Theriva Biologics, Inc. (TOVX) Q1 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to Synthetic Biologics' First Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dean Schwartz of LifeSci Advisors. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. Welcome to Synthetic Biologics 2022 first quarter Investor conference call. Leading the call today will be Steven Shallcross, Chief Executive and Chief Financial Officer of Synthetic Biologics; Dr. Vince Wacher, Head of Corporate and Product Development of Synthetic Biologics; Dr. Manel Cascallo, General Director of Synthetic Biologics, European Subsidiary; and Dr. Frank Tufaro, Chief Operating Officer are also on the call and will be available to answer questions during the Q&A session. Synthetic Biologics issued a press release this morning, which provided operational highlights and included the financial results for the first quarter ending March 31, 2022. The press release can be found in the investors section of the company website at www.syntheticbiologics.com, together with the quarterly report on Form 10-Q for the quarter ended March 31, 2022, which we plan to file today with the Securities and Exchange Commission, or SEC. In addition to the phone line, this call is being streamed live via webcast, which will be archived on the company website www.syntheticbiologics.com for 90 days. During this call, certain forward-looking statements regarding Synthetic Biologics and VCN Biosciences current expectations and projections about future events will be made. Generally, the forward-looking statements can be identified by terminologies 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, Dean. Good morning, everyone, and thank you for joining our 2022 first quarter investor conference call. The onset of 2022 was marked by the successfully completed acquisition of VCN Biosciences, a privately held clinical-stage biotech company focused on developing a new oncolytic adenovirus or OV platform. The acquisition transformed Synthetic Biologics' pipeline with the addition of VCN's lead clinical stage drug candidate, VCN-01, as well as preclinical VCN-11, both of which are next-generation oncolytic adenoviruses designed to break down the tumor stroma through the expression of hyaluronidase. This differentiating mechanism of action is intended to improve the antitumor effect of both the oncolytic virus and co-administered chemotherapies and immuno-oncology products. Importantly, degrading the stroma can expose tumor antigens turning cold tumors hot and enabling a sustained antitumor response by leveraging the patient's own immune system. As part of this acquisition and to support our extension into oncology, we're pleased to welcome Dr. Frank Tufaro, as Chief Operating Officer; and Dr. Manel Cascallo, one of the Founders of VCN, as General Director of Europe. Both bring extensive expertise in oncolytic adenoviruses and are uniquely suited to support our transformative clinical development strategy. Additionally, we recently formed a Scientific Advisory Board of key opinion leaders to advance our oncology pipeline. These distinguished leaders have made groundbreaking scientific advances in their respective fields of oncology, immunology, gene therapy, ophthalmology and tumor virology, and we look forward to their counsel as we advance our OV development program to address devastating cancers with high unmet need. This is an important phase of Synthetic Biologics evolution, and with our strengthened leadership team, recently formed Scientific Advisory Board and expanded differentiated pipeline, we believe we are well positioned to deliver on nearing pivotal milestones. I would now like to provide an overview of our pipeline and walk you through key updates. Our lead oncology product, VCN-01, is a next-generation OV designed for intravenous, intra-tumoral and intravitreal delivery. VCN-01 has been administered to 72 cancer patients in four Phase 1 clinical studies to-date, with a focus on pancreatic ductal adenocarcinoma, also known as PDAC, and retinoblastoma. As a reminder, VCN-01 was granted orphan drug designation in 2011 by the European Medicines Agency for the treatment of PDAC and was granted orphan drug designation by the FDA in February this year for the treatment of retinoblastoma. If VCN-01 is approved by the FDA, orphan drug designation provides critical marketing exclusivity, and we plan to take full advantage of the development benefits to which we are eligible under the Orphan Drug Act, including tax credits, reduced user fees, and again, market exclusivity. We are highly encouraged by the regulatory support and the promising clinical safety and efficacy data generated to date. In March of 2022, we announced the publication of a Phase 1 study investigating the safety and tolerability of intravenous VCN-01 administered to patients with solid tumors, including pancreatic cancer. The multicenter, open-label, dose-escalation study reported in the Journal for Immunotherapy of Cancer was divided into three parts. In Part 1, VCN-01 was administered intravenously as a single agent to patients with solid tumors. In parts 2 and 3, VCN-01 was administered intravenously in combination with the standard-of-care chemotherapy regimen of gemcitabine plus nab-paclitaxel in patients with locally advanced or metastatic un-resectable PDAC. In Part 2, VCN-01 was administered on the same day as the first dose of chemotherapy known as the concomitant regimen. And in part 3, VCN-01 was administered seven days prior to the first dose of chemotherapy known as the sequential regimen. The objective was to determine the maximum tolerated dose, the recommended Phase 2 dose and dose limiting toxicity. The results of the publication provide value dose finding context and support for IV VCN-01 administered using the sequential dosing regimen. The encouraging biological and clinical data from the study underscore VCN-01's differentiated mechanism of action and suggests that treatment of cancer patients with VCN-01 is feasible and has an acceptable safety profile. We look forward to leveraging these findings and initiating our planned Phase 2 clinical study of intravenous VCN-01 in combination with gemcitabine and nab-paclitaxel, the standard-of-care chemotherapy, as a first-line therapy in newly diagnosed patients with metastatic PDAC. We expect to initiate the Phase 2 study in the fourth quarter of 2022. As a reminder, the proposed randomized, multicenter, open-label Phase 2 clinical study is projected to enroll up to 92 adults with PDAC and will be conducted across sites in the U.S. and Europe. The study, which has not yet been agreed to by regulators is designed to have two treatment arms. In arm 1, patients will receive gemcitabine and nab-paclitaxel, the standard of care chemotherapy. In arm 2, patients will receive VCN-01 administered seven days prior to gemcitabine and nab-paclitaxel. It is proposed that two doses of VCN-01 will be administered approximately three months apart. Primary endpoint for the study may include overall survival and safety and tolerability. Additional endpoints may include progression-free survival objective response rate and measures of biodistribution, fibrous replication and immune response. Since this is anticipated to be a two-arm open-label study, we plan to monitor the study's progress very closely and may try to accelerate the clinical program if supported by the emerging data. The study will be led by Dr. Manuel Hidalgo, an internationally renowned physician, scientist academic and the Chief of the Division of Hematology and Medical Oncology at Weill Cornell Medicine New York Presbyterian Hospital. Now moving on to our planned clinical study in advanced retinoblastoma. We believe VCN-01 holds tremendous progress and promise as a novel rescue therapy for patients who fail standard therapy or as an adjunct to chemotherapy to improve outcomes for these patients. We are working closely with key opinion leaders to finalize the protocol for a Phase 2/3 study of intravitreal VCN-01 to treat vitreous seeds in children with retinoblastoma. There is no current regulatory guidance for the development of retinoblastoma medicines, so we will be working closely with regulatory agencies to determine the appropriate study endpoints and pave the way for the development of new treatment options to address this large unmet need. The Phase 2/3 study of VCN-01 is expected to initiate in early 2023. In addition to the planned Company-sponsored studies in PDAC and retinoblastoma, VCN-01 is undergoing evaluation in a number of investigator-sponsored studies, including a study at the University of Pennsylvania combining VCN-01 with mesothelin-directed CAR-T cell therapy in pancreatic and ovarian cancer patients, and a study at the University of Leeds in patients with high-grade brain tumors. We look forward to a number of potentially exciting upcoming milestones from the planned diverse VCN-01 clinical programs over the next 12 to 24 months. Our next product candidate, VCN-11, is a modified version of VCN-01 that incorporates a proprietary albumin-binding domain in the virus’ outer shell. VCN-11 is designed to improve systemic delivery by enabling the virus to code itself with host serum albumin and prevent inactivation by antiviral neutralizing antibodies. IND-enabling studies are being planned and are expected to commence following the completion of ongoing preclinical studies in CMC activities. Earlier this month, we announced that our abstract on VCN-11 was selected for an oral presentation at the upcoming 25th Annual Meeting of the American Society of Gene and Cell Therapy, or ASGCT. The conference will be held virtually and in person starting today and continuing through May 19 in Washington, D.C. The presentation at ASGCT this evening will include preclinical results showcasing the potential of VCN-11 to balance safety and effectively target tumors by evading neutralizing antibodies after intravenous readministration. We look forward to building upon our foundation of compelling proof of mechanism data and continuing to advance our VCN-11 program through clinical development. In parallel, we will drive our OV program forward, clinical development for SYN-004 and SYN-020 continues to progress. Washington University continues to screen and enroll patients in our Phase 1b/2a clinical study of SYN-004, or ribaxamase, in allogeneic hematopoietic cell transplant, or HCT, recipients for the prevention of acute graft versus host disease in bone marrow transplant patients. The Phase 1b/2a study is designed to assess the feasibility of using SYN-004 in this specific patient population and to provide key information requested by the FDA regarding the safety and tolerability of SYN-004 in patients with impaired intestinal barrier function. Last year, we announced that enrollment in patient dosing had commenced in the first of three sequential antibiotic cohorts that will each be administered a different IV beta-lactam antibiotic to treat fever following conditional therapy. In total, eight participants in each cohort will receive SYN-004 and four will receive placebo. To-date, we have dosed 17 patients, 11 that are currently considered available in the study. One more available patient is required to complete the cohort. If enrollment proceeds on the current schedule, we'll be positioned to announce top line data from the first cohort in the second half of 2022. We have also advanced our SYN-020 intestinal alkaline phosphatase program and recently reported positive safety data from the Phase 1a multiple ascending dose, or MAD study in healthy volunteers. The Phase 1 MAD study enrolled 32 healthy adult volunteers into four cohorts with SYN-020 administered orally in doses ranging from 5 milligrams to 75 milligrams twice daily for 14 days with a follow-up evaluation at day 35. Each cohort included six subjects who received SYN-020 and two who received placebo. Analysis of preliminary data demonstrated that SYN-020 maintained a favorable safety profile and was well tolerated across all dose levels. There were a few treatment-related adverse events and all were grade 1 and resolved without medical intervention. SYN-020 levels were also below the limit of quantification in all plasma samples at all time points during the study. Additional analysis is underway, including fecal levels of SYN-020 and antidrug antibody levels. Again, this data will be available in the near future. These Phase 1 data support the development of SYN-020 in multiple clinical indications targeting disorders stemming from gastrointestinal inflammation. We will continue to explore the therapeutic potential of SYN-020 across indications, including celiac disease, nonalcoholic fatty liver disease and age-related metabolic and inflammatory diseases. Contingent on funding, we expect to initiate a Phase 2a study in the second half of 2022. As part of our strategic transformation, we are exploring value-creating options around our SYN-004 and SYN-020 assets, which have significant potential opportunity in non-oncology indications. We are currently evaluating the best path forward for these assets and whether to advance these programs internally or out-licensing or partnering there. As we look to the year ahead, the projected progress of our clinical development pipeline is expected to deliver numerous upcoming milestones the have the potential to drive significant value for shareholders. Key near-term clinical milestones over the next six months include the initiation of VCN-01 dosing in the investigator-sponsored study of brain tumors at the University of Leeds, the initiation of VCN-01 dosing in combination with mesothelin-directed CAR T cells in the investigator-sponsored study of pancreatic and ovarian cancer at the University of Pennsylvania. During the second half of 2022, we expect to initiate key clinical trials, including the Phase 2 study of VCN-01 in PDAC patients, a data readout from the first cohort of the SYN-4 study in allogeneic HCT patients, and again, contingent upon funding a Phase 2 study of SYN-020. Additionally, we anticipate the initiation of a Phase 2/3 study of VCN-01 in retinoblastoma in early 2023. Now I'd like to turn briefly to our financial results for the three months ended March 31, 2022. General and administrative expenses increased to $1.7 million for the three months ended March 31, 2022 from $1.4 million for the three months ended March 31, 2021. This increase of 17% is primarily comprised of increased consulting and legal costs related to the VCN acquisition, higher insurance, cost audit fees and public relations expenses, and VCN administrative expenses not included in the prior year. The charge related to stock-based compensation expense was $85,000 for the three months ended March 31, 2022 compared to $82,000 for the three months ended March 31, 2021. Research and development expenses increased to $2.6 million for the three months ended March 31, 2022, from approximately $1.1 million for the three months ended March 31, 2021. This increase of 132% is primarily the result of higher manufacturing expense for SYN-020, costs incurred related to our Phase 1a clinical trial of SYN-020 and Phase 1b/2a clinical trial of SYN-004 in allogeneic HCT recipients, and VCN research expenses related to VCN-01 not incurred in the prior year. We anticipate research and development expense to increase as we plan for and initiate enrollment for our Phase 2 clinical trial for VCN-01 in PDAC, Phase 2/3 clinical trial in retinoblastoma, expand GMP manufacturing activities for VCN-01 and SYN-020, and continue with supporting our VCN-11 and other preclinical and discovery initiatives. The charge related to stock-based compensation expense was $28,000 for the three months ended March 31, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended March 31, 2021. Other expenses was $21,068 for the three months ended March 31, 2022, compared to income of $347 for the three months ended March 31, 2021. Other expenses primarily composed of exchange losses of $22,607, offset by interest income of $1,539. Cash and cash equivalents totaled $56.7 million as of March 31, 2022, a decrease of $10.5 million from December 31, 2021. With an advanced clinical pipeline and a strong cash position, we are more excited than ever about the outlook for the company. We look forward to providing further updates as we advance our technologies and products. With that said, we're happy to take some questions.

Thank you. [Operator Instructions] Our first question is from the line of Jim Molloy with Alliance Global Partners. Please go ahead.

Hi, good morning. Thank you for taking my questions. I know in the past, you've discussed potential partners, particularly for SYN-004 and I guess across the board. Can you speak a little bit about -- can you characterize perhaps how the partnership landscape looks given the buzz we saw that everyone's going through first part of the year as valuations change. Has that increased or decreased the opportunities for partnership?

So one of our strategies all along, Jim, was to make sure we had sufficient clinical data that would be necessary to advance partnering discussions. So in the case of SYN-004, we need to get through this was WashU study and generate the data necessary so that we can reengage with folks who have expressed interest in the asset. So those discussions will commence once that trial ultimately is completed. Actually, after this first cohort is completed, we'll have a good read on whether or not ribaxamase is systemically absorbed. We don't believe it will be. But after we have those initial data, I think we'll be able to reengage with the folks that have previously expressed interest. On the SYN-020 side, as I said last quarter, we have interested parties, plural, and in some cases, we continue to have discussions and go through diligence activities. And I would say that the two Phase 1s gave us a sufficient amount of safety data that, I think, gives comfort to the folks that we've been having discussions with. And in keeping with practice in the past, once those discussions move far enough along and we have something that is legally binding, we'll talk about it at that time.

Understood. The VCN acquisition here in early '22, we're closing that down. Excellent work. Are you guys still on the hunt for additional opportunities? Can you characterize how that looks for potential additional acquisitions going forward?

Well, I think it's safe to say we have our plate pretty full right now. So although there could be some interesting things to add into the portfolio in the future, right now, the focus is totally on getting the PDAC trial initiated in the fourth quarter. And as we said, we're really excited about the opportunity to develop a clinical program for retinoblastoma. As I mentioned in our comments, there's no treatment today that's approved for retinoblastoma. So we clearly have an opportunity to be pioneers in this area. So we're very excited about getting these two trials underway, and to continue our work on SYN-004, which, as you know, that trial is still ongoing, and then will evaluate our options as it relates to SYN-020. The bottom line here is we're well financed. We've got sufficient cash that allows us to advance all these programs that I discussed today. That cash carries us, at least through 2023, without having to go back to the market. So we're in really, really good shape financially.

And maybe final question. I know that obviously, the CAR T with U-Penn, the brain tumor at University at Leeds, how is the enrollment environment going? Obviously, looking at the PDAC and the retinoblastoma coming up later, how's the enrollment environment going currently? I know it can be a challenge sometimes working with third parties to get them to focus on getting trials up and running, how has that been going as a partnership on getting your trials priority and getting patients in there?

So I can tell you that the relationships with both Leeds and U-Penn are outstanding. We are in constant communication with both of the organizations. We know that both trials are screening patients for enrollment. Once we're in a position where the patients have passed all the screening criteria and they've been enrolled and dosed at that point in time, we'll put the announcements out.

Excellent. Thank you for taking the questions.

Thank you. Our next question is from the line of Jason McCarthy with Maxim Group. Please go ahead.

This is Jo-Anne Lee [ph] on the call for Jason McCarthy. Thanks for taking the question. For the metastatic PDAC study initiating later this year, could you just share what kind of data is expected to be seen in terms of overall survival, which you mentioned could be the primary endpoint for VCN-01 compared to the treatment arm with just standard of care? What will be considered a successful outcome? Maybe if you could briefly remind us of some of the key findings from the Phase 1 that helped shape the design for the upcoming study? Thank you.

Yes. I'll let Manel take that question. Thank you.

Hi. Yes, we have defined overall survival as the primary endpoint of our Phase 2 pancreatic trial because that's probably the more powerful tool just to get a real sense of the activity of the product, and that's probably -- that paves the road for approval of the product later. In our Phase 1 trial, we have observed that in the sequential arm, that is the more promising in terms of clinical activity, we have observed overall survival of 20 months or 20.8 months for the higher dose treated group. Obviously, that's a small core. What we think that could be probably significant in this Phase 2 trial, probably is trying to have our overall survival around 15 months. That basically what Manuel Hidalgo is anticipating as a relevant number in this Phase 2 trial, and we are pretty confident that we can reach at this point. But obviously, we need to collect the data as soon as possible.

Got it. Thank you for that. Just as a brief follow-up to that, what is the expected timing for an outcome with regulators on getting the trial design approved?

So we have right now very close to the submission. So we expect to submit IND to FDA probably mid this year. So we expect initiating recruitment of this trial by the last quarter of 2022. Obviously, it depends on what's going to be the recruitment rate, but probably we expect having the enrollment complete by ending next year, probably.

Great. Thank you for the detail and taking the questions guys.

Thank you.

Our next question is from the line of Leland Gershell with Oppenheimer. Please go ahead.

Good morning. Thanks for the update. Steve, wanted to ask if you or maybe members of our team could review with us the intellectual property surrounding the VCN assets. Maybe you could share just what the key protections are on VCN-01 and 11 and perhaps any further protections around the albumin coding platform and delivery technology that could be used for other programs in the future.

Okay, Leland. I'll let Manel have that as well.

Okay, perfect. So basically, for VCN-01, we have two patents covering the product. One is the marginal patent that is especially covering the [indiscernible] expressing technology. That patent has already been granted in the major areas. So in Europe and also in U.S. We have also granted the patent in Israel, in Mexico and Russia, in Canada, in Australia, in South Korea. So in the major areas, this patent has already in place and has been already granted. We have a second patent, specifically covering VCN product for retinoblastoma. This patent has been already granted in U.S. and in China. We are expecting to have also the approval in Europe quite soon. With respect to the ABV [ph] technology, the Albumin mining technology that covers basically the product VCN-11, we have already obtained the approval in U.S., in China, in Japan, Israel, in Mexico and Australia. We are still not finished the process because, obviously, that was filed later in time, but we expect also fulfilling all the major areas. That's basically the protection for our main products in the pipeline right now. We have other technologies, and we are also exploring other possibilities to cover the product from different other possibilities. That's obviously an ongoing work that we are currently conducting.

Great, thanks. That was very helpful. Thanks.

Leland, I'll just add to that a little bit. The team at VCN has just done a tremendous amount of work on the preclinical side with respect to both VCN-01 and VCN-11 and has generated tremendous amounts of data. So now we've looped the VCN team in with our patent team, and we're revisiting all this data, and there may be some real interesting ideas about additional applications to be filed throughout this year.

Terrific. Thanks for the updates.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to Steven Shallcross for closing remarks.

Thank you, Peter, and thank you, everyone, for taking time to join our call today. In the first quarter of 2022, we continued to build on the momentum following the transformational VCN transaction. We are well positioned to deliver on our sharpened clinical development strategy as well as our key objectives that we believe will drive significant value for our Shareholders in the months and years ahead. We are extremely pleased with the progress and the transformational growth that continues to propel our business forward, and that continues to position Synthetic Biologics at the forefront of oncolytic virus development to improve patient outcomes for very, very hard-to-treat cancers. Before we conclude today's call, I'd like to thank our Shareholders, the entire team and the many people who have been supportive along the way, including our patients and their families. Once again, thank you for joining us today, and we look forward to keeping you updated on our continued progress.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.