Alaunos Therapeutics, Inc. (NASDAQ:TCRT) is a clinical-stage oncology-focused cell therapy company that has been developing adoptive TCR-T cell therapy to treat multiple solid tumor types. However, the company has recently announced a strategic reprioritization of its business and wind-down of its TCR-T Library Phase 1/2 Trial.
In the third quarter of 2023, Alaunos reported an annual net loss of $35.1 million, annual revenue of $5,000, annual operating cash flow of -$30.1 million, and annual free cash flow of -$30.3 million. For the first quarter of 2023, the company reported a net loss of $1.7 million, collaboration revenue of $1,000, and a decrease in research and development expenses by $6.4 million compared to the prior year period.
Business Overview
Alaunos has been leveraging its proprietary, non-viral Sleeping Beauty gene transfer platform and its novel cancer mutation hotspot TCR library to design and manufacture personalized cell therapies that target neoantigens arising from common tumor-related mutations in key oncogenic genes, including KRAS, TP53 and EGFR. The company's most advanced product candidates were in an early-stage Phase 1/2 clinical trial evaluating 12 TCRs reactive to mutated KRAS, TP53 and EGFR for the treatment of non-small cell lung, colorectal, endometrial, pancreatic, ovarian and bile duct cancers.Strategic Reprioritization and Exploration of Alternatives
On August 14, 2023, Alaunos announced a strategic reprioritization of its business and wind-down of its TCR-T Library Phase 1/2 Trial. In connection with the reprioritization, the company has significantly reduced its workforce by approximately 95% to date and is working to reduce costs in order to extend its cash runway. Alaunos continues to explore strategic alternatives, including, but not limited to, an acquisition, merger, reverse merger, sale of assets, strategic partnerships, capital raises or other transactions. The company has engaged Cantor Fitzgerald & Co. to act as strategic advisor for this process.Alaunos is also evaluating several potential in-licensing opportunities in obesity, oncology and virology, though there is no assurance that any of these potential opportunities will come to fruition. The company believes there is value in its hunTR® TCR discovery platform, but the platform is experimental, and there can be no assurances that Alaunos can succeed in improving the platform's appeal and increasing its value or monetize the platform or any TCRs discovered through partnerships or out-licensing.
Nasdaq Delisting Determination
Alaunos received a Delisting Determination from Nasdaq in 2023 due to the company's common stock trading below the $1.00 minimum bid price requirement. While the company has addressed this issue with a recent reverse stock split and its stock price has trended upwards, it remains subject to panel monitoring until February 2025, during which time it could be delisted again if it fails to comply with the Minimum Bid Price Rule. Alaunos does not have shareholder approval for a second reverse stock split, which would be required to respond to a new delisting notice during the monitor period. Even if the company is able to obtain such approval, there is no guarantee the trading price would meet the Minimum Bid Price Rule after a second reverse split.Liquidity
As of March 31, 2023, Alaunos had approximately $4.1 million in cash and cash equivalents. The company anticipates that its cash resources will be sufficient to fund operations into the third quarter of 2024. However, Alaunos has no committed sources of additional capital at this time and will require substantial additional financing to continue as a going concern, including through the strategic review process.The company follows the guidance of Accounting Standards Codification Topic 205-40, Presentation of Financial Statements - Going Concern, and based on the current cash forecast, management has determined that Alaunos' present capital resources will not be sufficient to fund its planned operations for at least one year from the issuance date of the financial statements, which raises substantial doubt about the company's ability to continue as a going concern.
Termination of Licenses and Agreements
In connection with its strategic reprioritization, Alaunos has terminated its Cooperative Research and Development Agreement with the National Cancer Institute, effective October 13, 2023, as well as its Patent License with the NCI, effective December 26, 2023. This will significantly limit the company's ability to resume its TCR-T clinical trial or begin new ones focused on TCR-T, as it will need to renegotiate the license or obtain approval from the FDA to use TCRs validated internally, which may not be feasible.Additionally, any termination of Alaunos' licenses with Precigen or MD Anderson, or its research and development agreements with MD Anderson, could result in the loss of significant rights and harm the company's ability to develop and commercialize its product candidates in the future, should it choose to resume those efforts.
Risks and Challenges
Alaunos faces significant risks and uncertainties, including the possibility that its strategic reprioritization may not be successful or yield the desired results, and that it may be unsuccessful in identifying and implementing any strategic transaction. If a strategic transaction is not consummated, the company's Board of Directors may decide to pursue a dissolution and liquidation, in which case the amount of cash available for distribution to shareholders would depend heavily on the timing of such liquidation and the amount of cash that needs to be reserved for commitments and contingent liabilities.The company also faces risks related to its ability to retain its remaining employees and consultants, as the significant workforce reduction could lead to further attrition and disrupt its exploration and consummation of a strategic alternative. Additionally, Alaunos' corporate restructuring and headcount reduction may not result in anticipated savings and could significantly disrupt its business.
Delisting from Nasdaq could prevent the company from maintaining an active, liquid and orderly trading market for its common stock and may materially and adversely impact its ability to consummate certain strategic transactions. The company also faces the risk of potential material weaknesses in its internal controls, which could result in material misstatements of its financial statements.