What changed in this filing

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Item 1. Financial Statements

2023-11-13 compared with 2023-08-08 · 205 added, 145 removed, 471 unchanged (43% of the section changed)

2 unchanged sentences

and Subsidiaries

Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

(In thousands except share and par value amounts)

June 30, 2023

September 30, 2023

December 31, 2022

1 unchanged sentence

Cash and cash equivalents

Tax credit receivable

Prepaid expenses and other current assets

3 unchanged sentences

Restricted cash

Right of use asset

Right of use assets

In-process research and development

6 unchanged sentences

Contingent consideration, current portion

Loans payable-current

Operating lease liability

Deferred research and development tax credit-current portion

Loans payable-current portion

Operating lease liability-current portion

Total Current Liabilities

1 unchanged sentence

Non-current contingent consideration

Loan Payable - Long term

Non-current loans payable

Deferred tax liabilities, net

Operating lease liability - Long term

Non-current deferred research and development tax credit

Non-current operating lease liability

Total Liabilities

Commitments and Contingencies

Commitments and Contingencies (Note 14)

Temporary Equity

7 unchanged sentences

Common stock, $ 0.001 par value;

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

350,000,000 shares authorized, 17,762,998 issued and 17,042,765 outstanding at September 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 June 30, 2023 and at December 31, 2022

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

Accumulated other comprehensive loss

7 unchanged sentences

(In thousands, except share and per share amounts)

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

Operating Costs and Expenses:

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Other Expense:

Exchange loss

Exchange gain (loss)

Interest income

Total Other Income (Expense)

Net Loss Before Income Taxes

Income tax benefit

Net Loss Attributable to Theriva Biologics, Inc.

and Subsidiaries

Effect of Warrant exercise price adjustment

Net Loss Attributable to Common Stockholders

Net Loss Per Share - Basic and Dilutive

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

Gain(Loss) on foreign currency translation

Net Loss Per Share - Basic and Diluted

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

Loss on foreign currency translation

Total comprehensive loss

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and Subsidiaries

Condensed Consolidated Statements of Stockholders Equity (Deficit)

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and par value amounts)

8 unchanged sentences

Stock-based compensation

Stock issued under "at-the-market"

Translation gains(loss)

Stock issued under “at-the-market” offering

Translation loss

Balance at June 30, 2023

Stock-based compensation

Stock issued under “at-the-market” offering

Translation loss

Balance at September 30, 2023

Common Stock $0.001 Par Value

9 unchanged sentences

Balance at June 30, 2022

Stock-based compensation

Translation gains (losses)

Balance at September 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash Flows From Operating Activities:

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Prepaid expenses and other current assets

Deposits and other assets

Accounts payable

9 unchanged sentences

Cash Flows from Financing Activities

Payment of debt

Proceeds from issuance ATM offering, net of issuance costs

Net Cash Provided by (used in) Financing Activities

Payment of loans payable

Proceeds from issuance under at-the-market offering, net of issuance costs

Proceeds from sale of Series C Preferred Stock, net of issuance cost

Proceeds from sale of Series D Preferred Stock, net of issuance cost

Net Cash Provided by Financing Activities

Effects of exchange rate changes on cash and cash equivalents

8 unchanged sentences

Right of use assets obtained in exchange for lease liabilities

Fair value of contingent consideration in a business combination

Fair value of contingent consideration issued in a business combination

Fair value of equity issued as consideration in a business combination

1 unchanged sentence

Goodwill measurement period adjustment

In-process R&D measurement period adjustment

Deferred tax liability measurement period adjustment

Effect of Warrant exercise price adjustment

See accompanying notes to unaudited condensed consolidated financial statements.

8 unchanged sentences

(“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:

Prior to the Acquisition, the Company’s focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases in areas which included its 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 as 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.

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In connection with the name change, its common stock 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.

Effective November 15, 2022, our acquired subsidiary VCN Biosciences, S.L.

Effective November 15, 2022, the Company’s acquired subsidiary VCN Biosciences, S.L.

rebranded to Theriva Biologics, S.L.

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

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

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

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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 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.

As of September 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 September 30, 2023, the Company has a significant accumulated deficit, 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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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.

The Company’s cash and cash equivalents totaled $ 31.2 million as of September 30, 2023, a decrease of $ 10.6 million from December 31, 2022.

During the three and nine months ended September 30, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $ 3.3 million and $ 12.9 million, respectively.

With the Company’s cash position of $ 26.1 million in early November 2023, the Company believes it will be able to fund its operations through the fourth quarter of 2024 and into the first quarter of 2025.

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

However, the actual amount of additional capital needed by the Company will also depend upon the costs to advance its VCN-01 clinical programs and whether it continues to develop SYN-004 internally, or out-licenses or partners such development.

If necessary, the Company may attempt to utilize the at-the-market offering facility (“ATM”) or seek to raise additional capital in other financing transactions, neither of which is guaranteed.

Form S-3 that currently registers the sale of the shares under the ATM Sales Agreement expires in May 2024.

The ATM Sales Agreement can be amended so that shares issued would be registered under a new universal shelf registration statement on Form S-3.

The Company anticipates filing the amendment prior to May 2024, but cannot guarantee filing such amendment.

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.

If the Company is not able to obtain additional capital (which is not assured at this time), its long-term business plan may not be accomplished, and it 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.

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 2022 Form 10-K, except as noted below.

Business Combination

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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 and six months ended June 30, 2023 and 2022.

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

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Research and Development Tax Credits

The Company, through its Theriva S.L.

subsidiary, participates in a Research and Development program sponsored by the Spanish government.

The program provides for reimbursement of certain expenses incurred in research and development efforts the Company incurs in Spain.

The reimbursements can be through either tax credits or direct refunds.

The program provides for certain limits on the types and amounts of expenses and requires participants to complete a certification and apply for the refund annually.

Subsequent to the period in which expenses are incurred, the program requires participants to maintain certain workforce levels and research and development expenditures over a 24-month period.

In the quarter ended June 30, 2023, the Company completed the certification and applied for direct reimbursement, as opposed to a tax credit, for its qualifying research and development expenses incurred in the year ended December 31, 2022.

The Company received approvals from the Spanish government in September and October 2023.

The Company evaluated the program and concluded that it qualified to be accounted for as government assistance.

Accordingly, the Company, as allowed by U.S.

GAAP, elected to account for the grant by analogizing to the guidance provided by International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

Accordingly, the Company recognized a tax credit receivable related to amounts that had been approved by the Spanish government prior to September 30, 2023 and a corresponding deferred research and development tax credit as it was determined that amounts became probable of being received upon the receipt of the approval.

Additionally, the Company has elected to account for the tax credit as a contra-expense as this most appropriately reflects the nature of the transaction and will reduce future research and development expenditures as the Company continues to incur expenses in the upcoming 24-month period.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

BUSINESS COMBINATION

On March 10, 2022, the Company completed the acquisition of all the outstanding shares of Theriva Biologics, S.L, which at the time was known as VCN Biosciences, S.L.(the “VCN Shares”) from the shareholders of VCN.

On March 10, 2022 (the “Closing”), the Company completed the acquisition of all the outstanding shares of Theriva Biologics, S.L, which at the time was known as VCN Biosciences, S.L.(the “VCN Shares”) from the shareholders of VCN.

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

Theriva’s lead product candidate, VCN-01, is being studied in a Company sponsored Phase 2 clinical trial for pancreatic cancer with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC), retinoblastoma, brain tumors and pancreatic and ovarian cancers.

The Company’s lead product candidate, VCN-01, is being studied in a Company sponsored Phase 2 clinical trial for pancreatic cancer with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC), retinoblastoma, brain tumors and ovarian cancers.

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

VCN-01 is designed to replicate selectively and aggressively within tumor cells, and to degrade the tumor stroma barrier that serves as a significant physical and immunosuppressive barrier to cancer treatment.

Degrading the tumor stroma has been shown to improve access to the tumor by the virus and additional therapies such as chemo- and immuno-therapies.

Degrading the tumor stroma has been shown to improve access to the tumor by the virus and additional therapies such as chemo and immunotherapies.

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

Theriva has the exclusive rights to four patent families 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.

VCN has the exclusive rights to four patent families 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.

As consideration for the purchase of the VCN Shares and pursuant to the terms of a purchase agreement that the parties entered into (the “Purchase Agreement”), the Company paid $ 4,700,000 to Grifols Innovation and New Technologies Limited (“Grifols”), the owner of approximately 86 % of the equity of VCN, and issued to the remaining sellers and certain key VCN employees and consultants of VCN an aggregate of 2,639,530 shares of its common stock, $ 0.001 par value per share (the “Common Stock”).

In addition to the consideration described above, under the terms of the purchase agreement that the parties entered into, the Company assumed up to $ 2,390,000 of existing liabilities of VCN and has agreed to make cash payments of up to $ 70.2 million to Grifols upon the achievement of certain clinical and commercialization milestones.

In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in PDAC.

In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in metastatic pancreatic ductal adenocarcinoma (“PDAC”).

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

In August 2023, the Company initiated patient dosing in the U.S.

in its Phase 2 clinical trial of VCN-01 in PDAC.

As a result, the Company paid Grifols $ 3.25 million in the fourth quarter of 2023.

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.

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

As a post-Closing covenant, the Company has agreed to commit to fund VCN’s research and development programs, including but not limited to VCN-01 in a pancreatic ductal adenocarcinoma PDAC Phase 2 trial, VCN-01 in a retinoblastoma (RB) Phase 2/3 trial and necessary G&A within a budgetary plan of approximately $ 27.8 million.

Total purchase consideration including cash, common shares and contingent consideration was valued at approximately $ 22.8 million, as follows (in thousands):

As a post-Closing covenant, the Company has agreed to commit to fund VCN’s research and development programs, including, but not limited to, VCN-01 in a pancreatic ductal adenocarcinoma PDAC Phase 2 trial, VCN-01 in a retinoblastoma (RB) Phase 2/3 trial and necessary general and administrative expenses within a budgetary plan of approximately $ 27.8 million.

Total purchase consideration including cash, shares of common stock and contingent consideration was valued at approximately $ 22.8 million, as follows (in thousands):

Cash paid at Closing

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Fair value of contingent consideration

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.

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BUSINESS COMBINATION - (continued)

As of September 30, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $ 5.9 million and $ 10.2 million, respectively.

During the three and nine months ended September 30, 2023, the Company recognized in operating expense a $ 1.6 million and $ 1.0 million, respectively, decrease in the fair value of the contingent consideration.

Upon initiation of patient dosing in the U.S.

during the three months ended September 30, 2023, $ 3.25 million that had previously been included as contingent consideration, became payable to Grifols and is included in accrued expenses as of September 30, 2023.

During the three and nine months ended September 30, 2022, the Company recognized in operating expense a $ 227,000 and a $ 244,000 decrease in the fair value of the contingent consideration for the nine months ended September 30, 2022, respectively.

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

4 unchanged sentences

In-process research and development intangible asset

Deferred tax assets (liabilities), net

Deferred tax liabilities, net

Accounts payable

1 unchanged sentence

Accrued employee benefits

Loan Payable-current

Loans payable-current

Other long-term liabilities

2 unchanged sentences

In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates.

In connection with the Acquisition, we recognized $ 19.7 million of indefinite-lived in-process research and development intangible assets.

In connection with the Acquisition, the Company recognized $ 19.7 million of indefinite-lived in-process research and development intangible assets.

Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities.

Goodwill of $ 5.7 million was established as a result of the Acquisition and is not tax deductible.

Theriva Biologics, S.L.

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

VCN operations recorded a net loss of $ 11.9 million from the date of Acquisition through September 30, 2023.

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

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● estimated fair value of its in-process R&D resulting in a $ 810,000 increase in in-process R&D, an increase of $ 202,000 in deferred tax liabilities and a decrease of $ 607,000 in goodwill.

The cumulative impact of the re-measurements as of the year ended December 31, 2022, was a reduction in accrued liabilities of $ 277,000 , and increase in other receivables or $ 176,000 , an increase in in-process R&D of $ 810,000 ;

The cumulative impact of the re-measurements during the measurement period, was a reduction in accrued liabilities of $ 277,000 , an increase in other receivables of $ 176,000 , an increase in in-process R&D of $ 810,000 ;

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

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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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Transaction Costs

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.

In conjunction with the Acquisition, the Company incurred approximately $ 0.2 million in transaction costs during the nine months ended September 30, 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 nine months ended September 30, 2023.

Goodwill and Intangibles

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

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

Goodwill (in thousands)

Balance at December 31, 2022

Goodwill from Acquisition of VCN

Goodwill impairment loss

Measurement Period Adjustments

Effects of exchange rates

Balance at December 31, 2022

Effects of exchange rates

Balance at June, 2023

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

Balance at September 30, 2023

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

R&D (in thousands)

Balance at December 31, 2022

Acquired IPR&D

Measurement Period Adjustments

Effects of exchange rates

Balance at December 31, 2022

Effects of exchange rates

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 and six months ended June 30, 2023.

Balance at September 30, 2023

During the quarters ended September 30, 2023 and 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 triggering event for impairment.

The Company performed an impairment analysis and concluded that the Goodwill and IPR&D were not impaired as of September 30, 2023 and December 31, 2022.

Theriva Biologics, Inc.

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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 level 1 instruments.

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

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rate 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.

In connection with the Acquisition of VCN, the Company will be required to pay up to $ 70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings completed noted in Note 4.

In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in PDAC.

Due to this approval the Company paid Grifols Innovation and New Technologies Limited (“Grifols”) $ 3.0 million in Q4 2022.

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

In August 2023, the Company initiated patient dosing in the U.S.

in its Phase 2 clinical trial of VCN-01 in PDAC.

As a result, payment was made subsequent to September 30, 2023 in the amount of $ 3.25 million.

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 $ 10.8 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 the contingent consideration was $ 5.9 million as of September 30, 2023 and is all reflected as non-current contingent consideration liability.

There were no transfers in or out of the level 3 liabilities during the three and nine months ended September 30, 2023 and 2022 , with the exception of the reclassification of $ 3.25 million related to the milestone that was met in the current period and reclassified to accrued expenses.

The following table summarizes the change in the fair value as determined by Level 3 inputs for the contingent consideration liabilities for the three and nine months ended September 30, 2023:

(in thousands)

Balance at March 10, 2022

Change in fair value

Balance at June 30, 2022

Change in fair value

Balance at September 30, 2022

Contingent consideration, current portion

Contingent consideration, net of current portion

Balance at September 30, 2022

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Fair Value of Financial Instruments – (continued)

(in thousands)

Balance at December 31, 2022

Change in fair value

Balance at March 30, 2023

Change in fair value

Balance at June 30, 2023

Change in fair value

Reclassification of amounts to accrued expenses due to milestone being achieved

Balance at September 30, 2023

Contingent consideration, current portion

Contingent consideration, net of current portion

Balance at September 30, 2023

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

As of June 30, 2023

As of September 30, 2023

Contingent consideration

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

As of June 30, 2023

As of September 30, 2023

Weighted Average

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Prepaid expenses and other current assets (in thousands)

September 30,

Prepaid clinical research organizations

Prepaid manufacturing expenses

Prepaid insurance

Prepaid consulting, subscriptions and other expenses

Receivable from prior owner

Prepaid insurance

VAT receivable

Receivable from Grifols

Prepaid clinical research organizations (CROs) expense is classified as a current asset.

The Company makes payments to the CROs based on agreed upon terms that include payments in advance of study services.

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

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

Theriva Biologics, Inc.

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Property and equipment, net (in thousands)

September 30,

Computers and office equipment

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Accrued expenses (in thousands)

September 30,

Milestone due to Grifols

Accrued clinical consulting services

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Accrued employee benefits (in thousands)

September 30,

Accrued bonus expense

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

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

Theriva Biologics, Inc.

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

As of September 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 June 30, 2023.

As of June 30, 2023, there were 2,082,155 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 September 30, 2023.

As of September 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.

Stock forfeitures are recognized as incurred.

Stock option forfeitures are recognized as incurred.

The fair value of the stock-based payment is recognized over the stated vesting period.

1 unchanged sentence

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 and six months ended June 30, 2023 and 2022.

There were no options granted during the three and nine months ended September 30, 2023 and 3,000 option were granted during the nine months ended September 30, 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.

4 unchanged sentences

Expected life of the option —The period of time that the options granted are expected to remain unexercised.

Options granted during the year have a maximum term of seven years.

Options granted during the prior year have a maximum term of seven years.

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.

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● monthly over three years.

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

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

Weighted Average

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Balance - December 31, 2022

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

Balance - September 30, 2023 - outstanding

Balance - September 30, 2023 - exercisable

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

4 unchanged sentences

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.

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to employees for the three and nine months ended September 30, 2023 was $ 61,000 and $ 187,000 , respectively, and $ 46,000 and $ 124,000 for the three and nine months ended September 30, 2022.

Stock-based compensation expense included in research and development expenses relating to stock options issued to employees for the three and nine months ended September 30, 2023 was $ 29,000 and $ 87,000 , respectively, and $ 21,000 and $ 62,000 for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense included in general and administrative expenses relating to stock options issued to consultants for the three and nine months ended September 30, 2023 was $ 34,000 and $ 101,000 , respectively, and $ 47,000 and $ 141,000 for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense included in research and development expenses relating to stock options issued to consultants for the three and nine months ended September 30, 2023 was $ 11,000 and $ 32,000 , respectively, and $ 7,000 and $ 21,000 for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, total unrecognized stock-based compensation expense related to stock options was $ 539,000 , which is expected to be expensed through July 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.

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

Stock Warrants

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $ 18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold (i)Class A Units (the “Class A Units”), consisting of an aggregate of 252,000 shares of the Common Stock, and five-year warrant to purchase an aggregate of 252,000 shares of Common Stock at an exercise price of $ 13.80 per share, which subsequently was reduced to $ 6.90 per share and then again to $ 1.22 (each a “Warrant” and collectively, the “Warrants”) and (ii) Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), consisting of an aggregate of 15,723 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $ 1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $ 11.50 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 1,367,218 shares of Common Stock, and issued with a warrant to purchase an aggregate of 1,367,218 shares of Common Stock.

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $ 18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold (i) Class A Units (the “Class A Units”), consisting of an aggregate of 252,000 shares of the Common Stock, warrants to purchase an aggregate of 252,000 shares of Common Stock at an exercise price of $ 13.80 per share, which subsequently was reduced to $ 6.90 per share and then again to $ 1.22 (each a “Warrant” and collectively, the “Warrants”) and (ii) Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), consisting of an aggregate of 15,723 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $ 1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $ 11.50 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 1,367,218 shares of Common Stock, and issued with a warrant to purchase an aggregate of 1,367,218 shares of Common Stock.

On November 16, 2020, the exercise price of the Warrants was reduced from $ 13.80 per Warrant per full share of the Company’s Common Stock, to $ 6.90 per Warrant per full share of Common Stock in accordance with the antidilution terms of the Warrant.

The reduction was the result of the issuance of shares of Common Stock by the Company through its “at the market offering” facility.

The reduction was the result of the issuance of shares of Common Stock by the Company through its ATM facility.

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 $ 0.9 million during the year ended December 31, 2020, which reduces the income available to common stockholders.

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The Underwriters partially exercised the Over-allotment Option by electing to purchase from the Company additional Warrants to purchase 180,783 shares of Common Stock.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock Warrants – (continued)

If, at the time of exercise, there is no effective registration statement registering, or no current prospectus available for the issuance of the shares of Common Stock to the holder, then the Warrants may only be exercised through a cashless exercise.

4 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 six months ended June 30, 2023.

Theriva Biologics, Inc.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Stock Warrants – (continued)

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

The Warrants have expired in October 2023 and are no longer outstanding.

On August 3, 2022, the Company announced the exercise price of Warrants issued by the Company in October 2018 was reduced from $ 6.90 per Warrant per full share of the Company’s common stock, $ 0.001 par value per share to $ 1.22 per Warrant per full share of Common Stock.

1 unchanged sentence

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 six months ended June 30, 2023 and the year ended December 31, 2022 is as follows:

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

Weighted Average

4 unchanged sentences

Balance at December 31, 2022

Balance at June 30, 2023

Balance at September 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 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 .

Net loss attributable to common stockholders for the three and nine months ended September 30, 2023 was $ 3.3 million and 12.9 , respectively.

Net loss attributable to common stockholders for the three and nine months ended September 30, 2022 was approximately $ 4.8 million and $ 13.6 million, respectively.

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

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 nine months ended September 30, 2023 were 2,284,336 and 634,426 , respectively and for the three and nine months ended September 30, 2022 were 607,370 and 634,497 , respectively, because their effect is anti-dilutive.

Theriva Biologics, Inc.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

Related Party

During the three and nine months ended September 30, 2023, Ms.

Shallcross had $ 36,000 and $ 108,000 in compensation expense, respectively.

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

Common and Preferred Stock

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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.

2 unchanged sentences

Common and Preferred Stock – (continued)

Riley Securities Sales Agreement

7 unchanged sentences

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.

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.

During the three and nine months ended September 30, 2023, the Company sold through the Amended and Restated Sales Agreement approximately 988 and 1.9 million shares, respectively, of the Company’s common stock and received net proceeds of approximately $ 1,000 and $ 2.2 million, respectively.

During the three and nine months ended September 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).

1 unchanged sentence

As a result of the VCN Acquisition, the Company maintains a restricted cash collateral account of $ 97,000 relating to the RETOS loan, which is reflected as a non-current asset on the balance sheet.

June 30, 2023

September 30, 2023

December 31, 2022

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

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

Theriva Biologics, Inc.

2 unchanged sentences

Commitments and Contingencies

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

and Spanish facilities are classified as an operating leases.

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

and Spanish facilities are classified as 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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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.

Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the three and nine months ended September 30, 2023 approximated $ 156,000 and $ 454,000 , respectively and $ 163,000 and $ 409,000 for the three and nine months ended September 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 June 30, 2023 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending June 30,

A maturity analysis of the Company’s operating leases as of September 30, 2023 is as follows (amounts in thousands of dollars) :

Future undiscounted cash flow for the years ending December 31,

Discount factor

Lease liability

Lease liability – current

Lease liability – long term

Operating lease liability

Operating lease liability – current

Operating lease liability – long term

Theriva Biologics, Inc.

3 unchanged sentences

Risks and Uncertainties

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.

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.

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

The Company and its third-party contract manufacturers, contract research organizations, and clinical sites may also face disruptions in procuring items that are essential to the Company’s 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 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

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 .

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

The invasion of Ukraine by Russia, the war in the Middle East, 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 the Company’s supply chain, and despite the fact that it currently does not plan any clinical trials in Eastern Europe, may adversely impact the cost and conduct of R&D, manufacturing, and international clinical trials of its product candidates.

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