What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-11 · 96 added, 82 removed, 318 unchanged (36% of the section changed)

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As a result of the Acquisition of Theriva Biologics, S.L.

(“VCN”, formerly named VCN Biosciences, S.L.), described in more detail below, we began transitioning our 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 clinical development candidates:

(“VCN”, formerly named VCN Biosciences, S.L.), described in more detail below, we began transitioning our 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, our focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases which included our 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, thereby preventing overgrowth and infection by pathogenic organisms such Clostridioides difficile infection (CDI) and vancomycin resistant Enterococci (VRE), and reducing the incidence and severity of 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.

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

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

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

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

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

Recent Financial Developments

B Riley and AGP Securities Sales Agreement

During the quarter ended June 30, 2023, we sold an aggregate of 1.9 million shares of our common stock and received net proceeds of approximately $2.2 million before deducting issuance expenses.

Our Current Product Pipeline

*Based on management’s current beliefs and expectations

aGVHD acute graft-vs-host disease;

allo-HCT allogeneic hematopoietic cell transplant.

IAP recombinant bovine intestinal alkaline phosphatase II.

CPI immune checkpoint inhibitor.

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

HNSCC head and neck squamous cell carcinoma.

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IVit intravitreal.

MAD multiple ascending dose.

ODD Orphan Drug Designation.

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

For other abbreviations see the text.

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

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Recent Clinical Developments

On January 9, 2023, we issued a press release announcing that the first patient has been dosed in the Phase 1 investigator sponsored clinical trial of intravenous VCN-01 in patients with high-grade brain tumors who are scheduled for surgical resection.

On January 17, 2023, we issued a press release announcing the first patient has been dosed in VIRAGE, the Phase 2b randomized, open-label, placebo-controlled, multicenter clinical trial of systemically administered VCN-01 in combination with standard-of-care (SoC) chemotherapy (gemcitabine/nab-paclitaxel) as a first line therapy for patients with newly diagnosed metastatic pancreatic ductal adenocarcinoma (PDAC) (NCT05673811).

On February 16, 2023, we issued a press release announcing that the presentation of blinded safety and pharmacokinetic (PK) data from the ongoing 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).

On August 2, 2023, we 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,

On June 27, 2023 we announced that the U.S.

Food and Drug Administration (FDA) has granted orphan drug designation to our lead clinical candidate VCN-01, our systemic, selective, stroma-degrading oncolytic adenovirus for the treatment of pancreatic cancer.

On February 16, 2023, we issued a press release announcing the presentation of blinded safety and pharmacokinetic (PK) data from the ongoing 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).

These data were featured in a poster presentation at 2023 Tandem Meetings:

Transplantation & Cellular Therapy Meetings of ASTCT and CIBMTR, being held in Orlando, Florida from February 15-19, 2023.

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

Twelve of these patients completed two doses of IV MER to be evaluable towards the study endpoints.

While the study is on-going and remains blinded, key findings showcased in the poster presentation (#LBA6) titled “Interim Analysis of SYN-004 Phase 1b/2a Trial in Hematopoietic Cell Transplant (HCT) Recipients” include:

● 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.

● 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.

● Meropenem pharmacokinetics were as expected for this patient population.

Our Current Oncology-Focused Pipeline

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

VCN-01 has been administered to 82 patients across multiple Phase 1 clinical trials, including patients with pancreatic cancer, head and neck squamous cell carcinoma, ovarian carcinoma, colorectal cancer, and retinoblastoma.

VCN-01 has been administered to 93 patients across multiple Phase 1 clinical trials and Phase 2 VIRAGE trial, including patients with pancreatic cancer, head and neck squamous cell carcinoma, ovarian carcinoma, colorectal cancer, and retinoblastoma.

Current clinical update

We are currently conducting a Phase 2 trial of intravenous VCN-01 with or without nab-paclitaxel plus gemcitabine in patients with solid tumors and PDAC.

Additional Phase 1 investigator sponsored studies are evaluating intravitreal VCN-01 in patients with retinoblastoma, a Phase 1 Trial of intravenous VCN-01 in Combination with Durvalumab in Subjects with Recurrent/ Metastatic SCCHN and a Phase 1 Trial evaluating the intravenous administration of VCN-01 in patients prior to surgical resection of high-grade brain tumors

Additional Phase 1 investigator sponsored studies are evaluating intravitreal VCN-01 in patients with retinoblastoma, a Phase 1 Trial of intravenous VCN-01 in combination with durvalumab in subjects with recurrent/ metastatic squamous cell carcinoma of the head and neck (SCCHN), a Phase 1 trial combining VCN-01 with huCART-meso cells in patients with pancreatic or serous epithelial ovarian cancer, and a Phase 1 trial evaluating the intravenous administration of VCN-01 in patients prior to surgical resection of high-grade brain tumors.

Phase 1 Clinical Trials in PDAC

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Cancer 2022 Mar;10(3):e003255 respectively).

Intravenous VCN-01 was found to have an acceptable safety/tolerability profile in PDAC and colorectal cancer patients and demonstrated compelling biochemical and clinical outcomes that enabled the advancement of VCN-01 into Phase 2 clinical trials in patients with metastatic PDAC.

Phase 2 Trial of intravenous VCN-01 with or without nab-paclitaxel plus gemcitabine in patients with solid tumors and PDAC

Phase 2 Trial of intravenous VCN-01 with or without nab-paclitaxel plus gemcitabine in patients with solid tumors and PDAC (VIRAGE)

In January 2023, we dosed the first patients in VIRAGE, the Phase 2b randomized, open-label, placebo-controlled, multicenter clinical trial of systemically administered VCN-01 in combination with standard-of-care (SoC) chemotherapy (gemcitabine/nab-paclitaxel) as a first line therapy for patients with newly-diagnosed metastatic pancreatic ductal adenocarcinoma.

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

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

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

The second VCN-01 dose is administered 7 days before the 4th cycle of chemotherapy (approximately 90 days after the first VCN-01 dose), followed by additional cycles of gemcitabine/nab-paclitaxel chemotherapy.

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

Six (6) patients have been treated with VCN-01 to date.

Six (6) patients have been treated in this Phase 1 trial with VCN-01 to date.

This study is ongoing and the enrollment period has been extended to include additional patients.

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Angel Montero-Carcaboso 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).

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

Phase 1 Trial of intravenous VCN-01 in Combination with Durvalumab in Subjects with Recurrent/ Metastatic Squamous Cell Carcinoma of the Head and Neck (SCCHN)

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

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

Durvalumab was administered Q4W until disease progression,

unacceptable toxicity, withdrawal of consent, or another discontinuation criterion.

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

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

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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);

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;

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When the natural balance or normal function of these microbial species is disrupted, a person’s health can be compromised.

All of our programs are supported by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio through:

filing new patent applications;

All our programs are supported by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio through filing new patent applications;

prosecuting existing applications;

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

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004 (ribaxamase).

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a randomized, double-blinded, placebo-controlled 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, NCT04692181).

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

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

On September 27, 2022, we issued a press release announcing positive outcomes 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 the first of 3 study cohorts (Cohort 1), which enrolled 19 patients who received at least 1 dose of study drug (SYN-004 or Placebo randomized 2:1).

To date, we have completed the first of 3 cohorts (Cohort 1) in this study, 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.

Based on a review of the safety and pharmacokinetic data, the DSMC 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.

If enrollment proceeds on the current schedule, we may be positioned to announce data readouts for the second cohort during the first half of 2024 and the third cohort during the first half of 2025.

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, NCT04692181).

On September 27, 2022, we issued a press release announcing positive outcomes from the Data and Safety Monitoring Committee (“DSMC”) review of results from the first Cohort and their recommendation that the study may proceed to enroll Cohort 2 in which study drug (SYN-004 or Placebo) is administered in combination with the IV beta-lactam antibiotic piperacillin/tazobactam.

On November 3, 2022 we announced the first patient had been dosed in Cohort 2.

Patient dosing is on-going and if enrollment proceeds on the current schedule, we may be positioned to announce data readouts for the second cohort during the first half of 2024 and the third cohort during the first half of 2025

On February 16, 2023 and April 13, 2023 we announced the presentation of safety and pharmacokinetic data from Cohort 1 of the Phase 1b/2a Clinical Trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant recipients at the 2023 Tandem Meetings:

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

VCN-11 showed a low toxicity profile in

athymic nude mice and Syrian hamsters, allowing treatments with high doses and fractionated administrations without major toxicities (up to 1.2x10 11 vp/mouse and 7.5x10 11 vp/hamster).

VCN-11 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.

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

SYN-006, SYN-007

SYN-006, SYN-007, other oncolytic virus

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

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There are accounting policies, each of which requires significant judgments and estimates on the part of management, that we believe are significant to the presentation of our consolidated financial statements.

The most significant accounting estimates relate to research and development costs, business combinations, contingent consideration, and impairment of long-lived assets.

The most significant accounting estimates relate to research and development costs, business combinations, contingent consideration, and impairment of long-lived assets, goodwill and In-process research and development (“IPR&D”).

Business Combination

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If a reporting unit’s carrying value exceeds its fair value, then the Company will record a goodwill impairment charge for the excess amount.

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

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

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

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Accrued CRO costs are subject to revisions as such studies progress to completion.

At March 31, 2023 and 2022, we have accrued CRO expenses of $0.8 million and $1.0 million, respectively, that are included in accrued expenses.

As of March 31, 2023, and 2022, we have prepaid CRO costs of $2.5 million and $0.3 million, respectively, that are included in prepaid expenses.

At June 30, 2023 and 2022, we have accrued CRO expenses of $1.0 million and $0.7 million, respectively, that are included in accrued expenses.

As of June 30, 2023, and 2022, we have prepaid CRO costs of $2.1 million and $1.2 million, respectively, that are included in prepaid expenses.

Results of Operations

Three Months Ended March 31, 2023 and 2022

Three Months Ended June 30, 2023 and 2022

General and Administrative Expenses

General and administrative expenses increased to $2.2 million for the three months ended March 31, 2023, from $1.7 million for the three months ended March 31, 2022.

This increase of 29% is primarily comprised of increased expense related to the fair value of the

contingent consideration, additional salary and benefits related to new headcount, audit fees, consulting fees, travel, and VCN administrative expenses not included in the prior year, offset by a decrease in consulting and legal costs related to the VCN acquisition.

The charge related to stock-based compensation expense was $87,000 for the three months ended March 31, 2023, compared to $85,000 for the three months ended March 31, 2022.

General and administrative expenses increased to $2.7 million for the three months ended June 30, 2023, from $1.5 million for the three months ended June 30, 2022.

This increase of 80% is primarily comprised of increased expense related to the fair value of the contingent consideration adjustment of $0.9 million, along with higher audit fees, consulting fees, travel, and VCN administrative expenses not included in the prior year, offset by a decrease in legal costs related to the VCN acquisition.

The charge related to stock-based compensation expense was $106,000 for the three months ended June 30, 2023, compared to $86,000 for the three months ended June 30, 2022.

Research and Development Expenses

Research and development expenses increased to $3.0 million for the three months ended March 31, 2023, from approximately $2.6 million for the three months ended March 31, 2022.

This increase of 15% is primarily the result of increased clinical trial expenses related to VCN-01 not incurred in the prior year, offset by lower expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and decreased manufacturing expenses related to our Phase 1a clinical trial of SYN-020.

Research and development expenses decreased to $3.1 million for the three months ended June 30, 2023, from approximately $3.5 million for the three months ended June 30, 2022.

This decrease of 11% is primarily the result of lower expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients Phase 1a clinical trial of SYN-020, and decreased manufacturing expenses related to our Phase 1a clinical trial of SYN-020, offset by increased clinical trial expenses related to VCN-01.

We anticipate research and development expense to increase as we continue enrollment in our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, and our ongoing Phase 1 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 $39,000 for the three months ended March 31, 2023, compared to $28,000 related to stock-based compensation expense for the three months ended March 31, 2022.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended March 31, 2023 and 2022.

The charge related to stock-based compensation expense was $40,000 for the three months ended June 30, 2023, compared to $27,000 related to stock-based compensation expense for the three months ended June 30, 2022.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended June 30, 2023 and 2022.

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

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Other Income/Expense

Other income was $370,000 for the three months ended March 31, 2023 compared to other expense of $21,000 for the three months ended March 31, 2022.

Other income for the three months ended March 31, 2023 is primarily comprised of interest income of $364,000 and exchange gain of $6,000.

Other expense the three months ended March 31, 2022 is primarily comprised of exchange loss of $23,000, offset by interest income of $2,000.

Other income was $377,000 for the three months ended June 30, 2023 compared to other expense of $17,000 for the three months ended June 30, 2022.

Other income for the three months ended June 30, 2023 is primarily comprised of interest income of $381,000 and exchange loss of $4,000.

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.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $4.5 million, or $0.30 per basic and dilutive common share for the three months ended March 31, 2023, compared to a net loss of approximately $4.3 million, or $0.32 per basic common share and dilutive common share for the three months ended March 31, 2022.

Our net loss attributable to common stockholders was approximately $5.1 million, or $0.34 per basic and dilutive common share for the three months ended June 30, 2023, compared to a net loss of approximately $4.5 million, or $0.28 per basic common share and dilutive common share for the three months ended June 30, 2022.

Six Months Ended June 30, 2023 and 2022

General and Administrative Expenses

General and administrative expenses increased to $4.9 million for the six months ended June 30, 2023, from $3.2 million for the six months ended June 30, 2022.

This increase of 53% primarily comprised of increased fair value of the contingent consideration adjustment of $0.9 million, along with higher audit fees, consulting fees, travel, and VCN administrative expenses not included in the prior year, offset by a decrease in legal costs related to the VCN acquisition and director and officer insurance.

The charge related to stock-based compensation expense was $193,000 for the six months ended June 30, 2023, compared to $172,000 the six months ended June 30, 2022.

Research and Development Expenses

Research and development expenses increased to $6.1 million for the six months ended June 30, 2023, from approximately $6.1 million for the six months ended June 30, 2022.

The movement between the two periods is primarily the result of higher increased clinical trial expenses related to VCN-01, offset by lower expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients, Phase 1a clinical trial of SYN-020, decreased manufacturing expenses related to our Phase 1a clinical trial of SYN-020 and lower other indirect costs.

The charge related to stock-based compensation expense was $79,000 for the six months ended June 30, 2023, compared to $54,000 related to stock-based compensation expense for the six months ended June 30, 2022.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the six months ended June 30, 2023 and 2022.

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.

Therapeutic Areas

Other therapeutic areas

Total direct costs

Total indirect costs

Total Research and Development

Other Income/Expense

Other income was $746,000 for the six months ended June 30, 2023 compared to other expense of $4,000 for the six months ended June 30, 2022.

Other income for the six months ended June 30, 2023 is primarily comprised of interest income of $745,000 and exchange gain of $1,000.

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.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $9.6 million, or $0.63 per basic and dilutive common share for the six months ended June 30, 2023, compared to a net loss of approximately $8.8 million, or $0.59 per basic common share and dilutive common share for the six months ended June 30, 2022.

Liquidity and Capital Resources

As of March 31, 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.

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.

Our cash and cash equivalents totaled $36.1 million as of March 31, 2023, a decrease of $5.7 million from December 31, 2022.

During the three months ended March 31, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $4.5 million for three months ended March 31, 2023.

Cash and cash equivalents includes the net proceeds from sales of our Series C Preferred Stock and Series D Preferred Stock issued during the year ended December 31, 2022, proceeds from the sale of 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 in 2021.

With these additional sources of liquidity, we believe we will be able to fund our operations through the second quarter and into the third quarter of 2024.

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.

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During the year ended December 31, 2022, our only source of cash was from the sales of our Series C Preferred Stock and Series D Preferred Stock.

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

During the three and six months ended June 30, 2023, our only source of cash was from sales of our common stock through the Amended and Restated ATM Sales Agreement in which we sold 1.9 million shares of our stock for net proceeds of $2.2 million.

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

If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted.

If we raise funds by selling additional shares of common

stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted.

If we are not able to obtain funding for future clinical trials when needed, we will be unable to carry out our business plan and we will be forced to delay the initiation of future clinical trials until such time as we obtain adequate financing.

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 $35 million in early May 2023 is sufficient to fund our operations through at least the end of the second quarter of and into the third quarter 2024, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, preclinical studies of VCN-11 and related discovery initiatives, and to fund our committed obligations under the VCN Purchase Agreement for the VCN Acquisition.

We believe our cash position of $32.8 million in early August 2023 is sufficient to fund our operations through at least the end of the third quarter of and into the fourth quarter 2024, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, preclinical studies of VCN-11 and related discovery initiatives, and to fund our committed obligations under the VCN 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, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, and the preclinical studies of VCN-11, and related discovery initiatives, we will need to obtain additional funds for future clinical trials.

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

Cash Used in Operating Activities

Net cash used in operating activities was $9.5 million and $9.3 million during the six months ended June 30, 2023 and 2022, respectively, which was primarily due to the use of funds in our operations related to the development of VCN-01 our product candidate.

Cash used in operating activities for the six months ended June 30, 2023 increased compared to the same period in 2022 due primarily to the ramp up in our Phase 2 trial.

Cash Used In Investing Activities

Cash used in investing activities during the six months ended June 30, 2023 was $17,000 for equipment purchase as compared to$ 4.3 million during the same period in the prior year, which were primarily related to the cash payment for the acquisition and a pre-acquisition loan to VCN.

Cash Provided by Financing Activities

Cash provided by financing activities during the six months ended June 30, 2023 included at the market offering proceeds of $2.2 million from sales of 1.9 shares of our common stock which was offset by $75,000 of payments of debt.

Cash used in financing activities during the six months ended June 30, 2022 related solely to the payment of $1.4 million of debt payments related to loans extended by certain Spanish institutions.

Off-Balance Sheet Arrangements

During the three months ended March 31, 2023, 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 June 30, 2023, 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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ROU assets are included in other noncurrent assets and lease liabilities are included in other current and non-current liabilities in our condensed consolidated balance sheets.

As of March 31, 2023, we did not have any material finance leases.

As of June 30, 2023, we did not have any material finance leases.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis