What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-07 · 129 added, 96 removed, 345 unchanged (39% of the section changed)

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(“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.

Our lead product candidate, VCN-01, a clinical stage oncolytic human adenovirus that is modified for tumor-selective replication and to express an enzyme, PH20 hyaluronidase, is currently being evaluated in a Phase 2 clinical study for the treatment of pancreatic cancer (“Virage”), and has recently been used to treat patients in a Phase 1 clinical study for the treatment of retinoblastoma, and Phase 1 clinical studies for the treatment of other solid tumors including 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:

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CPI immune checkpoint inhibitor.

CSR clinical study report.

FTD Fast Track Designation.

HNSCC head and neck squamous cell carcinoma.

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SYN-004 may enter an FDA-agreed Phase 3 clinical trial for the treatment of CDI.

³We have an option-license agreement with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

Recent Clinical Developments

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.

On May 23, 2024, we announced that the U.S.

Food and Drug Administration (FDA) has granted Fast Track Designation (FTD) to lead clinical candidate VCN-01 in combination with gemcitabine and nab-paclitaxel to improve progression-free survival and overall survival in patients with metastatic pancreatic adenocarcinoma.

In VIRAGE, the Company’s ongoing multinational Phase 2b clinical study, intravenous VCN-01 is being evaluated in combination with standard-of-care (SoC) chemotherapy (gemcitabine/nab-paclitaxel) as a first line therapy for patients with pancreatic ductal adenocarcinoma (PDAC).

Previously, the FDA granted orphan drug designation to VCN-01 for treatment of PDAC.

Op May 10, 2024, we presented data demonstrating 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 first-line pancreatic cancer chemotherapy regimens.

On April 23, 2024, we announced positive topline data from the investigator sponsored Phase 1 Trial of intravitreal VCN-01 in pediatric patients with refractory retinoblastoma.

Safety and clinical outcomes support the therapeutic potential of VCN-01 in retinoblastoma and emphasize VCN-01’s potential for use in diverse cancer.

The Monitoring Committee determined that the trial results were positive, and therefore, the Company will receive an exclusive, worldwide license, and related patents from Sant Joan de Déu-Barcelona Children’s Hospital for the treatment of pediatric patients with advanced retinoblastoma.

According to the IDMC’s 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.

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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).

Additional on-going investigator sponsored studies comprise 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 Reports (CSRs) are 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) and the Phase 1 trial evaluating intravitreal VCN-01 in patients with retinoblastoma.

Phase 1 Clinical Trials in PDAC

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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.

in July 2023.

Twenty-three patients have received their second doses of intravenous VCN-01, which were well tolerated and demonstrated the expected VCN-01 safety profile.

On June 1, 2024, we presented the design of VIRAGE trial in a poster at the American Society of Clinical Oncology (ASCO) Annual Meeting 2024 Congress held and in Chicago (Illinois) from May 31- June 4, 2024.

The poster discussed the objectives, endpoints and key inclusion and exclusion criteria included in the trial protocol, together with the treatment schedule for each arm of the study.

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 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.

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, dosing and safety follow-up in this study have been completed and the clinical study report is being prepared..

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.

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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.

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

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.

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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.

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

● In July 2021, VCN entered into a Clinical Trial Agreement with the University of Pennsylvania (Philadelphia) to conduct an investigator sponsored Phase 1 clinical study to evaluate the safety, tolerability and feasibility of intravenous administration of VCN-01 in combination with lentiviral transduced huCART-meso cells (developed by the laboratory of Dr.

VCN-01 in combination with lentiviral transduced huCART-meso cells (developed by the laboratory of Dr.

Carl June) in patients with histologically confirmed unresectable or metastatic pancreatic adenocarcinoma and serous epithelial ovarian cancer (NCT05057715).

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and licensing and acquiring new patents and patent applications.

We are exploring value creation options for our SYN-004 assets, including out-licensing or partnering.

SYN-004 (ribaxamase) — Prevention of antibiotic-mediated microbiome damage, thereby preventing overgrowth and infection by pathogenic organisms such as Clostridioides difficile infection (CDI) and vancomycin resistant Enterococci (VRE), and reducing the incidence and severity of acute graft-versus-host disease (aGVHD) in allogeneic HCT recipients

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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 Phase 1b/2a clinical trial is 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.

Study participants are 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.

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

however, based upon our current available funding and our focus on our clinical development of VCN-01 we do not anticipate that enrollment for the third cohort will commence unless we out-license the SYN-004 development program or find a partner for the program.

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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While we believe SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we have also begun planning for potential development of SYN-020 in large market indications with significant unmet medical needs.

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”).

Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”), and indications to treat and prevent metabolic and inflammatory disorders associated with aging.

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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Additionally, fecal SYN-020 analyses verified intestinal bioavailability while plasma levels of SYN-020 were below the limit of quantitation in all samples at all timepoints verifying that SYN-020 was not absorbed into the systemic circulation.

During the second quarter of 2020, we announced that we entered into an agreement with Massachusetts General Hospital (“MGH”) granting us an option for an exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases.

During the second quarter of 2021, we announced an amendment to our option for an exclusive license agreement with MGH to include intellectual property and technology related to the use of SYN-020 to inhibit liver fibrosis in select diseases, including NAFLD.

Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General and Gastrointestinal Surgery and Professor of Surgery, Harvard Medical School, evaluated long-term oral supplementation of IAP, including SYN-020, in mice.

Hodin’s research demonstrated that IAP administration, starting at 10 months of age, slowed the microbiome changes, gut-barrier dysfunction, and gastrointestinal and systemic inflammation that normally accompany aging.

Additionally, the IAP administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

Under the terms of the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and prevent metabolic and inflammatory diseases associated with aging.

If executed, we plan to use this license in the advancement of an expanded clinical development program for SYN-020.

The Phase 1 data from our SAD and MAD studies are intended to support the development of SYN-020 in multiple clinical indications including radiation enteritis, NAFLD, celiac disease, and indications supported by our collaboration with Massachusetts General Hospital.

The option expired unexercised on July 1, 2024.

With our transition to an oncology focused Company, we are exploring strategic opportunities to enable advancement of this potentially valuable asset.

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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.

On May 10, 2024, we presented non-clinical describing enhanced anti-tumor effects in human pancreatic cancer xenograft-bearing mice treated with lead product candidate VCN-01 and liposomal irinotecan in a poster at the 27 th American Society of Gene and Cell Therapy (ASGCT) 2024 Congress held in Baltimore (Maryland) from May 7-11, 2024.

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

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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

VCN-11 is a novel virus that we believe has the potential to extend our OV platform.

VCN-11 has been engineered to contain all of the features of VCN-01 as well as an additional modification to include an albumin binding domain (ABD) in the virus capsid.

VCN-X Next Generation OVs and Albumin Shield™ Technology

In parallel with VCN-01 clinical development, we are developing next-generation oncolytic adenoviruses (termed VCN-X) with novel therapeutic payloads and structural modifications to increase tumor cell killing and improve systemic virus pharmacokinetics.

Preclinical proof-of-concept has been established with VCN-11, which has been engineered to contain all of the features of VCN-01 as well as an additional modification to include an albumin binding domain (ABD) in the virus capsid.

The virus capsid is the target for neutralizing antibodies (NAbs) that are generated by the host immune system to destroy circulating viruses.

The presence of an albumin binding domain, however, blocks the binding of most neutralizing antibodies, which allows the virus to reach the tumor following intravenous administration.

This “Albumin Shield” works because human blood contains a large amount of albumin to coat the VCN-11 virus.

The presence of an ABD, however, blocks the binding of most neutralizing antibodies, which allows the virus to reach the tumor following intravenous administration.

This “Albumin Shield” works because human blood contains a large amount of albumin to coat the ABD-containing virus.

Importantly, this coating of albumin appears to be displaced after the virus reaches tumor cells to infect them.

In pre-clinical mouse studies to test the functionality of the “Albumin Shield”, mice pre-immunized with virus are able to completely neutralize an unmodified OV because they have a large concentration of neutralizing antibodies in their blood.

By contrast, viruses containing the albumin binding domain such as VCN-11 are not neutralized and retain their ability to infect and destroy tumor cells.

We believe these results support the further development of VCN-11 for tumors in which rapid multi-dosing may be beneficial.

In the second quarter of 2020, VCN had several interactions with Spanish regulatory authorities (AEMPS) to agree on the design of the non-clinical GLP toxicology and biodistribution studies that are required to support a first-in-human clinical trial for VCN-11.

By contrast, viruses such as VCN-11 that contain the ABD are not neutralized and retain their ability to infect and destroy tumor cells.

We believe the results with VCN-11 support the application of the Albumin Shield technology in our VCN-X program to advance treatments for tumors in which rapid multi-dosing may be beneficial.

In March 2021, preclinical data obtained with VCN-11 was published (J Control Release.

2021 Apr 10;332:517-528), showing that VCN-11 induced 450 times more cytotoxicity in tumor cells than in normal cells.

VCN confirmed VCN-11 hyaluronidase production by measuring the activity of the PH20 enzyme with a hyaluronic acid-degradation assay, and by measuring PH20 activity in VCN-11 infected tumors in vivo.

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

2021 Apr 10;332:517-528), showing that the ABD-containing virus induced 450 times more cytotoxicity in tumor cells than in normal cells.

Hyaluronidase production was confirmed by measuring the activity of the PH20 enzyme with a hyaluronic acid-degradation assay, and by measuring PH20 activity in VCN-11 infected tumors in vivo.

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

VCN-11 showed a low toxicity profile in athymic nude mice and Syrian hamsters, allowing treatments with high doses and fractionated administrations without major toxicities (up to 1.2x10 11 vp/mouse and 7.5x10 11 vp/hamster).

VCN-11 increased ALT levels on day 3 within an acceptable range that returned to normal levels by day 9.

Fractionated intravenous administration of VCN-11 (splitting the dose into two portions administered 4 h apart) appeared to improve VCN-11 circulation kinetics and increase tumor levels.

VCN-11 showed antitumor efficacy in the presence of NAbs against Ad5 and itself.

In May 2022, we presented on VCN-11 at the 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT).

The presentation included preclinical results showcasing the potential of VCN-11 to balance safety, with no major toxicities observed, and effectively target tumors after intravenous re-administration, even in the presence of high level NAbs.

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

ALT levels were increased on day 3 within an acceptable range that returned to normal levels by day 9.

Fractionated intravenous administration of the ABD-containing virus (splitting the dose into two portions administered 4 h apart) appeared to improve virus circulation kinetics and increase tumor levels.

Antitumor efficacy was observed in the presence of NAbs against Ad5 and the ABD-containing virus.

In May 2022, we presented data at the 25th Annual Meeting of the American Society of Gene & Cell Therapy (ASGCT).

The presentation included preclinical results showcasing the potential of the Albumin Shield Technology to effectively target tumors after intravenous re-administration, even in the presence of high level NAbs, with no major toxicities observed.

Our internal VCN-X discovery programs are currently evaluating new oncolytic viruses that contain the Albumin Shield technology and may expand the potential efficacy of Theriva’s oncolytic viruses.

Intellectual Property

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

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.

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 Albumin Shield programs are supported by U.S.

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.

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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.

We concluded that the IPR&D was not impaired as of June 30, 2024.

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.

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.

During the quarter ended June 30, 2024, we experienced a sustained decline in the quoted market price of our common stock and we deemed this to be a triggering event for impairment.

We performed an interim impairment analysis using the “Income approach” that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post-launch cash flows and a risk-adjusted weighted average cost of capital.

We concluded that goodwill with a carrying value of $5.5 million was written down to its estimated fair value of $1.5 million and an impairment charge of $4.0 million was recorded during the quarter ended June 30, 2024.

Contingent Consideration

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

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.

At June 30, 2024 and 2023, we have accrued CRO expenses of $2.5 million and $1.0 million, respectively, that are included in accrued expenses.

As of June 30, 2024 and 2023, we have prepaid CRO costs of $0.2 million and $2.1 million, respectively, that are included in prepaid expenses.

Results of Operations

Three Months Ended March 31, 2024 and 2023

Three Months Ended June 30, 2024 and 2023

General and Administrative Expenses

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.

General and administrative expenses decreased to $1.5 million for the three months ended June 30, 2024, from $2.7 million for the three months ended June 30, 2023.

This decrease of 45% is primarily comprised of the decrease in employee compensation costs, consulting fees, audit fees, lower director and officer insurance, and a decrease in fair value of the contingent consideration adjustment, offset by increased investor relation costs.

The charge related to stock-based compensation expense was $114,000 for the three months ended June 30, 2024, compared to $106,000 for the three months ended June 30, 2023.

Research and Development Expenses

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.

Research and development expenses decreased to $3.0 million for the three months ended June 30, 2024, from approximately $3.1 million for the three months ended June 30, 2023.

This decrease of 6% is primarily the result of lower clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC and lower expenses related to our Phase 1a clinical trial of SYN-020 which has completed, offset by increased expenses to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

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 other preclinical and discovery initiatives.

The charge related to stock-based compensation expense was $58,000 for the three months ended June 30, 2024, compared to $40,000 related to stock-based compensation expense for the three months ended June 30, 2023.

The following table sets forth our research and development expenses directly related to our product candidates for the three months ended June 30, 2024 and 2023.

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

Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific product candidates.

Therapeutic Areas

Other therapeutic areas

Total direct costs

Total indirect costs

Total Research and Development

Goodwill Impairment

During the quarter ended June 30, 2024, we experienced a sustained decline in the quoted market price of our common stock and we deemed this to be a triggering event for impairment.

The Company performed an interim impairment analysis using the “Income approach” that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post-launch cash flows and a risk-adjusted weighted average cost of capital.

We concluded that the IPR&D was not impaired as of June 30, 2024, however, goodwill with a carrying value of $5.5 million was written down to its estimated fair value of $1.5 million and an impairment charge of $4.0 million was recorded during the quarter ended June 30, 2024.

The decrease in the valuation was primarily driven by an increase in the discount rate which was impacted by an increase in the company specific risk premium, and not by material changes to the clinical and administrative operations of the business.

Other Income/Expense

Other income was $172,000 for the three months ended June 30, 2024 compared to other income of $377,000 for the three months ended June 30, 2023.

Other income for the three months ended June 30, 2024 is primarily comprised of interest income of $173,000 and an exchange loss of $1,000.

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.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $8.3 million, or $0.43 per basic and diluted common share for the three months ended June 30, 2024, compared to a net loss of approximately $5.1 million, or $0.34 per basic common share and diluted common share for the three months ended June 30, 2023.

Six Months Ended June 30, 2024 and 2023

General and Administrative Expenses

General and administrative expenses decreased to $3.4 million for the six months ended June 30, 2024, from $4.9 million for the six months ended June 30, 2023.

This decrease of 30% is primarily comprised of the decrease in compensation costs, consulting, legal fees, audit fees, investor relation costs, lower director and officer insurance, and a decrease in fair value of the contingent consideration adjustment.

The charge related to stock-based compensation expense was $215,000 for the six months ended June 30, 2024, compared to $193,000 for the six months ended June 30, 2023.

Research and Development Expenses

Research and development expenses increased to $6.4 million for the six months ended June 30, 2024, from approximately $6.1 million for the six months ended June 30, 2023.

This increase of 5% 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.

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.

The charge related to stock-based compensation expense was $116,000 for the six months ended June 30, 2024, compared to $79,000 related to stock-based compensation expense for the six months ended June 30, 2023.

The following table sets forth our research and development expenses directly related to our product candidates for the six months ended June 30, 2024 and 2023.

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

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Total Research and Development

Goodwill Impairment

During the six months ended June 30, 2024, we experienced a sustained decline in the quoted market price of our common stock and we deemed this to be a triggering event for impairment.

Other Income/Expense

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.

Other income was $400,000 for the six months ended June 30, 2024 compared to other income of $746,000 for the six months ended June 30, 2023.

Other income for the six months ended June 30, 2024 is primarily comprised of interest income of $402,000 and an exchange loss of $2,000.

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.

Net Loss Attributable to Common Stockholders

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.

Our net loss attributable to common stockholders was approximately $13.5 million, or $0.74 per basic and diluted common share for the six months ended June 30, 2024, compared to a net loss of approximately $9.6 million, or $0.63 per basic common share and diluted common share for the six months ended June 30, 2023.

Liquidity and Capital Resources

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.

As of June 30, 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 $322.8 million as of June 30, 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 $16.6 million as of June 30, 2024, a decrease of $6.6 million from December 31, 2023.

During the year ended December 31, 2023 and six months ended June 30, 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 $13.5 million for the year ended December 31, 2023 and the six months ended June 30, 2024, respectively.

With our cash position of approximately $14.5 million in early August 2024, we believe we will be able to fund our operations into the second quarter of 2025.

Following the anticipated completion of our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, and preclinical studies supporting VCN-01 and our 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.

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.

Management believes its plan, which is focused on the advancement of VCN-01 will allow us to meet our financial obligations, further advance key products, and maintain our planned operations.

Based upon our current estimates of the funding required to complete our current ongoing VCN-01 clinical trials, we do not anticipate continuing the development of SYN-004 internally and instead are seeking to out-license or partner the development of SYN-004.

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.

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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.

During the three and six months ended June 30, 2024, our only source of cash was from sales of our common stock through the Amended and Restated ATM Sales Agreement pursuant to which we sold 4.4 million shares of our stock for net proceeds of $1.8 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 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.

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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..

We do anticipate that our current cash or approximately $14.5 million as of early August, 2024 will allow us to cover overhead costs, manufacturing costs for near-term clinical supply, manufacturing costs of VCN-01 for clinical trail use and limited research efforts, including completing our funding requirements for our ongoing Phase 1b/2a clinical study (cohort II) 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 supporting VCN-01 and our ongoing discovery initiatives, and to fund our committed obligations under the VCN Purchase Agreement for the VCN Acquisition into the second quarter of 2025.

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.

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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.

If we fail to obtain additional funding for our 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.

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 or the Phase 1b/2a clinical study of SYN-004 (ribaxamase) 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.

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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.

Even if we meet the requirements for use of the ATM, there can be no assurance that we will be able 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.

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Cash Used in Operating Activities

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.

Net cash used in operating activities was $8.3 million and $9.5 million during the six months ended June 30, 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 operating activities for the six months ended June 30, 2024 decreased compared to the same period in 2023 due primarily to the reduction of prepaid clinical costs related to our Phase 2 trial incurred in the current year.

Cash Used In Investing Activities

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.

Cash used in investing activities during the six months ended June 30, 2024 and 2023 was $1,000 and $17,000 for equipment purchases.

Cash Provided by Financing Activities

Cash provided by financing activities during the six months ended June 30, 2024 included at the market offering proceeds of $1.8 million from sales of 4.4 million shares of our common stock offset by payments related to loans extended by certain Spanish institutions of $67,000.

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 debt payments.

Off-Balance Sheet Arrangements

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.

During the six months ended June 30, 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 March 31, 2024, we did not have any material finance leases.

As of June 30, 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