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Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2021-11-03 · 341 added, 169 removed, 92 unchanged (85% of the section changed)

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Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and elsewhere herein, and those identified under Part I, Item 1A of our 2021 Form 10-K.

We are a diversified clinical-stage company developing therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need.

Our lead clinical development candidates are:

We are a diversified clinical-stage company developing therapeutics in areas of high unmet need.

Prior to the Acquisition of VCN, our focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases which included.

our lead clinical development candidates:

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent microbiome damage, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases.

We plan to explore and evaluate a range of strategic options, which may include:

in-licensing opportunities;

evaluation of potential acquisitions;

or other potential strategic transactions.

In the meantime, we remain focused on working with our clinical development partners to complete the ongoing Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT patients, and advancing the clinical development program for SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications.

We are continuing to assess the potential impact of the COVID-19 pandemic.

We are in close contact with our clinical development partners in order to assess the impact of COVID-19 on our studies and current timelines and costs.

While we currently do not anticipate any interruptions in our operations due to COVID-19, it is possible that if the COVID-19 pandemic were to increase in severity for an extended period of time, we could once again experience delays in our clinical trials which could result in significant disruptions to our clinical development timelines due to the COVID-19 pandemic, which would adversely affect our business, financial condition, results of operations and growth prospects.

In response to the spread of COVID-19 as well as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity.

We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state and local government and health authorities.

The full extent to which the COVID-19 outbreak will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.

The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

Our Product Pipeline:

Upon consummation of the Acquisition of VCN, described in more detail below, we are transitioning our strategic focus to oncology, through the development of new oncolytic adenovirus products designed for intravenous and intravitreal delivery to trigger tumor cell death, improve access of co-administered cancer therapies to the tumor, and promote a robust and sustained anti-tumor response by the patient’s immune system.

As part of our strategic transformation into an oncology focused company, we are exploring value creation options around our SYN-020 and SYN-004 assets.

SYN-004 and SYN-020 both have significant potential opportunity in non-oncology related indications.

Advancement of these products may be better achieved through out-licensing or partnering and we will explore opportunities for both SYN-004 and SYN-020 moving forward.

Acquisition of VCN Biosciences, S.L

On March 10, 2022, pursuant to the terms of the Share Purchase Agreement (“Purchase Agreement”) we entered into with VCN and the shareholders of VCN Biosciences S.L.(the “Sellers”), we completed our acquisition of all the outstanding shares of VCN (the “VCN Shares”) from the shareholders of VCN.

Pursuant to the Purchase Agreement, as consideration for the purchase of the VCN Shares of capital stock, we paid $4,700,000 (the “Closing Cash Consideration”) to Grifols Innovation and New Technologies Limited (“Grifols”), the owner of approximately 86% of the equity of VCN, and issued to the remaining Sellers 26,395,303 shares of our common stock, $.001 par value (the “Closing Shares”), representing 19.99% of the outstanding shares of our common stock on December 14, 2021, the date of the Purchase Agreement.

As additional consideration for the purchase of the VCN Shares held by Grifols, we also agreed to make certain milestone payments to Grifols.

Pursuant to the terms of the Purchase Agreement we loaned VCN $417,000 to help finance the costs of certain of VCN’s research and development activities.

In addition, at Closing VCN and Grifols entered into a sublease agreement for the sublease by VCN of the laboratory and office space as well as a transitional services agreement.

We agreed as a post- Closing covenant to commit to fund VCN’s research and development programs, including but not limited to VCN-01 PDAC phase 2 trial, VCN-01 RB trial and necessary G&A within a budgetary plan of approximately $27.8 million.

VCN is a private, clinical-stage biopharmaceutical company developing new oncolytic adenoviruses for the treatment of cancer.

VCN’s lead product candidate, VCN-01, is being studied in clinical trials for pancreatic cancer and retinoblastoma.

VCN-01 is designed to be administered systemically, intratumorally or intravitreally, either as a monotherapy or in combination with standard of care, to treat a wide variety of cancer indications.

VCN-01 is designed to replicate selectively and aggressively within tumor cells, and to degrade the tumor stroma barrier that serves as a significant physical and immunosuppressive barrier to cancer treatment, Degrading the tumor stroma has been shown to improve access to the tumor by the virus and additional therapies such as chemo- and immuno-therapies.

Importantly, degrading the stroma exposes tumor antigens, turning “cold” tumors “hot” and enabling a sustained anti-tumor immune response.

VCN has the rights to four exclusive patents for proprietary technologies, as well as technologies developed in collaboration with the Virotherapy Group of the Catalan Institute of Oncology (ICO-IDIBELL) and with Hospital Sant Joan de Deu (HSJD), with a number of additional patents pending.

Our Current Product Pipeline

*Based on management’s current beliefs and expectations

aGVHD acute graft-vs-host disease;

allo-HCT allogeneic hematopoietic cell transplant patients;

AMR antimicrobial resistance;

CDI Clostridioides difficile infection.

SAD single ascending dose

allo-HCT allogeneic hematopoietic cell transplant.

IAP recombinant bovine intestinal alkaline phosphatase II.

CPI immune checkpoint inhibitor.

Gem/Nab-P Gemcitabine + Abraxane® (nab-paclitaxel).

HNSCC head and neck squamous cell carcinoma.

IV intravenous.

IVit intravitreal.

MAD multiple ascending dose.

ODD Orphan Drug Designation.

OV oncolytic adenovirus engineered to selectively replicate in tumors and express hyaluronidase enzyme PH20.

¹Additional products with preclinical proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD and infection by carbapenem resistant enterococci and SYN-007 (ribaxamase) DR to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

²Dependent on funding/partnership.

³Announced option-license agreement with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

Additional pipeline products with preclinical proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD, microbiome damage and infection due to treatment with carbapenem antibiotics, and SYN-007 (ribaxamase) delayed release (“DR”) being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

Summary of Clinical and Preclinical Programs

Therapeutic Area

Current Status

Prevention of microbiome damage, CDI, overgrowth of pathogenic organisms, AMR, and aGVHD in allogeneic HCT recipients (Degrade IV beta-lactam antibiotics)

(oral enzyme)

Announced outcomes from End of Phase 2 meeting, including Food and Drug Administration (FDA)-proposed criteria for Phase 3 clinical efficacy and safety which, if achieved, may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018)

Clarified market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic hematopoietic cell transplant (HCT) patients

Announced clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate safety, tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019)

Received official meeting minutes from FDA Type-C meeting held on December 2, 2019 to discuss development in allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever (Q1 2020)

Received written notification from the FDA informing the Company that the FDA determined the Phase 1b/2a clinical program in adult allogeneic hematopoietic cell transplant (HCT) recipients may proceed per the submitted clinical program protocol (Q3 2020)

Washington University began enrollment and the first patient was dosed in the first of three antibiotic cohorts for the Phase 1b/2a clinical trial of SYN-004 in adult HCT recipients (Q2 2021)

Preserve gut barrier, treat local GI inflammation, and restore gut microbiome

(oral IAP enzyme)

Generated high expressing manufacturing cell lines for intestinal alkaline phosphatase (IAP) (1H 2017)

Identified basic Drug Supply manufacturing process and potential tablet formulation (2H 2017)

Identified potential clinical indications with unmet medical need including enterocolitis associated with radiation therapy for cancer (Q1 2019)

Completed pre-IND (Investigational New Drug) meeting with the FDA to clarify requirements for IND-enabling toxicology studies and manufacturing requirements (Q2 2019)

Entered into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases (Q2 2020)

Submitted IND application with U.S.

FDA supporting an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy (Q2 2020)

Received study-may-proceed letter from U.S.

FDA to conduct a Phase 1 single ascending dose (“SAD”) study in healthy volunteers, designed to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

Commenced enrollment, dosing and observation in a Phase 1 SAD study of SYN-020 (Q2 2021)

Announced that enrollment, dosing and observation has been completed in the Phase 1, open label, SAD clinical trial.

Analyses of preliminary data demonstrated SYN-020 maintained a favorable safety profile and was well tolerated at all dose levels (Q2 2021)

Commenced enrollment, dosing and observation in a Phase 1, multiple ascending dose (“MAD”) clinical trial of SYN-020 in healthy, adult volunteers (Q3 2021).

A data readout is anticipated during the second quarter of 2022

Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade IV carbapenem antibiotics)

(oral enzyme)

Identified P2A as a potent carbapenemase that is stable in the GI tract

Manufactured a formulated research lot for oral delivery (2017)

Demonstrated microbiome protection in a pig model of ertapenem administration (Q1 2018)

Reported supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance in a pig model, including encoded beta-lactamases and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of antibiotic-associated diarrhea (AAD), overgrowth of pathogenic organisms and AMR (Degrade oral beta-lactam antibiotics)

(oral enzyme)

Preclinical work ongoing to expand the utility of SYN-004 (ribaxamase) for use with oral beta-lactam antibiotics

Reported supportive data from a second canine animal model demonstrating that when co-administered with oral Amoxicillin and oral Augmentin (combination amoxicillin/clavulanate), oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these antibiotics (Q2 2018)

Reported supportive data demonstrating SYN-007 mitigated antibiotic-mediated gut microbiome alterations and maintained gut microbiome integrity when co-administered with oral amoxicillin in a dose-response canine study (Q2 2019)

Reported supportive data demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase inhibitor Augmentin and also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Prevention and treatment of pertussis

(monoclonal antibody

Reported supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection from pertussis for five weeks in a neonatal non-human primate study (Q4 2017)

Collaboration with UT Austin

Recent Developments

²Depending on funding/partnership.

SYN-004 may enter an FDA-agreed Phase 3 clinical trial for the treatment of Clostridioides difficile infection.

³We have an option-license agreement with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

Our Gastrointestinal (GI) and Microbiome-Focused Pipeline

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Phase 1b/2a Clinical Study in Allogeneic HCT Recipients

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever.

Under the terms of this agreement, we serve as the sponsor of the study and supply SYN-004 (ribaxamase).

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Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow Transplantation and Leukemia.

The Phase 1b/2a clinical trial is a single center, randomized, double-blinded, placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

The goal of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg oral SYN-004 (ribaxamase) administered to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic to treat fever.

Study participants are being enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam antibiotic.

Eight participants in each cohort will receive SYN-004 (ribaxamase) and four will receive placebo.

Safety and pharmacokinetic data for each cohort will be reviewed by an independent Data and Safety Monitoring Committee, which will make a recommendation on whether to proceed to the next IV beta-lactam antibiotic.

The clinical trial will also evaluate potential protective effects of SYN-004 (ribaxamase) on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 (ribaxamase) in allogeneic HCT recipients.

On April 14, 2021, we announced that enrollment has commenced and the first patient of the first antibiotic cohort of this study had been dosed.

At this time, enrollment remains ongoing and a data readout for the first antibiotic cohort is anticipated in Q1 2022.

Due to the unique challenges posed by the global COVID-19 pandemic, Washington University continues to evaluate non-essential activities which may have a direct impact on planned and ongoing clinical trials.

On January 7, 2020, we announced the receipt of official meeting minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever.

Based on the final meeting minutes, the Phase 1b/2a clinical trial will comprise a single center, randomized, double-blinded, placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

The goal of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of oral SYN-004 (ribaxamase;

150 mg four times daily) administered to allogeneic HCT recipients who receive an IV carbapenem or beta-lactam antibiotic to treat fever.

Study participants will be enrolled into three sequential cohorts administered a different study-assigned IV antibiotic.

Each cohort seeks to complete eight evaluable participants treated with SYN-004 (ribaxamase) and four evaluable participants treated with placebo.

The study will also evaluate potential protective effects of SYN-004 on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 in allogeneic HCT recipients.

On July 30, 2020, we received written notification from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic HCT recipients may proceed per the submitted clinical study protocol.

On December 22, 2020, we announced that we received approval from the Institutional Review Board (IRB) at Washington University to commence the Phase 1b/2a clinical trial of SYN-004.

During the first quarter of 2021, Washington University began screening patients for enrollment of the first of three antibiotic cohorts in the Phase 1b/2a clinical trial of SYN-004 in allogeneic HCT recipients.

On April 14, 2021, we announced that the first patient had been dosed in our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) recipients for the prevention of acute graft-versus-host-disease (aGVHD.

To date, we have dosed 17 patients (11 that are considered evaluable) in the study.

If enrollment proceeds on the current schedule we may be positioned to announce as many as three interim data readouts during the next 18-24 months with the first one anticipated from the first antibiotic cohort during the second half of 2022, pandemic conditions permitting, the second cohort during the second half of 2023 and the third cohort during the second half of 2024.

Due to the unique challenges posed by the global COVID-19 pandemic, Washington University had previously halted the commencement of the Phase 1b/2a clinical trial and they continue to evaluate non-essential activities which may have a direct impact on the continuation of the ongoing clinical trial.

Continuation of the Phase 1b/2a clinical trial including, but not limited to, the enrollment of new patients remains largely at the discretion of Washington University and is contingent upon their ability to conduct this clinical program free from the impact of COVID-19.

We remain in close contact with Washington University and are actively monitoring the crisis caused by the spread of COVID-19 and its impact to the clinical development plans for our SYN-004 (ribaxamase) program.

We remain in close contact with Washington University and are actively monitoring the potential impact of COVID-19 on the clinical development plans of SYN-004 (ribaxamase) program.

SYN-020 — Oral Intestinal Alkaline Phosphatase

SYN-020 is a quality-controlled, recombinant version of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery.

The published literature indicates that IAP functions to diminish GI and systemic inflammation, tighten the gut barrier to diminish “leaky gut,” and promote a healthy microbiome.

The published literature indicates that IAP functions to diminish GI inflammation, tighten the gut barrier to diminish “leaky gut,” promote a healthy microbiome, and diminish GI and systemic inflammation.

Despite its broad therapeutic potential, a key hurdle to commercialization has been the high cost of IAP manufacture, which is commercially available for as much as $10,000 per gram.

We believe we have developed technologies to traverse this hurdle and now have the ability to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per gram at commercial scale.

Based on the known mechanisms as well as our own supporting animal model data, we intended to initially develop SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers.

While we believe SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we have also begun planning to develop SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also addressing significant unmet medical needs.

We believe we have developed technologies to traverse this hurdle currently now have the ability to produce more than 3 grams per liter of SYN-020.

If the yields are successfully translated to a commercial scale, we could ultimately manufacture IAP for roughly a few hundred dollars per gram.

Based on the known IAP mechanisms of action, as well as our own supporting animal model data, we intended to initially develop SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers.

While we believe SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we have begun planning for potential development of SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also addressing significant unmet medical needs.

Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”), and indications to treat and prevent metabolic and inflammatory disorders associated with aging, which are supported by our collaboration with Massachusetts General Hospital (“MGH”).

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are expected to increase from 2.8 million in 2013 to an expected 4.3 million in 2023, representing a significant market opportunity.

During the second quarter of 2020, we announced that we entered into an agreement with Massachusetts General Hospital granting us an option for an exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases.

During the second quarter of 2021, we announced an amendment to our option for an exclusive license agreement with MGH to include intellectual property and technology related to the use of SYN-020 to inhibit liver fibrosis in select diseases, including NAFLD.

Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General and Gastrointestinal Surgery and Professor of Surgery, Harvard Medical School, evaluated long-term oral supplementation of IAP, including SYN-020, in mice.

Hodin’s research demonstrated that IAP administration, starting at 10 months of age, slowed the microbiome changes, gut-barrier dysfunction, and gastrointestinal and systemic inflammation that normally accompany aging.

Additionally, the IAP administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

Under the terms of the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and prevent metabolic and inflammatory diseases associated with aging.

If executed, we would use this license in the advancement of an expanded clinical development program for SYN-020.

On June 30, 2020, we submitted an IND application to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy.

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On April 1, 2021, we announced that enrollment had commenced in the Phase 1 SAD clinical trial of SYN-020.

On June 29, 2021, we announced that enrollment, patient dosing and observation had been completed in its Phase 1, open-label, SAD study of SYN-020.

On June 29, 2021, we announced that enrollment, patient dosing and observation had been completed in the Phase 1, open-label, SAD study of SYN-020.

The SAD study enrolled 6 healthy adult volunteers into each of four cohorts with SYN-020 given orally as single doses ranging from 5 mg to 150 mg.

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On October 21, 2021 we announced that patient enrollment, dosing and observation commenced in the Phase 1 MAD of SYN-020.

The ongoing Phase 1, placebo-controlled MAD study is intended to evaluate the safety, tolerability and biodistribution of SYN-020 upon repeated dosing and is expected to enroll 8 healthy adult volunteers into each of four cohorts (32 total study participants) with SYN-020 given orally twice daily for fourteen days as multiple ascending doses ranging from 5 mg to 75 mg.

A safety review will be conducted at the end of each cohort to determine whether progression into the next higher dose cohort is permissible.

At this time, the first cohort of 8 study participants is nearing completion and dosing of the second cohort of 8 study participants is expected to begin shortly thereafter, pending a safety review A topline data readout of the Phase 1 MAD clinical study is anticipated during the second quarter of 2022, pandemic conditions permitting.

Both studies are intended to support the development of SYN-020 in multiple potential clinical indications including celiac disease, NAFLD, radiation enteritis, as well as indications supported by our collaboration with Massachusetts General Hospital.

Following the completion of Phase 1 safety studies, we may consider conducting a placebo-controlled Phase 1b/2a gluten challenge study in as many as 40 celiac patients who present with predominantly GI symptoms followed by a Phase 2b proof-of-concept clinical trial in a similar patient population.

We may also seek to initiate clinical trials of SYN-020 evaluating its potential therapeutic benefit in NAFLD patients.

oral supplementation of IAP, including SYN-020, in mice.

Additionally, the IAP administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

If executed, we plan to use this license in the advancement of an expanded clinical development program for SYN-020.

This Phase 1, placebo-controlled MAD study was designed to evaluate the safety, tolerability and biodistribution of SYN-020 upon repeated dosing in 8 healthy adult volunteers in each of four cohorts (32 total study participants).

SYN-020 was given orally twice daily for fourteen days as multiple ascending doses ranging from 5 mg to 75 mg.

Safety reviews were conducted at the end of each cohort to approve progression into the next higher dose cohort.

On May 10, 2022, we announced positive safety data from its Phase 1, placebo-controlled, double-blind multiple ascending dose (MAD) clinical trial of SYN-020 intestinal alkaline phosphatase (IAP).

The Phase 1 MAD study enrolled 32 healthy adult volunteers into four cohorts with SYN-020 administered orally in doses ranging from 5 mg to 75 mg twice daily for 14 days with a follow-up evaluation at day 35.

Each cohort included six subjects who received SYN-020 and two who received placebo.

Analyses of preliminary data demonstrated that SYN-020 maintained a favorable safety profile and was well-tolerated across all dose levels.

There were a few treatment-related adverse events, and all were mild (grade 1) and resolved without medical intervention.

The most common adverse event, constipation, occurred in three out of 24 subjects in the treatment arm and in one out of eight subjects in the placebo arm.

No adverse event led to discontinuation of the study drug and there were no serious adverse events.

SYN-020 levels were below the limit of quantitation in all plasma samples at all timepoints during the study.

The Phase 1 data from our SAD and MAD studies are intended to support the development of SYN-020 in multiple clinical indications targeting disorders stemming from gastrointestinal (GI) inflammation.

We will continue to explore the therapeutic potential of SYN-020 across indications including celiac disease, NAFLD, age-related metabolic and inflammatory diseases.

Contingent on funding, we expect to initiate a Phase 2a study in the second half of 2022.

Our Current Oncology-Focused Pipeline (through the acquisition of VCN)

Oncolytic Viruses

Our oncology platform is based on oncolytic virotherapy (“OV therapy”), which exploits the ability of certain viruses to kill tumor cells and trigger an anti-tumor immune response.

This novel class of anticancer agents has unique mechanisms of action compared to other cancer drugs.

Oncolytic viruses exploit the fact that cancer cells contain mutations that cause them to lose growth control and form tumors.

Once inside a tumor cell, oncolytic viruses exploit the tumor cell machinery to generate thousands of additional copies of the virus, which then kill the tumor cell and spread to neighboring cells, causing a chain reaction of cell killing.

This infection by OVs also alerts the immune system, which can then attack the virus infected cells and the tumor cells to help destroy the tumor in some instances.

Our OV products are engineered to efficiently infect and selectively replicate to a high extent in tumor cells versus normal host cells, which enables intravenous delivery.

By contrast, many other oncolytic viruses in clinical development today are administered by direct injection into the tumor.

Intravenous delivery has the potential to expand the therapeutic effect of OVs because the virus can infect both the primary tumor and tumor metastases throughout the body.

Our first product, VCN-01, is a clinical stage oncolytic human adenovirus that is modified to express an enzyme, hyaluronidase, that helps the virus and other molecules to penetrate the tumor.

VCN-01 can be used alone or in combination with other cancer therapies such as chemotherapy and immunotherapy, for difficult to treat cancers.

An expanding intellectual property portfolio supports our oncology programs, and because our products are characterized as biologics, they will be further protected by data and/or market exclusivity in major markets.

VCN-01 — An oncolytic human type-5 virus engineered for intravenous administration and to express a tumor matrix degrading enzyme (PH20, hyaluronidase) that facilitates the entry of therapeutics and immune cells into tumors

VCN-01 is a genetically modified oncolytic adenovirus that has been engineered to contain four independent genetic modifications on the backbone of the wild-type human adenovirus serotype 5 (HAd5) genome.

These modifications have been shown in preclinical and clinical studies to confer tumor selective replication and antitumor activity.

VCN-01 was engineered to replicate in and kill virtually all cancer cells, to expose tumor neoantigens of lysed tumors, to increase tumor targeting, and to express PH20 hyaluronidase to enhance the penetration of virus, chemotherapy and immune cells into the tumor.

Malignant tumors are made up of tumor cells as well as significant supporting tissue known as tumor stroma.

The tumor stroma supports the formation and growth of tumors and contains cells and other components that are required for robust tumor growth and metastasis.

The stroma also forms an effective barrier to the entry of therapeutic agents such as chemotherapy and antibodies.

VCN-01 is designed to overcome the stroma barrier problem by expressing the well-characterized stroma degrading enzyme PH20 hyaluronidase after it infects tumor cells.

Expression of PH20 by VCN-01 degrades the hyaluronic acid within the tumor stroma and improves virus spread.

Based upon the foregoing, we believe our oncolytic virus platform, exemplified by VCN-01, represents a new and potentially powerful form of therapy that combines tumor cell killing, anti-tumor immunity and stroma destruction after intravenous delivery.

The VCN-01 product candidate is provided as a sterile liquid concentrate that is diluted for infusion or injection.

The proposed therapeutic indication for VCN-01 is the treatment of solid tumors, as its selectivity mechanism relies on cellular properties shared by virtually all human tumor cells.

Our initial indication for clinical development is unresectable metastatic pancreatic cancer, a disease for which there is currently no cure and only limited therapeutic options.

VCN-01 has been evaluated in 72 patients across four Phase 1 clinical trials, including patients with pancreatic cancer, head and neck squamous cell carcinoma, colorectal cancer, and retinoblastoma.

Pancreatic Ductal Adenocarcinoma

Cancer of the pancreas consists of two main histological types:

cancer that arises from the ductal (exocrine) cells of the pancreas or, much less often, cancers may arise from the endocrine compartment of the pancreas.

Pancreatic Ductal Adenocarcinoma (“PDAC”) accounts for more than 90% of all pancreatic tumors.

It can be located either in the head of the gland or in the body-tail.

Pancreatic cancer usually gives metastases to liver and peritoneum.

Other less common sites are lungs, brain, kidney and bone.

Since in early stages the pancreatic cancer does not give any characteristic symptoms, patients visit their physician late.

In many instances, progressive abdominal pain is the first symptom.

Therefore, for most cases, pancreatic cancer is diagnosed in its late stages (locally advanced non-metastatic or metastatic stage of the disease) when the radical resection and possibly curative treatment is not possible anymore.

It’s generally assumed that only 10% of cases are resectable at presentation, whereas 30-40% of patients are diagnosed at local advanced/unresectable stage and 50-60% presents distant metastases.

PDAC Clinical Unmet need and Market Opportunity

PDAC is one of the most fatal cancers accounting for the 3 rd highest cause of cancer-associated deaths in US and 4 th in the European Union.

Despite significant research efforts, minimal progress has been achieved to date.

The five-year overall survival rate is < 10% and has not substantially improved over the last 30 years.

Surgery is the only treatment that offers the prospect of long term-survival;

however, the 5-year survival for the limited number of patients in whom resection is possible remains low (20 – 30 %).

Patients with advanced disease are managed with chemotherapy.

In recent years, the combination of gemcitabine with albumin-bound paclitaxel (GA), and the combination of folic acid, 5-fluorouracil, irinotecan and oxaliplatin (FOLFIRINOX) have emerged as the standard of care.

However, the results are still very poor and new therapeutic interventions are needed.

The increase is particularly evident in younger people and several studies anticipate that pancreatic cancer is expected to become the second leading cause of cancer-related death in the United States by 2030.

The rising incidence of pancreatic cancer and its current economic burden place increased pressure to improve outcomes for patients.

In May 2011, the Committee for Orphan Medicinal Products (“COMP”) from the European Medicines Agency (“EMA”) recommended granting Orphan Medicinal Product Designation to VCN-01 for the treatment of pancreatic cancer and in June 2011, the European Commission confirmed the designation under Regulation (“EC”) No 141/2000 of the European Parliament and of the Council.

Phase 1a/Proof of Concept Trial of VCN-01 by intratumor administration in PDAC

In September 2019, VCN presented a poster at the European Society for Molecular Oncology (“ESMO”) annual meeting describing initial mechanism of action data from a multicenter, Phase 1 dose escalation study of intratumoral (“IT”) VCN-01 administered to pancreatic cancer patients in combination with standard doses/schedules of either gemcitabine or nab-paclitaxel plus gemcitabine (“NCT02045589”).

The study was conducted at three hospitals in Spain and 8 patients with confirmed histologic diagnosis of unresectable PDAC amenable to endoscopic ultrasound guided (“EUS)) injection were treated with 3 injections (coincident with 1 st day of the chemotherapy cycles) at two different dose levels of VCN-01 (six patients had metastatic disease and two had locally advanced disease).

The treatment regimen was generally well-tolerated;

however, one patient died from severe intraabdominal fluid collection that was considered to be related to VCN-01 treatment Evaluation of virus pharmacokinetics and PH20 levels in serum were consistent with strong virus replication in the tumors.

This was supported by the presence of viral particles in tumor cells as assessed in paired tumor biopsies collected before and after treatment.

Tumor stiffness was reduced in all VCN-01-injected lesions as measured by elastography.

Disease stabilization of injected lesions was observed in 5 out of 6 patients although subsequent tumor progression was observed in most of the patients due to the appearance of new lesions or growth of distant, non-injected, metastatic lesions.

This study provided encouraging mechanism of action data for VCN-01;

however, intratumoral injection did not appear to deliver sufficiently high VCN-01 levels for effective delivery to non-injected tumors.

We believe these results supported the evaluation of the safety/tolerability and potential efficacy of VCN-01 via intravenous administration in combination with chemotherapy and/or immunotherapies for the treatment of advanced PDAC.

Phase 1 Trial of intravenous VCN-01 with or without nab-paclitaxel plus gemcitabine in patients with solid tumors and PDAC

In March 2022, we announced the peer-reviewed publication of a Phase 1, multicenter, open-label, dose-escalation study investigating the safety, tolerability and biodistribution of intravenous VCN-01 oncolytic adenovirus with or without standard-of-care (SoC) chemotherapy (gemcitabine/nab-paclitaxel) in patients with advanced solid tumors.

The data, published in the Journal for ImmunoTherapy of Cancer, suggests that treatment with VCN-01 is feasible and has an acceptable safety profile, with encouraging biological and clinical activity.

(Journal for Immunotherapy of Cancer 2022;10:e003255.

doi:10.1136/jitc-2021-003255).

Data from the recent publication had previously been presented, in part, in a poster at the ESMO 2019 annual meeting.

The published study was a multicenter, open-label, dose-escalation phase I clinical trial of a single dose of intravenous VCN-01 alone (Part I, 16 patients with advanced refractory solid tumors) or in combination with nab-paclitaxel plus gemcitabine (Part II and III;

patients with pancreatic adenocarcinoma).

In Part II, 12 patients received VCN-01 dose concurrent with chemotherapy on day 1, whereas in Part III 14 additional patients received the dose of VCN-01seven days before chemotherapy.

The RP2D was determined to be 1x10 13 viral particles (vp)/patient in Part I, 3.3x10 12 vp/patient in Part II and 1x10 13 vp/patient in Part III.

Based on its apparent safety profile and the absence of dose-limiting toxicities, 1x10 13 vp/patient using sequential dosing schedule was selected for further clinical development.

Pharmacokinetic data showed dose linearity, as well as relevant VCN-01 exposure.

Analysis of VCN-01 clearance in patients enrolled in Part II did not show significant differences with respect to patients receiving VCN-01 as a single agent.

VCN-01 viral genomes were detected in tumor tissue in 5 out of 6 biopsies.

A second viral peak in plasma and increased hyaluronidase serum levels suggested replication after intravenous injection in all patients.

Increased levels of immune biomarkers (IFNγ, sLAG3, IL-6, IL-10) were found after VCN-01 administration.

In patients with pancreatic adenocarcinoma, the overall response rate (ORR) was 50% for Part II and 50% for Part III, as assessed by the investigators.

Median progression free survival (PFS) for patients in Part III was 6.7 months, and median overall survival (OS) was 13.5 months.

Eight patients (66.7%) survived more than 12 months.

In addition, in April 2021, a subgroup analysis of patients at the RP2D (1.x10 13 vp/patient followed by nab-paclitaxel plus gemcitabine one week later, n=6) was conducted and showed an ORR of 83%, with a median PFS of 6.3 months and median OS of 20.8 months.

Some VCN-01 treated patients appeared to benefit from late-onset responses.

This form of delayed anti-tumor activity is not common with chemotherapy but is frequently observed with immunotherapies.

We believe an immune mechanism of action associated with the oncolytic activity of VCN-01 may be the underlying explanation.

VCN-01 appeared to convert the typically immunosuppressive tumor microenvironment of pancreatic adenocarcinomas into an enhanced inflammatory microenvironment (IDO, CD28, PD-1, CTL signature up-regulation, and collagen formation) after treatment.

Future Planning and Potential Regulatory Strategy for development of VCN-01 in PDAC

We are currently planning a Phase 2 clinical trial of systemically administered VCN-01 in PDAC patients and anticipate submission of the protocol to the FDA and EMA in Q2 2022.

The proposed Phase 2 trial is expected to be an open-label, randomized study to test the efficacy of VCN-01 in combination with gemcitabine and nab-paclitaxel in patients with newly diagnosed metastatic pancreatic cancer.

The study is expected to enroll 92 patients and be conducted at approximately 25 sites in the US and EU.

Two doses of VCN-01 are planned in the treatment arm:

the 1st dose will be administered on day 1, then one week later 3 cycles of gemcitabine and nab-paclitaxel as standard of care will be administered.

The second VCN-01 dose will be administered 7 days before the 4th cycle of chemotherapy, followed by additional chemotherapy.

Manuel Hidalgo, chief of the Division of Hematology and Medical Oncology at Weill Cornell Medicine/New York-Presbyterian Hospital has been appointed as Principal Investigator.

If the regulatory agencies allow us to proceed, initiation of recruitment is expected during Q4 2022.

Retinoblastoma

Retinoblastoma is a tumor that originates in the retina and it is the most common type of eye cancer in children.

It occurs in approximately 1 / 14,000-1 / 18,000 live newborns and accounts for 15% of the tumors in the pediatric population < 1 year old.

The average age of pediatric patients at diagnosis is 2, and it rarely occurs in children older than 6.

In the US, retinoblastoma shows an incidence rate of 3.3 per 1,000,000 with only about 200 to 300 children diagnosed per year according to the American Cancer Society.

Bilateral retinoblastoma (Rb1 germinal mutation) represents 25-35% of the cases while unilateral retinoblastoma (sporadic mutation) accounts for 65-75%.

While retinoblastoma is a highly curable disease, with a current disease-free survival rate of >95%, the clinical challenge for those who treat retinoblastoma is to preserve life and to prevent the loss of an eye, blindness and other serious effects of treatment that reduce the patient’s life span or the quality of life.

Current treatments are not without significant morbidity, which may include visual impairment and severe cosmetic deformity secondary to enucleation and/or irradiation of the orbital region.

The use of intravenous chemotherapy and more recently intra-arterial and intravitreal chemotherapy have resulted in a significantly greater number of eyes preserved with fewer long-term effects compared to past treatments such as external radiation therapy.

However, allowing patients with advanced intraocular disease to be treated conservatively, led to the appearance of a subgroup of patients with advanced intraocular disease who relapsed after an initial response.

Most of these cases include those patients who present gross vitreous or subretinal seeding.

Once the aforementioned treatments are exhausted, these patients rarely manage to preserve the eyes and vision and must be enucleated.

The ocular preservation rate of these eyes with advanced disease is still less than 50%.

In February 2022, the FDA granted orphan drug designation to VCN-01 for the treatment of retinoblastoma.

Phase 1 Trial of intravitreal VCN-01 in patients with retinoblastoma

During the third quarter of 2017, VCN entered into a Clinical Trial Agreement with Hospital Sant Joan de Déu (Barcelona, Spain) to conduct an investigator sponsored Phase 1 clinical study evaluating the safety and tolerability of two intravitreal injections of VCN-01 in patients with intraocular retinoblastoma refractory to systemic, intra-arterial or intravitreal chemotherapy, or radiotherapy, in whom enucleation was the only recommended treatment (NCT03284268).

Patients received two doses of VCN-01 injected 14 days apart using a dose escalation regimen.

At this time, the dose-escalation phase of the study has already been completed in 4 patients distributed in two cohorts (2 x 10 9 vp/eye and 2 x 10 10 vp/eye).

VCN-01 was well tolerated to date after intravitreal administration, although some degree of intravitreal inflammation and associated turbidity were observed.

Inflammation has been managed and potential turbidity minimized with local and systemic administration of anti-inflammatory drugs.

VCN-01 does not appear to change the retinal function, and selective VCN-01 replication in retinoblastoma cells has been observed by immunohistochemical analysis.

Replication within retinoblastoma tumors over time was detected and VCN-01 reduced the number of vitreous seeds in all patients treated at 2 x 10 10 vp/eye (n=3).

The investigator has reported that one patient treated with VCN-01 has had a complete regression lasting more than 30 months.

This study is currently ongoing and anticipated to be completed in the second half of 2022.

We anticipate the initiation of a Phase 2/3 trial of VCN-01 as either an adjunct to chemotherapy or a potential rescue therapy in pediatric patients with advanced retinoblastoma in early 2023.

VCN-01 in combination with Immunomodulatory therapeutics

Based on the clinical and pre-clinical data described below, we believe that the administration of VCN-01, can elicit an anti-tumor immune response that could potentiate the effects of VCN-01 and co-administered therapeutics.

Biopsies from the Phase 1 trial of PDAC patients administered intravenous VCN-01 demonstrated lymphocyte (CD8+) infiltration and modulated levels of immune markers in tumors, including an induction of the PD1/PD-L1 expression in tumor tissue from some of the patients.

Preclinical experiments demonstrated that VCN-01 significantly increased extravasation of an anti-PD-L1 antibody into subcutaneous xenograft tumors compared to non-treated (PBS) tumors and also that PH20 hyaluronidase improves the ingress of T-cells in animal models.

Thus, we hypothesize that the administration of VCN-01 into the tumor will help to overcome the observed resistance to PD-L1 checkpoint inhibitors and to mesothelin-directed CAR-T cells.

Phase 1 Trial of intravenous VCN-01 in Combination with Durvalumab in Subjects with Recurrent/ Metastatic SCCHN

In February 2019, VCN entered into a Clinical Trial Agreement with Catalan Institute of Oncology (ICO) (Spain) to conduct an investigator sponsored Phase 1 clinical study to evaluate the safety, tolerability and RP2D of a single intravenous injection of VCN-01 combined with durvalumab in two administration regimens:

VCN-01 concomitantly with durvalumab, or sequentially with durvalumab starting two weeks after VCN-01 administration (NCT03799744).

The study is also designed to evaluate whether VCN-01 treatment can re-sensitize PD-(l)-1 refractory tumors to subsequent anti-PD-L1 therapy.

Durvalumab is a human monoclonal antibody (mAb) of the immunoglobulin G (IgG) 1 kappa subclass that inhibits binding of PD-L1 and is being developed by AstraZeneca/MedImmune, which supplies the product for its use in the clinical study.

This Phase I trial is a multicenter, open label, dose escalation study in patients with histologically confirmed head and neck squamous cell carcinoma from specific sites:

oral cavity, oropharynx, larynx or hypopharynx that is recurrent/metastatic (R/M) and not amenable to curative therapy by surgery or radiation.

In addition, all patients should have undergone prior exposure to anti-PD-(L) 1 and progressed.

Patients are entered at each dose level, according to a planned dose escalation schedule.

The treatment is a single intravenous VCN-01 dose combined with concomitant intravenous durvalumab (MEDI4736) 1500 mg Q4W (Arm I) or durvalumab starting two weeks after VCN-01 administration (“sequential schedule”;

Patient recruitment into Arm I and Arm II was performed concurrently.

Intravenous VCN-01 is administered to each patient only once during the trial at the VCN-01 dose level to which they are randomized.

Durvalumab is administered Q4W until disease progression, unacceptable toxicity, withdrawal of consent, or another discontinuation criterion.

Patient recruitment into the study was completed in February 2022 with a total of 18 patients enrolled.

Phase 1 Trial evaluating the safety and feasibility of huCART-meso cells when given in combination with VCN-01

In July 2021, VCN entered into a Clinical Trial Agreement with the University of Pennsylvania (Philadelphia) to conduct an investigator sponsored Phase 1 clinical study to evaluate the safety, tolerability and feasibility of intravenous administration of VCN-01 in combination with lentiviral transduced huCART-meso cells (developed by the laboratory of Dr.

Carl June) in patients with histologically confirmed unresectable or metastatic pancreatic adenocarcinoma and serous epithelial ovarian cancer (NCT05057715).

This is a Phase I study evaluating the combination of VCN-01 when given in combination with huCART-meso cells in a dose-escalation design in two cohorts (N = 3-6), where patients will receive VCN-01 as a single IV infusion (at 3.3x10 12 or 1x10 13 vp) on Day 0, followed by a single dose of 5x10 7 huCART-meso cells on Day 14 via IV infusion.

huCART-meso cells are modified T-cells targeting the mesothelin antigen, which is frequently expressed in multiple tumor types, particularly in pancreatic and ovarian cancers.

June’s previous clinical studies have shown that huCART-meso cells encounter significant challenges in the tumor microenvironment, including immunosuppressive cells and soluble factors as well as metabolic restrictions.

Initial VCN-01 clinical data from the studies described above suggest that administration of VCN-01 may increase tumor immunogenicity and improve access of the huCART-meso cells to tumor cells.

This Phase I study will evaluate the safety and tolerability of the VCN-01 huCART-meso cell combination and test the hypothesis that administration of VCN-01 may enhance the potential antitumor effects of the co-administered huCART-meso cells.

The trial is open and we anticipate initiation of VCN-01 dosing the first half of 2022.

Phase 1 Trial evaluating the intravenous administration of VCN-01 in patients prior to surgical resection of high-grade brain tumors

In the second quarter of 2021, VCN entered into a Clinical Trial Agreement with the University of Leeds (UK) to sponsor a proof-of-concept Phase 1 clinical study to evaluate whether intravenously administered VCN-01 can cross the blood-brain barrier and infect the target brain tumor.

This is an open-label, non-randomized, single center study of VCN-01 given intravenously at a dose of 1x10 13 virus particles to patients prior to planned surgery for recurrent high-grade primary or metastatic brain tumors.

We believe that the intravenous delivery of anti-cancer therapy to brain tumors, if effective, may allow repeat dosing may enable the treatment of systemically disseminated brain metastases and may allow for reduction in the need to use neurosurgery to administer the drugs.

This study aims to assess the presence of VCN-01 within the resected surgical specimen after systemic VCN-01 delivery and determine the safety of intravenous VCN-01 in patients with recurrent high-grade glioma or brain metastases.

By confirming the presence of VCN-01 in high grade brain tumors following intravenous delivery, this study may pave the way for larger trials to study VCN-01 efficacy, both as a monotherapy and in combination with PD-1/PD-L1 blockade.

This trial has already received approval from Medicines & Healthcare Products Regulatory Agency (MHRA) from UK Government and we anticipate initiation of VCN-01 dosing the first half of 2022.

Research Programs

SYN-006, SYN-007 and SYN-005

To date, our research programs have been primarily directed to the development of GI acting products that have generated preclinical proof-of-concept with two pipeline products (SYN-006 and SYN-007) that expand the potential utility of our beta-lactamase strategy.

SYN-007 is a specially formulated version of SYN-004 (ribaxamase) designed to degrade orally administered beta-lactam antibiotics to protect the gut microbiome from antibiotic-mediated dysbiosis.

SYN-006 is a carbapenemase designed to degrade intravenous (IV) carbapenem antibiotics within the GI tract to maintain the natural balance of the gut microbiome for the prevention of CDI, overgrowth of pathogenic organisms and the emergence of antimicrobial resistance (AMR).

Our SYN-005 monoclonal antibody program is intended to both treat and prevent pertussis.

Our research programs may be expanded to include development of new oncolytic virus products and/or explore oncology applications of our existing products such as SYN-006 and SYN-020.

VCN-11 is a novel virus that we believe has the potential to extend our OV platform.

VCN-11 has been engineered to contain all of the features of VCN-01 as well as an additional modification to include an albumin binding domain (ABD) in the virus capsid.

The virus capsid is the target for neutralizing antibodies (NAbs) that are generated by the host immune system to destroy circulating viruses.

The presence of an albumin binding domain, however, blocks the binding of most neutralizing antibodies, which allows the virus to reach the tumor following intravenous administration.

This “albumin shield” works because human blood contains a large amount of albumin to coat the VCN-11 virus.

Importantly, this coating of albumin appears to be displaced after the virus reaches tumor cells to infect them.

In pre-clinical mouse studies to test the functionality of the “albumin shield”, mice pre-immunized with virus are able to completely neutralize an unmodified OV because they have a large concentration of neutralizing antibodies in their blood.

By contrast, viruses containing the albumin binding domain such as VCN-11 are not neutralized and retain their ability to infect and destroy tumor cells.

We believe these results support the further development of VCN-11 for tumors in which rapid multi-dosing may be beneficial.

In the second quarter of 2020, VCN had several interactions with Spanish regulatory authorities (AEMPS) to agree on the design of the non-clinical GLP toxicology and biodistribution studies that are required to support a first-in-human clinical trial for VCN-11.

In March 2021, preclinical data obtained with VCN-11 was published, showing that VCN-11 induced 450 times more cytotoxicity in tumor cells than in normal cells.

VCN confirmed VCN-11 hyaluronidase production by measuring the activity of the PH20 enzyme with a hyaluronic acid-degradation assay, and by measuring PH20 activity in VCN-11 infected tumors in vivo.

VCN-11 evaded NAbs from different sources and tumor level were demonstrated in the presence of high levels of NAbs in vivo, whereas the control virus without ABD was neutralized.

VCN-11 showed a low toxicity profile in athymic nude mice and Syrian hamsters, allowing treatments with high doses and fractionated administrations without major toxicities (up to 1.2x10 11 vp/mouse and 7.5x10 11 vp/hamster).

VCN-11 increased ALT levels on day 3 within an acceptable range that returned to normal levels by day 9.

Fractionated intravenous administration of VCN-11 (splitting the dose into two portions administered 4 h apart) appeared to improve VCN-11 circulation kinetics and increase tumor levels.

VCN-11 showed antitumor efficacy in the presence of NAbs against Ad5 and itself.

In May 2022, we announced an upcoming oral presentation on VCN-11 at the 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT).

The presentation will include preclinical results showcasing the potential of VCN-11 to balance safety, with no major toxicities observed, and effectively target tumors after intravenous re-administration, even in the presence of high level NAbs.

Intellectual Property

All of our programs are supported by growing patent estates.

In total, we have over 80 U.S.

In total, Synthetic Biologics has over 95 U.S.

and foreign patents and over 70 U.S.

and foreign patents pending.

VCN Biosciences, through assignment or exclusive licenses, controls over 25 U.S.

and foreign patents and over 15 U.S.

and foreign patents pending

The SYN-004 (ribaxamase) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

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Further, U.S.

Patent 9,301,995 and 9,301,996, both of which will expire in 2031, cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

Patent 9,301,995 and 9,301,996, both of which will expire in at least 2031, cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

9,290,754, 9,376,673, 9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase compositions of matter related to SYN-004 (ribaxamase).

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and foreign patent applications (in many major markets, e.g.

Europe, Canada, and Australia).

Europe, China, Japan, Korea, Canada, and Australia).

These patent applications, which cover various formulations, medical uses and manufacture of SYN-020, are expected to expire in 2038-2040, if granted, and without taking potential patent term extensions or patent term adjustment into account.

The VCN-01 and VCN-11 programs are supported by patents and patent applications that are assigned to VCN Biosciences or exclusively licensed from Fundacio Privada Institut d'Investigacio Biomedica de Bellvitge (IDIBELL), Institut Catala d'Oncologia (ICO), and Hospital Sant Joan De Deu Barcelona.

The patents and patent applications include U.S.

patents and foreign patents (in most major markets, e.g.

Europe, China, Japan, Korea, Canada, Israel, Mexico, Russia, and Australia) and U.S.

and foreign patents pending (in most major markets, e.g.

Europe, China, Korea, Canada, Mexico, and India).

The patents and patent applications cover compositions of matter and pharmaceutical compositions of oncolytic adenoviruses and various medical uses of the same.

For instance, U.S.

10,316,065, which expires in 2030 without taking potential patent term extensions or patent term adjustment into account, provides composition of matter and pharmaceutical composition coverage for a genus of engineered oncolytic adenovirus suitable for the treatment of solid tumors.

Other patents and patent applications, if granted, will provide protection to 2037 without taking potential patent term extensions or patent term adjustment into account.

Our goal is to (i) obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve our trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide.

We seek, where appropriate, the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination of contractual arrangements and patents.

Critical Accounting Policies

Critical Accounting Estimates

The condensed consolidated financial statements are prepared in conformity with U.S.

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The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our 2021 Form 10-K.

Business Combination

The Company accounts for acquisitions using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from

The Company classifies intangible assets into two categories:

(1) intangible assets with indefinite lives not subject to amortization and (2) goodwill.

Intangible assets that are deemed to have indefinite lives, including goodwill, are reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

The impairment test for indefinite-lived intangibles, other than goodwill, consists of a comparison of the fair value of the intangible asset with its carrying amount.

If the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.

Indefinite-lived intangible assets, such as goodwill, are not amortized.

The Company tests the carrying amounts of goodwill for recoverability on an annual basis or when events or changes in circumstances indicate evidence a potential impairment exists, using a fair value-based test.

Pursuant to ASU 2017-04, the Company must record a goodwill impairment charge if a reporting unit’s carrying value exceeds its fair value.

In-process research and development, or IPR&D, assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development projects.

IPR&D assets represent the fair value assigned to technologies that the Company acquires, which at the time of acquisition have not reached technological feasibility and have no alternative future use.

During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts.

If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives at that point in time.

If development is terminated or abandoned, the Company may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of carrying value of the IPR&D assets over fair value.

Contingent Consideration

Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”).

Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations.

The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones.

The milestone payments will be made upon the achievement of clinical and commercialization milestones as well as single low digit royalty payments and payments upon receipt of sublicensing income.

Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date.

Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations.

Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets.

Results of Operations

Three Months Ended September 30, 2021 and 2020

Three Months Ended March 31, 2022 and 2021

General and Administrative Expenses

General and administrative expenses increased by 9% to approximately $1.3 million for the three months ended September 30, 2021, from approximately $1.2 million for the three months ended September 30, 2020.

This increase is primarily due to higher insurance costs, audit fees and registration fees offset by lower legal costs and vacation expense.

The charge related to stock-based compensation expense was $83,000 for the three months ended September 30, 2021, compared to $67,000 for the three months ended September 30, 2020.

General and administrative expenses increased to $1.7 million for the three months ended March 31, 2022, from $1.4 million for the three months ended March 31, 2021.

This increase of 17% primarily comprised of increased consulting and legal costs related to the VCN acquisition, higher insurance costs, audit fees, and public relations expenses and VCN administrative expenses not included in prior year.

The charge related to stock-based compensation expense was $85,000 for the three months ended March 31, 2022, compared to $82,000 the three months ended March 31, 2021.

Research and Development Expenses

Research and development expenses increased by 116% to approximately $2.0 million for the three months ended September 30, 2021, from approximately $900,000 for the three months ended September 30, 2020.

This increase is primarily the result of increased clinical trial expenses as we continued dosing patients in the Phase 1b/2a clinical trial of SYN-004 and by higher indirect program costs for the three months ended September 30, 2021, including an increase in manufacturing costs for SYN-020.

We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients.

The charge related to stock-based compensation expense was $19,000 for the three months ended September 30, 2021, compared to $15,000 related to stock-based compensation expense for the three months ended September 30, 2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended September 30, 2021 and 2020.

Research and development expenses increase to $2.6 million for the three months ended March 31, 2022, from approximately $1.1 million for the three months ended March 31, 2021.

This increase of 132% is primarily the result of higher manufacturing expense for SYN-020, costs incurred related to our Phase 1a clinical trial of SYN-020 and the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and VCN research expenses related to VCN-01 not incurred in the prior year.

We anticipate research and development expense to increase as we plan for and initiate enrollment for our phase 2 clinical trial for VCN-01 in PDAC, phase 2/3 clinical trial in retinoblastoma, expand GMP manufacturing activities for VCN-01 and SYN-020, and continue with supporting our VCN-11 and other preclinical and discovery initiatives.

The charge related to stock-based compensation expense was $28,000 for the three months ended March 31, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended March 31, 2021.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended March 31, 2022 and 2021.

These direct expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific drug candidates.

September 30,

Therapeutic Areas

Ribaxamase (SYN-004)

Other therapeutic areas

Total direct costs

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Other Income/Expense

Other income was $2,000 for the three months ended September 30, 2021, compared to other income of $134 for the three months ended September 30, 2020.

Other income for the three months ended September 30, 2021 and 2020 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $3.3 million, or $0.02 per basic and dilutive common share for the three months ended September 30, 2021, compared to a net loss of approximately $2.7 million, or $0.14 per basic common share and dilutive common share for the three months ended September 30, 2020.

Net loss attributable to common stockholders for the three months ended September 30, 2020 excludes net loss attributable to non-controlling interest of $8,000 and includes the accretion of Series B preferred discount of $519,000 on converted shares and Series A Preferred Stock accrued dividends of $64,000.

Nine Months Ended September 30, 2021 and 2020

General and Administrative Expenses

General and administrative expenses increased by 3% to approximately $4.0 million for the nine months ended September 30, 2021, from approximately $3.9 million for the nine months ended September 30, 2020.

The movement for the period primarily consisted of increased insurance costs, audit fees and registration fees offset by lower legal costs related to business development, patent execution and employee contract matters, vacation expense and travel.

The charge related to stock-based compensation expense was $248,000 for the nine months ended September 30, 2021, compared to $193,000 for the nine months ended September 30, 2020.

Research and Development Expenses

Research and development expenses increased by 21% to $5.0 million for the nine months ended September 30, 2021, from $4.1 million for the nine months ended September 30, 2020.

This increase is primarily the result of the clinical trial expenses as we began dosing patients in the Phase 1b/2a clinical trial of SYN-004 and Phase 1 SAD clinical trial of SYN-020 offset by lower indirect program costs for the nine months ended September 30, 2021, including salary and related expense reductions, a decrease in clinical contract service costs for SYN-004 and market research.

In addition, as a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 to include only essential activities as part of their pandemic response, which delayed the start of our clinical trial until 2021.

We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients.

Research and development expenses also include a charge relating to stock-based compensation expense of $57,000 for the nine months ended September 30, 2021, compared to $52,000 for the nine months ended September 30, 2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the nine months ended September 30, 2021 and 2020.

These direct expenses were external costs associated with preclinical studies and clinical trials.

September 30,

Therapeutic Areas

Total direct costs

Total indirect costs

Total Research and Development Expenses

Other Income/Expense

Other income was $4,000 for the nine months ended September 30, 2021, compared to other income of $44,000 for the nine months ended September 30, 2020.

Other income for the nine months ended September 30, 2021 and 2020 is primarily comprised of interest income.

Other expense was $21,068 for the three months ended March 31, 2022 compared to other income of $347 for the three months ended March 31, 2021.

Other expense is primarily comprised of exchange loss of $22,607, offset by interest income of $1,539.

Other income for the three months ended March 31, 2021 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $17.9 million, or $0.15 per basic and dilutive common share for the nine months ended September 30, 2021, compared to a net loss of approximately $9.4 million, or $0.52 per basic common share and dilutive common share for the nine months ended September 30, 2020.

Net loss attributable to common stockholders for the nine months ended September 30, 2021 excludes net loss attributable to non-controlling interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of $7.4 million.

Net loss attributable to common stockholders for the nine months ended September 30, 2020 excludes net loss attributable to non-controlling interest of $50,000 and includes the accretion of Series B preferred discount of $1.3 million on converted shares and Series A Preferred Stock accrued dividends of $189,000.

Our net loss attributable to common stockholders was approximately $4.3 million, or $0.03 per basic and dilutive common share for the three months ended March 31, 2022, compared to a net loss of approximately $11.5 million, or $0.13 per basic common share and dilutive common share for the three months ended March 31, 2021.

Net loss attributable to common stockholders for the three months ended March 31, 2021 excludes net loss attributable to non-controlling interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of $7.4 million.

Liquidity and Capital Resources

With the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred negative cash flows from operations, and have a significant accumulated deficit.

We have incurred an accumulated deficit of approximately $266 million as of September 30, 2021 and expect to continue to incur losses in the foreseeable future.

During the nine months ended September 30, 2021, our operating activities used net cash of approximately $8.1 million.

Our cash and cash equivalents totaled approximately $72.1 million as of September 30, 2021, an increase of approximately $65.9 million from December 31, 2020.

During the three and nine months ended September 30, 2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of approximately $3.3 million and approximately $9.0 million for the three and nine months ended September 30, 2021, respectively.

As of March 31, 2022, the Company has a significant accumulated deficit, and with the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, the Company has experienced significant losses and incurred negative cash flows since inception.

The Company expects to continue incurring losses for the foreseeable future, with the recognition of revenue being contingent on successful phase 3 clinical trials and requisite approvals by the FDA or foreign equivalents.

Historically, the Company has financed its operations primarily through public and private sales of its common stock and a private placement of its preferred stock, and it expects to continue to seek to obtain required capital in a similar manner.

The Company has spent, and expects to continue to spend, a substantial amount of funds in connection with implementing its business strategy, including planned product development efforts, clinical trials and research and discovery efforts.

Cash and cash equivalents totaled approximately $56.7 million as of March 31, 2022, which includes the net proceeds from sales of its Common Stock in “at-the-market” (ATM) equity offerings during 2021 and cash proceeds of approximately through the exercise of a portion of the October 2018 warrants.

With these additional sources of liquidity, we believe we will be able to fund our operations through the next twelve months from the issuance date of these financial statements.

Management believes its plan, which includes the additional testing of SYN-004 (ribaxamase) and the advancement of VCN-01 will allow us to meet our financial obligations, further advance key products, and maintain our planned operations for at least one year from the issuance date of these consolidated financial statements.

However, the amount of capital needed by us will also depend upon whether we develop SYN-004 and/or SYN-020 internally or we our-license or partner such development.

If necessary, the Company may attempt to utilize the ATM or seek to raise additional capital on the open market, neither of which is guaranteed.

Use of the ATM is limited by certain restrictions and management’s plan does not rely on additional capital from either of these sources.

If the Company is not able to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished and we may be forced to cease certain development activities.

More specifically, the completion of any later stage clinical trial will require significant financing or a significant partnership.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations.

We are actively monitoring the global situation and its potential impact on our financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity.

Although we are experiencing limited, if any, adverse impact to our financial stability stemming from the global economic slowdown, the overall disruption of global healthcare systems and other risks and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical trial timelines, our business, financial condition, results of operations and growth prospects could be materially adversely affected.

Historically, we have financed our operations primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner.

During the year ended December 31, 2020, our only source of financing was from sales of approximately 9.2 million shares of our common stock utilizing our at-the-market offering program through the Original ATM Sales Agreement (as defined below) pursuant to which we received net proceeds of approximately $3.4 million.

During the nine months ended September 30, 2021, we raised approximately $74.0 million, of which (i) approximately $8.0 million was raised from cash received from the issuance of approximately 11.6 million shares of our common stock upon the exercise of approximately 65% of the 2018 Warrants during the three months ended March 31, 2021 and (ii) approximately $66.0 million of net proceeds was raised from the sale of approximately 78.7 million shares of our common stock during the three months ended March 31, 2021 in “at the market” offerings pursuant to the Sales Agreement that we had entered into in 2016 with FBR Capital Markets & Co.

(now known as B.

Riley Securities) (the “Original ATM Sales Agreement”) and the Amended and Restated ATM Sales Agreement.

During the three months ended September 30, 2021, we did not sell any of our common stock through the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement.

We believe that our cash and cash equivalents at September 30, 2021 will be sufficient to fund our operations through at least the end of the first quarter of 2023.

The Amended and Restated ATM Sales Agreement enables us to offer and sell shares of our common stock from time to time through B.

Riley and AGP as our sales agents.

Sales of common stock under the Amended and Restated ATM Sales Agreement are made in sales deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act.

Riley and AGP are entitled to receive a commission rate of up to 3.0% of gross sales in connection with the sale of our common stock sold on our behalf.

During the year ended December 31, 2021, our only source of cash was from the exercise of the 2018 Warrants and sales of our common stock through the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement discussed above.

There can be no assurance that we will be able to continue to raise funds through the sale of shares of common stock through the Amended and Restated ATM Sales Agreement.

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We have committed, and expect to continue to commit, substantial capital in order to implement our business strategy, including our planned product development efforts, preparation for our planned clinical trials, and performance of clinical trials and our research and discovery efforts.

We believe our cash position of $72.1 million as of September 30, 2021 is sufficient to fund our operations through at least the end of the first quarter of 2023, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, as well as our ongoing Phase 1 MAD study and Phase 2 clinical programs for SYN-020.

Following the anticipated completion of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the ongoing Phase 1 MAD study and planned Phase 2a clinical trial of SYN-020, we may need to obtain additional funds for future clinical trials, the amount of which will depend upon the trial size and number of clinical sites.

We believe our cash position of $54.9 million at the end of April 2022 is sufficient to fund our operations through at least the end of the fourth quarter of 2023, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, as well as our planned Phase 1 clinical programs for SYN-020 and to fund our committed obligations under the Purchase Agreement for the VCN Acquisition.

Following the anticipated completion of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the Phase 1 SAD and MAD clinical studies, we will need to obtain additional funds for future clinical trials.

We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the aforementioned clinical programs.

We do not have any committed sources of financing for future clinical trials at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all.

As a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 and the first quarter of 2021 to include only essential activities as part of their pandemic response.

These delays impacted the timelines for our clinical programs, which included delaying commencement of the Phase 1b/2a clinical trial of SYN-004 until the second quarter of 2021.

These delays also resulted in a decrease in anticipated expenses as no clinical trials had yet commenced during that period.

If enrollment in our ongoing Phase 1b/2a clinical trial being conducted by Washington University is halted due to COVID-19 developments, we may experience reduced expenses until such time as enrollment resumes.

As the COVID-19 coronavirus continues to spread around the globe, we have experienced disruptions that impacted our business and clinical trials, including postponement of commencement of the now ongoing Phase 1b/2a clinical trial of SYN-004.

Although we are currently experiencing limited, if any, adverse impact to our financial stability stemming from the global economic slowdown, the overall disruption of global healthcare systems and other risks and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical timelines, our business, financial condition, results of operations and growth prospects could be materially adversely affected.

As the COVID-19 coronavirus continues to spread around the globe, we have experienced disruptions that impacted our business and clinical trials, including halting the enrollment of new patients in our previous Phase 2b investigator-sponsored clinical trial of SYN-010 and postponement of clinical site initiation of the Phase 1b/2a clinical trial of SYN-004.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

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Off-Balance Sheet Arrangements

During the three and nine months ended September 30, 2021, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

During the three months ended March 31, 2022, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

4 unchanged sentences

ROU assets are included in other noncurrent assets and lease liabilities are included in other current and non-current liabilities in our condensed consolidated balance sheets.

As of September 30, 2021, we did not have any material finance leases.

As of March 31, 2022, we did not have any material finance leases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis