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.

See also Top 15 CBI Programs for Tax Benefits and 20 Most Desirable Digital Nomad Visa Countries in 2023.

Q&A Session

Operator: [Operator Instructions] The first question we have is from James Molloy of Alliance Global Partners.

James Molloy: I had a question on expectations for the Phase IIb VIRAGE in PDAC and if you expect to complete first half ’24, the enrollment completed first half ’24, when should we anticipate sort of final data? And what are our expectations for next steps of that trial? Is that something that should the data look good enough potentially go to the FDA and we’re talking about registration? Or do you think you need additional trial regardless of the locking the FDA about that?

Steve Shallcross: Right. So thanks for the question, Jim. A couple of points here. So first and foremost, the plan is to have the trial completely enrolled in the first half of ’24, and that’s consistent with our guidance. I can tell you that we’re on track with our enrollment expectations as we speak, and we should be able to achieve that objective. The primary endpoint of the trial is overall survival. And if you recall from our Phase I study, we had a cohort where the mean survival was over 21 months. Obviously, completing the trial in early ’24 is not going to bridge you to that primary endpoint and that data won’t be available until mid to late 2025. However, there are other endpoints that we’re evaluating in this trial.

The next probably more important endpoint is response rate. And because the trial is open label, we will have the ability to evaluate the data as it comes in real time from both of these arms, and if we are in a position to observe response rates that were along the lines of the observations in the Phase I study, that will give us an opportunity to perhaps have discussions with regulators, both in Europe and the FDA. And if you recall that Phase I data at the high dose, we had a response rate of over 80% where the response rate for the standard of care treatment, nab-paclitaxel and gemcitabine was around 23%. So obviously, one of the reasons for running this Phase II trial with 92 patients is to see if we can replicate the observations that we had in the results we observed in the Phase I study.

With that type of data in hand, we’ll have that option, if you will, to have discussions with regulatory authorities and anything is possible. Obviously, the agencies, both in the U.S. and abroad, want to get these types of treatments to the patients as quickly as possible, especially if we’re seeing significant improvements in survival. So I guess, an option is if the data are as robust as we observed in the Phase I to convert this ongoing Phase II into a pivotal trial. And I guess there’s always the possibility of some form of accelerated approval with the continuance of enrollment to collect additional data. Does that help answer your question?

James Molloy: It does indeed. Much will depend on how the data looks, of course.

Steve Shallcross: Exactly. It’s all about the data.

James Molloy : Exactly right. The — there are a couple of INDs. I think that previously, you guided to potentially filing by the end of ’23, the adjunctive to chemo, in retinoblastoma potential IND guidance for the end of this year? And then also the next-gen oncolytic adenovirus VCN-11, a potential IND filing with trials starting sort of fourth quarter ’23. Could you please update where those stand? I know that maybe time lines have adjusted.

Steve Shallcross: Right. Let me talk to retinoblastoma very quickly, and then I’ll have Manel discuss where we’re at in our research and development initiatives. The retinoblastoma program continues. Interestingly, we continue to enroll and patients — enroll patients in the Phase I study. And as that data further matures, we’ll have something to talk about at a later date. We do have a meeting with the FDA in December to discuss a path forward for the retinoblastoma program. And together with our key opinion leaders around the world, we’ve come up with some ideas about potential designs for a retinoblastoma program. As we mentioned in our discussions earlier, there’s no approved treatment for retinoblastoma, and those patients today that get treated are done so in multiple different ways, depending on what part of the world those patients are being treated.

So having an approved treatment with the set protocol is something that not only we’re very much interested in, but I think treating physicians around the globe be interested in. So after our meeting in December, I think we’ll have a bit better idea about how that program in that trial design may look. And then after those discussions have been finalized, then we could talk to all of you about what the timing of a program like that may look like. Manel, you want to talk about the R&D efforts.

Dr. Manel Cascalló: So very briefly, so our R&D team is working very intensively in the development of new candidates right now. So we have a bunch of different technologies that some of them has already been published, for instance, the [ABB] technology as you are perfectly aware, it’s the technology that basically allows our products to escape the interaction with neutralizing antibodies. But our scientists have also developed a new technologies right now, and they are right now evaluating the combination of these new technologies with [ABB] technology to generate a more powerful product. And in fact, that’s something they are very actively working in just fine-tuning the best candidate to move to the clinic. That’s something that we expect to occur probably at some point during the first half of next year also.

And in parallel to that, the team has also been working in all these assets related with manufacturing, which is an intrinsic part of the development of products, and it’s very relevant because, as you know, for our products, the application capabilities, it’s a critical feature that allows for a much better clinical behavior. So we have been increasing our capabilities here also in the manufacturing terms for testing the process development for the new candidates that we are developing, and we have acquired new equipments in our labs here in our facilities in Europe. And we are very convinced that with this new capabilities, we are going to just generate very relevant data for just moving ahead the new candidates faster than we have done previously.

James Molloy : Maybe last question on the pipeline, then if I could please. I think you guys touched on most of your early-stage ISTs. Did you touch on the retinoblastoma one with University of Leeds where that IST stands? And then as you look — you’ve been in these trials for a little bit. We stand back and look, do you see 1 or 2 that look more promising than others at this juncture?

Steve Shallcross: Vince, do you want to take the leads question first?

Dr. Vince Wacher: So thanks, Jim. The University of Leeds study, we had to — well, if an investigator sponsored study, the investigators wanted to make an amendment to the protocol, which they did to help with the scheduling of the surgery that’s part of that protocol. As you’re probably well aware, in the U.K., everything runs through the NHS, so scheduling was becoming a bit of a challenge and they submitted that protocol. That protocol has recently been approved by the MHRA and we are now working on the appropriate drug supply for them to move forward with that study. It’s a study that’s really a PK study, I just want to remind everybody, it’s fundamentally to see whether or not intravenous virus can get into the brain. So we have the one patient that’s been treated. We don’t have the final results from them. But that study is moving comparatively slowly just because of this amendment took quite a while to get approved.

Steve Shallcross: So then maybe I’ll just touch briefly on what I think we’re learning from what we’re doing in the clinic and what offers the most promise for unlocking the most value for the shareholders. Obviously, PDAC is the most important program to the company. It’s the one where we’re committing, I would say, 90-plus percent of our financial resources to. The other program that is very exciting that we just recently talked about from ESMO is the data using VCN-01 in combination with durvalumab in head and neck cancer patients. We had an investigator call following the release of the date at ESMO and when we put that press release out, that interview and conference is still available on our website, and I encourage investors to go listen to it because it was quite revealing.

Essentially, this was a group of 20 patients that had failed checkpoint inhibitor therapy. These patients typically die within 7 months after they’ve failed multiple rounds of checkpoint inhibitor therapy. These patients were then given VCN-01 and then started up on checkpoint inhibitor therapy once again. And we had some pretty remarkable results. On average, at the low dose, we had a survival rate of 15.5 months and at the high dose, 17.3 months. So this is an interesting program and potentially a program for partnering, and we have engaged with folks that should be interested in a program like this, and we’ll keep you updated on the progress of those types of discussions.

James Molloy : Well, last question. I know that you touched on it in the prepared remarks, but G&A, pretty remarkable drop in the quarter. Is this the level we should expect going forward? Or is it going to go back to more of that $2 million roughly per quarter that it had been over the last number of quarters?

Steve Shallcross: It will go back to more of the $2 million. That was an anomaly resulted to the accounting for the contingent consideration. We had a payment to the Grifols. And obviously, every quarter, you readjust and revalue the future payments that are all milestone driven. So that was more of an anomaly for the quarter.

Operator: We have no further questions at this time. I would like to turn the floor back over to Steve Shallcross for closing comments.

Steve Shallcross: Thanks, Irene, and thank you to everyone for taking the time to join us today. Again, we remain focused on driving our key programs forward, and we’ll continue to evaluate strategic opportunities that we believe have an opportunity to drive significant shareholder value and long-term success. Once again, thanks for joining us today, and we look forward to keeping you updated in the future. Have a great week.

Operator: This concludes today’s conference. Thank you for joining us. You may now disconnect your lines.