What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-08 · 127 added, 88 removed, 326 unchanged (40% of the section changed)

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Recent Financial Developments

Tax Credit Receivable

During the quarter ended September 30, 2023, we recognized a $1.4 million tax credit receivable and offsetting deferred R&D tax credit.

We participate 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 we incur 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, we completed the certification and applied for direct reimbursement, for our qualifying research and development expenses incurred in the year ended December 31, 2022.

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

The credit will be amortized as a contra-expense over the two-year period 2024 and 2025.

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.

During the nine months ended September 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.

During the quarter ended September 30, 2023, we sold an aggregate of 988 shares of our common stock and received net proceeds of approximately $1,000.

Our Current Product Pipeline

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Recent Clinical Developments

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

On November 2, 2023, we issued a press release announcing that we executed an exclusive worldwide option to negotiate an exclusive license for certain Sant Joan de Déu-Barcelona Children’s Hospital (“SJD”) intellectual property rights related to the use of VCN-01 in combination with topoisomerase I inhibitor chemotherapies for the treatment of cancer.

VCN-01 is Theriva’s systemic, selective, stroma-degrading oncolytic adenovirus.

We will pay SJD an option fee of twenty-five thousand Euros (€25,000).

Final license terms will be negotiated during a 12-month option period.

On October 23, 2023, we issued a press release announcing the presentation of new clinical data from the Phase 1 investigator-sponsored study with the Institut Catala d’Oncologia (ICO) evaluating VCN-01 in combination with durvalumab for patients with recurrent/metastatic squamous cell carcinoma of the head and neck (R/M HNSCC).

The poster titled “Survival Outcomes in Phase I Trial Combining VCN-01 and Durvalumab (MEDI4736) in Subjects with Recurrent/Metastatic Head and Neck Squamous Cell Carcinoma Refractory to Previous Immunotherapy Treatment” was presented at the European Society for Medical Oncology (ESMO) Congress, being held both virtually and in Madrid, Spain from October 20-24, 2023.

Key Takeaways from the presentation include:

VCN-01 combined with durvalumab showed encouraging overall survival (OS) in patients who previously progressed on anti-PD(L)-1 therapy.

VCN-01 induced upregulation of PD-L1, which correlated with enhanced patient survival.

● In the concomitant (CS) cohort at the 3.3×10 12 viral particles (vp) dose, overall survival (OS) was 10.4 months and progression free survival (PFS) was 1.7 months.

● In the sequential (SS) cohort at the 3.3×10 12 vp dose OS was 15.5 months and PFS was 3.7, whereas in the SS cohort at the 1×10 13 vp dose OS was 17.3 months and PFS was 2.1 months.

● VCN-01 induces changes in the immune status of tumors

● VCN-01 combined with durvalumab increased CD8 T cells, a marker of tumor inflammation and the expression of PD(L)-1 in tumors.

An increase of PD(L)-1 CPS (8/11 at day 8;

8/10 at day 28) and CD8 T cells (7/11 at day 8;

5/10 at day 28) from baseline were found in tumor biopsies.

● VCN-01 alone increased the CPS score of tumor biopsies at day 8 after administration by 62.5% in the sequential arm.

● VCN-01 induced PD(L)-1 upregulation with enhanced patient survival.

A statistical correlation was observed between CPS on day 8 and patient OS (p=0.005).

● Pharmacodynamics and shedding of VCN-01

● PH20 expression from VCN-01 peaked on day 3-8 and remained elevated in some patients up to day 42.

Quantification of VCN-01 genomes in stool demonstrated viral shedding that peaked at day 8.

On August 2, 2023, we announced that patient dosing has initiated in our Phase 2 Trial of intravenous VCN-01 with or without nab-paclitaxel plus gemcitabine in patients with solid tumors and PDAC (VIRAGE) 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.

and eight sites open in Spain, the trial remains on track to be fully-enrolled in the first half 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,

Initiating dosing in the U.S triggered the attainment of a milestone set forth in the Purchase Agreement which requiring us to pay Grifols $3.25 million within 60 days, which payment was made in October 2023.

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.

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).

Our Current Oncology-Focused Pipeline

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

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

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.

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.

We expect the trial to be fully-enrolled in the first half of 2024

On August 2, 2023, we issued a press release announcing that patient dosing was initiated in the U.S.

and that the first patients treated in Spain have received their second doses of intravenous VCN-01, which were well tolerated and demonstrated the expected VCN-01 safety profile.

Retinoblastoma

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The investigator has reported that one patient treated with VCN-01 has had a complete regression lasting more than 43 months.

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

Seven (7) 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.

We anticipate meeting with the FDA during the second half of 2023 to discuss the path forward for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma.

We anticipate meeting with the FDA during the fourth quarter of 2023 to discuss the path forward for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma.

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

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

The new data from the study for which Dr.

The data from the study for which Dr.

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.

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:

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 recommended Phase 2 dose (RP2D) of a single intravenous injection of VCN-01 combined with durvalumab in two administration regimens:

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

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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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We expect to report additional results from this study in H2 2023 as data become available.

On October 16, 2023, we announced a presentation of additional data from this study in a poster at the European Society for Medical Oncology (ESMO) 2023 Congress.

Key data and conclusions featured in the ESMO presentation include:

● 20 patients were enrolled with a median of 4 prior lines of therapy, from which six in the concomitant (CS) (single dose of VCN-01 in combination with durvalumab on day 1) and 12 in the sequential (SS) (single dose of VCN-01 on day -14 and durvalumab on day 1) were evaluable for response.

● In the CS cohort at the 3.3×10 12 viral particles (vp) dose, overall survival (OS) was 10.4 months.

● In the SS cohort at the 3.3×10 12 vp dose OS was 15.5 months, whereas in the SS cohort at the 1×10 13 vp dose OS was 17.3 months.

● 11 patients (61.1%) were alive >12 months (2 in CS;

5 in SS at 3.3×10 12 vp, 4 in SS at 1×10 13 vp).

● In spite of the advanced stage of the disease, and objective response rate of 0%, most of the patients appeared to benefit from subsequent treatment.

● Biological activity :

Patients showed VCN-01 replication and increased serum hyaluronidase levels were maintained for over six weeks.

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

● Increase of PDL1-CPS (16/21;

p=0.013) and CD8 T-cells (12/21;

p=0.007) from baseline were found in tumor biopsies.

● CPS score of tumor biopsies was increased by administration of VCN-01 at day 8 after administration in the sequential group.

● A statistical correlation between OS observed in patients and CPS on day 8 (p=0.005).

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

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

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

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

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

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

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

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

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During the third quarter of 2021 we initiated a Phase 1 clinical study evaluating multiple ascending doses (“MAD”) of SYN-020 (NCT05045833).

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

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

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

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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.

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

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

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

Our research programs may be expanded to include development of new oncolytic virus products and/or explore oncology applications of our existing products such as SYN-006 and SYN-007.

The scope of our research is expanding to include development of new oncolytic virus products, and may include oncology applications of our existing products such as SYN-006 and SYN-007.

Intellectual Property

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

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

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

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S.

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

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

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

The VCN-01 and VCN-11 programs are supported by U.S.

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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, goodwill and In-process research and development (“IPR&D”).

Business Combination

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

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

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

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

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

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

Goodwill and IPR&D

The Company classifies intangible assets into two categories:

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

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

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

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

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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.

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

The Company performed an impairment analysis at September 30, 2023 and December 31, 2022 and concluded that the Goodwill and IPR&D was not impaired at both dates.

Contingent Consideration

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

Long-Lived Assets

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

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

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

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

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

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

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

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

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

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

Research and Development Costs

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

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.

At September 30, 2023, we have accrued CRO expenses of $1.4 million that are included in accrued expenses.

As of September 30, 2023, we have prepaid CRO costs of $1.2 million that are included in prepaid expenses.

Results of Operations

Three Months Ended June 30, 2023 and 2022

Three Months Ended September 30, 2023 and 2022

General and Administrative Expenses

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.

General and administrative expenses decreased to $212,000 for the three months ended September 30, 2023, from $2.4 million for the three months ended September 30, 2022.

This decrease of 91% is primarily comprised of the decrease in the fair value of the contingent consideration of $1.6 million, along with lower salary and bonus costs, investor relations fees, audit fees, travel, and VCN administrative

expenses not included in the prior year, offset by an increase in consulting fees.

The charge related to stock-based compensation expense was $95,000 for the three months ended September 30, 2023, compared to $93,000 for the three months ended September 30, 2022.

Research and Development Expenses

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.

Research and development expenses increased to $4.0 million for the three months ended September 30, 2023, from approximately $2.6 million for the three months ended September 30, 2022.

This increase of 56% is primarily the result of higher clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, offset by decreased 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.

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 $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.

The charge related to stock-based compensation expense was $40,000 for the three months ended September 30, 2023, compared to $28,000 related to stock-based compensation expense for the three months ended September 30, 2022.

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

September 30,

Therapeutic Areas

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Other Income/Expense

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.

Other income was $388,000 for the three months ended September 30, 2023 compared to other income of $161,000 for the three months ended September 30, 2022.

Other income for the three months ended September 30, 2023 is primarily comprised of interest income of $382,000 and an exchange gain of $6,000.

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

Net Loss Attributable to Common Stockholders

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

Our net loss attributable to common stockholders was approximately $3.3 million, or $0.19 per basic and diluted common share for the three months ended September 30, 2023, compared to a net loss of approximately $4.8 million, or $0.30 per basic common share and diluted common share for the three months ended September 30, 2022.

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

Nine Months Ended September 30, 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.

General and administrative expenses decreased to $5.1 million for the nine months ended September 30, 2023, from $5.6 million for the nine months ended September 30, 2022.

This decrease of 9% is primarily comprised of the decrease in the fair value of the contingent consideration of $1.0 million, along with lower salary and bonus expense, investor relations, legal costs related to the VCN acquisition and director and officer insurance offset by higher audit fees, consulting fees, and VCN administrative expenses not included in the prior

The charge related to stock-based compensation expense was $288,000 for the nine months ended September 30, 2023, compared to $265,000 the nine months ended September 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.

Research and development expenses increased to $10.1 million for the nine months ended September 30, 2023, from approximately $8.7 million for the nine months ended September 30, 2022.

The movement between the two periods is primarily the result of higher clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, 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.

The charge related to stock-based compensation expense was $119,000 for the nine months ended September 30, 2023, compared to $83,000 related to stock-based compensation expense for the nine months ended September 30, 2022.

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

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

September 30,

Therapeutic Areas

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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.

Other income was $1.1 million for the nine months ended September 30, 2023 compared to other income of $157,000 for the nine months ended September 30, 2022.

Other income for the nine months ended September 30, 2023 is primarily comprised of interest income of $1.1 million and an exchange gain of $7,000.

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

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.

Our net loss attributable to common stockholders was approximately $12.9 million, or $0.82 per basic and diluted common share for the nine months ended September 30, 2023, compared to a net loss of approximately $13.6 million, or $0.87 per basic common share and diluted common share for the nine months ended September 30, 2022.

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

Liquidity and Capital Resources

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 $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.

As of September 30, 2023, we have a significant accumulated deficit of $303.8 million, and with the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses and incurred negative cash flows since inception.

We expect 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 $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 for the three and nine months ended September 30, 2023, respectively.

With our cash position of $26.1 million in early November 2023, we believe we will be able to fund our operations through the fourth quarter and into the first quarter of 2025.

Management believes its plan, which includes the advancement of VCN-01 and the additional testing of SYN-004 (ribaxamase) 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.

If necessary, we may attempt to utilize the ATM or seek to raise additional capital on the in other financing transactions, neither of which is guaranteed.

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

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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 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.

During the nine months ended September 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.

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.

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 $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.

We believe our cash position of $26.1 million in early November 2023 is sufficient to fund our operations through at least the end of the fourth quarter of 2024 and into the first quarter 2025, 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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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.

Net cash used in operating activities was $12.5 million and $13.7 million during the nine months ended September 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 nine months ended September 30, 2023 decreased compared to the same period in 2022 due primarily to the increase in interest income, which led to a decrease in net loss.

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 used in investing activities during the nine months ended September 30, 2023 was $146,000 for equipment purchases 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.

Cash provided by financing activities during the nine months ended September 30, 2023 included at the market offering proceeds of $2.2 million from sales of 1.9 million shares of our common stock which was offset by $75,000 of payments of debt that we incurred when we acquired VCN.

Cash provided by financing activities during the nine months ended September 30, 2022 related to the proceeds received from the issuance of Series C and D preferred stock offset by 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 June 30, 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 September 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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We have made certain accounting policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases.

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

As of September 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