Theriva Biologics Inc (TOVX) 2015 Q1 法說會逐字稿

Good afternoon and welcome to the Synthetic Biologics first-quarter 2015 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 at Synthetic Biologics. Please go ahead.

Thank you, Laura, and good afternoon, everyone. Welcome to Synthetic Biologics first-quarter 2015 results conference call. Today I am joined by our CEO, Jeff Riley.

After market close today, Synthetic Biologics issued a press release reporting its first-quarter 2015 financials and summarizing recent operational highlights. That release can be found on the investor 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 programs. Jeff will also provide a brief financial summary. After the formal portion of the call, we will offer an opportunity for questions and answers.

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 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 on current beliefs, expectations and assumptions and are subject to a number of risks and uncertainties including those set forth in Synthetic Biologics filing 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 also 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 would like to turn the call over to Jeff.

Thanks, Kris, and thanks for everyone joining us this afternoon. We have made great progress since the beginning of this year especially with our programs designed to protect the microbiome. We advanced our C. difficile program into Phase 2 clinical trials. We remain on target to initiate Phase 2 clinical trials for our IBS constipation program before the end of June. And we expect to have Phase 2 data from both programs focused on protecting the microbiome by year end.

We have also expanded our leadership team with the appointment of Steve Shallcross as our Chief Financial Officer beginning June 1 and Maureen Early joining the team in the newly created position of Vice President, Commercial. As we move to the next phase of development with our microbiome focused product portfolio, it is crucial that we build an infrastructure to move our programs into and through the clinic and to support our efforts as we begin to plan for commercial entry. Due to the nature of these microbiome programs, the time spent in the clinic is likely less than a typical drug development program.

I believe Steve's significant experience will be valuable to achieving our goals. He has operational, financial and international biotech industry experience and an established track record leading the financial, development and strategy for several publicly traded biotech companies. He has effectively manage broad operations, cultivated significant relationships with a number of corporate development leaders in biotech and repeatedly structured financing strategies that enable some very successful companies in our industry to achieve their clinical and business goals. Steve will be based out of our Rockville, Maryland offices.

Maureen has extensive global and domestic strategic marketing experience in the pharmaceutical industry working on products from prelaunch through post-launch. During her career she has successfully launched several products, created effective anti-infective marketing programs and developed solutions to optimize brand lifecycles.

I look forward to Steve and Maureen's contributions as we execute our clinical milestones and seek to generate increased returns for our shareholders.

I also want to thank Evan Ballantyne for his contributions to Synthetic Biologics over the past three years. We appreciate his dedication to ensuring that the financials for the first quarter were successfully completed before he left to pursue other interests. We wish Evan the very best in his future endeavors.

I would now like to spend some time on development of our lead therapeutics that are designed to protect the microbiome while targeting pathogen specific diseases. These programs include SYN-004 to protect the gut microbiome from beta-lactam IV antibiotics for the prevention of C. difficile infection and antibiotic associated diarrhea or AAD. And SYN-010, to reduce the impact of methane producing organisms on IBS constipation.

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 a stronger bad bacteria which C. difficile is among the strongest, to take over. This can lead to AAD or antibiotic associated diarrhea and perforation of the intestinal wall with potentially fatal outcomes.

Rather than treating C. difficile, we have designed SYN-004 to be what we believe is the first point-of-care preventative therapy to protect the gut microbiome from the effects of certain beta-lactam antibiotics and therefore prevent the onset of C. difficile infection and AAD.

Our initial product, oral SYN-004 is intended to be administered to a patient with the IV antibiotics. It is intended to target and neutralize antibiotics that are excreted into the gut before they have a chance to disrupt the microbiome and cause the conditions that allow the overgrowth of C. difficile bacteria and the onset of diarrhea.

We believe 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 as a preventative. SYN-004 also has a much larger potential market. Since it is difficult to predict who are among the 14 million hospitalized patients receiving IV beta-lactam antibiotics as part of most surgical procedures might develop C. difficile, it is conceivable that all or at least a very large percentage would be coadministered SYN-004.

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.

It is also important to note that SYN-004 is expected to be synergistic with fecal transplants and other gut repopulation techniques. They are not mutually exclusive strategies.

We have completed Phase 1a and 1b clinical trials and reported positive topline safety and tolerability data from both studies. This quarter we reported positive pharmacokinetic results from both the Phase 1a and 1b, clinical trials with supportive evidence that there is no active enzyme absorption into the bloodstream.

In March we initiated a Phase 2a clinical trial to evaluate gastrointestinal antibiotic degrading effects and safety of SYN-004 in ileostomy patients and we expect topline data from this clinical trial to be reported next month. The Phase 2a randomized multicenter open label study is expected to evaluate the ability of two different dose strengths of SYN-004 to degrade residual IV ceftriaxone in the GI track of up to 20 healthy participants with functioning ileostomies without affecting the concentrations of IV ceftriaxone in the bloodstream.

The study consists of two treatment phases for all participants. One, the administration of IV ceftriaxone alone. And two, the administration of one of two doses of oral SYN-004 and IV ceftriaxone. Chyme samples will be collected from the participants to measure the ability of SYN-004 to degrade the residual antibiotic. Participants will be enrolled at up to four trial sites located in the United States and Canada.

The next step will be a Phase 2b 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 drugs, lovastatin, is also on track for the initiation of Phase 2 clinical trials 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. We are working in collaboration with Dr. Mark Pimentel at Cedars-Sinai whose work has demonstrated a leading cause of IBS-C is excessive production of methane gas in the gut by microorganisms called M smithii. The methane gas reduces G.I. motility and causes intestinal blockage.

Current treatment options which more often than not are over-the-counter laxatives, treat the symptoms of constipation and tend to cause an IBS-C. patient to swing the other way and have diarrhea. The market opportunity for SYN-010 is very large. Up to one-third of IBS patients suffer from the constipation form of IBS which puts the current addressable market in the US alone at just over 13 million patients. SYN-010 is designed to reduce the impact of methane-producing organisms and restore normal bowel function. Therefore, it is designed to treat the underlying cause of pain, bloating and constipation associated with IBS-C., not just the symptoms.

SYN-010 is also designed to have minimal impact on the microbiome. It is intended to slow the production of methane gas without disturbing the natural balance of the patients' gut microbiome.

We are currently finalizing a modified release formulation for SYN-010 to provide a more efficacious pharmacokinetic profile intended to diminish or prevent systemic absorption. Synthetic Biologics intends to file an IND application for SYN-010 to support the launch of Phase 2 trial by the end of June and topline results are expected from this trial also by the end of this year.

Synthetic Biologics' third pathogen specific program, SYN-005, is being developed in collaboration with Intrexon and is based on research and IP license from the University of Texas at Austin. It combines two novel monoclonal antibodies to target and destroy pertussis toxins which is responsible for pertussis or whooping cough. We are continuing our discussions with international nonprofit health organizations to secure non-dilutive funding to advance our SYN-005 program. If secured, Synthetic Biologics intends to initiate a nonhuman primate program to explore the prophylaxis and therapeutic effects of our antibodies and then move the program rapidly into the clinic.

As previously disclosed, we are in active discussions with potential partners for Trimesta, our Phase 2 candidate for the treatment of relapse remitting MS. Pending MRI data from UCLA, we intend to further these discussions with potential partners with a goal of accelerating the development of Trimesta as quickly as possible.

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 but also showed a statistically significant and clinically relevant improvement in cognition and this clearly distinguishes Trimesta from all currently available MS therapies.

Enrollment is continuing in the separate Phase 2 study specifically designed to evaluate the neuroprotective properties of Trimesta in combination with any of the leading MS therapies.

Turning to our financial performance, we continue to operate in a highly efficient manner. We utilized $5.5 million of cash during the first quarter and had $12 million of cash as of March 31. The Phase 2 trials will increase cash utilization as will our expanded team that has been brought on board to execute the next phase of development and create shareholder value.

In addition, we are also planning our move into new executive offices in Rockville, Maryland on the Johns Hopkins NCI campus. The new space will accommodate our expanded clinical development and research teams which are driving our programs into and through the clinic. Keep in mind the expanded team now has a total of 18 individuals that are full-time.

To wrap up my prepared remarks, Synthetic Biologics has become a leader in the microbiome space with two microbiome protecting pathogen specific candidates on track to report topline Phase 2 clinical data this year. Additionally, our monoclonal antibody candidate to treat whooping cough has demonstrated strong preclinical data, has received orphan drug status and supports preparation for clinical development. And we have what we believe is a rich asset in our Trimesta MS program which we expect to partner as soon as possible.

Overall, we are very optimistic about the potential of Synthetic Biologics to address large markets, meet unmet medical needs while generating significant returns for our shareholders.

At this time I would like to turn it back over to Kris.

Thank you, Jeff. Before we start the Q&A session, I wanted to remind everyone that Synthetic Biologics C. difficile and IBS-C. programs will be featured in poster presentations at the Digestive Disease Week meeting in May. Our C. diff program will be highlighted in poster presentations at the American Society for Microbiology meeting in June and our C. diff program was recently selected for oral presentation at the International Conference on the Evolution and Transfer of Antibiotic Resistant meeting in June.

In addition, Synthetic Biologics is continuing its annual tradition and will host a micro biome analyst and investor meeting in New York City on June 3. If you would like to attend, please let me know.

Now, Laura, we would like to open the phone line to questions. Would you please describe the procedures to ask questions for our listeners?

(Operator Instructions). Patrick Lin, Primarius Capital.

Congrats on the quarter and the accomplishments thus far. I know you guys have been working hard to get a lot of stuff done. And I am sorry, one quick second here. Can you tell me on your microbiome focused Phase 2 trials why they have such a short timeline as far as the data readout? And then I may have a quick follow-up.

It is essentially the disease states, not necessarily the microbiome itself. So one of the diseases, IBS-C., the constipation form, you actually can see improvement or not in these patients within four weeks. It is a fairly quick endpoint in that particular case.

And then for the C. diff antibiotic associated diarrhea program, that is also exceptionally quick because you are just dosing the patient while they are on that antibiotic. And for example, the Phase 2b that we are going to run is going to be in patients that have pneumonia, so that you go to the hospital, you are diagnosed with pneumonia, you were going to get an antibiotic, ceftriaxone in this case, that usually lasts anywhere from one to three days so again, a very quick turnaround time for those particular disease states.

I don't know if all microbiome projects, ours or other folks are going to be as quick but again, it is highly likely.

Terrific. To me Synthetic still seems like a very undervalued stock. Can you maybe share some light on what you might have planned as far as an investor relations effort either at conferences or internal programs please?

You bet. We just recently hired an IR group that started a couple of weeks ago and those individuals are beginning to ramp up our meetings with a variety of folks, existing investors as well as new investors or new potential investors. We have a plethora of new papers. These are posters, scientific articles, journals, etc. that are starting literally as of last Friday. I am speaking at a translational microbiome conference the first of its kind up in Boston this Thursday and we have a bunch of those. So I think the visibility is going to become significantly better.

Interestingly the pharmas of the world, the big biotechs know who we are. We have had lots and lots of discussions with those folks, not from an MS partnering perspective, we have had those as well but just from people basically kicking the tires to see what we have. That has not yet translated into share price but I think it is inevitable that that should begin happening in particular when we start releasing Phase 2 data from these programs.

Great. One quick follow-up, you mentioned this new IR. Can you share maybe some of the track record of the IR firms, if they have been involved with any known companies?

I would say probably their biggest success would have been with -- I don't know if I can say the name -- I guess I can, they were recently acquired by [Mallinckrodt] a couple of years ago and they basically grew from roughly our size a little bit smaller about $100 million market cap and they were acquired for several billion dollars by Mallinckrodt. I think they have been through the ringer if you will from going from a company that is our size with at the moment poor visibility and able to translate that, the assets that we have into actual shareholder value given the valuations in the marketplace today. There is a dearth of good solid products available to be big pharma folks and we have two that are -- well, we have three that are potential $1 billion plus markets. I think they have a track record of doing that where we are executing on Doug's plan and we will see what happens.

That sounds wonderful and just to follow up on your earlier comment, you said you do have some conferences coming up or you are not announcing them yet? As far as investor conferences?

Yes, there's about five or six this year. We just presented at ECCMID, which is the European Congress of -- I don't remember what the whole acronym is but it is an anti-infectious disease conference in Copenhagen two weeks ago. Our Chief Medical Officer did a microbiome conference on Friday last week in London and I do one in Boston coming up and there are several more this year. As I think, Kris, our IR person typically puts out a press release roughly a week in advance of these give or take.

Great. Thank you very much and congrats again on your progress.

[Anita Gureck].

Thank you. Good afternoon. I have two questions or two areas. The first is a real quick one probably just clarification. Is Intrexon collaborating only on pertussis, the SYN-005 or on SYN-004 as well?

It is actually on two programs in total, Anita. One is SYN-005; that is the pertussis program. We also have an ongoing program -- it is discovery stage so we typically don't show it but it is for a gram-negative organism called Acinetobacter baumannii, and we are searching for a very similar strategy to pertussis. We are searching with Intrexon, with their platform to find antibodies that bind to the surface of these particular bugs so that we can again have a very pathogen specific way of eliminating these bugs from the system. But not SYN-004, correct.

Second several questions I have are regarding Trimesta. As a long-term investor, I have heard the partnership discussion statement many, many years and calls and wondering if you could explain -- and obviously you can't say names -- but are you talking about partnerships with big pharma or are you talking about in MS societies because I do think there is a big difference.

There is a huge difference. I can tell you that when we started the conversation -- so I have been with the Company three years. So what happened prior I am not privy to but I can tell you that our partnership discussions began literally five minutes after the PI from UCLA did her first presentation on April 30 of last year, five minutes. She walked back to the back of the room at the AAN meeting. I was there, we then met up with an individual from a very large biotech who you would know that is in the MS space and we started discussions at that time.

We then ended up having multiple discussions since then with six different companies and we are down to three at this stage of the game. None of those are the MS Society. The MS Society is a separate non-profit entity. The ones that we are speaking with today run the gamut from what you would consider a large specialty pharma company but multi-billion, very large to the same company we spoke with five minutes after her first presentation on April 30 to a smaller company even that has a significant amount of capital and expertise in the CNS, or central nervous system disorders space.

I don't know where we are going to go with those because again we are partnered with UCLA so any deal that we are doing, we are under CVAs, we are talking to these folks but again we have to get the full dataset done and that is the MRI dataset for them to be able to vet the data set in order for move to the next stage which is discussions.

Now we have had verbal discussions around I wouldn't call them term sheet discussions at verbal discussions around economics but we haven't been to the point where we put pen to paper yet.

Obviously that is an important distinction for long-term shareholders if you are talking to biotech, if you are talking to big pharma, that is going to be more meaningful for the share price certainly without intending disrespect than the MS Society from shareholders' perspective.

The other question related to Trimesta is in addition we been hearing about the MRI results coming out the second half of the year, Q2, what have you. Is there any more clarification you can give on A, when those results will be disseminated and where? Can we expect a joint conference with SYN and UCLA, can we expect just a press release, what should we be expecting?

I don't have any visibility on that, Anita. Again, the MRI data is in the hands of UCLA at this time and they are continually -- they are crunching, they are working their way through all of that information. It is not a simple thing. It requires several radiologists and a lot of work on a per patient per scan basis and all of that has to be put into a database obviously. So they are working through it. Last we heard, we have filed intellectual property around the findings to date and we talked about that back in September, October of last year.

But they are working through it and again as soon as they get that, we will have access to it and we will be able to then have those discussions from a third-party perspective with the potential partners. I can't give more clarity than that because I don't have any more clarity than they are working as quickly as they can.

But consistently you have said 2Q end of June.

We are working toward that. We are not in June yet, Anita.

I just want to know if you are still on that timeframe?

We are still on that timeframe, correct.

Okay. And as far as how it would be announced, we don't know that?

We don't know that.

Okay, and then not to belabor the point but this is really important for us shareholders. When you are saying you are in partnership discussions, can you just give a little idea of what steps would be next? Let's say you get the MRI data, I assume whoever these companies are they have read all through the other data that you have in the studies, what would be the steps?

The next step would be a term sheet where basically the lawyers step in and generate what is called a term sheet and this is with any deal, not just this one. And then the term sheet iterates, it goes back and forth between the entities a few times. If the terms are great off the bat then life is good. If the terms are -- I used to do this for Pfizer and we always tended to be pretty aggressive as far as our offers -- we tended --

We know that about you, Jeff. That is why we are so excited.

We tended to lowball people. Other companies like J&J I think is a great example where they tend to give a very fair price up front. So it really depends on that price as to how many times you iterate and how far apart you are and what you think the value of the drug use or the project is. After that it is pretty much done.

I mean the hardest part frankly is going through the CDAs, creating the relationship, knowing the individuals, making sure that the drug fits their portfolio of what they are looking for, either synergistically or a brand new drug, maybe they are going into a CNS space. And I have spoken with some folks out there.

I mean the deals could be anything from where we just throw the product over the wall and you get a bucket of cash, that is one way to do it. And it is out of our hands to some extent. All the way to something a little more intimate where it would be maybe a 50-50 style deal and we've talked about all of those several groups but I can't tell you where it is going to end up until we actually get a piece of paper in hand saying we are willing to pay you this. And then it is a discussion at that stage of the game.

But that is all incumbent on the MRI data to a large extent because you are right, the relapse or remitting data is out there. They have looked at it, that is fairly straightforward. We know the study was probably underpowered, we know it had a good result for year one, not as great a result for year two but that is a powering problem, not necessarily a drug specific problem.

And so the MRI data will differentiate this drug we think significantly from the other existing therapies and I don't know if you follow the space very much but Tecfidera has been getting hit pretty hard recently because patients are realizing that PML or brain infections sometimes happen. Would you rather take a drug where you sometimes get a brain infection or would you rather take a drug that Mother Nature made initially and is relatively safe and that would be estriol in this case? Does that answer your question, Anita? Hello?

(Operator Instructions). And showing no further questions, I would like to turn the conference back over to Jeff Riley for closing remarks.

Thanks, Laura. Thanks everybody and thanks for the great questions. Again, I think a lot of you folks have my email and cellphone number and you definitely can reach Kris through the corporate number on our website. If you have questions, ask. That is the only way we can communicate.

Once again thanks for joining us today. Everyday SYN moves closer to the goal of offering differentiated products to large markets with clear unmet needs and we are excited about the progress we are making. We look forward to reporting our continued progress especially reporting the topline results of our Phase 2 studies for both C. diff and IBS-C. later this year. We are positioned to create value for our shareholders at multiple points to include monetizing the MS asset, hopefully moving both the IBS and C. diff drug forward and hopefully finding external financing for the pertussis drug as well as our discovery project with Intrexon which is Acinetobacter that we hope and feel that we will be able to find an antibody that will be pathogen specific again and we will be able to revolutionize the way we treat some infectious diseases.

With that I would like to say thanks to everyone.

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