Theriva Biologics Inc (TOVX) 2020 Q4 法說會逐字稿

Good afternoon, and welcome to Synthetic Biologics' 2020 Year-end Investor Conference Call. (Operator Instructions) Please note, this event is being recorded. At this time, I would like to turn the call over to Vincent Perrone, Director, Corporate Communication at Synthetic Biologics. Please go ahead.

Thanks, Gary, and good afternoon, everyone. Welcome to Synthetic Biologics' 2020 year-end investor conference call. Today, I'm joined remotely by Steven Shallcross, Chief Executive and Financial Officer; Dr. Michael Kaleko, Senior Vice President, Research and Development; and Dr. Vince Wacher, Head of Product and Corporate Development.

Synthetic Biologics issued a press release this afternoon, which provided operational highlights and reported our financial results for the year ending December 31, 2020. The release can be found on the Investor Relations section of our website.

During our call today, we'll provide an operational update on our GI and microbiome-focused clinical programs and summarize our financial results. We'll take questions after prepared remarks. In addition to the phone line, this call will be streamed live via webcast and will be archived on our website at www.syntheticbiologics.com for 90 days.

During this call, we will be making forward-looking statements regarding Synthetic Biologics' current expectations and projections about future events. Generally, the forward-looking statements can be identified by 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, Vincent. Good afternoon, everyone, and thank you for joining our 2020 year-end investor conference call. I hope everyone is staying safe and healthy as we continue to navigate the global health crisis sparked by the COVID-19 pandemic. It was a busy year and the start of the new year for the SYN team. I'm very excited to be with you this afternoon to share our operational highlights and financial results.

I'd like to start our call by saying that we are more encouraged than ever by the outlook for our business. We've made important progress this year by advancing and demonstrating the significant value of our pipeline of GI and microbiome focused clinical programs. And as we look ahead into 2021 and 2022, there are more reasons than ever to be excited about our company's future prospects.

Before I give you an update on our 2 lead clinical programs, I'd like to provide a brief recap of several operational milestones, which have unquestionably allowed us to strengthen our balance sheet and position our company for what I believe will be significant long-term growth as well as the delivery of multiple short and long-term clinical milestones.

Starting in January, the favorable market conditions triggered the exercise -- the cash exercise of approximately 65% of the warrants associated with our 2018 public financing and allowed us to efficiently utilize our at-the-market facility. In addition, the conversion of all of our outstanding shares of Series A and Series B convertible preferred stock into common stock have not only further helped streamline our capital structure and balance sheet, but allowed us to position the company to meet the conditions to fully regain NYSE listing compliance.

As a result of these activities, we're pleased to announce that our current cash balance is approximately $72.6 million, the strongest cash position in the company's history. Our strength and financial position now provides us with the runway to continue our operations well into 2023. Importantly, we now have the financial foundation to fully fund our Phase Ib/IIa clinical trial of SYN-004 and planned Phase I and Phase II clinical studies of SYN-020. In addition, we are now positioned to evaluate and potentially acquire new technologies and/or assets intended to enhance our development pipeline, which we believe may benefit from our incredibly experienced team.

As we anticipate clinical trials returning to normal, our recently strengthened financial position will allow us to conduct multiple clinical studies during the next several years, advancing our portfolio of GI-focused clinical programs through proof of concept. As we think about the remainder of 2021 and moving into 2022, we are excited about several potential catalysts and clinical milestones that can create additional significant value for our shareholders.

Specifically, for SYN-004, our therapy and development to prevent acute graft-versus-host-disease, or aGVHD, we are excited to announce that Washington University has begun screening patients for enrollment of the first cohort in the Phase Ib/IIa clinical trial in allogeneic hematopoietic cell transplant or HCT recipients. We expect to begin dosing patients in this cohort before the end of the month. And if enrollment proceeds as planned, we will be positioned to announce up to 3 interim data readouts during the next 12 to 18 months with the first one anticipated before the end of the year, pandemic conditions permitting.

For SYN-020, our intestinal alkaline phosphatase program, a Phase I single ascending dose study or SAD study, is expected to begin during the second quarter. A top line readout for this clinical trial is expected during the third quarter of 2021 and a second Phase I multiple ascending dose study or MAD study of SYN-020 is expected to begin in Q3 with top line data expected in Q1 of next year. Both Phase I trials are designed to support the development of SYN-020 in multiple clinical indications.

Following what we believe will be a successful Phase I program, we are preparing a Phase II clinical study in celiac patients as well as clinical programs for other potential indications that could begin as soon as early 2022.

We believe SYN-004 in development to prevent aGVHD and SYN-020, a recombinant intestinal alkaline phosphatase program address very sizable and underserved markets and have the potential to be foundational long-term drivers of value for our company and our shareholders.

With that backdrop, I'd like to provide an update on our clinical development activities, beginning with our SYN-004 or ribaxamase program. SYN-004 is our first-in-class therapeutic intervention designed to protect the gut microbiome from antibiotic-mediated dysbiosis. We believe protection of the gut microbiome may play a pivotal role in improving health outcomes for patients administered long courses of intravenous beta-lactam antibiotics, as part of their treatment plan for bone marrow and solid organ transplantations. Allogeneic HCT recipients routinely receive long courses of IV beta-lactam antibiotics to treat neutropenic fever, which occurs in 80% to 90% of the patients. Microbiome damage from IV beta-lactam antibiotics is associated with aGVHD, VRE colonization, bacteremia and C. difficile infection.

aGVHD occurs in 30% to 60% of allogeneic HCT recipients and is a leading cause of graft failure and mortality. Prevention of aGVHD is absolutely critical in this patient population since first-line aGVHD steroid therapies fail in more than 50% of the patients, resulting in 2-year survival rates of around 20%. The use of SYN-020 -- I'm sorry, the use of SYN-004 in allogeneic HCT patients is well supported by our existing clinical data. And SYN-004's potential to preserve the intestinal microbiome in allogeneic HCT recipients could provide remarkable benefits to patients, providers and payers.

Estimates of in-hospital costs for allogeneic HCT recipients in the U.S. range from $180,000 to more than $300,000. All costs -- inpatient and outpatient costs are estimated to be greater than $600,000 per patient when measured up to 12 months after hospital admission. At least one U.S. study found that allogeneic HCT recipients who developed aGVHD had a 3x higher in-hospital mortality rate, an almost 2-fold increase in higher median hospital costs than patients who did not develop aGVHD. If SYN-004 could reduce aGVHD incidents by 30%, it may provide significant improvements in patient outcomes, including prevention of an average of 11 deaths and a reduction of $4.3 million in hospital treatment costs per 1,000 patients.

In 2018, there were approximately 29,000 allogeneic HCT procedures conducted in the U.S. and Europe, an additional 13,000 procedures connected in Japan and China. While these are comparatively small patient numbers, the substantial potential benefits SYN-004 may provide in this patient population could allow for premium pricing and significant market value.

Conservatively, our modeling suggests a revenue opportunity in the U.S. and European markets of more than $800 million in the first 5 years of sales when considering pricing of $1,000 a day for 14 days of treatment. If we were able to expand the opportunity for SYN-004 use in solid organ transplant recipients, the market opportunity could be 4x larger. It is worth noting that developing SYN-004 for use in this specific patient -- in this specific patient population may also provide an opportunity to seek orphan drug designation, which may further facilitate Phase III clinical development.

Last year, we outlined our plan to move this program forward in collaboration with our clinical development partner, the Washington University School of Medicine in St. Louis in the form of a Phase Ib/IIa clinical trial of SYN-004 and allogeneic HCT recipients. The goal of this study is to evaluate the safety, tolerability and pharmacokinetics of SYN-004 administered to as many as 36 adult allogeneic HCT recipients who receive a beta-lactam antibiotic to treat fever.

Participants will be enrolled in 3 sequential cohorts that will be administered a different IV beta-lactam antibiotic. 8 participants in each cohort will receive SYN-004 and 4 will receive placebo.

Patients enrolled in the first antibiotic cohort will receive the antibiotic meropenem, which is not degraded by SYN-004 in order to determine whether SYN-004 is systemically absorbed in this patient population. Pharmacokinetic data from our previously completed Phase I and Phase II clinical trials provided supporting evidence that SYN-004 should not affect the IV antibiotic in the bloodstream. If we see that SYN-004 is not systemically absorbed in this first cohort, we'll consider applying for orphan drug designation and begin to prepare for our Phase III program as the remainder of this clinical trial completes.

At this time, Washington University is currently screening patients for enrollment in this first cohort and dosing of the first patient is expected to take place this month. If enrollment proceeds as planned, a top line data readout for the first cohort may be available before the end of the year.

Next, I'd like to turn the call over to my colleague, Dr. Michael Kaleko who will provide an update on our SYN-020 intestinal alkaline phosphatase, or IAP program, which is currently being developed as a treatment for celiac disease as well as other potential GI and systemic inflammatory and age-related disorders. Mike?

Thanks, Steve. I welcome this opportunity to discuss the SYN-020 program and to outline the anticipated clinical program in our selected indications. We're about to reach an important milestone with the first clinical trial scheduled to begin next month.

SYN-020 is a high specific activity form of intestinal alkaline phosphatase, which I'll refer to as IAP produced recombinantly in CHO cells and delivered orally. It's formulated to be protected in the stomach and released in the upper small intestine. SYN-020 is resistant to digestion, and is anticipated to remain in the GI tract and eventually emerge in the stool in active form.

IAP is an endogenous enzyme produced by the cells that line the small intestine. And it has multiple functions, 3 in particular: First, it removes the phosphate from inflammatory mediators such as endotoxin to diminish local inflammation in the GI tract; second, IAP acts directly on the cells that line the GI tract to improve barrier function and diminish so-called leaky gut; and third, IAP serves to maintain a healthy microbiome. The combination of these 3 functions suggest that in addition to its role in diminishing GI inflammation, IAP may also diminish the low-grade systemic inflammation that has been associated with metabolic diseases and with aging.

The therapeutic potential of IAP supplementation has been verified in many animal studies. Oral administration of IAP to rodents has been efficacious in virtually every model of colitis as well as models of metabolic syndrome and liver disease.

Interestingly, a recent publication from our collaborator, Dr. Richard Hodin at Massachusetts General Hospital, show that long-term supplementation of IAP in mice diminished the inflammatory and metabolic changes that occur with normal agent and prolonged the mouse lifespan. Why then haven't other companies developed oral IAP products? The answer would seem to be that it's remarkably difficult to manufacture. Most of the studies in the literature have been performed with IAP derived from calf intestines. Calf intestinal IAP costs up to $10,000 per gram, which is prohibitive for an oral therapeutic. In published reports of various recombinant platforms have described very poor yields, again, insufficient for an oral therapeutic.

At Synthetic Biologics, we've overcome this hurdle. Our unique advantage is that we've been able to generate a high-yield production cell line that at commercial scale is anticipated to enable cost-effective manufacturing. We've shown that our recombinant IAP, that is SYN-020 is biologically equivalent to calf-derived IAP, and it was well tolerated in mouse and dog toxicology studies, at doses up to 50-fold above the anticipated clinical dose.

Last June, we filed an IND application that received a study-may-proceed approval from the FDA for a first-in-human Phase I single ascending dose clinical study to evaluate SYN-020 safety, tolerability and biodistribution in healthy volunteers. We're really excited to say that this first clinical study is scheduled to begin next month. 4 cohorts to be run sequentially and top line data are anticipated in the third quarter of this year.

The single ascending dose study will be followed by a multiple ascending dose study, again to assess safety, tolerability and biodistribution, but in this case, with twice daily dosing for 10 days. We're aiming to initiate the study in the third quarter of this year with top line data anticipated by the first quarter of next year.

Importantly, both of these Phase I studies are designed to provide support with subsequent clinical trials in multiple indications. We've previously discussed 3 potential indications for early SYN-020 evaluation, radiation enteropathy, gluten enteropathy or celiac disease and non-alcoholic fatty liver disease. We've now prioritized these indications and devised a clinical development plan for the ensuing 2 to 3 years.

Our initial indication for SYN-020 clinical development will be celiac disease, an autoimmune disease triggered in genetically predisposed individuals by ingestion of gluten proteins from wheat as well as other grains.

Celiac disease prevalence is approximately 1% of the U.S. population and includes children and adults. The clinical manifestations include both gastrointestinal and systemic symptoms. While the disease presentation and course vary from patient to patient, the underlying causes are the same.

Specifically, gluten-derived peptides open the gut barrier, leak into the intestinal wall, stimulate an inflammatory response and then cause an autoimmune reaction to human proteins, most notably tissue transglutaminase. The disease is unique among autoimmune disorders and that the trigger that is gluten is known and its withdrawal can, in most cases, mitigate the symptoms.

Celiac disease has a very significant unmet medical need. There are no pharmaceutical treatments. Patients are condemned to a lifelong, highly restrictive gluten-free diet. Even then some patients fail to respond to the diet. The disease can be very severe and in rare cases, can lead to early death from lymphoma.

From a mechanistic perspective, we believe SYN-020 is well suited to improve clinical outcomes when combined with diet. First, by bolstering the gut barrier, SYN-020 may block the initial step of gluten entry into the intestinal wall; second, through its anti-inflammatory activities, SYN-020 may serve to attenuate the immune response to the gluten peptides; and finally, patients with active celiac disease have been shown to have reduced levels of their own endogenous IAP, presumably because the disease damages the intestinal villi that normally produce IAP. Thus SYN-020 in celiac patients would potentially supplement and correct their low endogenous IAP levels.

The first proposed clinical evaluation of SYN-020 in celiac patients will be a 6-week Phase Ib/IIa gluten challenge study in patients, who were well controlled on a gluten-free diet. It's anticipated that the Phase Ib/IIa study will be followed by a 12-week Phase IIb study in patients who are poorly controlled on a gluten-free diet. Clinical endpoints for both studies will include patient-reported outcomes, laboratory data and endoscopic biopsies.

Assuming successful completion of the Phase I studies in healthy volunteers, the Phase Ib/IIa study in celiac patients is tentatively scheduled to commence in the second half of next year. It's anticipated that these 2 studies will provide information with safety, potential efficacy and therapeutic dose to support subsequent pivotal studies.

I'm also very pleased to announce that we have engaged as a consultant, Dr. Alessio Fasano from Harvard University in Massachusetts General Hospital. Dr. Fasano is the Division Chief of Pediatric Gastroenterology and Nutrition and the Director of the Center for Celiac Research and Treatment. More to the point, Dr. Fasano is the world-leading key opinion leader in the field of celiac disease who can guide us through the clinical analysis.

Finally, I would like to finish by reemphasizing that SYN-020 has the potential to treat both gastrointestinal and systemic diseases. Accordingly, we're currently drafting a clinical plan to evaluate SYN-020 for the treatment of nonalcoholic fatty liver disease. The utility of SYN-020 for this indication, well supported by efficacy studies in multiple animal models of metabolic and liver disease.

Briefly, we anticipate clinical entry as a Phase Ib placebo-controlled, double-blind study in patients with modest elevations of serum liver enzymes. The study will address safety and tolerability and follow the liver enzymes as well as relevant metabolic parameters.

To assist with the clinical design, I'm very pleased to announce that we've engaged, as a consultant, Dr. Rohit Loomba at UC San Diego. Dr. Loomba is the Director of the NAFLD, Non Alcoholic Fatty Liver Disease Research Center and a world-leading KOL in the field of nonalcoholic fatty liver disease. We'll provide more on this indication as the plan materializes.

In short, we are excited to see the SYN-020 program advance into the clinic. Thanks for your attention, and I'll turn it back to Steve.

Thanks, Mike. Our SYN-020 platform technology has a remarkable opportunity to help address a considerable unmet need for innovative new therapies targeting GI disorders stemming from immune and inflammatory responses, including celiac disease. Currently, there are no FDA-approved therapies to treat celiac disease and disease management predominantly relies on lifestyle modifications and adherence to a strict gluten-free diet.

Across the 6 major markets, the total prevalent cases of celiac disease are expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately 4%. During the same period, prevalent cases in the U.S. are expected to increase from 2.8 million in 2013 to an expected 4.3 million in 2023, representing a significant market opportunity.

Nonalcoholic fatty liver disease is also an indication with high unmet need. It is estimated that the worldwide prevalence of nonalcoholic fatty liver disease is anywhere from 6% to 33%. In the U.S. non-alcoholic fatty liver disease is highly prevalent with an estimated prevalence of approximately 30% in the general population.

Nonalcoholic fatty liver disease is also strongly associated with metabolic syndrome and like celiac disease, no approved pharmaceutical therapies are available to treat this illness and disease management is dependent on lifestyle modification.

I hope we've conveyed our excitement for this versatile program and its potential to become a platform therapeutic for our company. We believe SYN-020 will play a major role in delivering long-term value to our shareholders while targeting large underserved markets, including celiac disease.

With that backdrop, I'll review our financial results for the year ended December 31, 2020. Throughout 2020, we operated very efficiently. We remain focused on prudent cash management and continued to identify areas to further reduce nonessential operating expenses. We ended the year with approximately $6 million in cash and cash equivalents. However, due to favorable market conditions, which triggered the cash exercise of approximately 65% of the warrants associated with our 2018 public financing and the efficient utilization of our at-the-market facility, our current cash position is approximately $72.6 million.

Now I'll turn to the year-end financial results. General and administrative expenses increased to $5 million for the year ended December 31, 2020, from $4.6 million for the year ended December 31, 2019. This increase of 8.7% is due to increased legal costs related to business development, patent execution, employee contract matters, vacation expense, insurance costs and registration fees. The charge related to stock-based compensation expense was $300,000 for the year ended December 31, 2020, compared to $300,000 for the year ended December 31, 2019.

Research and development expenses decreased to $5.1 million for the year ended December 31, 2020, from $11.1 million for the year ended December 31, 2019. This decrease of 54.1% is primarily due to a reduction in preclinical and manufacturing activity of the SYN-020 IAP program and the result of the response to the global COVID-19 pandemic by our clinical development partners, which led to the postponement of the Phase Ib/IIa clinical trial of SYN-004 in allogeneic HCT recipients, the SYN-010 clinical trial and to a lesser extent, the discontinuation of the Phase IIb investigator-sponsored clinical trial of SYN-010.

Research and development expense also included a charge related to noncash stock-based compensation expense of $66,000 for the year ended December 31, 2020, compared to $75,000 for the year ended December 31, 2019. Total other income was $44,000 for the year ended December 31, 2020, compared to other income of $283,000 for the year-end December 31, 2019. Total other income for the year ended December 31, 2020 and 2019 is primarily comprised of interest income from investments.

I hope we've conveyed in our remarks, the embarking on a transformative and exciting direction that we're taking our company. We believe our newly found financial strength and long-term outlook will allow us to unlock and further showcase the value of our clinical assets and generate long-term end value for our shareholders.

Looking ahead to the remainder of 2021 and into 2022, upcoming significant major announcements and potential catalysts include: for SYN-004, our program in the development to prevent acute graft-versus-host disease. We anticipate dosing the first patient in the Phase Ib/IIa clinical trial this month. And if enrollment proceeds as planned, a top line data readout for this first cohort is expected before the end of the year.

For SYN-020, our therapeutic intended to treat celiac disease a first Phase I single ascending dose study is expected to commence next month, and a top line data readout is expected during Q3 of this year. A second Phase I multiple ascending dose study is expected to start in Q3 and a top line data readout from this clinical study is expected during the first quarter of 2022.

Following the completion of our Phase I studies, we're preparing for our Phase II proof-of-concept clinical studies in celiac patients while also planning for clinical studies to evaluate SYN-020 for use in other potential indications that could also begin as soon as early 2022. We look forward to continuing to update you on our progress in the weeks and months ahead.

So now I'll turn the back -- the call back over to Vincent.

Thanks, Steve. Gary, we'd like to open the phone line to questions. Can you please describe the procedure to ask questions for our listeners?

(Operator Instructions) Our first question is from Jim Molloy with Alliance Global Partners.

And certainly a lot going on, a nice change from some previous calls, if we could cash in and looks like it exciting 2021 setting up here. I'd like to go through some of the NAFLD, I think right at the end, you're talking about the Phase I for the NAFLD and I was wondering on the Phase I, does the -- the Phase I that you're currently running for celiac, will that sort of cover the NAFLD or do you run a separate Phase I for that, and what's kind of the timing on that?

Okay. So thanks for the questions, Jim. I'm going to let Mike take that question and walk you through the Phase I program and as you'll see from his discussion the data that we gather from the Phase I studies will allow us to advance the program in multiple indications for Phase 2, but I'll let Mike walk you through that again.

Okay. Thanks. So the initial Phase I studies will be a single ascending dose study and a multiple ascending dose study. Those should both -- the single ascending dose study will be completed this year. The multiple ascending dose study will start this year and be completed early next year. Both of those are in normal healthy volunteers. They're designed to demonstrate safety, tolerability and biodistribution. We would like to show that SYN-020 stays in the GI tract, which it should and not move to the systemic circulation.

Once those safety studies are completed, then we go into a Phase Ib/IIa study in celiac disease. That's the challenge study, and that should start in the middle of next year. And that will be followed by a Phase IIb study in celiac patients shortly thereafter.

Now as a separate indication, there's nonalcoholic fatty liver disease. Okay, that will start as a Phase Ib study. And in patients with mild elevations of liver enzymes, and we expect that during that study or we hope to see the liver enzymes diminish, and we'll also be following other metabolic parameters for target validation in those patients.

Now those 2 patient studies, celiac and nonalcoholic fatty liver disease are independent. They are both supported by the Phase I SAD and MAD studies in normal healthy volunteers, but the patient studies are independent. At the moment, we plan to start the celiac study very shortly after the MAD study in normal healthy volunteers is finished. And then somewhere along the way. We would move into nonalcoholic fatty liver disease. And the timing for that is not yet determined, but it can potentially be run in parallel with celiac. It is not dependent upon celiac. Does that clarify things?

That's does very much clarify things. Thank you very much. You get a lot of trials running, sort of starting up here. So thank you for laying that out.

Yes, pretty cool.

Yes. On -- what should we anticipate for spend for 2021 with these various trials, we had about -- you guys burn through about $10.1 million, $10.2 million in 2020, down from obviously, again, down from $15.6 million last -- in 2019. Do we get back to the $15 million levels with the cash on hand and trials ramping up? Or do we stay sort of somewhere between $10 million and $15 million, any guidance on that?

Yes. I would expect our fixed burn to stay in the $400,000 to $500,000 a month. That might start to increase a little bit more next year. The Phase I study that will be conducted starting this next month. The SAD study would -- it's probably around $1 million study, and the MAD study, you could probably think about it in terms of about $1.5 million. The ongoing trial that is about to get -- well, the trial is lot to get underway with Wash U. As we previously disclosed, that's about a $3.6 million trial, about $700,000 has already been spent on that.

So this is just under $3 million-or-so that would be spread over the next 12 to 18 months. The Phase II programs, we haven't finalized our costs on that yet. So when we have a little bit more clarity on that, we'll share that. Does that help you out?

Very helpful. And then just my last question. You have a couple of other -- a couple of programs obviously didn't work out and the nature of drug development, but SYN-010 and sort of the thoughts on the C. diff program. Any -- what should we anticipate you guys might do with these compounds? Is something that is an interest from potential partners or are they just pretty much going to be shelved for the future?

So the SYN-010 program, we've discontinued our license with Cedar-Sinai, it was a mutual termination. So we are not spending any more money on that program, and we've moved on from it. I'll let Vince Wacher talk about our long-term strategy as it relates to SYN-004 or ribaxamase and where we're beginning and ultimately how we could get to a broader C. diff indication. Vince, do you want to take that?

Thanks for directing that to me. The C. diff compounds and the bone marrow transplant and allo-HCT compound are one and the same, exactly the same product. We are pursuing the bone marrow indication because it enables us to advance the product more effectively and in a smaller number of patients in smaller clinical trials. And ideally, with a greater number of endpoints that we can evaluate to help move that program forward.

The mechanism is exactly the same for both indications, the bone marrow transplant and the C. diff, and in fact, preventing C. diff is an anticipated outcome in bone marrow transplant patients in addition to reducing GVHD.

So this -- one of the ways to think about the overall development plan is that we start with the bone marrow transplant patients looking at GVHD, looking at VRE colonization and also looking at C. difficile and other opportunistic infections. That data can be leveraged to move into broader population as Steve had referenced the solid organ transplant population.

We know that they have issues with opportunistic infections in those immunosuppressed patients. And so that's an indication where if we expanded, would be more focused on the opportunistic infections like C. diff. And then ultimately, using the data that's accumulated as we move through these increasing indications to get back to the broader use in C. diff, which as we've explained before, required a massive Phase III trial that was beyond us at the time, and so we're pursuing this more focused approach to get the product forward and generate that data.

The next question is from Jason McCarthy with Maxim Group.

It is Michael Okunewitch on the line for Jason. Congratulation on the progress. It seems like things are really moving forward now. I'd like to ask regarding the trial design for SYN-004, if you could give a bit more on that, like the overall timeline of the study, and which antibiotics from the 3 cohorts, and which of the cohorts is the 1 you're expecting to read out by year-end?

Why don't you go ahead, Vince, and take that one as well.

No problem. So it's the 3-cohort study and the -- each cohort uses a different antibiotic. And the way that they're staged is to minimize risk to the patients based on the potential effects of SYN-004. So to quickly recap, SYN-004 degrades penicillin and cephalosporin antibiotics, but not carbapenem antibiotics. So what we want to do is start with a carbapenem antibiotic in our first cohort and a measure the potential for absorption of SYN-004 and what would be considered the cohort of lowest risk if there was any absorption because our product doesn't degrade carbapenem even if it got a -- and then we don't believe it will, even if any got in, it's not likely to affect the antibiotic because it's the carbapenem.

If that cohort proves to give us the results that we need, if we have a successful completion of that cohort, that's the one that will initially read out, and the data we'll get from that will be safety and tolerability data of SYN-004 in the target population. We'll also get a read on whether or not SYN-004 is absorbed into the circulation of patients with impaired barrier function. And those are 2 key questions that the FDA had for the program in general.

So with that data in hand, we will be able to proceed to the next cohort, which will be the piperacillin/tazobactam, which is a cohort where the piperacillin can be degraded by SYN-004 that is present in the circulation, but tazobactam stops it from doing that. So these patients have a minder. They have a body guard for their antibiotic that would -- if our product got absorbed, it would prevent it from degrading.

So that's the next risk level. That's, again, a cohort that would read out subsequent to the first 1 and give us another set of PK data, another set of antibiotic data and safety data. And the final cohort is cefepime that's cephalosporin antibiotic, and that antibiotic is exposed. It has no -- it could be degraded by our product, and it has also got nothing to protect it. So it is a product -- that's the final cohort that we would run because that's the one where, if our drug got into the circulation, it would be the highest risk degrading the antibiotic.

All right. And then I'd actually touch on the M&A side of things. You mentioned that business development is a potential and wouldn't be surprising given you have a fairly stable cash balance at this point. So what sort of compounds would you be looking for? It seems like you guys have expertise in GI microbiome health as well as GI delivery of drug. So could you help narrow down which disease areas or which type of drugs you might target?

So I think it's best that we kind of hold our cards a little tight at the moment. I could tell you this, we've been evaluating many opportunities and some are a little bit further along than others in diligence. And I'll just say that when we're ready to talk about those details, we'll get that out and disseminate it accordingly, but we just prefer to keep our cards close at this point.

Right. And then I have one more. I'd just like to touch real quick on some of the existing safety data out there for IAP. I mean, obviously, you don't have anything for SYN-020 quite yet, but IAP has been out there. So patients with radiation enteropathy and severe celiac may be willing to take on some safety risk with some adverse events, but diseases like well controlled celiac and NAFLD, which is largely asymptomatic, maybe less willing to take those risks. So how does the safety look like for IAP in general?

Mike, do you want to take that?

The IAP, as I said, is an endogenous enzyme. It's in your intestines all the time. Although we're using a bovine version of it because it's got a higher specific activity. The safety profile for IAP is very good. It would be even more of use, but I don't think that's necessary at this point.

Our -- for our SYN-020, we saw virtually no adverse events in canine and mouse studies that were 6 weeks long with -- at doses up to 50-fold the anticipated clinical dose. Now other companies have developed both bovine and human IAP products, most notably though, for intravenous use. And in the safety studies, again, there was pretty much a fairly remarkable profile. I really don't want to speak completely for other companies because I'm not privy to their data, but for the most part, our intravenous delivery of human IAP in patients at doses that increase the alkaline phosphatase level. These are, I believe, about 500-fold of background was well tolerated.

And there's been 1 oral study with bovine IAP, again, very well tolerated. That was in ulcerative colitis patients. And let's see. I think that's probably about it. You could consider the safety profile that we anticipate to be quite good. We anticipate a very reasonable risk-benefit ratio even for diseases that are not fatal. And I should also finally add that celiac disease, yes, there are patients who are well controlled on a gluten-free diet, but that's a really unpleasant diet. There are a large percentage of patients who are not well controlled on a gluten-free diet and some will have refractory disease.

So I don't think we'll have trouble finding or I don't anticipate that we'll have trouble finding a patient population to -- as a home for SYN-020. And I think you know that among patients with nonalcoholic fatty liver disease, maybe 20% of them are going to get NASH, which is associated with fibrosis, cirrhosis and occasionally, hepatocellular carcinoma. So again, I don't think we'll find -- difficulty finding a patient population for SYN-020. Does that answer your question?

Yes, yes, great answer.

This concludes our question-and-answer session. I would like to turn the conference back over to Steven Shallcross for any closing remarks.

Thanks, Gary. So before we end the call, I'd just like to make a few final comments about our company.

First, I'm incredibly proud of our talented team who have just worked countless hours to get us where we're at today. The effort taken to advance our programs just could not have happened without their dedication and persistent drive to help a patient population that just continues to be underserved.

Second, we're in the strongest financial position in the company's history. And because of this, we're now very, very well positioned to not only fund our clinical programs for the next 2 years, but to deliver on multiple clinical milestones over the next 12 to 24 months. So the value of these programs that we have under development can be further supported and potentially the value potentially fully realized by the markets. And we also have this great, great opportunity, finally, to go out and acquire or license new technologies to further expand our product portfolio and add additional shareholder value.

So in closing, I'd like to thank our long-term shareholders for their ongoing support and also just welcome any new shareholders that have discovered us and are equally excited to be a part of our great company. I promise you that 2021 will be an exciting year, and we look forward to just keeping you informed and updated on our progress. Have a good weekend, and we look forward to talking to you next time. Thank you.

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