What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-11 · 174 added, 158 removed, 442 unchanged (43% of the section changed)

4 unchanged sentences

(In thousands except share and par value amounts)

March 31, 2023

June 30, 2023

December 31, 2022

22 unchanged sentences

Deferred tax liabilities, net

Lease liability - Long term

Operating lease liability - Long term

Total Liabilities

9 unchanged sentences

Common stock, $ 0.001 par value;

350,000,000 shares authorized, 15,844,294 issued and 15,124,061 outstanding at March 31, 2023 and 15,844,294 issued and 15,124,061 outstanding at December 31, 2022

350,000,000 shares authorized, 17,762,010 issued and 17,041,777 outstanding at June 30, 2023 and 15,844,294 issued and 15,124,061 outstanding at December 31, 2022

Additional paid-in capital

Treasury stock at cost, 720,233 shares at March 31, 2023 and at December 31, 2022

Treasury stock at cost, 720,233 shares at June 30, 2023 and at December 31, 2022

Accumulated other comprehensive loss

1 unchanged sentence

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Total Liabilities Temporary Equity, and Stockholders’ Equity

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands, except share and per share amounts)

For the three months ended March 31,

For the three months ended June 30,

For the six months ended June 30,

Operating Costs and Expenses:

3 unchanged sentences

Loss from Operations

Other Income (Expense):

Exchange income (loss)

Other Expense:

Exchange loss

Interest income

Total Other Income (Expense)

Net Loss before income taxes

Income tax benefit

2 unchanged sentences

Weighted average number of shares outstanding during the period - Basic and Dilutive

Gain on foreign currency translation

Gain(Loss) on foreign currency translation

Total comprehensive loss

12 unchanged sentences

Balance at March 31, 2023

Stock-based compensation

Stock issued under "at-the-market"

Translation gains(loss)

Balance at June 30, 2023

Common Stock $0.001 Par Value

4 unchanged sentences

Issuance of Common Stock for VCN Acquisition

Translation gains

Translation gains (losses)

Balance at March 31, 2022

Stock-based compensation

Translation gains (losses)

Balance at June 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash Flows From Operating Activities:

3 unchanged sentences

Change in fair value of contingent consideration

Right of use asset

Non-cash lease expense

Changes in operating assets and liabilities:

3 unchanged sentences

Accrued employee benefits

Lease liability

Operating lease liability

Net Cash Used In Operating Activities

6 unchanged sentences

Payment of debt

Net Cash Provided by Financing Activities

Proceeds from issuance ATM offering, net of issuance costs

Net Cash Provided by (used in) Financing Activities

Effects of exchange rate changes on cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents and restricted cash at the end of this period

Reconciliation of cash, cash equivalents, and restricted cash reported in the statement of financial position

Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet

Cash and cash equivalents

6 unchanged sentences

Effective settlement of pre-closing VCN financing

Goodwill measurement period adjustment

See accompanying notes to unaudited condensed consolidated financial statements.

7 unchanged sentences

As a result of the acquisition of Theriva Biologics S.L.

(“VCN”, formerly known as VCN Biosciences, S.L.) (the “Acquisition”), described in more detail below, the Company transitioned 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.

(“VCN”, formerly known as VCN Biosciences, S.L.) (the “Acquisition”), described in more detail below, the Company transitioned 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, to improve access of co-administered cancer therapies to the tumor, and to promote a robust and sustained anti-tumor response by the patient’s immune system.

Prior to the Acquisition, the Company’s focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases in areas which included our clinical development candidates:

7 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information.

Accordingly, they do not include all of the information and notes required by Accounting Principles Generally Accepted in the United States of America (“U.S.

Accordingly, they do not include all the information and notes required by Accounting Principles Generally Accepted in the United States of America (“U.S.

GAAP”) for complete financial statements.

2 unchanged sentences

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2022 Form 10-K.

The interim results for the three months ended March 31, 2023 are not necessarily indicative of results for the full year.

The interim results for the six months ended June 30, 2023 are not necessarily indicative of results for the full year.

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

2 unchanged sentences

however, due to the inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

As of March 31, 2023 the Company has one operating segment (which includes the legacy Company business and the VCN business) and therefore one reporting segment.

As of June 30, 2023 the Company has one operating segment (which includes the legacy Company business and the VCN business) and therefore one reporting segment.

As of June 30, 2023, 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.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization, Nature of Operations and Basis of Presentation – (continued)

Our cash and cash equivalents totaled $ 34.2 million as of June 30, 2023, a decrease of $ 7.5 million from December 31, 2022.

During the three and six months ended June 30, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $ 5.1 million and $ 9.6 million for three and six months ended June 30, 2023, respectively.

With our cash position of $ 32.8 million in early August 2023, we believe we will be able to fund our operations through the third quarter and into the fourth 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.

However, the amount of additional capital needed by us will also depend upon the costs to advance our VCN-01 clinical programs and whether we continue to develop SYN-004 internally, or out-license or partner such development.

If necessary, we 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 we are 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.

Summary of Significant Accounting Policies

There have been no new or material changes to the significant accounting policies discussed in the Company’s audited financial statements and the notes thereto included in the Fiscal 2022 Form 10-K.

Business Combination

7 unchanged sentences

The IPR&D and goodwill are deemed to have indefinite lives and therefore not amortized.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization, Nature of Operations and Basis of Presentation – (continued)

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

5 unchanged sentences

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

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Significant Accounting Policies – (continued)

The Company tests the carrying amounts of goodwill for recoverability on an annual basis on October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired.

7 unchanged sentences

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.

The payments include milestone payments to 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.

1 unchanged sentence

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.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Summary of Significant Accounting Policies

Long-Lived Assets

3 unchanged sentences

If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset.

No impairment charges were recorded during the three months ended March 31, 2023 and 2022.

Recent Accounting Pronouncements and Developments

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (subtopic 815-40) :

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance for both Subtopics.

The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in annual reporting periods ending after December 15, 2020.

The Company has adopted ASU 2020-06 on January 1, 2022.

The ASU impacted the analysis of the accounting treatment for the issuance of Convertible Preferred Series C & D stock during the third quarter of 2022, specifically the cash conversion and beneficial conversion features.

No impairment charges were recorded during the three and six months ended June 30, 2023 and 2022.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION

11 unchanged sentences

Due to this approval, the Company paid Grifols $ 3.0 million in the fourth quarter of 2022.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

In anticipation of the Acquisition, prior to the Closing, the Company loaned VCN $ 417,000 to help finance the costs of certain of VCN’s research and development activities.

6 unchanged sentences

Fair value of contingent consideration

As of March 31, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $ 10.3 million and 10.1 million, respectively.

During the three months ended March 31, 2023, the Company recognized in operating expense a $ 135,000 fair value adjustment increase to contingent consideration.

There was no fair value adjustment to contingent consideration for the three months ended March 31, 2022.

As of June 30, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $ 10.8 million and 10.2 million, respectively.

During the three and six months ended June 30, 2023, the Company recognized in operating expense a $ 432,000 and 568,000 , respectively, fair value adjustment increase to contingent consideration.

During the three months ended June 30, 2022 the Company recognized fair value adjustment decrease to contingent consideration of $ 432,000 .

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

The allocation of the fair value of the VCN acquisition updated for measurement period and other adjustments is shown in the table below.

17 unchanged sentences

Theriva Biologics, S.L.

operations recorded a net loss of $ 7.8 million from the date of Acquisition through March 31, 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

operations recorded a net loss of $ 8.3 million from the date of Acquisition through June 30, 2023.

During the year ended December 31, 2022, the Company recognized the following measurement period adjustments:

4 unchanged sentences

an increase in deferred tax liabilities of $ 202,000 and a decrease in goodwill of $ 1,061,000 .

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION - (continued)

Pro Forma Consolidated Financial Information (unaudited)

The following unaudited pro forma consolidated financial information summarizes the results of operations for the periods indicated as if the VCN Acquisition had been completed as of January 1, 2022 (in thousands):

Three months Ended March 31

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

Transaction Costs

In conjunction with the Acquisition, the Company incurred approximately $ 0.2 million in transaction costs during the three months ended March 31, 2022, which were expensed as general, and administrative expense in the consolidated statements of operations.

There were no acquisition costs incurred during the three months ended March 31, 2023.

In conjunction with the Acquisition, the Company incurred approximately $ 0.2 million in transaction costs during the three and six months ended June, 2022, which were expensed as general, and administrative expense in the consolidated statements of operations.

There were no acquisition costs incurred during the three and six months ended June 31, 2023.

Goodwill and Intangibles

The following table provides the Company’s Goodwill as of March 31, 2023.

The following table provides the Company’s Goodwill as of June 30, 2023.

Goodwill (in thousands)

6 unchanged sentences

Effects of exchange rates

Balance at March 31, 2023

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Goodwill and Intangibles – (continued)

The following table provides the Company’s in-process R&D as of March 31, 2023.

Balance at June, 2023

The following table provides the Company’s in-process R&D as of June 30, 2023.

R&D (in thousands)

5 unchanged sentences

Effects of exchange rates

Balance at March 31, 2023

During the quarter ending September 30, 2022, and the quarter ended December 31, 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 trigger event for impairment.

Balance at June 30, 2023

During the quarter ended September 30, 2022, and the quarter ended December 31, 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 trigger event for impairment.

The Company performed an impairment analysis and concluded that the Goodwill and IPR&D was not impaired as of September 30, 2022, and December 31, 2022.

There was no trigger event during the three months ended March 31, 2023.

There was no trigger event during the three and six months ended June 30, 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Fair Value of Financial Instruments

10 unchanged sentences

The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments.

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rates loans extended by Spanish government.

The carrying value of the loans payable approximate fair value and are classified under level 2.

In connection with the Acquisition of VCN, the Company will be required pay up to $ 70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings completed noted in Note 3.

2 unchanged sentences

The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs.

The fair value of the contingent consideration was $ 10.3 million as of March 31, 2023 and is reflected as current accrued contingent consideration of $ 4.9 million and non-current contingent consideration liability of $ 5.4 million in the consolidated balance sheet.

During the three months ended March 31, 2023 the Company recognized in operating expense a $ 135,000 fair value adjustment increase to contingent consideration.

There was no fair value adjustment during the three months ended March 31, 2022.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Fair Value of Financial Instruments – (continued)

The fair value of the contingent consideration was $ 10.8 million as of June 30, 2023 and is reflected as current accrued contingent consideration of $ 5.0 million and non-current contingent consideration liability of $ 5.8 million in the consolidated balance sheet.

During the three and six months ended June 30, 2023 the Company recognized in operating expense a $ 432,000 and $ 568,000 , respectively, fair value adjustment increase to contingent consideration.

During the three months ended June 30, 2022 the Company recognized in operating expense a $ 432,000 fair value adjustment decrease to contingent consideration.

There were no transfers in or out of the level 3 liabilities during the three and six months ended June 30, 2023 and 2022.

The fair value of financial instruments measured on a recurring basis is as follows:

As of March 31, 2023

As of June 30, 2023

Contingent consideration

Loans payable

Total liabilities

As of December 31, 2022

Contingent consideration

Loans payable

Total liabilities

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Fair Value of Financial Instruments – (continued)

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:

As of March 31, 2023

As of June 30, 2023

Weighted Average

25 unchanged sentences

6.9 % to 95.0 %

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Selected Balance Sheet Information

3 unchanged sentences

Prepaid insurance

Receivable from prior owner

Prepaid consulting, subscriptions and other expenses

Receivable from prior owner

VAT receivable

2 unchanged sentences

Receivable from prior VCN owner includes amounts due related to research and development tax rebates, VAT and corporate taxes.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Selected Balance Sheet Information – (continued)

Property and equipment, net (in thousands)

4 unchanged sentences

Accrued expenses (in thousands)

Accrued manufacturing costs

Accrued clinical consulting services

Accrued manufacturing costs

Accrued vendor payments

1 unchanged sentence

Accrued bonus expense

Accrued vacation expense

Accrued compensation expense

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Accrued vacation expense

Stock-Based Compensation

3 unchanged sentences

The exercise price of stock options under the 2007 Stock Plan was determined by the compensation committee of the Board of Directors and could be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted.

As of March 31, 2023, there were 372 options issued and outstanding under the 2007 Stock Plan.

As of June 30, 2023, there were 86 options issued and outstanding under the 2007 Stock Plan.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

On November 2, 2010, the Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (“2010 Stock Plan”) for the issuance of up to 8,572 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries.

2 unchanged sentences

Options become exercisable over various periods from the date of grant and expire between five and ten years after the grant date.

As of March 31, 2023, there were 202,095 options issued and outstanding under the 2010 Stock Plan.

As of June 30, 2023, there were 202,095 options issued and outstanding under the 2010 Stock Plan.

There are no shares available to be issued under this plan.

On September 17, 2020, the stockholders approved and adopted the 2020 Stock Incentive Plan (“2020 Stock Plan”) for the issuance of up to 400,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries.

The number of shares authorized for options was increased such that 7,000,000 were authorized as of March 31, 2023.

As of March 31, 2023, there were 2,093,002 options issued and outstanding under the 2020 Stock Plan.

The number of shares authorized for options was increased such that 7,000,000 were authorized as of June 30, 2023.

As of June 30, 2023, there were 2,082,155 options issued and outstanding under the 2020 Stock Plan.

In the event of an employee’s termination, the Company will cease to recognize compensation expense for that employee.

3 unchanged sentences

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model.

There were no options granted during the three months ended March 31, 2023 and 2022.

There were no options granted during the three and six months ended June 30, 2023 and 2022.

Expected dividends — The Company has never declared or paid dividends on its common stock and has no plans to do so in the foreseeable future.

6 unchanged sentences

The Company estimates the expected life of the option term based on the weighted average life between the dates that options become fully vested and the maximum life of options granted.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

The Company records stock-based compensation based upon the stated vesting provisions in the related agreements.

6 unchanged sentences

● one-third immediate vesting and the remaining annually over two years,

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

● one-half immediate vesting and the remaining over nine months,

3 unchanged sentences

● monthly over three years.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

A summary of stock option activity for the three months ended March 31, 2023 and the year ended December 31, 2022 is as follows:

A summary of stock option activity for the six months ended June 30, 2023 and the year ended December 31, 2022 is as follows:

Weighted Average

3 unchanged sentences

Balance - December 31, 2022

Balance - March 31, 2023 - outstanding

Balance - March 31, 2023 - exercisable

Grant date fair value of options granted – three months ended March 31, 2023

Weighted average grant date fair value – three months ended March 31, 2023

Balance – June 30, 2023 - outstanding

Balance – June 30, 2023 - exercisable

Grant date fair value of options granted – six months ended June 30, 2023

Weighted average grant date fair value – six months ended June 30, 2023

Grant date fair value of options granted – year ended December 31, 2022

Weighted average grant date fair value – year ended December 31, 2022

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to employees for the three months ended March 31, 2023 and 2022 was $ 83,000 and $ 59,000 , respectively.

Stock-based compensation expense included in general and administrative expenses and research and development expenses relating to stock options issued to consultants for the three months ended March 31, 2023 and 2022 were $ 43,000 and $ 53,000 , respectively.

As of March 31, 2023, total unrecognized stock-based compensation expense related to stock options was $ 841,000 , which is expected to be expensed through May 2025.

The FASB’s guidance for stock-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from operating activities.

Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options.

The Company did not record any excess tax benefits during the three months ended March 31, 2023 and 2022.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Stock-Based Compensation – (continued)

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to employees for the three and six months ended June 30, 2023 was $ 73,000 and $ 126,000 , respectively, and $ 39,000 and $ 78,000 for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense included in research and development expenses relating to stock options issued to employees for the three and six months ended June 30, 2023 was $ 29,000 and $ 58,000 , respectively, and $ 21,000 and $ 41,000 for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to consultants for the three and six months ended June 30, 2023 was $ 33,000 and $ 66,000 , respectively, and $ 46,000 and $ 93,000 for the three and six months ended June 30, 2022, respectively.

Stock-based compensation expense included in research and development expenses relating to stock options issued to consultants for the three and six months ended June 30, 2023 was $ 11,000 and $ 21,000 , respectively, and $ 7,000 and $ 14,000 for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, total unrecognized stock-based compensation expense related to stock options was $ 673,000 , which is expected to be expensed through June 2025.

The FASB’s guidance for stock-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from operating activities.

Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options.

The Company did not record any excess tax benefits during the six months ended June 30, 2023 and 2022.

Stock Warrants

11 unchanged sentences

During the three months ended March 31, 2021, 1,165,575 Warrants were exercised for cash proceeds of $ 8.0 million.

There were no Warrants exercised during the year ended December 31, 2022, or the three months ended March 31, 2023.

There were no Warrants exercised during the year ended December 31, 2022, or the six months ended June 30, 2023.

Theriva Biologics, Inc.

5 unchanged sentences

The effect of the change in the exercise price of the Warrants as a result of the triggering of the down round protection clause in the Warrants was recorded as a deemed dividend of $ 340,000 during the year ended December 31, 2022, which reduces the income available to common stockholders.

A summary of all warrant activity for the Company for the quarter ended March 31, 2023 and the year ended December 31, 2022 is as follows:

A summary of all warrant activity for the Company for the six months ended June 30, 2023 and the year ended December 31, 2022 is as follows:

Weighted Average

4 unchanged sentences

Balance at December 31, 2022

Balance at March 31, 2023

On December 26, 2017, the Company entered into a consulting agreement for advisory services for a period of six months.

As compensation for such services, the consultant was paid an upfront payment, a monthly fee and on January 24, 2018 was issued a warrant exercisable for 714 shares of the Company’s common stock on the date of issue.

The warrant is equity classified and the fair value of the warrant approximated $ 9,000 and was measured using the Black-Scholes option pricing model.

The warrant expired in December 2022.

Balance at June 30, 2023

Net Loss per Share

2 unchanged sentences

Diluted net loss per share assumes the issuance of potential dilutive common shares outstanding for the period and adjusts for any changes in income and the repurchase of common shares that would have occurred from the assumed issuance, unless such effect is anti-dilutive.

Net loss attributable to common stockholders for the three months ended March 31, 2023 was $ 4.5 million.

Net loss attributable to common stockholders for the three months ended March 31, 2022 was $ 4.3 million.

The number of options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share and for the three months ended March 31, 2023 were 2,295,469 and 634,426 , respectively and for the three months ended March 31, 2022 were 610,772 and 634,426 , respectively, because their effect is anti-dilutive.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Net loss attributable to common stockholders for the three and six months ended June 30, 2023 was $ 5.1 million and 9.6 , respectively.

Net loss attributable to common stockholders for the three and six months ended June 30, 2022 was approximately $ 4.5 million and $ 8.8 million, respectively.

The number of options and warrants for the purchase of common stock that were excluded from the computations of net loss per common share and for the three and six months ended June 30, 2023 were 2,284,336 and 634,425 , respectively and for the three and six months ended June 30, 2022 were 607,334 and 634,497 , respectively, because their effect is anti-dilutive.

Related Party

On December 15, 2022, the Company approved the retention of MaryAnn Shallcross, the wife of Steven Shallcross, as director of Clinical Operations, for compensation of $ 145,000 and the grant of an option to purchase 50,000 shares of common stock having a value of $ 20,000 .

During the three and six months ended June 30, 2023, Ms.

Shallcross had $ 36,000 and $ 72,000 in compensations expense, respectively.

Shallcross had been performing services for us during 2022 for total compensation of less than $ 120,000 .

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Common and Preferred Stock

3 unchanged sentences

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

The Company included certain proposals at its 2022 annual meeting of stockholders, including to consider (i) an amendment to the Company’s Articles of Incorporation, as amended (the “Charter”), to change the name of the Company to “Theriva Biologics, Inc.” (the “Name Change”), (ii) an amendment to the Articles of Incorporation, as amended to increase the number of authorized shares of Common Stock from 20,000,000 to 350,000,000 (the “Authorized Common Stock Increase”) and (iii) any proposal to adjourn any meeting of stockholders called for the purpose of voting on the Authorized Common Stock Increase (collectively, the “Stockholder Items”).

The Company included certain proposals at its 2022 annual meeting of stockholders, including (i) an amendment to the Company’s Articles of Incorporation, as amended (the “Charter”), to change the name of the Company to “Theriva Biologics, Inc.” (the “Name Change”), (ii) an amendment to the Articles of Incorporation, as amended to increase the number of authorized shares of Common Stock from 20,000,000 to 350,000,000 (the “Authorized Common Stock Increase”) and (iii) to adjourn any meeting of stockholders called for the purpose of voting on the Authorized Common Stock Increase (collectively, the “Stockholder Items”).

The purchaser of the Preferred Stock agreed in the Purchase Agreement to (i) not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the earlier of the date that the Authorized Common Stock Increase is effected or October 26, 2022 (which may be extended to December 31, 2022 if certain conditions are met), and (ii) vote the shares of the Series C Preferred Stock purchased in the Offering in favor of the Stockholder Items.

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The Conversion Price may be adjusted pursuant to the Certificates of Designation for stock dividends and stock splits, subsequent rights offering, pro rata distributions of dividends or the occurrence of a fundamental transaction (as defined in the applicable Certificate of Designation).

The Series C Preferred Stock and Series D Preferred Stock is classified as temporary equity as a result of the deemed liquidation provision.

The Series C Preferred Stock and Series D Preferred Stock are classified as temporary equity as a result of the deemed liquidation provision.

Transaction expenses paid to third parties will be charged to temporary equity and will not be accreted as deemed dividends until redemption becomes probable.

In order to comply with Section 122 of the NYSE American Company Guide, on August 9, 2022 the Company and the holder of the Company’s Series C preferred stock and Series D preferred stock amended the Securities Purchase Agreement entered into between them on July 28, 2022 to provide that the holder may only submit 1,549,295 of the votes relating to the Series C Preferred Stock that it would otherwise be entitled to vote.

Theriva Biologics, Inc.

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Common and Preferred Stock – (continued)

Riley Securities Sales Agreement

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The sales agents are entitled to receive a commission rate of up to 3.0 % of gross sales in connection with the sale of the Common Stock sold on the Company’s behalf.

The Company did not sell any shares of common stock during the three months ended March 31, 2023 through the Amended and Restated Sales Agreement.

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rates loans ( 0 %- 1 %) extended by Spanish governmental institutions of Ministerio de Ciencia , Innovacion y Universidades and ACC10 Generalitat de Catalunya (CDIT loans) The maturities of these loans are between 2027 and 2028.

As a result of the VCN Acquisition, the Company maintains a restricted cash collateral account of $ 100,000 relating to the RETOS loan, which is reflected a non-current assets on the balance sheet.

March 31, 2023

During the three and six months ended June 30, 2023, the Company sold through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement approximately 1.9 million shares of the Company’s common stock and received net proceeds of approximately $ 2.2 million.

During the three and six months ended June 30, 2022, there were no sales of the Company’s common stock through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement.

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rates loans ( 0 %- 1 %) extended by Spanish governmental institutions of Ministerio de Ciencia, Innovacion y Universidades and ACC10 Generalitat de Catalunya (CDIT loans).

The maturities of these loans are between 2024 and 2028.

As a result of the VCN Acquisition, the Company maintains a restricted cash collateral account of $ 100,000 relating to the RETOS loan, which is reflected as a non-current asset on the balance sheet.

June 30, 2023

December 31, 2022

The difference between the fair value of these liabilities (when relevant conditions associated with the grants are met) and the amount received is recognized as a government grant and classified as other operating income in the statement of profit and loss.

A maturity analysis of the debt as of March 31, 2023 is as follows (amounts in thousands of dollars) :

A maturity analysis of the debt as of June 30, 2023 is as follows (amounts in thousands of dollars) :

Theriva Biologics, Inc.

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Commitments and Contingencies

The Company’s existing lease as of March 31, 2023 for its U.S.

location is classified as an operating lease.

As of March 31, 2023, the Company has two operating leases for facilities.

The Company’s existing leases as of June 30, 2023 for its U.S.

and Spanish facilities are classified as an operating leases.

During the quarter ended June 30, 2021, the Company renewed its Rockville MD facility lease by entering into a Second Lease Amendment which extends the lease term for 63 months beginning on September 1, 2022 and ending on December 31, 2027 at stated rental rates and including a 3-month rent abatement.

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There is an option in this Second Amendment to Lease for the Company to borrow funds for tenant improvements subject to an 8.5 % interest rate.

The Company also leases research and office facilities in Barcelona Spain for its 100 percent owned VCN subsidiary.

The current lease is short term agreement with a 90-day termination notice provision that can be exercised by either party.

On the closing date of the VCN acquisition, a sublease was executed for Theriva to lease research and office facilities at a new location in Parets del Valles (Barcelona) from the former owner of VCN.

This lease was executed for an initial term estimated to begin in January 2023 until October 2026, with an option to renew for an additional five years .

On January 15, 2023, the company moved into the facilities and the new lease commenced and the prior lease terminated.

Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the quarter ended March 31, 2023 and 2022 approximated $ 144,000 and $ 107,000 , respectively.

The Company also leases research and office facilities in Barcelona Spain for its 100 percent owned Theriva S.L.

The lease that was in existence from December 2021 to December 2022 was a short term agreement with a 90-day termination notice provision that can be exercised by either party.

On the closing date of the Theriva S.L.

acquisition, a sublease was executed for Theriva S.L.

to lease research and office facilities at a new location in Parets del Valles (Barcelona) from the former owner of Theriva S.L..

This lease was executed for an initial term to begin in January 2023 until October 2026, with an option to renew for an additional five years .

On January 15, 2023, Theriva S.L.

moved into the facilities and the new lease commenced and the prior lease terminated.

Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the three and six months ended June 30, 2023 approximated $ 158,000 and $ 303,000 , respectively and $ 138,000 and $ 245,000 the three and six months ended June 30, 2022, respectively.

For the Barcelona lease, the day one non-cash addition of right of use assets due to adoption of ASC 842 was $ 937,000 .

A maturity analysis of our operating leases as of March 31, 2023 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending March 31,

A maturity analysis of our operating leases as of June 30, 2023 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending June 30,

Discount factor

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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 the Company’s business and operations are uncertain.

The Company may face difficulties recruiting or retaining patients in its 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 its 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 the Company have not experienced any material adverse effects on its business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand or pricing manufacturing of its drug candidates or services providers, foreign exchange rates or employee wages.

The Company is actively monitoring the effects these disruptions and increasing inflation could have on its operations.

Through the VCN Acquisition, the Company has operations in Spain and may conduct research and development, manufacturing, and clinical trials in Western European countries.

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

The Company is actively monitoring the effects that these disruptions and increasing inflation could have on its operations.

Through the VCN Acquisition, the Company has operations in Spain is conducting research and development, manufacturing, and clinical trials in Western European countries.

The invasion of Ukraine by Russia and the retaliatory measures that have been taken, or could be taken in the future, by the United States, NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could disrupt our supply chain, and despite the fact that we currently do not plan any clinical trials in Eastern Europe, may adversely impact the cost and conduct of R&D, manufacturing, and international clinical trials of our product candidates.

Subsequent events

Effective May 10, 2023, The Company entered into a Separation Agreement and Release with Frank Tufaro (the “Separation Agreement”) and a consulting agreement with Mr.

Tufaro had entered into an employment agreement with the Company on March 22, 2022 (the “Employment Agreement”) to serve as our Chief Operating Officer.

In accordance with the terms of the Employment Agreement, the Separation Agreement provides for (i) the payment to Mr.

Tufaro of a total of $ 196,875 , paid in bi-monthly installments, less applicable withholding, for a period of six months, (ii) reimbursement of COBRA coverage for himself, his spouse and other eligible dependents for the lesser of:

six months or until he commences new employment or substantial self-employment, and (iii) acceleration of the vesting of his outstanding stock options (the “Option Awards”)and (iv) the extension of the period of time for which Mr.

Tufaro has the right to exercise any vested shares subject to options until the earlier of (i) the expiration date of the Option Awards, or (ii) six (6) months from the separation date.

The Separation Agreement contains mutual general releases of claims and non-disparagement provisions.

The Consulting Agreement has a term of six months unless sooner terminated.

Either party may terminate the Consulting Agreement without cause at any time upon thirty (days’ prior written notice or with cause immediately.

Tufaro will be compensated a set daily rate for each full day that he provides consulting services, pro-rated for any days services are provided less than eight hours.

On August 2, 2023, the Company announced that patient dosing has initiated in the U.S.

and with four sites open in the U.S.

and eight sites open in Spain and that the trial remains on track to be fully-enrolled in the first quarter of 2024.

Dosing in Spain initiated in January 2023 and the first patients have now received their second doses of intravenous VCN-01.

Initiating dosing in the U.S triggered the attainment of a milestone set forth in the Purchase Agreement which obligates requiring the Company to pay Grifols $ 3.25 million within 60 days .

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 1. Financial Statements