0000894158--12-312023Q3falseP3MP90DP5Y8620821552020952750002750000000894158tovx:SeriesDConvertiblePreferredStockMember2022-07-290000894158tovx:SeriesCConvertiblePreferredStockMember2022-07-290000894158tovx:SeriesDConvertiblePreferredStockMember2023-09-300000894158tovx:SeriesCConvertiblePreferredStockMember2023-09-300000894158tovx:SeriesDConvertiblePreferredStockMember2022-12-310000894158tovx:SeriesCConvertiblePreferredStockMember2022-12-310000894158us-gaap:OverAllotmentOptionMember2020-11-162020-11-160000894158us-gaap:CommonClassAMember2018-10-152018-10-150000894158us-gaap:CommonStockMember2022-01-012022-03-310000894158us-gaap:TreasuryStockCommonMember2023-09-300000894158us-gaap:RetainedEarningsMember2023-09-300000894158us-gaap:AdditionalPaidInCapitalMember2023-09-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000894158us-gaap:TreasuryStockCommonMember2023-06-300000894158us-gaap:RetainedEarningsMember2023-06-300000894158us-gaap:AdditionalPaidInCapitalMember2023-06-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-3000008941582023-06-300000894158us-gaap:TreasuryStockCommonMember2023-03-310000894158us-gaap:RetainedEarningsMember2023-03-310000894158us-gaap:AdditionalPaidInCapitalMember2023-03-310000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-3100008941582023-03-310000894158us-gaap:TreasuryStockCommonMember2022-12-310000894158us-gaap:RetainedEarningsMember2022-12-310000894158us-gaap:AdditionalPaidInCapitalMember2022-12-310000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000894158us-gaap:RetainedEarningsMember2022-09-300000894158us-gaap:AdditionalPaidInCapitalMember2022-09-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000894158us-gaap:RetainedEarningsMember2022-06-300000894158us-gaap:AdditionalPaidInCapitalMember2022-06-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000008941582022-06-300000894158us-gaap:RetainedEarningsMember2022-03-310000894158us-gaap:AdditionalPaidInCapitalMember2022-03-310000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100008941582022-03-310000894158us-gaap:RetainedEarningsMember2021-12-310000894158us-gaap:AdditionalPaidInCapitalMember2021-12-310000894158us-gaap:CommonStockMember2023-09-300000894158us-gaap:CommonStockMember2023-06-300000894158us-gaap:CommonStockMember2023-03-310000894158us-gaap:CommonStockMember2022-12-310000894158us-gaap:CommonStockMember2022-09-300000894158us-gaap:CommonStockMember2022-06-300000894158us-gaap:CommonStockMember2022-03-310000894158us-gaap:CommonStockMember2021-12-310000894158us-gaap:EmployeeStockOptionMember2021-01-012021-12-310000894158us-gaap:EmployeeStockOptionMember2022-12-310000894158us-gaap:EmployeeStockOptionMember2021-12-310000894158tovx:StockPlan2020Member2020-09-170000894158tovx:StockPlan2010Member2010-11-020000894158tovx:StockPlan2007Member2007-03-200000894158us-gaap:EmployeeStockOptionMember2023-01-012023-09-300000894158us-gaap:EmployeeStockOptionMember2023-09-300000894158tovx:StockPlan2020Member2023-01-012023-09-300000894158tovx:StockPlan2010Member2019-09-052019-09-0500008941582021-01-012021-12-310000894158tovx:MaryannShallcrossMemberus-gaap:RelatedPartyMember2023-07-012023-09-300000894158tovx:MaryannShallcrossMemberus-gaap:RelatedPartyMember2023-01-012023-09-300000894158tovx:MaryannShallcrossMembersrt:MaximumMemberus-gaap:RelatedPartyMember2022-01-012022-12-310000894158us-gaap:AccountingStandardsUpdate201602Member2023-01-012023-09-300000894158us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2023-09-300000894158us-gaap:LeaseholdImprovementsMember2023-09-300000894158us-gaap:ComputerSoftwareIntangibleAssetMember2023-09-300000894158tovx:ComputersAndOfficeEquipmentMember2023-09-300000894158us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2022-12-310000894158us-gaap:LeaseholdImprovementsMember2022-12-310000894158us-gaap:ComputerSoftwareIntangibleAssetMember2022-12-310000894158tovx:ComputersAndOfficeEquipmentMember2022-12-310000894158us-gaap:RetainedEarningsMember2023-07-012023-09-300000894158us-gaap:RetainedEarningsMember2023-04-012023-06-300000894158us-gaap:RetainedEarningsMember2023-01-012023-03-310000894158us-gaap:RetainedEarningsMember2022-07-012022-09-300000894158us-gaap:RetainedEarningsMember2022-04-012022-06-300000894158us-gaap:RetainedEarningsMember2022-01-012022-03-3100008941582018-10-152018-10-1500008941582022-07-292022-07-290000894158tovx:SeriesDConvertiblePreferredStockMember2022-01-012022-09-300000894158tovx:SeriesCConvertiblePreferredStockMember2022-01-012022-09-300000894158tovx:FbrCapitalMarketsCoMember2023-07-012023-09-300000894158tovx:FbrCapitalMarketsCoMember2023-01-012023-09-3000008941582022-08-032022-08-030000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000894158us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000894158us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2023-09-300000894158tovx:Retos2015Member2023-09-300000894158us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2022-12-310000894158tovx:Retos2015Member2022-12-310000894158us-gaap:InProcessResearchAndDevelopmentMember2023-09-300000894158us-gaap:InProcessResearchAndDevelopmentMember2022-12-310000894158us-gaap:InProcessResearchAndDevelopmentMember2023-01-012023-09-300000894158us-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMember2023-09-300000894158us-gaap:FairValueInputsLevel2Memberus-gaap:LoansPayableMember2023-09-300000894158us-gaap:LoansPayableMember2023-09-300000894158us-gaap:FairValueInputsLevel3Member2023-09-300000894158us-gaap:FairValueInputsLevel2Member2023-09-300000894158us-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMember2022-12-310000894158us-gaap:FairValueInputsLevel2Memberus-gaap:LoansPayableMember2022-12-310000894158us-gaap:LoansPayableMember2022-12-310000894158us-gaap:FairValueInputsLevel3Member2022-12-310000894158us-gaap:FairValueInputsLevel2Member2022-12-310000894158us-gaap:CommitmentsMember2023-06-300000894158us-gaap:CommitmentsMember2023-03-310000894158us-gaap:CommitmentsMember2022-12-310000894158us-gaap:CommitmentsMember2022-06-300000894158us-gaap:CommitmentsMember2022-03-100000894158us-gaap:CommitmentsMember2023-04-012023-06-300000894158us-gaap:CommitmentsMember2023-01-012023-03-310000894158us-gaap:CommitmentsMember2022-07-012022-09-300000894158us-gaap:CommitmentsMember2022-03-112022-06-300000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMemberus-gaap:MeasurementInputDiscountRateMember2023-09-300000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:ProbabilityOfOccurrenceCumulativeMember2023-09-300000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:MeasurementInputProbabilityOfOccurrenceMember2023-09-300000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMemberus-gaap:MeasurementInputDiscountRateMember2023-09-300000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:ProbabilityOfOccurrenceCumulativeMember2023-09-300000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:MeasurementInputProbabilityOfOccurrenceMember2023-09-300000894158us-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:WeightedAverageDiscountRateMember2023-09-300000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMemberus-gaap:MeasurementInputDiscountRateMember2022-12-310000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:ProbabilityOfOccurrenceCumulativeMember2022-12-310000894158srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:MeasurementInputProbabilityOfOccurrenceMember2022-12-310000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMemberus-gaap:MeasurementInputDiscountRateMember2022-12-310000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:ProbabilityOfOccurrenceCumulativeMember2022-12-310000894158srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:MeasurementInputProbabilityOfOccurrenceMember2022-12-310000894158us-gaap:FairValueInputsLevel3Memberus-gaap:CommitmentsMembertovx:WeightedAverageDiscountRateMember2022-12-310000894158srt:MinimumMember2023-09-300000894158srt:MaximumMember2023-09-300000894158us-gaap:SeriesBPreferredStockMember2018-10-152018-10-150000894158tovx:Amendment2022Member2023-09-300000894158tovx:Amendment2022Member2022-12-3100008941582022-08-030000894158us-gaap:CommonClassAMemberus-gaap:WarrantMember2023-09-300000894158tovx:OctoberTwoThousandEighteenWarrantsMember2022-08-030000894158us-gaap:WarrantMember2020-11-1600008941582020-11-160000894158us-gaap:CommonClassAMemberus-gaap:WarrantMember2018-10-150000894158us-gaap:WarrantMember2018-10-1500008941582021-12-3100008941582022-09-300000894158us-gaap:CommitmentsMember2023-09-300000894158us-gaap:CommitmentsMember2022-09-300000894158tovx:VCNBiosciencesS.LMemberus-gaap:GeneralAndAdministrativeExpenseMember2022-03-100000894158tovx:VCNBiosciencesS.LMember2023-07-012023-09-300000894158tovx:VCNBiosciencesS.LMember2022-07-012022-09-300000894158tovx:VCNBiosciencesS.LMember2022-01-012022-09-300000894158tovx:NewTechnologiesMembertovx:VCNBiosciencesS.LMember2022-03-100000894158tovx:VCNBiosciencesS.LMember2023-09-300000894158tovx:VCNBiosciencesS.LMemberus-gaap:GeneralAndAdministrativeExpenseMember2022-09-300000894158us-gaap:StockOptionMember2023-07-012023-09-300000894158us-gaap:WarrantMember2023-01-012023-09-300000894158us-gaap:StockOptionMember2022-07-012022-09-300000894158us-gaap:WarrantMember2022-01-012022-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:EmployeeStockMember2023-07-012023-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMembertovx:ConsultantMember2023-07-012023-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:EmployeeStockMember2023-07-012023-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMembertovx:ConsultantMember2023-07-012023-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:EmployeeStockMember2023-01-012023-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMembertovx:ConsultantMember2023-01-012023-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:EmployeeStockMember2023-01-012023-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMembertovx:ConsultantMember2023-01-012023-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:EmployeeStockMember2022-07-012022-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMembertovx:ConsultantMember2022-07-012022-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:EmployeeStockMember2022-07-012022-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMembertovx:ConsultantMember2022-07-012022-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMemberus-gaap:EmployeeStockMember2022-01-012022-09-300000894158us-gaap:ResearchAndDevelopmentExpenseMembertovx:ConsultantMember2022-01-012022-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMemberus-gaap:EmployeeStockMember2022-01-012022-09-300000894158us-gaap:GeneralAndAdministrativeExpenseMembertovx:ConsultantMember2022-01-012022-09-300000894158us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100008941582023-01-012023-03-310000894158us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000894158us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000008941582022-04-012022-06-300000894158us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100008941582022-01-012022-03-3100008941582022-07-282022-07-2800008941582021-01-012021-03-310000894158us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-3000008941582023-07-012023-09-300000894158us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-3000008941582023-04-012023-06-300000894158us-gaap:CommonStockMember2023-07-012023-09-300000894158us-gaap:CommonStockMember2023-04-012023-06-300000894158tovx:StockPlan2020Member2023-09-300000894158tovx:StockPlan2010Member2023-09-300000894158tovx:StockPlan2007Member2023-09-300000894158tovx:MaryannShallcrossMemberus-gaap:RelatedPartyMember2022-12-152022-12-150000894158us-gaap:EmployeeStockOptionMember2022-01-012022-12-310000894158srt:MinimumMembertovx:StockPlan2010Member2010-11-022010-11-020000894158srt:MaximumMembertovx:StockPlan2010Member2010-11-022010-11-020000894158us-gaap:ResearchAndDevelopmentArrangementMember2023-01-012023-09-300000894158us-gaap:CommitmentsMember2023-07-012023-09-300000894158us-gaap:SeriesBPreferredStockMember2018-10-1500008941582020-11-162020-11-160000894158tovx:VCNBiosciencesS.LMember2022-01-012022-12-310000894158us-gaap:OverAllotmentOptionMember2020-11-1600008941582022-07-012022-09-3000008941582022-01-012022-12-3100008941582020-01-012020-12-310000894158tovx:VCNBiosciencesS.LMember2022-12-3100008941582022-07-290000894158tovx:GrifolsInnovationMembertovx:VCNBiosciencesS.LMember2022-03-102022-03-100000894158tovx:VCNBiosciencesS.LMember2022-03-100000894158tovx:VCNBiosciencesS.LMember2023-01-012023-09-300000894158tovx:VCNBiosciencesS.LMember2022-03-102022-03-100000894158tovx:FbrCapitalMarketsCoMember2016-08-050000894158tovx:VCNBiosciencesS.LMemberus-gaap:SubsequentEventMember2023-10-012023-10-310000894158tovx:GrifolsInnovationMembertovx:VCNBiosciencesS.LMember2022-10-012022-12-310000894158tovx:VCNBiosciencesS.LMember2022-10-012022-12-310000894158tovx:GrifolsInnovationMembertovx:VCNBiosciencesS.LMember2023-10-012023-12-3100008941582022-01-012022-09-3000008941582023-09-3000008941582022-12-3100008941582023-11-0800008941582023-01-012023-09-30xbrli:sharesiso4217:USDxbrli:puretovx:Assetiso4217:USDxbrli:sharestovx:Votetovx:segment

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

For the transition period from   ____________ to  ____________

Commission File Number: 001-12584

THERIVA BIOLOGICS, INC.

(Exact name of registrant as specified in its charter)

Nevada

13-3808303

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9605 Medical Center Drive, Suite 270

Rockville, MD

20850

(Address of principal executive offices)

(Zip Code)

(301) 417-4364

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

TOVX

NYSE American

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes     No

As of November 8, 2023, the registrant had 17,042,765 shares of common stock, $0.001 par value per share, outstanding.

THERIVA BIOLOGICS, INC.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, statements contained in this Quarterly Report on Form 10-Q, including but not limited to, statements regarding the timing of our clinical trials, the development and commercialization of our pipeline products, the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities and the timing of any such financing, our future results of operations and financial position, business strategy and plans prospects, or costs and objectives of management for future research, development or operations, are forward-looking statements. These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “seeks,” “goals,” “estimates,” “predicts,” “potential” and “continue” or similar words. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and those identified under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 30, 2023 (the “2022 Form 10-K”). Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Theriva Biologics,” the “Company,” “we,” “us” and “our” refer to Theriva Biologics, Inc. and our subsidiaries Theriva Biologics, S.L. (“VCN”, formerly known as VCN Biosciences, S.L.) Pipex Therapeutics, Inc. (“Pipex Therapeutics”), Effective Pharmaceuticals, Inc. (“EPI”), Solovax, Inc. (“Solovax”), CD4 Biosciences, Inc. (“CD4”), Epitope Pharmaceuticals, Inc. (“Epitope”), Healthmine, Inc. (“Healthmine”), Putney Drug Corp. (“Putney”) and Synthetic Biomics, Inc. (“SYN Biomics”).

NOTE REGARDING TRADEMARKS

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

THERIVA BIOLOGICS, INC.

FORM 10-Q

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

3

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months ended September, 2023 and 2022

4

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months ended September, 2023 and 2022

5

Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2023 and 2022

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

41

PART II. OTHER INFORMATION

43

Item 1.

Legal Proceedings

43

Item 1A.

Risk Factors

43

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

45

Item 3.

Defaults Upon Senior Securities

45

Item 4.

Mine Safety Disclosures

45

Item 5.

Other Information

45

Item 6.

Exhibits

45

 

SIGNATURES

46

2

PART I–FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Theriva Biologics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands except share and par value amounts)

    

September 30, 2023

    

December 31, 2022

Assets

 

  

 

  

Current Assets

 

  

 

  

Cash and cash equivalents

$

31,160

$

41,786

Tax credit receivable

1,399

Prepaid expenses and other current assets

 

2,208

 

3,734

Total Current Assets

 

34,767

 

45,520

Non-Current Assets

Property and equipment, net

 

389

 

345

Restricted cash

97

99

Right of use assets

1,831

1,199

In-process research and development

 

18,925

 

19,150

Goodwill

5,460

5,525

Deposits and other assets

 

76

 

23

Total Assets

$

61,545

$

71,861

Liabilities and Stockholders‘ Equity

 

 

  

Current Liabilities:

 

 

  

Accounts payable

$

833

$

915

Accrued expenses

 

5,590

 

1,496

Accrued employee benefits

 

1,269

 

1,403

Contingent consideration, current portion

2,973

Deferred research and development tax credit-current portion

525

Loans payable-current portion

65

57

Operating lease liability-current portion

 

461

 

216

Total Current Liabilities

 

8,743

 

7,060

Non-current Liabilities

Non-current contingent consideration

5,935

7,211

Non-current loans payable

150

221

Deferred tax liabilities, net

413

1,618

Non-current deferred research and development tax credit

874

Non-current operating lease liability

1,546

1,187

Total Liabilities

 

17,661

 

17,297

Commitments and Contingencies (Note 14)

 

 

  

Temporary Equity

Series C convertible preferred stock, $0.001 par value; 10,000,000 authorized; 275,000 issued and outstanding

2,006

2,006

Series D convertible preferred stock, $0.001 par value; 10,000,000 authorized; 100,000 issued and outstanding

 

728

 

728

Stockholders’ Equity:

 

 

  

Common stock, $0.001 par value; 350,000,000 shares authorized, 17,762,998 issued and 17,042,765 outstanding at September 30, 2023 and 15,844,294 issued and 15,124,061 outstanding at December 31, 2022

 

18

 

16

Additional paid-in capital

 

346,312

 

343,750

Treasury stock at cost, 720,233 shares at September 30, 2023 and at December 31, 2022

(288)

(288)

Accumulated other comprehensive loss

(1,058)

(679)

Accumulated deficit

 

(303,834)

 

(290,969)

Total Stockholders’ Equity

 

41,150

 

51,830

Total Liabilities, Temporary Equity, and Stockholders’ Equity

$

61,545

$

71,861

See accompanying notes to unaudited condensed consolidated financial statements.

3

Theriva Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

    

For the three months ended September 30,

    

For the nine months ended September 30,

    

2023

    

2022

    

2023

    

2022

Operating Costs and Expenses:

 

  

 

  

 

  

 

  

General and administrative

212

2,416

5,099

5,612

Research and development

 

4,006

 

2,570

 

10,115

 

8,652

Total Operating Costs and Expenses

 

4,218

 

4,986

 

15,214

 

14,264

Loss from Operations

 

(4,218)

 

(4,986)

 

(15,214)

 

(14,264)

Other Expense:

Exchange gain (loss)

 

6

 

(9)

 

7

 

(40)

Interest income

 

382

 

170

 

1,127

 

197

Total Other Income (Expense)

 

388

 

161

 

1,134

 

157

Net Loss Before Income Taxes

(3,830)

(4,825)

(14,080)

(14,107)

Income tax benefit

527

335

1,216

867

Net Loss Attributable to Theriva Biologics, Inc. and Subsidiaries

$

(3,303)

$

(4,490)

$

(12,864)

$

(13,240)

Effect of Warrant exercise price adjustment

(340)

(340)

Net Loss Attributable to Common Stockholders

$

(3,303)

$

(4,830)

$

(12,864)

$

(13,580)

Net Loss Per Share - Basic and Diluted

$

(0.19)

$

(0.30)

$

(0.81)

$

(0.87)

Weighted average number of shares outstanding during the period - Basic and Diluted

 

17,042,701

 

15,844,061

 

15,784,685

 

15,176,927

Net Loss

(3,303)

(4,490)

(12,864)

(13,240)

Loss on foreign currency translation

(702)

(1,527)

(379)

(2,844)

Total comprehensive loss

$

(4,005)

$

(6,017)

$

(13,243)

$

(16,084)

See accompanying notes to unaudited condensed consolidated financial statements.

4

Theriva Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and par value amounts)

Common Stock $0.001 Par Value

Accumulated

Additional

Other

Total

Paid-in

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

income

    

Treasury Stock

    

Equity

Balance at December 31, 2022

15,844,061

$

16

$

343,750

$

(290,969)

$

(679)

$

(288)

$

51,830

Stock-based compensation

126

126

Translation gains

374

374

Net loss

(4,478)

(4,478)

Balance at March 31, 2023

15,844,061

$

16

$

343,876

$

(295,447)

$

(305)

$

(288)

$

47,852

Stock-based compensation

146

146

Stock issued under “at-the-market” offering

1,917,716

2

2,154

2,156

Translation loss

(51)

(51)

Net loss

(5,084)

(5,084)

Balance at June 30, 2023

17,761,777

$

18

$

346,176

$

(300,531)

$

(356)

$

(288)

$

45,019

Stock-based compensation

135

135

Stock issued under “at-the-market” offering

988

1

1

Translation loss

(702)

(702)

Net loss

(3,303)

(3,303)

Balance at September 30, 2023

17,762,765

$

18

$

346,312

$

(303,834)

$

(1,058)

$

(288)

$

41,150

Common Stock $0.001 Par Value

Accumulated

    

Other

Total

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

APIC

    

Deficit

    

income

    

Equity

Balance at December 31, 2021

13,204,531

$

13

$

336,679

$

(271,284)

$

$

65,408

Stock-based compensation

112

112

Issuance of Common Stock for VCN Acquisition

2,639,530

3

6,596

6,599

Translation gains (losses)

181

181

Net loss

(4,273)

(4,273)

Balance at March 31, 2022

 

15,844,061

 

$

16

 

$

343,387

 

$

(275,557)

 

$

181

$

68,027

Stock-based compensation

113

113

Translation gains (losses)

(1,442)

(1,442)

Net loss

(4,477)

(4,477)

Balance at June 30, 2022

15,844,061

$

16

$

343,500

$

(280,034)

$

(1,261)

$

62,221

Stock-based compensation

121

121

Translation gains (losses)

(1,464)

(1,464)

Net loss

(4,490)

(4,490)

Balance at September 30, 2022

 

15,844,061

 

$

16

 

$

343,621

 

$

(284,524)

 

$

(2,725)

$

56,388

See accompanying notes to unaudited condensed consolidated financial statements.

5

Theriva Biologics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the Nine Months Ended September 30,

    

2023

    

2022

Cash Flows From Operating Activities:

 

  

 

  

Net loss

$

(12,864)

$

(13,240)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Stock-based compensation

 

407

 

346

Income tax benefit

(1,216)

 

(867)

Change in fair value of contingent consideration

 

(999)

 

(244)

Non-cash lease expense

283

137

Depreciation

 

96

 

60

Changes in operating assets and liabilities:

 

 

Prepaid expenses and other current assets

 

1,524

 

780

Deposits and other assets

 

(54)

 

Accounts payable

 

(74)

 

(504)

Accrued expenses

 

883

 

(326)

Accrued employee benefits

 

(129)

 

271

Operating lease liability

 

(312)

 

(127)

Net Cash Used In Operating Activities

 

(12,455)

 

(13,714)

Cash Flows from Investing Activities

 

 

Purchase of property and equipment

(146)

(25)

Cash paid for business combination, net of cash acquired

(3,863)

Pre-acquisition loan to VCN

(417)

Net Cash Used in Investing Activities

(146)

(4,305)

Cash Flows from Financing Activities

 

 

Payment of loans payable

(75)

(1,376)

Proceeds from issuance under at-the-market offering, net of issuance costs

2,157

Proceeds from sale of Series C Preferred Stock, net of issuance cost

2,006

Proceeds from sale of Series D Preferred Stock, net of issuance cost

728

Net Cash Provided by Financing Activities

2,082

1,358

Effects of exchange rate changes on cash and cash equivalents

(109)

(84)

Net decrease in cash and cash equivalents and restricted cash

(10,628)

(16,745)

Cash and cash equivalents and restricted at the beginning of this period

 

41,885

 

67,325

Cash and cash equivalents and restricted cash at the end of this period

$

31,257

$

50,580

Reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet

Cash and cash equivalents

$

31,160

$

50,490

Restricted cash included in other long-term assets

97

90

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

$

31,257

$

50,580

Supplemental non-cash investing and financing activities:

 

 

Right of use assets obtained in exchange for lease liabilities

$

937

$

Fair value of contingent consideration issued in a business combination

$

$

12,158

Fair value of equity issued as consideration in a business combination

$

$

6,599

Effective settlement of pre-closing VCN financing

$

$

417

Goodwill measurement period adjustment

$

$

(884)

In-process R&D measurement period adjustment

$

$

810

Deferred tax liability measurement period adjustment

$

$

202

Effect of Warrant exercise price adjustment

$

$

340

See accompanying notes to unaudited condensed consolidated financial statements.

6

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Operations and Basis of Presentation

Description of Business

Theriva Biologics, Inc. (the “Company” or “Theriva Biologics”) is a diversified clinical-stage company developing therapeutics in areas of high unmet need. As a result of the acquisition of Theriva Biologics S.L. (“VCN”, formerly known as VCN Biosciences, S.L.) (the “Acquisition”), described in more detail below, the Company transitioned its strategic focus to oncology 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. Prior to the Acquisition, the Company’s focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases in areas which included its clinical development candidates: (1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent 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 hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases. On October 12, 2022, the Company changed its name to Theriva Biologics, Inc. In connection with the name change, its common stock began trading on the NYSE American LLC under the new ticker symbol “TOVX” effective as of the opening of trading hours on October 13, 2022. Effective November 15, 2022, the Company’s acquired subsidiary VCN Biosciences, S.L. rebranded to Theriva Biologics, S.L. without other changes to its corporate structure.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information and notes required by Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”) for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, comprised of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position, and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2022 Form 10-K. The interim results for the nine months ended September 30, 2023 are not necessarily indicative of results for the full year.

The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods. As of September 30, 2023 the Company has one operating segment (which includes the legacy Company business and the VCN business) and therefore one reporting segment.

Liquidity

As of September 30, 2023, the Company has a significant accumulated deficit, the Company has experienced significant losses and incurred negative cash flows since inception. The Company expects to continue incurring losses for 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.

7

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

1. Organization, Nature of Operations and Basis of Presentation – (continued)

The Company’s cash and cash equivalents totaled $31.2 million as of September 30, 2023, a decrease of $10.6 million from December 31, 2022. During the three and nine months ended September 30, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $3.3 million and $12.9 million, respectively. With the Company’s cash position of $26.1 million in early November 2023, the Company believes it will be able to fund its operations through the fourth quarter of 2024 and into the first quarter of 2025. Management believes its plan, which includes the advancement of current trials for VCN-01 and the on-going testing of SYN-004 (ribaxamase) will allow it to meet its financial obligations, further advance key products, and maintain its planned operations for at least one year from the issuance date of these consolidated financial statements. However, the actual amount of additional capital needed by the Company will also depend upon the costs to advance its VCN-01 clinical programs and whether it continues to develop SYN-004 internally, or out-licenses or partners such development. If necessary, the Company may attempt to utilize the at-the-market offering facility (“ATM”) or seek to raise additional capital in other financing transactions, neither of which is guaranteed. Form S-3 that currently registers the sale of the shares under the ATM Sales Agreement expires in May 2024. The ATM Sales Agreement can be amended so that shares issued would be registered under a new universal shelf registration statement on Form S-3. The Company anticipates filing the amendment prior to May 2024, but cannot guarantee filing such amendment. Use of the ATM is limited by certain restrictions and management’s plan does not rely on additional capital from either of these sources. If the Company is not able to obtain additional capital (which is not assured at this time), its long-term business plan may not be accomplished, and it may be forced to cease certain development activities. More specifically, the completion of any later stage clinical trial will require significant financing or a significant partnership.

2. Summary of Significant Accounting Policies

There have been no new or material changes to the significant accounting policies discussed in the Company’s audited financial statements and the notes thereto included in the 2022 Form 10-K, except as noted below.

Business Combination

The Company accounts for acquisitions using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values. The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

As a result of the acquisition of VCN (see Note 4), the Company recorded two intangible assets: in-process research and development (“IPR&D”) and goodwill. The IPR&D and goodwill are deemed to have indefinite lives and therefore not amortized.

IPR&D

IPR&D assets represent the fair value assigned to technologies that the Company acquired, which at the time of acquisition have not reached technological feasibility and have no alternative future use. IPR&D assets are considered to have indefinite-lives until the completion or abandonment of the associated research and development projects. If and when development is complete, which generally occurs upon regulatory approval and the ability to commercialize products associated with the IPR&D assets, these assets are then deemed to have definite lives and are amortized based on their estimated useful lives at that point in time. If development is terminated or abandoned, the Company 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.

During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis on October 1, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that could indicate an impairment. The impairment test consists of a comparison of the estimated fair value of the IPR&D with its carrying amount. If the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.

8

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

2. Summary of Significant Accounting Policies – (continued)

Goodwill

The Company tests the carrying amounts of goodwill for recoverability on an annual basis on October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs a one-step test in its evaluation of the carrying value of goodwill if qualitative factors determine it is necessary to complete a goodwill impairment test. In the evaluation, the fair value of the relevant reporting unit is determined and compared to its carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable, and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in the Company’s consolidated statements of operations.

Contingent Consideration

Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”). Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations. The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on the probability of meeting future milestones. The payments include milestone payments to be made upon the achievement of clinical and commercialization milestones as well as single low digit royalty payments and payments upon receipt of sublicensing income. Subsequent to the date of acquisition, the Company reassesses the actual consideration earned and the probability-weighted future earn-out payments at each balance sheet date. Any adjustment to the contingent consideration liability will be recorded in the consolidated statements of operations. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long-term liabilities in the consolidated balance sheets.

Long-Lived Assets

Long-lived assets include property, equipment, and right of use assets. Management reviews the Company’s long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as whether there is reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset. No impairment charges were recorded during the three and nine months ended September 30, 2023 and 2022.

9

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

3. Research and Development Tax Credits

The Company, through its Theriva S.L. subsidiary, participates in a Research and Development program sponsored by the Spanish government.  The program provides for reimbursement of certain expenses incurred in research and development efforts the Company incurs in Spain.  The reimbursements can be through either tax credits or direct refunds.  The program provides for certain limits on the types and amounts of expenses and requires participants to complete a certification and apply for the refund annually.  Subsequent to the period in which expenses are incurred, the program requires participants to maintain certain workforce levels and research and development expenditures over a 24-month period.

In the quarter ended June 30, 2023, the Company completed the certification and applied for direct reimbursement, as opposed to a tax credit, for its qualifying research and development expenses incurred in the year ended December 31, 2022.  The Company received approvals from the Spanish government in September and October 2023.  

The Company evaluated the program and concluded that it qualified to be accounted for as government assistance. Accordingly, the Company, as allowed by U.S. GAAP, elected to account for the grant by analogizing to the guidance provided by International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.  Accordingly, the Company recognized a tax credit receivable related to amounts that had been approved by the Spanish government prior to September 30, 2023 and a corresponding deferred research and development tax credit as it was determined that amounts became probable of being received upon the receipt of the approval. Additionally, the Company has elected to account for the tax credit as a contra-expense as this most appropriately reflects the nature of the transaction and will reduce future research and development expenditures as the Company continues to incur expenses in the upcoming 24-month period.

10

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

4. BUSINESS COMBINATION

Summary

On March 10, 2022 (the “Closing”), the Company completed the acquisition of all the outstanding shares of Theriva Biologics, S.L, which at the time was known as VCN Biosciences, S.L.(the “VCN Shares”) from the shareholders of VCN. VCN is a clinical-stage biopharmaceutical company developing new oncolytic adenoviruses for the treatment of cancer. The Company’s lead product candidate, VCN-01, is being studied in a Company sponsored Phase 2 clinical trial for pancreatic cancer with additional investigator sponsored trials in indications including head and neck squamous cell carcinoma (HNSCC), retinoblastoma, brain tumors and ovarian cancers. VCN-01 is designed to be administered systemically, intratumorally or intravitreally, either as a monotherapy or in combination with standard of care chemotherapies or immunotherapies, to treat a wide variety of cancer indications. VCN-01 is designed to replicate selectively and aggressively within tumor cells, and to degrade the tumor stroma barrier that serves as a significant physical and immunosuppressive barrier to cancer treatment. Degrading the tumor stroma has been shown to improve access to the tumor by the virus and additional therapies such as chemo and immunotherapies. Importantly, degrading the stroma exposes tumor antigens, turning “cold” tumors “hot” and enabling a sustained anti-tumor immune response. VCN has the exclusive rights to four patent families for proprietary technologies, as well as technologies developed in collaboration with the Virotherapy Group of the Catalan Institute of Oncology (ICO-IDIBELL) and with Hospital Sant Joan de Deu (HSJD), with a number of additional patents pending. As consideration for the purchase of the VCN Shares and pursuant to the terms of a purchase agreement that the parties entered into (the “Purchase Agreement”), the Company paid $4,700,000 to Grifols Innovation and New Technologies Limited (“Grifols”), the owner of approximately 86% of the equity of VCN, and issued to the remaining sellers and certain key VCN employees and consultants of VCN an aggregate of 2,639,530 shares of its common stock, $0.001 par value per share (the “Common Stock”). In addition to the consideration described above, under the terms of the purchase agreement that the parties entered into, the Company assumed up to $2,390,000 of existing liabilities of VCN and has agreed to make cash payments of up to $70.2 million to Grifols upon the achievement of certain clinical and commercialization milestones. In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in metastatic pancreatic ductal adenocarcinoma (“PDAC”). Due to this approval, the Company paid Grifols $3.0 million in the fourth quarter of 2022. In August 2023, the Company initiated patient dosing in the U.S. in its Phase 2 clinical trial of VCN-01 in PDAC. As a result, the Company paid Grifols $3.25 million in the fourth quarter of 2023.

In anticipation of the Acquisition, prior to the Closing, the Company loaned VCN $417,000 to help finance the costs of certain of VCN’s research and development activities. At the Closing, VCN and Grifols entered into a sublease agreement for the sublease by VCN of laboratory and office space as well as a transitional services agreement. As a post-Closing covenant, the Company has agreed to commit to fund VCN’s research and development programs, including, but not limited to, VCN-01 in a pancreatic ductal adenocarcinoma PDAC Phase 2 trial, VCN-01 in a retinoblastoma (RB) Phase 2/3 trial and necessary general and administrative expenses within a budgetary plan of approximately $27.8 million.

Total purchase consideration including cash, shares of common stock and contingent consideration was valued at approximately $22.8 million, as follows (in thousands):

Cash paid at Closing

    

$

4,700

Receivable from VCN “effectively settled”

 

417

Fair value of common shares issued

 

6,599

Fair value of contingent consideration

 

11,093

$

22,809

11

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

4. BUSINESS COMBINATION - (continued)

As of September 30, 2023 and December 31, 2022, the fair value of the contingent consideration was approximately $5.9 million and $10.2 million, respectively. During the three and nine months ended September 30, 2023, the Company recognized in operating expense a $1.6 million and $1.0 million, respectively, decrease in the fair value of the contingent consideration. Upon initiation of patient dosing in the U.S. during the three months ended September 30, 2023, $3.25 million that had previously been included as contingent consideration, became payable to Grifols and is included in accrued expenses as of September 30, 2023. During the three and nine months ended September 30, 2022, the Company recognized in operating expense a $227,000 and a $244,000 decrease in the fair value of the contingent consideration for the nine months ended September 30, 2022, respectively.

The allocation of the fair value of the VCN Acquisition updated for measurement period and other adjustments is shown in the table below.

    

Estimated fair value

($in thousands)

Cash and cash equivalents

$

837

Receivables

 

1,889

Property and equipment

 

216

In-process research and development intangible asset

 

19,742

Goodwill

 

5,696

Deferred tax liabilities, net

 

(3,209)

Accounts payable

 

(522)

Accrued expenses

 

(113)

Accrued employee benefits

 

(90)

Loans payable-current

 

(67)

Other long-term liabilities

 

(1,570)

Total purchase consideration

$

22,809

The net assets were recorded at their estimated fair value. In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. In connection with the Acquisition, the Company recognized $19.7 million of indefinite-lived in-process research and development intangible assets.

Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities. Goodwill of $5.7 million was established as a result of the Acquisition and is not tax deductible.

VCN operations recorded a net loss of $11.9 million from the date of Acquisition through September 30, 2023.

During the year ended December 31, 2022, the Company recognized the following measurement period adjustments:

estimate of acquired liabilities resulting in a $277,000 reduction in accrued expenses and goodwill,
estimate in the receivable from the prior owner resulting in a $176,000 increase in other receivables and reduction in goodwill.
estimated fair value of its in-process R&D resulting in a $810,000 increase in in-process R&D, an increase of $202,000 in deferred tax liabilities and a decrease of $607,000 in goodwill.

The cumulative impact of the re-measurements during the measurement period, was a reduction in accrued liabilities of $277,000, an increase in other receivables of $176,000, an increase in in-process R&D of $810,000; an increase in deferred tax liabilities of $202,000 and a decrease in goodwill of $1,061,000.

12

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

4. BUSINESS COMBINATION - (continued)

Pro Forma Consolidated Financial Information (unaudited)

The following unaudited pro forma consolidated financial information summarizes the results of operations for the periods indicated as if the VCN Acquisition had been completed as of January 1, 2022 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

 

(in thousands)

    

2023

    

2022

    

2023

    

2022

Net revenues

$

$

$

Net loss

$

(3,303)

$

(4,853)

(12,864)

$

(14,956)

Transaction Costs

In conjunction with the Acquisition, the Company incurred approximately $0.2 million in transaction costs during the nine months ended September 30, 2022, which were expensed as general, and administrative expense in the consolidated statements of operations. There were no acquisition costs incurred during the three and nine months ended September 30, 2023.

5. Goodwill and Intangibles

The following table provides the Company’s Goodwill as of September 30, 2023.

    

Goodwill (in thousands)

Balance at December 31, 2022

$

5,525

Effects of exchange rates

(65)

Balance at September 30, 2023

$

5,460

The following table provides the Company’s in-process R&D as of September 30, 2023.

    

In-process

R&D (in thousands)

Balance at December 31, 2022

$

19,150

Effects of exchange rates

(225)

Balance at September 30, 2023

$

18,925

During the quarters ended September 30, 2023 and December 31, 2022, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and the Company deemed this to be a triggering event for impairment. The Company performed an impairment analysis and concluded that the Goodwill and IPR&D were not impaired as of September 30, 2023 and December 31, 2022.

13

Table of Contents

Theriva Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

6. Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified on a three-tier hierarchy as follows:

Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 inputs: Inputs, other than quoted prices, that are observable either directly or indirectly; and
Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these level 1 instruments.

As a result of the acquisition of VCN the Company acquired interest-free or below-market interest rate loans extended by Spanish government. The carrying value of the loans payable approximate fair value and are classified under level 2.

In connection with the Acquisition of VCN, the Company will be required to pay up to $70.2 million in additional consideration upon the achievement of certain milestones, including regulatory filings completed noted in Note 4. In September 2022, the Company received approval from the FDA to proceed with the Phase 2 clinical trial of VCN-01 in PDAC. Due to this approval the Company paid Grifols $3.0 million in the fourth quarter 2022. In August 2023, the Company initiated patient dosing in the U.S. in its Phase 2 clinical trial of VCN-01 in PDAC. As a result, payment was made subsequent to September 30, 2023 in the amount of $3.25 million. The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs. The fair value of the contingent consideration was $5.9 million as of September 30, 2023 and is all reflected as non-current contingent consideration liability. There were no transfers in or out of the level 3 liabilities during the three and nine months ended September 30, 2023 and 2022 , with the exception of the reclassification of $3.25 million related to the milestone that was met in the current period and reclassified to accrued expenses.

The following table summarizes the change in the fair value as determined by Level 3 inputs for the contingent consideration liabilities for the three and nine months ended September 30, 2023:

    

(in thousands)

Balance at March 10, 2022

$

12,158