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TCR2 Therapeutics Inc. (NASDAQ:TCRR)
Q1 2019 Earnings Call
May 13, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen and welcome to the TCR2 first quarter 2019 earnings conference call. As a reminder, this conference call may be recorded. I'd now like to introduce your host for today's conference call, Carl Mauch, Director of Investor Relations and Corporate Communications. Sir, you may begin.

Carl Mauch -- Director of Investor Relations and Corporate Communications 

Thank you, Operator. Good afternoon and thank you for joining us on today's call. After market close today, we issued a press release announcing our first quarter 2019 financial results, which is available in the investors section of our website at www.tcr2.com. Today, joining me on the call we have Gary Menzel, our Chief Executive Officer, Ian Somaiya, our Chief Financial Officer, Alfonso Quintas, our Chief Medical Officer, and Robert Hofmeister, our Chief Scientific Officer.

Before we begin our discussion, I would like to remind everyone that this call will include forward-looking statements, including statements regarding the potential of therapeutic candidates and our development pipeline.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described in our SEC filings and our 10-Q filed after market close today. We undertake no obligation to update or revise the information provided on this call as a result of new information or future results or developments.

With that, I'll now turn the call over to Garry.

Garry Menzel -- Chief Executive Officer

Thank you, Carl and good afternoon, everyone. We appreciate you joining us today on our first ever quarterly conference call. I am delighted to report that the first quarter 2019 was marked by continued progress in our quest to provide new effective treatment options for cancer patients suffering from a wide range of hematologic cancers and solid tumors. Most important, we crossed the threshold into the clinic with our first therapy, TC-210.

As you may know, we are pioneering the development of a novel T-cell engineering platform which we believe can address the shortcomings of both CAR T and TCR T-cell therapies. The key differentiating factor is that our proprietary TRuC T-cells can harness the entire signaling complex of the natural T-cell receptor independent of HLA expression. In pre-clinical studies, we have already observed greater anti-tumor activity, longer persistence, and less cytokine relief. We believe that these properties could translate into more durable responses with potentially fewer adverse events for patients with cancer.

To date, in 2019, our key achievements have been consistent with the timelines in our corporate plan. These include one, we received FDA clearance of our IND for solid tumor program TC-210. We have already opened our first two clinical trial sites and have begun screening patients with mesothelin positive non-small cell lung cancer, ovarian cancer, cholangiocarcinoma, and malignant mesothelioma.

Two, we had a successful pre-IND meeting with the FDA for hematology program TC-110, putting us on track to file an IND for that therapy in the second half of this year. Three, we took occupancy of our manufacturing suite at the Cell and Gene Therapy Catapult. We expect this partnership to significantly boost the capacity beyond our current CDMO relationships and enable us to meet our future clinical trial needs while providing access to advanced manufacturing facilities and expert support from the Catapult team.

Four, we published pre-clinical data in a leading academic journal, Nature Communications, showing the advantages of our T-cell therapy approach. This marked our first ever peer-reviewed publication. Five, we were issued our first patent on the composition of matter claims covering TRuC T-cells as expressed anti-mesothelin TCR fusion proteins, including TC-210. And six, we successfully completed our initial public offering including the full exercise of underwriter's over-allotment option, placing TCR squared in a strong financial position to continue to support our clinical development programs into 2022.

Most important to us all at TCR2, however, is our quest to bring effective treatments to cancer patients. To outline in more detail our progress in that regard, I will turn the call over to Alfonso Quintas, our Chief Medical Officer.

Alfonso Quintas -- Chief Medical Officer

Thanks, Garry. The first quarter of 2019 has been very important for us. In January, we received clearance from the FDA of our IND for TC-210, our lead drug against mesothelin. In February, TC-210 was also granted forefront drug designation by the FDA for the treatment for mesothelioma.

Currently, we have two high-quality sites actively screening patients for a Phase 1/2 clinical trial for TC-210. Our study will enroll patients with either cholangiocarcinoma, mesothelioma, ovarian cancer, or non-small cell lung cancer overexpressing mesothelin. The Phase 1 portion of the study will evaluate four skeleton doses for TC-210. At each dose level, the first patient enrolled will receive TC-210 without lymphodepletion and then following a 28-day safety observation period, the subsequent free patients will receive TC-210 at the same dose following lymphodepleting chemotherapy.

Dose escalation will follow a standard 3 x 3 design. Upon infusion of the last patient in any given cohort, there will be a 28-day safety observation period. The focus of our Phase 1 study is patient safety with the key objective to determine the recommended Phase 2 dose. Additionally, we will be conducting multiple translational studies to assess patients' tissues for key attributes of TC-210 TRuC T-cells such as expansion, trafficking, and persistence.

Our translational studies will enable us to confirm in patients' unique characteristics of our TRuCs, which we observe in our clinical studies. In the Phase 2 portion of the clinical trial, we will plan to enroll approximately 50 patients who will receive TC-210 at the recommended Phase 2 dose in four distinct cohorts based on tumor histology. Each cohort will include ten patients with the exception of the non-small cell lung cancer cohort, which will enroll 20 patients. Eight patients will receive TC-210 as a single agent and 12 patients will receive TC-210 in combination with a PD-1-blocking antibody.

These will allow us to evaluate potential synergy of the two therapeutic modalities. We anticipate providing an update of the Phase 1/2 trial for TC-210 in the fourth quarter of 2019. Now, to briefly touch upon our earlier stage programs, the company held a pre-IND meeting with the FDA for TC-110, our lead TRuC T-cell candidate targeting CD19+ hematological malignancies in the first quarter of 2019.

Our focus for TC-110 continues to be on three specific areas -- adult acute lymphoblastic leukemia, aggressive and indolent B-cell lymphomas, all of which are indications for which CAR T-cells have either not yet been approved or have faced clinical limitations in terms of toxicity and/or efficacy. We remain on track to submit an IND in the second half of 2019 for TC-110.

With TC-220, our TRuC T-cell candidate targeting MUC16-positive tumors, we are conducting IND-enabling studies. We are attracted to MUC16 as a target because of its high expression in many solid tumors and low expression in normal tissues. We are currently pulling together our pre-clinical package and our goal is to find an IND for TC-220 in the first half of 2020. I will now turn the call over to Ian for an update on the quarterly financial results.

Ian Somaiya -- Chief Financial Officer

Thank you, Alfonso. In today's press release, we reported our first quarter 2019 financial results. Following our initial public offering in February, I'm happy to report that we're in a strong financial position and are well-capitalized to further advance our pipeline and enhance our platform. As of March 31st, 2019, TCR2 had $192 million in cash, cash equivalents, and investments compared to approximately $123 million as of December 31st, 2018. This increase was due primarily to the $80 million in net proceeds from our initial public offering.

Net cash used in operations was approximately $11 million for the first quarter compared to $3 million for the same period last year. For the first quarter of 2019, R&D expenses were approximately $8 million compared to $3 million for the same period last year. The increase was primarily due to activities related to the start of the Phase 1/2 clinical trial of TC-210 and an increase in headcount.

General and administrative expenses were $3 million for the first quarter compared to $1 million for the same period last year. The increase in G&A expenses was primarily due to an increase in personnel costs and costs of operating a public company. Our net loss for the first quarter of 2019 was $10 million compared to $4 million for the same period last year, driven primarily by our increased R&D expenses in the quarter.

Now, turning to financial guidance -- we expect our full year 2019 net cash expenditure to range from $45 million to $55 million and aim to end 2019 with a healthy $148 million to $158 million in cash and cash equivalents.

With that, Operator, can you please open the lines for Q&A?

Questions and Answers:

Operator

Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press * then 1. If your question has been answered or you wish to remove yourself from the queue, please press the # key.

Our first question comes from Biren Amin from Jefferies. Please go ahead.

Biren Amin -- Jefferies -- Analyst

Hi, guys. Thanks for taking my questions. Let me just start with the TC-210 program. I noticed that back in February, the CDRH deemed the IHC assay to be a significant risk, but you amended a protocol where they then deemed it to be a non-significant risk. Can we just walk through how the protocol changed that allowed the CDRH to have better confidence in the assay?

Alfonso Quintas -- Chief Medical Officer

Hi, Biren. This is Alfonso. Thanks for the question. You are correct. We received that letter from the FDA back in February requesting that we submit an IDA request to them. Upon discussion with the FDA, what they really wanted to make sure is that in the design of the clinical protocol, we had specified that each one of the patients, for each one of the indications included in the study had received all of the FDA-approved agents prior to being enrolled in the study.

More specifically, they wanted very specific and explicit language with regard to specific patient populations. One is that patients with ovarian cancer in BRCA1 or BRCA2 mutations, they wanted to make sure that we had the language describing that those patients should have failed prior PARP inhibitor therapy.

Number two, for patients with non-small cell lung cancer, they wanted to make sure that if they had an EGFR mutation and they had received TKI inhibitor therapy and developed subsequently a T790M mutation, they wanted to make sure that they had received osimertinib prior to being enrolled or considered for our study. So, those two were the main changes to the protocol, which was amended and then resubmitted and added to the FDA, upon which the FDA communicated to us that we need not submit an IDA application.

Garry Menzel -- Chief Executive Officer

And Biren, it's Garry -- just to further emphasize, these were minor changes as you just heard and required literally two to three sentences in our resubmission.

Biren Amin -- Jefferies -- Analyst

Got it. And then just on the Phase 1 dose finding aspect, I know you've got four different dose levels, but are you also investigating potential changes across lymphodepletion regimens? Will that dose finally allow you to evaluate different regimens?

Alfonso Quintas -- Chief Medical Officer

No. The way the protocol stands right now is such that we will evaluate the escalating dose of TC-210. We're not contemplating right now exploring different combinations of lymphodepleting regimens for different doses of those agents.

Biren Amin -- Jefferies -- Analyst

Great. Then maybe just at the end of the year, you're expecting to present or publish some data. What can we expect? How many patients? How much follow-up would we get at that point?

Alfonso Quintas -- Chief Medical Officer

At this point, we won't be commenting on any specific patient numbers. What we can say is that the screening, enrollment, and manufacturing are progressing well without any unexpected delays. What I think is worth reminding is the design of the study to give an idea of what the pace of enrollment will be.

So, again, we will have four different dose levels of TC-210. Within each dose level, we will first treat one patient without lymphodepletion. Then we'll wait 28 days looking for safety signals. If we don't appreciate any safety signals, meaning we don't find any dose limit in toxicity, then we will open a cohort of three patients that will receive the same dose of TC-210 but this time following lymphodepleting chemotherapy.

So, what happens is after the first patient, we'll have to wait another 28 days looking for safety signals and if no safety signals, then we will enroll two patients simultaneously. Then we will dose escalate following the rules of a 3 x 3 design and the next dose, we will repeat the same exercise. Those are going to be the mechanics of the study in the Phase 1 portion, just to give you an idea of how many patients we're going to enroll in the study.

Biren Amin -- Jefferies -- Analyst

Great. Thank you.

Garry Menzel -- Chief Executive Officer

Biren, I think the second part of your question was what should you be expecting at the end of the year?

Biren Amin -- Jefferies -- Analyst

Correct.

Garry Menzel -- Chief Executive Officer

So, in that particular case, if you think of the data that we are collecting -- Alfonso or Robert can certainly expand on this -- we're collecting three different types of data as we perform the study that Alfonso just described. First and foremost, we're collecting safety data. Our hope would be that we would see that early.

Ultimately, we want efficacy. It's possible we see that early, but we may require higher doses. The other bucket of data that we're collecting is what you might call correlated. So, where we are looking here is to try and determine whether or not our TRuC T-cells perform in humans the same way that they perform in animals.

So, the data that we're collecting there involves looking at TRuC T-cell expansion and persistence because that's certainly an important early indicator of effect. We're looking at TRuC T-cell tumor infiltration. We're looking at TRuC T-cell immunophenotypes. So, it's activation, exhaustion, memory, TRuC T-cell functionality. So, we're looking at cytokine production and so forth.

So, this correlative data will act as a proxy for the efficacy going forward. So, at some point during the year, we'll provide an update when we see fit as to what data we are seeing and it might not be in the form of a presentation, as you described it, or a conference, because we're not sure that any of those line up. It may be in the form of a press release.

Biren Amin -- Jefferies -- Analyst

Great. Thank you.

Operator

Our next question comes from Jonathan Chang from SVB Leerink. Please go ahead.

Jonathan Chang -- SVB Leerink -- Analyst

Hi, guys. Thanks for taking my questions. The first question -- can you talk about the cell doses being evaluated in the TC-210 study and how are you thinking about the cell dose level needed to achieve activity in the study?

Alfonso Quintas -- Chief Medical Officer

Thank you. So, we don't comment specifically on the doses we're going to use. What we can tell you is that the selection of the dose has been informed by very importantly my prior experience with both CAR Ts, not just in hematology, but also in solid tumors as well as TCR Ts. So, we've designed dose escalation schema that straddle the doses used in CAR Ts and solid tumors as well as TCR Ts to cover the wide gamut of cell doses explored in cell therapies and also informed by our pre-clinical models in animal models.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Second question -- with your collaboration with the Cell and Gene Therapy Catapult, can you talk about what your manufacturing capabilities are currently and how do you see that evolving over time?

Ian Somaiya -- Chief Financial Officer

Sure, Jonathan. It's Ian. I'll take that question. Through our collaborations with the CDMOs, we're able to meet their demand for a Phase 1/2 trial for TC-210. As you'll note, we've taken occupancy of Catapult, which allows us to increase our capacity to treat an upwards of 400 patients. There's the unique aspect of our collaboration with Catapult where we have an option on a second clean room, which will in effect allow us to treat patients and meet the needs for a potential Phase 3 study.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Thanks. Just one last question -- what are your overall thoughts on mesothelin as a target for your platform? I'm curious to get your updated thoughts post recent data in the field at AACR. Thanks.

Alfonso Quintas -- Chief Medical Officer

Yeah. Without commenting on specific data from other groups, I think the data we're seeing at AACR on the one hand validates even further mesothelin. There's a significant body of work with a number of therapeutic modalities out there. But now, having this robust CAR T-cell data further validates mesothelin and it's telling us that targeted mesothelin is a good way of achieving clinical efficacy in patients with solid malignancies. But also, I think it validates the field. It validates the field of adoptive T-cell therapies in solid tumors.

So, overall, I think it's very positive that those data have come out and will continue tracking data from other groups that will inform our own studies.

Garry Menzel -- Chief Executive Officer

And maybe one other thing I could add -- it also did highlight some of the limitations of CAR-Ts and the lack of persistency we've seen with CAR-Ts on their own, where in the case of the AACR presentation, the combination arm was the one that produced the best results.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Thank you.

Operator

Ladies and gentlemen, if you have any further questions at this time, please press * and 1. If your question has been answered or you with to remove yourself from the queue, please press the # key. Our next question comes from Do Kim from BMO Capital. Markets. Please go ahead.

Do Kim -- BMO Capital Markets -- Analyst

Good afternoon. Thanks for taking my questions. Just to follow-up on that AACR data for mesothelin-targeting CAR T-therapy, in your mind, does that potentially suggest that you should be adding anti-PD1 to all the Phase 2 cohorts instead of just lung cancer?

Alfonso Quintas -- Chief Medical Officer

Well, not necessarily. In other words, yes and no. No because I think what Memorial Sloan Kettering has done, which I think is the right thing to do, is to follow their science. They have published on their pre-clinical models that the efficacy that they achieved with local administration of the CAR-Ts and especially in combination with PD1-blocking agents is far superior to the IV administration of the CAR Ts. That's what they replicated in the clinical trial.

We, on the other hand, after performing the run in the in vivo models, we haven't seen that difference. In other words, when we treat locally and when we treat IV, we see identical efficacy, which is why, again, following the science, we elected to pursue an IV administration of our drug T-cells.

I should say that in addition to that, I think the adopted T-cell therapies are fundamentally IV therapies. It's only one or two malignancies that will render themselves amenable to local administration of these T-cells. So, as you can see in the design of our study, what we're going to do is we're going to give TC-210 IV.

The consideration of local administration of TC-210 is one of the ideas that we are considering, but perhaps on a separate study and most likely in the context of an investigator-initiated study, for the purpose of this Phase 1, Phase 2 study, we're going to focus on IV administration only.

Do Kim -- BMO Capital Markets -- Analyst

I see. You've also shown that in your pre-clinical studies that TRuC T-cells migrate toward the tumor a lot more quickly than CAR Ts. Could you talk about how the full TCR plays in the homing toward the tumor?

Robert Hofmeister -- Chief Scientific Officer

This is Robert. Indeed, we have shown in our pre-clinical models that TRuC T-cells compared to CARs migrate faster and accumulate faster there. We attribute that to the full and broad signaling of the T-cell receptor. So, we do not only rely on one subunit, but we are able to utilize the entire signaling complex. With that entire signaling complex come a number of other attributes, like, for example, the up-regulation of CXCR3 on TRuC T-cells, which facilitates the migration into the tumors.

Alfonso Quintas -- Chief Medical Officer

Let me add -- on the question of the combination with PD-1, I think it's good to remind that in the Phase 2 portion of the study, we will have an arm, specifically the non-small cell lung cancer arm, where we will combine TC-210 with a PD-1-blocking antibody. And of course, if the data we see suggests synergism, you may see us expanding that paradigm to other arms of the study.

Do Kim -- BMO Capital Markets -- Analyst

Thank you. And last question on TC-110 -- in your pre-IND meeting, were there any new questions or concerns by the FDA compared to your interactions for TC-210? Since you've been through the process with 210, do you think that you'll be able to conduct a faster early stage program and skip the without lymphodepletion part of the dosing?

Alfonso Quintas -- Chief Medical Officer

You're exactly correct. The conversation with the FDA for TC-110 basically revolves around the specific data that the agency wants to see in the IND package. On a clinical aspect of it, we focus the conversation on two aspects. One is the definition of the DLTs, which is something that we will very clearly and explicitly describe in the clinical trial and secondly, the design of the dose escalation phase, which basically touches upon what you just asked in your question, the limitation of the without lymphodepletion requirement. So, you will see us progressing through that study much faster compared to the TC-210 program.

Do Kim -- BMO Capital Markets -- Analyst

Thank you for taking my questions.

Operator

Thank you. I show no further questions in the queue at this time. This concludes our Q&A session and today's call. Thank you, ladies and gentlemen, for attendance. You may all disconnect.

Duration: 28 minutes

Call participants:

Carl Mauch -- Director of Investor Relations and Corporate Communications 

Garry Menzel -- Chief Executive Officer

Alfonso Quintas -- Chief Medical Officer

Ian Somaiya -- Chief Financial Officer

Robert Hofmeister -- Chief Scientific Officer

Biren Amin -- Jefferies -- Analyst

Jonathan Chang -- SVB Leerink -- Analyst

Do Kim -- BMO Capital Markets -- Analyst

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