Greetings, and welcome to the Theriva 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, Steven Shallcross. Thank you. You may begin.
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 Cascalló, General Director 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 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.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 for 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 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 continued 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, degrade the 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 in 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 focus portfolio, we continue to screen and enroll patients in the second cohort of the phase 1b/2a 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 at 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, 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 2b 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 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 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 if 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 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 VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma. We believe intravitreal VCN-01 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 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 will focus on recent updates from our collaboration with the Institut Català d'Oncologia, 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 four 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 1 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 anti-tumor 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 1 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 1b/2a clinical trial at Washington University, evaluating SYN-004, or 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 and infection by pathological organisms such as C. difficile and vancomycin-resistant enterococci.
The phase 1b/2a study is designed to assess the feasibility of using SYN-004 and consists of three sequential cohorts comparing different IV beta-lactam antibiotics following conditioning therapy. In each cohort, eight patients will receive SYN-004 and four 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 immunoshield 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 1b/2a clinical study of SYN-004 for the prevention of aGVHD in 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 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 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 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 VIRAGE phase II clinical trial of VCN-01 in PDAC, offset by decreased expenses related to our phase 1b/2a clinical trial of SYN-004 in allogeneic HCT recipients, phase 1a clinical trial of SYN-020, and decreased manufacturing expenses related to our phase 1a 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 retinoblastoma, 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 three months ended September 30, 2023, compared to $28,000 related to 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 the 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 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 as 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 and 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 thirty, 2023, compared to $41.8 million as of December thirty, 2022. We remain deeply committed to improving patient outcomes for 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 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. If you would like to ask a question, please press Star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and then two, 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. The first question we have is from James Molloy of Alliance Global Partners. Please go ahead.
Hey, good morning. Thank you for taking my questions. I had a question on expectations for the phase 2b VIRAGE, the PDAC. I know that, you expect to complete first half 2024. Should have the enrollment completed in first half 2024? When should we anticipate sort of final data, and what are, what are expectations for, for next steps for that trial? Is that, is that something that should the data look good enough to potentially go to the FDA and, and be talking about registration, or do you think you need an additional trial regardless, and you'll talk to the FDA about that?
Right. So thanks for the question, James. A couple points here. So first and foremost, the plan is to have the trial completely enrolled in the first half of 2024, 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 1 study, we had a cohort where the mean survival was over 21 months. Obviously, completing the trial in early 2024 is not gonna 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 1 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 1 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%.
Obviously, you know, one of the reasons for running this phase 2 trial with 92 patients is to see if we can replicate the observations that we had and the results we observed in the phase 1 study. With that type of data in hand, we'll have that option, if you will, to have discussions with regulatory authorities and, you know, anything is possible. Obviously, the agencies both in the U.S. and abroad, you know, 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 1, to convert this ongoing phase 2 into a pivotal trial.
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?
It does indeed. Thank you very much. Much will depend on how the data looks, of course.
Exactly.
Then-
It's all about the data.
Exactly right. There are a couple INDs, I think that previously you had guided to potentially filing by the end of 2023 the adjunctive to chemo within retinoblastoma, potential IND guidance for the end of this year and then also VCN, the next gen oncolytic adenovirus, VCN-11, a potential IND filing with trials starting sort of fourth quarter 2023. Could you please update where those stand? I know that maybe timelines have adjusted.
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 patients in the phase 1 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, you know, 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, you know, 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, you know, with a set protocol is something that not only we're very much interested in, but I think treating physicians around the globe would be interested in. So after our meeting in December, I think we'll have a bit better idea about how that program and that trial design, you know, may look.
And then after those discussions, you know, have been finalized, then we could talk, you know, to all you about, you know, what the timing of a program like that may look like. Manel, you wanna talk about the R&D efforts?
Okay. Thank you. Yeah. 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 have already been public. Said, for instance, the Albumin Shield technology, as you are perfectly aware, it's a technology that basically allows our products to escape the interaction with neutralizing antibodies. But our scientists have also developed the new technologies right now, and they are right now evaluating the combination of these new technologies with the Albumin Shield technology to generate a more powerful product. And in fact, that's something that they are very actively working in, 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 the aspects 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 replication capability, 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 equipment in our lab here in our facilities in Europe.
And we are very convinced that with these new capabilities, we are going to just generate very relevant data for just moving ahead the new candidates faster than we have done previously.
Well, maybe the 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 glioblastoma one with University of Leeds, where that IST stands? And then as you look, you've been, you know, you've been in these trials for a little bit, when you stand back and look, do you see one or two that look most more promising than others at this juncture?
Sure. Vince, you wanna take the Leeds question first?
Yeah. So thanks, James. The University of Leeds study, we had to. Well, it's 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, and 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. As I just wanna 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.
So then maybe I'll just touch briefly on, you know, 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, you know, I would say 90%+ 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 data 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 seven 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, you know, 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.
This is an interesting program and potentially a program for partnering. We have engaged with, you know, folks that should be interested in a program like this. You know, we'll keep you updated on the progress of those types of discussions.
Okay, well, last question. I know that you touched on it in prepared remarks, but G&A, pretty remarkable drop in the quarter. Is this the level we should expect going forward, or is it gonna go back to more than $2 million roughly per quarter that it had been over the last number of quarters?
It'll 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 Grifols, and you know, 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.
Great. Thank you for taking the questions.
Thank you. We have no further questions at this time. I would like to turn the floor back over to Steven Shallcross for closing comments.
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 derive 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.
This concludes today's conference. Thank you for joining us. You may now disconnect your lines.