Q2 2020 Synthetic Biologics Inc Earnings Call

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Good afternoon, and welcome to synthetic biologics 2022nd quarter Investor Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star Keith followed by zero.

After todays presentation, there will be an opportunity to ask question.

I think question. He May press Star then one on your telephone keypad to withdraw your question. Please press Star then too.

Please note. This event is being recorded at this time I would like to turn the call over to Vincent her own director corporate communication and synthetic biologics Vincent.

Thanks, Danielle and good afternoon, everyone.

Welcome to synthetic biologics Twentytwenty second quarter Investor Conference call today, I'm joined remote lead by our Chief Executive and financial Officer, Steve Shallcross, Dr., Michael Telco Senior Vice President of research and development and Dr., Vince wager head of product and corporate development.

Synthetic biologics issued a press released this afternoon, which provided operational highlights and reported all financial results for the quarter ending June 30, 2020. The release can be found in the Investor Relations section of our website.

During our call today will provide an operational update on RG, <unk> and microbiome focused clinical programs and will summarize our financial results well take questions. After our prepared remarks. In addition to the phone line. This call is being streamed live via webcast, which will be archived on our website www dot synthetic biologics dot com for 90 days.

Right.

During this call we will be making forward looking statements regarding synthetic biologics current expectations projections about future that.

Generally the forward looking statements can be identified by terminology such as May should expects anticipates intends plans believes estimates and similar expressions. These statements are based upon current beliefs expectations and assumptions and are subject to a number of risks and uncertainties include.

And those set forth in synthetic biologics filings with the FCC many of which are difficult to predict no forward looking statements can be guaranteed and actual results may differ materially from such statements. The information on this call is provided only as of the date of this call and synthetic biologics undertakes no obligation to update any forward looking statements.

Contained on this conference call on account of new information future events or otherwise, except as required by law with that I'd like to turn the call over to Steve Steve.

Thanks, that's it.

Good afternoon, everyone and thank you for drilling or 2022nd quarter Investor Conference call.

On behalf of synthetic biologics, we hope you are safe and in good health.

I'm glad to be with you. This afternoon and look forward to sharing important updates on our strategy for advancing our portfolio of GE and Microturbine focused clinical development programs during today's call.

Today will review, our 2022nd quarter operational highlights and financial results and provide an update on our clinical development strategy as we continue to navigate the global health and economic crisis sparked by the code 19 pandemic.

Our focus now and in the past is the safety and well being of the patients. We aim to serve our clinical research and development partners and of course, the dedicated team here synthetic biologics.

As a nationwide response to the covert 19 global pandemic evolves, we continue to inform or decisions based on recommendations made by local governments hospitals and health care organizations, many of which continued to focus resources towards battling the pandemic and their regions.

During our last call I outlined our revised operational framework, which was which has allowed us to navigate to covert banking crisis and advance our clinical programs in the second quarter.

Specifically enrollment in the investigator sponsored phase Twob clinical trials in 10 has restarted following the temporary halt during the second quarter due to the coven 19 global pandemic.

We submitted an idea application with the FDA and received a study may proceed letter to conduct a phase one single ascending dose study in healthy volunteers intended to evaluate some 24 safety tolerability and Pharmacal kinetic parameters.

We expanded our collaboration with Massachusetts General Hospital in the form of an exclusive option agreement to license intellectual property and technology to commercially develops in 20 for the treatment and prevention of metabolic and inflammatory diseases associated with age.

And we remain in close contact with Washington University as they continue to evaluate opportunities, which may allow us to initiate the planned phase one be two way clinical trials in four and allogeneic HCT patients into phase of the ongoing covert 19 pandemic.

Importantly, these initiatives have been conducted with a sharp focus on prudent cash management in financial stewardship, which will allow us to preserve our cash runway through at least the first quarter of 2021.

With that backdrop I'd like to provide an update on our late stage emerging clinical programs beginning with our Syn 10 program.

Since then is designed to target to target an underlying microbial cause of constipation.

C patients with the goal of normalizing bowel habits without diarrhea, nausea, often associated with over the counter and prescription therapies.

Last year, we began enrollment in a phase to be investigator sponsored clinical trial. Since then in collaboration with our research partners Cedar Sinai Medical center to further evaluate the efficacy and safety of Syn 10, and IDFC patients.

We designed this clinical trial with Threed specific objectives in mine first to generate a dataset of the highest quality in order to provide additional insights into dose response, Atlanta treatment for future potential pivotal trials.

Second to allow us to Reengage with prospective partners, who found on the phase two eight data compelling yet inconclusive enough to justify significant investment for phase three development.

And importantly number three to generate this dataset at a cost effective manner.

During the second quarter patient enrollment was temporarily halted as a result of the impact of the global fluid 19, pandemic, which required cedars Sinai to temporary limits certain non essential activities.

During this time Cedar Sinai implemented steps, which allowed actively enrolled patients to complete their full 12 week treatment period.

Importantly data from this active group was collected in accordance with the clinical trial protocol.

At this time Cedars Sinai has restarted new patient recruitment and enrollment remains ongoing.

However, their ability to continue to enroll new patients remains contingent upon the impact of the covert 19 pandemic.

A data readout in the form up an interim futility analysis is anticipated during the third quarter of 2020 and topline data is anticipated during the first quarter of 2021 subject to covert 19.

We remain in close contact with the team Cedars and look forward to providing additional updates as they become available.

Next I'd like to provide a brief update on our soon for core Ribaxamase program.

Since four as our first in class therapeutic intervention designed to protect the gut microbiome from antibiotic unmediated dysbiosis.

We believe protection of the gut microbiome may play a pivotal role improving health outcomes for patients administered long courses of intravenous beta lactam antibiotics is part of their treatment plan for bone marrow and solid organ transplantations.

Last year, we announced our intention to move this program forward in collaboration with our clinical development partner, The Washington University School of Medicine in Saint Louis in the form of a phase one be two way clinical trial within four and allogeneic HCT transplant recipients.

Following this announcement, we held the type C meeting with the FDA to discuss the clinical program requirements needed to evaluate the safety tolerability and potential absorption into this Sunday circulation if any of soon for an adult allogeneic HCT recipients.

We're pleased to announce that we recently received written notification from the FDA informing us they have determined that the phase one be two way clinical program protocol and adult Elgin AK Siti recipients is safe to proceed as planned.

Looking ahead, we plan to share the FDA cleared clinical protocol with Washington Universities, Institutional review board or higher B.

Upon approval by the RV the team at Washington University will be in a position to begin enrolling patients into this clinical trial.

During the second quarter, we remain in close contact with Washington University in order to better understand how their ongoing response to the global growth of Iris pandemic has impacted their ability to initiate the planned phase one be to a clinical trial ups and poor.

Wash use informed us that although health and safety initiatives intended to slowed spread of covert 19 have been effective the virus continues to pose difficult and unique challenges. The continued delay certain non essential activities. However, they also informed us that they could potentially.

Be in a position to initiate a phase one be to a clinical trial as early as this fall.

This remains largely at the discretion of wash use institutional review board and is contingent upon their ability to conduct this clinical program free from the impact of covert 19, which at this time is still difficult to predict.

We will remain in close contact with Washington University, and we'll be ready to proceed with this program in the event. It is deemed safe to do so by the university's RV and FDA.

However, given this continued uncertainty we maintain our previous guidance and anticipate commencement of this clinical program during the first quarter of 2021.

We look forward to providing additional updates as they become available.

Before reviewing our financials I'd like to hand, the call over to our senior Vice President of research and development Dr., Michael Calico mine.

Mike will provide an update on the exciting developments and achievements we've made for us in 20 intestinal Oakland Foster taste program during the second quarter might.

Thanks, Steve.

On June 29, synthetic biologics file deny empties person 20.

We received FDA approval precede the first clinical trial single ascending dose study in normal healthy volunteers.

As we enter the clinical stage it seems like an opportune time to provide some details about the program.

Then he published data to which are or will be referenced on our company website.

Since Plenti is there were a competent form of bovine intestinal alkaline phosphatase base, which I'll refer to as I am happy.

Produced in show cells and formulated for oral delivery.

In mammals, including humans IP isn't in lodging. This enzyme produced by the cells foot line the small intestine.

It was functions to remove the phosphate group from multiple different substrate.

I would be released by the cells is not suggested it travels to the intestine is biologically active for mid plays a key role in maintaining got held.

So at least three important mechanisms.

First it diminishes gastro intestinal inflammation by Detoxifying multiple inflammatory molecules, probably the most important of which has ended toxic.

Second it acts directly on the intestinal wall to tighten the gut barrier to diminish so-called leaky dust.

Third it functions to support healthy bacterial microbiome.

Based on these functional activities, we and others have recognized oral administration with IP has the potential to treat inflammatory diseases of the G. I track.

In this clinical strategy is low supported by multiple animal models.

Well as a pilot study is useless ulcerative colitis.

But equally important might be toxify intestinal inflammatory mediators implied preventing them from leaking out into the systemic circulation.

Hi, Pete has the potential diminished chronic low grade systemic inflammation, which is believed to exacerbate metabolic syndrome and accelerate the progression of disease is associated with agent.

More on this in a minute.

Synthetic biologics, we've been collaborating with Dr., Richard potent chief of the Division of General gastrointestinal surgery, as Massachusetts General Hospital.

Dr. Horton has been researching IP for decades and is a world leader in exploring its efficacy in animal models of disease.

In 2013, he published a seminal paper demonstrating that I P treatment of mice with metabolic syndrome was remarkably effective in treating disorder.

Dramatically, reducing both high blood sugar and be associated fatty liver disease.

More recently he showed that long term supplementation was IP in mice diminish the inflammatory and metabolic changes that occur with normal agent.

Amazingly sustained oral administration I take substantially prolonged mouse life span.

Does that make biologics has been exclusive option agreement with mass General hospital to license the intellectual property pertaining to the prevention and treatment of metabolic and inflammatory disorders.

Associated with aging.

I would encourage you take a look at Doctor, who is papers, which encompass a multitude of the animal models for other disease indications.

Great hope conveyed the message so one of the most exciting aspects of the send 20 product candidate is this potential utility for a broad array of clinical indications.

You might ask why haven't to other companies already developed an oral hi, hi piece therapeutic.

The answer would seem to be is remarkably difficult to manufacture.

Most of the studies in the literature been performed with IP derived from cast contestants.

Cafes, ERP cost up to $10000 from which is prohibitive for an oral therapeutic.

And published reports with various recombinant platforms I've described very poor yield.

Again insufficient for an oral therapeutic.

Synthetic biologics we've overcome this.

Our unique advantage is the we've been able to generate high yields production. So.

At commercial scale is anticipated to enable cost effective manufacturer.

We've demonstrated that the recombinant since 20 biologically equivalent to capture arrived I P and it was well tolerated in mountains dog toxicology studies, the doses up to 50 fold above the anticipated clinical dose.

As mentioned previously we filed an eye Andy It received a study may proceed approval from the Ftn.

So the initial clinical application, we look for a nishu indication it could potentially provide an accelerated path to registration.

Our current top choice the enterocolitis associated with radiation that repeat for erectile and anal cancers.

Since the radiations feels for these cancers includes the lower abdomen patients frequently experienced acute side effects, including diarrhea, nausea vomiting cramping.

While these symptoms usually abate upon completion of the radiation dosing.

50% of cancer survivors, who will go onto developed a long term complication of intestinal fibrosis.

Which can be debilitating and has a significant unmet medical need just currently no way to presented.

Well with course.

While we will initially focused on the acute toxicities. There is a significant opportunities person 20 to potentially address the long term complication as well.

Finally in supported this indication all administration I P was efficacious.

Published animal models of radiation exposure and we verified centstwenty.

Efficacious in our quoted pilot study in mice.

I would be remiss, if I didnt mention it. We're also exploring the utility of since when he personally have disease, which is an auto immune disease that condemns patients to lifelong highly restrictive gluten free jive.

Certainly and I guess, particularly intriguing because when the disease is active it's associated with well I P levels.

And got sour your leakage, Josh Supplementals and plenty would seem to be ideally suited to remedy these abnormalities.

To be clear the disease can be complex was both intestinal and extra intestinal presentations.

However, a clinical trial design that incorporates the gluten challenge could potentially provide an early read house on Centstwenty utility.

We look forward just sharing additional updates on this in the future.

To conclude our initial phase one studies will be conducted in normal healthy volunteers.

<unk> safety studies will support the subsequent gastrointestinal trials.

But more broadly should also enable the pursuit of other clinical indications.

Ultimately the goal is to leverage low cost manufacturing.

And the expense of clinical opportunities offered by saying 20 to address metabolic as well as age related disorders.

So thanks for your attention and let me now turn it back to Steve.

Thanks, Mike.

Yes, you can see we're very excited about the future. This program has potential to be a significant value, adding catalyst for our company.

With that backdrop I will review our financial results for the quarter ended June 30 2020.

During the second quarter of 2020, we continue to operate in a lean and efficient manner.

We maintain focused on prudent cash management have successfully identified additional areas to further reduce non essential operating expenses.

We ended the quarter with approximately 8.1 million cash and cash equivalents and looking ahead, we anticipate our burn to remain in line with the previous quarter.

This is due primarily to the postponement of the phase one be to a clinical trials and four and allogeneic HCT recipients.

Yes at this time, we do not anticipate additional expenses related to this program for the remainder of the year.

As a result, we anticipate that our current cash position will allow us to continue operations through at least the first quarter of 2021.

Now I'll turn to the second quarter financial results.

General and administrative expenses increased by 23% to $1.3 million for the three months ended June 32020 from $1 million for the three months ended June 30, 2019th.

This increase is primarily due to increased legal costs related to business development path and execution employee contract matters as well as vacation and insurance costs.

The charge related to stock based compensation expense was $67000 for the three months ended June 30, 2020 compared to $59000 for three months ended June 32019.

Research and development expenses decreased by 38% of $1.6 million for the three months ended June 32020 from $2.6 million for three months ended June 32019.

This decrease is primarily the result of the response to the global cabin Cobot 19 pandemic by our clinical development partners, which has led to the postponement of the phase one be two way clinical trials in four and allogeneic HCT recipients and a temporary halt and new enrollment in the phase Twob investigators fun.

Answered clinical trials intent.

Charge related to stock based compensation expense was $19000 for three months ended June 32020, compared to $31000 for the three months ended June 30 29 team.

Other income was $6000 for three months ended June 32020, compared to other income of $80000 for the three months ended Junethirty 2019.

Other income for the three months ended June 30, 29, 2020, and 29 team is primarily comprised of interest income.

In closing despite uncertainty around covert 19, we had synthetic biologics remain focused on the execution of our strategy of advancing our portfolio of Gi microbiome focused clinical programs.

We continue to coordinate and evaluate our clinical development strategies along side our partners.

And as.

We have the ability to adjust and adapt when necessary to remain aligned with recommendations by the government and healthcare organizations, leading the response against the krona virus pandemic.

We continue to support the efforts of our clinical development partners and the healthcare workers around the globe, who continue to risk their own health to help others battling the novel thrown a virus on behalf of synthetic biologics team I. Thank you.

We look forward to continuing to update you on our progress and the weeks and months ahead.

Now I'll turn the call back to Vincent.

Thanks, Steve the now we'd like to open the phone line to questions can you. Please and start the procedure to ask questions foreign listeners.

We will now begin the question and answer session to ask a question. He May press Star then one on your telephone keypad.

If you're using a speaker phone take please pick up a handset before passing the keys to withdraw your question. Please press Star then Kim.

Again, it's star one to ask a question.

The first question comes from James on the line and the line Global Partners. Please go ahead.

Hi, guys. Thanks for taking my question on the call went on the Syn 10 will the C.S.M.C. I know that.

You suggested the new restart.

In the fall.

Oh, I'm, sorry, I got since before so.

Since then restarted the trial.

Interim look at third quarter topline first quarter 21, and what point, we just didn't know if that's going you know.

If that's going to be on track or in other be will give you additional risks of a slowdown of things you know for himself.

In would see designer.

So Jim this is Steve so we're in.

Regular contact with our partners is Cedar Sinai and they have started enrolling patients again in that trial. So we're happy to see that happened. There is obviously additional protocol that they had the put in place an order for this to happen for instance, all the patients before they.

Can come into the clinic for their screening half the pass a.

Covert test.

So even with those additional steps that have been built in to the process.

Things currently are back on track I I guess as we stated in our comments.

Who knows what happens as we continue to go forward, but as of as of today, we know that patients are continuing to enroll.

Yes, I think you mentioned in your prepared remarks as well.

As I sort of the level of bar on the one 2.8 about 3 million.

<unk> expenses in the quarter.

That is after you're done and expect to have the next few quarters.

Going forward here in 2020, I, I think I'd model, and probably lower thinking Recoded may delay things longer it sounds like things got back on track sooner than expected.

Yeah, I mean, the actual cash used for the quarter was around 2 million I think that's pretty consistent with where we're at.

We've talked in the past our fixed monthly burns about $500000 in anything that we spend above and beyond that is strictly.

Due to the programs that are ongoing.

Yes, the guidance that we've given his cash through the first quarter of 2021 so.

As you sort of look at your model.

You know understanding where the cash balances today I think you can sort of.

How that works.

Indeed, you guys Ronald Lein ships, I guess is already I <unk> other than many rooms isn't much room for running at leaner.

The one question I guess last two questions would be I promise you that disease for Oetwo always very interesting comment I'd love to you'll get some thoughts on what where you would need to do the so they advance along those lines.

So first of all to others.

Weekly answer the.

Cash question, we're pretty lean as it is we continue to look at every opportunity where we could still reduce our burn further but I think in the last year, we did a pretty good job of getting our costs down I mean, we have 10 full time employees, that's pretty lean for a company that's working actively.

Three programs.

So we're feeling pretty good about where we're at in terms of staffing and our ability to manage our cash.

The silly I can opportunities is real interesting. This is actually a program that we looked at several years ago. We did some some extensive analysis of the market opportunity and.

We will continue to keep.

Yes, this sort of on the radar and now that we had the ability to go into the clinic initially with our phase one study it's become something that you know has become very very important to us, especially with the fact that there's an unmet need in the marketplace.

Our development team and our clinical folks are looking at ways that we may advances into the clinic.

Those thoughts and ideas are.

No in various stages right now and once I think we were a little bit more clear about how we plan to proceed will have a discussion with the FDA and then I think we can share that more broadly where there.

Our shareholder base.

Well you need to final question, what do you see the sort of the cost to get to a go no go onto reacting and then.

Yeah, I would assume a sort of.

10, 15 million sort of all in travel costs through I'm thinking I I can't even begin to answer that right now until.

We're clear on what a program would look like and then we actually sit down with the FDA and discuss it. So it's it's still too soon to tell.

Understood. Thank you very much second question.

As a reminder, do you have a question please press star one.

Our next question question comes from Jason Mccarthy of Maxim Group. Please go ahead.

Hey, guys as Michael Accuen, which on the line for Jason Congratulation on the progress and thanks for taking the bus.

Hey, Mike.

So I'd like to see lower on the topic, I'm, saying 20 looks like a pretty exciting opportunity with I.E.

And.

From one from what we've been watching it with the story it looks like essentially be on pipeline and it still sort of situation here.

And I know cost of manufacturing imitate previously prevented large scale development, but let's just see if you could talk a bit more on.

What the actual market opportunity is here and if you give a bit more specifics on the which age related metabolic and lavatory condition could benefit from 20.

Well since there hasn't been a lot done in terms of Hynix clinical trials in humans for this area a lot of.

What we have two referred to today is what's been done and animal models and.

Dr. Calico has been spending a lot of time was.

Dr. Hodan.

So.

Maybe Mike if you want to just spend a couple minutes.

And talk about the the broad platform opportunity.

We view this this compound as a potential platform.

Type product.

First things first of all right, we want to get through the initial phase one studies and then as we hone in on the areas, where we have opportunity. You know then I think we'll be in a position that talk more broadly about specific indications and ultimately how big the product could be in any one of those indications.

But Mike why do you go ahead and just.

A couple of minutes on how we view this and where we're ultimate the opportunities could take us.

Okay. We initially as I as I discussed chose radiation enteral leidos for those specific to cancers, and we believe there's the potential for orphan designation, which could accelerate this pathway to.

Two registration and we feel it's important to move through registration as quickly as possible.

Iliac as I mentioned as well.

It seems remarkably well suited for saying 20.

Was it is a busy used to that is characterized by will be key god and there are.

Clinical indications that if you could fixed leak.

That it actually could potentially improve over the course of disease and soon 20 is really good.

Net fixing leaky does.

Additionally.

So we act is.

Aggravated sometimes by a small intestinal bacterial overgrowth and you could imagine the tests inflammatory.

Clinton has the potential to diminish such inflammation. So it seems very well well suited to silly act when there's a very significant unmet medical need.

So those are the two gastrointestinal diseases.

After that one would look at broader indications.

And I think the.

First one one would think about would be metabolic syndrome type two diabetes.

This is down the road is it.

The regulatory pathway for diabetes.

It is complex so it's down the road, but certainly that is the disease of aging for which since he has had remarkable animal model data and there's actually data that suggests that you.

With.

Hi levels I either pieces are protected in diabetes, even if there are obese.

The other age related disease.

That people tend to think opus atherosclerosis, we have not what did that in detail. So it is premature to discuss it what I can tell you there similar publication, suggesting that.

The.

Instead to which people develop the skewing the Clark disease may be inversely correlated with their FICO levels. So I.

So there's some potential.

Is there, but now you're looking way down the road.

So I think those those are the two diseases as AJ, so would come after the gastrointestinal.

Hi, Thank you very healthy.

The next thing.

The next question is Ah, let's see if you could provide a bit more.

Color on you know what to expect from the read out fees to be and I've, yes.

What's sort of difference from placebo would we need to see to consider it great results.

And then which is a key secondary end points do you consider the most important for attracting a partner for the phase three.

Okay, Mike Thanks for the question Vince you want to take that.

[noise] enough I would do.

So just to clarify what we're expecting this in the near term, it's a futility analysis until we determine.

You know that don't futility analysis, if the study should continue and whether it's it looks like.

New engine will add to the overall outcome.

Downstream, what do we want what do you want to see in that product in this space.

Well, particularly in 10, well you definitely want to see.

Defined effect on the complete spontaneous bowel movements, you need an increase of a baseline the FDA.

Endpoint is an increase of at least one per week comparatively you'd like to see an increased more than one week, but for the most partner you can increase that's why I want to await that's that's hitting the endpoint that you need to have.

In the IB S.C. you need to also get a reduction in abdominal pain.

And the endpoint as a 30% reduction and that's all I nature.

That's just baseline wakes up that except the average school. So those are the key efficacy endpoints. It sounds are differentiating we would like to see that products have a effect on some of the things that are most impactful quote lot lot decreasing plunging I agree.

Discussed before that bloating is the symptom that I V. S. C patients complained about the most well it is a key.

Secondary endpoints, we'd like to see bloating.

The study as well.

And then the key side effect overseas diarrhea, we want to make sure that we've gotten have.

Okay. That's all areas out we'd like to have out now benefits in our traditional.

That's on bloody without causing direct which is one of the dose limiting.

FX.

So it would would you consider loading and diarrhea. Some of the key things that led to a high rate of guest satisfaction with the current option out there.

Absolutely diary.

I quantified yet be sort of call it loss impact of diary, Aaron different studies have moved to the.

Satisfaction with chronic therapy Sox, yet because the lack of efficacy at one of things that diarrhea as a as an outcome certainly a reason it will stop using current therapies and it's not just the fact that there is.

The fact that it so variably slate.

Can happen.

When you least expected them and that is certainly uncomfortable.

Sounds good.

I should say willingness to continue on medication.

Alright, Thank you very much for taking my questions.

Thank you I would now like to turn the conference back over to Steve Shallcross for closing remarks.

Thank you and once again.

Thank you for joining us today, we look forward to keeping you updated on our progress and we'll talk to you next time.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.