Synthetic Biologics, Inc.
Q1 2021 Earnings Call Transcript

Published: 5 May 2021

[Operator:]

Good afternoon, and welcome to Synthetic Biologics 2021 First Quarter Investor Conference Call. Please note, today’s event is being recorded. At this time, I would like to turn the call over to Vincent Perrone, Director of Corporate Communication at Synthetic Biologics. Vincent, please go ahead.

[Vincent Perrone:]

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 Kaleko, Senior Vice President of Research and Development; and Dr. Vince Wacher, 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. The release can be found in the Investor Relations section of our website.

[Steven Shallcross:]

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 forward to sharing 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 in 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’ve also converted all the outstanding shares of Series A and Series B convertible preferred stock and a common stock, which has not only helped streamline our capital structure and 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 catalyst that we believe have the potential to deliver significant shareholder value. Specifically, we look forward to reporting top line data from the Phase 1a single ascending dose study of SYN-020 in the third quarter of 2021. Second, we expect to commence a second Phase 1a multiple ascending dose study of SYN-020 during the third quarter of 2021 with top line data expected during the second quarter of 2022. And finally, we look forward to reporting a top line data readout from the first antibiotic cohort of the SYN-004 Phase 1a/2b 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’re entering a very exciting period for the company.

[Vincent Perrone:]

Thanks, Steve. Rocco, we’d like to open up the phone line for questions. Can you please describe the procedure to ask questions for our listeners?

[Operator:]

Absolutely. Today’s first question comes from Jason McCarthy with Maxim Group. Please go ahead.

[Michael Okunewitch:]

Hey guys, thank you very much for taking my questions. This is Michael Okunewitch on the line for Jason. So I’d like to first just kind of gauge on the ongoing 1b/2a study in stem cell transplants. How has the ongoing pandemic impacted the number of stem cell transplants in the U.S.? I know that the oncology space has broadly been impacted by the pandemic. But has the more recent reopening, removal of lockdowns and vaccine rollout driven a recovery in those numbers.

[Steven Shallcross:]

Mike, it’s Steve. Good to hear from you. I’m going to let Vince Wacher take this call. We have weekly discussions with the Washington University team. So Vince, why don’t you take that and give Mike the update.

[Vince Wacher:]

So during the height of it all, when things were not very – when things all went sideways with COVID, they did reduce the number of transplants, but now the systems are in place internally and the COVID management and all of the new systems that have been put in place in the Washington University. So that the number of transplants really hasn’t dropped off dramatically from what it would have been pre-pandemic. I think if I were to estimate when we’ve asked them in the past, maybe they were down about 20%, but for the most part, I think that they’ve come back and there hasn’t been any recent discussion or any recent advice from Washington University that they would be slowing down again. And again, I think it’s because they have these processes in place and the people need to get the transplant, they can’t get the transplant, they can’t really wait. These are very sick people. So we’ve been somewhat fortunate. And as Steve indicated, we’ve had two people actually have completed their antibiotic courses on the study. We just found out today. So that is very exciting because that’s part of our first cohort and we’ve got 25% of the – the 25% of the cohort now. So they are continuing to recruit and we’re looking forward to – at least to a month going into the study.

[Michael Okunewitch:]

All right. Thank you very much. And then I’d also like to ask on SYN-020, because you identified celiac disease as kind of the major priority. So I’d like to get your thoughts on how SYN-020 fits into the broader celiac disease space, especially with larazotide P3 readout expected from 9 Meters next year.

[Steven Shallcross:]

Mike, do you want to take that?

[Michael Kaleko:]

Sure. SYN-020 would have a mechanism of action that is orthogonal or quite different from the mechanism of action of other celiac drugs that are in clinical trials. So larazotide works directly to latch up tight junctions and improve gut barrier integrity. There are also GlutenEase in clinical trial. And SYN-020 works differently from all of those. We would expect that SYN-020 could be used in combination just with diet or potentially in combination with those other two classes of drugs that 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, you don’t need gluten-free diets anymore. But it would be to diminish problems if they should have a mistake on their gluten-free diet or we’ve even talked a little bit about gluten holidays. But the bottom line is it could be usable in a wide variety of patients in combination or separate, from the drugs that are currently in clinical trials. Does that address your question?

[Michael Okunewitch:]

Yes. Perfect answer. The other thing I’d like to ask, one more thing more on the – I guess in the modeling side, like to see, if you could help give us a bit more color on what you’re expecting in terms of the costs for the Phase 1a and the Phase 1b/2a study?

[Steven Shallcross:]

So what we’ve previously discussed, Mike, is that let’s start with SYN-020. The first 1a study is around $1 million. And we talked about that last quarter. The second Phase 1a study will be a little bit more, we probably – we’ll add another cohort. And we’re still talking about the timeframe for dosing. So I think factoring in somewhere, up to $1.4 million for that trial. On the ongoing ribaxamase trial we disclosed last month or last quarter that the total cost over 18 months or 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 $400,000 a month range. So in total for this year and next year, we’re talking about annual burns of $13 million to $15 million somewhere in that neighborhood.

[Michael Okunewitch:]

All right. Thank you very much. It’s really great to see these programs moving forward. Thank you very much for taking my questions.

[Operator:]

Today’s next question comes from Jim Molloy with Alliance Global Partners. Please go ahead. Jim, your line is open. Mr. Malloy, is your line unmuted perhaps?

[Jim Molloy:]

Hello? Can you hear me okay?

[Steven Shallcross:]

Yes, we hear you now, Jim.

[Jim Molloy:]

Yes. My apology, I put my phone off mute. I apologize. I’m outside of the house to lockup the noise. Speaking on $70 million, an excellent use of the ATM and you’re raised – you just outlined about $30 million. You might need the next couple of years. Can you speak to any potential other uses of that cash besides just sitting in the bank, acquisition opportunities something you’re looking at and can you characterize what you might be looking at?

[Steven Shallcross:]

So again, in 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 at this point, not to discuss that any further. And at the same time, I don’t think, we’re in the position to discuss exactly what they’re pubic areas? What mode these ideas would cover. So all I can say is stay tuned.

[Jim Molloy:]

Understood. With the caveat that transactions never done until they’re done, would it be reasonable to expect for an outsiders’ perspective to think we could see transactions this year?

[Steven Shallcross:]

Like you said, Jim, they are never done, so they’re done. We continue to do our diligence on a number of ideas and we get something over the line we’ll announce it.

[Jim Molloy:]

Okay. And would you be able to comment on a $7 million, $8 million as a first quarter in a month or so here, have you’ve been utilizing the ATM still the cash balance up, down, or about the same?

[Steven Shallcross:]

So the cash balance is approximately $77 million at the end of the first quarter. And since the beginning of the quarter, we have not utilized that at all.

[Jim Molloy:]

All right, great. Thank you very much for taking the questions.

[Operator:]

And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Steve Shallcross for his closing remarks.

[Steven Shallcross:]

Thanks, Rocco. In closing, I just want to make one brief comment. And that’s the fact that 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, I’ve conveyed today in my remarks, we’ve really embarked on a transformative and exciting direction for our company. And more importantly, we have 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, I 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. Have a great weekend.

[Operator:]

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.