Seeking Alpha • Aug 31
Alaunos Therapeutics: Keep An Eye On Upcoming TCR-T Solid Tumor Study Data
Summary
Alaunos has undergone a name change and a staff and management overhaul over the past 12 months.
The company is now targeting T-cell receptor cell therapies, having pioneered an approach that relies on a library of TCR targeting high frequency mutations.
This approach is being used to target solid tumor cancers - a field not yet served by existing CAR-T therapies that treat hematological cancers only.
Management is promising data from its Phase 1/2 trial - which may have only enrolled a single patient to date - it seems in a presentation scheduled for 30th September.
Positive data could have a transformative effect on Alaunos' share price - but there are many reasons for prospective investors to adopt a "wait and see" approach.
Investment Thesis
The stock price of Alaunos Therapeutics (TCRT) has made an impressive 113% gain across the past month, leaping from a price of ~$0.50, to trade at $2.40 at the time of writing.
Alaunos was formerly known (until January this year) as Ziopharm, a cell and gene therapy specialist biotech, but has undergone an overhaul and a name change, primarily triggered by WaterMill Asset Management, an activist shareholder which had been vocally critical of management's efforts developing different programs, including a controlled IL12 gene therapy directed against glioblastoma (brain cancer), a CAR-T cell therapy program, and T-cell receptor ("TCR") T-cell therapies based on its non-viral Sleeping Beauty gene transfer platform.
In December 2021 WaterMill successfully campaigned to have three new members appointed to Ziopharm's board - Robert Postma, founder of WaterMill, and Jaime Vieser and Holder Weis, a venture capital / corporate restructuring specialist and an experienced Life Sciences consultant - whilst former Chair Scott Tarriff left his role, to be replaced by James Huang, a Managing Partner at Kleiner Perkins Caulfield and Byers ("KBCB") China, where he has played a leading role in the founding and funding of biotech companies including GenScript, Legend Biotech (LEGN) and Zai Lab Limited (ZLAB).
Zai Lab has successfully commercialised a portfolio of four drugs led by Zejula, the only PARP inhibitor approved for first line Ovarian cancer in China, whilst Legend recently gained approval in the US for Carvykti, a CAR-T therapy indicated for Multiple Myeloma ("MM"), in partnership with Johnson & Johnson's (JNJ) drug development subsidiary Janssen. The company's respective market caps are $4.3bn and $6.8bn.
At first, the Boardroom shenanigans drove Ziopharms' share price above $5 for the first time since 2019, before the stock - in keeping with a prevailing biotech bear market - declined in value to <$0.50, despite the August 2021 announcement of a new CEO, Kevin Boyle, formerly of Kuur Therapeutics. Kuur focused on transducing NKT cells with chimeric antigen receptors (CARS) and T cell receptors (TCRs) to target hematological and solid cancers - Boyle led the company through its business transformation, culminating in the sale of the business to Athenex (ATNX) for $185m.
Boyle's first move at Alaunos was to halve Ziopharm's workforce by cutting 60 positions at the company, in order to reduce costs - the company had made losses of $58m and $80m in 2019 and 2020, and went on to make a $77m loss in 2021. Cash position at the end of 2021 was just $76m.
Having ditched its IL12 and CAR-T programs, Ziopharma finally rebranded as Alaunos, closed its offices in Boston, Massachusetts, and relocated to Texas, where the company has an in-house, cGMP manufacturing facility allowing it to engineer and manufacture its own cell therapy candidates. The company now describes itself as follows:
A clinical-stage oncology-focused cell therapy company, focused on developing T-cell receptor (TCR) therapies based on its proprietary, non-viral Sleeping Beauty gene transfer platform and its unique cancer mutation hotspot TCR library, targeting common tumor-related mutations in key oncogenic genes including KRAS, TP53 and EGFR.
Announcing the rebrand, Alaunos was also able to announce the initiation of a Phase 1/2 trial of its TCR library as follows:
The study being conducted at MD Anderson Cancer Center is an open label, dose escalation study that will enroll patients who have a matched HLA and hotspot mutation that is targeted by one of the 10 TCRs from the Alaunos library.
The trial will evaluate 10 unique TCRs targeting KRAS, TP53 and EGFR mutations in patients across a broad range of solid tumors that include non-small cell lung, colorectal, endometrial, pancreatic, ovarian, and bile duct cancers, all in a single trial.
This appears to be a relatively bold and innovative approach to targeting solid tumors - which represent 90% of all new cancer diagnoses - however, although the cell therapy industry has made some strong recent progress, with four new CAR-T therapies FDA approved since 2021 - Bristol Myers Squibb's (BMY) Abecma and Breyanzi, Gilead Sciences (GILD) Tecartus, and Legend's Carvykti - all of these drugs target hematological, rather than solid tumor cancers.
If Alaunos' study was to be successful and show that TCR cell therapy can succeed where Chimeric antigen receptor ("CAR") and tumor infiltrating lymphocyte ("TIL") therapies have failed to make an impact i.e. in solid tumors, the effect on the company's valuation and share price ought to be seismic, as this would apparently represent a remarkable breakthrough.
With that said, although some members of the new management team and board have had success in other forms of cell therapy, both scientifically and in terms of business building and M&A, the cell therapy field is exceptionally competitive, and there is therefore a possibility that management has been forced to over-play its hand, and may struggle to deliver success in the clinic.
In this article, I will try to explain in more detail precisely what investors are buying in Alaunos, and highlight the importance of an upcoming data presentation - scheduled for 30th September at the Sixth CRI-ENCI-AACR International Cancer Immunotherapy Conference - in which Alaunos is expected to report data from the Phase 1/2 trial.
What Is Alaunos Trying To Achieve With Its TCR Program?
In essence, it seems as though Alaunos wants to make cell therapy simpler, and cheaper, whilst simultaneously improving efficacy and safety. In terms of the mechanism of action, a statement in the company's 2021 10K submission to the SEC explains:
We genetically modify peripheral blood-derived T cells to express TCRs with specificity to tumor-derived antigens, especially neoantigens, and propagate them to sufficient numbers prior to administration.
We aim to overcome the key challenges of targeting neoantigens by using DNA plasmids to reprogram T cells to express introduced TCRs on a patient-by-patient basis. This is designed to help address tumor heterogeneity.
T cells can be activated by molecules on the surface of cancer cells via the human leukocyte antigen ("HLA") system. These are known as neoantigens and they are encoded by tumor specific mutated genes, some of which are known as "driver mutations" which are classes of mutations that are common across tumor types, and individuals.
Essentially, Alaunos believes it can prepare TCRs in advance - using peripheral blood T-cells that are healthier and stronger than TILs - and store them in a library. When a patient is screened and found to have certain driver mutations, they can be matched to TCRs in the library. According to Alaunos:
Once a match to our TCR library is confirmed, a portion of the patient’s white blood cells is collected through a peripheral blood leukapheresis and sent to our own cGMP manufacturing facility in Houston, Texas.
Once the desired pre-manufactured TCR transposon is selected from our TCR library, we utilize our proprietary non-viral Sleeping Beauty genetic engineering technology to modify the patient’s T cells (both CD4+ and CD8+).
Alaunos lists three main advantages to this process: firstly, because its 'Sleeping Beauty" technology "requires only the synthesis of DNA plasmids as the starting material for genetic engineering of the T cells", it is simpler than traditional viral gene transfer - which requires "specialised manufacturing of each viral vector of interest" or new gene therapy options such as CRISPR - and cheaper.
Secondly, Alaunos can manufacture customisable therapies and keep creating and storing more, allowing it to cater for more patients. And thirdly, because the anti-tumor response generated by the Sleeping Beauty platform may potentially persist longer than traditional medicines, leading to "durable and progressively greater clinical regression in patients".
Alaunos lists advantages of TCR-T approach. (company presentation)
Source; company presentation.
Alaunos is confident in its approach and lists perceived advantages over CAR-T and TIL cell therapies as per the table above. It may be a stretch to claim that the approach has shown "proven efficacy in solid tumors", but now there is at least a trial underway designed to generate some in-human data.
The main driver mutations being addressed are KRAS, a signalling gene and protein, a tumor suppressing gene, and epidermal growth factor receptor, or EGFR. These are expressed uniquely in a range of tumors including lung, colon, endometrium, pancreas, ovary, and bile duct.
The Phase 1/2 Trial
This trial - the only clinical trial that Alaunos is running at the present time - is enrolling patients where a TCR matching a neoantigen / HLA pairing is available in the library, but only when the patient has failed a standard therapy - across three ascending dose cohorts.
To date, we only know that one patient with non-small cell lung cancer ("NSCLC") has been enrolled, with a KRAS G12D mutation. CEO Boyle refused to answer analysts' questions on that front during the company's Q222 earnings call, although he did hint that more information will be shared "at some point in the next six weeks", which possibly refers to the September conference presentation.
It is to be hoped that the trial has enrolled more than one patient by then, because if patients are not expressing interest in the trial or interest in being screened, or if Alaunos cannot find any matches within its library, the entire study looks to be doomed before it has properly begun.
In the case of the former CEO Boyle told analysts that >500 patients have been screened, and in the case of the latter, he discussed a match rate of ~5%, so it seems as though the upcoming data presentation could discuss a target enrollment of 25 patients, which would be encouraging. Patient 1 has reportedly passed their 28-day safety window evaluation, which is another encouraging sign.
Boyle also claimed that the in-house manufacturing process took around 30 days to complete "bed to bed", and that he believed that timeframe could be halved eventually.
In summary, Alaunos' trial is in its infancy, and a lot of questions remain - not least the type of response the therapy may generate - but to its credit, Alaunos has managed to bring its clinical study and manufacturing processes online, and appears to have data to present that it believes will impress the market.
One analysts at Cantor noted the title of the presentation - "Objective clinical response by KRAS mutation-specific TCR-T cell therapy in previously treated advanced Non-small cell lung cancer" - suggests a positive clinical response may have been observed - although the title may also imply there is still only one patient in the study.
Alaunos R&D and expansion plans
The ability to treat solid tumors with an autologous - patient cell derived, as opposed to "allogeneic", or donor cell derived - cell therapy would constitute a major breakthrough for a cell therapy company, as discussed. It can probably be viewed as a positive that the Phase 1/2 study is being carried out at the MD Anderson Cancer Center in Texas, although enrollment will inevitably be slowed by newly diagnosed patients opting for traditional therapies and treatments, and viewing Alaunos' trial as a last resort option.
Alaunos will be hoping that early data is strong enough to attract more patients, and says it is now hiring more staff to support its manufacturing capability. Management is confident that its thesis can achieve results in a clinical setting, with the company's VP of R&D, Drew Deninger, pointing to a recent research article on the Q222 earnings call, which 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.
Deninger also referenced a recent publication in the New England Journal of Medicine ("NEJM") in which a patient with pancreatic cancer, treated with TCT-T cells targeting KRASG12D mutation, had achieved a partial response >70%, ongoing after six months of follow up.
Alaunos has a partnership in place with the National Cancer Institute ("NCI") which was recently extended to 2025, with the NCI hoping to generate proof-of-concept data for TCR-T therapies using the "Sleeping Beauty" approach, which bypasses the complexity of a gene editing or a viral vector approach, and is scalable for clinical production, Alaunos believes. It may help that Deninger has previously worked with Dr Rosenborg of the NCI, with the VP telling analysts on the recent earnings call that:
We believe our work together will help bring the vision of personalized TCR-T cell therapy to the commercial setting.
