Theriva Biologics, Inc. (NYSE:TOVX) Q3 2023 Earnings Call Transcript

Theriva Biologics, Inc. (NYSE:TOVX) Q3 2023 Earnings Call Transcript November 17, 2023

Operator: Greetings, and welcome to the Theriva Biologics, Inc. 2023 Third Quarter Operational Highlights and Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Shallcross. Thank you. You may begin.

Steve Shallcross: Thank you, Irene, and good morning, everyone, and thank you for joining our call today. Welcome to Theriva Biologics Third Quarter 2023 Investor Conference Call. Joining me on today's call will be Dr. Manel Cascallo, Director General of Theriva Biologics' European Subsidiary; and Dr. Vince Wacher, Head of Corporate and Product Development of Theriva Biologics. Theriva Biologics issued a press release this morning, which provided operational highlights and included the financial results for the third quarter ended September 30, 2023. 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, 2023, which we plan to file today with the Securities and Exchange Commission.

A doctor consulting with a patient, discussing treatment options for breast cancer.

In addition to the phone line, this call is being streamed live via webcast, which will be archived on the company's 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 upon current beliefs, expectations and assumptions and are 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 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 start by discussing our progress during the quarter. In the third quarter of 2023, we continue to make steady progress to drive forward our oncology-focused portfolio designed to address unmet needs for difficult-to-treat cancers. With our extended cash runway into the first quarter of 2025, we believe we're well positioned to execute on our corporate objectives and remain on track to achieving multiple value-enhancing milestones.

Our primary efforts and resources are focused on pursuing multiple therapeutic opportunities for our lead clinical candidate, VCN-01. As a reminder, VCN-01 is a systemically administered oncolytic adenovirus designed to selectively replicate within the tumor, degreed to tumor matrix and increase tumor immunogenicity. We believe these multiple modes of action position VCN-01 for optimized tumor killing across several indications and in combination with different types of therapies. The potential use of VCN-01 to enable and enhance the use of chemotherapy and immuno-oncology products and otherwise refractory solid tumors is a strategic focus for Theriva that may provide multiple opportunities in areas of high therapeutic need. Today, I'm pleased to report recent highlights from our ongoing programs, evaluating VCN-01 in different indications in combination with chemotherapy, immune checkpoint inhibitors and CAR-T cells.

Building on our exploration of the potentially broad synergistic clinical benefit of VCN-01, we are pursuing new oncolytic virus candidates to leverage our novel Albumin Shield Technology, which is designed to protect systemically administered oncolytic viruses from the host immune system and may facilitate repeated administration of oncolytic virus therapies. This may enable our pipeline programs to be used in standardized treatment cycles that are well established in cancer chemotherapy and immunotherapy. Additionally, as part of our oncology focused portfolio, we continue to screen and enroll patients in the second cohort of the Phase Ib/IIa clinical trial of SYN-004 designed to prevent potentially fatal adverse outcomes in patients who undergo allogeneic hematopoietic cell transplant, or HCT, to treat hematologic cancers.

With this brief introduction, I will now provide further details on how these programs continue to position Theriva the forefront of oncolytic virus development, starting with our lead program, VCN-01. Our confidence in VCN-01 is built on a strong clinical foundation as VCN-01 has been administered to more than 100 patients across diverse indications, including pancreatic ductal adenocarcinoma or PDAC, head and neck squamous cell carcinoma, colorectal cancer, ovarian cancer and retinoblastoma. VCN-01 has been granted orphan drug designation in the U.S. and Europe for the treatment of pancreatic cancer and in the U.S. for retinoblastoma, providing additional opportunities for regulatory engagement and if approved, market exclusivity. Our most advanced program for VCN-01 is in PDAC, which has one of the lowest survival rates among all cancers and is an indication that is ripe for innovation.

It is well established that the PDAC tumor matrix is one of the key reasons for the overall poor therapeutic outcomes for these patients. We believe VCN-01 has the potential to address the urgent need for new treatment options for patients with PDAC by degrading the tumor matrix and increasing tumor access by co-administered cancer therapies. VIRAGE, our Phase IIb trial of VCN-01 in combination with standard of care chemotherapy, gemcitabine and nab-paclitaxel as a first-line therapy for patients with PDAC, continues to advance with dosing well underway across sites in the U.S. and Spain. VCN-01 has been well-tolerated with a safety profile consistent with prior clinical trials. We remain on track to complete enrollment with 92 available patients in the first half of 2024.

As a reminder, the primary endpoint for the trial include overall survival and VCN-01 safety and tolerability. Additional endpoints include progression-free survival, objective response rate and measures of VCN-01 biodistribution replication and immune response. Since this is an open-label trial, progress will be monitored very closely and steps to accelerate the clinical program may be implemented and supported by emerging data. More broadly, the VIRAGE trial will enable us to determine the feasibility of repeated dosing of VCN-01, which could shift the paradigm to standardized treatment cycles that are well established in cancer chemotherapy and immunotherapy and may lead to improved clinical outcomes for patients with PDAC and other solid tumors.

In addition to advancing the VIRAGE PDAC trial, we continue to work closely with key opinion leaders in the U.S., Europe, Central and South America to refine our clinical strategy in retinal blastoma. Since current clinical practice varies and there's no regulatory guidance specific to retinoblastoma drug development, we have submitted our meeting request with regulatory agencies and look forward to discussing the development pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma. We believe intravitreal VCN-01 has the potential to treat Vitreous seeding in children with retinoblastoma, and we look forward to leveraging our orphan drug designation in this indication to facilitate protocol discussions with the FDA and other regulatory agencies to enable the development of new potential treatment options for this difficult-to-treat cancer.

In parallel with company-sponsored studies, the potential utility of VCN-01 is being explored in a number of investigator-sponsored studies that are underway at leading oncology research institutions around the world. Today, I'll focus on recent updates from our collaboration with the Catalan Institute of Oncology, or ICO, for patients with head and neck cancer and the University of Pennsylvania for patients with pancreatic and ovarian cancer. Data from the ongoing study of VCN-01 in combination with durvalumab in patients with recurrent metastatic head and neck cancer were recently presented at the European Society for Medical Oncology Annual Congress, or ESMO. Results showed enhanced patient survival up to almost 4 years in one patient, which correlated with VCN-01 mediated increases in CPS score, a key determinant of outcomes with anti-PD-L1 checkpoint inhibitor therapies.

These data are remarkable, given these patients had all failed prior lines of anti-PD-L1 treatment. In addition to the presentation at ESMO, we hosted a virtual KOL event featuring Dr. Ricard Mesia of the ICO. In addition to reviewing key takeaways from the ESMO poster presentation, Dr. Mesia discussed the unmet medical needs in head and neck cancer, current treatment limitations and the therapeutic potential of VCN-01. Dr. Mesia also highlighted data from the ICO Phase I study showing that VCN-01-treated patients had improved responses to later lines of therapy. This is consistent with VCN-01's matrix degrading effect, which enables better access by the co-administered cancer therapies and the potential to elicit an extended antitumor immune response.

Consistent with these clinical data, a significant increase in the infiltration of tumors with anti-PD-L1 positive immune cells was observed, which statistically correlated with patient survival. Additionally, the University of Pennsylvania continues to enroll and treat patients in their Phase I investigator-sponsored study, administering VCN-01 with huCART-meso cells to patients with ovarian and pancreatic cancers. VCN-01 is designed to increase tumor immunogenicity and improve access by additional therapies such as huCART-meso cells. While cell-based immunotherapies have had limited efficacy against solid tumors to date, we are encouraged by the initial results, highlighting the feasibility of administering VCN-01 with huCART-meso cells. These preliminary results were recently presented at the Society for Immunotherapy of Cancer Annual Meeting or SITC.

With no dose-limiting toxicities observed to date, the study will continue to explore higher doses of VCN-01 co-administered with huCART-meso cells. We look forward to further data from the study to determine if VCN-01 can improve patient outcomes with these powerful immunotherapies to treat solid tumors. Turning to our ongoing Phase Ib/IIa clinical trial, Washington University evaluating SYN-004 ribaxamase to reduce potentially fatal adverse events related to IV beta-lactam antibiotic use in allogeneic HCT recipients, including acute graft versus host disease, or aGVHD, and overgrowth in infection by pathological organisms such as C. difficile and vancomycin-resistant enterococci. The Phase Ib/IIa study is designed to assess the feasibility of using VCN-04 and consists of 3 sequential cohorts comparing different IV beta-lactam antibiotics following conditioning therapy.

In each cohort, patients will receive SYN-004 and 4 will receive placebo. While the data remain blinded, interim analysis suggests that SYN-004 is well tolerated and was not observed in the blood samples of a majority of the available patients. Our second cohort is underway and is designed to evaluate SYN-004 in combination with piperacillin and tazobactam. This cohort will provide important additional safety information, in particular, whether oral SYN-004 has the potential to alter IV antibiotic levels in this patient population. Overall, we're encouraged by the progress across our pipeline and the growing clinical data that underscore the promise of our systemically administered oncolytic adenovirus in key indications and combinations. We remain focused on driving our clinical programs forward and exploring opportunities to leverage our novel Albumin Shield Technology and exciting additional technologies from our OV discovery platform.

I'm confident that the company's strong cash position and upcoming catalysts provide a solid foundation for execution and value creation. We remain on track to complete enrollment for VIRAGE in the first half of 2024, meet with the FDA to discuss the clinical program and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma before the end of the year and complete enrollment in the second cohort of our Phase Ib/IIa clinical study of SYN-004 for the prevention of aGVHD and bone marrow transplant patients in the first half of 2024. Now I'd like to briefly turn to our financial results for the third quarter ended September 30, 2023. General and administrative expenses decreased to $212,000 for the 3 months ended September 30, 2023, from $2.4 million for the 3 months ended September 30, 2022.

This decrease of 91% is primarily comprised of the decrease in the fair value of contingent consideration of $1.6 million, along with lower salary and bonus costs investor relation fees, audit fees, travel and VCN administrative expenses not included in the prior year, offset by an increase in consulting fees. The charge related to stock-based compensation expense was $95,000 for the 3 months ended September 30, 2023, compared to $93,000 for the 3 months ended September 30, 2022. Research and development expenses increased to $4 million for the 3 months ended September 30, 2023, from approximately $2.6 million for the 3 months ended September 30, 2022. This increase of 56% is primarily the result of higher clinical trial expenses related to our VIRAGE Phase II clinical trial of VCN-01 in PDAC offset by decreased expenses related to our Phase Ib/IIa clinical trial of SYN-004 in allogeneic HCT recipients, Phase Ia clinical trial of SYN-020 and decreased manufacturing expenses related to our Phase Ia clinical trial of SYN-020.

We anticipate research and development expense to increase as we continue enrollment in our VIRAGE Phase II clinical trial of VCN-01 in PDAC and our ongoing Phase I clinical trial in retinal blastoma, 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 $40,000 for the 3 months ended September 30, 2023, compared to $28,000 related to stock-based compensation expense for the 3 months ended September 30, 2022. Other income was $388,000 for the 3 months ended September 30, 2023, compared to other income of $161,000 for the 3 months ended September 30, 2022. Other income for the 3 months ended September 30, 2023, is primarily comprised of interest income of $382,000 and an exchange gain of $6,000.

Other income for the 3 months ended September 30, 2022, is primarily comprised of interest income of $170,000, offset by an exchange loss of $9,000. And a further strengthening of our balance sheet during the quarter ended September 30, 2023, we recognized a $1.4 million tax credit receivable and offsetting deferred R&D tax credit is a result of our participation in a research and development program sponsored by the Spanish government. The program provides for reimbursement of certain expenses incurred in research and development efforts that we incurred in Spain. As a condition for participation in the program, we will be required to maintain certain workforce levels in research and develop expenditures over the next 24-month period. Beginning in Q1 2024, the deferred R&D credit will be amortized monthly as a contra expense during 2024 and 2025.

We expect to receive the full cash payment under this program by the end of 2024. Cash and cash equivalents totaled $31.2 million as of September 30, 2023, compared to $41 million -- $41.8 million as of December 30, 2022. We remain deeply committed to improving patient outcomes through these very hard to treat cancers. And before we conclude today's call, I want to extend my sincere appreciation and gratitude for the foundational work that has brought us closer to developing and delivering on our mission. I'd like to thank the entire Theriva team, our investors and the many people who have been supportable along the way, including our patients and their families. With that, we're happy to take a few questions.

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