Good afternoon and welcome to the Synthetic Biologics' 2020 Second Quarter Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the call over to Vincent Perrone, Director, Corporate Communication at Synthetic Biologics. Vincent?

Thanks, Tanya and good afternoon everyone. Welcome to Synthetic Biologics 2020 second quarter investor conference call. Today, I'm joined remotely by our Chief Executive and Financial Officer, Steven Shallcross; Dr. Michael Kaleko, Senior Vice President of Research and Development; and Dr. Vince Wacher, Head of Product and Corporate Development. Synthetic Biologics issued a press release this afternoon, which provided operational highlights and reported our financial results for the quarter ending June 30, 2020. The release can be found on the Investor Relations section of our website. During our call today, we'll provide an operational update on our GI and microbiome-focused clinical programs and we'll summarize our financial results. We'll take questions after our prepared remarks. In addition to the phone line, this call is being streamed live via webcast, which will be archived on our website, www.syntheticbiologics.com for 90 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 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 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 such statements. The information on 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 Steve. Steve?

Thanks, Vincent. Good afternoon everyone, and thank you for joining our 2020 second quarter investor conference call. On behalf of Synthetic Biologics, we hope you are safe and in good health. I'm glad to be with you this afternoon and look forward to sharing important updates on our strategy for advancing our portfolio of GI and microbiome focused clinical development programs during today's call. Today, we'll review our 2020 second quarter operational highlights and financial results and provide an update on our clinical development strategy as we continue to navigate the global health and economic crisis sparked by the COVID-19 pandemic. Our focus now and in the past is the safety and well-being of the patients we aim to serve our clinical research and development partners, and of course, the dedicated team here at Synthetic Biologics. As a nationwide response to the COVID-19 global pandemic evolves, we continue to inform our decisions based on recommendations made by local governments, hospitals and healthcare organizations, many of which continue to focus resources towards battling the pandemic in their regions. During our last call, I outlined our revised operational framework, which was -- which has allowed us to navigate the COVID-19 crisis and advance our clinical programs in the second quarter, specifically enrollment in the investigator sponsored Phase 2B clinical trial SYN-010 has restarted following a temporary halt during the second quarter due to the COVID-19 global pandemic. We submitted an IND application with the FDA and received a study may proceed letter to conduct a Phase 1 single ascending dose study in healthy volunteers intended to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters. We expanded our collaboration with Massachusetts General Hospital in the form of an exclusive option agreement to license intellectual property and technology to commercially develop SYN-020 for the…

Thanks, Steve. On June 29, Synthetic Biologics filed an IND for SYN-020 and has received FDA approval proceed with the first clinical trial, the single ascending dose study in normal healthy volunteers. As we enter the clinical stage, it seems like an opportune time to provide some details about the program. Any published data to which I refer will be referenced on our any company website. SYN-020, is a recombinant form of bovine intestinal alkaline phosphatase, which I'll refer to as IAP, produced in flow cells and formulated for oral delivery. In mammals, including humans, IAP is an endogenous enzyme produced by the cells that line the small intestine, and it functions to remove a phosphate group from multiple different substrates. IAP released by these cells is not digested. It travels through the intestine in biologically active form that plays a key role in maintaining gut health through at least three important mechanisms. First, it diminishes gastrointestinal inflammation by detoxifying multiple inflammatory molecules, probably the most important of which is endotoxin. Second, it acts directly on the intestinal wall to tighten the gut barrier to diminish so called leaky gut. Third, it functions to support a healthy bacterial microbiome. Based on these functional activities, we and others have recognized that oral administration of IAP has the potential to treat inflammatory diseases of the GI tract. And this clinical strategy is well supported by multiple animal models, as well as a pilot study in humans with ulcerative colitis. But equally important, by detoxifying intestinal inflammatory mediators, and by preventing them from leaking out into the systemic circulation IAP has the potential to diminish chronic low-grade systemic inflammation, which is believed to exacerbate metabolic syndrome and accelerate the progression of diseases associated with aging. More on this in a minute. At Synthetic…

Thanks, Mike. And as you can see, we're very excited about the future of this program and its potential to be a significant value adding catalyst for our company. With that backdrop, I will review our financial results for the quarter ended June 30, 2020. During the second quarter of 2020, we continue to operate in a lean and efficient manner. We maintain focused on prudent cash management that has successfully identified additional areas to further reduce non-essential operating expenses. We ended the quarter with approximately $8.1 million in cash and cash equivalent and looking ahead, we anticipate our burn to remain in line with the previous quarter. This is due primarily to the postponement of the Phase 1a/2b like clinical trials in for an allogeneic HCT recipients. At this time, we do not anticipate additional expenses related to this program for the remainder of the year. As a result, we anticipate that our current cash position will allow us to continue operations through at least the first quarter of 2021. Now let's turn to the second quarter financial results. General and administrative expenses increased by 23% to $1.3 million for the three months ended June 30, 2020. From $1 million dollars for the three months ended June 30 2019. This increase is primarily due to increase legal costs related to business developments, past and execution, employee contract matters as well as vacation and insurance costs. The charges related to stock-based compensation expense was $67,000 for the three months ended June 30, 2020, compared to $59,000 for the three months ended June 30, 2019. Research and development expenses decreased by 38% to $1.6 million for the three months ended June 30, 2020, from $2.6 million for the three months ended June 30, 2019. This decrease is primarily the result of…

Thanks Steve. Tanya we'd like to open the phone line to questions. Can you please describe the procedure to ask questions for our listeners?

Sure. We will now begin the question-and-answer session. [Operator instructions] The first question comes from James Molloy of Alliance Global Partners. Please go ahead.

Hey, guys, thanks for taking my question on the call. When on the SYN-010, will the CSMC, I know that you suggest the near restart in the fall? I'm sorry, again SYN-004. The SYN-010, the restart of the trial of the interim located third quarter top line first quarter ’21. At what point we just have to know if that's going, if that's going to be on track, or there will be additional risks of a slowdown of things, turn south in wood, Cedars-Sinai?

So, Jim, this is Steve. So we're in regular contact with our partners in Cedars-Sinai and they have started enrolling patients again in that trial. So, we're happy to see that happen. There's, obviously additional protocol that they had to put in place in order for this to happen, for instance, all the patients before they can come into the clinic for their screening have to pass a COVID test. So, even with those additional steps that have been built in to the process, things currently are back on track. I guess, as we stated in our comments, who knows what happens as we continue to go forward. But as of today, we those patients are continuing to enroll.

And I think you mentioned in your prepared remarks as well that sort of the level of burn of $2.8 million about $3 million expenses in the quarter. Is that what you'd expect to have the next few quarters going forward here in 2020. I think I had modeling something lower thinking the COVID may delay things longer. It's not like things got back on track sooner than expected?

Yeah. I mean, the actual cash used for the quarter was around $2 million. And I think that's pretty consistent with where we're at. We've talked in the past our fixed monthly burns about $500,000 and then anything that we spend above and beyond that is strictly due to the programs that are ongoing. The guidance that we've given is cash through the first quarter of 2021. So, as you sort of look at your model and understanding where the cash balances to kick in sort of see how that works.

Indeed. You guys run a lean ship, so I guess it's already other -- are there many rooms, is there much room for running it leaner. The one question I guess, the last two questions would be, I thought the disease for 020 always very interesting comment. I'd love to get some thoughts on what you would need to do to sort of advance along those lines?

So, first I'll just quickly answer the cash question. We're pretty lean as it is. We continue to look at every opportunity where we could still reduce our burn further. But I think in the last year, we did a pretty good job of getting our costs down. I mean, we have 10 full time employees. That's pretty lean for a company that's working actively and three programs. So we're feeling pretty good about where we're at in terms of staffing and our ability to manage our cash. The Celiac opportunity is really interesting. This is actually a program that we looked at several years ago, we did some extensive analysis of the market opportunity and we continue to keep this sort of on the radar. And now that we have the ability to go into the clinic initially with our Phase 1 study, it's become something that has become very, very important to us, especially with the fact that there's an unmet need in the marketplace. Our development team and our clinical folks are looking at ways that we may advance this into the clinic. Those thoughts and ideas are in various stages right now. And, once I think we were a little bit more clear about how we plan to proceed well have a discussion with the FDA, and then I think we could share more broadly with our shareholder base.

Okay. Final question for me, what do you state sort of the cost to get to a go, no go on Celiac? And then, I would assume a sort of $10 million $15 million sort of all-in trial costs running things through.

I can't even begin to answer that right now until we're clear on what a program would look like. And then we actually sit down with the FDA and discuss it. So it's still too soon to tell.

Understood. Thank you very much taking the questions.

[Operator Instructions] The next question comes from Jason McCarthy of Maxim Group. Please go ahead.

Hey, guys, this is Michael Okunewitch on the line for Jason. Congratulations on the progress and thanks for taking the question. Certainly, I like to see while we're on the topic of SYN-020. Looks like a pretty exciting opportunity with IAP. And, from what we've been watching it with a story, it looks, could essentially be a pipeline and a fill sort of situation here. And I know cost to manufacture mutations has previously prevented large scale development, but like to see if you could talk a bit more on what the actual market opportunity is here? And if you give a bit more specifics on which age related metabolic and inflammatory conditions could benefit from SYN-020?

Well, since there hasn't been a lot done in terms of clinical trials in humans for this area, a lot of what we have to refer to today as what's been done in animal models and Dr. Kaleko has been spending a lot of time with Dr. Holden. So, maybe Mike if you want to just spend a couple minutes and talk about the broad platform opportunity? We view this compound is a potential platform type product. First things first, though, right. We want to get through the initial Phase 1 studies. And then, as we hone in the areas where we have opportunity then I think we'll be in a position to talk more broadly about specific indications and ultimately, how big the product could be in any one of those indications. But, Mike, why don't you go ahead and just a couple minutes on how we view this and where ultimate the opportunities could take us?

Okay. We initially as I discussed, chose radiation enterocolitis for those specific two cancers, and we believe there's a potential for orphan designation which could accelerate the pathway to registration. And we feel it's important to move through registration as quickly as possible. Celiac, as I mentioned, has seemed remarkably well suited for SYN-020, because it is a disease that is characterized by leaky gut. And there are clinical indications that if you could fix the leaky gut that it actually could potentially improve the course of the disease. And SYN-020, is really good at fixing leaky gut. Additionally, Celiac is aggravated sometimes by small intestinal bacterial over growth and you could imagine intestine inflammatory in 20 has the potential to diminish such inflammation. So it seems very well suited to Celiac. And there's a very significant unmet medical need. So those are the two gastrointestinal diseases. After that, we would look at broader indications. And I think the first one when we think about would be metabolic syndrome Type II diabetes. Now this is down the road a bit. The regulatory pathway for diabetes is complex. So it's down the road. But certainly that is the disease of aging for which SYN-020 has remarkable animal model data. And there's actually data that suggests that human with high levels of IAP in their species are protected from diabetes, even if they're obese. The other age-related disease that people tend to think of as atherosclerosis, we have not looked at that in detail, so it is premature to discuss it. But I can tell you there's similar publication suggesting that the extent to which people develop ischemic heart disease may be inversely correlated with their FICO levels of IAP. So there's some potential promise there, but now you're looking way down the road. So I think those are the two diseases of aging that would come after the gastrointestinal.

Thank you. Very helpful. The next thing -- the next question is, I'd like to see if you could provide a bit more color on what to expect from the readout of the phase 2B in IBS-C both. What sort of difference from placebo would we need to see to consider it a great result? And then, which of the key secondary endpoints you consider the most important for attracting a partner for the Phase 3?

Okay, Mike, thanks for the question. Vince, you want to take that?

Yeah. That's would be -- So just to clarify, what we're expecting this in the near term is the futility analysis until we determine the futility analysis if the study should continue. And whether it looks like continuation will add to the overall outcome? Downstream, what do we -- what do you want to see in a product in this space, and more particularly from SYN-010. Well, you definitely want to see a defined effect on the complete spontaneous bowel movements you need an increase of a baseline the FDA endpoint is an increase of at least one per week. Competitively, you'd like to see an increase of more than one per week. But for the most part, I think if you can increase that that by one or two week, that's hitting the endpoint that you need to have. In IBS-C, you need to also get a reduction in abdominal pain. And the endpoint is a 30% reduction in abdominal pain, HVO versus baseline for the week, so their exactly average score. So those are the key efficacy endpoints in terms of differentiating, we would like to see, the products have an effect on some of the things that are most impactful for quality of life, like decreasing splurging. And we've discussed before the bloating is the symptom that IBS-C patients complain about the most. And bloating is a key. To secondary endpoints, we'd like to see bloating energy used in the study as a way of differentiating. And then the key side effect obviously is diarrhea. We want to make sure that we don't have a diarrhea outcome. We'd like to have our benefits and our additional effects on bloating without causing diarrhea, which is one of the first limiting -- utility limiting effects.

So would, you consider bloating and diarrhea, some of the key things that have led to a high rate of dissatisfaction with the current options out there?

Absolutely, diarrhea I've quantified the sort of the quality of life, the impact of diarrhea and different studies have looked at satisfaction with therapies and obviously efficacy or lack of efficacy is one of the things. But diarrhea, as an outcome, certainly a reason that people stopped using therapies, that it's not just the fact that there is diarrhea, is the fact that it's so variably afflicts the person. It can happen, when you least expect it and that is certainly uncomfortable in terms of a patient's willingness to continue on a medication that does.

All right. Thank you very much for taking the questions.

Thank you. I would now like to turn the conference back over to Steve Shallcross for closing remarks.

Thank you. And once again, thank you for joining us today. We look forward to keeping you updated on our progress, and we'll talk to you next time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.