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EARNINGS CALL TRANSCRIPT
EARNINGS CALL TRANSCRIPT 2017 - Q2
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Operator

Good day, ladies and gentlemen and welcome to the ZIOPHARM's Second Quarter 2017 Earnings Call. All this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] I would now like to turn the conference over to our host for today, Dr.

Laurence Cooper, Chief Executive Officer. You may begin..

Laurence Cooper

Thank you very much, operator, and good afternoon everybody from ZIOPHARM's. Today with me in the conference room is Caesar Belbel, our Chief Operating Officer and Dr. Francois Lebel, our Chief Medical Officer. We'll begin as usual with our forward-looking statements.

I will not read this toto, but please refer to the ZIOPHARM website if you should have any additional questions or need information.

So Slide 3, this is titled what has ZIOPHARM accomplished to succeed? This is the slide that really differentiates ZIOPHARM from others in our space and we have four technologies which we are reducing the practice that clearly mark us as different and special from others.

In the upper left hand side is our approach to gene therapy and this is based on the non-viral transfer of DNA plasmid that are coated from what's called the Sleeping Beauty System and this is an ability therefore for ZIOPHARM to insert genetic information into cells such as T-cells and to render them capable of targeting cancer cells for instance CD19 on B-cell malignancies.

And as the yellow text in the box says, we had already achieved success in clinical trials. So we've checked that box if you would. On the right hand side is the switch system that we're using to control gene therapy products act as they've been administered. Many of our competitors deliver cells or agents to the body and then hope for success.

With this type of switch system, we can guide for success using a drug or veledimix or small molecule called veledimix. And this accesses the components of a switch system called the RheoSwitch system. Also in yellow is that we've achieved success in clinical trials. So again, we've checked the box there.

In the bottom left hand side, is the type of technologies that are disruptive, that allow us to scale our technologies to achieve the growing demand for these types of very sophisticated and powerful cell and gene therapies, these hinge on two technologies, the so called point-of-care that I'm going to carefully explain in the coming slides, and also the off the shelf manufacturing.

Both of these have had success in our preclinical studies and both of these are now firmly on the ramp to being tested in clinic. And then on the bottom right hand side is this new molecule that we're advancing, where we can activate cells such as T-cells with IL-15.

IL-15 is the cytokine molecule that work through a membrane receptor, a cytokine receptor if you would that activates T-cells and in coordination with other molecules like chimeric antigen receptors or CARs it can provide a fully active phenotype. In other words a fully active cell that is capable of grafting and then going to work on our demand.

And this membrane-bound IL-15 molecule as I've explained in prior calls and also as we've explained now in the literature has achieved success in preclinical studies and we'll be talking to you about this.

All of these four pieces, the Sleeping Beauty system, the switch, the novel approaches to manufacturing, and the cytokine [indiscernible] all working in concert together to provide us the competitive advantage. And they all work eventually to generate cells or to generate virus [ph] for the purposes of treating oncology.

So on the next slide, I'm going to share with you where we stand with how we are harnessing the Sleeping Beauty system and applying it with the IL-15 biology to implement a whole new approach to manufacturing where T-cells expressing the chimeric antigen receptor can be produced in under two days.

And just if I put that in context, many of you might seen some presentations to ODAC one of the advisory committees to the FDA where our competitors are producing T-cells that takes 20 or so days. We are going to be able to do this in under two days. This is a major leap forward for the field.

But in order to leap you have to essentially have the legs to do it and we've put together essentially the program over this last month whereby we can share with you the success.

The first is a trial that guys had started when I was back at MD Anderson as Head of Pediatric Transplants and we've seen finished the trial and we wrapped this up essentially as the first generation technology in which the Sleeping Beauty System, this non-viral approach to gene transfer was definitely shown to work in humans.

And we did two trials and for treating both patients with non-Hodgkin's lymphoma and acute lymphoblastic leukemia and this is published as you can see in the monograph in 2016.

In that data amongst all of the findings where the T-cell survived after being infused, having been genetically reprogrammed with the Sleeping Beauty system and then the patients also survived, and this is essentially lynchpin now that allows me to share with you that this approach to gene therapy works. But that's an academic trial if you would.

That's a trial that we worked on when we were at MD Anderson Cancer Center for the purposes of the proof of principle of the Sleeping Beauty system. What ZIOPHARM and together with our colleagues in [indiscernible] have done is that we've taken that academic trial and we have now put it on a commercial footing.

In other words, we've gone to work at what other four pieces of the technology that drive up our costs and undermine the control of CAR-T. So to solve that we have launched and are continuing to study a second generation technology and there are a number of technological advances in this second generation.

For instance we have shortened the manufacturing time from four weeks to two weeks. In other words we're producing T-cells now in 14 days and I'll share with you and you can see the image on your screen where patients who receive this shorted manufactured T-cells again using the Sleeping Beauty system could have major response.

For instance if there is a patient on that who has a scan, who is essentially has lethal acute lymphoblastic leukemia or ALL and then after giving the CAR-T the patient goes into remission. This is a second generation trial through is a transit stage for us.

This is the way in which we are working with our investigators at MD Anderson Cancer Center for the purposes of shortening the manufacturing time, understanding some of the regulatory complexities, developing new technology, because where we are going and what will be transformative is on the third generation trial which is schematized on the right hand side and this is a trial that we summarized as point-of-care or POC.

In this trial, patient's blood is obtained for instance the standard is where your patient undergoes leukapheresis or apheresis and then we gene transfer in not just the CAR but also their membrane-bound IL-15.

This formulation of IL-15 that we've generated, such as the T-cell can have two signaling capabilities; the first is it can recognize the tumor like CD19 on a cancer through the CAR and the second is that the cytokine molecule IL-15 can give the T-cell a proliferative advantage, a survival advantage if you would after being infused.

In the little number three you can see on the right hand side is really where the magic happens because this type of technology can be accelerated to where we can essentially introduce the genes and then immediately within two days infuse those out, those cells that go to work in the body and expand courtesy of the signaling through IL-15 which we can control.

So this generation of first to second, to third generation is what we've been working on and this is essentially the update where we are now progressing steadily through these technologies so we can launch the POC at manufacturing and essentially test this in the humans.

On the next slide, I share with you just a teaser really, that will be updated in the community in the coming months. Around the first generation technology, I'll be talking about the long term survival of these patients because again as I alluded to on the prior slide this trial was started when I was back at MD Anderson.

So we now have data on these patients that goes back a number of years and I think that will be a lot of interest in that. We'll also have an update on the current trial where we are, I'll be able to update you on some of my thinking about the regulatory landscape in particular as we transition then into the third generation technology.

In other words, this very rapid or point-of-care approach to manufacturing piece outs. We continue to work on the preclinical data. It's really coming to rest at this point and we are now putting this together in the regulatory package.

And the reason that I have optimism about that is that we've learnt a lot from the second generation trial that informed on the third generation trial, so will help us essentially navigate the regulatory pathway.

But again if you would a teaser and just to kind of remind you of why these data are going to be so transformative for the industry, I'll just share with you the data that came from the lab in the preclinical modeling.

You can see in the graph there that there are two axis, the vertical axis is the amount of tumor that's in a mouse and the x-axis or the horizontal axis is essentially the days of life of that mouse or that group of mice.

When we infuse T-cells into this mouse that's riddled with tumor and you can look at the little black diamond there, you can see that there are essentially two parts of the curve.

The first part of the curve is where there is essentially a rapid growth of the tumor and then there's a plateau essentially from day 16 to 30 and then there's a diminution in the signal and the mouse goes into remission.

So what is happening there in the triangle – and then excuse me in those black diamonds? What's happening is that we're infusing T-cells just as I described for the human clinical trial in which T-cells have been genetically modified with the Sleeping Beauty system to express the CAR in the IL-15 and then there's no propagation.

Essentially these T-cells are gene transferred and then given to the mouse within two days. So these T-cells grow in the mice.

They then grow to the number that's needed to control the disease by day 16 and then by day 30 the mouse goes into remission and this obviously is in contrast to the control where the mice continue to suffer for instance if they only get the tumor and does not get any immunotherapy.

So again, the technologies that we are talking about here are really transformative for the industry. And I just want to put this in context on slide 6. Really with what I consider where this type of point of care technology sits into the big picture.

We're right now somewhere between the first and the second era if you would at gene therapies for the purposes of targeting CD19. There's terrific excitement and optimism about targeting CD19.

But most companies are focused on viral based gene transfer and that has a whole headwind eventually to commercialization really because of difficulties that control and T-cells after they are infused there is a lot of cytokine storm associated with it with giving virally transfused T-cells and the cost is inherent to having large GMP facilities and to having infrastructure wedded to producing virals [ph].

What ZIOPHARM has done is considered that there are other alternatives essentially to doing gene therapy based on fixed infrastructure associated with biases GMP manufacturing and to move it through these various eras if you would, one has to take advantage of this non-viral transfer which we have and which I've now documented work and we have to also understand the fundamental signaling properties of T-cells which will allow us to generate T-cells that have the vital advantages, especially you can give low doses of T-cells and you may be able to avoid the issues of cytokine storm and you can get to a manufacturing solution in other words put out the final era if you would where these T-cells can be made at multiple points of care without having to have large structures, GMP facilities and having centralized manufacturing.

This is a very exciting and optimistic look at the future because it gets at the heart of the issues that are holding back the commercial success of CAR modified T-cells. On Slide 7 it's not just CAR T-cells that we're talking about it is also the ability to generate T-cell path T-cell receptors.

So you might remember CAR, essentially it interrogates tumor cells directly. They form if you were to handshake or death grip with the tumor cells. A T-cell receptor is more new one. The T-cell receptor can peer inside a tumor cell, courtesy of being able to look antigens decorated in what we called Class I or Class II, HLA or human leukocyte antigens.

Visibility to peer inside tumor cells really opens up the repertoire of antigens that could be targeted by a genetically reprogrammed T-cell. And it's the opportunities there for go beyond hematologic malignancies and one can really now talk about targeting solid tumors.

And the reason that's important is that 8/10 cancers, in other words the vast majority of cancers are derived from the epithelium. They are also known as carcinomas. These are tumors for which TCR, modified T-cell is perfectly designed to take advantage.

And the reason for that is that the T-cell receptor can peer inside the cell and recognize the Achilles' heel of cancer. In other words it can recognize what's called neoantigens or neoantigens that are part and parcel of the reason why that particular tumor cell became carcinogenic in the first place.

So by being able to do this one has to have most efficient and the most cost effective team transfer technology. And the reason for that is that unlike many other companies that are targeting what's called shared antigens, antigens that are in tumor cells that are in widely expressed in tumor cells, we are going after neoantigens.

And the reason for that is that these neoantigens truly are the reason why these tumor cells became tumor again. In other words, why they became cancerous. So if you could target the actual lesion, you may be able to actually target all of that solid tumor. But you have to do on a patient by patient basis.

In other words, one person's T-cell receptors worked for one person's tumor. So we want to scale this and develop a technology that's commercialized of all. We are now harnessing essentially the Sleeping Beauty system and all of the other technologies I've alluded to.

In other words, the point-of-care technology, which should be able to generate T-cells that are individualized for each patient, so we can target solid tumors.

And this is not last on the academic community and it is indeed our colleague Steven Rosenberg at the NCI reached out to us and asked us to use the Sleeping Beauty system because he recognized that he needs to develop personalized immunotherapy the target the patients with solid tumors in his practice and he needed the most clinically advanced of them for doing so and he reached out to Intrexon andZIOPHARM,CRADA and we're delighted to partner withSteveon this.

In addition, we have also had a significant publication with him where we demonstrated the Beauty System could indeed be used to reprogram T-cells to target solid tumors.

You can see on the left hand side the schematic essentially that allows you to understand as I understand it how we are approaching the therapy for solid tumors where again patients are screened for their neoantigen.

These particular lesions that are associated with their malignancy with the use of same Sleeping Beauty system that we have been using in the CAR programs or reprogram the T-cells and then we're going to be infusing these T-cells in very short periods of time, again using the point of care technology.

So this is a pause here if you would, a sort of a summary of the point-of-care solutions. And on the left hand side I have tried to capture where the field is vis-à-vis the competitive landscape. So there is a patient who has four yellow tumor cells just for schematic purposes and that patient will receive CAR modified piece out.

But there are a number of essentially of head wins to the commercialization of that CAR T-cell therapy. The first is that by having a centralized manufacturing solution and using virus my competitors have to build in essentially a tolerance for the variability in the system.

In other words if you are propagating cells outside the body for weeks there is going to be variation associated with that manufacturing solution and that variability is going to coin the question the underlying reproducibility at the process and therefore the product. The second is issues around the scalability.

Can you essentially have enough space, enough technology, enough manufacturing solutions to be able to handle the number of patients if you are fixed to the idea that you need a centralized manufacturing to be able to growth T-cells and then shipping them to use them.

When you give those cells, and there's a whole world of safety concerns since patient's that have had cytokine release syndrome and those types of adverse events. And the last is the patients had to receive lymphodepletion as part and parcel given these modified T-cells.

These of these data essentially to uncertainty in the field and this is something that I have essentially addressed with the ZIOPHARM solution and the reason all of this worked is that I've understood issues, why those headwinds are essentially slowing the field down what do we need do as a company to solve all of these.

Well the first is that we are essentially undoing the need to propagate T-cells for long periods of time outside the body. As I've explained now, we can do this now in under two days in our preclinical model.

This allows for a major reduction in the cost and particularly by avoiding the issue of needing lengthy virus and just using simple DNA as another major cost savings. We can improve scalability and the reason for that is that we're not growing T-cells for long periods of time outside the body.

These are short pulses essentially a manufacturing where we can infuse the T-cells. We can deliver the cells when the patient needs then rather than when they are available. This is a big issue right now because many patients have aggressive leukemias and those patients underlying assumed are at comfort at rest before they can get their therapy.

This is a solution for giving T-cells if you would on-demand. Furthermore we can improve the safety of these technologies because we have switch system to control the persistence of the T-cell vac that a major advancement is the roll out of IL-15.

As many of you know IL-15 biology is important for the persistence of T-cells and it is one of the reasons why lymphodepleting chemotherapy is given. The patient gets chemotherapy so they could free up their own body's IL-15.

If you are delivering T-cells with IL-15 imbedded into the T-cells, then we can infuse T-cells that may not need lymphodepleting chemotherapy. Again, a major advantage and I'd like to share with you this whole solution allows if they get into targeting solid tumors which is a very large landscape and again gets that 8/10 cancer.

So if we transition now to Slide 9, it is not only about what we're doing for CD19 or what we're doing for if we approach solid tumors. We have made real headway in targeting tumors such as AML, acute myelogenous leukemia and this is now on Slide 10. So AML is an unmet need and something that the CAR T-cell can really address.

So we have developed technology to ask the question whether CD33 is a good target for patients who have refractory or relapsed AML. And so we have generated CAR-Ts that have the ability to dock with CD33 and to kill cells that express CD33 and we have a switch technology.

Again part of the programming language of the T-cell so that we can eliminate the T cells if we need to essentially if there is untoward toxicities and we're going to open this trial in patients who are both the adults as well as pediatrics and be able to do so in Q3 basically in this next quarter.

And the reason we're optimistic about this is that we already have an IND, that's been approved through the FDA based on for instance some of the data that I am sharing with you on the right.

This is a mouse model again of AML and here are mice that are surviving a 100% survival when they receive the CAR modified T-cells that are targeting CD33, whereas the irrelevant T-cells for instance in this case CD19, because CD19 is not on AML blast or you get T-cells that don't have the CAR in that situation the mice die precipitously.

So in this example, we're just delighted to be able to share with you that this trial will be open at MD Anderson as an investigator initiated program.

And we will learn for the first time at least in the United States if CD33 is a good target and I think this will be really a great opportunity not only for ZIOPHARM and Intrexon but also for patients. But AML is also as you’ll see on the next slide susceptible to not just T-cell therapy but also natural killer cell therapy or NK-cell therapy.

So NK cells have some real opportunities here and the reason that we are interested in them is that they can be made in advance of their need and then put into the freezer and then thawed as a patient comes into the door and essentially infuse right then and there as the patient needs it.

And you can generate NK-cells that can directly target AML cells without any further genetic modification. But the trick you have to understand is how to grow out large numbers of primary NK-cells. These are not immortalized NK-cells, these are primary NK-cells. They don't have to be irradiated. They can be directly infused.

And as you can see in the graphic on the top right hand side we can take one donor's NK-cells, make a very large bank of these cells on our specialized feeder cells and then infuse them into multiple recipients with AML.

One of the reasons that if you would off the shelf or third party technology work is because NK- cells lack what's called the T-cell receptor.

In other words they lack the molecule that would cause toxicity and I think this is a very important part because we as a company therefore don't have to do any genetic editing at this point for the purposes of making an off the shelf therapeutic.

And then there is some data on the bottom right hand side that maybe a bit techie, but I think is important. On the X Factor from the bottom is essentially a marker for T-cells it’s called CD3 and on the Y axis is a marker for NK-cells called CD56.

And as you can see at the beginning if you just take peripheral blood mononuclear cells or PBMC, this product has a mixed population of NK-cells and T-cells, but as part of our manufacturing solutions in the feeder cells we've generated that have a special molecule on the surface called IO21, we've been able to grow out a highly pure population of NK-cells you can see 91% there after we have completed our manufacturing campaign and again this bodes very well for the purposes of clinical conduct and we expect to open this trial so, that we can understand how these off the shelf NK-cells work in the really the medically fragile patients or the elderly patients.

And you know this is - you know your heart has to go out to these patients because it is often their last diagnosis. They'll get AML and they won't be eligible for any of the standard intensive chemotherapy and so, we're going to offer them a potential solution with off the shelf NK-cells.

So, now we're going to lead the world of cell based therapy and transition to our program in which we are delivering Adenovirus to instill IL12 and control IL12 for the purposes of treating brain cancer.

So this is Slide 13 now and this is really the opening slide that shares with you the update of what we shared at ASCO back in a few months ago earlier this year. So in the trial which is now open across the United States you can see that the trial sites at the top down.

We have infused patients in three cohorts and I really want you to pay attention to the 20 milligram cohort because that's the cohort that we have signaled to regulators is the one we wish to take forward. In the 20 milligram cohort we are delivering Adenovirus 2X10 11 vp and then we are giving 14 days veledimix after their neurosurgery.

So, let's just pause for a second and look at the graphics on the right. So, you can see that a still - of a patient who has a syringe he or she has a syringe in the glioma.

So this patient has a recurrence of their glioma, that's what makes them eligible for the trial and then they receive as part of their essentially their standard of care they'll go to the operating room for a neo surgical procedure to try and debulk some of the tumor. That neurosurgical procedure is by no means curative.

Nobody comes out of the operating room cured of recurrent glioblastoma based on neurosurgery alone.

What does happen though and the reason why there is therapeutic optimism is that during the neurosurgical procedure, the syringe of IL12 is handed to the neurosurgeon and it's not just IL12 is the recombinant protein, it’s IL12 that is cleverly inserted into a viral vector and that viral vector then worms its way into the brain tumor cells, deposits of payload of IL12 under control of the RTS, the RheoSwitch system.

And then on the far right hand side, you can see the little tail in that person stomach because that's what happens, this patient now is out of the operating room, takes the Veledimex daily by mouth in other words that pill and then the content of that pill, the Veledimex across the blood brain barrier and confines the RTS, the switch that has been deposited by the adenovirus in the brain tumor and that then turns on IL12.

Now let's go back and look at the table for a minute and now we can kind of take a look and begin to see in the 20 milligram cohort what happens to these patients.

So first of all, these patients are highly motivated to go on this trial because they've had multiple prior lines of treatment in other words on average about 2.2 and I would add here as an editorial note, this is different from some of our competitors.

Some of our competitors in the field essentially enrolled patients with who may have only had one line of prior treatment, we are taking if you would more advanced patients and as you can seen many of these patients have had multiple recurrences, they really are in desperate shape.

But the reason why the 20 milligram cohort is to be absented here is you can see right at the bottom of the Veledimex dosing compliance is that the majority of patients on the 20 milligram cohort were compliant with their dosing. In other words could take the Veledimex and received the full beneficial effect of the IL12.

So as we go on, we can now look to see on the next slide what happens to patients in which they had essentially the 20 milligrams of Veledimex, had essentially the exposure within their tumor to the IL12 and did they have a benefit, did they essentially have a response.

And what's really remarkable and I think highly encouraging about this Phase 1 trial is the answer appears to be yes. And you can see in the green line for those 15 patients now that the median overall survival is 12.5 months and this is now at a follow up of about 9.2 months as you can see in the text at the bottom.

So why is this significant? And the reason is when you look back at the most mature literature, whether the multicenter trial or randomized trials, the 12.5 month stands clearly superior to all these other modalities.

So let's just take a look at a particular trial for instance, the Lomustine versus Bevacizumab trial or Avastin, in that situation those patients essentially lived on average about eight months.

So we’re doing much better than that, we’re already out to 12.5 months or look for instance at the randomized trial comparing the Carmustine wafer, the Gliadel wafer if you would versus the polymer placebo control.

In this trial, all the patients went to neurosurgery, everybody had some type of polymer but only half the patients had the chemotherapy Carmustine in their polymer, in other words those 110 patients. So basically it didn't matter whether you had neurosurgery or neurosurgery plus the chemotherapy in your wafer.

All those patients unfortunately died somewhere between 5.5 to 7 or so months. So in another words this is really the control arm for what happens when you have neurosurgery by itself, it doesn't cure you. You basically unfortunately go on to die something like five or so to six months after that neurosurgical procedure.

And again just place that in contrast with the 12.5 months that you see in the green line on the top. So those data obviously are exciting but what I think is really coming home and what is an important update for this call is that we're beginning to understand the mechanism why this works.

So again we're delivering IL12 using the switch system, we're controlling IL12 with the small molecule Veledimex. We give more Veledimex, we make more IL12, we get them less Veledimex, we make no IL12, we stop Veledimex and essentially all the IL12 goes away.

That IL12 biology is predictive to have effects, because we know from other human studies as well as in the mouse model that IL12 works on the immune system.

So in other words if the patient is surviving because there is an IL12 effect, we should be able to understand the mechanism of why the IL12 is impactful and we have two intriguing pieces of data to point in that direction. The first is in the role of dexamethasone.

Okay so dexamethasone is a steroid and it is a systemically delivered steroid and it's given by neurosurgeons around the time of the surgery, now there's no standard of practice for dexamethasone.

Some investigators will give very little to no dexamethasone as part of their standard of care for patients and some neurosurgeons will give for instance a lot of dexamethasone like over 100 milligrams.

ZIOPHARM is a witness to the amount of steroids that are being given to these patients, we don’t – we don’t tell the neurosurgeons what to do, they're doing their standard of practice according to their neurosurgical training, but it's a natural history experiment and we essentially have broken open the envelope.

And have now looked back in time and asked the question and said, of all the patients who were on the trial, who received 20 milligrams of Veledimex, what type of steroid dosing did they have and yes, you can see here it broke into three lines, three cohorts if you would, there is the black, the blue and the purple.

The black had the least amount of steroids, the blue had the intermediate amount of steroid and the purple had the highest dose of steroids and very nicely and essentially, it provides you data that shows you that the amount of steroids as it goes up, so the overall survival goes down.

So why does that fit the model, it fits the model because steroids are not only useful for neurosurgeons and their practice but they also had a crossover effect and they damaged the ability of T-cells to work. And T-cells as well as NK cells are part of the affector mechanism, part of the reason why IL12 works.

So in other words if IL12 is activated in the immune system to go after that person's brain tumor then the IL12 will work better when the handcuffs are off, in other words when the dexamethasone is at its lowest and of course you can see some very intriguing data where we had 100% survival so the patients who had the least amount of steroids again these are small numbers but again I think it really points to that underlying biology and it fits with the mechanism.

On the right hand side is another piece of biology that also fits the mechanism because as I've explained IL12 activates the immune system. So you should have more cellular elements, more activated T-cells in your body than the so-called regulated T-cells.

So there's two ways you can look at that, one way is to look at the number of activated T-cells based on CD8 and the other way to look at the number of suppressor T-cells based on FoxP3. These are technical measurements, but you can essentially now paint in your mind CD8 for killer T-cells and FoxP3 for Suppressor or regulatory T-cells.

And if ZIOPHARM is right, it should be that IL12 drive up the number of killer T-cells and drives down the number of regulatory T-cells, so that you will have a ratio and that's just what we show in these patients.

And the ratio correlates with survival, so in other words the higher the ratio of the so-called CD8, the FoxP3 or killer to regulatory T-cells, the longer the patient survive and again these are retrospective data.

We collected these data and then broke holes in the envelope to take a look inside and could match these data now back against our survival curve. And so, not only as I’ve shown you that we have 12.5 months of median overall survival which is head and shoulders above what is available to patients currently in the formulary.

But we also have a mechanism, why these patients did well.

So if we go to the next slide, we're going to look now through the future and in fact the future is here, this is future now if you would, because we have gone and opened up a arm of the study in which patients are being enrolled, where they are having the virus, the adenovirus, delivery the IL12 stereotactically.

In other words a small hole is opened up and then a needle is inserted directly into the tumor and then we deliver the IL12 by the adenovirus, such that the patient then can have controlled deliver of IL12 from within their tumor without having to have the so-called sort of neurosurgical procedure that I was talking to about before.

So, why is that important? It’s important because we're going after two new major trials.

The first is that some patients, particularly children, who develop tumors not in that, in the thinking part of your head, but they devastatingly have tumors in their brainstem and I tried to show you an image actually on your slide there of what's called a pontine glioma and that white mass sits right in the mid brain or in the pons of that child's brainstem and there's no neurosurgical procedure there.

The child would die on the operating room table. So the only way we can access that tumor is stereotactically. This is going to be very, very exciting for the company and quite frankly we will put place a head and shoulders about the competition because we're the only group that really can do that.

And really the reason we have such excitement about it is that we've modeled this in the mice and you can see the curves on the left hand side where mice with pontine glioma have been treated with stereotactic insertion of the Adenovirus into their pontine region in their midbrain region and we've had survivors in the mice.

So again, it's really, and I think generates enthusiasm for this pediatric study. The other reason we've opened up the stereotactic arm is on the right hand side because you can see and I tried again to show you a representative image of a patient with a very large tumor in their head.

This tumor is simply not amenable to any type of neurosurgery and no neurosurgeon will go in there, it’s getting into the ventricles and its disturbing critical elements of the brain. So the only hope for the patient is to have instruments that would delicately place the virus into that surgical mass.

But the reason we're optimistic for that patient is not only are they going to get the IL12 and the control them on IL12 but they're going to get some combination therapy using PD-1 blockade or anti PD-1.

And the reason we're excited about that again goes back to the mouse models and you can see in the red triangles when you combine IL12 biology with anti PD-1 you can have a 100% survival on the mice and that obviously is superior to giving essentially one of the other therapies working by itself.

So again, we've opened up the stereotactic arm and this is the lead in now to the pediatric study and into the combination study in adults. So I’m just going to quickly summarize here. The updated Phase I results and plans. So, as I shared with you Veledimex regulates IL12 in a dose depended manner by activating the RheoSwitch.

There's a very good correlation option we've stated with you in the past, I didn't do so to repeat today, but again we've had a very strong correlation between the amount of Veledimex. It's a ability of this drug to cross the blood-brain barrier and then to proportionately generate IL12 and then kick off gamma interferon production.

As we reported at ASCO we've had all the adverse events were related to IL12 biology completely understandable, completely predictable and rapidly reversed upon discontinuing Veledimex. This has been a remarkably a safe drug to be able to give to patients who've had no drug related deaths.

As I've shared with you our survival data continues to get stronger and if here's the correlates now, so we have a mechanism to help us understand why these patients are surviving. I’d alluded to the fact that there's a very intriguing subpopulation of patients who had low dose steroids and had actually just wonderful survival.

And that the, the current median over survival rests at 12.5 months which really is favorable compared to historical control. So we’ll have more to share with you in the coming months at SNO and I look forward to updating you on the technologies.

As I mentioned were enrolling the stereotactic group as the runway for the pediatric trial and the combo trial. And then importantly, a lot of work has been done this year on moving us now to the Phase 3 trial. We are currently working on the protocol designs to open the pivotal trial. We will be open by the end of the year.

And we have the potential for a single arm study, comparing the Adenovirus with the control production of IL12 and Veledimex historical control in a subpopulation of patients with GBM. And we'll have more to say and I'm sure there will be some questions on this, but rest assured this is a high priority for the company.

We will update you in due course and essentially as we move through the international regulatory landscape it just takes time to meet with all the regulators, particularly in Europe for the purposes of getting a unified trial out the door by the end of the year.

And then I've also mentioned and again, I'm not going to tip my hand any further, but we are currently active in partnership opportunities and discussing the types of partnerships that are looking at essentially commercializing, I think was a promising asset. Let me transition now to the end of my prepared remarks.

We will go through the financials and have a summary. So, here are we on Slide 19 which is the overall kind of snapshot if you would of the company. I'm not going to read every one of these notes.

I'm just going to really say that I think the key part is our cash runway extends into Q4, 2018 and we're really delighted essentially with our relationship with MD Anderson.

This is as an academic having worked there for 10 years and now been in the industry for two years, this has really been a wonderful collaboration and it really has justified our investment in MD Anderson and as you can see that we have significant resources that we've put into place at MD Anderson for the purposes of really punching out these trials, the point of care, the NK-cells the AML, the combo trial and more to come.

The milestone Slide, we don't have to spend too long on it together and you can look at it at your leisure, but I’ll just sort of pick up the highlights if you would. On the top for the Adenovirus the Ad-RTS is the RheoSwitch IL-12 that's topline there. Obviously we're heading towards the pivotal trial.

I talked about the stereotactic leading and the combo trial and the pediatric trial.

Going into the CAR program we've also talked about the updates we're going to have around the short manufacturing that are really a laser like focus on the point of care technology where we're advancing back to the clinic and as you can see we're making great progress getting this through the regulatory landscape through the rest of this year and then be open for clinical conduct next year.

The AML trial and CD33 is about to start.

I haven’t be able to share with you really just in the interest of time the Merck program, but again those are really tracking well with as you our press release on this and they are delighted by the technology associated with the Sleeping Beauty system and the IL15 and all of that is really coming into focus for clinical trial next year.

The NK-cells also will have a trial and be tested this year I mentioned why and we're really interested in testing the concept of off the shelf therapies and then the Sleeping Beauty system for the purpose of tied [ph] in TCR.

The clinical trial there will be launched through NCI and again we'll work with you and update you on that through the remainder of the year. But so far we're aiming for this year being in the clinic. So, the last slide in this synopsis is really just to kind of go back over our competitive advantages.

So, I think as you've seen as I started out, you know as we ticked a few of those four boxes you know we are really at the company have thought deeply about what it would take to commercialize gene and cell therapies.

The concept of point of care this is very rapid under two day manufacturing is really going to be a change for the field because it will get at the major problems associated with like [indiscernible] perceived to be so expensive.

Furthermore the switch system, the RheoSwitch and the ability to control transcription using the Veledimex will allow us to control products after they've been infused, in other words to control the fate of genetically modified T-cells so that we can prevent the cytokine storms.

The gene switch also has been applied for the first time to really show exquisite control of this very powerful cytokine IL12 and that has had some terrific now data with related to the survival of patients and also the biology of how IL12 when it is carefully controlled can activate the immune system to generate these so-called killer T-cells.

Our program in solid tumors continues to advance. This is a terrific opportunity as I mentioned. The landscape for solid tumors really is much, much larger than the opportunity for CAR-T and the off the shelf NK cell program will be you'll see data this year and you’ll see the trial start this year.

And we think this is again a really interesting opportunities we think about, again the kinds of competitive advantages that are out there for ZIOPHARM as we develop new therapies for patients with cancer. So thank you for bearing with me over the last 45 minutes.

That was my prepared remarks and I'm now going to turn it back over to the operator and then we have about 15 or so minutes for questions if folks are interested..

Operator

Thank you. [Operator Instructions] And our first question comes from Reni Benjamin of Raymond James. Your line is now open..

Reni Benjamin

Hey, good afternoon, and thanks Laurence for the update and congrats on all the progress. Maybe just a couple of questions, one we had quite an eventful month, this month with Novartis panel.

Do you have any takeaways that you can provide from the panel, any learning’s that you might be applying to your programs and in particular I guess differentiations in terms of manufacturing and the use of non-retroviral systems versus the FDA focused on?.

Laurence Cooper

Sure. So Reni I think the, yes I mean several to be honest, the first is the sort of sharing from Novartis about the heterogeneity of that product. I think this was a moment that the FDA will have to contemplate.

Clearly the clinicians in the room wanted the technology advanced and also as a pediatric oncologist, I’ve taken care of patients with refractory ALL, I'm delighted that there are options like this available.

But it is one thing to excitement around the clinical efficacy, but there is another set of concerns or at least to say headwind that one has to contemplate with respect to the heterogeneity of the product. The time it takes to make the product if I remember is 22 days, that’s a long time for a child to wait with ALL.

You know there was also concern about the integration, pattern of integrations from the lentivirus system. All of these can be addressed with the non-viral system. If you can get the manufacture down to under two days, the heterogeneity is no longer part of the process. It's ascribed to the patient.

If you can get the – if you can use Sleeping Beauty versus lentivirus, the pattern of integrations is much different and in fact we published that in the JCI Paper, it’s truly a random integration pattern which is different from using a virus.

And if you can rapidly manufacture T-cells, then that child or that patient can receive the T-cells before their disease gets out of hand.

So this looks like a lot there to be honest to kind of dive into and I think it's important that the FDA ruled favorably, but I think as in many technologies that’s the first chapter, it’s the first era if you would and I’m interested in moving on to what is I think a safe ground where there really is a commercialization anchor to the types of thing we're doing and because the elephant in the room is the cost and that's really where we're going to make progress..

Reni Benjamin

So that’s a perfect answer to my follow up, which is when does the POC kind of hit primetime and what are the potential hurdles? So for example, training somebody at the site of – at the point of care what’s involved there, the variability of transaction outside of your hands and into these other institutions and anything else we may not be thinking about?.

Laurence Cooper

Sure yes. So those are excellent questions and it's really the reason why ZIOPHARM has gone through these generations of technologies. I thought of point of care when I was first talking to the Board about the job and joining ZIOPHARM.

And but it became clear that you couldn't just show up one day and say you're going to do point of care T-cells, you had to have essentially the elements. You have to tick the boxes if you would. So part of the answer to your question is that we de-risked the program all the way along, like now the Sleeping Beauty is here to stay, it worked.

In the second generation trial, I'll be able to share with you in the public space, but I can tell you that the regulatory learnings in the second generation trial are the direct lead in to having essentially the regulatory overview of the point of care go well.

In other words, we're contemplating many of the regulatory release criteria in the second generation trial for what's needed in the so-called third generation trial.

But your point good in the last one is that okay ZIOPHARM, you get all this going, you get it going at MD Anderson, how do you scale it up? And the reason it’s scalable is that we have deliberately generated T-cells that have their own ability to grow in a competitive environment.

I didn't want to develop technology that is so refined or nuanced that you had to essentially have just the perfect amount of T-cells going to a patient for a graft.

I wanted to take advantage of T-cell biology, T-cell behavior, and the key there is the IL15 because in our models you can give low doses of T-cells that have the IL15 that is expressed and those low doses of T-cells come in and graft in those animals.

See, you don’t have to hit the nail on the head, you just have to be in the proximity and then you let the T-cells if you would do the work for you..

Operator

Thank you. And our next question comes from Tony Butler of Guggenheim Securities. Your line is now open..

Tony Butler

Thanks very much, Laurence. I do have several questions, but I will keep it to two minimum here.

One is on the Phase 3 or pivotal trial and I'm curious because you won't be able to limit steroid used and if it's true it will have an effect, why then move forward in a single arm study because the real benefit would be illustrated in a comparative trial? That’s question one and back to point of care, one concern always is that you get T-cells that end up having exhausted and one could argue if you rush it, they become increasingly exhausted at an increasing rate, how can you actually keep it to a level where there if you will more…? Yes thanks..

Laurence Cooper

Okay, so this is first one first is the steroid piece. So first of all there are neurosurgeons in the United States for instance, whose standard of practice is to go very little to no steroids and because people have grown up if you would in an era where they now understand that steroids have a double edged sword.

Now back in the day before people really understood that steroids were modulators, they were giving them for issues of edema, swelling of the neurosurgery, now I think sophisticated neurosurgeons recognize that the amount of steroids that can be given to patients can be reduced and indeed we've had patients excuse me we’ve had practitioners on our trial who have given no steroids.

So as we go through into the pivotal trial, we're going to give guidance about the steroid dosing and we can’t absolutely say what the dose would be because that’s obviously a neurosurgical expertise, but we can certainly give guidance.

And when we've talked and this is part of the reason why it's taken a while, when we've talked to our colleagues and our thought leaders really around the world now to get this next pivotal trial going, they are very comfortable with us, very comfortable.

So it's not like given 100 milligrams of steroids in that, there is a lot of flexibility in the system and I think a real understanding that low dose steroids is completely acceptable practice.

Your other point about the single arm trial versus a randomized trial; I guess I just want to just debate that with you Tony just a little bit because when I picture the single arm trial, what I'm picturing is that the patients are enrolled and then after a period of time, the envelope is broken open and we see how well the patients survive vis-à-vis an established set of historical data.

As long as we have met that benchmark, we will be able to declare success, we won't have to if you would sort of enrol patients on a spectrum of steroid dosing. So did I get that right or did I misunderstand the question there? With permission Tony, I'm going to go to your second question.

Okay your second question was sort of the evergreen phenomenon of T-cell, you’re quite right. So, when T-cells kill and re-kill they will differentiate into essentially a terminal programming event and then eventually they'll just simply give up and die of exhaustion.

One of the reasons they give up and die of exhaustion is that they don't get enough cytokine, they don't get enough juice if you would through their cytokine receptor and that’s the major reasons why the IL15 molecule, the membrane-bound IL15 molecule works.

And in fact not to get too technical, but in the PNS paper, we published a few months ago, we showed that the signaling through the IL15 molecule gave rise to a long-lived stem cell population of T-cells and that's sort of an evergreen population of T-cells that can give rise then to killers and actually can keep going if you would in this sort of factory mentality, popping out further killer cells and that's again one of the reasons why the IL15 biology I think has worked so well and was served so well as the linchpin for the point of care technology.

Thank you..

Operator

Thank you. And our next question comes from Keith Markey of Griffin Securities. Your line is now open..

Keith Markey

Hi, thank you for taking my question.

Laurence, I was wondering if you might, I know it's a little bit early yet to talk in detail about the upcoming clinical trials that you planned for the second half of this year, but I was wondering if you might be able to give us a little bit of guidance on the sizes of those trials and or perhaps talk about just how much of your credit that you have already with MD Anderson might be able to cover those costs..

Laurence Cooper

Yes, certainly keep - us a good question so, so we're you know the two cell therapy trial CD33 CAR trial and the NK-cell trial will both be right in the MD Anderson, the both the investigator initiated trials and the money at MD Anderson that there are already the I think it's about $27.3 million that is well essentially covers the cost of those trials so, we're very comfortable there.

We're also going to open up a part of a number of trials like but one of the trials and it will be MD Anderson for the combination trial where we are giving anti PD-1 and Adenovirus that control Veledimex in that combination trial also can be well handled by the cash that's on hand that MD Anderson.

So, I think we see that cash position as a little bit like a bank account if you would one of which we can draw down for not only the trials that I described but really to be honest for the years to come and that's really the reason why we're just delighted about working with MD Anderson.

They have the patients, we have the infrastructure to do the trials and we have an essentially the cash position to make sure they're well executed..

Keith Markey

So if I can elaborate or perhaps interpret what you're saying it sounds like the trials will probably relatively small..

Laurence Cooper

Yes, we haven't got a great detail; I mean eventually you'll see it in our clinical trial and what not. But yes, I mean these are going to Phase I cell therapy trials, typically speaking they come in the sort of 10 to 30 range number of patients..

Keith Markey

Great. Thank you very much..

Laurence Cooper

Sure, thank you..

Operator

Thank you. And our next question comes from Swayampakula Ramakanth of HC Wainwright. Your line is now open. Q - Swayampakula Ramakanth Thank you, and a couple of really quick questions.

The first one being on the DIPG trial of the pediatric brain tumor trial, I was wondering what kind of data would you need to provide to the FDA before you can start this trial in the pediatric patients and is there anything on the preclinical side that you can either present at a public meeting or you’ve already presented?.

Laurence Cooper

This is Dr. Lebel, I'll answer that one..

Francois Lebel

Yes, so the we're in the process of activating site in I think we have communicated before that we for the pediatric trial DIPG is very rare disease. But obviously as Laurence has indicated it is uniformly lethal for these children so, we're working on the West Coast with UCSF in Chicago. I can release at Northwestern and at Dana Farber.

So we're actively now answering question from IRB. So we anticipate – and at the same time we've opened the stereotactic arm in adult so, we're really getting very, very close now to open this study and so far the FDA has that no objection to our trial..

Swayampakula Ramakanth

Okay, good. The next question I had is on the - what sort of data should be expect at the SITC conference and also the SNO conference later this year..

Laurence Cooper

Sure. So I'm just going to pay myself down for the SNO conference.

And we'll have updates on the clinical trial, the frontline trial with that leading into the pivotal trial and then we also have some preclinical data that I think you'll find very interesting and I'm not going to share with you again the embargo, but you'll essentially have those two major updates of the clinical and the non-clinical program for brain tumors..

Swayampakula Ramakanth

Okay, good. Thank you very much..

Laurence Cooper

Sure, thank you..

Operator

Thank you and ladies and gentlemen this does conclude our question and answer session. I would now like to turn the call back over to Dr. Laurence Cooper for closing remarks..

Laurence Cooper

Yes I'd just, there as a brief closing say thank you for listening and paying attention and we look forward to another successful quarter. Thank you..

Francois Lebel

Thank you..

Operator

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

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