Theriva Biologics Inc (TOVX) 2021 Q2 法說會逐字稿

Good afternoon, and welcome to Synthetic Biologics' 2021 Second Quarter Investor Conference Call. (Operator Instructions) Please note, this event is being recorded.

At this time, I would like to turn the call over to Mr. Vincent Perrone, Director, Corporate Communication at Synthetic Biologics. Please go ahead, Mr. Perrone.

Thanks, Lexie, and good afternoon, everyone. Welcome to Synthetic Biologics' 2021 second quarter investor conference call. Today, I'm joined remotely by Steven Shallcross, Chief Executive and Chief Financial Officer; Dr. Michael Kaleko, Senior Vice President of 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 quarter ended June 30, 2021. The release can be found in the Investors section of our website at www.syntheticbiologics.com.

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 is being streamed live via webcast, which will also be archived on our website, 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 terminology 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 uncertainty, 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 said, I'll now turn the call over to Steve. Steve?

Thanks, Vincent. Good afternoon, everyone, and thank you for joining our 2021 second quarter investor conference call. I'm glad to be with you this afternoon and look forward to sharing important updates on our strategy for advancing our portfolio of GI and microbiome-focused clinical development programs during today's call. I remain very encouraged about the progress we continue to make on advancing our clinical programs. Not only have we made significant progress on our clinical pipeline, but our balance sheet remains stronger than ever with nearly $74 million of cash on hand at the end of the quarter, providing us with more than sufficient capital to advance our clinical programs through proof-of-concept and extend our operations into 2023.

Importantly, by streamlining our capital structure earlier in the year, we were able to regain listing compliance with the New York Stock Exchange during the second quarter. Moreover, we've had a number of very exciting -- we have a number of very exciting upcoming catalysts that we believe will have the potential to deliver significant shareholder value. Specifically, we look forward to commencing a second Phase I multiple ascending-dose clinical trial of SYN-020 during the third quarter of 2021 with top line data expected during the second quarter of 2022. We also anticipate reporting data from the first antibiotic cohort of the SYN-004 Phase Ia/IIb (sic) [Phase Ib/IIa] clinical trial during the fourth quarter of 2021. I'll discuss more about each of these in a moment. But as you can see, we are in the midst of a very, very exciting period for the company.

Turning now to the quarter. First, on SYN-020, we announced that patient enrollment, dosing and evaluation was completed in the Phase I open-label, single-ascending dose clinical trial of SYN-020, our proprietary formulation of intestinal alkaline phosphatase or IAP, intended to treat Celiac Disease and other systemic and GI-related diseases stemming from inflammation of the GI tract. Analysis of preliminary data demonstrated SYN-020 maintained a favorable safety profile and was well tolerated at all dose levels. A second Phase I multiple-ascending dose clinical trial of SYN-020 is expected to commence during the third quarter of this year. Importantly, both Phase I studies are designed to support the development of SYN-020 in multiple clinical indications, including Celiac Disease.

Turning to SYN-004. Washington University continued to screen and enroll patients for our Phase Ib/IIa clinical trial in allogeneic hematopoietic cell transplant or ACT recipients for the prevention of acute graft-versus-host-disease. A data readout for the first of 3 antibiotic cohorts is anticipated during the fourth quarter of 2021. As I've stated before, we believe both SYN-004 and SYN-020 may address very sizable and underserved markets that have the potential to be foundational long-term value drivers for our company and our shareholders.

With that backdrop, I'd like to provide a more detailed update on our clinical development activities, beginning with SYN-004 or our 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. Specifically, allogeneic HCT patients have a very high risk of dysbiosis, following long courses of IV beta-lactam antibiotic used to treat fever after conditioning therapy. We believe SYN-004 has the potential to significantly improve outcomes for allogeneic HCT recipients since damage to the gut microbiome by these antibiotics is strongly associated with a number of potentially fatal adverse outcomes, most notably acute graft-versus-host disease, VRE colonization, bacteremia and C. difficile infection.

Our outlook is supported by results from our previously completed Phase II clinical trial of SYN-004 in patients treated for pneumonia, which demonstrated that protection of the gut microbiome in treated patients led to significant reductions in the incidence of CDI and VRE colonization. We are currently advancing this program 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. The goal of this study is to evaluate the safety, tolerability and pharmacokinetics of SYN-004 in this fragile patient population.

Earlier this year, we announced that enrollment and patient dosing had commenced in the first of 3 sequential antibiotic cohorts that will each be administered a different IV beta-lactam antibiotic to treat fever. We are pleased to report that at this time, patient screening and enrollment is proceeding as expected. In total, 8 participants in each cohort will receive SYN-004 and 4 will receive placebo. A data readout from the first antibiotic cohort is anticipated during the fourth quarter of this year. Importantly, if we observe the -- as we expect, 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 we complete the remainder of this clinical trial.

Next, I'd like to provide an update on our SYN-020 program that we're developing initially as a treatment for Celiac Disease, which has a significant unmet medical need. SYN-020 is our proprietary recombinant form of bovine IAP produced in CHO cells and formulated for oral delivery. IAP is an endogenous enzyme expressed in the upper small intestine that plays an important role in maintaining gut health through at least 3 important mechanisms: first, it diminishes GI inflammation by detoxifying inflammatory molecules; second, it acts directly on the intestinal wall to tighten the gut barrier to diminish leaky gut; and third, it functions to support a healthy gut microbiome. We've used SYN-020 as a versatile, multi-indication platform program that has the potential to treat a number of clinical indications stemming from inflammation of the GI tract.

In addition, we believe SYN-020 has the potential to diminish low-grade systemic inflammation, which is believed to exacerbate metabolic syndrome and accelerate the progression of diseases associated with aging. And perhaps most important, we've overcome the manufacturing hurdles, which have previously hindered the clinical and commercial development of IAP to treat these diseases.

We've previously outlined in detail our clinical development strategy for SYN-020, which includes pursuing the treatment and prevention of Celiac Disease's initial clinical indication. Celiac Disease affects approximately 1% of the U.S. population and is characterized by an intolerance to gluten. Clinical manifestations include both gastrointestinal and systemic symptoms. We believe SYN-020 is well suited to improve clinical outcomes when combined with the proper 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 gluten peptides. And finally, patients with active Celiac Disease have been shown to have reduced levels of endogenous IAP, presumably because the disease damages the intestinal villi that normally produce IAP. Thus, we believe SYN-020 in Celiac patients would potentially supplement and correct their low endogenous IAP levels.

Last June, we initiated a Phase I open-label, single-ascending dose clinical study intended to evaluate safety, tolerability and biodistribution of SYN-020 in healthy adult volunteers. During the second quarter, we announced that enrollment, patient dosing and evaluation had been completed in this study. In total, 60 healthy volunteers were enrolled in each of 4 cohorts with SYN-020 given orally at single doses ranging from 5 milligrams to 150 milligrams. Analysis of preliminary data demonstrated that SYN-020 maintained a favorable safety profile, was well tolerated at all dose levels with no adverse events attributed to study drug. Importantly, no serious adverse events were reported. We expect additional data from this clinical trial later this year.

Planning for a second Phase I study to evaluate multiple ascending doses of SYN-020 is also underway, and participant screening is anticipated to commence during the third quarter of 2021. However, initiation of the MAD study could be briefly delayed due to lingering supply chain delays caused by the COVID-19 pandemic. If everything goes as planned, a top line data readout of the Phase I MAD study is anticipated during the second quarter of 2022. Following the completion of the Phase I safety studies, we anticipate conducting a placebo-controlled Phase IIa gluten challenge study in as many as 40 Celiac patients who present with predominantly GI symptoms, followed by a Phase IIb proof-of-concept clinical trial in a similar patient population.

Assuming successful completion of the Phase I studies in healthy volunteers, the Phase IIa study in Celiac Disease patients may begin as early as the second half of next year. It is expected that these 2 studies will provide information on safety, potential efficacy and therapeutic dose to support subsequent pivotal studies. We may also seek to initiate clinical trials of SYN-020 to evaluate its therapeutic potential for nonalcoholic fatty liver disease as well as for metabolic and inflammatory disorders associated with aging, the latter of which are supported by our exclusive option license agreement with Massachusetts General Hospital.

We are excited about 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 second quarter ended June 30, 2021. Our balance sheet remains very strong, and we are well capitalized to support our operations for the foreseeable future as we reported approximately $74.3 million of cash on hand at the end of the second quarter. Our strengthened financial position and current cash runway provides more than sufficient funding to achieve a number of major milestones, including the completion of ongoing Phase Ib/IIa clinical trial of SYN-004 as well as the completion of clinical trials of SYN-020 through proof-of-concept and other key value drivers to the company.

Turning now to the second quarter financial results. General and administrative expenses decreased by 2% to approximately $1.26 million for the 3 months ended June 30, 2021, from approximately $1.29 million for the 3 months ended June 30, 2020. This decrease is primarily due to lower legal costs and vacation expense offset by higher insurance costs, audit fees and registration fees. Research and development expenses increased by 21% to approximately $1.9 million for the 3 months ended June 30, 2021, from approximately $1.6 million for the 3 months ended June 30, 2020. This increase is primarily the result of increased clinical trial expenses as we began dosing patients in the Phase Ib/IIa clinical trial of SYN-004 and the Phase I SAD study -- the Phase I SAD clinical study of SYN-020. These costs were offset -- this increase in cost was offset by lower indirect program costs for the 3 months ended June 30, 2020, including salary and related expenses, reductions and a decrease in manufacturing costs for SYN-020 and market research.

To wrap up, 2021 continues to be a very exciting year for Synthetic Biologics, and we look forward to providing further updates as developments unfold.

Now I'll turn the call back to Vincent to open the call for questions.

Thanks, Steve. Lexie, we'd like to open up the phone line for questions. Can you please describe the procedure for those on the line?

(Operator Instructions) Your first question comes from James Molloy with Alliance Global Partners.

Just a quick checkup on SYN-006 IND for CRE. Is that still -- can you tell me where that stands? And then I think I'm going to start on the SAD study, the end of the SAD study for 20, that was -- for SYN-020. That was a 24 or was it 60?

I'm sorry, your first question, Jim, is on SYN-006?

Yes. SYN-006 for CRE?

Right. Vince, you want to take that question first?

Yes, SYN-006 is a carbapenemase follow-on just for a net product is actually at the preclinical strategy. The discussions we had around SYN-006 were fundamentally directed to a potential clinical trial that benefited markets where CRE carbapenemase ceftriaxone was a big deal, and that was predominantly in China. Those -- that didn't -- those things obviously haven't gone ahead, given everything that's gone on, but also our focus on our other assets to move them into the clinic. So SYN-006 is still in the preclinical stage. It's still an opportunity for CRE, but it hasn't advanced.

And Jim, just to follow-up on that. Part of that is we had the focus, and obviously, the priority was to advance our 2 programs that are in the clinic as rapidly as possible. So that's the position we've taken and probably when we do our strategy review near the end of the year, we'll take a look at it and figure out if there's a place for it on a go-forward basis. If we had an opportunity to partner that compound with somebody, we'd certainly consider advancing it that way.

Understood. And I assume you'll on focus on the near term.

Right.

And speaking of partners, has there been any movement or anything to speak to on potential partner for SYN-004 for C. diff?

Nothing at this point. And again, the strategy there is to continue to develop additional clinical data. And I think once we get finished with this ongoing trial in acute graft-versus-host disease, we'll have additional data on C. diff prevention as well as perhaps the prevention of VRE. And I think we'll have more to talk about with potential interested parties on that.

Understood. And then last question on SYN-004 for aGVHD, HCT, the Phase I -- first cohort data you're expecting fourth quarter, where would you anticipate sort of the final -- all cohort data and sort of a final presentation of the complete data set?

So when we discussed the design of the trial with the team at Washington University, it was anticipated that the total trial will take about 18 months long. As of today, we're on target with where we expect it to be in terms of enrollment. We'll do an evaluation of that data at the end of the year, and there's some discussions on how we may speed up the trial. But right now, the best guidance we can give you is that from start to finish, it should be about 18 months.

Your next question comes from Jason McCarthy with Maxim Group.

This is Michael Okunewitch on the line for Jason. So I wanted to ask you, for the Phase Ib/IIa and specifically that data readout that you have coming ahead in the fourth quarter, I was expecting you to provide the absorption data. And that was not an efficacy readout per se, since it would be proof-of-concept for the GI restriction of ribaxamase, could that be viewed as a derisking event for when you actually proceed into beta-lactams?

Why don't you go ahead?

Yes. So in fact, so yes is the short answer. And as you know, Mike, the study was set up to do exactly that and take the lowest-risk antibiotic for the -- for this trial, which was the meropenem because that's not broken down by ribaxamase, and use that as a way of looking at a patient population who are receiving SYN-004 but who have had the transplant whose intestinal tract is probably damaged from the chemo and the radiation. And just looking to see if we can -- if we get any absorption in that circumstance. And so what we will be ideally looking for is exactly what you said that we see low to no SYN-004 in these patients, and that will definitely make it -- give us a great deal of more comfort moving into the next population where ribaxamase can degrade. I think we're still in that -- and to assess the pain.

All right. And I wanted to follow-up on that without getting too presumptuous and looking too far ahead, what would be the next steps after this 1b/2a after you've gotten that proof-of-concept to say that this does exactly what we said it does, it breaks down the beta-lactam in the gut, protects the microbiome but doesn't impact the efficacy of the antibiotics? Where would you go from there? Would it be -- would you be moving into something like a Phase II? Could you jump straight into a Phase III? Do you have any indication on what you would need to get this to approval after the Phase Ib/IIa?

So the way we're looking at it is basically by a comparison to all of the other products that are in this space. And what we would hope for -- and is obviously, is completely in double-underlined big bold letters, a discussion to be had with the FDA first to make sure that they are on board, but we would like to get FDA agreement that we can move straight into a pivotal trial in prevention of aGVHD and with endpoints related -- also, whether they're secondary or core-primary, related to CDI and bacteremia.

So we're looking at them -- sort of as many of these endpoints as a feasible to support the use of the SYN-004. There's probably not a lot of reason to do an interim Phase II study unless there was a safety signal, and we don't anticipate that there will be. We would really like to get to the FDA and have a discussion about going forward into a pivotal trial. And ideally some form of special designation, whether that's an orphan, and this would certainly qualify based on the number of patients or some have a designation that facilitates moving forward into a clinical trial. But again, and I can't emphasize this enough, until we have the data, we haven't had that conversation with the FDA, and we need to have that conversation with them. But that would be ideal.

Yes, of course. And then I guess just one more from me. I wanted to ask if you've -- with the emergence of the Delta variant across much of the country, particularly in the south, do you have any indication from Washington University as to whether there is any increased risk right now of a delay to the ongoing study?

So they haven't said that there is an increased risk of delay to the ongoing study. I mean, we sort of knew that the [CDC] putting back in some mask mandates and things like that. But by and large, Washington University and the Siteman Cancer Center have implemented their own strategies as far as dealing with COVID and preventing the dissemination of COVID, whichever variant that happens to be. And they will continue with those processes and implement those to ensure that those trials run safely and the hospitals run safely. I think the patient population wherein they can't decide to put off a transplant. So while I think that there may be modest changes to their ability to do things in a certain time frame, they have certainly not indicated to us that there is a gross inhibition of their ability to get patients into the study or slowing of their ability to do clinical trials.

We have reached our allocated time for the question-and-answer session. I would now like to turn the conference back over to Mr. Steve Shallcross for any closing remarks.

Thanks, Lindsay. In closing, I'd just like to say that we're just very, very happy with our progress and I hope you see that we remain very, very focused on executing our strategy. In fact, the more I see the progress before us, I'm more confident than ever in the outlook of our business and believe that with the financial strength that we currently have, advancing these clinical programs to unlock the value and generate the long-term growth for our shareholders is clearly, in my opinion, on the horizon. I'm very proud of the progress we've made and even more excited about what lies ahead for us. I'd like to thank our team here at Synthetic for their tireless efforts to advance these programs and our shareholders for their ongoing support. And again, we look forward to keeping you updated on our progress. Have a great weekend.

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