UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
( (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: |
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Title of each class |
Trading Symbol |
Name of exchange on which registered |
The |
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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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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 2, 2023, there were
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical fact contained herein are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.
SYNLOGIC, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION |
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Item 1. Financial Statements |
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1 |
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Unaudited Consolidated Statements of Operations and Comprehensive Loss |
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3 |
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4 |
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5 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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13 |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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24 |
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24 |
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PART II - OTHER INFORMATION |
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25 |
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25 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
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60 |
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60 |
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60 |
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60 |
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61 |
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62 |
SYNlogic, Inc. and SUBSIDIARIES
Unaudited Consolidated Balance Sheets
(In thousands, except share amounts)
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September 30, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term marketable securities |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use asset - operating lease |
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Restricted cash |
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Prepaid research and development, net of current portion |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue |
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Lease liability - operating lease |
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Finance lease obligations |
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Total current liabilities |
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Long-term liabilities: |
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Lease liability - operating lease, net of current portion |
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Finance lease obligations, net of current portion |
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Total long-term liabilities |
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Stockholders' equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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( |
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Accumulated deficit |
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( |
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( |
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Treasury stock, at cost ( |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the unaudited consolidated financial statements.
1
Synlogic, INC. aND SUBSIDIARIES
Unaudited Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
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For the Three Months Ended |
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For the Nine Months Ended |
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September 30, 2023 |
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September 30, 2022 |
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September 30, 2023 |
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September 30, 2022 |
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Revenue |
$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other income (expense): |
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Interest and investment income |
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Interest expense |
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( |
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( |
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( |
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Other income (expense) |
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( |
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( |
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Total other income, net |
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Loss before income taxes |
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( |
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( |
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( |
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( |
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Income tax expense |
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( |
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( |
) |
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Net loss |
$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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Net loss per share - basic and diluted |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average common stock outstanding - basic and diluted |
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Comprehensive loss: |
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Net loss |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net unrealized (loss) gain on marketable securities |
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( |
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Comprehensive loss |
$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
2
Synlogic, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
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Common stock |
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Additional |
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Accumulated |
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Accumulated |
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Treasury Stock |
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Total |
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Shares |
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Amount |
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capital |
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income (loss) |
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deficit |
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Shares |
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Amount |
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equity |
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For the Three Months Ended September 30, 2023 |
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Balance at June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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( |
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$ |
( |
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$ |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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Cancellation of restricted stock |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Reverse Split: fractional share adjustment |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain (loss) on securities |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance at September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
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For the Three Months Ended September 30, 2022 |
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Balance at June 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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— |
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$ |
— |
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$ |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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Cancellation of restricted stock |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation expense |
— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain (loss) on securities |
— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Balance at September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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— |
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$ |
— |
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$ |
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||||
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For the Nine Months Ended September 30, 2023 |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
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( |
) |
$ |
( |
) |
$ |
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Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs |
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— |
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— |
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— |
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— |
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— |
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Issuance of restricted stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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|||
Cancellation of restricted stock |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Reverse Split: fractional share adjustment |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Equity-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain (loss) on securities |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Balance at September 30, 2023 |
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|
$ |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
$ |
( |
) |
$ |
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|||||
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For the Nine Months Ended September 30, 2022 |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
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— |
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$ |
— |
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$ |
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Exercise of options |
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— |
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— |
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— |
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— |
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— |
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Issuance of restricted stock |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|||||
Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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— |
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— |
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Cancellation of restricted stock |
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( |
) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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||||
Equity-based compensation expense |
— |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain (loss) on securities |
— |
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— |
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— |
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( |
) |
— |
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— |
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— |
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( |
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||||
Net loss |
— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
||||
Balance at September 30, 2022 |
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$ |
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$ |
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$ |
( |
) |
$ |
( |
) |
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— |
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$ |
— |
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$ |
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The accompanying notes are an integral part of the unaudited consolidated financial statements.
3
Synlogic, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(In thousands)
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Nine Months Ended |
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Nine Months Ended |
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September 30, 2023 |
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September 30, 2022 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Gain on disposal of property and equipment |
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( |
) |
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Equity-based compensation expense |
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Accretion/amortization of investment securities |
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( |
) |
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( |
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Change in carrying amount of operating lease right of use asset |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
) |
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Prepaid expenses and other current assets |
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( |
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Prepaid research and development, net of current portion |
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( |
) |
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Accounts payable and accrued expenses |
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( |
) |
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Deferred revenue |
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( |
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Operating lease liabilities |
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( |
) |
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( |
) |
Other assets |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Purchases of marketable securities |
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( |
) |
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( |
) |
Proceeds from maturity of marketable securities |
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Purchases of property and equipment |
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( |
) |
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( |
) |
Proceeds from the sale of property and equipment |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Payments on finance lease obligations |
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( |
) |
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( |
) |
Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs |
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||
Proceeds from employee stock purchases and exercise of stock options |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
) |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
|
$ |
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$ |
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||
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Supplemental disclosure of non-cash investing activities: |
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Assets acquired under operating lease obligation |
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$ |
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|
$ |
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||
Property and equipment purchases included in accounts payable and accrued expenses |
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$ |
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$ |
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||
Supplemental disclosure of non-cash financing activities: |
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Cash paid for income taxes |
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$ |
|
|
$ |
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||
Cash paid for interest |
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$ |
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$ |
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||
Issuance costs included in accounts payable and accrued expenses |
|
$ |
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$ |
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||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
4
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Organization
Synlogic, Inc., together with its wholly owned and consolidated subsidiaries (Synlogic or the Company), is a late-stage biopharmaceutical company advancing novel, orally-administered, non-systemically absorbed therapeutics for serious diseases based on the Company's Synthetic Biotic product platform. Synthetic Biotics are generated from Synlogic’s proprietary platform, leveraging a reproducible, modular approach to the generation of novel drug candidates that perform or deliver critical therapeutic functions. Synthetic Biotics are designed to metabolize a toxic substance, compensate for missing or damaged metabolic pathways or deliver combinations of therapeutic factors. Synlogic’s goal is to discover, develop and ultimately commercialize Synthetic Biotics. Since incorporation, the Company has devoted substantially all of its efforts to the research and development of its product candidates.
Risks and Uncertainties
At September 30, 2023, the Company had approximately $
As a clinical-stage company, the Company is subject to a number of risks common to other life science companies, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (CROs) and contract manufacturing organizations (CMOs), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology. The Company’s therapeutic programs are currently pre-commercial, spanning discovery through development and will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization of any product candidates. These efforts require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital or obtain financing from other sources, such as strategic collaborations or alliances.
COVID-19
While the Company is not aware of a material impact from the continuation of the COVID-19 pandemic through September 30, 2023, the full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, and financial condition, including expenses and manufacturing, clinical trials, and research and development costs, depends on future developments that are uncertain at this time.
5
The significant accounting policies described in the Company’s audited financial statements as of and for the year ended December 31, 2022, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (SEC) on March 29, 2023 (the 2022 Annual Report), have had no material changes during the nine months ended September 30, 2023, other than the note below.
Reverse Stock Split
Basis of Presentation
The accompanying consolidated financial statements and the related disclosures as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the SEC for interim financial statements. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the Company’s 2022 and 2021 audited consolidated financial statements and notes included in the 2022 Annual Report. The consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures including notes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position and results of operations for the three and nine months ended September 30, 2023 and 2022. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other interim period or future year or period.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Synlogic and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Recently Issued Accounting Pronouncements
New accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) from time to time, and rules are issued by the SEC that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future financial statements.
The tables below present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, as described under Note 2, Summary of Significant Accounting Policies, in the audited financial statements included in the 2022 Annual Report.
The Company’s investment portfolio includes many fixed income securities that do not always trade on a daily basis. As a result, the pricing services used by the Company applied other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. In addition, model processes were used to assess interest rate impact and develop prepayment scenarios. These models take into consideration relevant credit information, perceived market movements, sector news and economic events. The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data.
6
At September 30, 2023 and December 31, 2022, the Company has classified assets measured at fair value on a recurring basis as follows (in thousands):
|
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Fair Value Measurements at Reporting Date Using |
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|||||||||||||
|
|
September 30, |
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Quoted Prices in Active |
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Significant Other |
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Significant |
|
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Description |
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2023 |
|
|
(Level 1) |
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(Level 2) |
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|
(Level 3) |
|
||||
Money market funds (included in cash and cash equivalents) |
|
$ |
|
|
$ |
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