Good afternoon, and welcome to the Synthetic Biologics 2018 First Quarter Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the call over to Vincent Perrone, Director, Corporate Communication at Synthetic Biologics. Please go ahead.

Thank you, Rochelle, and good afternoon, everyone. Welcome to Synthetic Biologics 2018 first quarter investor conference call. Today, I am joined by our acting CEO and CFO, Steven Shallcross; and our Chief Medical Officer, Dr. Joseph Sliman. Synthetic Biologics issued a press release this afternoon, which provided operational highlights and reported our financial results for the period ending March 31, 2018. The release can be found on the Investors section of our website. During our call today, Steve and Joe will provide an operational update on our microbiome-focused clinical programs and summarize our financial results. We'll take questions after our prepared remarks. In addition to the phone line, this call is being streamed live via webcast, which will be archived on our website, www.syntheticbiologics.com for 90 days. During this call, we will be making forward-looking statements regarding Synthetic Biologics' current expectations and projections about future events. 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 upon 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 Steve. Steve?

Thanks, Vincent. Good afternoon, everyone, and thank you for joining us today. The first quarter of 2018 was one of important progress for Synthetic Biologics. We are very excited to have announced key developments for our SYN-004 program or ribaxamase, which we believe provides us with a clear path forward towards the initiation of an optimized and achievable Phase 3 clinical trial. Our mission remains to develop best-in-class microbiome-focused products that have the potential to improve clinical outcomes and quality of life for millions of underserved patients. With the start of the year, we outlined two key objectives for 2018 which we believe are the critical drivers to our company's long-term success and to unlocking the full value of our clinical development pipeline targeting unmet needs and the prevention of life-threatening gut microbiome infections and GI disorders. Those two objectives are to: one, work with the FDA to establish a clear path forward for our planned Phase 3 clinical trial for ribaxamase, our first-in-class oral enzyme; and two, continue to pursue and evaluate strategic opportunities, including partnership or licensing agreements for one or both of our proprietary late-stage microbiome-focused assets, ribaxamase and SYN-010. Ribaxamase holds the potential to be a disruptive yet simple approach to more effective antibiotic therapies. It has been well established that the prolonged use of antibiotics significantly increases the risk of developing gastrointestinal infections, like CDI, as well as the emergence and spreading of antimicrobial-resistant genes. Designed to be taken in conjunction with certain IV beta-lactam antibiotics, ribaxamase offers a first-of-its-kind, innovative approach to preventing antibiotic-mediated CDI and AMR by degrading residual antibiotics before they can disrupt the natural balance of microorganisms that inhibit the GI tract. As the first development-stage drug candidate designed for the prevention of CDI, ribaxamase holds the potential to help combat…

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

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Keith Markey with Griffin Securities.

Hi, thank you for taking my questions. I have a few. I was wondering, could you possibly explain in a little bit more detail the uncoupling of the safety and the primary efficacy endpoints of your ribaxamase trial?

Go ahead, Joe.

Yes, sure, Keith. So in a nutshell, a standard clinical trial, especially a pivotal trial, usually requires you to enroll a set of patients for treatment who already have a condition. And then you evaluate efficacy by looking not only at your measure of the endpoint, your responders, but you count any missing data. So any patient who does not complete the study, who's enrolled obviously, and doesn't complete the study, whether that's due to a fatality or withdrawal of consent for adverse event or for some other reason or a simple failure of follow-up, they count as a treatment failure, okay? So that's how you treat missing data. Safety is a large component often of missing data. So in our study, which is a prevention trial in which we're enrolling a population that is highly at risk of mortality due to their comorbid conditions, right, and where the – we expect that in a best-case scenario, our underlying rates of C. diff infection in these patients will be 3% to 5%. The mortality in these patients, for example, among the high-at-risk lower respiratory tract inpatients, is 10% or more in the first 30 days. And that's – again, that's at least double the anticipated endpoint rate. So what you have is you have – statistically, you have your missing data, your fatal events, which should count as missing data because you don't know how they turned out because they never got to the endpoint. Even if they are balanced between groups, they overwhelm your endpoint. It significantly dilutes your smaller number of C. diff events. And so statistically speaking, it doesn't make any sense to include any of these events in the evaluation of your efficacy endpoint. We were happy, of course, that the FDA actually agreed with our assessment, and they have given the initial agreement to evaluate the risk reduction in the endpoint, meaning the reduction in the rate of C. diff infection between groups, separate that from a separate analysis of mortality and missing data. So in other words, we are able to not only power our study adequately and effectively but at a much lower number than we would have otherwise. That make sense?

Thank you. Yes, sure, it does. So if we can take that a step further, if you – if I understand you correctly, then the event-driven nature of your ribaxamase trial has a lot to do with missing data and obviously fatalities?

Well, right. And so it will be an evaluation separately of the missing data – the different categories of missing data, primarily the fatal events between the two groups. But again, as a separate evaluation, so we will be evaluating safety and missing data to be statistically relatively the same between the two groups, yes.

Okay. And do you have a certain event number that will – or a percentage, I guess, it would have to be, that would cause the trial to come to a halt, and you'd do a readout at that point?

Well, we're going to be – we're considering having a separate safety monitoring board or data monitoring board to evaluate that separately from us. So that would be an independent evaluation.

Okay. And then I was just wondering, do you feel that the recent issuance of the composition of matter patent on SYN-010 is going to aid you significantly in your discussions with potential partners?

Yes, absolutely, Keith. This only adds to the pretty comprehensive patent estate that's already built around the asset. But this is a key patent. And again, we've already just received this, so it's now being included in our discussions with potential partners.

Great. And then if I could jump back, I have one more question about the ribaxamase trial. It sounds – you mentioned the global nature of the trial. Can you give us a little bit more detail, Europe, Australia, that sort of thing?

Yes. For a couple of reasons, we'd like to get to Australia at least as part of the southern hemisphere simply because lower respiratory tract infection is – the rates of it anywhere, the incidence is driven largely by the flu season and the cold season. And that's obviously the opposite in the southern hemisphere from the northern hemisphere. So it will give us theoretically a better enrollment rate year round, so we can continue to go without having any kind of lull or dead period in enrollment. And also, in Asia, particularly in China, there is an emerging threat of – or I guess I should say it's an emerging recognition of the threat of antimicrobial resistance and C. diff infection. And of course, as you're probably well aware, that the market in China is already as big as the U.S. and Europe, and it's only getting bigger as they continue to improve access to health care. So it's important because there's a lot of patients over there to be evaluated and are in need of the exact same therapies and the same antibiotics that we are in Europe and North America.

Yes. And I imagine that they have a higher incidence of multidrug resistance over there given the relative frequent use of the antibiotics.

Yes. I think it's still largely dependent upon who you ask and who your data resource is, but that's our expectation, yes.

Okay, thank you very much.

[Operator Instructions] The next question comes from Tim Chiang with BTIG.

Hi, Steven. So is there any sort of update you can provide in terms of potential partnerships? Certainly, I think you've got two interesting assets here, SYN-004, SYN-010. But certainly, you need larger companies to help fund the development of these pivotal studies. Looks like the SYN-004 program's going to require a pretty large patient study. What sort of progress have you guys made so far? Is there anything you can – you could highlight on that in that regard?

Yes. So I'll go back in part to the comments I made back in the beginning of the year. And I stated, if you recall, that securing a partnership or partnerships was one of our key objectives for the next six to 12 months. It is very clear we got to get something over the line. I can tell you this much, we have engaged additional outside resources, and we are very focused on execution and trying to make something happen. We're evaluating opportunities in North America, we're evaluating opportunities in Europe, and we're evaluating opportunities in China. And we're – I should say we have interest in both assets. Other than that, I'm not going to give you any additional color on the progress of discussions. I just think that's unfair and sets unfair expectations, but I can assure you that we’re on top of this. It is my top priority. And as soon as we have something to announce, we'll obviously certainly get that news out as quickly as possible.

Okay, great. And then just the cash on the balance sheet, I think, what, it's around $11 million. Do you have enough cash to get through the rest of this year?

So what I stated previously and which still holds to be true is that we have a fixed burn that runs about $1.3 million a month, and then we've been strategically spending a little extra on prep activities, primarily on the regulatory side for ribaxamase, as well as a little extra on manufacturing, and it's primarily on the tech transfer and validation side. Other than that, I'll let you do the math and figure out what the runway looks like. Having said that, I'll also make this comment, I am very sensitive to how our shareholders feel about potential dilution. I get it. I also understand the need to get something over the line because of our limited on-hand cash resources. We do have options. Obviously, our first option would be to secure some type of deal where we bring in some non-dilutive upfront cash. We also have availability under our ATM if I need to extend our runway to bridge to some type of action down the road. And I might add that we have not utilized the ATM from the third quarter of last year through today. So again, I take the use of that very seriously, and I view this as another tool in the toolbox. We also have the ability if needed to do some type of strategic funding, maybe through a PIPE, if you will, or more traditional public offerings. Obviously, the first choice is to bring non-dilutive cash into the company to top up the balance sheet. But whatever happens, you can be assured that I'm going to keep the best interest of our investors and the company in mind, whatever choice we decide to make. And it's all towards making sure we continue to move our late-stage products forward. We've got clarity on ribaxamase now. We have the ability to find a home for it. So moving forward, with what we have is what this story is all about now.

Okay, that’s very helpful. Thanks, Steve. Operator This concludes our question-and-answer session. I would like to turn the conference back over to Steve Shallcross for any closing remarks.

Yes. I just want to make one additional brief comment. I just want to reiterate the point that we are very focused on execution and delivery of what I said I was going to do back in the beginning of the year. And I think we're well on our way to achieving those objectives. I get it. We have incredibly positive momentum following our successful discussions with the FDA, which, as I said earlier, gives us the ability to move our strategic discussions forward. And again, as soon as we have something further to talk about, we'll get that news out to you. We have incredibly great assets, and again, we're working very, very hard to unlock the value of those assets. I'd like to thank our dedicated shareholders for hanging in there with us. And I also want to thank our dedicated team members for the commitment they've made to helping bring these assets ultimately forward and hopefully in relative short order to the market. I look forward to continuing our dialogue and updating you on our progress in the months ahead. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.