Earnings Call Transcript - TOVX Q4 2022

Operator, Operator

Greetings. Welcome to Theriva Biologics 2022 full year operational highlights and financial results conference call. Please note, this conference is being recorded. I will now turn the conference over to Chris Calabrese with LifeSci Advisors. Thank you. You may begin.

Chris Calabrese, LifeSci Advisors

Thank you, operator, and good morning, everyone. Welcome to the Theriva Biologics Full Year 2022 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 this morning, which provided operational highlights and included the financial results for the full year ending December 31, 2022. The press release can be found in the Investors section of the company website at www.therivabio.com together with the annual report on Form 10-K for year ended December 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.therivabio.com for 90 days. During this call, certain forward-looking statements regarding Theriva Biologics and VCN Biosciences, current expectations and projections of our 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 turn the call over to Steve. Steve?

Steven Shallcross, CEO and CFO

Thank you, Chris. Good morning, and I appreciate everyone for taking the time to join us today. During the full year of 2022 and the first few months of 2023, we continue to make significant progress across our oncology-focused portfolio. With a cash runway into the third quarter of 2024, we believe we're well positioned to execute on our corporate objectives and reach multiple value-enhancing milestones throughout this year. Our lead clinical candidate, VCN-01, is a systemically administered oncolytic adenovirus, designed to selectively replicate within the tumor, remodel the tumor matrix and increase tumor immunogenicity. We've dedicated our primary resources to VCN-01 and have successfully initiated two clinical trials, VIRAGE, our Phase IIb trial for patients with newly diagnosed metastatic pancreatic ductal adenocarcinoma, or PDAC, as well as the investigator-sponsored Phase I trial for patients with brain tumors. We have dosed the first patients and enrollment is ongoing for both of these newly initiated clinical trials. With these studies, we look forward to building on the growing data that underscore VCN-01's differentiated mechanism of action, biological activity and synergistic clinical benefit observed in combination with standard of care chemotherapy. As part of our oncology-focused portfolio, we've also initiated the second cohort of the Phase Ib/IIa clinical trial SYN-004, which is designed to prevent potentially fatal adverse outcomes in patients who undergo allogeneic hematopoietic cell transplant, HCT, to treat hematologic cancers. In addition, our OV discovery team continues to identify new development candidates to leverage our novel albumin shield technology. This proprietary technology 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 standardized treatment cycles that are well established in cancer chemotherapy. We expect 2023 to be an important year for the advancement of our clinical programs that should continue to position Theriva at the forefront of oncolytic virus development. On today's call, we will provide an update on recent activities and share details on how these together align with our mission to address unmet needs for difficult-to-treat cancers. Starting with our lead program, VCN-01. Building on the positive results of our Phase I studies, in January 2023, we dosed the first patients in VIRAGE, a multinational Phase IIb clinical study evaluating intravenous VCN-01 in newly diagnosed PDAC patients treated with first-line standard of care chemotherapy, gemcitabine and nab-paclitaxel. The incidence of PDAC continues to rise. And while it is one of the lowest survival rates among all cancer types, efforts to improve upon the standard of care treatment have largely stalled. We believe VCN-01 has the potential to address the urgent need for new treatment options. The VIRAGE is a randomized controlled, multicenter open-label Phase IIb trial that is expected to enroll up to 92 adults in approximately 25 sites across the U.S. and Europe. In both the control arm and the treatment arm, patients will receive gemcitabine and nab-paclitaxel standard of care chemotherapy in 28-day cycles. In the treatment arm only, patients will also receive systemically administered VCN-01 seven days prior to the first and fourth cycle of gemcitabine and nab-paclitaxel treatment. Primary endpoints for the trial include overall survival and VCN-01 safety and tolerability. Additional endpoints include progression-free survival, objective response rate and measures of attribution, VCN-01 replication and immune response. 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. In addition to initiating the VIRAGE pancreatic cancer trial, we continue to refine our clinical strategy 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 in treatment line for intravitreal VCN-01 to treat vitreous seeds in 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. Complementing our company-sponsored studies, there are several investigator-sponsored studies underway at world-leading oncology research institutions. In collaboration with the University of Leeds, we are evaluating VCN-01 in patients with high-grade brain tumors who are scheduled for surgical resection. In January 2023, we dosed the first patient in the Phase I trial, which will evaluate the ability of VCN-01 to enter brain tumors following systemic administration. Patients with recurrent high-grade primary brain tumors typically have poor prognosis and often undergo one or more surgical interventions to remove their tumors. The leaky vasculature of many brain tumors may provide an excellent opportunity for systemically administered VCN-01 to enter the tumor where it can replicate and initiate tumor cell killing, destroy tumor stroma and stimulate anti-tumor immune response. Successful delivery of VCN-01 to brain tumors after systemic administration could provide a more effective and less invasive intervention and potentially transform the way these cancers are treated. Additionally, our investigator-sponsored Phase I clinical study in collaboration with Hospital Sant Joan de Déu in Barcelona, Spain is also ongoing. The study is designed to evaluate the safety and tolerability of VCN-01 in patients with interocular retinoblastoma refractory to systemic intra-arterial or intravitreal chemotherapy or radiotherapy. Six patients have been treated with VCN-01 to date, and the enrollment period has been extended to include additional patients. We plan to hold a meeting with the FDA in 2023 to discuss the clinical development and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma. In a separate investigator study, we are also exploring the therapeutic potential of VCN-01 in combination with durvalumab for patients with recurrent metastatic squamous cell carcinoma of the head and neck. We are encouraged by the data generated to date, highlighted by the acceptable safety profile seen with sequential dosing of VCN-01 and durvalumab as well as the biological activity observed in head and neck cancer patients previously treated with PD-L1 agents. The results obtained to date 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. We will continue to explore collaboration and partnership opportunities to further advance VCN-01 in this setting and we are also planning to present additional efficacy and survival data from the study in the second half of 2023. In parallel with our clinical studies for VCN-01, we are keenly advancing our OV discovery platform in albumin shield technology. Our proprietary albumin shield oncolytic viruses incorporate an albumin binding domain in the virus' outer shell. This is designed to improve systemic delivery by enabling the virus to coat itself with host serum albumin to prevent inactivation by antiviral neutralizing antibodies. We look forward to building on our foundation of compelling proof of mechanism data generated with VCN-01 and VCN-11 to develop new albumin shield OVs, incorporating additional therapeutic payloads. Finally, turning to our ongoing Phase Ib/IIa clinical trial of SYN-004, or ribaxamase, to prevent acute graft versus host disease in patients undergoing allogeneic HCT treatment for hematologic cancers. SYN-004 is intended to address key limitations of broad-spectrum antibiotics or IV beta-lactam antibiotics and potentially improve treatment outcomes with this important and widely used class of therapeutics. The Phase Ib/IIa study is designed to assess the feasibility of using SYN-004 in the specific patient population and to provide key information requested by the FDA regarding the safety and tolerability of SYN-004 in patients with impaired intestinal barrier function. The study consists of three sequential cohorts designed to compare different IV beta-lactam antibiotics to treat fever following conditioning therapy. In each cohort, eight patients will receive SYN-004 and four will receive placebo. Dosing is now underway for the second cohort, which will evaluate SYN-004 in combination with piperacillin and tazobactam. As we reported in September 2022, progress to the second cohort was permitted by an independent safety monitoring committee after a detailed review of safety and pharmacokinetic data from the first antibiotic cohort administering meropenem. These data were recently presented at this year's 2023 Tandem meetings, Transplantation and Cellular Therapy meetings of ASTCT and CIBMT. 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. With our collaborators at Washington University, we plan to continue to explore the therapeutic potential of SYN-004 and its ability to reduce serious adverse events in patients with hematologic cancers undergoing allogenic HCT. Looking ahead, with a focused clinical development portfolio and an expected financial runway into the third quarter of 2024, we are well positioned to reach potentially transformational inflection points, which include planning to complete enrollment for VIRAGE, the Phase II clinical trial of VCN-01 in PDAC by early 2024, holding a pre-IND meeting with the FDA in the second half of 2023 to discuss the clinical development and potential registration pathway for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma, presenting additional data from the study of VCN-01 in combination with durvalumab in patients with recurrent metastatic squamous cell carcinoma of the head and neck in the second half of 2023, and completing the second cohort of our Phase Ib/IIa clinical study of SYN-004 for the prevention of acute graft versus host disease in bone marrow transplant patients in the first quarter of 2024. Now I'd like to briefly turn to our financial results for the full year ended December 31, 2022. General and administrative expenses increased to $9.9 million for the year ended December 31, 2022, from $6.5 million for the year ended December 31, 2021. This increase of approximately 50.8% is primarily comprised of increased expense related to the fair value of contingent consideration, higher insurance costs, additional salary and benefits related to new headcount, public relations expense and VCN administrative expenses not included in the prior year, offset by a decrease in consulting and legal costs related to the VCN acquisition. The charge related to stock-based compensation expense was $400,000 for the year ended December 31, 2022, compared to $300,000 for the year ended December 31, 2021. Research and development expenses increased to $11.7 million for the year ended December 31, 2022, from $7.8 million for the year ended December 31, 2021. This increase of approximately 50% is primarily the result of increased clinical trial expenses related to VCN-01, not incurred in the prior year, offset by lower clinical and manufacturing expenses related to our Phase Ia clinical trial of SYN-020 and expenses related to our Phase Ib/IIa clinical trial of SYN-004 in allogeneic HCT resilience. We anticipate research and development expenses to increase as we continue to enroll in our VIRAGE Phase II clinical trial of VCN-01 and PDAC in our ongoing Phase I clinical trial of retinoblastoma and GMP manufacturing activities for VCN-01 and continue supporting our VCN-11 and other preclinical and discovery initiatives. Research and development expenses also include a charge related to noncash stock-based compensation expense of $112,000 for the year ended December 31, 2022, compared to $76,000 for the year ended December 31, 2021. Other income was $471,000 for the year ended December 31, 2022, compared to other income of $6,000 for the year ended December 31, 2021. Other income for the year ended December 31, 2022, is primarily comprised of interest income of $512,000, offset by an exchange loss of $41,000. Other income for the year ended December 31, 2021, was primarily comprised of interest income. Cash and cash equivalents totaled $41.8 million as of December 31, 2022, compared to $67.3 million as of December 31, 2021. This is expected to provide a runway as we discussed earlier into the third quarter of 2024. Following a very strong year where execution allowed us to make tremendous progress in 2022, we have now set the stage for a meaningful 2023. We remain focused on driving our key programs forward and will continue to evaluate strategic opportunities that drive shareholder value and long-term success. With that, we're happy to take some questions.

Operator, Operator

Our first question is from James Molloy with Alliance Global.

James Molloy, Analyst

I had a question on the head and neck squamous cell, where you are anticipating data second half 2023 and look at that Phase I investigator-sponsored trial. Could you walk through sort of expectations of what we should be looking for and any thoughts on what the number of patients that might be treated at that point?

Steven Shallcross, CEO and CFO

Sure. I'll let Manel take that question. There are 20 patients in that study. Manel, you want to give an overview of the design and what we could expect to see when there is efficacy and survival data come out?

Manel Cascalló, General Director

Exactly. Yes. The trial started in 2018, and it included two different cohorts where we combined our product with durvalumab, which is an anti-PD-L1 antibody after previous lines of anti-PD-1 therapy failure in patients with head and neck carcinoma. The main goal of the trial is to evaluate the tolerability of the combination, but also to evaluate if the treatment with our product can overcome resistance to PD-1 antibody. We published last year at the ESMO meeting in Paris all the data related to the safety of the trial, which has demonstrated to be very mild, and we can also dose at the highest level when combining sequentially our product with anti-PD-L1. At ESMO, we also disclosed all the biological data obtained from this trial, where we have demonstrated the replication capability of the virus, but also the capability of the virus to shift the immunological environment of these tumors to express more immunologically sustainable markers that warrant better prognosis. We are collecting survival data right now, and that’s going to be interesting because we have seen encouraging initial signs. We expect to present this data probably at ESMO in 2023, which is going to be in the last part of September of '23 in Madrid, Spain. We promise this is going to be interesting.

James Molloy, Analyst

I think you mentioned the combination with KEYTRUDA as well. Any updates on that beyond Imfinzi?

Michael Kaleko, Not Specified

Well, that definitely is something that we could evaluate. We have already data with anti-PD-L1 KEYTRUDA and anti-PD-1 antibody. We are evaluating based on the results that we obtained from this and when we have a better understanding of the final conclusions, we're looking at various possibilities to progress this program.

James Molloy, Analyst

Great. Could you share your thoughts on the PDAC trial? I believe, Steven, you mentioned that you expect enrollment to be completed in the first half of '24. What can we expect from the interim analysis in late '23?

Steven Shallcross, CEO and CFO

So maybe I'll start this one off. Based on our projections, we expect to have the trial enrolled by early 2024. The study design is quite creative. Although it's a controlled study, it's also open label. Overall survivability is the most important endpoint from the regulators' perspective. However, we're going to have the ability to look at response rates in real-time for patients enrolled in this trial. The expectation is that by the end of this year, we hope to have enough patients enrolled and have collected sufficient data for us to indicate whether we are observing the same types of response rates that we saw in our Phase I study. If the data looks compelling, we may have options to approach regulatory authorities to explore faster advancement of this trial, possibly converting it into a pivotal one or even a registration trial with additional data monitoring on the back end. All those options are on the table and will depend on the data.

James Molloy, Analyst

Got it. Last question. On VCN-11, the next gen optimized for IV administration. Can you walk through expectations for VCN-11?

Steven Shallcross, CEO and CFO

Yes. Maybe, Manel, you could take that as well and discuss? We're evaluating not only VCN-11 but also our other product candidates, VCN-12 and VCN-13, as we advance that program and look for opportunities to enhance the payloads of the viruses for additional therapeutic benefits.

Manel Cascalló, General Director

Yes. As you probably remember, we discussed our technology. It's indeed a platform technology that we can apply to different products. Our scientists are very actively working on different payloads, evaluating the best combination of genetic modifications that the product can incorporate to have additional properties. We know VCN-11 can be redosed effectively after systemic administration based on our encouraging data from different systemic administration models in animals. We are seeing if we can incorporate additional properties to the virus to enhance its effectiveness in combating tumors. That’s why we have not only the VCN-11 as indicated by Steve, but different candidates that we are evaluating in parallel. Our recommendation is that we expect to have a final decision on moving into the clinic during this year.

Operator, Operator

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Steve for closing comments.

Steven Shallcross, CEO and CFO

Thank you, Sherry, and thank you to everyone for taking the time to join us today. We remain very deeply committed to improving patient outcomes for these very hard-to-treat cancers, and we look forward to providing updates on our progress as we continue forward. Once again, I'd like to thank our shareholders, the entire team and the many people who have supported us along the way, including our patients and their families. Once again, thank you for joining us today, and we look forward to future updates.

Operator, Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.