What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-13 · 174 added, 186 removed, 267 unchanged (57% of the section changed)

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Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and elsewhere herein, and those identified under Part I, Item 1A of our 2023 Form 10-K.

We are a diversified clinical-stage company developing therapeutics in areas of high unmet need.

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

(“VCN”, formerly named VCN Biosciences, S.L.), described in more detail below, we began transitioning our strategic focus to oncology through the development of VCN’s new oncolytic adenovirus platform designed for intravenous and intravitreal delivery to trigger tumor cell death, 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.

We are a diversified clinical-stage company developing therapeutics designed to treat cancer and related diseases in areas of high unmet need.

As a result of the acquisition in March 2022 of Theriva Biologics, S.L.

(“VCN”, formerly named VCN Biosciences, S.L.), described in more detail below (the “Acquisition”), we began transitioning our strategic focus to oncology, which is now our primary focus, 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.

Our lead product candidate, VCN-01, a clinical stage oncolytic human adenovirus that is modified to express an enzyme, PH20 hyaluronidase, is currently being evaluated in a Phase 2 clinical study for the treatment of pancreatic cancer, and has recently been used to treat patients in a Phase 1 clinical study for the treatment of retinoblastoma, and a Phase 1 clinical study for the treatment of solid tumors.

Additionally, it has also been tested in several other indications including a Phase 1 clinical study for the treatment of head and neck squamous cell carcinoma.

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

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent microbiome damage, thereby preventing overgrowth and infection by pathogenic organisms such Clostridioides difficile infection (CDI) and vancomycin resistant Enterococci (VRE), and reducing the incidence and severity of acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases.

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

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

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

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 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.

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

Our Current Product Pipeline

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Recent Clinical Developments

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, 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 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 7, 2024, we announced that the Independent Data Monitoring Committee (IDMC) recommended the continuation of enrollment as planned into VIRAGE, a multinational, Phase 2b, randomized, open-label, controlled clinical trial evaluating VCN-01 in combination with standard-of-care chemotherapy (gemcitabine/nab-paclitaxel) as a first-line therapy for patients with metastatic pancreatic ductal adenocarcinoma (PDAC).

According to the IDMC's comprehensive assessment of clinical data from patients enrolled across 6 sites open in the U.S.

and 9 sites open in Spain, the ongoing Phase 2b trial will continue without any changes to the protocol.

No safety concerns were raised based on the evaluation of data presented at the IDMC meeting.

Intravenous VCN-01 has been well tolerated and demonstrated a safety profile consistent with prior clinical trials.

Importantly, no additional toxicities were observed in patients receiving a second dose of VCN-01, providing the first clinical evidence of the feasibility of repeated systemic dosing.

VIRAGE is expected to complete enrollment in the third quarter of 2024.

Our Current Oncology-Focused Pipeline

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Oncolytic viruses exploit the fact that cancer cells contain mutations that cause them to lose growth control and form tumors.

Once inside a tumor cell, oncolytic viruses are designed to exploit the tumor cell machinery to generate thousands of additional copies of the virus, which then kill the tumor cell and spread to neighboring cells, causing a chain reaction of cell killing.

This infection by OVs also alerts the immune system, which can then attack the virus infected cells and the tumor cells to help destroy the tumor in some instances.

Our OV candidates’ products are engineered to efficiently infect and selectively replicate to a high extent in tumor cells versus normal host cells, which enables intravenous delivery.

Once inside a tumor cell, oncolytic viruses exploit the tumor cell machinery to generate thousands of additional copies of the virus, which then kill the tumor cell and spread to neighboring cells, causing a chain reaction of cell killing.

This infection and tumor cell killing by OVs also alerts the immune system, which can then attack the virus infected tumor cells to help destroy the tumor in some instances.

Our OV product candidates are engineered to efficiently infect and selectively replicate to a high extent in tumor cells versus normal host cells, which enables intravenous delivery.

By contrast, many other oncolytic viruses in clinical development today are administered by direct injection into the tumor.

Intravenous delivery has the potential to expand the therapeutic effect of OVs because the virus can infect both the primary tumor and tumor metastases throughout the body.

Our first product candidate, VCN-01, is a clinical stage oncolytic human adenovirus that is modified to express an enzyme, hyaluronidase, that degrades hyaluronan in the tumor stroma, which helps the virus and other molecules to penetrate and spread throughout the tumor.

Our first product candidate, VCN-01, is a clinical stage oncolytic human adenovirus that is modified to express an enzyme, PH20 hyaluronidase, that degrades hyaluronan in the tumor stroma, which helps the virus and other molecules to penetrate and spread throughout the tumor.

VCN-01 can be used alone or in combination with other cancer therapies, such as chemotherapy and immunotherapy, for difficult to treat cancers.

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

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

VCN-01 has been administered to 125 patients across multiple Phase 1 clinical trials and Phase 2 VIRAGE trial, including patients with pancreatic cancer, head and neck squamous cell carcinoma, ovarian carcinoma, colorectal cancer, and retinoblastoma.

Current clinical update

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

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

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

Additional investigator sponsored studies comprise a Phase 1 trial evaluating intravitreal VCN-01 in patients with retinoblastoma, a Phase 1 trial combining VCN-01 with huCART-meso cells in patients with pancreatic or serous epithelial ovarian cancer, and a Phase 1 trial evaluating the intravenous administration of VCN-01 in patients prior to surgical resection of high-grade brain tumors.

Additionally, the Clinical Study Report is being prepared for the Phase 1 Trial of intravenous VCN-01 in combination with durvalumab in subjects with recurrent/ metastatic squamous cell carcinoma of the head and neck (mSCCHN).

Phase 1 Clinical Trials in PDAC

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

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

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

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

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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.

Patient dosing was initiated in the U.S.

in July 2023 and the nineteen patients have received their second doses of intravenous VCN-01, which were well tolerated and demonstrated the expected VCN-01 safety profile.

According to the IDMC's comprehensive assessment of clinical data from patients enrolled across 6 sites open in the U.S.

and 9 sites open in Spain, the ongoing Phase 2b trial will continue without any changes to the protocol.

No safety concerns were raised based on the evaluation of data presented at the IDMC meeting.

Intravenous VCN-01 has been well tolerated and demonstrated a safety profile consistent with prior clinical trials.

Importantly, no additional toxicities were observed in patients receiving a second dose of VCN-01, providing the first clinical evidence of the feasibility of repeated systemic dosing.

VIRAGE is expected to complete enrollment in the third quarter of 2024.

On April 25, 2024, we announced the upcoming presentation, at the 2024 American Society of Clinical Oncology (ASCO) Annual Meeting, of a trial-in-progress poster discussing the design of VIRAGE, our Phase 2b Trial of Systemically Administered VCN-01 in Combination with Chemotherapy in Pancreatic Ductal Adenocarcinoma.

Retinoblastoma

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During the third quarter of 2017, VCN entered into a Clinical Trial Agreement with Hospital Sant Joan de Déu (Barcelona, Spain) to conduct an investigator sponsored Phase 1 clinical study evaluating the safety and tolerability of two intravitreal injections of VCN-01 in patients with intraocular retinoblastoma refractory to systemic, intra-arterial or intravitreal chemotherapy, or radiotherapy, in whom enucleation was the only recommended treatment (NCT03284268).

Patients received two doses of VCN-01 injected 14 days apart using a dose escalation regimen.

At this time, the dose-escalation phase of the study has already been completed in 6 patients distributed in two cohorts (2 x 10 9 vp/eye and 2 x 10 10 vp/eye).

VCN-01 was well tolerated to date after intravitreal administration, although some degree of intravitreal inflammation and associated turbidity were observed.

Inflammation has been managed and potential turbidity minimized with local and systemic administration of anti-inflammatory drugs.

Patients received two intravitreal injections of VCN-01, 14 days

apart, at a dose of either 2 x 10 9 vp/eye (n=1) or 2 x 10 10 vp/eye (n=8).

Enrollment and dosing in this study have been completed and patient follow-up is expected to complete in the second quarter of 2024.

On April 23, 2024, we announced positive topline data from this study, with agreement by the study Monitoring Committee that the study had a positive outcome.

● VCN-01 was well tolerated after intravitreal administration at the 2 doses and the most frequently reported treatment-related adverse events were Grade 1 or 2.

There were no dose limiting toxicities and no ocular or systemic toxicities equal to or greater than Grade 3 during the evaluation period.

● Some degree of ocular inflammation and associated turbidity was observed after VCN-01 injection.

Inflammation was managed, and vitreous haze improved in some cases, by local and systemic administration of anti-inflammatory drugs.

● VCN-01 does not appear to change the retinal function, and selective VCN-01 replication in retinoblastoma cells has been observed by immunohistochemical analysis.

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

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

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

● Replication within retinoblastoma tumors over time was detected

● intravitreal VCN-01 demonstrated promising antitumor activity:

o Four patients presented a response characterized by unequivocal improvement in vitreous seed density.

o Eye enucleation was avoided in 3 patients to date, one of whom has retained their eye after 4 years of follow-up.

Per the terms of the clinical trial agreement, the determination by the study Monitoring Committee that the study had a positive outcome means Theriva will pay to Hospital Sant Joan de Déu the amount of three hundred twenty thousand Euros (€320,000) or $345,000.

In exchange, Theriva will receive an exclusive, worldwide technology license, and related patents from Hospital Sant Joan de Déu for the treatment of pediatric patients with advanced retinoblastoma.

A pre-IND meeting with the FDA was held on December 19, 2023 to discuss the path forward for VCN-01 as an adjunct to chemotherapy in pediatric patients with advanced retinoblastoma.

The FDA provided some guidance on the potential endpoints and patient population for an advanced clinical trial and encouraged submission of a formal protocol under a US IND in order to provide more detailed commentary.

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

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

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upregulation of PD-L1;

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

and downregulation of matrix-related

pathways after VCN-01 administration.

The last patients in this study are currently being followed for overall survival and patent samples are being analyzed to evaluate potential VCN-01 pharmacodynamic effects.

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.

On October 16, 2023, we presented additional data from this study in a poster at the European Society for Medical Oncology (ESMO) 2023 Congress held virtually and in Madrid, Spain from October 20-24, 2023.

Key data and conclusions featured in the ESMO presentation include:

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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.

● In spite of the advanced stage of the disease, and a global objective response rate for the trial of 5.5%, most of the patients appeared to benefit from subsequent treatment, with 2 patients showing complete responses to palliative chemotherapy and at least one patient still alive 4 years after entering the study.

● Biological activity:

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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).

● There was a statistical significant 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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The study is on-going.

● On June 22, 2023, at their Cellicon Valley conference, and again at the Society for Immunotherapy of Cancer (SITC) meeting in San Diego, CA on November 03, 2023, and the International Oncolytic Virotherapy Conference (IOVC2023) in Calgary on November 13 2023, University of Pennsylvania investigators presented preliminary clinical safety and pharmacokinetic data from this study highlighting the feasibility of administering VCN-01 in sequence with huCART-meso cells in pancreatic and ovarian cancer patients.

VCN-01 persistence was suggestive of tumor infection and active replication.

The peak and duration of huCART-meso T cells in the peripheral blood as well as duration of stable disease in evaluable patients showed encouraging trends.

● The study may test higher doses of VCN-01 and interrogate tumor biopsies to gain further insights.

The results will inform and guide optimization of the combination of CAR T cells with oncolytic virus.

Phase 1 Trial evaluating the intravenous administration of VCN-01 in patients prior to surgical resection of high-grade brain tumors

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

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

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

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

We are maintaining and building our patent portfolio through:

filing new patent applications;

prosecuting existing applications;

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

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a randomized, double-blinded, placebo-controlled Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) recipients for the prevention of acute graft-versus-host-disease (aGVHD, NCT04692181).

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

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

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

The Phase 1b/2a clinical trial will comprise a single center, randomized, double-blinded, placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

The goal of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of oral SYN-004 (ribaxamase;

150 mg four times daily) administered to allogeneic HCT recipients who receive an IV carbapenem or beta-lactam antibiotic to treat fever.

Study participants will be enrolled into three sequential cohorts administered a different study-assigned IV antibiotic.

Each cohort seeks to complete eight evaluable participants treated with SYN-004 (ribaxamase) and four evaluable participants treated with placebo.

Safety and pharmacokinetic data for each cohort will be reviewed by an independent Data and Safety Monitoring Committee, which will make a recommendation on whether to proceed to the next IV antibiotic cohort.

The study will also evaluate potential protective effects of SYN-004 on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 in allogeneic HCT recipients.

To date, we have completed the first of 3 cohorts (Cohort 1) in this study, which enrolled 19 patients who received at least 1 dose of study drug (SYN-004 or Placebo randomized 2:1).

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

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

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

Enrollment into Cohort 2 has completed and, we expect to announce a data readout for the second cohort during the third quarter of 2024.

If recommended by the DSMC review of the second cohort results, enrollment into the third cohort could commence in the second half of 2024.

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

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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 and anticipate a cost of 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 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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Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”), and indications to treat and prevent metabolic and inflammatory disorders associated with aging, which are supported by our collaboration with Massachusetts General Hospital (“MGH”).

Across the six major markets, the total prevalent cases of celiac disease are expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately 4%.

During the same period, prevalent cases in the U.S.

are expected to increase from 2.8 million in 2013 to an expected 4.3 million in 2023, representing a significant market opportunity.

On June 30, 2020, we submitted an IND application to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy.

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On June 29, 2021, we announced that enrollment, patient dosing and observation had been completed in the Phase 1, open-label, SAD study of SYN-020.

The SAD study enrolled 6 healthy adult volunteers into each of four cohorts with SYN-020 given orally as single doses ranging from 5 mg to 150 mg.

The SAD study enrolled 6 healthy adult volunteers into each of four

cohorts with SYN-020 given orally as single doses ranging from 5 mg to 150 mg.

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

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Research Programs

VCN-01 + Topoisomerase Inhibitors

On April 22, 2024 we announced the upcoming presentation of a poster at the American Society for Cell and Gene Therapy (ASGCT) 27th Annual Meeting, describing enhanced anti-tumor effects in human pancreatic cancer xenograft-bearing mice treated with lead product candidate VCN-01 and liposomal irinotecan.

These data support the potential synergy of VCN-01 and additional first-line pancreatic cancer chemotherapy regimens FOLFIRINOX and NALIRIFOX.

Key finding reported in the poster include:

● The combination of VCN-01 + topoisomerase I (topo1) inhibitors, such as liposomal irinotecan, has a tolerable toxicity profile and may improve efficacy in the treatment of human pancreatic cancer.

● Viral protein expression was increased in human pancreatic cancer cell lines when they were exposed to topo1 inhibiting chemotherapeutics, irinotecan, its active metabolite, SN-38, and topotecan.

● Synergy of VCN-01 plus liposomal irinotecan was observed in animals bearing subcutaneous human pancreatic tumors.

o In human pancreatic mouse xenograft models, treatment with VCN-01 at a dose of 4x1010 vp or liposomal irinotecan alone (at both the 10 mg/kg and 5 mg/kg doses) resulted in significant tumor growth inhibition compared to saline.

o Combination therapy with VCN-01 + liposomal irinotecan at either dose displayed significantly reduced tumor growth compared to each treatment alone.

o qPCR analyses performed on tumors collected at end of study confirmed the presence of viral genomes, indicating ongoing transcriptional activity of VCN-01, which is consistent with viral replication for several days after administration.

VCN-11 Albumin Shield™ Technology

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

SYN-006, SYN-007, other oncolytic virus

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).

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

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.

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.

and foreign patents and patent applications that are assigned to VCN or exclusively licensed from Fundacio Privada Institut d’Investigacio Biomedica de Bellvitge (IDIBELL), Institut Catala d’Oncologia (ICO), and Hospital Sant Joan de Déu in Barcelona.

and foreign patents and patent applications that are assigned to VCN or exclusively licensed from Fundació Privada Institut d’Investigacio Biomedica de Bellvitge (IDIBELL), Institut Catala d’Oncologia (ICO), and Hospital Sant Joan de Déu in Barcelona.

The patents and patent applications include U.S.

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The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP) which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented.

We believe that the accounting estimates employed are appropriate and resulting balances are reasonable;

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

The most significant accounting estimates relate to goodwill and IPR&D, research and development costs, contingent consideration, and impairment of long-lived assets.

Goodwill and IPR&D

The Company classifies intangible assets into two categories:

We classify intangible assets into two categories:

(1) intangible assets with indefinite lives not subject to amortization and (2) goodwill.

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Indefinite-lived intangible assets, such as goodwill, are not amortized.

The Company tests the carrying amounts of goodwill for recoverability on an annual basis or when events or changes in circumstances indicate evidence a potential impairment exists, using a fair value-based test.

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

We test the carrying amounts of goodwill for recoverability on an annual basis or when events or changes in circumstances indicate evidence a potential impairment exists, using a fair value-based test.

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

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

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

During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts.

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

During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if we become aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts.

If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives at that point in time.

If development is terminated or abandoned, the Company may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of carrying value of the IPR&D assets over fair value.

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

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

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 September 30, 2023 and December 31, 2022 and concluded that the Goodwill and IPR&D was not impaired at both dates.

If development is terminated or abandoned, we may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of carrying value of the IPR&D assets over fair value.

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

We will conduct an impairment test of goodwill on an annual basis as of October 1

of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce our fair value below our net equity value.

Contingent Consideration

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Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations.

The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones.

The milestone payments will be made upon the achievement of clinical and commercialization milestones as well as single low digit royalty payments and payments upon receipt of sublicensing income.

Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date.

We estimate the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones.

The milestone payments will be made upon the achievement of clinical and commercialization milestones.

Subsequent to the date of acquisition, we reassess the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date.

Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations.

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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Research and development expenses include external contract research organization (“CRO”) services.

Additionally, the grant income is used to offset research and development costs.

We make payments to the CROs based on agreed upon terms and may include payments in advance of study services.

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

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.

At March 31, 2024 and 2023, we have accrued CRO expenses of $2.4 million and $0.8 million, respectively, that are included in accrued expenses.

As of March 31, 2024 and 2023, we have prepaid CRO costs of $0.4 million and $2.5 million, respectively, that are included in prepaid expenses.

Results of Operations

Three Months Ended September 30, 2023 and 2022

General and Administrative Expenses

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 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 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

Other therapeutic areas

Total direct costs

Total indirect costs

Total Research and Development

Other Income/Expense

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 $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

Three Months Ended March 31, 2024 and 2023

General and Administrative Expenses

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.

General and administrative expenses decreased to $1.9 million for the three months ended March 31, 2024, from $2.2 million for the three months ended March 31, 2023.

This decrease of 12% is primarily comprised of the decrease in salary costs, consulting, legal fees, and lower director and officer insurance, offset by an increase in fair value of the contingent consideration adjustment.

The charge related to stock-based compensation expense was $101,000 for the three months ended March 31, 2024, compared to $87,000 for the three months ended March 31, 2023.

Research and Development Expenses

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 $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.

Research and development expenses increased to $3.5 million for the three months ended March 31, 2024, from approximately $3.0 million for the three months ended March 31, 2023.

This increase of 16% is primarily the result of higher clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, increased expenses related to the Phase 1 trial of intravitreal VCN-01 in patients with retinoblastoma, and increased expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients, offset by lower 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, advance our VCN-01 program 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 $58,000 for the three months ended March 31, 2024, compared to $39,000 related to stock-based compensation expense for the three months ended March 31, 2023.

The following table sets forth our research and development expenses directly related to our product candidates for the three months ended March 31, 2024 and 2023.

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 $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.

Other income was $227,000 for the three months ended March 31, 2024 compared to other income of $370,000 for the three months ended March 31, 2023.

Other income for the three months ended March 31, 2024 is primarily comprised of interest income of $228,000 and an exchange loss of $1,000.

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

Net Loss Attributable to Common Stockholders

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.

Our net loss attributable to common stockholders was approximately $5.2 million, or $0.30 per basic and diluted common share for the three months ended March 31, 2024, compared to a net loss of approximately $4.5 million, or $0.30 per basic common share and diluted common share for the three months ended March 31, 2023.

Liquidity and Capital Resources

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.

As of March 31, 2024, 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.

We have incurred an accumulated deficit of $314.5 million as of March 31, 2024, and expect to continue to incur losses in 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 $18.3 million as of March 31, 2024, a decrease of $4.9 million from December 31, 2023.

During the year ended December 31, 2023 and quarter ended March 31, 2024, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $18.3 million and $5.2 million for the year ended December 31, 2023 and the quarter ended March 31, 2024, respectively.

With our cash position of $16.4 million in early May 2024, we believe we will be able to fund our operations through the fourth quarter of 2024 and into the first quarter of 2025.

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.

We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the aforementioned clinical programs.

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

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 in other financing transactions, neither of which is guaranteed.

If necessary, we may attempt to utilize the at the market sales facility (the “ATM”) or seek to raise additional capital 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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Historically, we have financed our operations primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner.

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 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.

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.

During the year ended December 31, 2023, our only source of cash was from sales of our common stock through the ATM pursuant to which we sold 2.0 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 ATM or other equity financings.

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

If we 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 $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.

We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the aforementioned clinical programs.

We have spent, and expect to continue to spend, a substantial amount of funds in connection with implementing our business strategy, including our planned product development efforts, preparation for our planned clinical trials, performance of clinical trials and our research and discovery efforts.

Based on our current plans, our cash and cash equivalents will not be sufficient to enable us to meet our near term or long-term expected plans as it is anticipated that we will not have enough cash to continue our operations for the next twelve months from the date of the filing of this Quarterly Report on Form 10-Q.

We will be required to obtain additional funding in order to continue the development of certain product candidates within the anticipated time periods (including initiation of planned clinical trials), if at all, and to continue to fund operations at the current cash expenditure levels.

We do anticipate that our current cash or $16.4 million as of May 1, 2024 will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including completing our funding requirements for 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..

Our independent registered public accounting firm has issued a report for the year ended December 31, 2023 that includes an explanatory paragraph referring to our recurring losses from operations (anticipated continued losses in the future) and net capital deficiency that raise substantial doubt in our ability to continue as a going concern without additional capital becoming available.

Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue.

Our notes to the consolidated financial statements contain an explanatory paragraph referring to our recurring and continuing losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available.

We cannot provide any assurance that we will be able to obtain the required funding to achieve our current business plan, obtain the required regulatory approvals for our product candidates or complete additional corporate partnering or acquisition transactions in order to commercialize such product

candidates once regulatory approval is received.

If we fail to obtain additional funding for its clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, we will not be able to execute our business plan as planned and will be forced to cease certain development activities (including initiation of planned clinical trials) until funding is received and our business will suffer, which would have a material adverse effect on our financial position, results of operations and cash flows.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital.

Our cash and cash equivalents will not be sufficient to enable us to meet our near term or long-term expected plans, including initiation or completion of future registrational studies for VCN-01, any potential future trials of SYN-004 including Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020.

Therefore, we do not intend to commence future new studies of VCN-01, SYN-004 (ribaxamase) or SYN-020 until we are confident that we have funding necessary to complete such trials.

We are actively pursuing additional equity or debt financing, in the form of either a private placement or a public offering and have been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings.

However, we do not currently have commitments from any third parties to provide us with capital.

Potential sources of financing that we are pursuing include strategic relationships, public or private sales of our equity (including through the ATM) or debt and other sources.

Such additional financing opportunities might not be available to the Company when and if needed, on acceptable terms or at all.

We cannot assure that we will meet the requirements for use of the ATM especially in light of the fact that we are currently limited by rules of the SEC as to the number of shares of common stock that we can sell pursuant to the ATM due to the market value of our common stock held by non-affiliates.

Even if we meet the requirements for use of the ATM, there can be no assurance that we will be able to to raise funds through the sale of shares of common stock through the ATM.

Additionally, we may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements.

If we are unable to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished and we may be forced to cease certain development activities.

More specifically, the completion of future Phase 3 and/or registrational clinical studies will require significant financing or a significant partnership.

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.

Cash Used in Operating Activities

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.

Net cash used in operating activities was $4.9 million and $5.6 million during the three months ended March 31, 2024 and 2023, 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 Investing Activities

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 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.

Cash used in investing activities during the three months ended March 31, 2023 was $8,000 for equipment purchases.

There was no cash used in investing activities during the three months ended March 31, 2024.

Cash Used in Financing Activities

Cash used in financing activities during the three months ended March 31, 2023 included payments of loans payable of $55,000.

There was no cash used in in provided by activities during the three months ended March 31, 2024.

Off-Balance Sheet Arrangements

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.

During the three months ended March 31, 2024, 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.

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

As of March 31, 2024, 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