Theriva Biologics Inc (TOVX) 2014 Q4 法說會逐字稿

Good morning and welcome to Synthetic Biologics' year-end 2014 investor conference call. All participants will be in listen-only mode. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to Kris Maly, Vice President, Corporate Communications for Synthetic Biologics. Ms. Maly, please go ahead.

Thank you, Keith, and good morning, everyone. Welcome to Synthetic Biologics' year-end 2014 investor conference call. Today, I am joined by our CEO, Jeff Riley, and our CFO, Evan Ballantyne.

(technical difficulty) market this morning, Synthetic Biologics issued a press release reporting its year-end 2014 financials and summarizing recent operational highlights. That release can be found on the investors section of our website.

During our call today, Jeff will provide an update on our C. difficile; irritable bowel syndrome with constipation; pertussis, otherwise known as whooping cough; and our MS program. Evan will then provide a brief overview of our financial statements for the year end December 31, 2014, after which the formal portion of the call we will have an opportunity for Q&A. In addition to the phone line, this call is being streamed live over the Internet today and the webcast replay will be archived on our website for 30 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 terminologies 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 back over to Jeff.

Thanks, Kris, and thank you all for joining us on this morning's call. I'd like to apologize in advance. I'm getting over the flu, so my voice is a bit gravelly this morning, but let's get into it.

2014 was a very, very productive year for Synthetic Biologics as we created the infrastructure and implemented the clinical strategies. We are building a robust portfolio of pathogen-specific drugs with a special focus on protecting the microbiome. We completed plans to launch two Phase II clinical trials this year, with topline results both expected by year-end. One program targets C. difficile infection and the other targets irritable bowel syndrome with constipation, or IBS-C.

We are seeking non-dilutive funding for our program for pertussis, or whooping cough, to support clinical development and we are in active partnering discussions for our Phase II MS candidate, Trimesta. We completed a $19 million equity raise last October to support our progress.

We established a clinical advisory board, bringing together preeminent thought leaders to provide valuable clinical guidance for our C. difficile and IBS-C programs. We were issued multiple new patents in 2014 for our C. diff program and MS programs and we filed numerous patent applications for all of our programs.

Preclinical and clinical results for each of Synthetic Biologics' programs were presented last year at almost a dozen different venues, all told, including our own IBS investor day in New York City last September.

Here is where each of our program stand, starting with C. difficile. As you may know, the rise of C. difficile infections, especially in healthcare settings, continues to get a lot of media attention. A recent study published in the New England Journal of Medicine reports that the mortality rate due to C. difficile has more than doubled in the past eight years and is now approaching 30,000 deaths annually in the United States. The disease is so serious and so prevalent that the Centers for Disease Control, or the CDC, has labeled it an urgent public health threat.

The majority of C. difficile cases are caused by the unintended consequences of antibiotic therapy to the gut microbiome. IV antibiotics excreted to the gut often wipe out the natural G.I. microflora, allowing the stronger bad bacteria, of which C. difficile is among the strongest, to take over. This can lead to recurring diarrhea and perforation of the intestinal wall, with potentially fatal outcomes.

In the past few years, a few powerful antibiotics have come to market for the treatment of C. difficile, but, as you might expect, their effect is limited since all they do is give doctors more antibiotics to fight a problem caused by antibiotics in the first place.

Synthetic Biologics' approach is radically different. Our C. difficile candidate, SYN-004, is designed to be what we believe is the first point-of-care preventative therapy to protect the gut microbiome and prevent the onset of C. difficile. Oral SYN-004 will be administered bedside, alongside the IV antibiotics. It is intended to stay in the gut to neutralize excreted antibiotics before they have a chance to disrupt the microbiome and cause the conditions that allow the overgrowth of C. difficile.

We believe that prevention is smarter than treatment and that a preventative therapy such as SYN-004 could potentially represent significant cost savings to the US healthcare system.

SYN-004 also has a much larger potential market. Since it's difficult to predict who among hospitalized patients gets IV beta-lactam antibiotics and who may develop C. difficile, it is conceivable that all or at least a very large percentage would be co-administered SYN-004.

We initiated CGMP manufacturing of SYN-004 in the third quarter of last year and we have completed the Phase Ia and Ib clinical studies. The topline pharmacokinetics data from both of our Phase I studies is expected to be reported shortly. The Phase Ia and Ib safety and tolerability data were very positive and clearly support Synthetic Biologics' plans for a Phase IIa trial, which we expect to launch this month, with topline results expected to be available in the second quarter of this year.

The next step will be a Phase IIb proof-of-concept trial that is planned to launch in the second half of this year, with topline data expected by year-end.

Synthetic Biologics' IBS-C candidate, which is a new modified release formulation of a widely prescribed statin [deverer], is also on track for the initiation of the Phase II clinical trial by mid-2015. A 505(b)(2) regulatory pathway is anticipated for the development of SYN-010 which may allow a less complex route to the market.

The groundbreaking work for this program was performed by Dr. Mark Pimentel and his team at Cedars-Sinai in Los Angeles. Dr. Pimentel has shown that a leading cause of IBS-C is excessive production of methane gas in the gut. The gut slows down the digestion of food and causes intestinal blockage.

Our drug candidate, SYN-010, is designed to reduce the impact of methane-producing organisms and restore normal bowel function. As such, it is designed to treat the cause of pain, bloating, and constipation associated with IBS-C, not just the symptoms.

We are currently finalizing the modified-release formulation of SYN-010 to provide a more efficacious pharmacokinetic profile intended to diminish or prevent systematic absorption. Synthetic Biologics intends to file an investigational new drug application for SYN-010 to support the launch of a Phase II trial by the end of June. Topline results are expected by year-end.

Synthetic Biologics' third pathogen-specific program, SYN-005, is being developed in collaboration with Intrexon. It combines two novel monoclonal antibodies to target and destroy pertussis toxin, which is responsible for pertussis, also known as whooping cough.

We are currently in discussions to secure non-dilutive funding from an international nonprofit health organization to advance our SYN-005 program. If secured, Synthetic Biologics intends to initiate a nonhuman primate program to explore the prophylaxis effects of our antibodies and also intends to launch a Phase I study for this.

Last year, SYN-005 was granted an orphan drug designation by the FDA for the treatment of pertussis, which may provide a variety of incentives, including seven years of market exclusivity should SYN-005 receive FDA approval for the treatment of pertussis.

As previously disclosed, we are in active discussions with partners for Trimesta, our Phase II candidate for the treatment of relapsing-remitting MS.

Last year at two scientific forums, the lead investigator from UCLA presented data that showed Trimesta in combination with Copaxone not only improved disability scores at 12 months among the 158 women in the study with MS, it also showed a statistically significant and clinically relevant improvement in cognition, and this clearly distinguishes Trimesta from all currently available MS therapies.

Additional analysis of MRI scans is underway to support the degree and prevalence of these clinical observations, with topline results anticipated by midyear. In the meantime, enrollment is continuing in a separate Phase II study specifically designed to evaluate the neuroprotective properties of Trimesta in combination with any of the leading MS therapies, including not only Copaxone, but also Gilenya, Tecfidera, Avonex, as well as others.

Let me take this opportunity to turn the call over to Evan Ballantyne, our Chief Financial Officer, for a review of our 2014 year-end financials, after which we will come back for a brief summary and questions and answers. Evan?

Thanks, everybody, for attending the call this morning.

Synthetic Biologics' year-end 2014 financial statements were included in a press release which was issued this morning over the newswire. The Company's 10-K for the year ended December 31, 2014, will be filed with the SEC later today.

Cash at December 31, 2014, was $17.5 million, compared to $14.6 million at December 31, 2013. For the year ended December 31, 2014, our general and administrative expenses were $6 million. Included in these numbers were non-cash charges related to stock-based compensation of $1.6 million for the year ended December 31, 2014. Research and development expenses increased to $14.5 million for the year ended December 31, 2014. This increase of 123% is primarily the result of increased program costs associated with expanded clinical development, manufacturing, and research activities within our pathogen-specific microbiome-focused pipeline, including our C. difficile, IBS-C, and pertussis programs.

Non-cash charges related to stock-based compensation within research and development were $803,000 for the year ended December 31, 2014.

I'd like to turn the call back to Jeff. Jeff?

Thanks, Evan.

I'd like to add one comment to the numbers discussed, if I may, and that's to make special note of the incredible productivity of our clinical and research investments, especially the past year.

To wrap up the formal portion of today's call with the events of 2014, Synthetic Biologics has become a later-stage drug development company with two candidates on track to start Phase II trials this year and one monoclonal antibody candidate demonstrating strong preclinical data that supports preparing for clinical development, and we have what we believe is a rich asset in our Trimesta MS program, which we expect to partner this year.

Each one of Synthetic Biologics' candidates addresses unmet needs in very large markets. I earlier mentioned the latest statistics on the rise of deaths due to C. difficile infections, many of which are related to antibiotic use. Each year, approximately 118 million doses of common IV beta-lactam antibiotics are administered in hospitals across America. Each of those doses represents an opportunity for SYN-004 to prevent the onset of C. difficile infection.

The market opportunity for SYN-010, our IBS-C drug that actually treats the cause -- again, not the symptoms of the disease -- is enormous. Nearly one-third of IBS patients suffer from the constipation form of IBS, which puts the current addressable market in the US at just over 13 million patients.

If our whooping cough antibody therapy is successful, it could significantly impact the current death rate from pertussis, which the World Health Organization puts at roughly 300,000 annually worldwide, mostly unvaccinated infants.

I am sure many of you know of the prevalence of MS and the magnitude of the market. It's forecasted to reach $18 billion worldwide by 2019. The cognitive improvement features of Trimesta make it a differentiated product in this very large market.

And at this time, I will turn it back to Kris.

Thank you, Jeff. Before we start our Q&A session, I wanted to remind everyone of Synthetic Biologics' upcoming poster presentations at scientific meetings.

Our pertussis program will be highlighted at the ECCMID meeting in April and our C. difficile and IBS-C programs will be featured at the Digestive Disease Week meeting in May. Synthetic Biologics was invited and will participate in the following events over the next few months, a C. difficile radio interview segment, the BIO legislative fly-in, and two microbiome-specific conferences. In addition, Synthetic Biologics is continuing its annual tradition and will host a microbiome investor day in New York City on June 3. We look forward to all of the events we have slated on the horizon.

Now, Keith, we would like to open the phone lines to questions. Would you please describe the procedure to ask questions for our listeners?

(Operator Instructions). Keith Markey, Griffin Securities.

I actually have a fairly broad one for you this morning. I was just wondering if you might elaborate a little bit on your commercialization plans for C. difficile, the constipation IBS, and pertussis products in the United States and abroad.

Good morning, Keith. Thanks for the question. We'll start with the easier one. So for the pertussis project, again, as we noted, we are working together at the moment with an international-based nonprofit firm that is looking at the ex-USA, ex-European markets to try and get that drug into the hands of these World Health Organizations and groups like that for infants primarily in these developing countries. That would be their specific distribution network.

Our distribution would be specific to the US and Europe, and we would probably be looking at stockpiling through governmental organizations the product in various hospitals for use in the event of outbreak or something of that nature, so that's a fairly straightforward, low-cost distribution for pertussis.

For IBS-C, this is again a relatively straightforward distribution. We are in the process of interviewing a variety of folks that will come on board as commercial guys or gals who will be looking at this market. We are gearing up this year to get ready for a potential launch here in a little bit under two years for this drug.

This would be a typical G.I. specific distribution methodology. Pricing would be somewhere between -- would be probably a specialty pharma style pricing. We have not looked at that yet, but that's our goal with that particular product. As it is a repurposed statin, the goal would be penetration market-wise more so than pricing high end.

Last, but not least, is the C. difficile program. That particular program is a bit more complicated, but again it is our flagship program. To some extent, it will likely be the largest program over time. On our staff today, we have a guy named Lew Barrett who used to run Wyeth's entire anti-infective franchise, as well as Pfizer's after Pfizer took over Wyeth.

He is looking at how we are going to distribute this product, what does it look like? And we are hiring folks again in that particular area to flesh that out more.

There is one slide in our current presentation that we've been presenting for the last 18 months or so that really looks at the overall markets and kind of what it would look like if we priced this drug at roughly $100 a day while the patient is in the hospital and maybe one or two days after they go home, depending on the half-life of the antibody. So that's a bit more complicated. It would probably be a hospital based sale, not a huge sales force, similar to the G.I. sales force, I would guess, and then fairly straightforward once you get into that distribution chain.

MS, as you guys know, we are looking to partner that program, get that off the balance sheet, but also to utilize other folks that maybe have a better view of how to distribute that product. That is a much broader central nervous system disorder type of sales force and one that we probably will not be building ourselves.

Right. So if I, for instance, if I take a look at just the C. difficile product, you would probably want to provide the marketing support for that, at least here in the United States. Would you consider out-licensing it or partnering it off for foreign territories?

Possibly. It's all about price, right? It depends on what the deal would look like.

Our intention today is to take the IBS-C program and the C. diff program forward on our own. There's high interest for the IBS program from a couple of Japanese companies. That is a prevalent issue over in Japan and not a geography that we probably want to distribute directly into, but the rest of the world is fairly straightforward. But, again, it depends on the price, Keith. If we have a good partner, obviously we would rather use them.

Right. Great. Thank you.

(Operator Instructions). [Scott Coburn], Private Investor.

Good morning. Thank you for taking my call. I have a question regarding SYN-004 and a two-part question relative to Trimesta. Could you expand upon comments made at ROTH pertaining to a possible Phase IIb in SYN-004 as possibly becoming a pivotal trial, and what has led you to that conclusion?

Also, what are your thoughts on the Trimesta Phase III primary endpoints being an improvement in RRMS at one year versus two years, and do you foresee the trial of the Trimesta/Copaxone combo versus some of the other drugs on the market or do you envision Trimesta as a standalone?

And third, could a partnership deal with Trimesta offset the need to raise capital? Thank you.

Okay. Those are some broad questions. Let's start with the SYN-004 question. No, let's not. Let's start with the Trimesta. That's the easier one.

Trimesta, again, it really depends on the partnering, Scott. It depends on who we partner with and really what the pathway forward is for those Phase IIIs. Some of the folks are looking at it as a cognition-specific drug to use in combination with their existing franchises. Other folks are looking at it as a standalone drug, for example if they want to get into the MS space. Each of those pathways forward is different and each would either require multiple other active controls, potentially, or a single control in some cases, if they are going alone. So it really depends on the particular partner.

I've said it multiple times. I don't know what the upfront is going to look like for this drug. Obviously, we can do one of two things. We can take a larger upfront and remove the potential dilution downstream or we can do a 50-50 or some type of deal like that where we maintain rights in a much larger economic benefit downstream. It really depends on the deal structures themselves and it really depends on sort of where our share price is at any given moment, to be honest, because you really need to look at what is the maximum value long term while we are building this Company for shareholders and that's the goal.

So I don't have visibility on that. I can tell you we are in deep discussions with a variety of folks and we are still, as I just mentioned earlier, shooting to have a deal done by the end of June, end of second quarter, and we hope that that deal will be -- the maximum will be a possible for shareholders at this point in time.

But the SYN-004, the comments I made at ROTH were whether or not we could take the Phase IIb study that we are getting ready to run and potentially use that as a pivotal. And the question really becomes, what do the results look like midstream in this particular study from an adaptive trial design perspective?

Keep in mind that the drug itself, from what we know at this point, is incredibly benign. This is an oral protein, an enzyme. It's non-systemically absorbed. There's a few peptides that break -- and it gets broken down just like any other protein. It doesn't get in the bloodstream; it doesn't get in -- systemic exposure, as far as we know at this stage, from what we have looked like.

So it's a very, very safe drug. So we can take the whole safety component out of the equation with respect to what's going to happen downstream. Cancer drugs, other drugs, we don't really know to some extent what that safety or off-target activity is going to be.

With respect to efficacy, again, we know our drug is incredibly effective because we are not going against a receptor again. We are not turning a biological switch on or off. All we are doing is we are breaking down a particular beta-lactam with our beta-lactamase, very straightforward, very simple. So we are removing two of the biggest obstacles to a lot of drugs, safety and efficacy, right off the bat.

So all we are really looking at is efficacy from a dosing perspective in these patients and making sure we deliver enough of this product at the right point in the gut, and that's what the Phase IIa study is about that we are starting here in a few weeks where we are looking at dosing ileostomy patients -- these are people without colons -- and really being able to test real time what's happening in these patients when we give them an antibiotic, plus and minus our drug. We will know if the drug works at that stage of the game.

And then, Phase IIb is obviously we will go into great detail on that on June 3 when both Dr. Pimentel and Dr. Wilcox from the UK come over and talk about the overall microbiome. But they will also be going into the specifics of each of our clinical studies, along with our medical officer, Dr. Joe Sliman, on June 3, again, in New York City.

I hope that answers your question. We just don't -- we are going to take an interim peek. We are going to see what's happening with the SYN-004, and if the results are looking good and we have something that may be significant to the public health, we will have that discussion with the FDA and they will provide guidance at that time.

Perfect. Makes sense. Very good, thank you, Jeff.

Thank you. And that's all the time we have for questions today, so at this time I would like to turn the conference back over to Jeff Riley for any closing remarks.

Thanks, Keith. Once again, everybody, thanks for joining us today.

Every day, Synthetic Biologics moves closer to the goal of offering differentiated products to large markets with clear unmet needs and we are very excited about the progress we are making. My sincere thanks go out to our shareholders for your continuing support, our truly dedicated team of inspired employees, and to our third-party vendors whose exceptional skills have and will continue to play an important role in our success. We look forward to reporting our continued progress and, this year, reporting the topline results of Synthetic Biologics' two Phase II trials in C. diff and IBS-C. Thanks again, everyone, and have a great day.

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