Good afternoon, ladies and gentlemen, and welcome to the Ziopharm Oncology First Quarter 2019 Results Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mr. Chris Taylor, Vice President, Investor Relations, Corporate Communications. Sir, you may begin..

Thank you, Bridget, good afternoon. Welcome to the Ziopharm Oncology conference call and webcast to review results for the first quarter of 2019. This afternoon, we filed our 10-Q and issued our Q1 news release, both of which are available in the Investors Section of our website, ziopharm.com.

During the course of this call, the company will make forward-looking statements, including statements regarding the potential therapeutic candidates in our development pipeline, regulatory status, financial information and business trends.

Forward-looking statements are subject to numerous risks and uncertainties, as described in our 10-Q and within other filings that we may make with the SEC. Participating on the call today are Dr. Laurence Cooper, CEO of Ziopharm; and Dr. David Mauney, our company President. Each will provide commentary and we'll open the call for Q&A.

Now I'd like to turn the call over to Dr. Mauney. Good afternoon, David..

Yes, thanks, Chris, and welcome aboard here at Ziopharm. And thank you for everyone -- thank you, everyone, for joining us today on the call.

We are pleased to speak with you this afternoon to provide an overview of results for the first quarter of 2019, to provide you an update on our core programs and to highlight value-creating milestones we expect for this year. We extend a special welcome to those of you who have taken a new look at Ziopharm over the last few months.

We benefit now from an increasingly strong and supportive base of shareholders, and we are pleased to see evidence of new support this year. We also welcome two new analyst on this call, each of them initiated coverage of Ziopharm in recent weeks. We began 2019 with significant corporate momentum.

In addition to a reinforced corporate structure and balance sheet, we are now well-positioned to achieve multiple-critical and value-driving milestones this year, including being in the clinic with all of our filler programs, namely TCR-T, CAR-T and Controlled IL-12.

We are pleased to report that all of the important clinical milestones articulated on our year-end call are on track, and today, we reaffirmed our timelines for attaining those events. With these milestones essentially upon us, the table is set for what we believe will be very a strong balance of the year.

To accomplish our goals, we have established strong partnerships with those, we think, are the most recognized leaders in our field. For our solid tumor TCR program, our external clinical lead is Dr. Steven Rosenberg, Chief of the Surgery Branch and Head of the Tumor Immunology Section at the NCI.

We spent increasing amounts of time at the NCI over the past quarter, and together, we agreed to extend our CRADA in February. Also in February, Ziopharm appeared in the Federal Register of the United States Government, contemplating a perspective and exclusive license from the NCI for additional patents and inventions.

The joint decision to extend the CRADA and the pursuit of extended licenses shows our commitment to this program and also reflects the commitment we see from Dr. Rosenberg and our shared vision for scalable, nonviral approaches to delivering TCR-T cell therapies.

We remain the only nonviral means for gene transfer for clinical grade TCRs being used by Dr. Rosenberg's group, and both parties feel our platform could be a key to targeting solid tumors of all types.

These efforts at the NCI could enable truly personalized autologous therapies, which almost certainly will require multiple targets per patient, something we think is not commercially viable with viral-based manufacturing.

Thus, with the full support and full agreement with the team at the NCI, we are pleased to reiterate that we expect Sleeping Beauty TCR-T cell therapy to be in the clinic in mid-2019. We also maintain a long-standing relationship with the MD Anderson Cancer Center.

Our Sleeping Beauty platform represents a paradigm shift where Ziopharm plans to solve ongoing commercialization hurdles with CAR-T therapies by manufacturing CAR-T faster and at a fraction of the expense compared to viral vectors. This has the potential to dramatically expand patient access and reduce costs.

The enthusiasm within MD Anderson for our Sleeping Beauty technology, which has now expanded across multiple clinical groups, is palpable. We are currently exploring ways to deepen our relationship within MD Anderson, efforts that would provide us an opportunity to expand our preclinical, clinical and GMP initiatives there.

Last summer, the FDA mandated that we achieve viability rates greater than 70% for our CD19-specific CAR-T cells. I'm happy to report that we have made considerable progress on this front, and we expect to respond to the FDA and meet our stated goal of being in the clinic at MD Anderson in the second half of this year.

I'm proud of our entire team and the collaborative efforts underway to achieve this clinical milestone.

To further develop our Controlled IL-12 platform, we partnered with Regeneron late last year, and I'm pleased to report that our respective teams have worked tremendously well together, such that we are on time and on track to open our Phase II trial for Recurrent GBM that combines our IL-12 with Regeneron's PD-1 inhibitor Libtayo this quarter.

This, in addition to the acceleration and enrollment we have seen in our other IL-12 trials, gives us increasing confidence that control of IL-12, is shaping up to be the drug platform we envisioned all along. Finally, we are very excited about the progress we are making with Eden BioCell, our joint venture in Greater China.

This effort oversees, will essentially mirror the same CD19 CAR-T Sleeping Beauty program that is underway at MD Anderson. This joint venture is structured as 50-50 ownership with our partner TriArm Therapeutics, to commit up to $35 million to this program.

We have been incredibly impressed by the intensity of the team's effort out of the gate and look forward to updating you on our progress and timelines.

We remain committed to these partnerships and also to potential, additional, external opportunities and collaborations that we believe will add to our core portfolio and build value to the business of Ziopharm going forward. Now for some internal updates. Over the past several months, we have strengthened our management team and Board of Directors.

We've recently made several key additions to our Boston headquarters as well to our Houston R&D and manufacturing teams, and are actively working with leading search firms to identify and recruit two critical hires for the C-suite as well for our final 2 open Board seats.

As we announced last week, Jim Cannon, who joined the Ziopharm Board in 2004, will not stand for reelection. I wanted to take this moment to sincerely thank Jim for the contributions made during his tenure, as well his generosity and time and effort, especially over this last critical year, as we reshape the company.

For both open board seats, we have identified strong potential candidates, seasoned leaders who will bring valuable and complementary skills to our board.

With 4 new members last year, two more on the horizon and a new chair, we will have completely reshaped our board in less than a year, efforts that had been paying dividends to us as a management team since day 1.

We believe that in building out our team at Ziopharm, we are now clearly on the right path to deliver best on the potential of our technology for the months and years to come. Finally, an update on our financial status. This afternoon, we issued a press release detailing our financial results for the quarter.

As of March 31, 2019, we had cash and cash equivalents of $51.5 million. This is the primary funding source for our Controlled IL-12 platform, the work with the NCI, as well our G&A, which is primarily based in Boston. We reiterate today that we have sufficient cash to support these activities into the second quarter of 2020.

There's an additional $26.4 million at MD Anderson that has been prepaid to cover our clinical and preclinical development work there. These resources cover all of our existing CD19 work planned at MD Anderson well into 2020 as well as other important initiatives we are exploring now in partnership with them.

Of course, securing our balance sheet to support our visions is a priority as well. We are now very confident in our ability to sufficiently capitalize the company going forward and will be creative and opportunistic in these efforts, updating the market as appropriate. Before I turn the call over to Laurence, let me wrap up with a few final thoughts.

While it is only been 8 weeks since our last call, there is tangible progress being made at Ziopharm. Progress that we believe will have very positive impact to the development of Ziopharm as a business, and more importantly, to the impact of changing the lives of patients.

It is quite clear that we are executing better than ever and rapidly expanding our team and deepening many relationships. We are pleased to welcome new analysts and investors and are equally pleased to see that our story is beginning to resonate with Wall Street. As we look ahead at the balance of 2019, we have multiple milestones to look forward to.

With the strength in management team and our Board of Directors and all three clinical pillars enrolling this year, 2019 is poised to be a very significant year for Ziopharm. And now, I would like to hand the call over to Laurence..

commencing through NCI a Phase I trial for TCR-T cell therapy midyear; initiating a Phase I trial in the second half of 2019 at MD Anderson and providing data to FDA to lift the clinical hold status; working through Eden BioCell's to advance the Sleeping Beauty platform in Greater China; presenting information from 2 approved abstracts at ASCO next month; and finally, initiating a Phase II combination trial with Regeneron's Libtayo this quarter.

And with that, we will turn the call to the operator for your questions..

[Operator Instructions]. Our first question comes from the line of Ren Benjamin with Raymond James..

Can you hear me okay?.

Yes..

Sorry about that. Thanks for taking my questions and congratulations on the progress.

Maybe just to start off with the third generation CAR-T, Laurence, can you just remind us kind of where we are in the process of getting the trial started? And whether you've now been able to consistently sort of generate product above the viability threshold that's required by the FDA?.

Yes. Thanks, Ren, and good to hear from you. The key concern from the FDA really was not associated with the Sleeping Beauty systems, so in other words, didn't penetrate the core nonviral approach.

It really went to the idea that when you rapidly produce T cells, and we're talking doing this in 2 days or less from gene transfer, those cells essentially, are coming out of the electroporator and being delivered to the patient as a bulk product, if you would.

So there's a mixture of cells that have gone through that physical process of viable and nonviable. The FDA guided us last year in June that, that essentially ratio had to be 70% in favor of viable cells.

So what we've done, basically, since that time is develop a process to achieve that goal, in other words, achieve the critical threshold of 7-0, 70% viability.

So by reiterating today that we are on track to open this trial in the second half of this year, I'm giving good guidance, I think, to The Street that the process engineers, who are based in Houston and we're very grateful to them, really have made significant progress in this area.

And I'm really delighted by what I've been seeing behind the scenes if you would..

Got it. And just maybe as a follow-up and switching gears to the IL-12 program. The ASCO data, you have a poster, you have an oral presentation.

Can you give us, just, any color as to how many patients in each of those presentations? How much follow-up should we be looking for? And what are the key endpoints that we should be focused on?.

Sure. Thank you. So there is two presentations, a poster and an oral. The poster is going to really focus on the monotherapy and be able to start addressing the expansion cohort. Now as you'll recall, that expansion study has very rapidly accrued. In fact, we've actually completed the accrual.

And so the data is locked in, but essentially, the stopwatch is going.

And the reason I highlight that is that we hold ourselves to a high standard around the quality of data and that data is, do the patient survive, do patients who have basically a lethal diagnosis of recurrent GBM, will they survive longer than historical controls, that 6 to 9 months benchmark.

So for that, essentially -- either to achieve that, we have to follow those patients out for the bulk of this year. So I think, the way that I would guide you and investors for that presentation is this will be an interim update.

And I think it will be important for the investor community, but it's a story really this will unfold and continue to unfold this year.

The oral presentation, obviously, we've got a lot of interest from the society, and the reason this is because we're the company that for really the first time is solving the problem of why PD-1 inhibitors, such as Opdivo or Libtayo, why they have had such a difficult track record in the treatment of GBM within use of monotherapy.

And the reason is because the most GBMs are immunologically sterile. They aren't just T cells in there to essentially disinhibit or to engage with your PD-1 asset.

Ziopharm has the answer, and we've published these data with you in the community showing that IL-12 can change that immunologic desert into one where it's now flush with T cells and those T cells will reside in that tumor for a long time.

This has, I think, a lot of opportunity and a lot of upside and the abstract and the oral presentation will address that type of technology.

So again, I think, it's really outstanding opportunity for the investors and for the scientific community to learn about how IL-12, really, for the first time, can be partnered with PD-1 in patients with brain tumor..

And our next question comes from Eric Joseph with JP Morgan..

I just wanted to follow-up to start maybe on -- walk on Rens' question regarding the NCI program. I'm just trying to get better visibility on the path to start of the clinical trial, and you -- just given the TCR program also being based on the Sleeping Beauty technology, the assay -- the IND, sort of, outstanding for the CD19 hematology program.

Sort of, is -- are you -- do you -- I guess you'd be thinking about sort of a formal IND having been filed or in place for the CRADA program? Or they potentially exempt?.

Yes. Sure. So the NCI follows the same type of procedures as any academic or any company. In other words, they would have approval through the FDA for this essentially first-in-human gene therapy trial..

Okay. Got it. Got it. And just on the hematology program with the CD19 Sleeping Beauty CAR. The -- just wondering, sort of, what the gating steps are.

I know you guys are on track to providing key data feedback looks like in half of the year, but just what is -- any, kind of, clarity you can offer in terms of the remaining hurdles that can be overcome? I guess, particularly given that, the competitor is using a similar technology platform is currently in clinic.

To what extent is your means of modifying the T-cell, unnecessarily to the CAR itself but modifying the T-cell potentially differentiated from other platform approaches that [indiscernible] through the approach?.

Yes, I can't comment on others and what their program is. But you are talking to the team that invented the very rapid manufacturing of CAR-T. We understand not only what it is to essentially genetically modify these T cells in 2 days or less, but also essentially what the path is to get that trial open and accruing patients.

So we are developed the solution to that. That solution is on track. It really is associated with the viability question. That's the primary thrust where we are working. And solutions that we've developed that are elegant, they're our own, and from the data I have seen, they are reproducible.

So we're buoyant about our chances now and I think at this trial, not only of clinical hold but enrolling patients this year..

Our next question comes from the line of RK from H.C. Wainwright..

Regarding the combination study with Regeneron's drug, Libtayo, do you need to wait for the newer study to mature a little bit more before finalizing the protocols so that you can come up with a steady -- with better data from the initial combination study? And also, what sort of tumors are we looking at with the Libtayo molecule?.

Sure. So, in terms of the package, if you would, about being able to move forward here, the Phase II study is actually really benefited from our work with Opdivo. This was a risk that Ziopharm took really last year starting a combination in June of 2018.

And it may not have been apparent to The Street, but the reason why that risk is paying off is that we have essentially understood how IL-12 now can be combined with the PD-1 asset. We've gone through a number, and I just announced this is -- we've just enrolled into the third dosing cohort here.

So that gives you a clear signal that we've been successful in essentially marrying IL-12 and the PD-1 asset and doing so, in a very careful way, such that we can achieve what we think are the correct doses.

That data has been essentially transmitted to our partner at Regeneron and allowed us now to essentially get to a Phase II trial, which -- the signals are that that will also be essentially enrolling patients this quarter. In terms of the types of tumor, this really remains focused on recurrent GBM.

Most patients with a diagnosis of GBM, it's something like 8 out of 10, 9 out of 10 of those patients will recur, and when they recur they die 6 to 9 months despite everything, that's currently commercially available.

So those are the patients that are our heart goes out to, those are the patients that are interested in the trial, and I would just add that we have a waiting list for our therapies. Patients and providers see IL-12 and see the combination with PD-1 as really life-changing, and we want to be able to essentially execute on that enthusiasm..

And our next question comes from the line of I-Eh Jen with Laidlaw & Company..

Probably just a follow-up on the IL-2 part as well a little bit more. The first one is that there was a paper published about 2 years ago regarding why the PD-1 studies failed in the GBM and there's -- some hypothesis has been suggested.

Do you feel that the combination now you have with IL-12 potentially could, sort of, overcome some of those potential hurdles, as has been mentioned in their publications?.

Yes. Thanks, I-Eh. Thanks also for really being involved in our story. So the reasons for PD-1 failure, as I understand that, primarily is driven by the fact that in the GBM, and especially in the recurrent setting, is immunologically isolated. You can't get T cells in there.

So even though the PD-1 asset can essentially activate those T cells by disinhibiting the PD-1, PD-L1 access. If you don't have T cells nested into and in with the tumor then those T cells essentially can't get to the problem. They're circulating if you would, and they're not intratumoral.

So we are very buoyant on the idea that by IL-12 being intratumorally administered, will totally change the landscape of the tumor microenvironment, essentially using buzzwords, turning a cold tumor, hot, getting an immune signal and then getting T cells in there that essentially can be -- essentially activated with this PD-1 inhibitor.

The data around monotherapy of PD-1, you said -- I probably saw the paper from a couple of years ago, I've also been recently updated in a series of monographs and in the Nature Medicine periodical. And those papers clearly guide around what I'm talking about.

In other words, the immunological signature is critical, if you would, to understanding how well PD-1 will work and IL-12 essentially takes that immunological signature from a negative to what we think is going to be a positive..

Okay. Great. That's very, very helpful. Maybe just follow up a little bit on that.

For the collaboration -- for the combo study with the Regeneron's PD-L1, just curious, what dose you might be starting will be repeating what you have, whether before or you are going to jump on maybe 1 or 2 dose starting with the higher dose?.

Yes. That is an excellent question. So here, we're building up our data with Opdivo. So we have a dosing strategy that really is appropriate for a Phase II trial. I mean we are not going to be doing it, dose-finding study.

We are pretty confident that we know what the sweet spot is for IL-12, and we are pretty confident, based on really the approval of cemiplimab or Libtayo that we know the dose for that asset.

We know that we essentially can put those together because of all the dose-finding studies we've done where we had to incrementally creep up to where we think the sort of the inflection point is.

So as we get ready to enroll, it will be a Phase II study, which would -- it should enroll rapidly because we're essentially pressure testing what we think is the correct dosing..

Our next question comes from the line of Thomas Flaten with Lake Street capital..

Great. Just a follow-up on the question about the IND at NCI.

I heard you confirmed that they would be subject to the same rules, but could you confirm that the IND's actually been submitted to FDA? Or is that still outstanding?.

Yes. Thanks, Thomas, and also thanks for being involved in our story. So our guidance here is that we're going to be open, essentially, mid-2019. As we were mentioning on the last -- really call just a few weeks ago, our intent here is to get away from the sort of day-to-day rhythm about regulatory processes.

That, in the past, has essentially not updated the Street, nor served Ziopharm well. But to give you, essentially, confidence about what's going on here, when we are talking to the NCI, and when we are essentially working in partnership with them, they are giving us full confidence that they're on track to enroll patients mid-2019.

And that should give you a good signal about the status of the regulatory process..

Yes. That's great. And then just a quick housekeeping follow-up. On R&D spend, there was a bit of an uptick from the fourth quarter, even though compared to first quarter last year, it was down.

Is the first quarter R&D spend a good number for us to use going forward? Or should we be thinking about a different level of spend for the last three quarters of the year?.

Sure. And we can all work with you offline a little bit if you need to hear some additional color there. I think the way to think about that is when we really went up on our own, we separated from what has been our primary partner Intrexon, they were taking care of a lot of the R&D for us. That was part of the agreement.

As we know are independent, that R&D budget has to reflect essentially that we're in R&D shop as well as prosecuting our commercial assets. So I think that's part of the story, and I think, for the investors, the good news is that we are now fully in control of our assets.

We are prosecuting our ideas essentially to the full extent that we can now because we are on our own, and I can see that together with my team, a clear opportunity for Ziopharm to essentially make inroads on a variety of ideas and cancer opportunities. And we're going to go full force on those.

So yes, there may be a sort of a small uptick, but that essentially is, I think welcome news for the investors..

And we do have a follow-up from Ren Benjamin with Raymond James..

Yes.

Just -- are you there? Can you hear me okay?.

Yes. Thanks, Ren..

Yes..

Great. Just the Eden -- the joint ventures, can you just provide -- I know you mentioned it, can you provide some color as to where we are? When do you think we might be able to get into the clinic in China? Just sort of what your thoughts are? You now had several months.

And then maybe just as a follow-up to that, there are several companies that are developing nonviral systems as you guys are aware of. But it seems like they're taking a different approach, which is partner the technology and there seems to be a lot of interest.

Can you talk a little bit about maybe why you feel, or maybe others feel that Sleeping Beauty is really the best nonviral option that's out there? Or they're roughly the same and it's really just a race of who gets there first?.

Sure. So first the Eden BioCell, I actually just got back from China. And while I can't tell you all of the insight scoop here I can certainly share the overview that it's dramatic progress, really from an accelerator going from 0, they're now going to 100.

People are hired, infrastructure's in place, GMP is being essentially built out and it looks fantastic. I mean you would be proud of this operation if it was based here in Boston, it would essentially rival any other company.

Those -- that essentially -- infrastructure essentially then is being married to really a set of clinicians, regulatory people and additional, sort of, if you would, sort of external infrastructure to be able to access greater China. And that really is remarkable in just a few short months.

And they have now, essentially, the people, the money and our help to be able to now go after this rapid manufacturing of the CD19 asset. So in terms of the -- when they're going to be treating patients, I can't go much further than say it's all lining up beautifully, it's the right people, the right time and stay tuned because it's a rocket ride.

The next part of your conversation is really around nonviral gene transfer.

So it actually brings a smile to my face because a lot of time, the questions were "hey, Lawrence, how come you not doing virus?" What's special about Sleeping Beauty kind of thing because why are you doing nonviral when the world is doing viral? And I just sort of see a smile a little bit to myself because the questions now are coming, "Okay.

We see that nonviral is the solution." And so we have been talking about nonviral ever since I got here, and actually, obviously, when I was at MD Anderson, working to get the first human trials done.

So that is a long history now of being able to work in the nonviral space and fully understand how Sleeping Beauty, how a nonviral system essentially can be used.

And I think what you see is that we're not just trying to replace lentivirus or retrovirus, we're not just trying to replace or have a different transposon compared to, say a piggyback, we're going after solutions and that's the critical message.

The solution, what we're providing in the TCR space is that the Sleeping Beauty system, because we've treated so many patients in CAR-T, has a direct line of sight now for TCRT. I'm not worried about whether Sleeping Beauty works anymore or not, we know it works.

The question now is, can it now execute in the TCR space? So we derisk the program to get its essential question, can TCRs against neoantigens put a patient in remission? Similarly, we're providing the solutions around essentially the cost and the complexity of viral-based gene transfer in the CARs.

Again, we're not just trying to replace lentivirus, what we're trying to do is provide essentially the street and the community with a solution for those big problems, the cost and complexity, and that, of course, is where we combine the Sleeping Beauty with essentially CARs and the IL-15.

So we have an inside track, we're first movers here in the TCRT space and we're first movers in getting essentially the manufacturing time for 2 days for CD19, which is a commercially approved product..

And I'm not showing any additional questions..

Okay. So thank you, operator. And thank you all on the phone. Have a great day..

Ladies and gentlemen, this does conclude the program. You may now disconnect..