Theriva Biologics, Inc. (TOVX) Q1 2023 Earnings Report, Transcript and Summary

Greetings, and welcome to the Theriva Biologics 2023 First Quarter Operational Highlights and Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Calabrese with LifeSci Advisors. Thank you, Chris. You may begin.

Thank you, operator, and good morning, everyone. Welcome to Theriva Biologics First Quarter 2023 Investor Conference Call. Leading the call today will be Steven Shallcross, Chief Executive and Chief Financial Officer of Theriva Biologics. Dr. Manel Cascalló, General Director of Theriva Biologics European subsidiary; and Dr. Vince Wacher, Head of Corporate and Product Development of Theriva Biologics are also on the call and will be available to answer questions during the Q&A session. Theriva Biologics issued a press release this morning, which provided operational highlights and included financial results for the first quarter ending March 31, 2023. The press release can be found in the Investors section of the company website at www.therivabio.com, together with the quarterly report on Form 10-Q for the quarter ended March 31, 2023, 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 we archived on the company website, www.therivabio.com, for 90 days. During the call, certain forward-looking statements regarding Theriva 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 Theriva 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 Theriva 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, Chris, and good morning. I appreciate everyone taking the time to join us today. I'd like to begin by reiterating our deep commitment to advancing our organization and addressing unmet needs for difficult-to-treat cancers. In the first few months of 2023, we continue to make steady progress across our oncology-focused portfolio and remain on track to reach multiple value-enhancing milestones. With cash runway into the third quarter of 2024, we believe we're well positioned to execute on our corporate objectives. As a reminder, our lead clinical candidate, VCN-01, is a systemically administered oncolytic adenovirus, designed to selectively replicate within the tumor, degrade the tumor matrix and increase tumor immunogenicity. We believe these features position VCN-01 for use in multiple indications in combination with multiple different types of therapies, providing multiple mechanisms of tumor killing. Building on strong Phase I clinical data, we are advancing VIRAGE, our Phase IIb trial for patients with newly diagnosed metastatic pancreatic ductal adenocarcinoma, or PDAC, and we are pleased with the progress to date. Enrollment and dosing are also underway for the Phase I trial of VCN-01 in patients with brain tumors, and we're preparing to engage with regulatory agencies to discuss the development and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinal blastoma. As part of our oncology-focused portfolio, in addition to exploring the potential clinical benefits of VCN-01 in different solid tumor indications, we continue to screen patients and enroll them in the second cohort of the Phase Ib/IIa clinical trial of SYN-004, which we expect to complete in the first quarter of 2024. As a reminder, SYN-004 is designed to prevent potentially fatal outcomes in patients who undergo allogeneic hematopoietic cell transplant, HCT, to treat hematologic cancers. In parallel, we've taken important steps to identify new candidates through our OV discovery platform, which is designed to protect systemically administered oncolytic viruses from the host immune system and may facilitate repeated administration of oncolytic virus therapies, thus, increasing their efficacy and potentially allowing our pipeline programs to be used in standardized treatment cycles that are well established in cancer chemotherapy and immunotherapy. With this brief introduction, I will now provide an update on recent activities and share details on how these programs continue to position Theriva at the forefront of oncolytic virus development, starting with our lead program, VCN-01. It is well known that PDAC has 1 of the lowest survival rates among all cancers, and despite the growing incidence, efforts to improve upon the standard of care chemotherapy treatments have largely stalled. We believe VCN-01 has the potential to address the urgent need for new treatment options for patients with PDAC. Enrollment and dosing are underway in VIRAGE, the multinational Phase IIb clinical study, evaluating intravenous VCN-01 in newly diagnosed PDAC patients treated with first-line standard of care chemotherapy, gemcitabine and nab-paclitaxel. The trial is expected to enroll up to 92 adults at up to 25 sites across the U.S. and Europe. We are encouraged by the enrollment to date, which is a testament to both the engagement of our clinical trial sites and the intense commitment of our experienced clinical team. In both the control arm and treatment arm, patients will receive gemcitabine and nab-paclitaxel standard of care chemotherapy in 28-day cycles. In the treatment arm only, patients will also receive systemically administered VCN-01 7 days prior to the first and fourth cycles of gemcitabine and nab-paclitaxel treatment. Primary endpoints for the trial include overall survival and VCN-01 safety and tolerability. Additional endpoints include progression-free survival, objective response rate and measures of biodistribution, VCN-01 replication and immune response. Since this is an open-label trial, progress will be monitored very closely, and steps to accelerate the clinical program may be implemented if supported by emerging data. In addition to initiating the VIRAGE PDAC trial, we continue to work closely with key opinion leaders to refine our clinical strategy in retinoblastoma. We believe intravitreal VCN-01 has the potential to treat vitreous seeds in children with retinoblastoma, and we also look forward to leveraging our orphan drug designation in this indication to facilitate protocol discussions with the FDA and other regulatory agencies. Since current clinical practice varies, and there is no regulatory guidance specific to retinoblastoma drug development, we are working with our key opinion leaders in the U.S., Europe, in Central and South America, to develop new potential treatment options for this difficult-to-treat cancer. In parallel, with company-sponsored studies, the potential utility of VCN-01 is being explored in a number of investigator-sponsored studies that are underway at leading oncology research institutions around the world. In collaboration with the University of Leeds, we are evaluating intravenous VCN-01 in patients with high-grade brain tumors who are scheduled for surgical resection. This Phase I trial is designed to evaluate the ability of VCN-01 to enter brain tumors following systemic administration. The leaky vasculature of many brain tumors may provide an excellent opportunity for systemically administered VCN-01 to enter the tumor where it may replicate and initiate tumor cell killing, destroy tumor stroma and stimulate an antitumor immune response. Successful systemic delivery of VCN-01 to brain tumors could provide a less invasive intervention and potentially transform the way these cancers are treated. The Leeds investigators have initiated dosing and are exploring protocol refinements that may expand enrollment. Additionally, enrollment in the Phase I clinical study in collaboration with Hospital Sant Joan de Déu in Barcelona, Spain, has been extended to additional patients. The study is designed to evaluate the safety and tolerability of VCN-01 in patients with intraocular retinoblastoma refractory to systemic intraarterial or intravitreal chemotherapy or radiotherapy. We plan to hold the meeting with the FDA in the second half of 2023 to discuss the clinical development and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma. A separate investigator-sponsored study is exploring the therapeutic potential of VCN-01 in combination with durvalumab for patients with recurrent metastatic squamous cell carcinoma of the head and neck. We are encouraged by the data generated to date, highlighted by the acceptable safety profile seen with sequential dosing of VCN-01 and durvalumab as well as biological activity observed in head and neck cancer patients who failed multiple previous lines of therapy, including treatment with anti-PD-1 and PD-L1 agents. We are planning to present additional efficacy and survival data from the study in the second half of 2023, and we will continue to explore collaboration and partnering opportunities to advance VCN-01 in this indication. The potential to enable the use of immune checkpoint inhibitors in refractory or in insensitive cancer patients is particularly compelling goal of VCN-01 that may have valuable utility in a range of cancer indications. Turning to our ongoing Phase Ib/IIa clinical trial SYN-004, ribaxamase, to prevent acute graft versus host disease, or aGVHD, in patients undergoing allogeneic HCT treatment for hematologic cancers. SYN-004 is intended to address key limitations of broad-spectrum antibiotics or IV beta-lactam antibiotics and potentially improve treatment outcomes with this important and widely used class of therapeutics. The Phase Ib/IIa 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. As a reminder, the study consists of 3 sequential cohorts designed to compare different IV beta-lactam antibiotics to treat fever following conditioning therapy. In each cohort, 8 patients will receive SYN-004 and 4 will receive placebo. Data from the first cohort was recently presented in April at the 33rd European Congress of Clinical Microbiology & Infectious Disease. While the data remain blinded, interim analysis suggests that SYN-004 is well tolerated and was not observed in the blood samples of the majority of the evaluable patients. Building on these results, our second cohort is underway and is designed to evaluate SYN-004 in combination with piperacillin and tazobactam. This cohort will provide important additional safety information, in particular, whether oral SYN-004 has the potential to alter IV antibiotic levels in this patient population. With our collaborators at Washington University, we continue to explore the potential of SYN-004 to reduce potentially fatal adverse events related to IV antibiotic use in allogeneic HCT recipients, including aGVHD and overgrowth and infection by pathological organisms such as C. difficile and vancomycin-resistant enterococci. We are pleased with the progress of our clinical programs, and in parallel, continue to identify new candidates through our OV platform. Our proprietary technologies have tremendous potential for our pipeline, and we look forward to building upon our foundation of compelling proof of mechanism data generated with VCN-01 and VCN-11 to develop new Albumin Shield candidates incorporating additional therapeutic payloads. Overall, I'm confident that the company's strong cash position and upcoming catalysts will provide a solid foundation for execution and value creation. We remain focused on driving our clinical programs forward and exploring opportunities to expand our pipeline through our OV discovery platform. We remain on track to complete enrollment for VIRAGE by early 2024, hold the pre-IND meeting with the FDA in the second half of 2023 to discuss the clinical development and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma, present additional data from the study of VCN-01 in combination with durvalumab in patients with recurrent metastatic squamous cell carcinoma of the head and neck in the second half of 2023, and complete the second cohort of our Phase Ib/IIa clinical study of SYN-004 for the prevention of acute graft versus host disease in bone marrow transplant patients in the first quarter of 2024. Now I'd like to briefly turn to our financial results for the first quarter ended March 31, 2023. General and administrative expenses increased to $2.2 million for the 3 months ended March 31, 2023, from $1.7 million for the 3 months ended March 31, 2022. This increase of 29% is primarily comprised of increased expense related to the fair value of the contingent consideration, additional salary and benefits related to new headcount, audit fees, consulting fees, travel and VCN administrative expenses not included in the prior year, offset by a decrease in consulting and legal costs related to the VCN acquisition. The charge related to stock-based compensation expense was $87,000 for the 3 months ended March 31, 2023, compared to $85,000 for the 3 months ended March 31, 2022. Research and development expenses increased to $3 million for the 3 months ended March 31, 2023, from approximately $2.6 million for the 3 months ended March 31, 2022. This increase of 15% is primarily the result of increased clinical trial expenses related to VCN-01 not incurred in the prior year, offset by lower expenses related to our Phase Ib/IIa clinical trial of SYN-004 in allogeneic HCT recipients and decreased manufacturing expenses related to our Phase Ia clinical trial of SYN-020. We anticipate research and development expense to increase as we continue enrollment in our VIRAGE Phase II clinical trial of VCN-01 in PDAC, and our ongoing Phase I clinical trial in retinoblastoma, expand GMP manufacturing activities for VCN-01, and continue supporting our VCN-11 and other preclinical and discovery initiatives. The charge related to stock-based compensation expense was $39,000 for the 3 months ended March 31, 2023, compared to $28,000 related to stock-based compensation expense for the 3 months ended March 31, 2022. Other income was $370,000 for the 3 months ended March 31, 2023, compared to other expense of $21,000 for the 3 months ended March 31, 2022. Other income for the 3 months ended March 31, 2023, is primarily comprised of interest income of $364,000 and an exchange gain of $6,000. Other expense for the 3 months ended March 31, 2022, is primarily comprised of an exchange loss of $23,000, offset by interest income of $2,000. Cash and cash equivalents totaled $36.1 million as of March 31, 2023, compared to $41.8 million as of December 31, 2022. We remain deeply committed to improving patient outcomes for these very hard-to-treat cancers. And before we conclude today's call, I want to extend my sincere appreciation and gratitude for the foundational work that has brought us closer to delivering on our mission. I'd also like to thank the entire Theriva team, our investors and the many people, who have been supportive along the way, including our patients and their families. With that, we're happy to take some questions.

[Operator Instructions] Our first question comes from the line of James Molloy with Alliance Global Partners.

On the VIRAGE trial, when do you anticipate -- looking for interim data here fourth quarter of '23, I believe, when do you anticipate sort of this trial concluding and top line data coming through?

So, Jim, as we previously disclosed, we plan to complete the enrollment by early 2024, so that's all 92 patients in. Enrollments currently are on target with our expectations. We expect that sometime by the end of the year, we should have enough patients enrolled that will give us the opportunity to evaluate the data and make some determinations on whether or not the trial and the patients in the trial are responding as we expect them to respond. That -- at that point in time, that will give us the opportunity to -- if we're foreseeing that robust response, to have discussions with regulatory authorities and look at our options on how we could accelerate the trial. Since the primary endpoint is overall survival, we expect this trial to go out beyond '24 and into '25 before it's fully completed. Obviously, the longer the better because, obviously, that would mean that patients are living longer. But we will have, in our opinion, a real good feel perhaps as soon as the end of the year on whether or not we're seeing the response rate that we observed or something close to it in the Phase I trial.

Excellent. How goes the expectation for the -- actually, excuse me, how go the UPenn and the Leeds IST trials? Any updates there that -- and when do you anticipate getting data potentially from those trials? I know they're out of your hands a little bit.

So you're correct on that. First, the Leeds trial, we have the first patient dosed. They're in the process of recruiting still. Recently, there were some proposed protocol amendments that would give the sponsor some additional flexibility to improve the enrollment rate. So that's ongoing, and we have no specific time line on when that study will conclude and at what point we'll actually have the data. That effort is totally in their hands. The UPenn study, similarly, we know that they're dosing patients. We have no specific data on exact numbers and what they're observing in terms of response rate. We would expect that sometime in the middle or going into the third quarter this year that we would have a communication, and it's also possible that UPenn, which they are, again, controlling the study, may perhaps present some of that data at a public forum.

How often is the communication between you guys and the IST is? And again, I know IST is outside of your hands, but what's the sort of the schedule of these updates? And you mentioned potentially second half of '23. Is there a set Board meeting or a panel meeting to coordinate efforts on these trials?

Depending on how active the site is. Sometimes, we'll discuss and have discussions with them on a monthly basis, sometimes it's quarterly basis. The head and neck trial, for example, we've been in active discussions with them because that data is being prepared to be released sometime in the third quarter at an upcoming conference. So in that case, the discussions with the PI are pretty active and pretty regular. So again, it depends on the trial and how aggressively the enrollments are progressing.

Understood. And then on SYN-004, I think you made it clear, I think, in the private -- previous calls you're looking to partner to continue the development beyond sort of the Phase Ib/IIa that you're currently working on. How would you characterize the partnership environment for SYN-004 currently?

There is interest, and we have had inbound interest. And again, these things take time to play out. And once we have something that's more definitive, we certainly will communicate that to everybody.

Would you think it's something that -- is it likely 2023? Or is it just still too early to -- if you can put a time line on it?

I can't put a time line. I mean this environment is very tricky nowadays. You get a lot of interest, you have discussions and there are a lot of reasons why something moves at the rate it does. And again, we're doing everything we can to actively engage with interested parties across our whole portfolio of products. And when we have something more definitive, we'll obviously, again, communicate that.

Our next question comes from the line of Jason McCarthy with Maxim Group.

This is Chad on for Jason. So for the retinoblastoma program, I know it's -- those meetings with the FDA are coming up, but do you anticipate, if you can speak on it, if this could be a registrational trial, if you guys may be go with a PII or PII/III, or would you need, do you think, an additional study after that?

So the bottom line is we won't know until we have a discussion with the FDA. But maybe, Manel, if you want to give a little bit more color about some of the discussions we've had with the KOLs and how we're moving forward. Manel Cascalló: Yes. Exactly. Yes. So as anticipated by Steve, that's something that we're trying to be very dependent on our interaction with FDA, obviously. We are working very intensively, having some very interesting discussions with key opening leaders, but -- here in U.S. and in Europe with the top investigators, but also with some physicians involved in treatment of this disease in low- and medium-income countries. Because in that geographical areas, it's where retinoblastoma is much more evident and patients normally are not diagnosed as soon as it could be, for instance, in U.S. And that gives us an opportunity to really impact with our treatment in that population that otherwise it's orphan of indications. So we are just getting a double effort with some relevant sites in U.S. and also sites in low- and medium-income countries just trying to develop a program that is going to be probably more in the line of health, global health system, let's say, okay. But Again, that's something that we should discuss with FDA. We have very nice ideas, I think, to discuss, and we are getting support for these ideas from the key opinion leaders. And until we have this discussion, it's really hard to know exactly what's going to be develop -- the complete development pathway for this program, but eventually...

There are no further questions at this time. I'd like to turn the floor back over to Steve for closing comments.

Thanks, Evan. Thanks again to everyone for taking the time to join us today. We remain focused on driving our key programs forward and we'll continue to evaluate strategic opportunities that we believe will help further drive our shareholder value and long-term success. Once again, thanks for joining us, and we look forward to future updates.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.