Synthetic Biologics, Inc.

greetings and welcome to synthetic biologics first quarter 2022 earnings conference call at this time all participants are in a listen only mode a question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star zero on your telephone keypad as a reminder this conference is being recorded i would now like to turn the conference over to your host Dean Schwartz of LifeSite Advisors. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. Welcome to Synthetic Biologics 2022 First Quarter Investor Conference Call. Leading the call today will be Stephen Shawcross, Chief Executive and Chief Financial Officer of Synthetic Biologics. Dr. Vince Wacher, Head of Corporate and Product Development of Synthetic Biologics. Dr. Manel Cascaio, General Director of Synthetic Biologics, European subsidiary, and Dr. Frank Tafaro, Chief Operating Officer, are also on the call and will be available to answer questions during the Q&A session. Synthetic Biologics issued a press release this morning, which provided operational highlights and included the financial results for the first quarter ending March 31st, 2022. The press release can be found in the investor section of the company website, at www.syntheticbiologics.com, together with the quarterly report on Form 10-Q for the quarter ended March 31, 2022, which we plan to file today with the Securities and Exchange Commission, or SEC. In addition to the phone line, this call is being streamed live via webcast, which will be archived on the company website, www.syntheticbiologics.com, for 90 days. During this call, Certain forward-looking statements regarding synthetic 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 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, Dean. Good morning, everyone, and thank you for joining our 2022 First Quarter Investor Conference Call. The onset of 2022 is marked by the successfully completed acquisition of VCN Biosciences, a privately held clinical stage biotech company focused on developing a new oncolytic adenovirus, or OV, platform. The acquisition transformed synthetic biologics pipeline with the addition of VCN's lead clinical stage drug candidate, BCN01, as well as preclinical stage, BCN11, both of which are next-generation oncolytic adenoviruses designed to break down the tumor stroma through the expression of hyaluronidase. This differentiating mechanism of action is intended to improve the anti-tumor effect of both the oncolytic virus and co-administered chemotherapies and immuno-oncology products. Importantly, degrading the stroma can expose tumor antigens, turning cold tumors hot and enabling a sustained anti-tumor response by leveraging the patient's own immune system. As part of this acquisition and to support our extension into oncology, We're pleased to welcome Dr. Frank DeFaro as Chief Operating Officer and Dr. Manel Cascallo, one of the founders of VCN, as General Director of Europe. Both bring extensive expertise in oncolytic adenoviruses and are uniquely suited to support our transformative clinical development strategy. Additionally, we recently formed a scientific advisory board of key opinion leaders to advance our oncology pipeline. These distinguished leaders have made groundbreaking scientific advances in their respective fields of oncology, immunology, gene therapy, ophthalmology, and tumor virology. And we look forward to their counsel as we advance our OV development program to address devastating cancers with high unmet need. This is an important phase of synthetic biologics evolution, and with our strengthened leadership team, recently formed scientific advisory board, and expanded differentiated pipeline, we believe we are well positioned to deliver on nearing pivotal milestones. I would now like to provide an overview of our pipeline and walk you through key updates. Our lead oncology product, VCN01, is a next-generation OB designed for intravenous, intratumoral, and intravitreal delivery. VCN01 has been administered to 72 cancer patients in four Phase I clinical studies to date with a focus on pancreatic ductal adenocarcinoma, also known as PDAC, and retinoblastoma. As a reminder, VCN01 was granted orphan drug designation in 2011 by the European Medicines Agency for the treatment of PDAC and was granted orphan drug designation by the FDA in February this year for the treatment of retinoblastoma. If VCN01 is approved by the FDA, orphan drug designation provides critical marketing exclusivity, and we plan to take full advantage of the development benefits to which we are eligible under the Orphan Drug Act, including tax credits, reduced user fees, and, again, market exclusivity. We are highly encouraged by the regulatory support and the promising clinical safety and efficacy data generated to date. In March of 2022, we announced the publication of a phase one study investigating the safety and tolerability of intravenous VCN01 administered to patients with solid tumors, including pancreatic cancer. The multicenter open-label dose escalation study reported in the Journal for Immunotherapy of Cancer was divided into three parts. In Part 1, BCN01 was administered intravenously as a single agent to patients with solid tumors. In Parts 2 and 3, BCN01 was administered intravenously in combination with the standard of care chemotherapy regimen of gencytomine plus napaxitaxel in patients with locally advanced or metastatic unresectable PDAC. In Part 2, BCN01 was administered on the same day as the first dose of chemotherapy known as the concomitant regimen. And in part three, BCN01 was administered seven days prior to the first dose of chemotherapy, known as the sequential regimen. The objective was to determine the maximum tolerated dose, the recommended phase two dose, and dose limiting toxicity. The results in the publication provide value dose finding context and support for IV VCN01 administered using the sequential dosing regimen. The encouraging biological and clinical data from the study underscore VCN01's differentiated mechanism of action and suggest that treatment of cancer patients with VCN01 is feasible and has an acceptable safety profile. We look forward to leveraging these findings and initiating our planned Phase II clinical study of intravenous VCN01 in combination with gencitabine and napaxitaxel, the standard of care chemotherapy, as a first-line therapy in newly diagnosed patients with metastatic PDAC. We expect to initiate the Phase II study in the fourth quarter of 2022. As a reminder, the proposed randomized multicenter open-label Phase II clinical study is projected to enroll up to 92 adults with PDAC and will be conducted across sites in the U.S. and Europe. The study, which has not yet been agreed to by regulators, is designed to have two treatment arms. In arm one, patients will receive gencitabine and dapaxitaxel, the standard of care chemotherapy. In arm two, Patients will receive BCN01 administered seven days prior to gencytabine and napaxitaxel. It is proposed that two doses of BCN01 will be administered approximately three months apart. Primary endpoints of the study may include overall survival and safety and tolerability. Additional endpoints may include progression-free survival, objective response rate, and measures of biodistribution, 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 closely and may try to accelerate the clinical program if supported by the emerging data. The study will be led by Dr. Manel Hidalgo, an internationally renowned physician, scientist, academic, and the chief of the Division of Hematology and Medical Oncology at Weill Cornell Medicine, New York Presbyterian Hospital. Now moving on to our planned clinical study in advanced retinoblastoma. We believe BCN01 holds tremendous progress and promise as a novel rescue therapy for patients who fail standard therapy or as an adjunct to chemotherapy to improve outcomes for these patients. We are working closely with key opinion leaders to finalize the protocol for a Phase 2-3 study of intravitreal VCN01 to treat vitreous seeds in children with retinoblastoma. There is no current regulatory guidance for the development of retinoblastoma medicines, so we will be working closely with regulatory agencies to determine the appropriate study endpoints, and pave the way for the development of new treatment options to address this large unmet need. The Phase 2-3 study of VCN01 is expected to initiate in early 2023. In addition to the planned company-sponsored studies in PDAC and retinal blastoma, VCN01 is undergoing evaluation in a number of investigator-sponsored studies including a study at the University of Pennsylvania combining VCO1 with mesothelin-directed CAR T-cell therapy in pancreatic and ovarian cancer patients, and a study at the University of Leeds in patients with high-grade brain tumors. We look forward to a number of potentially exciting upcoming milestones from the planned, diverse VCN01 clinical programs over the next 12 to 24 months. Our next product candidate, VCN11, is a modified version of VCN01 that incorporates a proprietary albumin binding domain in the virus's outer shell. VCN11 is designed to improve systemic delivery by enabling the virus to coat itself with host serum albumin and prevent inactivation by antiviral neutralizing antibodies. IND enabling studies are being planned and are expected to commence following the completion of ongoing preclinical studies and CMC activities. Earlier this month, we announced that our abstract on BCN11 was selected for an oral presentation at the upcoming 25th Annual Meeting of the American Society of Gene and Cell Therapy, or ASGCT. The conference will be held virtually and in person starting today and continuing through May 19th in Washington, D.C. The presentation at ASGCT this evening will include preclinical results showcasing the potential of VCN11 to balance safety and effectively target tumors by evading neutralizing antibodies after intravenous readministrations. We look forward to building upon our foundation of compelling proof-of-mechanism data and continuing to advance our VCN11 program through clinical development. In parallel, we will drive our OB programs forward. Clinical development for SIN4 and SIN20 continues to progress. Washington University continues to screen and enroll patients in our Phase 1b2a clinical study of SYN4, or ribaximase, in L-genic hematopoietic cell transplant, or HCT, recipients for the prevention of acute graft-versus-host disease in bone marrow transplant patients. The Phase 1b2a study is designed to assess the feasibility of using SYN4 in this specific patient population and to provide key information requested by the FDA regarding the safety and tolerability of SYN4 in patients with impaired intestinal barrier function. Last year, we announced that enrollment and patient dosing had commenced in the first of three sequential antibiotic cohorts that will each be administered a different IV beta-lactam antibiotic to treat fever following conditional therapy. In total, eight participants in each cohort will receive SYN4 and four will receive placebo. To date, we have dosed 17 patients, 11 that are currently considered available in the study. One more available patient is required to complete the cohort. If enrollment proceeds on the current schedule, we will be positioned to announce top line data from the first cohort in the second half of 2022. We have also advanced our CIN20 intestinal alkaline phosphatase program and recently reported positive safety data from the phase 1A multiple ascending dose or MAD study in healthy volunteers. The phase 1 MAD study enrolled 32 healthy adult volunteers into four cohorts with CIN20 administered orally in doses ranging from 5 milligrams to 75 milligrams twice daily for 14 days, with a follow-up evaluation at day 35. Each cohort included six subjects who received CIN20 and two who received placebo. Analysis of preliminary data demonstrated that CIN20 maintained a favorable safety profile and was well tolerated across all dose levels. There were a few treatment-related adverse events, and all were grade one and resolved without medical intervention. CIN20 levels were also below the limit of quantification in all plasma samples at all time points during the study. Additional analysis is underway, including fecal levels of CIN20 and anti-drug antibody levels, and again, this data will be available in the near future. These Phase I data support the development of CIN20 and multiple clinical indications targeting disorders stemming from gastrointestinal inflammation. We will continue to explore the therapeutic potential of CIN20 across indications, including celiac disease, nonalcoholic fatty liver disease, and age-related metabolic and inflammatory diseases. Contingent on funding, we expect to initiate a Phase IIa study in the second half of 2022. As part of our strategic transformation, we are exploring value-creating options around our SIN 4 and SIN 20 assets, which have significant potential opportunity and non-oncology indications. We are currently evaluating the best path forward for these assets and whether to advance these programs internally or without licensing or partnering them. As we look to the year ahead, The projected progress of our clinical development pipeline is expected to deliver numerous upcoming milestones that have the potential to drive significant value for shareholders. Key near-term clinical milestones over the next six months include the initiation of BCN01 dosing in the investigator-sponsored study of brain tumors at the University of Leeds, the initiation of BCN01 dosing in combination with mesothelin-directed CAR T cells, in the investigator-sponsored study of pancreatic and ovarian cancer at the University of Pennsylvania. And during the second half of 2022, we expect to initiate key clinical trials, including the Phase II study of VCN01 in PDAC patients, a data readout from the first cohort of the SIN4 study in allogeneic HCT patients, and again, contingent upon funding a Phase II study of SIN20. Additionally, we anticipate the initiation of a Phase 2-3 study of BCNL1 in retinoblastoma in early 2023. Now, I'd like to turn briefly to our financial results for the three months ended March 31, 2022. General administrative expenses increased to $1.7 million for the three months ended March 31, 2022 from $1.4 million for the three months ended March 31, 2021. This increase of 17% is primarily comprised of increased consulting and legal costs related to the VCN exact acquisition, higher insurance costs, audit fees, and public relations, relations expenses, and VCN administrative expenses not included in the prior year. The charge related to stock based compensation expense was $85,000 for the three months ended March 31, 2022. compared to $82,000 for the three months ended March 31, 2021. Research and development expenses increased to $2.6 million for the three months ended March 31, 2022, from approximately $1.1 million for the three months ended March 31, 2021. This increase of 132% is primarily the result of higher manufacturing expense for SIN 20, costs incurred related to our Phase 1A clinical trial of SIN20 and Phase 1B2A clinical trial of SIN4 in allogeneic HCT recipients, and VCN research expenses related to VCN01 not incurred in the prior year. We anticipate research and development expense to increase as we plan for and initiate enrollment for our Phase 2 clinical trial for VCN01 in PDAC Phase 2-3 clinical trial in retinal blastoma, expand GMP manufacturing activities for VCN01 and SIN20, and continue with supporting our VCN11 and other preclinical and discovery initiatives. The charge related to stock-based compensation expense was $28,000 for the three months ended March 31, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended March 31, 2021. Other expenses was $21,068 for the three months ended March 31, 2022, compared to income of $347 for the three months ended March 31, 2021. Other expenses primarily composed of exchange losses of $22,607 offset by interest income of $1,539. Cash and cash equivalents totaled $56.7 million as of March 31, 2022, a decrease of $10.5 million from December 31, 2021. With an advanced clinical pipeline and a strong cash position, we are more excited than ever about the outlook for the company. We look forward to providing further updates as we advance our technologies and products. With that said, We're happy to take some questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from the line of Jim Molloy with Alliance Global Partners. Please go ahead.

Hi, good morning. Thank you for taking my questions. I know in the past you've discussed potential partners, particularly for SIN004 and O2, I guess, across the board. Can you speak a little bit about SIN004 How the, can you characterize perhaps how the partnership landscape looks given, you know, the buzzsaw that everyone's been going through first part of the year and valuations changing? Has that increased or decreased the opportunities for partnership?

So, one of our strategies all along, Jim, was to make sure we had sufficient clinical data that would be necessary to advance partnering discussions. So in the case of SIN 4, we need to get through this WashU study and generate the data necessary so that we can reengage with folks who have expressed interest in the asset. So those discussions will commence once that trial ultimately is completed. And actually, after this first cohort is completed, we'll have a good read on whether or not ribaximase is systemically absorbed. We don't believe it will be, but after we have those initial data, you know, I think we'll be able to reengage with the folks that have previously expressed interest. On the SIN20 side, as I said last quarter, we have interested parties, plural. Um, and in some cases, you know, we continue to have discussions and go through, uh, diligence activities. And, um, I would say that the two phase ones gave us, you know, a sufficient amount of safety data that I think gives comfort to the folks that we've been having discussions with. And as you know, in keeping with practice in the past, you know, once those discussions move far enough along and we have something. that, you know, is legally binding, you know, we'll talk about it at that time. Understood.

And the VCN acquisition here in early 22, we're closing that down. Excellent work. Are you guys still on the hunt for additional opportunities? Can you characterize how that looks for potential additional acquisitions going forward?

Well, I think it's safe to say we have our plate pretty full right now. So although there could be some interesting, you know, things to add into the portfolio in the future, right now the focus is totally on getting the PDAC trial initiated in the fourth quarter. And as we said, we're really excited about the opportunity to develop a clinical program for retinoblastoma. As I mentioned in our comments, there's no treatment today that's approved for retinoblastoma. So we clearly have an opportunity to be pioneers in this area. So we're very excited about getting these two trials underway and to continue our work on SYN4, which, as you know, that trial is still ongoing. And then we'll evaluate our options as they relate to SYN20. Okay. The bottom line here is we're well financed. We've got sufficient cash that allows us to advance all these programs that I discussed today. And that cash carries us at least through 2023 without having to go back to the market. So we're in really, really good shape financially.

And maybe final question. I know that obviously the cartoon with UPenn, the brain tumor at University of Leeds, how is the enrollment environment going and obviously you're looking at the PDAC and the retinoblastoma coming up later. How's the enrollment environment going currently, and how I know it can be a challenge sometimes working with third parties to get them to focus on getting trials up and running. How has that been going as a partnership on getting your trials priority and getting patients in there?

So I can tell you that the relationships with both Leeds and UPenn are outstanding. We are in constant communication with both of the organizations. We know that both trials are screening patients for enrollment. And once we're in a position where the patients have passed all the screening criteria and they've been enrolled and dosed, at that point in time, we'll put the announcements out.

Excellent. Thank you for taking the questions.

Thank you. Our next question is from the line of Jason McCarthy with Maxon Groups. Please go ahead.

Hi, this is Joanne Lee on the call for Jason McCarthy. Thanks for taking the question. For the metastatic PDAC study initiating later this year, could you just share what kind of data is expected to be seen in terms of overall survival, which you mentioned could be the primary endpoints? for VCN01 compared to the treatment arm with just standard of care, what would be considered a successful outcome? And maybe if you could briefly remind us of some of the key findings from phase one that helped shape the design for the upcoming study. Thank you.

Yeah, I'll let Manel take that question. Thank you.

Hi. Yeah, we have defined that overall survival as the primary endpoint of our phase two pancreatic trial because that's probably the more powerful tool just to get a real sense of the activity of the product, and that's probably, that paves the road for approval of the product later. And in our phase one trial, we have observed that in the sequential arm, that is the more promising in terms of clinical activity, we have observed overall survival of 20 months for, or 20.8 months for the higher dose treated group. In this, obviously that's a small cohort, and what we think that could be probably significant in this phase to trial, probably it's going to have overall survival around 15 months. That's basically what Manuel Hidalgo is anticipating as a relevant number in this phase to trial, and we are pretty confident that we can reach this point, but obviously we need to collect the data as soon as possible.

Got it. Thank you for that. And just as a brief follow-up to that, what is the expected timing for an outcome with regulators on getting the trial design approved?

So, we have right now very close to the submission. So, we expect to submit the IND to FDA probably mid-next, this year, sorry. And so, we expect initiating recruitment of this trial by the last quarter of 2022. And obviously, it depends on what's going to be the recruitment rate, but probably we expect having the enrollment complete by ending next year, probably.

Great. Thank you for the details and taking the questions, guys.

Thank you.

Thank you. Our next question is from the line of Leland Gershelt with Oppenheimer. Please go ahead.

Good morning. Thanks for the update. And Steve wanted to ask if you or maybe a member of your team could review with us the intellectual property surrounding the VCN assets. Maybe you could share just what the key protections are on VCN01 and 11 and perhaps any further protections around the albumin coding platform delivery technology that could be used for other programs in the future. Thank you.

Okay, Leland, I'll let Manel have that as well.

Okay, perfect. So, basically, for VC01, we have two patents covering the product. One is the original patent that is basically covering the dial-on-the-dash expression technology. That patent has already been granted in the major areas, so in Europe and also in the U.S. We have also granted the patent in Israel, in Mexico, and Russia. in Canada, in Australia, in South Korea, so in the major areas that this patent has already in place and has been already granted. We have a second patent specifically covering BCN product for retinoblastoma. This patent has been already granted in US and in China, and we are expecting to have also the approval in Europe quite soon. And with respect to the ABD technology, the albumin mining technology that covers basically the product BCN11, we have already obtained the approval in US, in China, in Japan, in Israel, in Mexico, in Australia. We are still not finishing the process because obviously that was filed later in time, but we expect also fulfilling all the major areas. And that's basically the protection for our main technology products in the pipeline right now. We have other technologies, and we are also exploring other possibilities to cover the product from different other possibilities. And that's obviously an ongoing work that we are currently conducting.

Great. Thanks. That's very helpful. Thanks.

And Leland, I'll just add to that a little bit. The team at VCN has just done a tremendous amount of work on the preclinical side with respect to both VCN01 and VCN11, and has generated tremendous amounts of data. So now we've looped the VCN team in with our patent team, and we're revisiting all this data, and there may be some real interesting ideas about for additional applications to be filed, you know, throughout this year.

Terrific. Thanks for the evidence, Steve.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Stephen Shawcross for closing remarks.

Thank you, Peter, and thank you everyone for taking time to join our call today. In the first quarter of 2022, we continue to build on the momentum following the transformational VCN transaction. We are well positioned to deliver on our sharpened clinical development strategy, as well as our key objectives that we believe will drive significant value for our shareholders in the months and years ahead. We are extremely pleased with the progress and the transformational growth that continues to propel our business forward. And that continues to position synthetic biologics at the forefront of oncolytic virus development to improve patient outcomes for very, very hard to treat cancers. Before we conclude today's call, 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. Once again, thank you for joining us today, and we look forward to keeping you updated on our continued progress.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.