Q1 2021 Synthetic Biologics Inc Earnings Call
The Investor Conference call.
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At this time I would like to turn the call over to Vincent Perrone director of corporate units communication at synthetic biologics Vincent. Please go ahead.
Thank you Rocco and good afternoon, everyone welcome to synthetic biologics 2021 first quarter Investor Conference call.
Today, I'm joined remotely by Steven Shallcross, Chief Executive and financial Officer, Dr. Michael Calico Senior Vice President of research and development and Dr. Vince Laker head of product and corporate development.
Synthetic biologics issued a press release this afternoon, which provided operational highlights and reported our financial results for the quarter ending March 31, 2021 for <unk>.
These can be found in the investors section of our website.
During our call today, we will provide an operational update on our Gi and microbiome focused clinical programs and summarize our financial results, we will 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 synthetic biologics dot com for 90 days.
During this call we will be making forward looking statements regarding synthetic biologics current expectations and projections about future events Jenny.
Generally the forward looking statements can be identified by terminology such as May should expects anticipates intends plans believes estimates and other similar expressions. These.
These statements are based upon current beliefs expectations and assumptions and are subject to a number of risks and uncertainties, including those set forth in synthetic biologics filings with the SEC 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 accounts of new information future events or otherwise, except as required by law with the.
I'd like to turn the call over to Steve Steve.
Thanks Vincent.
Good afternoon, everyone and thank you for joining our 2021 first quarter Investor Conference call.
I'm glad to be with you. This afternoon and look toward the sharing of important updates on our strategy for advancing our portfolio of Gi and microbiome focused clinical development programs during today's call.
Let me start by saying that I'm more encouraged than ever by the outlook for the business.
Not only have we made significant progress on our clinical pipeline, but we're now in the strongest financial position in the company's history with nearly $77 million of cash on hand at the end of the quarter.
Providing us with more than sufficient capital to execute on our clinical programs through proof of concept and extend our operations into 2023.
We have also converted all of the outstanding shares of series, a and series B convertible preferred stock on the common stock, which has not only helped streamline our capital structure on balance sheet, but allowed us to position the company to regain listing compliance with the New York stock exchange.
Moreover, we have a number of very exciting upcoming catalysts that we believe have the potential to deliver significant shareholder value.
Specifically, we look forward to reporting topline data from the phase one of the single ascending dose study of Syn <unk> in the third quarter of 2021.
Second we expect the commenced our second phase one of multiple ascending dose study of Syn <unk> during the third quarter of 2021 with topline data expected during the second quarter of 2022.
And finally, we look forward to reporting of top line data readout from the first antibiotic cohort of the <unk> for phase <unk> clinical trial during the fourth quarter of 2021.
I'll discuss more about each of these in a moment, but as you can see we are entering a very exciting period for the company.
Turning now to the quarter, we've been very busy.
During the first quarter of 2021, we achieved the number of important milestones that have brought us closer to data Readouts I mentioned earlier.
First we announced that Washington University commenced enrollment and dose the first patients in the phase one b to a clinical trial of Syn for which is intended to prevent the incidence of acute graft versus host disease and allogeneic <unk> recipients.
Second we initiated a phase one single ascending dose clinical trial of Syn <unk>, our proprietary formulation of intestinal alkaline phosphatase or IAP intended to treat celiac disease, and other systemic and Gi related diseases stemming from inflammation.
Of the Gi tract.
And third we laid the groundwork to initiate our second phase <unk> multiple ascending dose clinical trial of <unk> in 'twenty.
Both phase one studies are designed to support the development of Syn <unk> in multiple clinical indications.
We achieved each of these milestones despite the ongoing impacts of the COVID-19 pandemic.
I'd like to thank all of our employees and partners for their tireless efforts. During these difficult times all of which of the kept this moving forward.
As I stated before we believe both the same for Ensign 'twenty address very sizable and underserved markets and have the potential to be foundational long term drivers of value for our company and our shareholders.
With that backdrop I'd like to provide a more detailed update on our clinical development activities, beginning with our syn for or <unk> program.
<unk> is our first in class therapeutic intervention designed to protect the gut microbiome from antibiotic mediated this biosys.
We believe protection of the gut microbiome may play a pivotal role in improving health outcomes for patients administered long courses of intravenous beta lactam antibiotics as part of their treatment plan for bone marrow and solid organ transplantations.
Specifically <unk> patients have a very high risk of this biosys. Following the long courses of IV beta lactam antibiotics used to treat fever after conditioning therapy.
The image to the gut microbiome caused by these antibiotics is also strongly associated with the number of potentially fatal adverse outcomes, most notably acute graft versus host disease, vre colonization, bacteremia and C difficile infection.
Results from our previously completed phase II clinical trial of <unk> for in patients treated for pneumonia demonstrated protection of the gut microbiome and treated patients, which led to significant reductions in the incidence of CDI and vre colonization.
We believe data from this previously completed clinical trial gives us very high confidence in the outcome for our program going forward.
Importantly, since for has the potential to address this important and underserved patient population by significantly improving outcomes for allogeneic <unk> recipients by preventing downstream complications often associated with disruption of the gut microbiome by IV.
Beta lactam antibiotics.
We are currently advancing this program in collaboration with our clinical development partner, The Washington University School of Medicine in St. Louis in the form of of Phase <unk> clinical trial.
The goal of this study is to evaluate the safety Tolerability and pharmacokinetics of <unk> for in this fragile patient population.
During the first quarter, we were pleased to announce that enrollment in this clinical trial is convinced and debt. We've begun dosing patients in the first of three sequential antibiotic cohorts that will be administered of different IV beta lactam antibiotic to treat fever.
In total eight participants in each cohort will receive syn for and for will receive placebo.
At this time, we are conservatively estimating enrollment to proceed with approximately two patients per month.
This is a function of the number of anticipated allogeneic hcg transplants, Washington University expects to conduct during the year as well as the number of competing.
Competing clinical trials running concurrently with ours at their facility.
If enrollment proceeds as planned we expect to announce topline data from the first antibiotic cohort during the fourth quarter of 2021 pandemic conditions permitting.
Importantly, if we observed as expected that sin for is not systemic we absorbed in this first cohort we will consider applying for orphan drug designation and begin to prepare for our phase III program is the remainder of this clinical trial completes.
Next I'd like to provide an update on our Syn <unk> IAP program that we're developing initially as the treatment facility at disease, which has a significant unmet medical need.
Since <unk> is our proprietary recombinant form of bovine IAP produced and chose cells and formulated for oral delivery.
<unk> is an endogenous enzyme expressed on the upper small intestine that plays an important role in maintaining gut health through at least three important mechanisms for.
It diminishes Gi inflammation by Detoxifying inflammatory molecules.
It acts directly on the intestinal wall of the tightened the gut barrier to diminish leaky gut.
Third it functions to support the healthy gut microbiome.
The therapeutic potential for IOP for IAP supplementation has been verified and many animal studies. However, despite its broad therapeutic potential industry development of IAP as an oral drug has been hindered by manufacturing hurdles, which has led to current.
Commercially available IAP costs of up to $10000 per Gram.
We have overcome these hurdles and now have the ability for true to produce IAP cost effectively and in an oral dosage formulation and.
An achievement that we believe fixed since <unk> of commercially attractive compound.
We use in 'twenty as.
As a versatile multi indication platform program that has the potential to treat a number of clinical indications stemming from inflammation of the Gi tract.
Equally important we believe since <unk> has the potential to diminish low grade systemic inflammation, which is believed to exacerbate metabolic syndrome and accelerate the progression of diseases associated with aging.
During our last call we outlined in detail our clinical development strategy for <unk>, 'twenty, which I'd like to briefly review for you today.
As an initial clinical indication, we're developing <unk> for the treatment of celiac disease.
The act disease affects approximately 1% of the U S population and is characterized by the talent and by an intolerance the gluten.
Clinical manifestations include both the gastrointestinal and systemic symptoms.
From a mechanistic perspective, we believe <unk> is well suited to improve clinical outcomes when combined with the proper diet.
First by bolstering the gut barrier since <unk> made block the initial step of gluten entry into the intestinal wall.
Second through its anti inflammatory activities since <unk> may serve to attenuate the immune response to the gluten peptides.
Finally patients with active celiac disease had been shown to have reduced levels of endogenous IAP, presumably because the disease damages the intestinal villi debt normally produced IAP.
Thus since 20 in celiac patients with potentially supplement and correct their low endogenous IAP levels.
Last June we filed an IND application. The received a study may proceed approval from the FDA.
During the first quarter of 2021, we were pleased to announce that we initiated a phase <unk> single ascending dose clinical study, which will evaluate safety tolerability and bio distribution of Syn <unk> in healthy volunteers.
At this time three out of a total of four cohorts have been dosed.
All 20 for healthy adult volunteers will be enrolled all of which will receive oral syn <unk> 'twenty.
The topline data readout is anticipated during the third quarter of 2021.
This first phase one single ascending dose study is expected to be followed by a second phase <unk> clinical study intended to evaluate multiple ascending doses of syn <unk> in healthy adult volunteers.
We anticipate initiating this study during the third quarter of 2021, the top line data expected during Q1 of 2022.
Importantly, both phase one <unk> clinical programs are intended to support the advancement of Syn <unk> in multiple clinical indications.
Following the completion of both phase one studies, we anticipate conducting a phase one b to a gluten challenge study in celiac patients who are well controlled on a gluten free diet.
It is anticipated debt the phase <unk> study will be followed by a 12 week phase <unk> study in patients who are poorly controlled on a gluten free diet.
Assuming successful completion of the phase one studies in healthy volunteers. The phase <unk> study in celiac disease patients may begin as early as the second half of next year.
As expected debt. These two studies will provide information on safety and potential efficacy and therapeutic therapeutic dose the support subsequent pivotal studies.
Lastly, I'd like to restate that we've used in 'twenty as a multi indication program. The has the potential to treat both Gi and systemic diseases.
Accordingly, we are also considering potential clinical development pathways to evaluate <unk> for the treatment of non alcohol fatty liver disease, as well as indications to treat and prevent metabolic and inflammatory disorders associated with aging.
The ladder, which are supported by our exclusive license agreement with Massachusetts General Hospital.
We are excited about this first of all program and its potential to become a platform therapeutic for our company. We believe <unk> will play a major role in delivering long term value to our shareholders, while targeting large underserved markets, including celiac disease.
With that backdrop I'll review, our financial results for the quarter ended March 31 2021.
During the first quarter of 2021 were able to significantly strengthen our balance sheet via the efficient utilization of our ATM and the cash exercise of warrants associated with our 2018 public financing.
As a result of these activities our cash position as of March 31, 2021 was $76 $9 million the strongest it's ever been.
As I mentioned earlier, we now have the resources and the financial flexibility to fully fund our thin for an <unk> 20 clinical programs at least through proof of concept of clinical studies.
And continue on our operations well into 2023.
Turning to the first quarter financial results.
General and administrative expenses increased slightly to $1 $42 million for the quarter ended March 31, 2021 from $1 $39 million for the quarter ended March 31 2020.
This increase is primarily due to higher insurance cost audit fees and legal costs offset by a reduction in patent related legal fees consulting fees and travel expense.
Research and development expenses decreased to $1 1 million for the three months ended March 31, 2021 from $1 6 million for the three months ended March 31 2020.
This decrease was primarily the result of lower indirect program costs for the three months ended March 31, 2021, including salary and related expense reductions of decrease in manufacturing costs for Syn <unk> and market research and.
In addition, as the result of the global COVID-19, pandemic, Washington University of reduced their operating capacity. During 2021 to include only essential activities as part of their pandemic response, which delayed the start of our clinical trial, resulting in lower clinical trial expenses for the quarter.
The research and development costs incurred during the quarter were primarily related to our phase one clinical trial of Syn <unk> and the phase <unk> clinical trial of <unk> for.
We anticipate the research and development expense to increase as our ongoing clinical trials continue to enroll patients.
Before concluding I'd like to take a moment to address our recently filed shelf registration statement.
On Monday, we filed the form S. Three to register the sale of up to $300 million worth of securities under a mixed shelf registration.
We have filed the current form S. Three to replace the previous form S. Three which was scheduled to expire later this month.
This filing will provide the company with the necessary flexibility to ensure that we can act and execute on potential future financings.
The form S. Three was also filed with the inclusion of of prospective supplement which will allow us to continue to utilize our ATM vehicle under the newly filed shelf registration.
We made considered of prudently utilize our ATM vehicle when favorable market conditions will allow.
However, it is important it's important to reiterate that given our current cash position. We are now funded to advance our current clinical programs and remain keenly focused on minimizing dilution.
To wrap it up 2021 is shaping up to be a very exciting year for synthetic biologics and we look forward to providing further updates as developments unfold.
Now I will turn the call back the Vincent ill open the call for questions.
Yes.
Thanks, Steve Rocco, we'd like to open up the phone line for questions could you. Please describe the procedure to ask questions for our listeners.
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Today's first question comes from Jason Mccarthy with Maxim Group. Please go ahead.
Hey, guys. Thank you very much for taking my questions. This is Michael <unk> on the line on for Jason.
Yeah.
So I would like to first just kind of gauge on the ongoing <unk> study.
And stem cell transplants, how is the ongoing pandemic impacted the number of stem cell transplants in the U S.
The oncology space has broadly been impacted by the pandemic, but has the more recent reopening removal of lockdowns in vaccine rollout driven recovery in those numbers.
Hey, Mike It's Steve good to hear from you I'm going to what the.
Vince waits for take take this call we have.
Weekly discussions with the Washington University team.
So Vince.
Vince why don't you take that and give Mike the update.
Okay.
So June.
The oil when things will not vary.
Or when does it solid lines of COVID-19, they did reduce the number of transplants.
Now the systems are in price and partly in the kind of advantage of mountain and all of the new systems of the being put in parts of the Washington divesting several of the number of transplants.
Dropped off dramatically from one of it would've been pre pandemic.
I think from if I were to estimate of when we bought them in the past maybe they went down about 20% book.
For the most part of it I think that they have come back on the Hasnt been any recent discussion or any recent.
On Vos from book University of that they would be slowing down again.
And again I think it's because they have the.
Processes in place.
On the people need to get the transplants on Wednesday.
Comps not get the transplant, thank al for any white.
Painful so we've been kind of a forecast and as Steve indicated we have had.
Two of them for actually have completed their antibiotic causes on the study. We just found out today. So that it's very exciting because that's part of our first cohort in our clubs.
25% of Oh, sorry.
The.
Just all of it.
The 25% of the cohort now.
So they are continuing to recruit.
We're looking forward to at least two of months going into the study.
Alright. Thank you very much and then I'd also like to ask.
On the <unk> 'twenty, because you identified celiac disease as kind of the major priority.
I'd like to get your thoughts on how it's been 2000 fits into the broader celiac disease space, especially with.
The Liraglutide piece III readout expected from non meter next year.
Mike do you want to take that.
Sure.
Since <unk> would have a mechanism of action.
Net is orthogonal are quite different.
From the mechanism of action of other silly at drugs that are in clinical trials. So low raise the tide works directly to latch of tight junctions and improve.
Barrier integrity there are.
Also of gluten aces in clinical trials and since <unk> works differently from all of loans, we would expect in 'twenty could be used in combination just with diet or potentially in combination with those other two classes of drugs.
As I just described.
And in that sense, it would be usable in patients.
Broadly with celiac disease.
The goal is probably not to say to them.
Gluten free diets anymore, but it would be to diminish.
Problems, if they should have a mistake on the gluten free diet or.
We've even talked a little bit about gluten policies, but but the.
But the bottom line is it could be usable and of <unk>.
Wide variety of patients in combination for separately.
From the drugs that are currently in clinical trials.
Does that address your question.
Yes, perfect answer.
Thank you.
The other thing I would like to ask one more thing more on the I guess from a modeling side wanted to see if you could help give us a bit more color on what you're expecting in terms of the other.
The costs for the phase <unk> phase <unk> and the phase <unk> studies.
So what we've previously discussed Mike is that let's start with <unk>.
The first.
The <unk> study is around $1 million and we talked about that last quarter. The.
The second.
The second phase one study will be a little bit more we probably.
We will add another cohort.
And we're still talking about.
The timeframe for dosing so.
Think factoring in somewhere up to $1 million for for that trial.
On the.
Ongoing where Baxter mace trial.
We disclosed last month on our last quarter that the total cost over 18 months are up to 18 months would be.
Starting at the beginning of this year around $3 million. We've also previously talked about our fixed burn being in the 400000 of month range. So in total for this year on next year, we're talking about annual Burns of.
<unk>, the $15 million somewhere in that neighborhood.
Alright, Thank you very much.
It's really great to see these programs moving forward.
Thank you very much for taking my questions.
Thanks.
Ladies and gentlemen on as a reminder, if you'd like to ask a question. Please press Star then one.
The next question comes from Jim Molloy with Alliance Global Partners. Please go ahead.
Jim Your line is open.
Okay.
It was from the Reuters your line perhaps.
Hello can you hear me okay.
Yes, we're hearing now Jim.
My apologies if you just take the phone off mute I apologize I'm on.
Outside of the housing market for noise sitting on 70 million the extra.
The use of the ATM you Ridge.
Just don't use of outlined above $30 million might need of those couple of years.
Can you just speak to any potential other uses of that cash besides the sitting on the sitting on the bank on that.
Because there's opportunities from Youre looking at in the characterize what you might be looking at.
So again on our last quarter call. We discussed that we were looking at opportunities either.
Asset purchases or licensing opportunities.
We are in diligence on a number of ideas.
And until we have anything further.
For at this point not to start the discuss that any further.
And at the same time I don't think we are.
We're in the position to discuss it.
Actually.
What therapeutic areas or on.
What mode.
These ideas would cover so all I can say is stay tuned.
Understood and with the caveat the transactions are never done until they're done.
Would it be reasonable to expect for an outsider's perspective.
We could see transactions this year.
Like you said, Jim Youre never done till they're done we continue to do our diligence on a number of ideas and we get something over the line we will announce it.
Okay.
You bet on the comments on seven 8 million as of first quarter for the month or so here of and utilizing the ATM still of the cash balance up down or about the same.
So the cash balance is approximately $77 million of she ended the first quarter and since the beginning of the quarter, we have not utilize debt at all.
Yes.
Alright, great. Thank you very much for taking my questions.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Steve Shallcross for any closing remarks.
Thanks Rocco.
In closing I, just want to make one brief comment comment net the fact that we're we're incredibly happy with the progress that we've made.
And I can assure you we remain focused on executing on our strategy.
As I hope.
Conveyed today in my remarks, we've really embarked on a transformative and exciting direction for our company.
And more importantly, we have the the financial strength to take these programs forward, which we ultimately believe will generate long term growth and ultimately value for our shareholders.
Once again I'm extremely proud of our progress.
That we've made and I'm, even more excited about what lies ahead.
So.
Again like to thank our shareholders for their ongoing support.
And we are always looking forward to keeping you updated on our progress and we look forward to the next call half of great weekend.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.