What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-10 compared with 2022-08-11 · 162 added, 61 removed, 408 unchanged (35% of the section changed)

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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.

As a result of the Acquisition of VCN, described in more detail below, the began transitioning its strategic focus to oncology through the development of VCN’s new oncolytic adenovirus platform 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.

Prior to the Acquisition, 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.

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.

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

In September, 2022, we received approval from the FDA that it is safe to proceed with our phase 2 clinical trial of VCN-01.

Due to this approval we will pay Grifols $3.0 million in Q4 2022.

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.

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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 is a 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 with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC)..

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.

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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.

Recent Developments

Effective October 12, 2022, we changed our name to Theriva Biologics, Inc.

by filing a Certificate of Amendment to its Articles of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada on October 11, 2022.

In addition, effective October 12, 2022, the Company amended and restated its Amended and Restated Bylaws (the “Bylaws”) to reflect the Name Change (the “Amended and Restated Bylaws”).

The Amended and Restated Bylaws contain no other changes.

In connection with the Name Change, the Company’s Common Stock will began trading on the NYSE American LLC under the new ticker symbol “TOVX” effective as of the opening of trading hours on October 13, 2022

Reverse Stock Split

On July 15, 2022, we announced a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding common stock, par value $0.001 per share (the “Common Stock”), at a ratio of one (1) share of Common Stock for every ten (10) shares of Common Stock, effective July 25, 2022 (the “Effective Date”).

Our Common Stock began trading on a split-adjusted basis on the NYSE American when the market opened on July 25, 2022.

The Reverse Stock Split was authorized by our Board of Directors on July 11, 2022.

Private Placement Offering

On July 29, 2022, we closed a private placement offering pursuant to the terms of a Securities Purchase Agreement (the “Purchase Agreement”) dated as of July 28, 2022 entered into with MSD Credit Opportunity Master Fund, L.P.

(the “Investor”), pursuant to which we issued and sold (the “Offering”) 275,000 shares of the Company’s Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), and 100,000 shares of the Company’s Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock,” and together with the Series C Preferred Stock, the “Preferred Stock”), at an offering price of $8.00 per share, for gross proceeds of approximately $3.0 million in the aggregate, before the deduction of discounts, fees and offering expenses.

The shares of Preferred Stock will be convertible, at a conversion price (the “Conversion Price”) of $1.22 per share (subject in certain circumstances to adjustments), into an aggregate of 2,459,016 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at the option of the holders of the Preferred Stock and, in certain circumstances, by the Company.

The Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing.

Recent Clinical Developments

On July 8, 2022, we were notified of the clearance of the safety evaluation period by the first patient that had been dosed in the investigator sponsored Phase 1 clinical trial evaluating VCN-01 (NCT05057715), an intravenous oncolytic adenovirus, in combination with mesothelin-directed lentiviral transduced human chimeric antigen receptor modified T cells (huCART-meso) for patients with pancreatic and serious epithelial ovarian cancers.

On September 5, 2022, we issued a press release announcing presentation of a poster entitled “A Phase I Study to Evaluate the Safety, Tolerability, and Efficacy of VCN-01 in Combination with Durvalumab (MEDI4736) in Subjects with Recurrent/ Metastatic Squamous Cell Carcinoma of the Head and Neck (R/M HNSCC)” at the European Society for Medical Oncology (ESMO) Congress of initial data from a Phase 1 investigator-sponsored study evaluating VCN-01 in combination with durvalumab for patients with recurrent/metastatic squamous cell carcinoma of the head and neck (R/M HNSCC).

We also issued a press release on September 12, 2022,

Key data and conclusions featured in the ESMO presentation include:

Treatment with VCN-01 had an acceptable safety profile when administered with durvalumab in the sequential regimen (single dose of VCN-01 administered 14 days prior to the first dose of durvalumab;

o The most common treatment-related adverse events (TRAEs) were pyrexia, flu-like symptoms and increases in liver transaminases.

o TRAEs were dose-dependent, reversible and consistent with TRAEs previously described for other adenovirus-based products.

● Pharmacokinetics (PK) and pharmacodynamics (PD) :

Based on toxicology and PK/PD analysis the recommended Phase 2 dose is 1x10 13 viral particles (vp)/patient.

● Biological activity :

Sustained blood levels of VCN-01 viral genomes and increased serum hyaluronidase levels were maintained for over six weeks.

o Observed an increase in CD8 T cells, a marker of tumor inflammation and an upregulation of PD-L1 in tumors.

o Analysis of serial tumor biopsies revealed differential gene expression profiles and downregulation of matrix-related pathways after VCN-01 administration.

On September 27, 2022, we issued a press release announcing positive outcome from the DSMC review of results from the first Cohort of our Phase 1b/2a randomized, double-blinded, placebo-controlled clinical trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) recipients for the prevention of acute graft-versus-host-disease (aGVHD).

Key data and conclusions disclosed in the press release include:

Cohort 1 enrolled 19 patients who received at least 1 dose of study drug (SYN-004 or Placebo randomized 2:1).

Sixteen patients received at least one dose of intravenous (IV) meropenem and 12 of these patients completed sufficient doses of IV meropenem to be evaluable towards the study endpoints.

The study is on-going and remains blinded;

however, key findings from blinded data for Cohort 1 are included below:

● Adverse events (AEs) and serious adverse events (SAEs) observed in Cohort 1 were typical of those observed in allo-HCT patients and no AEs or SAEs were determined to be related to study drug treatment by the investigators.

o A total of 13 SAEs were reported among 10 patients, with the most common SAE being infections and infestations including sepsis.

o One patient died 14 days after the last dose of study drug (within the 30-day reporting period) due to sepsis that was not related to study drug.

● Consistent with previous studies of SYN-004 in healthy volunteers, SYN-004 was not observed in blood samples from the majority of the evaluable patients.

o A total of 3 plasma samples (~2% of all analyzed samples) had low but quantifiable levels of SYN-004 using a sensitive ECL assay.

o None of the 3 ECL positive plasma samples was found to contain active SYN-004 using a functional enzyme activity assay.

● Meropenem pharmacokinetics were as expected for this patient population.

Based on a review of the safety and pharmacokinetic data, the DSMC has recommended that the study may proceed to enroll Cohort 2 in which study drug (SYN-004 or Placebo) will be administered in combination with the IV beta-lactam antibiotic piperacillin/tazobactam.

On September 30, 2022, we issued a press release announcing an oral presentation entitled “Topotecan enhances oncolytic adenovirus infection, replication and antitumor activity in retinoblastoma,” featuring Dr.

Victor Burgueño, Professor at Fundació Sant Joan de Déu at the SIOP 2022 Congress of the International Society of Pediatric Oncology, being held in Barcelona, Spain from September 28-October 1, 2022.

The new data from the study for which Dr.

Victor Burgueño is the lead investigator further support evaluation of VCN-01, an oncolytic adenovirus expressing hyaluronidase, and topotecan for the treatment of refractory retinoblastoma.

Key data and conclusions showcased in the SIOP presentation include:

● VCN-01 treatment in combination with topotecan, but not with carboplatin or melphalan, significantly increased VCN-01 infection and replication in retinoblastoma cells (p=0.0007) in vitro.

● In athymic mice engrafted with human retinoblastomas, topotecan administered systemically after intratumoral VCN-01 increased viral genome replication and the number of VCN-01 infected cells when compared to administration of VCN-01 alone (p = 0.0002).

● Sequential administration of intratumoral VCN-01 followed by systemic topotecan significantly increased median ocular survival, compared to VCN-01 alone (p =0.0364).

Our Current Product Pipeline

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²Depending on funding/partnership.

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

SYN-004 may enter an FDA-agreed Phase 3 clinical trial for the prevention 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.

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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 19 patients in Cohort 1 of the study (12 that are considered evaluable) in the study.

A topline data readout from the first Cohort 1 is expected in the second half of 2022 after review by a protocol-specified review by a Data and Safety Monitoring Committee.

On September 27, 2022, we issued a press release announcing positive outcome from the Data and Safety Monitoring Committee (“DSMC”) review of results from the first Cohort of the Company’s Phase 1b/2a randomized, double-blinded, placebo-controlled 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 completed Cohort 1, which enrolled 19 patients who received at least 1 dose of study drug (SYN-004 or Placebo randomized 2:1).

Sixteen patients received at least one dose of intravenous (IV) meropenem and 12 of these patients completed sufficient doses of IV meropenem to be evaluable towards the study endpoints.

The study is on-going and remains blinded;

however, key findings from blinded data for Cohort 1 are included below:

o A total of 13 SAEs were reported among 10 patients, with the most common SAE being infections and infestations including sepsis.

o One patient died 14 days after the last dose of study drug (within the 30-day reporting period) due to sepsis that was not related to study drug.

● Consistent with previous studies of SYN-004 in healthy volunteers, SYN-004 was not observed in blood samples from the majority of the evaluable patients.

o A total of 3 plasma samples (~2% of all analyzed samples) had low but quantifiable levels of SYN-004 using a sensitive ECL assay.

o None of the 3 ECL positive plasma samples were found to contain active SYN-004 using a functional enzyme activity assay.

● Meropenem pharmacokinetics were as expected for this patient population.

If enrollment proceeds on the current schedule, we may be positioned to announce data readouts for the second cohort during the second half of 2023 and the third cohort during the second half of 2024.

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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.

On November 3, 2022 we announced the first patient has been dosed in Cohort 2 of its Phase 1b/2a randomized, double-blinded, placebo-controlled clinical trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) recipients for the prevention of acute graft-versus-host-disease (aGVHD).

SYN-020 — Oral Intestinal Alkaline Phosphatase

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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.

Analyses of preliminary data demonstrated that SYN-020 maintained a favorable safety profile, was well tolerated at all dose levels, and no adverse events were attributed to the study drug.

The data demonstrated that SYN-020 maintained a favorable safety profile, was well tolerated at all dose levels, and no adverse events were attributed to the study drug.

No serious adverse events were reported.

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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 recommended phase 2 doses (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.

The recommended phase 2 doses (RP2D) were 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.

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We are currently planning a Phase 2 clinical trial of systemically administered VCN-01 in PDAC patients and submitted of the protocol to the FDA and Spanish and German regulatory agencies in June of 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.

In September 2022 the trial received “safe to proceed” from FDA and it has been approved by Spanish National Authority (AEMPS) The proposed Phase 2 trial will 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.

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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.

Initiation of recruitment is expected during Q4 2022.

Retinoblastoma

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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).

Replication within retinoblastoma tumors over time was detected and VCN-01 reduced the number of vitreous seeds in 4 out of 5 patients treated at 2 x 10 10 vp/eye (n=5).

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 first quarter of 2023.

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 the second half of 2023.

We anticipate the initiation of a Company-sponsored trial of VCN-01 as either an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma in the second half of 2023.

VCN-01 in combination with Immunomodulatory therapeutics

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

The last patients on the study are currently in the follow-up period and initial safety data from these patients is expected to be available in Q3 2022.

On September 05, 2022 we announced a presentation of initial data from a Phase 1 investigator-sponsored study evaluating VCN-01 in combination with durvalumab for patients with recurrent/metastatic squamous cell carcinoma of the head and neck (R/M HNSCC).

Data will be featured in a poster presentation at the European Society for Medical Oncology (ESMO) Congress.

The poster reported that treatment with VCN-01 had an acceptable safety profile when administered with durvalumab in the sequential schedule and the most common treatment-related adverse events were dose-dependent and reversible pyrexia, flu-like symptoms and increases in liver transaminases.

Sustained blood levels of VCN-01 viral genomes and increased serum hyaluronidase levels were maintained for over six weeks and analysis of tumor samples showed an increase in CD8 T cells (a marker of tumor inflammation);

upregulation of PD-L1;

and downregulation of matrix-related pathways after VCN-01 administration.

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

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This trial has already received approval from Medicines & Healthcare Products Regulatory Agency (MHRA) from UK Government and recruitment is on-going.

Initiation of VCN-01 dosing is expected in the second half of 2022.

Initiation of VCN-01 dosing is expected in Q4 2022.

Research Programs

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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 Albumin Shield™ Technology

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

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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.

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.

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The presentation included 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.

Our internal discovery programs are currently evaluating new oncolytic viruses derived from VCN-11 that may expand the potential efficacy of Albumin Shield viruses.

Intellectual Property

All of our programs are supported by growing patent estates.

In total, Synthetic Biologics has over 100 U.S.

In total, Theriva Biologics has over 100 U.S.

and foreign patents and over 70 U.S.

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and foreign patents pending

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

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

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

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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).

The SYN-020 (oral intestinal alkaline phosphatase (IAP)) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

The SYN-020 (oral intestinal alkaline phosphatase (IAP)) program is supported by IP that is assigned to Theriva Biologics, namely U.S.

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

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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.

Impairment of Long-Lived Assets

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets.

If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets.

Acquired In-Process Research & Development represents the fair value assigned to those research and development projects that were acquired in a business combination for which the related products have not received regulatory approval and have no alternative future use.

IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition

are expensed as incurred.

Upon achieving regulatory approval or commercial viability for the related product, the indefinite-lived intangible asset is accounted for as a finite-lived asset and is amortized on a straight-line basis over the estimated useful life.

If the project is not completed or is terminated or abandoned, the Company may have an impairment related to the IPR&D which is charged to expense.

Indefinite-lived intangible assets are tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may be impaired.

Impairment is calculated as the excess of the asset’s carrying value over its fair value.

During the quarter ending September 30, 2022, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and the Company deemed this to be a triggering event.

The Company performed an interim impairment analysis and concluded that the Goodwill and IPRD was not impaired as of September 30,2022.

Goodwill represents the excess of the purchase price paid when the Company acquired VCN in March 2022, over the fair values of the acquired tangible or intangible assets and assumed liabilities.

The Company will conduct an impairment test of goodwill on an annual basis as of October 1 of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce the Company’s fair value below its net equity value.

Results of Operations

Three Months Ended June 30, 2022 and 2021

Three Months Ended September 30, 2022 and 2021

General and Administrative Expenses

General and administrative expenses increased to $1.5 million for the three months ended June 30, 2022, from $1.3 million for the three months ended June 30, 2021.

This increase of 19% 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 $86,000 for the three months ended June 30, 2022, compared to $83,000 the three months ended June 30, 2021.

General and administrative expenses increased to $2.4 million for the three months ended September 30, 2022, from $1.3 million for the three months ended September 30, 2021.

This increase of 88% was primarily comprised of increased consulting and legal costs related to the VCN acquisition, increase in the fair value of the contingent consideration, higher insurance costs, audit fees, and public relations expenses, and VCN administrative expenses not included the in prior year.

The charge related to stock-based compensation expense was $93,000 for the three months ended September 30, 2022, compared to $83,000 for the three months ended September 30, 2021.

Research and Development Expenses

Research and development expenses increased to $3.5 million for the three months ended June 30, 2022, from approximately $1.9 million for the three months ended June 30, 2021.

This increase of 80% is primarily the result of VCN research expenses related to VCN-01 not incurred in the prior year and to a lesser extent higher manufacturing expense for SYN-020, costs incurred related to our Phase 1a clinical trial of SYN-020 and expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

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 continue with supporting our VCN-11 and other preclinical and discovery initiatives.

The charge related to stock-based compensation expense was $27,000 for the three months ended June 30, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended June 30, 2021.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended June 30, 2022 and 2021.

Research and development expenses increased to $2.6 million for the three months ended September 30, 2022, from approximately $2.0 million for the three months ended September 30, 2021.

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

The charge related to stock-based compensation expense was $28,000 for the three months ended September 30, 2022, compared to $19,000 related to stock-based compensation expense for the three months ended September 30, 2021.

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

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 product candidates.

Three months ended

September 30,

Therapeutic Areas

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Other Income/Expense

Other income was $17,000 for the three months ended June 30, 2022 compared to other income of $2,000 for the three months ended June 30, 2021.

Other income for the three months ended June 30, 2022 is primarily comprised of interest income of $26,000 offset by an exchange loss of $9,000.

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

Other income was $161,000 for the three months ended September 30, 2022 compared to other income of $2,000 for the three months ended September 30, 2021.

Other income for the three months ended September 30, 2022 is primarily comprised of interest income of $170,000 offset by an exchange loss of $9,000.

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

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $5.0 million, or $0.31 per basic and dilutive common share for the three months ended June 30, 2022, compared to a net loss of approximately $3.2 million, or $0.24 per basic common share and dilutive common share for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 and 2021

Our net loss attributable to common stockholders was approximately $5.2 million, or $0.33 per basic and dilutive common share for the three months ended September 30, 2022, compared to a net loss of approximately $3.3 million, or $0.25 per basic common share and dilutive common share for the three months ended September 30, 2021.

Net loss attributable to common stockholders for the three months ended September 30, 2022 includes the effect of the warrant exercise price adjustment of $340,000.

Nine Months Ended September 30, 2022 and 2021

General and Administrative Expenses

General and administrative expenses increased to $3.2 million for the six months ended June 30, 2022, from $2.7 million for the six months ended June 30, 2021.

This increase of 18% 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 $172,000 for the six months ended June 30, 2022, compared to $165,000 the six months ended June 30, 2021.

General and administrative expenses increased to $5.6 million for the nine months ended September 30, 2022, from $4.0 million for the nine months ended September 30, 2021.

This increase of 40% was primarily comprised of increased consulting and legal costs related to the VCN acquisition, higher insurance costs, and public relations expenses, and VCN administrative expenses not included in the prior year offset by a decrease in the fair value of the contingent consideration.

The charge related to stock-based compensation expense was $264,000 for the nine months ended September 30, 2022, compared to $248,000 for the nine months ended September 30, 2021.

Research and Development Expenses

Research and development expenses increased to $6.1 million for the six months ended June 30, 2022, from approximately $3.0 million for the six months ended June 30, 2021.

This increase of 99% is primarily the result of VCN research expenses related to VCN-01 not incurred in the prior year and to a lesser extent higher manufacturing expense for SYN-020, costs incurred related to our Phase 1a clinical trial of SYN-020 and expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

The charge related to stock-based compensation expense was $54,000 for the six months ended June 30, 2022, compared to $38,000 related to stock-based compensation expense for the six months ended June 30, 2021.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the six months ended June 30, 2022 and 2021.

Research and development expenses increased to $8.6 million for the nine months ended September 30, 2022, from approximately $5.0 million for the nine months ended September 30, 2021.

This increase of 30% is primarily the result of VCN research expenses related to VCN-01 not incurred in the prior year and, to a lesser extent, higher manufacturing expenses related to our Phase 1a clinical trial of SYN-020 and expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

The charge related to stock-based compensation expense was $82,000 for the nine months ended September 30, 2022, compared to $57,000 related to stock-based compensation expense for the nine months ended September 30, 2021.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the nine months ended September 30, 2022 and 2021.

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

Six months ended

Nine months ended

September 30,

Therapeutic Areas

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Other Income/Expense

Other expense was $4,000 for the six months ended June 30, 2022 compared to other income of $2,000 for the six months ended June 30, 2021.

Other expense for the six months ended June 30, 2022 is primarily comprised of exchange loss of $31,000, offset by interest income of $27,000.

Other income for the six months ended June 30, 2021 is primarily comprised of interest income.

Other income was $157,000 for the nine months ended September 30, 2022 compared to other income of $4,000 for the nine months ended September 30, 2021.

Other income for the nine months ended September 30, 2022 is primarily comprised of exchange loss of $40,000, offset by interest income of $197,000.

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

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $9.2 million, or $0.62 per basic and dilutive common share for the six months ended June 30, 2022, compared to a net loss of approximately $5.7 million, or $1.31 per basic common share and dilutive common share for the six months ended June 30, 2021.

Net loss attributable to common stockholders for the six months ended June 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.

Our net loss attributable to common stockholders was approximately $14.4 million, or $0.95 per basic and dilutive common share for the nine months ended September 30, 2022, compared to a net loss of approximately $17.9 million, or $1.51 per basic common share and dilutive common share for the nine months ended September 30, 2021.

Net loss attributable to common stockholders for the nine months ended September 30, 2022 includes the effect of the warrant exercise price adjustment of $340,000.

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.

Liquidity and Capital Resources

As of June 30, 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.

As of September 30, 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.

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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 $52.3 million as of June 30, 2022, which includes the net proceeds from sales of our Common Stock in “at-the-market” (ATM) equity offerings during 2021 and cash proceeds 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.

Cash and cash equivalents totaled approximately $50.5 million as of September 30, 2022, which includes the net proceeds from sales of our Series C and D Convertible Preferred Stock issued during the three months ended September 30, 2022, Common Stock in “at-the-market” (ATM) equity offerings during 2021 and cash proceeds 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 into the first quarter of 2024.

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.

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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.

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.

The uncertain financial markets, disruptions in supply chains, mobility restraints, and changing priorities as well as volatile asset values could impact our business in the future.

The outbreak and government measures taken in response to the pandemic have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, have spiked, while demand for other goods and services, such as travel, have fallen.

The future progression of the pandemic and its effects on our business and operations are uncertain.

We may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by the virus or are fearful of traveling to our clinical trial sites because of the outbreak.

We and our third-party contract manufacturers, contract research organizations, and clinical sites may also face disruptions in procuring items that are essential to our research and development activities, including, for example, medical and laboratory supplies used in our clinical trials or preclinical studies, in each case, that are sourced from abroad or for which there are shortages because of ongoing efforts to address the outbreak.

Further, although we have not experienced any material adverse effects on our business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of our drug candidates or services providers, foreign exchange rates or employee wages.

We are actively monitoring the effects these disruptions and increasing inflation could have on our operations.

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.

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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 $53.5 million as of August 1, 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.

We believe our cash position of $50.1 million as of November 1, 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 with SYN-020, and the proposed clinical trials with VCN-01, we will need to obtain additional funds for future clinical trials.

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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 persistent COVID-19 and the global economic downturn, we are not able to estimate the future effects of the these factors on our results of operations, financial condition, or liquidity.

Given the daily evolution of persistent COVID-19 and the global economic downturn, we are not able to estimate the future effects of these factors on our results of operations, financial condition, or liquidity.

Off-Balance Sheet Arrangements

During the three months ended June 30, 2022, 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 September 30, 2022, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

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What changed 10-Q

Item 2. Management’s Discussion and Analysis