Theriva Biologics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Theriva is a clinical-stage biotechnology company transitioning its focus toward oncology following its acquisition of Theriva Biologics S.L. (VCN). Common stock trades on NYSE American under TOVX. Amounts below are in U.S. dollars; financial statement amounts are generally in millions unless noted.
Financial results and liquidity
- Revenue: No revenue was reported in the periods presented; the filing says future revenue depends on successful late-stage trials and regulatory approvals.
- Q3 results: Net loss was $3.30 million, or $0.19 per share, versus $4.49 million, or $0.30 per share, in Q3 2022. Operating expenses were $4.22 million, compared with $4.99 million. R&D rose 56% to $4.01 million, primarily due to VCN-01 pancreatic cancer trial spending. G&A fell to $0.21 million from $2.42 million, principally reflecting a $1.6 million reduction in contingent-consideration fair value and lower costs.
- Nine-month results: Net loss was $12.86 million, or $0.81 per share, versus $13.24 million, or $0.87 per share, in 2022. Operating expenses increased to $15.21 million from $14.26 million: R&D rose to $10.12 million, while G&A declined to $5.10 million. Higher interest income partly offset operating losses.
- Cash flow: Operating activities used $12.46 million in the first nine months, versus $13.71 million in 2022. Investing activities used $0.15 million. Financing provided $2.08 million, including $2.16 million net ATM proceeds, partly offset by debt repayments.
- Balance sheet at September 30: Cash and cash equivalents were $31.16 million, down from $41.79 million at December 31, 2022; total current assets were $34.77 million and current liabilities $8.74 million. Total liabilities were $17.66 million. Spanish government loans totaled $0.22 million; operating lease liabilities totaled $2.01 million. A $1.40 million Spanish R&D tax-credit receivable was recognized, with the credit expected to reduce R&D expense over 2024–2025.
- Equity and dilution: The company sold about 1.9 million shares through its ATM during the nine months for approximately $2.2 million net. There were 17.04 million common shares outstanding as of November 8, 2023.
Material changes and business developments
- Spending shifted toward the VCN-01 oncology program: nine-month direct VCN-01 costs rose to $5.91 million from $2.51 million. Costs for SYN-004 and SYN-020 were lower year over year.
- U.S. patient dosing began in August for the Phase 2 VIRAGE VCN-01 trial in pancreatic cancer. The company said enrollment was on track for the first half of 2024.
- Initiating U.S. dosing triggered a $3.25 million milestone payment to Grifols. It was accrued at quarter-end and paid in October 2023. The remaining contingent-consideration liability was $5.94 million; the acquisition agreement provides for up to $70.2 million in additional milestone and other contingent payments.
- Theriva is exploring out-licensing or partnering options for its legacy gastrointestinal assets SYN-004 and SYN-020 as it prioritizes oncology.
- In October 2023, the company presented additional investigator-sponsored VCN-01/durvalumab study data in head and neck cancer. Reported survival observations were described as encouraging, but the study reported a 0% objective response rate. These are early clinical findings, not evidence of established efficacy.
Outlook, risks and unusual items
- Management estimated that the $26.1 million cash balance in early November 2023 would fund planned operations through Q4 2024 and into Q1 2025. The estimate depends on program costs and future development choices; the filing states later-stage trials will require substantial financing or a significant partnership.
- Additional capital is not assured. The ATM is subject to restrictions, and the Form S-3 registering ATM shares expires in May 2024; the company anticipated filing an amendment but gave no assurance it would do so. Further equity financing could dilute shareholders.
- Management expected R&D expense to increase with VIRAGE enrollment, the retinoblastoma trial, VCN-01 manufacturing, and VCN-11 and other discovery work. No revenue or earnings guidance was provided.
- The company reported material weaknesses in controls over non-routine transactions and tax accounting, IT access and program-change controls, and documentation and precision of management review. Management concluded disclosure controls were ineffective as of September 30, 2023 and described remediation efforts.
- Other risks include clinical and regulatory uncertainty, reliance on contract manufacturers, research organizations and clinical sites, potential supply-chain and geopolitical disruption, and impairment risk for acquired goodwill and in-process R&D. The company said impairment testing found neither asset impaired at September 30, 2023, despite a sustained decline in its share price.
Most important facts for investors to verify
- Cash runway assumptions and the cash balance after the October $3.25 million milestone payment; the runway estimate depends on spending and financing assumptions.
- VIRAGE enrollment progress, timing and cost, and whether management’s first-half 2024 enrollment target remains achievable.
- Financing options and ATM availability before the Form S-3 expires in May 2024, including potential dilution.
- Clinical evidence behind VCN-01 efficacy claims, particularly the small investigator-sponsored studies and the reported 0% objective response rate in the head and neck study.
- Resolution of filing figures that differ between sections: nine-month loss per share is $0.81 in the financial statements but $0.82 in MD&A; the risk-factor discussion also cites operating cash use of about $12.3 million versus $12.455 million in the cash-flow statement.
- Progress in remediating the material weaknesses and whether controls are tested and found effective.