeting CD19, the status of our TCR program with Dr. Rosenberg and his group at the NCI and then an update on controlled IL-12 studies that are enrolling patients both as monotherapy and in combination with immune checkpoint inhibitors. Then, our Lead Director – he’s been newly appointed, Scott Tarriff, will outline plans from the perspective of our board. And finally, our Chief Business Officer and Interim COO, David Mauney, will provide an update to our current balance sheet and cash time line and a brief overview of other activities. Just transition to Slide 4. And with that, and at the beginning, let me start with some reassurance. All of us at ZIOPHARM believe we’re on the edge of achieving important value driving milestones. Our platforms and vision remain intact, and we are executing on our plan for growth. And we expect this trend to continue, even to accelerate. We do acknowledge the downturn in our stock and the anxiety it has caused. But let us keep in mind, however, where we have come from and where we are going. Over the last approximately three years, we have transitioned to a broad immuno-oncology company focused on driving forward two major and distinct platform technologies that, when successful, will have overcome the major problems in the field of immuno-oncology that our competitors face

[Scott Tarriff:]

Well, thank you. Thank you, Laurence. First, let me say, that I am proud to have been asked to take over as Lead Director for ZIOPHARM Oncology. I’m excited about what’s in store for this company and the potentially transformative technologies we’re advancing. Our focus is on driving forward these core technologies, Sleeping Beauty and controlled IL-12, as they are on the precipice of making a meaningful impact on cancer and driving shareholder value. Our first task in hand is rebuilding and strengthening our Boar of Directors by broadening the experience and expertise of our members. We have started this process with this week’s nomination of two new directors

[Laurence Cooper:]

Thank you, Scott. And we’ll go to Slide 12. I appreciate your confidence in me and the team. And I look forward to working with you and the new board. I would now like to turn the call over to our Chief Business Officer and Interim Chief Operating Officer, David Mauney, who will provide a brief on our finances and other activities. David?

[David Mauney:]

Yes. Thank you, Laurence, and thank you, Scott, for the remarks. And thank you to everyone on this call. We’re now on Slide 13. And to start, I would actually go directly to our balance sheet status. As we detailed in our press release this afternoon, we have approximately $40.4 million in cash at ZIOPHARM as of the end of the second quarter, June 30, 2018. This $40.4 million is a primary source of cash for our controlled IL-12 program, the work we do at the NCI as well as our G&A. So we believe we have time to drive real value for these two programs and cover our costs over the coming months with our existing cash and potential for collaboration. In addition, there’s $31.7 million at MD Anderson prepaid to cover our clinical and preclinical development work done there. These resources cover all of our existing CD19 and CD33 CAR work at MD Anderson as well other important initiatives we are exploring and investigating in partnership with them. Most importantly to remember, these funds available at MD Anderson will cover all of these activities just mentioned well beyond 2019. I want to reiterate, as a result, that we are not currently pressed or feeling rushed towards a heavily dilutive financing, particularly given our current stock price. We are working very hard in this area and will continue to update you as we move towards a longer-term balance sheet security plan. On to Slide 14. And as Laurence highlighted, we are also growing as an organization. In fact, I am pleased to announce that, since our last call, we have added to our team, including key hires and program management in Investor Relations. First, and in June, Dr. Catherine Venturini joined the company as vice President and Program Lead for the controlled IL-12 gene therapy program. Previously, Dr. Venturini spent 10 years in discovery and in development at Bristol-Myers Squibb, managing early and late-stage programs, including Abilify, SPRYCEL, EMPLICITI and Yervoy. Most recently, she worked at Biogen, and later its spin off company Bioverativ, where she led clinical development and clinical operations teams. Also, I’m very pleased to report that, just this week, Mike Moyer joined us as Vice President of Portfolio Strategy, a newly created position in Investor Relations. Mr. Moyer joins ZIOPHARM from Stifel, where he was the firm’s first health care sector desk specialist. Prior to that, he was in institutional sales at Summer Street Research. Mike will work closely with me with David Connolly and the team at Trout Group as we seek to strengthen our current and future institutional relationships. Now let me speak briefly on some business development activities. Again, we have said this in the past, and it continues today, we have multiple advanced-stage business development opportunities in front of us. And this is both in the U.S. and abroad. And we realize the need to close these potential deals sooner than later. But as I said before, we’re not going to do a deal just to do a deal or get it done as we believe our platforms represent tremendous value, and we have patience. More specifically, and as Laurence mentioned, we are working diligently and with urgency on closing clinical collaborations around our IL-12 platform, which we will believe – which we believe will validate our approach. Our clinical work is still early. The promise of our Sleeping Beauty non-viral manufacturing to target TCRs and neoantigens, as well as its flexibility to accommodate different CAR targets is gaining traction worldwide. Diving a bit deeper on our IL-12 platform, we pivoted earlier this year to add the shots on goal in the form of combination therapy, first, with immune checkpoint inhibitors as well to target multiple tumor types. Many, if actually not all of our conversations with would be strategic partners, send as in this direction. There are two lines of evidence that fuel these discussions. As Laurence mentioned, first activity is a monotherapy; and second, kickstarting the immune system to make checkpoint inhibitors work better. I believe we are one of the very few companies that can do that, and that belief has spread. Lastly, we are also focused on improvements at the operational level throughout ZIOPHARM as we grow. As you’ve heard, we began to rebuild our board. As Scott highlighted, we are accelerating efforts to expand our team at ZIOPHARM in anticipation of our immediate and future plans. And we’ve also been fortunate to enjoy globally recognized partners in the corporate, government and academic arena. And we have a renewed focus on optimizing each and every one of these relationships. In sum, I want to thank all of our shareholders for supporting us during these turbulent times and want you to know that inside of the walls at ZIOPHARM, a high level of optimism and enthusiasm is building. And with that, I’ll turn the call back over to Laurence.

[Laurence Cooper:]

Thank you, David. Slide 15. In conclusion, I believe that today is an opportune time to be a shareholder and a supporter of ZIOPHARM. Together with our board, we’re becoming stronger as an organization, and we’re completely dedicated to our goals. I end this call as I started. ZIOPHARM has two potential solutions to solve the problem facing companies who are serious about treating cancer using immuno-oncology. Our two platforms address the critical issues of how to target solid tumors and how to bring the cost of immuno-oncology under control. All of us at ZIOPHARM have the passion and expertise to see these efforts bear fruit, realizing, of course, that these are cutting-edge technologies, and they take time to generate data and achieve consensus. We’re not here. I’m not here to iterate on the mundane, but rather to strive to resolve the major challenge facing the immuno-oncology world. This is hard work, but we are up for the challenge. And as we pass this test, the investors, most importantly the patients, will be rewarded for many years to come. So thank you. So now let me turn it over to the operator for questions and answers.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Ren Benjamin with Raymond James. Your line is now open.

[Ren Benjamin:]

Hey, good afternoon, guy. Thanks for taking the questions and congratulations on the progress. Laurence, can we talk or dig into a little bit more regarding the second-generation product and the ongoing study? When might we see some updated results? And usually, when we’re – at least when I think about it, when we’re transitioning from second generation to third-generation. And it is kind of like a quantum leap, the switch. Transaction efficiencies as well as comparable efficacies to what might already be in the marketplace, I think, would be a very important comparison to do. And can you just talk a little bit about what you’re seeing in that second-generation trial and how confident you feel that it could be translated into the third generation.

[Laurence Cooper:]

Sure. So thank you, yes. So we’ll update it or report at a major medical meeting, so stay tuned there. The trial was set up to help the company understand the transition from going – from an academic trial, which was really the first-generation technology, to the new technology, which is what we call the third generation. And I realize that the leap essentially to go from what was 28 days of manufacturing and this is now revisiting some history here, but the first-generation trial took four weeks to produce the T cells because, of course, this is the first time in human history a transposed-on system has been used. And so we worked very closely with the agency to establish the release criteria and so forth. And that resulted in a 28-day process. That process, as we published in JCI a couple of years ago now, resulted in meaningful outcomes. And indeed, if I remember correctly, at the recent ASH, we were able to update the survival curves and showed, for instance, in patients who had autologous T cells for non-Hodgkin’s lymphoma, they had an 80% or so survival after the stem cell transplantation. And we could see the T cells in some of these patients for up to four years. These are really important benchmarking studies to show that the Sleeping Beauty system work. But the bridge to go from 28 days to less than two days is a big jump. And you can already see that the agency is working very hard with us to understand that jump. And so we derisked – significantly derisked the program by undertaking the second-generation trial. And it answers questions that is central essentially to starting the point-of-care trial, the less-than-two-day manufacturing. In other words, we reconfigured the CAR design. We have shortened the manufacturing time. We’re understanding T-cell dosing. And importantly, we’re understanding the release criteria. Because as you can anticipate, if you’re doing less-than-two-day manufacturing, that also encompasses not just the production of cells, but the release of cells. But all has to be done in under two days. So the first part, the production of the T cells, that is engineering around the membrane-bound IL-15. It’s engineering around the Sleeping Beauty system. And it’s engineering around the switch. That essentially is its own package, but the second campaign has to be undertaken to understand essentially can we get the release testing done under the same – essentially the same time constraints. And the answer to that is yes. Because as we go on through the second-generation trial, we’re pressure testing all of those ideas. So let me just kind of summarize over the long answer, and I apologize to the listeners. The bottom line is the second-generation trial is the transition trial. And we’ve got many moving parts. Despite many moving parts, we are seeing complete responses in patients that last meaningful amounts of time. And that, together with the first-generation trial, really, I think, underscores our excitement about moving to this less-than-two-day manufacturing.

[Ren Benjamin:]

Great. And just to – I know you mentioned at major medical conference. The next major one that I can think of is ASH. Would that be a fair assumption are we assuming this year as far as an update goes? Or could it be next year?

[Laurence Cooper:]

Yes. I think just stay tuned on that. There’s a lot of data coming in on that trial, and we want to provide an update. And of course, we want to provide an update as we transition to the third-generation trial.

[Ren Benjamin:]

Got it, okay. Just switching gears to the TCR programs. At least from a 20,000 kind of foot view, can you talk a little bit about maybe the learnings from others that have kind of pioneered programs in the TCR space? And any sort of learnings regarding the hemology of these newly identified proteins to cell proteins and how you plan on kind of getting this.

[Laurence Cooper:]

Right, right. I mean I could go on for an hour. Sure, but the audience doesn’t want that. So let me kind of just hit the high points here. So the hallmark of cancer – one of the hallmarks of cancer is genetic instability. What does that mean? That means that a cancer cell emerges because of a set of genetic insults that essentially has reprogrammed that cell to become autonomous. Those genetic insults can now be sequenced and identified, so they are the essentially the Achilles’ heel of that tumor. Other lesions, other genetic events occur in cancer cells, but they’re not part and parcel of the driver mutation that give rise essentially to the cancer cell, or as we would say, oncogenesis. And examples of those ancillary mutations and overexpressed antigens are, for instance, from the Mage family, the cancer testis family. Those mutations – excuse me, changes – those changes are not necessarily critical to the cancer cell biology. So we distinguish ourselves from our competitors because we’re going after the fundamental changes, the genetic aberrations that give rise to cancer. Others are going after what I will consider a bystander event. What does it mean for ZIOPHARM is that we can therefore target the heartbeat of the cancer and are not restricted to a subset of cancers that have these overexpressed for instance cancer testis antigens, which I would add by parenthesis are the minority of cancers. So we stand out because we know, like Dr. Rosenberg knows and like many know, that really you have to go after the neoantigens. That’s the key. The problem has been is the field has lacked a therapy. So many companies have embraced vaccines, and we can talk about that as a compare and contrast another day. But we have said that, if you’re going to realistically eradicate metastatic solid tumors in a patient, you have to put T cells in that patient. And you have to put T cells in the patient that have neoantigens, and we are the only company that can do that.

[Ren Benjamin:]

Got it, okay. And then just one final one for me. I know you talked about partnerships before, and you can’t go into any sort of details, but maybe can you give us a sense of what’s the ideal deal that I think you guys would be either happy with or you’d be looking for? Are you happy with a worldwide rights being given to somebody else and taking the royalty? Would you prefer 50-50? I mean, how should we be thinking about this discussion?

[Laurence Cooper:]

Sure. So There’s several opportunities to partner with ZIOPHARM. One of them is, for instance, in our cell therapy program around our technologies for point of care. We see that as an early opportunity, and we see additional work in that area will drive value. Similarly with the TCR program, because we see that if we take on the responsibilities to get a really exciting data, so the chances of partnership, meaningful partnerships go up. So that really now come to the IL-12 program. That data set, with the two founding principles, in other words, that we see single-agent activity, and we can see call tumors turning hot, generates a lot of enthusiasm and a lot of interest from partners. And as David said in his remarks, we’re essentially looking carefully at those opportunities and looking for essentially that value proposition that the shareholders and the stakeholders around ZIOPHARM can participate in. And so we’re basically – I can’t go much farther because obviously we would tip our hand. I think David said it, and I embrace it, these conversations are pretty advanced. And so we’re looking forward to driving those to conclusion.

[Ren Benjamin:]

Great. Thanks very much for taking the questions.

[Laurence Cooper:]

Sure, thank you.

[Operator:]

Thank you. I’m not showing any further questions at this time. I would now like to turn the call back over to Laurence Cooper for any closing remarks.

[Laurence Cooper:]

Okay. So thank you all for your attention, and we really appreciate you joining us this afternoon. Thank you so much, operator and everyone.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program, and you may all disconnect. Everyone, have a great day.