What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-10 compared with 2020-08-06 · 300 added, 312 removed, 314 unchanged (66% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read

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We are a diversified clinical-stage company

leveraging the microbiome to develop therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need.

Our lead candidates are:

(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, Clostridioides difficile infection (CDI), overgrowth of pathogenic

organisms, the emergence of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic

cell transplant (HCT) recipients, and (2) SYN-010 which is intended to reduce the impact of methane-producing organisms in the

gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C).

We are also advancing SYN-020,

an early-stage oral formulation of the enzyme intestinal alkaline phosphatase (IAP) to treat both local GI and systemic diseases.

We are in close contact with our

clinical sites and are assessing the impact of COVID-19 on our studies and current timelines and costs.

the recent and rapidly evolving impact of COVID-19 on patient recruitment in clinical trials and considering patient safety

and trial integrity, initiation of our Phase 1b/2a clinical study of SYN-004 to be conducted by Washington University in

Allogeneic HCT Recipients has been postponed until Q1 2021, subject to the COVID-19 global pandemic.

Enrollment of new

patients in our Phase 2b clinical study of SYN-010 was temporarily halted during the first and second quarter of 2020 due to

the COVID-19 pandemic and has since recommenced.

However, the ability to continue to recruit new patients into the Phase 2b

clinical trial of SYN-010 remains at the discretion of CSMC and contingent upon the COVID-19 pandemic.

If the COVID-19

pandemic continues and persists for an extended period of time, we could experience significant disruptions to our clinical

development timeline, which would adversely affect our business, financial condition, results of operations and growth

developing therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need.

Our lead clinical development

candidates are:

(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, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms,

the emergence of antimicrobial resistance (AMR), and 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.

We were also developing SYN-010 to reduce

the impact of methane-producing organisms in the gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation

On September 30, 2020, Cedars Sinai Medical Center’s (CSMC) (the Company’s SYN-010 clinical development partner)

informed the Company that it agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 in IBS-C

Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated,

it was unlikely to meet its primary endpoint by the time enrollment is completed.

As a result of the decision to discontinue

the ongoing Phase 2b investigator-sponsored clinical study of SYN-010, we plan to explore and evaluate a range of strategic options,

which may include:

in-licensing opportunities;

evaluation of potential acquisitions;

or other potential strategic transactions.

In the meantime, we remain focused on working with our clinical development partners to advance the planned Phase 1b/2a clinical

trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) patients, and advancing the clinical development

program for SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications.

Both of these programs are unrelated

to SYN-010, and therefore, we remain encouraged by the outlook and potential for these programs in addressing large, underserved

We are in close contact with our clinical

sites and are assessing the impact of COVID-19 on our studies and current timelines and costs.

To maximize patient

participation and safeguard the trials integrity and patient safety, initiation of the Company’s Phase 1b/2a clinical

study of SYN-004 to be conducted by Washington University in Allogeneic HCT Recipients is deferred until Q1 2021, pandemic conditions

If the COVID-19 pandemic continues and persists for an extended period of time, we could experience significant disruptions

to our clinical development timeline, which would adversely affect our business, financial condition, results of operations and

growth prospects.

In response to the spread of COVID-19 as

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Our Product Pipeline:

AAD antibiotic associated diarrhea;

aGVHD acute graft-vs-host disease;

allogeneic hematopoietic cell transplant patients;

AMR antimicrobial resistance;

CDI Clostridioides difficile infection.

CIC chronic idiopathic constipation;

CPI checkpoint inhibitor autoimmune enteropathy;

CRE carbapenem resistant

DR delayed release;

HCT hematopoietic cell transplant patients;

IAP intestinal

alkaline phosphatase;

IBS-C irritable bowel syndrome with constipation;

VRE vancomycin resistant enterococci.

SAD single ascending dose

¹Additional products with preclinical

proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD and infection by carbapenem resistant Enterobacteriaceae

and SYN-007 (ribaxamase) DR being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

²Dependent

on funding/partnership.

proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD and infection by vancomycin resistant enterococci and SYN-007

(ribaxamase) DR to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

²Dependent on funding/partnership.

³Announced option-license agreement

with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier

*Based on management’s current beliefs

and expectations.

Summary of Clinical and Preclinical Programs

Summary of Current Clinical and Preclinical Programs

Therapeutic Area

Current Status

Developments & Milestones

Prevention of microbiome damage, CDI, overgrowth of pathogenic organisms, AMR, and aGVHD in allogeneic HCT recipients (Degrade IV beta-lactam antibiotics)

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are administered IV beta-lactam antibiotics in response to fever (Q1 2020)

Received written notification from the FDA informing the Company

that the FDA determined the Phase 1b/2a clinical program in adult allogeneic hematopoietic cell transplant (HCT) recipients may

proceed per the submitted clinical program protocol (Q3 2020)

of proposed Phase 1b/2a clinical trial to be conducted by Washington University in adult allogeneic

HCT recipients temporarily postponed until Q1 2021, subject to COVID-19 global pandemic

written notification from the FDA informing the Company that the FDA determined the Phase 1b/2a clinical program in adult allogeneic

hematopoietic cell transplant (HCT) recipients may proceed per the submitted clinical program protocol (Q3 2020)

Proposed Phase 1b/2a clinical trial to be conducted by Washington University in adult allogeneic HCT is anticipated

to commence during Q1 2021, subject to COVID-19 global pandemic

Treatment of IBS-C

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inform Phase 3 clinical development (Q3 2018)

in the Phase 2b investigator-sponsored clinical study of SYN-010 conducted by CSMC was temporarily

halted in Q1 and Q2 2020 due to the COVID-19 global pandemic

recruitment has recommenced and remains contingent upon CSMC’s ability to enroll new patients during the COVID-19 global

pandemic (Q3 2020)

recruitment and enrollment in the Phase 2b investigator-sponsored clinical study recommenced following a temporary halt in Q1 and

Q2 due to the COVID-19 global pandemic (Q3 2020)

Announced results from a planned interim futility analysis which concluded that although SYN-010 was well-tolerated, it

was unlikely to meet its primary objective by the time enrollment is completed.

As a result, CSMC has agreed to discontinue the

trial and will conduct a comprehensive review of the final data set and publish its findings (Q3 2020)

Preserve gut barrier, treat local GI inflammation, and restore gut microbiome

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requirements (Q2 2019)

Entered into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an

exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish

systemic inflammation, and treat age-related diseases (Q2 2020)

Entered into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an exclusive

license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic

inflammation, and treat age-related diseases (Q2 2020)

IND application with U.S.

FDA supporting an initial indication for the treatment of radiation enteropathy

secondary to pelvic cancer therapy (Q2 2020)

FDA supporting an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer

therapy (Q2 2020)

Received study-may-proceed letter from U.S.

FDA to conduct a Phase 1 single ascending dose study in healthy volunteers,

designed to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

FDA to conduct a Phase 1 single ascending dose study in healthy volunteers, designed

to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade IV carbapenem antibiotics)

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from pertussis for five weeks in a neonatal non-human primate study (Q4 2017 )

Collaboration

with UT Austin

Our Microbiome-Focused Pipeline

Our Gastrointestinal (GI) and Microbiome-Focused Pipeline

Our SYN-004 (ribaxamase) and SYN-020 clinical

programs are focused on the gut microbiome, which is home to billions of microbial species and composed of a natural balance of

both “good” beneficial species and potentially “bad” pathogenic species.

When the natural balance or normal

function of these microbial species is disrupted, a person’s health can be compromised.

All of our programs are supported

by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio through:

filing new patent

applications;

programs are focused on the gastrointestinal tract (GI) and the gut microbiome, which is home to billions of microbial species

and composed of a natural balance of both “good” beneficial species and potentially “bad” pathogenic species.

When the natural balance or normal function of these microbial species is disrupted, a person’s health can be compromised.

All of our programs are supported by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio

filing new patent applications;

prosecuting existing applications;

and licensing and acquiring new patents and patent applications.

and licensing and acquiring new patents and patent

applications.

Recent Developments

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Transplantation and Leukemia.

On January 7, 2020, we announced the receipt of official meeting

minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development of SYN-004 (ribaxamase)

for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever.

Based on the final

meeting minutes, the Phase 1b/2a clinical trial will comprise a single center, randomized, double-blinded, placebo-controlled clinical

trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

The goal of this study is to evaluate

the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg oral SYN-004 (ribaxamase) administered

to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic to treat fever.

Study participants will

be enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam antibiotic.

Eight participants

in each cohort will receive SYN-004 (ribaxamase) and four will receive placebo.

On July 30, 2020 we received written notification

from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic HCT recipients may proceed

per the submitted clinical program protocol.

On January 7, 2020, we announced the receipt

of official meeting minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development

of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response

Based on the final meeting minutes, the Phase 1b/2a clinical trial will comprise a single center, randomized, double-blinded,

placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg

oral SYN-004 (ribaxamase) administered to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic

to treat fever.

Study participants will be enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam

Eight participants in each cohort will receive SYN-004 (ribaxamase) and four will receive placebo.

On July 30, 2020

we received written notification from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic

HCT recipients may proceed per the submitted clinical program protocol.

Safety and pharmacokinetic data for each

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of SYN-004 (ribaxamase) in allogeneic HCT recipients.

Initiation of this clinical trial remains contingent upon approval of the

clinical study protocol by the Washington University School of Medicine’s Institutional Review Board (IRB).

Due to the unique challenges posed by the

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on planned and ongoing clinical trials.

We have been notified by Washington University that they could consider initiating planned

clinical trials, including the SYN-004 (ribaxamase) Phase 1b/2a clinical program as early as September 2020.

However, this remains

largely at their discretion and is contingent upon Washington University’s ability to conduct this clinical program free

from the impact of COVID-19, and approval from their IRB and the FDA.

At this time, we have determined that postponing the initiation

of the planned Phase 1b/2a clinical trial in allogeneic HCT recipients until at least the first quarter of 2021 remains the appropriate

course of action in the current operating environment.

We remain in close contact with Washington University and are actively monitoring

the crisis caused by the spread of COVID-19 and its impact to the clinical development plans for our SYN-004 (ribaxamase) program.

Initiation of the Phase 1b/2a clinical trial remains largely at their discretion and is

contingent upon Washington University’s ability to conduct this clinical program free from the impact of COVID-19, and approval

from their IRB and the FDA.

At this time, we have determined that postponing the initiation of the planned Phase 1b/2a clinical

trial in allogeneic HCT recipients until at least the first quarter of 2021 remains the appropriate course of action in the current

operating environment.

We remain in close contact with Washington University and are actively monitoring the crisis caused by the

spread of COVID-19 and its impact to the clinical development plans for our SYN-004 (ribaxamase) program.

SYN-010 — Treatment

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agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by us and CSMC.

2b study is being conducted out of the Medically Associated Science and Technology (MAST) Program at CSMC and is a 12-week, placebo-controlled,

2b study was being conducted out of the Medically Associated Science and Technology (MAST) Program at CSMC and was a 12-week, placebo-controlled,

double-blind, randomized clinical trial to evaluate two dose strengths of oral SYN-010 21 mg and 42 mg in as many as 150 patients

diagnosed with IBS-C using a breath methane screening level as a criterion for patient enrollment.

The primary objective for the study is

to determine the efficacy of SYN-010, measured as an improvement from baseline in the weekly average number of complete spontaneous

bowel movements (CSBMs) during the 12-week treatment period for SYN-010 21 mg and 42 mg daily doses relative to placebo.

efficacy endpoints for both dose strengths of SYN-010 will measure changes from baseline in abdominal pain, bloating, stool frequency

as well as the use of rescue medication relative to placebo.

Exploratory outcomes include Adequate Relief and quality of life measures

using the well-validated EQ-5D-5L and PAC-SYM patient questionnaires.

Importantly, this study will aim to generate

a comprehensive and meaningful data set to provide additional insights and address specific queries into potential SYN-010 clinical

efficacy, including dose response, length of treatment and microbiome effects, intended to be evaluated in the FDA-agreed Phase

2b/3 adaptive design clinical program.

We believe outcomes from this clinical trial are important to solidifying existing clinical

outcomes data, and potentially simplifying and reducing costs for future Phase 3 clinical development.

Generating such a data set

requires rigorous screening criteria in order to obtain reliable baseline parameters that includes foregoing current constipation

interventions for a period of time prior to breath methane screening.

This has proven challenging for a portion of prospective

participants leading to higher than anticipated and inadvertent patient-related screen-fail rates for IBS-C patients who presented

at screening with breath-methane levels below the protocol-required ten parts-per-million.

During the first quarter of 2020, we

met with the study investigators at CSMC and, following some discussion, we collectively determined that generating a meaningful

data set may be possible with a smaller patient population than previously anticipated.

We believe the successful completion of

this study will allow us to re-engage with prospective partners, both domestically and abroad, who found the results from our previously

completed Phase 2 studies compelling and have indicated their interest in reviewing a more robust and meaningful clinical data

The primary objective for the study

was to determine the efficacy of SYN-010, measured as an improvement from baseline in the weekly average number of complete

spontaneous bowel movements (CSBMs) during the 12-week treatment period for SYN-010 21 mg and 42 mg daily doses relative to

Secondary efficacy endpoints for both dose strengths of SYN-010 were intended measure changes from baseline in

abdominal pain, bloating, stool frequency as well as the use of rescue medication relative to placebo.

Exploratory outcomes

included Adequate Relief and quality of life measures using the well-validated EQ-5D-5L and PAC-SYM patient questionnaires.

Importantly, this study was intended to generate a comprehensive and meaningful data set to provide additional insights and

address specific queries into potential SYN-010 clinical efficacy, including dose response, length of treatment and

microbiome effects, intended to be evaluated in the FDA-agreed Phase 2b/3 adaptive design clinical program.

Enrollment in this study commenced in January

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was collected in accordance with the clinical trial protocol.

The recruitment of new patients into this trial has since recommenced,

however, the ability to continue to recruit new patients into this clinical trial remains at the discretion of CSMC and contingent

upon the COVID-19 global pandemic.

A data readout in the form of an interim futility analysis is anticipated during the third quarter

of 2020 and topline data is anticipated during the first quarter of 2021, subject to COVID-19.

During the third quarter of 2020, a planned

interim futility analysis of the Phase 2b investigator-sponsored clinical study was completed.

Based on the review of the interim

analysis, it was concluded that although SYN-010 was well-tolerated, it failed to meet the prespecified efficacy criteria and was

unlikely to meet the primary objective of the study by the time enrollment is completed.

On September 30, 2020 CSMC formally agreed

to discontinue the study.

CSMC has been unblinded and intends to conduct a comprehensive review of the data set and publish its

SYN-020 — Oral Intestinal

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The published

literature indicates that IAP functions to diminish GI inflammation, tighten the gut barrier to diminish “leaky gut,”

promote a healthy microbiome, and diminish GI and systemic inflammation.

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1 single ascending dose study in healthy volunteers designed to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters.

The Phase 1 clinical program is intended to support the clinical development of SYN-020 for multiple indications.

The Phase 1 clinical program is anticipated to commence during the first quarter of 2021 and is intended to support the clinical

development of SYN-020 for multiple indications.

During the second quarter of 2020, we also

announced that we entered into an agreement with Massachusetts General Hospital (“MGH”) granting us an option for an

exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish

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Medical School, evaluated long-term oral supplementation of IAP, including SYN-020, in mice.

Hodin’s research demonstrated

that IAP administration, starting at 10 months of age, slowed the microbiome changes, gut-barrier dysfunction, and gastrointestinal

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If executed, we plan to use this license in the advancement of an expanded clinical development program

In addition, we continue to explore and evaluate potential future indications for use of SYN-020 in chronic inflammatory

diseases such as inflammatory bowel disease (IBD), Celiac disease, Crohn’s disease and metabolic syndrome, where decreased

IAP expression and impairment of the intestinal barrier has been linked as a causative factor.

In addition, we continue to explore and evaluate potential future indications that have been associated with decreased

IAP expression and intestinal barrier dysfunction.

Such potential indications include inflammatory bowel disease (IBD) and celiac

disease, as well as metabolic syndrome and associated non-alcoholic fatty liver-disease (NAFLD).

Intellectual Property

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Results of Operations

Three Months Ended June 30, 2020

Three Months Ended September 30,

2020 and 2019

General and Administrative Expenses

General and administrative expenses increased

by 23% to $1.3 million for the three months ended June 30, 2020, from $1.0 million for the three months ended June 30, 2019.

increase is primarily due to increased legal costs related to business development, patent execution and employee contract matters,

vacation expense, and insurance costs.

The charge related to stock-based compensation expense was $67,000 for the three months

ended June 30, 2020, compared to $59,000 the three months ended June 30, 2019.

by 9% to $1.2 million for the three months ended September 30, 2020, from $1.1 million for the three months ended September 30,

This increase is primarily due to increased insurance costs and stock registration fees, offset by a decrease in legal

The charge related to stock-based compensation expense was $67,000 for the three months ended September 30, 2020, compared

to $68,000 the three months ended September 30, 2019.

Research and Development Expenses

Research and development expenses decreased

by 38% to $1.6 million for the three months ended June 30, 2020, from $2.6 million for the three months ended June 30, 2019.

decrease is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners which has

led to the postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and a temporary

halt in new enrollment in the Phase 2b investigator sponsored clinical trial of SYN-010.

The charge related to stock-based

compensation expense was $19,000 for the three months ended June 30, 2020, compared to $31,000 for the three months ended June

by 78% to $0.9 million for the three months ended September 30, 2020, from $4.1 million for the three months ended September 30,

This decrease is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners

which led to the postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients as well as

the discontinuation of the Phase 2b investigator sponsored clinical trial of SYN-010.

The charge related to stock-based compensation

expense was $15,000 for the three months ended September 30, 2020, compared to $23,000 for the three months ended September 30,

The following table sets forth our research

and development expenses directly related to our therapeutic areas for the three months ended June 30, 2020 and 2019.

expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development expenses

related to employee costs, facilities, stock-based compensation and research and development support services that are not directly

allocated to specific drug candidates.

Therapeutic Areas

June 30, 2020

June 30, 2019

and development expenses directly related to our therapeutic areas for the three months ended September 30, 2020 and 2019.

direct expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development

expenses related to employee costs, facilities, stock-based compensation and research and development support services that are

not directly allocated to specific drug candidates.

Therapeutic Areas (in thousands)

September 30,

SYN-004 (ribaxamase

Total direct costs

Total indirect costs

Total Research and Development

Other Income/Expense

Other income was $134 for the three months

ended June 30, 2020, compared to other income of $80,000 for the three months ended June 30, 2019.

Other income for the three months

ended June 30, 2020 and 2019 is primarily comprised of interest income.

ended September 30, 2020, compared to other income of $92,000 for the three months ended September 30, 2019.

Other income for the

three months ended September 30, 2020 and 2019 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders

was $3.3 million, or $0.18 per basic and dilutive common share for the three months ended June 30, 2020, compared to a net loss

of $3.7 million, or $0.23 per basic common share and dilutive common share for the three months ended June 30, 2019.

Net loss attributable

to common stockholders for the three months ended June 30, 2020 excludes net loss attributable to non-controlling interest of $16,000

and includes the accretion of Series B preferred discount of $392,000 on converted shares and Series A Preferred Stock accrued

dividends of $63,000.

Net loss attributable to common stockholders for the three months ended June 30, 2019 excludes net loss attributable

to non-controlling interest of $27,000 and includes the accretion of Series B preferred discount of $117,000 on converted shares

and $61,000 of Series A accrued dividends.

Six Months Ended June 30, 2020 and

was $2.7 million, or $0.14 per basic and dilutive common share for the three months ended September 30, 2020, compared to a net

loss of $5.3 million, or $0.31 per basic common share and dilutive common share for the three months ended September 30, 2019.

Net loss attributable to common stockholders for the three months ended September 30, 2020 excludes net loss attributable to non-controlling

interest of $8,000 and includes the accretion of Series B preferred discount of $519,000 on converted shares and Series A Preferred

Stock accrued dividends of $64,000.

Net loss attributable to common stockholders for the three months ended September 30, 2019

excludes net loss attributable to non-controlling interest of $30,000 and includes the accretion of Series B preferred discount

of $70,000 on converted shares and $63,000 of Series A accrued dividends.

Nine Months Ended September 30, 2020

General and Administrative Expenses

General and administrative expenses increased

by 22% to $2.7 million for the six months ended June 30, 2020, from $2.2 million for the six months ended June 30, 2019.

increase is primarily due to increased legal costs related to business development, patent execution and employee contract

matters, vacation expense, insurance costs and registration fees.

The charge related to stock-based compensation expense was $132,000

for the six months ended June 30, 2020, compared to $125,000 for the six months ended June 30, 2019.

by 18% to $3.9 million for the nine months ended September 30, 2020, from $3.3 million for the nine months ended September 30,

This increase is primarily due to increased legal costs related to business development, patent execution, employee

contract matters, vacation expense, insurance costs and registration fees.

The charge related to stock-based compensation expense

was $199,000 for the nine months ended September 30, 2020, compared to $193,000 for the nine months ended September 30, 2019.

Research and Development Expenses

Research and development expenses decreased

by 35% to $3.2 million for the six months ended June 30, 2020, from $5.0 million for the six months ended June 30, 2019.

This decrease

is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners which has led to the

postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and a temporary halt in new

enrollment in the Phase 2b investigator sponsored clinical trial of SYN-010.

Research and development expenses also include a charge

relating to stock-based compensation expense of $37,000 for the six months ended June 30, 2020, compared to $30,000 for the six

months ended June 30, 2019.

by 55% to $4.1 million for the nine months ended September 30, 2020, from $9.2 million for the nine months ended September 30,

This decrease is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners

which led to the postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and a temporary

the discontinuation of the Phase 2b investigator sponsored clinical trial of SYN-010.

Research and development expenses also include

a charge relating to stock-based compensation expense of $52,000 for the nine months ended September 30, 2020, compared to $53,000

for the nine months ended September 30, 2019.

The following table sets forth our research

and development expenses directly related to our therapeutic areas for the six months ended June 30, 2020 and 2019.

expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development expenses

related to employee costs, facilities, stock-based compensation and research and development support services that are not directly

allocated to specific drug candidates.

Therapeutic Areas

June 30, 2020

June 30, 2019

and development expenses directly related to our therapeutic areas for the nine months ended September 30, 2020 and 2019.

direct expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development

expenses related to employee costs, facilities, stock-based compensation and research and development support services that are

not directly allocated to specific drug candidates.

Therapeutic Areas (in thousands)

September 30,

SYN-004 (ribaxamase)

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Total indirect costs

Total Research and Development Expenses

Other income was $44,000 for the six months

ended June 30, 2020, compared to other income of $125,000 for the six months ended June 30, 2019.

Other income for the six months

ended June 30, 2020 and 2019 is primarily comprised of interest income.

Other income was $44,000 for the nine months

ended September 30, 2020, compared to other income of $217,000 for the nine months ended September 30, 2019.

Other income for the

nine months ended September 30, 2020 and 2019 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders

was $6.8 million, or $0.38 per basic and dilutive common share for the six months ended June 30, 2020, compared to a net loss of

$7.7 million, or $0.48 per basic common share and dilutive common share for the six months ended June 30, 2019.

Net loss attributable

to common stockholders for the six months ended June 30, 2020 excludes net loss attributable to non-controlling interest of $42,000

and includes the accretion of Series B preferred discount of $796,000 on converted shares and Series A Preferred Stock accrued

dividends of $125,000.

Net loss attributable to common stockholders for the six months ended June 30, 2019 excludes net loss attributable

to non-controlling interest of $43,000 and includes the accretion of Series B preferred discount of $515,000 on converted shares

and $122,000 of Series A accrued dividends.

was $9.4 million, or $0.52 per basic and dilutive common share for the nine months ended September 30, 2020, compared to a net

loss of $12.9 million, or $0.79 per basic common share and dilutive common share for the nine months ended September 30, 2019.

Net loss attributable to common stockholders for the nine months ended September 30, 2020 excludes net loss attributable to non-controlling

interest of $50,000 and includes the accretion of Series B preferred discount of $1.3 million on converted shares and Series A

Preferred Stock accrued dividends of $189,000.

Net loss attributable to common stockholders for the nine months ended September

30, 2019 excludes net loss attributable to non-controlling interest of $73,000 and includes the accretion of Series B preferred

discount of $585,000 on converted shares and $185,000 of Series A accrued dividends.

Liquidity and Capital Resources

3 unchanged sentences

We have incurred an accumulated deficit of $245

million as of June 30, 2020 and expect to continue to incur losses in the foreseeable future.

Our ability to continue as a going

concern is dependent upon our ability to raise additional debt and equity capital.

million as of September 30, 2020 and expect to continue to incur losses in the foreseeable future.

Our ability to continue as a

going concern is dependent upon our ability to raise additional debt and equity capital.

There can be no assurance that such capital

10 unchanged sentences

and prospects will be adversely affected.

Our cash and cash equivalents totaled $8.1 million as of June

30, 2020, a decrease of $7.0 million from December 31, 2019.

During the three months ended June 30, 2020, the primary use

of cash was for working capital requirements and operating activities which resulted in a net loss of $2.9 million for the three

months ended June 30, 2020.

With the cash available in early August 2020, we believe these resources will be sufficient to fund

our operations through at least the end of the first quarter of 2021.

As a result of the global COVID-19

pandemic, management has the ability to further extend its cash runway since its clinical development partners (Cedars-Sinai

Medical Center (CSMC) and Washington University) reduced their operating capacity during the second quarter of 2020 to

include only essential activities, which excluded all planned and ongoing clinical trials of SYN-004 and SYN-010.

our planned clinical trial timelines will be adversely impacted.

We anticipate reduced research and development costs through

the end of the year, since we anticipate that our proposed Phase 1b/2a clinical trial to be conducted by Washington

University will be postponed until 2021, subject to further COVID-19 developments and we anticipate slower enrollment than

anticipated in our Phase 2b investigator-sponsored clinical study of SYN-010 conducted by CSMC due to the pandemic.

anticipate our current cash will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale

up costs and limited research efforts, including completing our funding requirements for our ongoing Phase 2b

investigator-sponsored clinical study of SYN-010, and the initiation of the Phase 1b/2a SYN-004 (ribaxamase) clinical trial.

Due to the unique challenges posed by the global COVID-19 pandemic, we have determined that postponing the commencement of

the planned Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients until the first quarter of 2021

remains the appropriate response to the novel coronavirus pandemic.

We do not anticipate any additional expense related to

the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared for commencement by Washington University.

Commencement of planned future Phase 3 clinical trials of SYN-004 and SYN-010 are subject to our successful pursuit of

opportunities that will allow us to establish the clinical infrastructure and financial resources necessary to successfully

Our cash and cash equivalents totaled $6.0

million as of September 30, 2020, a decrease of $9.0 million from December 31, 2019.

During the three months ended September

30, 2020, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of

$2.1 million for the three months ended September 30, 2020.

With the cash available in early November 2020, we believe these resources

will be sufficient to fund our operations through at least the end of the first quarter of 2021.

As a result of the global COVID-19 pandemic,

management has been able to further extend our cash runway since our clinical development partners CSMC and Washington University)

reduced their operating capacity when necessary during 2020 to include only essential activities, which excluded all planned and

ongoing clinical trials of SYN-004 and SYN-010.

However, this reduction in operating activity has adversely impacted our planned

clinical trial timelines.

We anticipate reduced research and development costs through the end of the year, since we anticipate

that our proposed Phase 1b/2a clinical trial to be conducted by Washington University will be postponed until 2021, subject to

further COVID-19 developments.

On September 30, 2020, CSMC agreed to discontinue

the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis.

Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is unlikely to meet its primary endpoint

by the time enrollment is completed.

As a result, the Company anticipates additional reductions in clinical development expense

during the remainder of 2020 due to the discontinuation of this clinical study.

We anticipate our current cash

will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research

efforts, including completing our funding requirements for the initiation of the Phase 1b/2a SYN-004 (ribaxamase) clinical trial

and the planned Phase 1 single ascending dose (SAD) study of SYN-020.

Due to the unique challenges posed by the global COVID-19

pandemic, we have determined that postponing the commencement of the planned Phase 1b/2a clinical study of SYN-004 (ribaxamase)

in allogeneic HCT recipients until the first quarter of 2021 remains the appropriate response to the novel coronavirus pandemic.

We do not anticipate any additional expense related to the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared

for commencement by Washington University.

Commencement of a future Phase 3 clinical trial of SYN-004 remains subject to our successful

pursuit of opportunities that will allow us to establish the clinical infrastructure and financial resources necessary to successfully

initiate and complete our plan.

We will be required to obtain additional funding in order to continue the development of our

current product candidates beyond our Phase 2b investigator-sponsored clinical study of SYN-010 and our planned Phase 1b/2a

clinical study of SYN-004 in allogeneic HCT recipients within the anticipated time periods, if at all, and to continue to

fund operations at the current cash expenditure levels.

Currently, we do not have commitments from any third parties to

provide us with capital.

If we fail to obtain additional funding for our clinical trials, whether through the sale of

securities or a partner or collaborator, and otherwise when needed, we will not be able to fully execute our business plan as

planned and we will be forced to cease certain development activities until funding is received and our business will suffer,

which would have a material adverse effect on our financial position, results of operations and cash flows.

We will be required to obtain additional funding in order to continue the development of our current

product candidates beyond our planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients, the planned Phase 1 SAD

study of SYN-020 in healthy volunteers within the anticipated time periods, if at all, and to continue to fund operations at the

current cash expenditure levels.

Currently, we do not have commitments from any third parties to provide us with capital.

fail to obtain additional funding for our clinical trials, whether through the sale of securities or a partner or collaborator,

and otherwise when needed, we will not be able to fully execute our business plan as planned and we will be forced to cease certain

development activities until funding is received and our business will suffer, which would have a material adverse effect on our

financial position, results of operations and cash flows.

While we are experiencing limited financial

impacts at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks

and uncertainties associated with the COVID-19 pandemic, our business, financial condition, results of operations and growth prospects

could be materially adversely affected.

and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical timelines, our business,

financial condition, results of operations and growth prospects could be materially adversely affected.

Historically, we have financed our operations

1 unchanged sentence

in a similar manner.

During the year ended December 31, 2019 and the six months ended June 30, 2020, we did not engage in any financing

activity as our financings conducted during the year ended December 31, 2018 were sufficient to satisfy our cash needs during 2019

and the six months ended June 30, 2020.

During the year ended December 31, 2018, our only sources of funding were from our underwritten

public offering (the “Offering”) described below pursuant to which we received net proceeds of approximately $16.7

million and sales of 3.5 million shares of our Common Stock in our at-the-market offering program through the FBR Sales Agreement

pursuant to which we received net proceeds of approximately $12.2 million.

The FBR Sales Agreement enables us to offer and sell

shares of our Common Stock from time to time through FBR Capital Markets & Co.

as our sales agent, provided that we meet certain

Sales of Common Stock under the FBR Sales Agreement are made in sales deemed to be “at-the-market”

offerings as defined in Rule 415 promulgated under the Securities Act.

During the year ended December 31, 2019 and the nine months ended September 30, 2020, we did not engage in

any financing activity as our financings conducted during the year ended December 31, 2018 were sufficient to satisfy our cash

needs during 2019 and the nine months ended September 30, 2020.

During the year ended December 31, 2018, our only sources of funding

were from our underwritten public offering (the “Offering”) described below pursuant to which we received net proceeds

of approximately $16.7 million and sales of 3.5 million shares of our Common Stock in our at-the-market offering program through

the FBR Sales Agreement pursuant to which we received net proceeds of approximately $12.2 million.

The FBR Sales Agreement enables

us to offer and sell shares of our Common Stock from time to time through FBR Capital Markets & Co.

as our sales agent, provided

that we meet certain conditions.

Sales of Common Stock under the FBR Sales Agreement are made in sales deemed to be “at-the-market”

equity offerings as defined in Rule 415 promulgated under the Securities Act.

FBR Capital Markets & Co.

is entitled to receive a commission

rate of up to 3.0% of gross sales in connection with the sale of our Common Stock sold on our behalf.

is entitled to receive

a commission rate of up to 3.0% of gross sales in connection with the sale of our Common Stock sold on our behalf.

On October 15, 2018, we closed the Offering

pursuant to which we received gross proceeds of approximately $18.6 million before deducting underwriting discounts, commissions

and other offering expenses payable by us and sold an aggregate of (i) 2,520,000 Class A Units (the “Class A Units”),

with each Class A Unit consisting of one share of Common Stock, and one five-year warrant to purchase one share of Common Stock

at an exercise price of $1.38 per share (the “October 2018 Warrants”), with each Class A Unit offered to the public

at a public offering price of $1.15, and (ii) 15,723 Class B Units (the “Class B Units), with each Class B Unit offered to

at an exercise price of $1.38 per share (the “October 2018 Warrants”), with each Class A Unit offered to the public

at a public offering price of $1.15, and (ii) 15,723 Class B Units (the “Class B Units), with each Class B Unit offered to

the public at a public offering price of $1,000 per Class B Unit and consisting of one share of our Series B Convertible Preferred

Stock (the “Series B Preferred Stock”), with a stated value of $1,000 and convertible into shares of Common Stock at

the stated value divided by a conversion price of $1.15 per share, with all shares of Series B Preferred Stock convertible into

1 unchanged sentence

A.G.P./Alliance

Global Partners (the “Underwriters”) acted as sole book-running manager for the Offering.

In addition, pursuant to

the Underwriting Agreement that we entered into with the Underwriters on October 10, 2018, we granted the Underwriters a 45 day

option (the “Over-allotment Option”) to purchase up to an additional 2,428,825 shares of Common Stock and/or additional

October 2018 Warrants to purchase an additional 2,428,825 shares of Common Stock.

17 unchanged sentences

Our cash and cash equivalents will not be sufficient to enable us to

meet our long-term expected plans, including initiation or completion of future registrational studies for SYN-010, potential Phase

3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients,

or later-stage clinical trials of SYN-020.

Therefore, we do not intend to commence future registrational studies of SYN-010, Phase

3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients,

or later-stage clinical trials of SYN-020 until we are confident that we have funding necessary to complete such trials.

actively pursuing additional equity or debt financing, in the form of either a private placement or a public offering and have

been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings.

However, we do not currently have commitments from any third parties to provide us with capital.

Potential sources of financing

that we are pursuing include strategic relationships, public or private sales of our equity (including through the FBR Sales Agreement)

or debt and other sources.

Such additional financing opportunities might not be available to the Company when and if needed, on

acceptable terms or at all.

We cannot assure that we will meet the requirements for use of the FBR Sales Agreement especially in

light of the fact that we are currently limited by rules of the SEC as to the number of shares of Common Stock that we can sell

pursuant to the FBR Sales Agreement due to the market value of our Common Stock held by non-affiliates.

Even if we meet the requirements

for use of the FBR Sales Agreement, there can be no assurance that we will be able to continue to raise funds through the sale

of shares of Common Stock through the FBR Sales Agreement.

Additionally, we may seek to access the public or private equity markets

when conditions are favorable due to our long-term capital requirements.

If we are unable to obtain additional capital (which is

not assured at this time), our long-term business plan may not be accomplished and we may be forced to cease certain development

More specifically, the completion of future Phase 3 and/or registrational clinical studies will require significant

financing or a significant partnership.

If we raise funds by selling additional shares of Common Stock or other securities convertible

into Common Stock, the ownership interest of our existing stockholders will be diluted.

If we are not able to obtain funding for

future clinical trials when needed, we will be unable to carry out our business plan and we will be forced to delay the initiation

of future clinical trials until such time as we obtain adequate financing and our operating results and prospects will be adversely

Following the completion of our ongoing

Phase 2b clinical study of SYN-010, our planned Phase 1b/2a clinical study of SYN-004 (ribaxamase)

in allogeneic HCT recipients and planned IND filing of SYN-020, we will need to obtain additional funds for future clinical trials.

We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the current

investigator sponsored Phase 2b study of SYN-010 or the planned Phase 1b/2a clinical trial of SYN-004 (ribaxamase) to be conducted

by Washington University.

We do not have any committed sources of financing for future clinical trials at this time, and it is

uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all.

meet our long-term expected plans, including initiation or completion of a future potential Phase 3 clinical program of SYN-004

(ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials

Therefore, we do not intend to commence future Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of

CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020 until we are confident

that we have funding necessary to complete such trials.

We are actively pursuing additional equity or debt financing, in the form

of either a private placement or a public offering and have been in ongoing discussions with strategic institutional investors

and investment banks with respect to such possible offerings.

However, we do not currently have commitments from any third parties

to provide us with capital.

Potential sources of financing that we are pursuing include strategic relationships, public or private

sales of our equity (including through the FBR Sales Agreement) or debt and other sources.

Such additional financing opportunities

might not be available to the Company when and if needed, on acceptable terms or at all.

We cannot assure that we will meet the

requirements for use of the FBR Sales Agreement especially in light of the fact that we are currently limited by rules of the SEC

as to the number of shares of Common Stock that we can sell pursuant to the FBR Sales Agreement due to the market value of our

Common Stock held by non-affiliates.

Even if we meet the requirements for use of the FBR Sales Agreement, there can be no assurance

that we will be able to continue to raise funds through the sale of shares of Common Stock through the FBR Sales Agreement.

Additionally,

we may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements.

If we are unable to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished

and we may be forced to cease certain development activities.

More specifically, the completion of future Phase 3 and/or registrational

clinical studies will require significant financing or a significant partnership.

If we raise funds by selling additional shares

of Common Stock or other securities convertible into Common Stock, the ownership interest of our existing stockholders will be

If we are not able to obtain funding for future clinical trials when needed, we will be unable to carry out our business

plan and we will be forced to delay the initiation of future clinical trials until such time as we obtain adequate financing and

our operating results and prospects will be adversely affected.

Following the completion of our planned

Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients and planned Phase 1 SAD study of SYN-020, we will

need to obtain additional funds for future clinical trials.

We anticipate that our future clinical trials will be much larger in

size and require larger cash expenditures than the current planned Phase 1b/2a clinical trial of SYN-004 (ribaxamase) to be conducted

by Washington University and Phase 1 SAD study of SYN-020 IAP.

We do not have any committed sources of financing for future clinical

trials at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable

to us, or at all.

On January 30, 2020, the World Health Organization

17 unchanged sentences

Off-Balance Sheet Arrangements

During the three and six months ended June

30, 2020, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

During the three and nine months ended

September 30, 2020, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

5 unchanged sentences

liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

We have made certain accounting

policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original

terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases.

ROU assets are included in

other noncurrent assets and lease liabilities are included in other current and non-current liabilities in our condensed

consolidated balance sheets.

As of June 30, 2020, we did not have any material finance leases.

We have made certain accounting policy

elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months

or less) and (ii) combine lease and non-lease elements of our operating leases.

ROU assets are included in other noncurrent assets

and lease liabilities are included in other current and non-current liabilities in our condensed consolidated balance sheets.

of September 30, 2020, we did not have any material finance leases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis