Theriva Biologics, Inc.

Greetings, and welcome to the Cereva Biologics Inc. 2023 Third Quarter Operational Highlights and Financial Results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Shelcross. Thank you. You may begin.

Thank you, Irene, and good morning, everyone, and thank you for joining our call today. Welcome to Threva Biologics' third quarter 2023 investor conference call. Joining me on today's call will be Dr. Manal Kaskal, Director General of Threva Biologics, European subsidiary, and Dr. Vince Wager, Head of Corporate and Product Development of Threva 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 investor 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. In addition to the phone line, this call is being streamed live via webcast, which will be archived on the company's website, www.thrivabio.com, for 90 days. During this call, certain forward-looking statements regarding Thriva Biologics and VCN Biosciences' current expectations and projections about future events will be made. 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 uncertainties, including those set forth in three of a biologic's 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 three of a biologic 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, VCN01. As a reminder, VCN01 is a systemically administered oncolytic adenovirus designed to selectively replicate within the tumor, degrade the tumor matrix, and increase tumor immunogenicity. We believe these multiple modes of action position VCN01 for optimized tumor killing across several indications and in combination with different types of therapies. The potential use of VCN01 to enable and enhance the use of chemotherapy and immune oncology products and otherwise refractory solid tumors is a strategic focus for Threva that may provide multiple opportunities in areas of high therapeutic need. Today, I'm pleased to report recent highlights from our ongoing programs evaluating BCN01 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 BCN01, 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 1b-2a clinical trial of SYN4, designed to prevent potentially fatal adverse outcomes in patients who undergo L-genic 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 at the forefront of oncolytic virus development starting with our lead program, VCN01. Our confidence in VCN01 is built on a strong clinical foundation as VCN01 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. BCN01 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 BCN01 is in PDAC, which has one of the lowest survival rates among all cancers and is an indication that it's 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 BCN01 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. VARAGE, our Phase 2B trial of VCN01 in combination with standard-of-care chemotherapy, gencitabine, and napaxitaxel, as a first-line therapy for patients with PDAC, continues to advance with dosing well underway across sites in the U.S. and Spain. VCN01 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 endpoints for the trial include overall survival and VCN01 safety and tolerability. Additional endpoints include progression pre-survival, objective response rate, and measures of VCN01 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 if supported by emerging data. More broadly, the VARACH trial will enable us to determine the feasibility of repeated dosing of ECN01, 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 VARAGE PDAC trial, we continue to work closely with key opinion leaders in the US, Europe, Central and South America to refine our clinical strategy in retinoblastoma. 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 VCN01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma. We believe intravitreal VCNL1 has the potential to treat vitreous seeds 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 those difficult to treat cancer. In parallel with company-sponsored studies, the potential utility of ECN01 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 Caniline 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 BCN01 in combination with Duralumab 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 four years in one patient, which correlated with BCN01-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 Moussaieb de Aiko. In addition to reviewing key takeaways from the ESMO poster presentation, Dr. Moussaieb discussed the unmet medical needs in head and neck cancer, current treatment limitations, and the therapeutic potential of VCN01. Dr. Maceo also highlighted data from the ICO Phase I study showing that VCN01-treated patients had improved responses to later lines of therapy. This is consistent with VCN01's matrix-degrading effect, which enables better access by the codes administered cancer therapies and the potential to elicit an extended anti-tumor immune response. Consistent with these clinical data, a significant increase in the infiltration of tumors with anti-PD-LN1-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 VCN01 with Heukarty mesocells to patients with ovarian and pancreatic cancers. VCN01 is designed to increase tumor immunogenicity and improve access by additional therapies such as Heukarty mesocells. 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 VCNL1 with UCAR-T mesocells. These preliminary results were recently presented at the Society for Immunotherapy of Cancer Annual Meeting, or CITC. With no dose-limiting toxicities observed today, the study will continue to explore higher doses of VCNL1 co-administered with UCAR-T mesocells. We look forward to further data from the study to determine if eCN01 can improve patient outcomes with these powerful immunotherapies to treat solid tumors. Turning to our ongoing phase 1B2A clinical trial at Washington University, evaluating SYN4 or riboxamase to reduce potentially fatal adverse events related to IV beta-lactam antibiotic use in L-genetic HCT recipients, including acute graft-versus-host disease, or AGVHD, and overgrowth and infection by pathological organisms such as C. difficile and vancomycin-resistant enterococcin. The Phase 1 B2A study is designed to assess the feasibility of using SYN4 and consists of three sequential cohorts comparing different IV beta-lactam antibiotics following conditioning therapy. In each cohort, eight patients will receive SYN4 and four will receive placebo. While the data remain blinded, interim analysis suggests that SYN4 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 SYN4 in combination with peperacillin and tezobactam. This cohort will provide important additional safety information, in particular, whether oral SYN4 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 Amblyumin Shield technology and exciting additional technology 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 Verage in the first half of 2024, meet with the FDA to discuss the clinical program and potential registration pathway for BCN01 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 1B28 clinical study of SYN4 for the prevention of ADHD 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 administrative expenses decreased to $212,000 for the three months ended September 30, 2023 from $2.4 million for the three 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 VC and administrative expenses not included in the prior year, offset by an increase in consulting fees. The charge-related stock-based compensation expense was $95,000 for the three months ended September 30, 2023, compared to $93,000 for the three months ended September 30, 2022. Research and development expenses increased to $4 million for the three months ended September 30, 2023, from approximately $2.6 million for the three months ended September 30, 2022. This increase of 56% is primarily the result of higher clinical trial expenses related to our VERAGE Phase 2 clinical trial of VCN01 and PDAC, offset by decreased expenses related to our Phase 1B2A clinical trial of SIN4 and LGA ACT recipients, Phase 1A clinical trial of SIN20, and decreased manufacturing expenses related to our Phase 1A clinical trial of SIN20. We anticipate research and development expense to increase as we continue enrollment in our VARAGE Phase II clinical trial of VCN01 and PDAC and our ongoing Phase I clinical trial in retinoblastoma, expand GMP manufacturing activities for VCN01, and continue supporting our VCN11 and other preclinical and discovery initiatives. The charge related to stock-based compensation expense was $40,000 for the three months ended September 30, 2023, compared to $28,000 related stock-based compensation expense for the three months ended September 30, 2022. Other income was $388,000 for the three months ended September 30, 2023, compared to other income of $161,000 for three months ended September 30, 2022. Other income for the three 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 three months ended up September 30, 2022 is primarily comprised of interest income of $170,000 offset by an exchange loss of $9,000. In 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 It's 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 contract 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 total $31.2 million as of September 30, 2023, compared to $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 three of the team, our investors, and the many people who have been supportive along the way, including our patients and their families. With that, we're happy to take a few questions.

Thank you. We will now be conducting a question and answer session.