Theriva Biologics (NYSE:TOVX) Q3 2022 Earnings Conference Call November 10, 2022 8:30 AM ET
Company Participants
Chris Calabrese – Investor Relations
Steven Shallcross – Chief Executive and Chief Financial Officer
Manel Cascalló – General Director, Theriva Biologics Europe
Frank Tufaro – Chief Operating Officer
Vince Wacher – Head, Corporate and Product Development
Conference Call Participants
Jim Molloy – Alliance Global Partners
Operator
Good day and welcome to the Theriva Biologics formerly Synthetic Biologics 2022 Third Quarter Operational Highlights and Financial Results. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Chris Calabrese, LifeSci Advisors Relationship Manager. Please go ahead, sir.
Chris Calabrese
Thank you, operator, and good morning, everyone. Welcome to the Theriva Biologics 2022 third quarter investor conference call. Leading the call today will be Steven Shallcross, Chief Executive and Chief Financial Officer of Theriva Biologics. Dr. Manel Cascalló, General Director of Theriva Biologics European subsidiary; Dr. Frank Tufaro, Chief Operating Officer; and Dr. Vince Wacher, Head of Corporate and Product Development of Theriva Biologics, are also on the call and will be available to answer questions during the Q&A session.
Theriva Biologics issued a press release last evening, which provided operational highlights and included the financial results for the third quarter ending September 30, 2022. The press release can be found in the Investors section of the company website at www.therivabio.com, together with the quarterly report on Form 10-Q for the quarter ended September 30, 2022, which we filed last night with the Securities and Exchange Commission. In addition to the phone line, this call is being streamed live via webcast, which will be archived on the company website www.therivabio.com for 90 days.
During this call, certain forward-looking statements regarding Theriva Biologics and VCN Biosciences, current expectations and projections about future events will be made. Generally, the forward-looking statements can be identified by terminologies such as may, should, expects, anticipates, intends, plans, believes, estimates and similar expressions. These statements are based on current beliefs, expectations and assumptions subject to a number of risks and uncertainties, including those set forth in Theriva Biologics filings with the SEC, many of which are difficult to predict.
No forward-looking statements can be guaranteed, and actual results may differ materially from such statements. The information on this call is provided only as of the date of this call, and Theriva Biologics undertakes no obligation to update any forward-looking statements 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?
Steven Shallcross
Thanks, Chris. Good morning, everyone, and I appreciate you taking the time to join us on our call today. We are very pleased to be speaking with you today as Theriva Biologics, a unifying new brand for the company that reflects our rapidly increasing momentum as a leading multinational developer of innovative, differentiated therapies for cancer and related diseases. Along with a new name, logo and corporate website, the company began trading on the NYSE under the ticker TOVX on October 13.
Today, I will present an update on our progress in well-defined path forward, which we believe will drive shareholder value and long-term success. In the third quarter of 2022, we accelerated the clinical advancement of Theriva’s oncology-focused portfolio, dedicating our primary resources to our lead clinical candidate, VCN-01, a systemically administered oncolytic adenovirus designed to selectively replicate within the tumor, remodel the tumor matrix and increase tumor immunogenicity. We also reported positive clinical data and have now initiated the second cohort of a Phase 1b/2a clinical trial of SYN-004, our product design to prevent potentially fatal adverse outcomes in patients who undergo allogeneic hematopoietic cell transplant, or HCT, to treat hematologic cancers.
In addition, preclinical pipeline expansion activities during the third quarter concentrated on optimizing VCN-11 and in exploring related oncolytic virus candidates incorporating our novel albumin shield technology, which is designed to protect systemically administered oncolytic viruses from the host immune system. We believe the albumin shield technology may facilitate repeated administration of oncolytic virus therapies, increasing their efficacy and potentially allowing our pipeline programs to be used in standard treatment cycles that are well established in cancer chemotherapy. Overall, we are extremely pleased with our progress that positions Theriva at the forefront of oncolytic virus development. With a focused portfolio and an expected financial runway into the first quarter of 2024, we are well positioned to deliver on a number of value-enhancing milestones.
I am now excited to share with you the details of our pipeline progress, starting with our lead program, VCN-01. Building on the positive results of our Phase 1 studies, we’ve designed VIRAGE, a multinational Phase 2 clinical study evaluating intravenous VCN-01 in newly diagnosed metastatic pancreatic cancer patients treated with first-line standard of chemotherapy, namely gemcitabine and nab-paclitaxel. The VIRAGE clinical trial is a randomized, controlled multicenter open-label Phase 2 study that’s expected to enroll up to 92 adults at sites across the U.S., Spain and Germany. In one treatment arm, patients will receive gemcitabine and nab-paclitaxel standard of care chemotherapy. And in the second treatment arm, patients will receive VCN-01 administered seven days prior to gemcitabine and nab-paclitaxel. Two doses of VCN-01 will be administered approximately three months apart.
In the third quarter, VIRAGE received regulatory clearance from both the FDA and the Spanish competent authority to proceed. We’ve also received clarification queries from regulators in Germany, and we plan to respond to these very shortly. We’ve also commenced site initiation visits in Spain, and we remain on track to dose the first patient in the fourth quarter of 2022. Primary endpoints for the study include overall survival and safety and tolerability. Additional endpoints include progression-free survival, objective response rate and measures of bio-distribution, virus replication and immune response.
Since this is anticipated to be a two-arm open-label study, we plan to monitor the study’s progress very, very closely and try to accelerate the clinical program if supported by the emerging data. In addition to initiating the VIRAGE pancreatic cancer trial, we’ve continued to refine our proposed clinical trial in retinoblastoma. Since there is no regulatory guidance for the development of retinoblastoma medicines, we have worked closely with key opinion leaders from well-known treatment centers across the U.S., Europe, Central and South America to confirm the optimal patient population and treatment line for intravitreal VCN-01 to treat vitreous seeds and children with retinoblastoma. We look forward to leveraging the orphan drug designation for VCN-01 in this indication to facilitate protocol discussions with the FDA and other regulatory agencies.
In addition to the planned company-sponsored studies, there are several investigator-sponsored studies underway at world-leading oncology research institutions. At this year’s ESMO Congress, we presented initial data from a Phase 1 investigator-sponsored study evaluating VCN-01 in combination with durvalumab for patients with recurrent metastatic squamous cell carcinoma of the head and neck. We are encouraged by the acceptable safety profile seen in the sequential arm of this study, as well as the biological activity observed in these head and neck cancer patients previously treated with anti-PD-L1 agents. These data speak to the promise of VCN-01 as a potential means of enhancing the efficacy of immunotherapeutic agents in patients whose cancers have been unresponsive to these powerful cancer therapies.
Our investigator-sponsored study with University of Leeds to evaluate VCN-01 in patients with high-grade brain tumors is currently recruiting patients with dosing of the first patient expected in the fourth quarter of 2022. This study is designed to determine whether systemically administered VCN-01 can reach tumors in the brain. Treatment of these tumors typically requires surgery and/or direct injection. Therefore, successful delivery of VCN-01 to the brain after systemic administration could potentially transform the way these cancers are treated.
In parallel to our clinical studies with VCN-01, we are keenly advancing our albumin shield technology platform. Our albumin shield oncolytic viruses incorporate proprietary albumin binding domain in the viruses’ outer shell. This is designed to improve systemic delivery by enabling the virus to code itself with host serum albumin to prevent inactivation by antiviral neutralizing antibodies. IND-enabling studies are being planned, and we expect to begin these studies following the completion of ongoing preclinical and CMC activities. We look forward to building upon our foundation of compelling proof-of-mechanism data and continuing to advance our VCN-11 program through clinical development.
Finally, turning to SYN-004 or ribaxamase. Washington University has dosed the first patient in Cohort 2 of our Phase 1b/2a study of SYN-004 to prevent acute graft-versus-host-disease in patients undergoing allogeneic HCT to treat hematologic cancers. In the Phase 1b/2a study, it’s designed to assess the feasibility of using SYN-004 in a specific patient population and to provide key information requested by the FDA and regarding the safety and tolerability of SYN-004 in patients with impaired intestinal barrier function. The study targets completion of eight participants who received SYN-004, and four who receive placebo in each of three sequential cohorts designed to compare different IV beta-lactam antibiotics to treat fever following conditioning therapy.
As we reported in September, progress to Cohort 2 was permitted by an independent Safety Monitoring Committee after a detailed review of safety and pharmacokinetic data from the first antibiotic cohort administering meropenem. The second antibiotic cohort will evaluate the combination of SYN-004 with piperacillin and tazobactam. We are very pleased with the continued advancement of SYN-004 as part of our oncology portfolio, and we are grateful for the tremendous support from Dr. Burke and his team at Washington University. Together, we will continue to work towards reducing potentially fatal adverse outcomes such as aGVHD and allogeneic HCT recipients.
In summary, we have made steady progress throughout the third quarter of 2022. With a cash runway into the first quarter of 2024, we are well positioned to reach potentially transformational inflection points across our oncology-focused pipeline. Near- and long-term clinical milestones include: The dosing of the first patient in VIRAGE, our Phase 2 study in patients with metastatic PDAC in the fourth quarter of 2022; the dosing of VCN-01 in the first patient with high-grade brain tumors at the University of Leeds in the fourth quarter of 2022; holding a pre-IND meeting with the FDA for our planned clinical study in retinoblastoma in early 2023, ahead of the anticipated study initiation in the second half of 2023; and completing the second cohort of our Phase 1b/2a clinical study of SYN-004 for the prevention of acute graft-versus-host-disease and bone marrow transplant patients in the first quarter of 2024. As you can see, we have positioned our company to deliver on a number of key value-creating milestones over the next 6 to 12 months. By prioritizing our core clinical programs, we have the ability to efficiently utilize our current cash position, which carries us into the first quarter of 2024 to deliver on important clinical data and related milestones.
Now I’d like to turn briefly to our financial results for the 3 months ended September 30, 2022. General and administrative expenses increased $2.4 million for the three months ended September 30, 2022, from $1.3 million for the three months ended September 30, 2021. This increase of 88% was primarily comprised of increased consulting and legal costs related to the VCN acquisition; an increase in the fair value of contingent consideration, higher insurance cost audit fees and public relation expenses; and VCN administrative expenses not included in the prior year. The charge related to stock-based compensation expense was $93,000 for the three months ended September 30, 2022, compared to $83,000 for the three months ended September 30, 2021.
Research and development expenses increased to $2.6 million for the three months ended September 30, 2022, from $2 million for the three months ended September 30, 2021. This increase of 30% is primarily the result of VCN research expense related to VCN-01, not incurred in the prior year and to a lesser extent, higher manufacturing expenses related to our Phase 1 clinical trial of 2020. We anticipate research and development expense to increase as we plan for and initiate enrollment for our VIRAGE Phase 2 clinical trial for VCN-01 in PDAC our proposed clinical trial retinoblastoma, expand GMP manufacturing activities for VCN-01 and continue supporting our VCN-11 and other preclinical and discovery initiatives. The charge related to stock-based compensation expense was $28,000 for the three months ended September 30, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended September 30, 2021.
Other income was $161,000 for the three months ended September 30, 2022, compared to other income of $2,000 for the three months of September 30, 2021. Other income for the three months ended September 30, 2022 is primarily comprised of interest income of $170,000, offset by an exchange loss of $9,000. Other income for the three months ended September 30, 2021, was primarily comprised of interest income. Cash and cash equivalents totaled $50.5 million as of September 30, 2022 compared to $67.3 million as of December 31, 2021.
In summary, we’ve had yet another quarter of great progress, and we’re very excited about Theriva’s renewed corporate strategy and path towards strategic growth. We believe our OV programs could represent a generational leap forward for patients in need of better treatment options, and we look forward to advancing VCN-01 and VCN-11 for clinical development. In parallel, we will continue to evaluate strategic opportunities that unlock value for our company.
And with that, we’re happy to take questions.
Question-and-Answer Session
Operator
Thank you, sir. [Operator Instructions] We will take our first question today from Jim Molloy of Alliance Global Partners. Please go ahead, your line is open.
Jim Molloy
Hey, good morning, Steve. Thanks for taking my question and excellent update on the quarter. And looking at the sort of the broad investigator-sponsored trial pipeline, and obviously, these are great ways to be the Shepherd’s capital, but sometimes it can be harder to control the timing. How much influence do you guys have – I am trying to impress upon the ISPs, sort of the need to sort of move as exponentially as possible, since obviously, it’s their trial.
Steven Shallcross
Yes. That’s something that we actually have a lot of discussion around on a weekly basis. I think the reality is the ball is in their courts when they take these programs forward. But I think the dialogue between the organizations that we’re working with, folks at ICO, folks at Leeds, folks at U Penn. I think we have an engagement that is respected quite nicely. And that – because of that dialogue, I think both parties understand the importance of continuing to advance these programs. And to be quite honest, it’s really a great opportunity for the company because although we’re providing study drug for these organizations typically fund these programs on their own, and they provide their own staff to monitor the progress of the programs. So it’s a nice way for us to continue to explore uses for VCN-01 while limiting how many resources we need to commit internally. It’s something that, again, we pay a lot of attention to. And as we’ve seen from the head-and-neck trial, we’ve generated some really interesting data that was presented in Paris recently. And there is still more data and specifically to come of that trial and survivability. And we’re looking forward to that data coming out some time in the next probably 6 months or so. Is that helpful for you?
Jim Molloy
It is indeed. Thank you, I appreciate that. And then on the combo in pediatric retinoblastoma, you’ve orphaned the U.S. And the VIRAGE PDAC first-line combo with chemo, you have orphaned EU, correct? Are the orphans correct on those two?
Steven Shallcross
That’s correct. And we’re in the process of applying for orphan indication for PDAC in the U.S. as well.
Jim Molloy
Excellent. And then how – is there a way to – obviously, you’re guiding for fourth quarter ‘23 to start the retino trial, is there – or second half ‘23, excuse me. Is there a way to advance that? I’m sure there is a lot that goes into – you can’t talk about in advance of that, but is there a way to advance either that? Or I guess that’s the only one. The other one, the University of Leeds, is an IST. So that’s at their discretion.
Steven Shallcross
So I’m going to – I’ll hand this over to Manel in a second to give you a little bit more color on how we’re thinking about the retinoblastoma trial. The reality of that is that there is no approved treatment for retinoblastoma. In the U.S., there is around 200 a little bit more patients here, the same in the EU. But the larger patient population is in South America, India and Asia. And one of the things that we’ve learned is that there may be opportunities as we design this trial to take advantage of those much larger patient populations to more quickly gather data. Maybe I’ll hand this over to Manel and he could talk about some of the findings that we’ve learned as a result of some of the discussions that we have ongoing with key opinion leaders. Manel?
Manel Cascalló
Yes, sure. Sure, Steve. Yes, in fact, we are very actively working in the retinoblastoma program, but we have a lot to learn. Because obviously, the way as retinoblastoma is treated, it’s changing. And we need a careful monitoring of all the activities that have been – all the treatments that has been proposed and more rapidly.But right now, we have a quite good consensus after having speaked with key opinion leaders in Europe and in U.S., also in Brazil and in India. And we are very clear in what’s going to be the target population and also the treatment schedule, which is very important. And in fact, we have presented quite recently in collaboration with one of our [indiscernible] collaboration since [indiscernible], very nice data showing that VCN-01 plus topotecan that it’s a track that it’s currently used for some patients in retinoblastoma results really enhance the anti-tumor activity. Which is very interesting and it’s very – it looks quite specific of the combination of topotecan and VCN-01. That’s data that has been presented in the Scientific Congress from the International Society of Oncology last September. So we are learning a lot, but we are in the good pathway. So we are right now just targeting the conversation with FDA, with the agreement of the key opinion leaders around the world, basically. And we are very confident that the trial can be a real success in the field of retinoblastoma as indicated by Steve. There is now an approved treatment for retinoblastoma, and that could really be a major milestone in the field.
Jim Molloy
To follow-up on that, if I could, please, that you guys recently held on Monday, I think, was it an excellent KOL call on PDAC. I guess it’s retino. But over on the PDAC side for VIRAGE, how would you – what sort of the key segues you guys heard from the Monday KOL call that – obviously, I’m talking about the challenges in the market that you can apply to the VIRAGE trial?
Steven Shallcross
Go ahead, Manel.
Manel Cascalló
So basically, the KOL meeting was really interesting because they highlighted a lot of things in the fibro pancreatic cancer. I’m pretty happy with the inputs that we have got in this conversation. In fact, they have highlighted the ability of our product to reach hepatic metastases, but I think it’s one of the key things in this trial. I think that obviously, there are challenges related with the recruitment rate. But I think that the fact that we have positioned our product at first line in metastatic pancreatic cancer warrants that we are going to have a good recruitment rate. And that’s also the feeling that we have with the PIs that are engaged in our trial, both in U.S. and Europe. So I mean I think the KOL meeting was really, really encouraging for us in order to see that the general perception of our product in terms of safety, in terms of activity, mechanism of administration, etcetera, was really the right pathway. So we are happy with that.
Jim Molloy
And maybe a final question for Steven. How would you characterize the market for your partnership opportunities for SYN-004? I know you’ve been obviously correctly, I think moving away from SYN-004 and focusing on VCN-01 and the opportunity to partner it out. How is that effort going?
Steven Shallcross
So historically, we’ve had discussion with interested parties on SYN-004. And we’ve actually had some discussions with folks that have a franchise in the transplant arena. So I guess the feedback we were given was that it would complement their portfolio of products for transplantation, whether it be blood cancers or solid organ transplants. But the feeling was that, okay, let’s overcome this issue on whether or not SYN-004 could possibly be systemically absorbed and interfere with the antibiotic used after conditioning in this more fragile patient population, as we’ve described. So the first cohort of that study has been completed. We’ve reported that data out in September, and the trial and the outcome of that trial was what we expected.
So now we’re actually going to the next cohort, where the SYN-004 enzyme has the ability to degrade pip/tazo. So this will be key. So then once this trial wraps up, I think we will have a very, very strong data package, not only what we generate from this ongoing trial, but we’ve previously been able to demonstrate in the original Phase 2 trial for the prevention of C. diff and AMR to re-approach potentially interested parties. So it’s definitely on the radar. We’re really happy with how this trial is performing. And Dr. [indiscernible] and his team at Wash have just done a tremendous job in the trial design and how it uses three antibiotics increasing in level of the type of activity we expect to see with the use of our ribaxamase. I don’t know, Vince, do you have any other comments on that perhaps?
Vince Wacher
No, I think that that’s all a reasonable assessment. We’ve got to get further data to really consolidate in this indication. But I will say that the interest in prevention in this indication, say, compared to other indications is extremely high and entrenched in the therapeutic rationale for this disease. Unlike other things, other conditions related potentially to infection. In bone marrow transplant it is well established. You must prevent, must prevent aGVHD, must prevent [indiscernible], must prevent CRE infections because they could be fatal. It’s – there is no question that prevention is key. So it’s a much better indication for us as far as taking forth these products. I’ll also say that there was an FDA and CDC workshop not too long ago that we participated in, and it was good to see that the FDA and the CDC are making a joint effort to understand how to prevent these hospital-acquired infections, of which clearly SYN-004 is in that space, and we were one of the participants. And I think what a great takeaway from that was something that people in the industry knew maybe people at the FDA and CDC didn’t, which is the need is tremendous to prevent hospital-acquired conditions, hospital-acquired infections, things related to antibiotic use and such as what we’re trying to address with SYN-004. But I don’t think that the FDA and the CDC understood the challenge of getting clinical trials done in those indications and the cost of moving forward. So that’s a positive outcome that we, on the corporate side and on the company side, we’re able to impact that not just Theriva biosynthetic, but other companies working in the space we’re able to say, listen, this is an important problem we’re addressing. But we need to work out a way to make these studies happen more easily and get to approvals faster.
Jim Molloy
Actually, one last question, where does VIRAGE stand for on the PDAC trial? How do you guys come up with that name for the trial?
Steven Shallcross
Go ahead, Manel.
Manel Cascalló
So basically, as anticipated by Steve, we have already got approval from Spanish authorities and the safe to proceed from FDA in September. So we are initiating sites in Spain. In fact, there is already sites already initiated and ready to recruit patients. So we expect recruiting patients very soon and definitively before the ending of this year. And we are also finalizing our answers to the queries raised by German authorities that are basically classical questions associated with the manufacturing of product that we are very familiar with because obviously, we have been previously asked about the same questions, and we are very happy to provide answers to these questions. So we expect that Germany is trying to be open, slightly a bit later that probably U.S. and Spain, but very soon also. So in fact, all the machinery is ready, all the vendors are ready and the physicians are really excited by this program. In fact, the investigator meetings that we have conducted, we have had investigator meeting in Paris that has been very successful, with the researchers from all the different areas where trial is trying to be conducted, expressed really excitement about this trial because it generates a unique opportunity because our product combines different mechanism of action in a single product. And that generated a lot of interest in order to see if we can really have a major impact on the survival of patients in pancreatic cancer, which is obviously really unmet need.
Vince Wacher
So I think to the question, I think it was also the name of the VIRAGE also was picked by – it really means to change course essentially. That’s what we’re trying to do. Change the course of pancreatic cancer, but also, it’s kind of a global name, and you could think about as virus, adenovirus gemcitabine, it’s sort of the way we thought about it. So it actually works pretty well.
Jim Molloy
Great. Thank you.
Operator
Thank you. It appears we have no further questions at this time. I would like to turn the call back over to Mr. Shallcross for any additional or closing remarks.
Steven Shallcross
Thank you, Elaine, and thank you to everyone for taking the time to join our call today. we remain deeply committed to improving patient outcomes for these really, really hard-to-treat cancers. And we look forward to providing future updates on our progress. Once again, I’d like to thank our shareholders, the entire team and the many people who have been supportive along the way, including our patients and their families. And finally, on this Veteran’s Day, we’d like to thank those who have served to protect our great, great country. Once again, thank you for joining us, and we look forward to keeping you updated on our progress. Have a great weekend.
Operator
Thank you. Ladies and gentlemen, that will conclude today’s conference call. Thank you for your participation. You may now disconnect.
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