Theriva Biologics, Inc. (TOVX) Q4 2013 Earnings Report, Transcript and Summary

Kris Maly - VP of Corporate Communication Jeff Riley - CEO Evan Ballantyne - CFO

Ram Selvaraju - Aegis Capital Jason Kolbert - Maxim Group

Good morning everyone, and welcome to Synthetic Biologics 2013 Year-end Investor Conference Call. (Operator Instructions) Please note, today’s event is being recorded. At this time, I would like to turn the call over to Kris Maly, Vice President, Corporate Communication at Synthetic Biologics. Kris?

Thanks Jamie, and good morning, everyone. Welcome to Synthetic Biologics 2013 Year-end Investor Conference Call. Today, I'm joined by our CEO, Jeff Riley; and our CFO, Evan Ballantyne. Pre-market this morning, Synthetic Biologics issued a press release reporting our 2013 year-end highlights surprising recent operational highlights. That release can be found in the Investors section of our website. On our call today, Jeff will provide an update on the progress of our development and clinical program and on the advances we have made to our upcoming milestone. Evan will then provide a brief overview of our 2013 year-end financials. After the formal portion of the call, we will offer the opportunity for Q&A. In addition to the phone line, this call is being streamed live over the Internet today, and the webcast replay will be archived on our website for 30 days. During this call, we will be making forward-looking statements regarding Synthetic Biologics' current expectations and projections about future events. Generally, the forward-looking statements can be identified by terminologies, such as may, should, expects, anticipates, intends, plans, beliefs, estimates and similar expressions. These statements are based upon current beliefs and expectations and assumptions and are subject to a number of risks and uncertainties, including those set forth in Synthetic Biologics' filings with the SEC, many of which are difficult to predict. No forward-looking statements can be guaranteed, and actual results may differ materially from these statements. The information in this call is provided only as of the date of this call, and Synthetic Biologics undertakes no obligation to update any forward-looking statements contained on this conference call on account of new information, future events or otherwise, except as required by law. With that, I'd like to turn the call over to Jeff.

Thanks, Kris, and good morning, everyone. It's my pleasure to update you today on our efforts at Synthetic Biologics. It would like to begin with our most potential near-term value driver for the company, our multiple sclerosis program, Trimesta our oral MS candidate, is being evaluated in combination with Teva's Copaxone in a Phase II clinical trial for the treatment of relapsing-remitting MS in women under an investigator-initiated IND. Available MS therapies demonstrate anti-inflammatory and/or immuno-modulatory responses. Based on Dr. Rhonda Voskuhl's previous research findings, Trimesta may offer both inflammatory and neuroprotective benefits for patients with multiple sclerosis when taken in combination with Teva's Copaxone. The patients in the Phase II clinical trial completed their final 24 months visit during January 2014, and we were pleased to announce earlier this quarter that the lead investigator of the trial Dr. Voskuhl is scheduled to present top line results at the American Academy of Neurology at the 66th annual meeting in Philadelphia next month. Dr. Voskuhl’s abstract titled a combination trial of Estriol Plus Glatiramer Acetate in Relapsing-Remitting Multiple Sclerosis, will be presented as part of the AAN’s emerging science program during two sessions, late next month on April 29 and the 30. The presentation of these topline results represents an important milestone for the company, and for the potential development of a treatment for MS patients. We look forward to announcing Dr. Voskuhl’s topline results concurrent with her presentation at AAN. More and more, often these days we hear reports in the news about outbreaks of infectious disease that are on the rise worldwide. Super bugs are increasingly more resistant to drugs. Antibiotics simply are not working. In fact, it is likely that antibiotics maybe creating even bigger problems for the patients. Over the past two years, Synthetic Biologics has built…

Thank you, Jeff and thank you everybody for attending our call today. Synthetic Biologics 2013 year-end financials were included in our press release which was distributed over the Newswire earlier this morning. The company’s December 31, 2013 10-K will be filed with the SEC this afternoon. For the year ended December 31, 2013 our general and administrative expenses increased to $5.8 million compared to $5 million for the same period 2012. The increase of 16% is primarily the result of bad debt expenses totaling $763,000 associated with the determination that the note and the interest receivable from the sale of Adeona Clinical Laboratory was uncollectible. Included in these numbers were non-cash charges related to stock-based compensation of $1.3 million for the year ended December 31, 2013, compared to $1.5 million for the same period a year ago in 2012. Research and development expense decreased to $6.5 million for the year ended December 31, 2013, compared to $12.3 million for the same period in 2012. The decrease of 47% is primarily the result of non-cash charges recorded to reflect the fair value of common stock issued to Intrexon in consideration for the infectious disease exclusive channel collaboration and the fair value of the common stock issued for the acquisition of the C. difficile program assets. The decrease in research and development expense was partially offset by increases in employee and program costs associated with the company's infectious disease programs. Non-cash charges related to stock-based compensation were $375,000 for the year ended December 31, 2013, compared to $400,000 for the same period a year ago in 2012. I would like to mention that the Phase II MS trial evaluating Synthetic Biologics world drug candidate Trimesta and being conducted under an investigator-initiated IND by Dr. Rhonda Voskuhl of UCLA is being funded by grants awarded to UCLA from the National MS Society and the NIH. Also our pertussis and Acinetobacter monoclonal antibody development programs as well as our newest discovery program for an autoimmune target for a subset of IBS are being funded from a prepaid account established with Intrexon in 2012. The establishment of the 2012 prepaid account has helped the company limit its 2013 cash burn required to fund these programs. In December 2013, Synthetic Biologics successfully completed a firm commitment underwriting public offering of approximately 12.2 million shares of common stock for net proceeds from the offering of approximately $12.2 million. Cash as of December 13 of 2013 was $14.6 million compared to $10 million in the same period a year ago. As of March 27, 2014, the company’s cash and cash equivalents were approximately $11.3 million. At this time I would like to turn the conference call back to Kris Maly.

Thanks Evan. We would like to open the line to questions now. Jamie would you please describe the procedure to ask questions for our listeners?

And ladies and gentlemen we will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Ram Selvaraju from Aegis Capital. Please go ahead with your question.

Yes, I just had a couple of questions regarding the Trimesta programs, could you clarify whether results were previously released from an earlier 64 patients study looking at the activity of Trimesta. I seem to recall that there was a prior study which should have reported results in advance of the study that Rhonda Voskuhl is presenting? And then secondly, can you comment on the possibility for there to be differential impacts on the clinical course of MS disease from progesterone or progesterone-based derivatives versus estrogen and estrogen-based derivatives?

Hi, Ram. This is Jeff, the CEO. The first question -- the answer to your question with respect to the 64 patient clinical trial, we do have a trial ongoing still and that is specific to cognition. So there were two Phase II trials going on, one was the relapsing-remitting trial which has completed in January. The other one is still enrolling and that is for cognitive dysfunction. That one has not completed enrollment at this time. The prior trial that was announced was a Phase I trial. There was a bit of confusion because this trial has taken a fair amount of time to enroll a little over five years and so people are looking back at we have the enrollment time period back then and sort of where we are today. So the enrollment finished two years ago and then we locked the trial and trial just completed. The other answer to your question -- the other question I believe is that we will be presenting top line results. Dr. Voskuhl will be presenting top line results next month when we have 30 days, 28 days we’re somewhere in there. Specific to relapsing-remitting we will then do a deeper dive into the dataset over the summertime and she plans on presenting the deeper dive results in the various different patients populations in the 15 different clinical sites, sometime in late September, October I believe this is the current thought process.

(Operator Instructions) Our next question comes from Jason Kolbert from Maxim Group. Please go ahead with your question.

Hi, Jeff, congratulation on a lot of progress. I just wanted to ask a little bit about the two studies that are going to be presented at AAN and can you help me understand the rationale behind what those two studies are and just the more information you can give me the better in terms of both results and mechanism of the action? Thanks.

Hi, Jason. Dr. Rhonda Voskuhl basically applied for two spots at the conference. One is a five-minute spot and we believe that is where she’s going to present the top line results. The other slide is specific to the mechanism of action of Estriol. So she is going to back historically and describe what why Estriol makes a lot of sense given alone or concurrently with existing medications for MS specific to brain lesions et cetera like that like the reduction of brain lesions and reduction in size of those brain lesions. But she is just going to discuss the MOA. I guess that’s the way the conference typically breaks it out as results come in one piece, explanation comes in a second piece and that’s the way that is going be.

And just transitioning to some of the other programs, can you outline for me what the next steps are going to be in the whopping cost study and just exactly when we can expect that to get underway?

Well, it’s underway today, I mean, we’re in the middle in the IND-enabling study. We are in at the middle of a non-human primate study. We should have that data relatively soon. We’re starting a second non-human primate study in nine days and we’ll be taking the results of all that information releasing that to the public after we have those results. Just a side note though the non-human primate study is not the gating event for us to move forward. We’ve got excellent results in the mouse models and those are models that need to be put into the IND-enabling. So the next steps are to continue with the non-human primate to further inform us as to dosing what not, continue with the IND-enabling work. We’re going to be ramping up to get the manufacturing of the two antibodies completed. This is together with Intrexon Corporation. And we should look toward on orphan drug application a little bit later this year as well and then jumping obviously into the clinic. This is a unique situation because it is an orphan drug indication, but we also don’t need a ton of patients to get all the way through we think through to registration for this particular trial. We haven’t said exactly how many but it’s well under 100 patients to get to that point. The endpoints are relatively clear as well. This would be mortality on a primary endpoint and likely white blood cell count or leukocyte count as a secondary or those maybe first but I think that’s essentially what we’re going to be looking at. So we should have more information in, I think I’ve said second quarter of this year on the primate study as well as the next steps going forward, but as you know I’m scaling up antibody takes a bit of time. So we’ll be looking at toward fourth quarter of this year before we have the material ready to rock and roll.

Okay, so what I hear you saying though that could be actually a rapid transition to commercialization once you start rolling beyond the primate study actually into proof-of-concept studies in people?

That’s correct, Jason. I mean there is no current therapeutic for this indication. 300,000 people died around the world mostly infants, newborns from this disease state, 50 million people catch pertussis around the world that’s a huge issue outside the United States and Europe and Japan. But we’re focused initially on the U.S. market and looking at how can we help these newborn infants that where there is currently no therapy and how can we help the elderly that maybe in an ICU unit or on respiratory therapy these type of folks that if they get this disease it’s very, very deadly to these guys I mean it’s a tough disease to get over. So, we’ll be enrolling likely for pediatric label later this year that’s a forward looking statement because we’ve not really gone through the regulatory pieces yet but we’ll be looking at transitioning straight into a Phase I/II and then obviously into a Phase II/III there afterwards for registration.

And can you just tough lastly with me on SYN-010 and just exactly what the next events are that we should be paying attention to as we look for that product to develop clinical data?

Thanks. This is an awesome product again we acquired this product from our founder of the company back in December of last year we’re in the process of building up intellectual property around this particular product is oral it is available today in another format has been giving to millions of patients around the world we have a very large safety database around this particular API. The next steps are once we have the IP in place we’ll file an IND later this year and then we’ll be jumping directly into a Phase II study. We have not had a pre-IND meeting with the FDA yet but we’ll probably ask for one this summer. That discussion will determine what that Phase II or even potentially a Phase III trial may look like for this particular drug. And again as I noted in the earlier statements we’ll be going after specifically irritable bowel syndrome and the constipation form of that versus [indiscernible] obviously has the diarrheal form but both are from the same investigator Dr. Pimentel, Cedars - Sinai has worked on both sides of this particular disease state. The really exciting things which we’re not going to be looking for end points but we will be generating data in it concurrent with Cedars - Sinai is in the Type 2 diabetes area as far as glucose lowering and in the obese area as far as reduction in weight. Both associated with reduction in methane gas in the small intestine which seems to be the primary culprit in each of these three diseases. Does that help?

Yes, that’s very helpful. Thanks for the rundown.

(Operator Instructions) And at this time, I’m not showing any questions I’d like to turn the conference call back over to Kris Maly for any closing remarks.

Thanks Jimmy and thanks everyone for joining us this morning. We look forward to updating you again next quarter. Have a great day.

Ladies and gentlemen, that does conclude today’s conference call. We do thank you for attending. You may now disconnect your telephone lines.