Theriva Biologics, Inc. (TOVX) Q2 2016 Earnings Report, Transcript and Summary

Good evening, and welcome to the Synthetic Biologics Second Quarter 2016 Operational Highlights and Financial Results Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the call over to Vincent Perrone, Manager-Corporate Communications at Synthetic Biologics. Vincent?

Thank you, Carrie and good evening everyone. Welcome to Synthetic Biologics second quarter 2016 operational highlights and financial results investor conference call. Today, I’m joined by our CEO, Jeff Riley, our CFO, Steve Shallcross and our SVP Clinical and Regulatory Dr. Joseph Sliman. Synthetic Biologics issued a press release this afternoon, which provided an operational highlights and reported financial results for the quarter ending June 30, 2016. The release can be found in the Investors section of our Web site. During our call today, Jeff and Joe will provide an update on our pipeline programs and Steve will summarize our financial highlights. We’ll take questions after our prepared remarks. In addition to the phone lines, this call is being streamed live over the Internet today and the webcast replay archived on our Web site for 90 days. During this call, we will be making forward-looking statements regarding Synthetic Biologics’ current expectations and projections about future. Generally, the forward-looking statements can be identified by terminology such as may, should, expects, anticipates, intends, plans, believes, estimates and similar expressions. These statements are based on current beliefs, expectations and assumptions, and are subject to a number of risks and uncertainties, including those set forth in Synthetic Biologics filings with the SEC, many of which are difficult to predict. No forward-looking statements can be guaranteed and actual results may differ materially from such statements. The information on this call is provided only as of the date of this call and Synthetic Biologics undertakes no obligation to update any forward-looking statements contained on this conference call on account of new information, future events or otherwise, except as required by law. With that, I’d like to turn the call over to Jeff.

Thanks, Vincent, and thanks everybody for joining the call today. During the second quarter of 2016, Synthetic Biologics achieved several important clinical and corporate milestones. Further in our transition from an early stage clinical development company focused on drug discovery to a clinical development company with two significantly de-risked microbiome-focused GI programs poised for late-stage clinical development, with the eventual goal of commercial entry either alone or with a partner. I’d like to start our call by providing a brief recap of our operational clinical achievements, since the beginning of the second quarter. I'll start with SYN-004, it is our oral enzyme designed to degrade certain IV beta-lactam antibiotics which are excreted into the gastrointestinal tract to preserve the naturally occurring balance of the gut microbiome, for the prevention of Clostridium difficile infection, CDI, antibiotic-associated diarrhea, AAD and the emergence of antibiotic-resistant organisms. Later in the call our Medical Officer, Joe Sliman will provide additional information about that drug. During the second quarter, we achieved milestones both inside and outside of the clinic. In May, we received approval from the United States Adopted Names Committee for the use of the generic name ribaxamase for SYN-004. This approval from the USAN represents a newly created and innovative first in class drug, designed to protect a naturally occurring gut microbiome from the unintended consequences of antibiotic use. In addition to measuring the ability of ribaxamase to prevent CDI, CDAD and AAD in patients who are hospitalized with a lower respiratory tract infection and receiving IV ceftriaxone, an exploratory end-point in our ongoing Phase 2b double-blind proof-of-concept study, will look at whether ribaxamase may reduce the occurrence of the antibiotic resistant organisms by preventing microbial imbalances in the gut, which may occur as a result of the antibiotic use. This is consistent with results previously demonstrated by a Phase 2 study conducted in Europe by our predecessor Ipsat. We believe ribaxamase has the ability to prevent the spread and occurrence of antibiotic resistant in organisms present in the gut. It may potentially reduce the ever increasing threat of a superbug epidemic. Continued exposure, overuse and misuse of antibiotics cause microorganisms to develop resistance to antimicrobial agents. Research shows such resistance strength of microorganisms maybe capable of transferring resistant genes with other species contributing to the spread of antibiotic resistance. Enrollment in this clinical trial remained robust during the second quarter and to-date we've enrolled 374 patients. As a result of this better than expected enrollment we anticipate completing this trial by the end of Q3 and expect to announce top-line results early 2017. During the second quarter we also announced positive top-line results from the second Phase 2a trial for SYN-004 or ribaxamase which demonstrate a correlation of the 150 milligram dose of ribaxamase and the successful degradation of IV ceftriaxone in the intestinal chyme of 14 healthy ileostomized study participants to levels that were near or below detectable without affecting ceftriaxone plasma concentrations. Results from these clinical trials were consistent when ribaxamase was administered alone and in the presence of the proton pump inhibitor. Ribaxamase was shown to be well tolerated in all study participants in this Phase 2a study. SYN-010, I'd like to switch gears now to our proprietary, modified-release formulation of lovastatin lactone designed to target the methane-producing function of certain microorganisms in the gut with minimal disruption to the gut microbiome. Methane has been shown to be a de facto causative factor of the symptoms commonly associated with irritable bowel syndrome, constipation. Unlike other currently approved and development stage therapies designed to treat IBS-C, SYN-010 is not intended to be a short-term solution to a long-term problem. By reducing methane production in the gut of IBS-C patients, SYN-010 has the potential to become a best in class in chronic treatment for an underlying cause of the constipation, abdominal pain and bloating IBS-C patients experience as a result of this disease. Simply put, our goals to develop a solution to the underlying problem. During Digestive Disease Week 2017 held in May, we presented detailed data from two previously reported Phase 2 clinical trials, which demonstrated significant clinical improvements, in study participants diagnosed with IBS-C and receiving SYN-010. The additional data suggests that inverse correlation between higher measurements and breath methane and complete spontaneous bowel movements or CSBMs and FDA defined regulatory endpoint in study participants receiving SYN-010. During a Clinical Advisory Board Meeting also held in May attended by several the nation’s premier GI physicians, we learned that the IBS-C patients under their care identify bloating as the most bothersome symptom they associated with IBS-C. Perhaps a particular note to these patients, data from our study also demonstrates clear improvements in abdominal pain and bloating and quality of life measures in study participants who were administered SYN-010. During the second quarter, we announced results from a separate randomized, open-label clinical trial, which evaluated the Pharmacokinetic profiles of lovastatin lactone and its beta-hydroxyacid metabolite. This metabolite is responsible for the cholesterol-lowering effect of currently approved formulations of lovastatin such as MEVACOR. Since these formulations are intended to be released in the stomach and absorbed into the bloodstream. Results from our PK study demonstrated SYN-010 released the antimethanogenic lovastatin lactone into the lower smaller intestine and colon while limiting absorption of the cholesterol-lowering beta-hydroxyacid metabolite of lovastatin lactone in the blood, the result of which limited SYN-010’s impact on cholesterol levels in study participants to inconsequential levels. In addition to and as a result of these positive clinical outcomes, we remain driven and poised for the continued late-stage clinical development of SYN-010. At this time, I would like to turn the call over to Dr. Joseph Sliman, who will briefly discuss our plans for the initiation of pivotal clinical studies for SYN-010. Joe?

Thanks Jeff. Before I begin, I’d like to take a moment to thank my colleagues at Synthetic Biologics here, who have really demonstrated a tremendous commitment and dedication, and in under three years have taken SYN-010 from an early stage discovery program to a late-stage clinical program that is poised for initiation of pivotal trials, that is quite an accomplishment. On July 20th, members of our clinical and regulatory team met with the U.S. FDA for the end of Phase 2 meeting for SYN-010. Following a brief review of data, a collaborative and very positive discussion with the agency and soon, to determine the optimal pathway to advance SYN-010 forward into Phase 3 development. In response to the FDA’s recommendations, our plans include a Phase 2b/3 adapted design study for the first pivotal trial. This will include exploration of dosing and patient population as it relates to breath methane. We expect to submit a protocol design and corresponding statistical analysis plan in the near future to the FDA and we anticipate starting this study early next year. Switching gears to SYN-004 that’s ribaxamase, I’d like to address the better than expected enrollment we’ve seen throughout our ongoing placebo controlled double-blinded, proof-of-concept Phase 2b/3 study. We designed this study anticipating that we would enroll approximately 370 patients and around 75 or so global sites to determine the ability of ribaxamase to prevent the incidence of C. diff infection, C. diff associated diarrhea and antibiotic associated diarrhea in patients hospitalized with lower respiratory tract infections and receiving intravenous ceftriaxone. A futility analysis is anticipated to determine whether the study is adequately powered based upon the C. diff rate in the placebo group. In addition, I'd like to report that as a result of stronger than expected enrollment of up to 374 patients to-date we have now exceeded enrollment expectations and we anticipate greater than 400 patients to enroll by the end of the third quarter. Given this robust enrollment number top-line data is expected in early 2017. And now I would like to turn the call back over to Jeff.

Thanks, Joe. I'd like to shift gears to our second quarter financial position at this time. We continue to operate in a very efficient manner in the second quarter and as of June 30, 2016 cash and cash equivalents were $10.1 million. With guidance from the FDA for the clinical advancement of SYN-010 to a pivotal trial and the clinical progress we've made for ribaxamase, we intend to continue to strengthen our balance sheet in order to move these programs forward. We continue to evaluate capital raising strategies which will allow us to benefit from the clinical momentum we experienced thus far in 2016 and we continue to engage with potential domestic and international partners for both GI microbiome-focused programs. At this time I'd like to turn the call over to our Chief Financial Officer, Steve Shallcross. Steve?

Thanks, Jeff. During the second quarter, we continue to operate in an efficient manner focusing on expending approximately 80% of our capital to the continued clinical development of both our lead GI microbiome-focused drug candidates in early stage pipeline programs. Our focus remains on moving both SYN-010 and ribaxamase into late-stage clinical development. Synthetic Biologics' second quarter financial results were included in the press release which was distributed over the newswire earlier this afternoon. The Company's 10-K for the quarter ended June 30, 2016 will also be filed with the SEC later this evening. At this time I'd like to provide an overview of our financial results from the second quarter of 2016. For the second quarter of 2016, general and administrative expenses were $2.1 million compared to $2.2 million in the same quarter last year. This decrease is primarily a result of lower legal fees offset by an increase in stock-based compensation and increased employee cost associated with the transition of the administrative and financial office to our Maryland headquarters. Non-cash charges related to stock-based compensation were $507,000 in the second quarter of 2016 compared to $335,000 in the same period last year. Research and development expenses decreased to $7.2 million in the second quarter of 2016 compared to $7.5 million in the same period last year. This decrease was primarily the result of decreased Phase 2 program cost associated with clinical development, manufacturing and research activities within our microbiome-focused pipeline. Non-cash charges related to stock-based compensation were $400,000 for the quarter ended June 30, 2016 compared to $253,000 for the same period last year. Cash and cash equivalents as of June 30, 2016 were $10.1 million compared to $4.1 million for the same period in 2015. Our positive cash position reflects the partial utilization of our prepaid expense balance for ongoing Phase 2b clinical trial for ribaxamase, the completion of Phase 2 trials for SYN-010 and our ability to continue to manage our overhead expenses as we continue to grow. We anticipate cash utilization to remain steady in the third quarter of 2016 as cash prepayments made during 2015 will continue to be used to offset a portion of the cost associated with the ongoing Phase 2b clinical trial for ribaxamase. Now I’ll turn the call back over to Vincent.

Thank you, Steve. Carrie, we’d like to open the phone line to questions. Would you please describe the procedure to ask questions for our listeners?

[Operator Instructions] Our first question comes from Ed White of FBR & Company. Please go ahead.

Hi guys. Thanks for taking my question. So first, I just want to start on SYN-010 from the press release yesterday, it appears that the -- in your comments today, it appears that the FDA meeting for SYN-010 went well. Can you elaborate on the adaptive design of the Phase 2/3 trial?

I sure can, so the FDA recommended that we examine multiple doses in Phase 3, which was, what we had submitted and requested. They also requested that we or recommended I should say, that we examine all comers, yes all IBS-C patients in the Phase 3 study. So they would like us to examine the efficacy rates in both patients who have diagnoses of IBS-C, who have positive methane breath test, as well as negative methane breath test. So in effect they have asked us to examine a broader patient population.

Which would give us a broader label, so this was a pleasant surprise for us as we are going forward and just to repeat what Joe said, we have a green light to move forward into a pivotal study, which is exciting and which we are designing as we speak, Ed?

Okay, great. Yes. Thank you. And then just so on the breath methane, if there is a divergence of the results. Could you still receive approval in your opinion? So if your -- work better and patients that are positive for breath methane could you be expected, do you expect it to be approved on that with the more restrictive label?

Yes. So the short answer is yes. The adapted design trial will allow us to look at whether we have similar or different efficacy in the two different patient populations. And so if we have similar efficacy, we can get approval in all comers. If not then we would continue the study and the further Phase 3 development in methane patients only.

Okay, great. Thank you. And then just a question on ribaxamase, I might have missed this if you said it, but was the interim analysis in the Phase 2b proof-of-concept trial conducted in the quarter?

For the ribaxamase study the interim analysis was triggered via enrollment. So, what has happened is we needed to get to a certain enrollment number to trigger the interim analysis to begin basically. In order to get all those patients evaluated, they have to complete their hospital course as well as then complete their four week follow-up after their discharge from the hospital and so that's what we're in right now, we're in the follow-up period for the patients who're identified for the interim analysis. In the meantime enrollment has actually increased at our sites in Europe. And so, I guess there's a lot of pneumonia and bronchitis going on right now. So, we've a lot of patients that are continuing to be enrolled. So, as a result of that we've continued to see acceleration in enrollment and we're now up around our originally targeted number.

And keep in mind, this wasn’t designed as a Phase 2b/3 study. So, we designed the study in cooperation with the FDA, since nobody has done something in the prevention space before in this area. So, this could be a pivotal study which is why we're continuing to enroll patients. We hope to get up over 400 patients. We think that's highly likely given how rapidly these folks are enrolling. And the interim study was basically a futility analysis which we were sort of blown by because of our enrollment numbers have been going so game busters over the last few weeks.

And then just the last question for you, Jeff this is more of a general question, but with the recent failure of Series there's been some pressure on the microbiome space, do you think that will have an impact on the investment in microbiome research in general and then more specifically for Synthetic, could it have an impact on your clinical programs?

There's two of us that are in the public domain that are microbiome we are only two companies it was us and Series obviously we have two very-very different approaches. Series is pursuing a bugs as drugs or as spores, that they put back into the patients after they've had C. diff infection and after they've had some probably brutal antibiotic regimens. We're on the other side of that, we're treating patients before they get the infection in a preventative mode and frankly our mechanism of actions are very simplistic. Elegantly simple I guess is probably a nice way to put it and that we're delivering an enzyme that breaks down the antibiotics themselves in a very select location in the intestinal tract. So, very elegant, very simple, significantly less risky than doing something that is short of an unknown at this stage of the game. Our other drug SYN-010 as well as our Pertussis drug, these are very targeted drugs, these are -- we're doing that one specific organism. They have very safety profiles, the FDA is allowing us to use MEVACOR as our safety profile if you will to some extent for SYN-010. Again we know the mechanism very well. We published a paper on the mechanism specifically I think about a few months ago, you can go look up that paper. But I think the way we're pursuing it is a little bit more traditional drug discovery development than some of the newer folks out there that are frankly on the cutting edge of science but when you're on the cutting edge of science sometimes you don’t know as much as you would like to know as you’re going forward. So I don’t know what the effect is going to be on us, we think it’s going to be a positive, we have drugs, two drugs going in the Phase 3. Potentially, I think we’re in a pretty gosh darn happy place and we are at the stage now, where we’re talking to investors and we’ll hopefully be able to get some bigger boys and our stock price that we’ll begin to move to price to where it should be from where it is today.

Okay. Great. Well, thanks Jeff for taking my questions.

No worries. Thanks Ed.

Our next question comes from Adnan Butt of RBC Capital Markets. Please go ahead.

Thanks for taking the question. First on 004, could you remind us what target enrollment is for the Phase 2/3 study and then based on the interim? Could you upsize the study further?

Yes. So the target enrollment for the Phase 2b was 372 patients and of course that’s 372 completers. But we have built into the study, the ability to enroll up to 600 patients if need be based upon the results of the interim analysis. We also have built into the protocol that we can continue to enroll the study, while the interim analysis process is ongoing. So that’s why we’ve continued to enroll through hitting the enrollment target for the interim analysis. And so we can go all the way up to 600 if we wanted to or if we needed to.

And as you know Adnan the bigger the end the bigger the number, the better off we’re going to be. Keeping in mind that we powered the study at a 5% C. diff infection and roughly 20% to 25% antibiotic-associated diarrhea rate. The gap that we’ve seen at this stage of the game is, there is a four-week follow-up for all of these patients. So we may have 375 enrolled as of today, but fully, almost half of those have not completed the entire follow-up time period yet and then obviously locking in the data base for each one of those individual patients after the fact. So we intend to continue the enrollment. Again we’re hoping to get well over 450 patients somewhere in that range to have a significant number when we go back to the CDC and the FDA. We hope to finish that up sometime towards the end of the third quarter and then obviously we’ll lock the database, we’ll do the continued follow-up and then we hope to have results early next year.

So to clarify, the results early next year would be from the 370 plus patients or will that be from however many of you’ve enrolled?

It will be from however many we enroll in complete.

Okay. Then just a question on 010 when you went to speak to the FDA, did the FDA ask any questions, did the FDA have any questions about the high dose statin. And then secondly what exactly is the adaptive component of the design for that study. Is it, you are adding patients, you are changing, you are using patients? What exactly changes there? Thanks.

So I’ll answer the second part first. The adaptive portion of the Phase 2b/3, the first pivotal study will be examining both multiple doses, and in both ends of the patient population of IBS-C patients, so those who have detectible breath methane and those who do not. That’s the adaptive portion of the trial. If we have efficacy in everybody then we'll move into the Phase 3, the rest of the Phase 3 program with multiple doses and all comers but we have the ability to down select a sub portion of the population based upon the adaptive part of the trial. Now the answer about the high dose the agency did not have questions about high dose other than to request more information about the effect of the high dose, the agency was very forthcoming about their confidence in the safety profile of lovastatin. And so they were perfectly comfortable with the high dose or the higher doses of SYN-010.

Okay. And this does count as one of two pivotals for [Multiple Speakers].

Yes, the 2b/3.

Okay.

Yes, the 2b/3 would count as one of the two pivotal studies. That's correct.

Our next question comes from Katherine Xu of William Blair. Please go ahead.

And my first question is on SYN-004. I just want to make sure that the interim analysis was triggered by at least 120 patients enrolling and also at least 10 CDI cases?

Katherine this is Joe. We had multiple possibilities built into interim analysis to trigger it. And it was triggered by enrollment, not cases.

So, do you not know that there were at least 10 cases or?

I do not know how many cases we have it's a double-blinded study.

And how many patients then is included -- are included in the interim right now?

I actually don't know that either because it depends on how many patients were enrolled on the day that the interim analysis was triggered.

Okay. So, the interim analysis was actually triggered by the age or by a?

By enrollment yes, yes. And once we hit that number, then whatever we ended up with that too ends up in the interim analysis.

So, you don't have any idea what the baseline CDI rate is in the population?

No, we designed it as a double-blinded study so that we could present it to the FDA eventually as a double-blinded result because any Phase 3 program that we would have to design for pivotal studies would necessarily look similar if not exactly like this study.

This was designed as a pivotal study with the FDA which is why we're double-blinded on this. If we were to take a look we would not be able to use this as a potential pivotal study.

But then I guess there was a -- there could be a independent Data Monitoring Board to look at that right? I thought that was the idea to look at -- to monitor the number of CDIs in the case. It is also total combined cases, right you don't have to un-blind anyway? [Multiple Speakers]

It's being monitored by an independent Data Monitoring Committee and that's very independent. They're independent of us. We don't know the results, we don't see them. I'd love to able to ask but I have to remain blinded in order to justify the data going forward.

I think the confusing part Katherine is that, we had expected to trigger that somewhere around 250 patients somewhere in that range. And what happens is we enroll, so rapidly that we have blown past that. So it was a futility analysis right. Is it working or is it not working and continue to enroll or not continue to enroll. We’re going to continue to enroll, because by the time, the interim analysis is finished we will be done with the study. So we’re going to continue to enroll, we’ll get up over 400 patients probably we’re hoping around 450ish. And we’ll be at the end of the day and literally that interim analysis will come in literally about the exact same time. So it’s kind of a move point, but we have to continue with it, because we cannot continue enrolling without protocol wise, without conducting that interim analysis. So it’s really kind of move point at the stage of the game, we’ll have the full study done, we’ll look at the data. Again it was powered at 5% for CDI rates, we don’t believe it’s going to be any different than that. I mean at the stage of the game and AAD is a antibiotic-associated diarrhea, we also assume that that’s could be 20% to 25%. The really important piece of both of those, two those regulatory endpoints what we’re very interested in what the CDC is interested in is the antibiotic resistance component. That’s what we really want to see, that’s what we’re taking fickle swabs from a lot of these patients before and after and we’re going to compare those. And really check out and see what’s happening to their microbiome and that diversity thereof during this treatment regimen. That is what we really need to see in the control group and the other group and that’s the important part. So we’re excited to be doing that. Again what we will report Q1 of next year will be top-line data for AAD and C. diff infection. We will not be reporting antibiotic resistance at that time, because that will take us longer to do the deep sequencing and the analysis to get that information so that will be released probably a little bit later next year. Once we’ve had time to meet with the CDC and go through all of that analysis. Does that makes sense?

Yes, I understand that part. I guess my question is really on the triggering of an interim analysis. So if you have that interim analysis triggered by, let’s say enrolling 250 patients. That doesn’t mean, because you have other triggers which is 10 total cases of CDI. So does that mean that, when you actually roll 250 patients, you just so didn’t have 10 cases of CDI?

We don’t know Katherine.

[Technical Difficulty] Because it’s not had happened that would have been the first trigger to trigger the interim analysis no?

That’s correct. But if you think about in 10 cases of CDI would require how many patients total given a 5% infection rate?

200.

So that’s when it was triggered. So we don’t know if it was triggered. We assume that it’s being triggered based upon the sheer numbers, and the sheer mass of people, that we’re enrolling in the study. For whatever reason, there is a bizarre occurrence of pneumonia and then Bronchitis happening in Europe at this stage of the game, which is good for us, bad for them, but good for us from a clinical perspective.

So if you get the top-line data, on third quarter of next year and that is successful. So basically you can, the next step is to a confirmatory, another confirmatory Phase 3?

No. We would probably take the data sets and go down to the CDC and get their buying and basically examine what we have here. This is a public policy style drug, right this is not a, it’s an unusual pathway forward for us on the commercialization side. We would like this drug to be on the formularies of hospitals and the VA or wherever it happens to be than anytime an antibiotic is prescribed. It's a beta-lactam antibiotic. Our drug would be prescribed along with it. It just naturally goes with it. It's a very different paradigm than what you would typically have with a more typical drug like a Viagra or something of that nature. So, we're going to go to the CDC first, we're going to analyze the data we're going to go down and reanalyze it with them in early next year. We will then go to the FDA for the end of Phase 2 discussion and design what that next study is going to look like ascertain whether or not we could use the data we have created. Could be a pivotal study, we don't know yet. We'll have to talk to the FDA about that and get their guidance and then figure out what the end point's going to be because we also don't know what the end point is going to be for the second confirmatory Phase 3. It maybe CDI, like we are doing now, and maybe antibiotic associated diarrhea, we don't know yet. So, there's a lot of open ended questions, what we do know is that historically this drug works exceptionally well, it's very safe, we know the mechanism of action intimately there's no off target activity. It has all the bells and whistles you would want for a very safe quality drug and that should be on the formulary of every hospital that it enrolled.

Okay. And then just going onto SYN-010, for the adaptive trial design, are you going to ratify the patients with methane 10 parts per million above and below or it's just positive and negative?

We will probably set it at just positive, negative, somewhere thereabout, that's part of our ongoing discussion with the agency as to what level [Multiple Speakers]. I hope the listeners understand what a huge win it was for us to get the feedback that we received from the FDA with regard to the design for an adaptive study design it is an atypical design and the beautiful thing about this is, is we're allowed to go -- we're going to go after all comers, this is anybody that does have methane or doesn't have methane, because again we don't know, the FDA doesn't know and this is the point that the diagnostic test for methane isn't super accurate at the lower level. So, we can't detect methane in all of these patients. So, all patients may actually have methane, we may all have methane, we just don't know at this stage of the game. And the FDA wants us to test that which means we would have a very broad label, if it works effectively in all of those groups. And we're excited I mean the FDA is asking us for a broader label versus a narrower label which is fantastic. If it doesn't work in everybody we'll still have a subset that are methane positive and our Phase 2s we just rant showed that that works in those patients. We will then continue with those -- with additional methane positive patients and it will be a Phase 3, I mean it will -- in that phase the label will be a bit narrower but still will cover around 60% to 70% of the patients that are in the IBS-C population give or take based upon Dr. Pimentel’s data.

So you look at the diagnostic for so to determine positivity and negativity would still be the same diagnostic and it is pretty much the limit of detection is the cutoff point?

The limit of detection in the Commonwealth breath test that we've been using which is now owned by Valeant, right the pharmaceutical company is three parts per million, at the bottom level. So in the study that we just did, we cut patients off at 10 parts per million. So we guarantee they had methane in them. And if you have methane, you likely have these microorganisms living in your gut. What we don’t know because of the limits of the test is what’s happening below three parts per million. So if patients have zero parts per million or one part per million that is undetectable at this stage of the game based on this test. Also these organisms live in various parts of your small and large intestine. So if they’re higher up in your intestinal tract, the methane is easier to detect on your breath, this is a breath test. If they are lower in your intestinal tract, it’s more difficult to detect typically. So there is a variety of variables there, which is fantastic, because the FDA is allowing us to test all of those in a pivotal study.

So I guess my question, again is that three part per million is that limit of detection is going to be the cut off in the Phase 3 or positivity versus negativity?

We don’t know yet at the moment…

[Indiscernible]

We don’t know yet Katherine we’re designing the study today, it will likely be binary it will be either, they are either methane positive or there not for the study itself. But we don’t know, we’re in the process of designing it and then we’ll submit that with the statistical analysis to the FDA for their sign off here in the next few weeks and off we go.

Okay. And then my last question if I may, can you just offer some more insights on the details that you’re trying to manage your cash efficiently?

So Katherine is everyone’s well aware last year when we raised the capital, we did the messaging was around raising enough to complete our two Phase 2 programs. And we’re well on our way to completing that objective as a matter of fact, we’ve exceeded expectations by continuing to manage our cash in a very, very prudent way. We also disclosed to the market, we would need to go back to the marketplace and we would evaluate opportunities in the capital markets, as well as we would continue to explore possibilities of potential partners. And both of those still hold true. So we’re still in the middle of evaluating our options and I can assure that our choice is going to have the best interest of our shareholders and the Company at large.

Thank you for taking the questions.

Our next question comes from Tim Chiang of BTIG. Please go ahead.

Hi. Thanks. Joe, could you just sort of provide a little bit more detail on the number of patients you plan on enrolling for SYN-010, in the first initial Phase 2b part of the trial?

Sure Tim. I want to caution you that of course we still have to have the discussion and approval with the agency. But our plan is do exactly what they recommended, which is to look at small sub-patients in each of arm. So we’ll have somewhere in the neighborhood of 250-300 patients in the Phase 2b portion.

And let’s assume you get the outcome that you’re looking for with this adaptive trial. What would be required post your discussion with the FDA for the Phase 3 study? I mean would you basically have to substantially increase the number of patients that are in the Phase 3 trial or what would the requirement be going from Phase 2/b to Phase 3?

Yes so that is a good question, the beauty of doing an adaptive design is that you don't commit yourself to an enormous number of patients. When you move from the 2/b to the 3 part of the program, because the interim analysis if you want to call it that, between the two parts of the study, allow you to identify which groups fall into your end point analysis. So, in other words, I'm going to need another 300 patients give or take, right, somewhere in that neighborhood to evaluate the end point regardless of whether it's all comers or whether it's subgroup analysis. Because it's got to be powered for the end point no matter what. So, it's a 600ish patient study, stays a 600ish patient study regardless of how I design it.

Okay. And just one last question, I just wanted to clarify, that do you or do you not need to run two pivotal trials, I thought this was a 505(b)(2) pathway. So, you…?

Yes, actually so what we're doing is we do have to do a second pivotal trial. The adaptive design will count as one and then we'll have to run a second Phase 3 confirmatory "Phase 3". It is a 505(b)(2) but it's a different formulation and so the FDA in our discussions, because it's a new or slightly different formulation and a new indication, they want us to stick to the guidance which requires two pivotals.

At this time I would like to turn the call back over to Jeff Riley for any closing remarks.

Thanks, Kerry. Again in closing, the first half of 2016 was one of progress in clinical success for Synthetic Biologics. We've continued to build intrinsic value for both of our lead programs, our innovative GI microbiome-focused space. And our goal remains to continue to build innovative and novel approaches to solving seriously unmet growing medical needs. In a nutshell we have two drugs in late stage clinical development for $1 billion plus markets that are novel, unique, very safe from the studies that we've done at this stage of the game and with very clear mechanisms of action which again I think is the key component to the success and continued success of these compounds as we move forward. Our fast prediction as we go forward looking at SYN-010 is we'll probably filing an NDA sometime in late 2019. We don't know again as Joe clearly pointed out for SYN-010, we'll do the adaptive study design. We'll take a look at it between the Phase 2/b and 3 portion. We'll probably talk about that publicly, that'll be some time next year. We could then potentially if it looks very good, we could start a Phase 3 in parallel to the other Phase 3 or we could continue it depends on capital more or less at that stage of the game, or we could do them in sequence. And that's another way we can go forward. Again there's a SYN-004 or we're going to call ribaxamase from now on. For the ribaxamase study we will shoot for 400 to 450 patients in the next few weeks. We will lock and load that sucker and we’re going to then analyze what’s happening thereafter. And we should have data sometime early next year from that particular study. And again we’re going to go to the CDC, we will then go to the FDA, we’ll design what that second Phase 3 is going to look like or at that stage of the game. And we’re off again to the races to see what we can do. We are in partnering discussions for both of those programs right now. I don’t want to partner both of them, because that’s giving way, a significant amount of the value of the company kind of early. That being said it is non-dilutive cash so if the deal is right we’ll take the deal, if and when it comes along. So as Steve pointed out, we’ll look at capital raises we are looking at partnering, we’re looking at a variety of different methodologies. We have some very solid insider folks that will support us as we go forward. And we’re trying to minimize solution and we’re trying to minimize the damage to shareholders and frankly to us is management team as well and our employees. So we’re trying to be very careful. But again, we need financial resources to move these projects forward and not throw them over the wall to somebody else for a song at the stage of the game. And with that, thanks again for everybody’s support and we’ll see you again shortly. And we look forward to reporting the results of these studies here in the upcoming months. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your lines. Have a great day.