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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-05 · 199 added, 387 removed, 54 unchanged (92% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in

conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form

10-Q, and our audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in our 2020 Form

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, and our audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in our 2020 Form 10-K.

This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties.

“Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these

Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking

statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and

elsewhere herein, and those identified under Part I, Item 1A of our 2020 Form 10-K.

We are a diversified clinical-stage company developing

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

See “Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and elsewhere herein, and those identified under Part I, Item 1A of our 2020 Form 10-K.

We are a diversified clinical-stage company 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 plan to explore and evaluate a range of strategic

options, which may include:

(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 plan to explore and evaluate a range of strategic options, which may include:

in-licensing opportunities;

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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.

We are continuing to assess the potential impact

of the COVID-19 pandemic.

We are in close contact with our clinical development partners in order to assess the impact of COVID-19

on our studies and current timelines and costs.

While we currently do not anticipate any interruptions in our operations due to COVID-19,

it is possible that if the COVID-19 pandemic persists for an extended period of time, we could experience significant disruptions to our

clinical development timelines due to the COVID-19 pandemic, which would adversely affect our business, financial condition, results of

operations and growth prospects.

In response to the spread of COVID-19 as well

as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity.

We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order

to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state

and local government and health authorities.

The full extent to which the COVID-19 outbreak will directly or indirectly impact our business,

results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.

The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay

our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other

limitations on our ability to conduct our business in the ordinary course.

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 HCT patients, and advancing the clinical development program for SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications.

We are continuing to assess the potential impact of the COVID-19 pandemic.

We are in close contact with our clinical development partners in order to assess the impact of COVID-19 on our studies and current timelines and costs.

While we currently do not anticipate any interruptions in our operations due to COVID-19, it is possible that if the COVID-19 pandemic were to increase in severity for an extended period of time, we could once again experience delays in our clinical trials which could result in significant disruptions to our clinical development timelines due to the COVID-19 pandemic, which would adversely affect our business, financial condition, results of operations and growth prospects.

In response to the spread of COVID-19 as well as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity.

We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state and local government and health authorities.

The full extent to which the COVID-19 outbreak will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.

The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

Our Product Pipeline:

*Based on management’s current beliefs

and expectations

*Based on management’s current beliefs and expectations

aGVHD acute graft-vs-host disease;

allogeneic hematopoietic cell transplant patients;

allo-HCT allogeneic hematopoietic cell transplant patients;

AMR antimicrobial resistance;

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SAD single ascending dose

¹Additional products with preclinical proof-of-concept

include SYN-006 (carbapenemase) to prevent aGVHD and infection by carbapenem 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 dysfunction.

Additional pipeline products with preclinical

proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD, microbiome damage and infection due to treatment with

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

¹Additional products with preclinical proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD and infection by carbapenem 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 dysfunction.

Additional pipeline products with preclinical proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD, microbiome damage and infection due to treatment with carbapenem antibiotics, and SYN-007 (ribaxamase) delayed release (“DR”) being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

Summary of Clinical and Preclinical Programs

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(oral enzyme)

outcomes from End of Phase 2 meeting, including Food and Drug Administration (FDA)-proposed criteria for Phase 3 clinical efficacy and

safety which, if achieved, may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018)

market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic hematopoietic

cell transplant (HCT) patients

clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate safety,

tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019)

official meeting minutes from FDA Type-C meeting held on December 2, 2019 to discuss development in allogeneic HCT recipients who

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

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)

University began enrollment and the first patient was dosed in the first of three antibiotic cohorts for the Phase 1b/2a clinical trial

of SYN-004 in adult HCT recipients (Q2 2021)

Announced outcomes from End of Phase 2 meeting, including Food and Drug Administration (FDA)-proposed criteria for Phase 3 clinical efficacy and safety which, if achieved, may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018)

Clarified market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic hematopoietic cell transplant (HCT) patients

Announced clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate safety, tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019)

Received official meeting minutes from FDA Type-C meeting held on December 2, 2019 to discuss development in allogeneic HCT recipients who 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)

Washington University began enrollment and the first patient was dosed in the first of three antibiotic cohorts for the Phase 1b/2a clinical trial of SYN-004 in adult HCT recipients (Q2 2021)

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

(oral IAP enzyme)

high expressing manufacturing cell lines for intestinal alkaline phosphatase (IAP) (1H 2017)

basic Drug Supply manufacturing process and potential tablet formulation (2H 2017)

potential clinical indications with unmet medical need including enterocolitis associated with radiation therapy for cancer (Q1 2019)

pre-IND (Investigational New Drug) meeting with the FDA to clarify requirements for IND-enabling toxicology studies and manufacturing

requirements (Q2 2019)

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)

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)

Announced enrollment commenced and

three out of a total of four cohorts have been dosed in a Phase 1a single-ascending-dose (SAD) study of SYN-020 (Q2 2021).

Generated high expressing manufacturing cell lines for intestinal alkaline phosphatase (IAP) (1H 2017)

Identified basic Drug Supply manufacturing process and potential tablet formulation (2H 2017)

Identified potential clinical indications with unmet medical need including enterocolitis associated with radiation therapy for cancer (Q1 2019)

Completed pre-IND (Investigational New Drug) meeting with the FDA to clarify requirements for IND-enabling toxicology studies and manufacturing 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)

Submitted IND application with U.S.

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 (“SAD”) study in healthy volunteers, designed to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

Announced enrollment commenced and three out of a total of four cohorts have been dosed in a Phase 1SAD study of SYN-020 (Q2 2021)

Announced that patient enrollment, dosing and observation has been completed in the Phase 1, open label, SAD clinical trial.

Analyses of preliminary data demonstrated SYN-020 maintained a favorable safety profile and was well tolerated at all dose levels (Q2 2021)

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

(oral enzyme)

P2A as a potent carbapenemase that is stable in the GI tract

a formulated research lot for oral delivery (2017)

microbiome protection in a pig model of ertapenem administration (Q1 2018)

supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance in a pig model, including encoded beta-lactamases

and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of antibiotic-associated diarrhea (AAD), overgrowth of pathogenic

organisms and AMR (Degrade oral beta-lactam antibiotics)

Identified P2A as a potent carbapenemase that is stable in the GI tract

Manufactured a formulated research lot for oral delivery (2017)

Demonstrated microbiome protection in a pig model of ertapenem administration (Q1 2018)

Reported supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance in a pig model, including encoded beta-lactamases and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of antibiotic-associated diarrhea (AAD), overgrowth of pathogenic organisms and AMR (Degrade oral beta-lactam antibiotics)

(oral enzyme)

work ongoing to expand the utility of SYN-004 (ribaxamase) for use with oral beta-lactam antibiotics

Reported supportive data

from a second canine animal model demonstrating that when co-administered with oral Amoxicillin and oral Augmentin (combination amoxicillin/clavulanate),

oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these antibiotics

supportive data demonstrating SYN-007 mitigated antibiotic-mediated gut microbiome alterations and maintained gut microbiome integrity

when co-administered with oral amoxicillin in a dose-response canine study (Q2 2019)

Reported supportive data

demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase inhibitor Augmentin and

also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Preclinical work ongoing to expand the utility of SYN-004 (ribaxamase) for use with oral beta-lactam antibiotics

Reported supportive data from a second canine animal model demonstrating that when co-administered with oral Amoxicillin and oral Augmentin (combination amoxicillin/clavulanate), oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these antibiotics (Q2 2018)

Reported supportive data demonstrating SYN-007 mitigated antibiotic-mediated gut microbiome alterations and maintained gut microbiome integrity when co-administered with oral amoxicillin in a dose-response canine study (Q2 2019)

Reported supportive data demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase inhibitor Augmentin and also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Prevention and treatment of pertussis

(monoclonal antibody

supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection from

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

Collaboration

with UT Austin

Reported supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection from pertussis for five weeks in a neonatal non-human primate study (Q4 2017)

Collaboration with UT Austin

Recent Developments

Our Gastrointestinal (GI) and Microbiome-Focused Pipeline

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

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.

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

filing new patent

applications;

filing new patent applications;

prosecuting existing applications;

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Clinical and Pre-Clinical Update

SYN-004 (ribaxamase) — Prevention

of antibiotic-mediated microbiome damage, C.

difficile infections (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial

resistance (AMR) and acute graft-versus-host disease (aGVHD) in allogeneic HCT recipients

Phase 1b/2a Clinical Study in Allogeneic HCT

In August 2019, we entered into a Clinical Trial

Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004

(ribaxamase).

Under the terms of this agreement, we will serve as the sponsor of the study and supply SYN-004 (ribaxamase).

Dubberke, Professor of Medicine and Clinical Director, Transplant Infectious Diseases at Washington University and a member of the SYN-004

(ribaxamase) steering committee will serve as the principal investigator of the clinical trial in collaboration with his Washington University

colleague Dr.

SYN-004 (ribaxamase) — Prevention of antibiotic-mediated microbiome damage, C.

difficile infections (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial resistance (AMR) and acute graft-versus-host disease (aGVHD) in allogeneic HCT recipients

Phase 1b/2a Clinical Study in Allogeneic HCT Recipients

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever.

Under the terms of this agreement, we serve as the sponsor of the study and supply SYN-004 (ribaxamase).

Dubberke, Professor of Medicine and Clinical Director, Transplant Infectious Diseases at Washington University and a member of the SYN-004 (ribaxamase) steering committee serves as the principal investigator of the clinical trial in collaboration with his Washington University colleague Dr.

Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow 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 is 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 are being

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.

Safety and pharmacokinetic data for each cohort

will be reviewed by an independent Data and Safety Monitoring Committee, which will make a recommendation on whether to proceed to the

next IV beta-lactam antibiotic.

The clinical trial will also evaluate potential protective effects of SYN-004 (ribaxamase) on the gut

microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 (ribaxamase)

in allogeneic HCT recipients.

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 December 22, 2020, we announced we received approval from the

Institutional Review Board (IRB) at Washington University to commence the Phase 1b/2a clinical trial of SYN-004.

On April 14, 2021

we announced that enrollment has commenced and the first patient of the first antibiotic cohort of this study had been dosed.

enrollment proceeds as planned, a data readout for the first cohort is anticipated in Q4 2021.

Due to the unique challenges posed by the global

COVID-19 pandemic, Washington University continues to evaluate non-essential activities which may have a direct impact on planned and

ongoing clinical trials.

Continuation of the Phase 1b/2a clinical trial including, but not limited to, the enrollment of new patients

remains largely at the discretion of Washington University and is contingent upon their ability to conduct this clinical program free

from the impact of COVID-19.

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-020 — Oral Intestinal

Alkaline Phosphatase

SYN-020 is a quality-controlled, recombinant version

of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery.

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.

Despite its broad therapeutic potential, a key hurdle to commercialization has

been the high cost of IAP manufacture which is commercially available for as much as $10,000 per gram.

We believe we have developed technologies

to traverse this hurdle and now have the ability to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per

gram at commercial scale.

Based on the known mechanisms as well as our own supporting animal model data, we intended to initially develop

SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers.

And, while we believe

SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we

have begun planning to develop SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also

addressing significant unmet medical needs.

Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”),

and indications to treat and prevent metabolic and inflammatory disorders associated with aging which are supported by our collaboration

with Massachusetts General Hospital (“MGH”).

Across the six major markets, the total prevalent cases of celiac disease are

expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately

The Phase 1b/2a clinical trial is 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 are being 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.

Safety and pharmacokinetic data for each cohort will be reviewed by an independent Data and Safety Monitoring Committee, which will make a recommendation on whether to proceed to the next IV beta-lactam antibiotic.

The clinical trial will also evaluate potential protective effects of SYN-004 (ribaxamase) on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 (ribaxamase) in allogeneic HCT recipients.

On April 14, 2021, we announced that enrollment has commenced and the first patient of the first antibiotic cohort of this study had been dosed.

If enrollment proceeds as planned, a data readout for the first cohort is anticipated in Q4 2021.

Due to the unique challenges posed by the global COVID-19 pandemic, Washington University continues to evaluate non-essential activities which may have a direct impact on planned and ongoing clinical trials.

Continuation of the Phase 1b/2a clinical trial including, but not limited to, the enrollment of new patients remains largely at the discretion of Washington University and is contingent upon their ability to conduct this clinical program free from the impact of COVID-19.

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-020 — Oral Intestinal Alkaline Phosphatase

SYN-020 is a quality-controlled, recombinant version of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery.

The published literature indicates that IAP functions to diminish GI and systemic inflammation, tighten the gut barrier to diminish “leaky gut,” and promote a healthy microbiome.

Despite its broad therapeutic potential, a key hurdle to commercialization has been the high cost of IAP manufacture which is commercially available for as much as $10,000 per gram.

We believe we have developed technologies to traverse this hurdle and now have the ability to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per gram at commercial scale.

Based on the known mechanisms as well as our own supporting animal model data, we intended to initially develop SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers.

And, while we believe SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we have also begun planning to develop SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also addressing significant unmet medical needs.

Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”), and indications to treat and prevent metabolic and inflammatory disorders associated with aging which are supported by our collaboration with Massachusetts General Hospital (“MGH”).

Across the six major markets, the total prevalent cases of celiac disease are expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately 4%.

During the same period, prevalent cases in the U.S.

are expected to increase from 2.8 million in 2013 to an expected 4.3 million in

2023, representing a significant market opportunity.

During the second quarter of 2020, we announced

that we entered into an agreement with Massachusetts General Hospital 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 systemic inflammation, and treat age-related diseases.

Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General

and Gastrointestinal Surgery and Professor of Surgery, Harvard 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 and systemic inflammation that normally accompany aging.

Additionally, the IAP

administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

Under the terms of

the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and

prevent metabolic and inflammatory diseases associated with aging.

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

clinical development program for SYN-020.

On June 30, 2020, we submitted an IND application

to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy.

2020, we announced that we received a study-may-proceed letter from the FDA to conduct a Phase 1a single-ascending-dose (“SAD”)

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

On April 1, 2021, we

announced that enrollment had commenced and three out of a total of four cohorts have been dosed in the Phase 1a SAD clinical trial of

In all, twenty-four healthy adult volunteers will be enrolled, all of which will receive oral SYN-020.

A topline data announcement

from this clinical trial is expected during the third quarter of 2021.

Planning for a second Phase 1a study evaluating multiple-ascending

doses (“MAD”) of SYN-020 is also underway and anticipated to commence during the third quarter of 2021.

A topline data readout

of the Phase 1a MAD clinical study is anticipated during the first quarter of 2022, pandemic conditions permitting.

Following the completion

of Phase 1 safety studies, we may consider conducting a placebo-controlled Phase 1b/2a gluten challenge study in as many as 40 celiac

patients who present with predominantly GI symptoms followed by a Phase 2b proof-of-concept clinical trial in a similar patient population.

are expected to increase from 2.8 million in 2013 to an expected 4.3 million in 2023, representing a significant market opportunity.

On June 30, 2020, we submitted an IND application to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy.

On July 30, 2020, we announced that we received a study-may-proceed letter from the FDA to conduct a Phase 1a single-ascending-dose (“SAD”) study in healthy volunteers designed to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters.

On April 1, 2021, we announced that enrollment had commenced in the Phase 1 SAD clinical trial of SYN-020.

On June 29, 2021, we announced that enrollment, patient dosing and observation had been completed in its Phase 1, open-label, SAD study of SYN-020.

The SAD study enrolled 6 healthy adult volunteers into each of four cohorts with SYN-020 given orally as single doses ranging from 5 mg to 150 mg.

Analyses of preliminary data demonstrated that SYN-020 maintained a favorable safety profile, was well tolerated at all dose levels, and no adverse events were attributed to study drug.

No serious adverse events were reported.

Additional data from this clinical trial is expected during the third quarter of 2021.

Planning for a second Phase 1 study evaluating multiple-ascending doses (“MAD”) of SYN-020 is also underway and participant screening is anticipated to commence during the third quarter of 2021.

A topline data readout of the Phase 1 MAD clinical study is anticipated during the second quarter of 2022, pandemic conditions permitting.

Following the completion of Phase 1 safety studies, we may consider conducting a placebo-controlled Phase 1b/2a gluten challenge study in as many as 40 celiac patients who present with predominantly GI symptoms followed by a Phase 2b proof-of-concept clinical trial in a similar patient population.

We may also seek to initiate clinical trials of SYN-020 evaluating its potential therapeutic benefit in NAFLD patients.

During the second quarter of 2020, we announced that we entered into an agreement with Massachusetts General Hospital 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 systemic inflammation, and treat age-related diseases.

During the second quarter of 2021, we announced an amendment to our option for an exclusive license agreement with MGH to include intellectual property and technology related to the use of SYN-020 to inhibit liver fibrosis in select diseases, including NAFLD.

Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General and Gastrointestinal Surgery and Professor of Surgery, Harvard 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 and systemic inflammation that normally accompany aging.

Additionally, the IAP administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

Under the terms of the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and prevent metabolic and inflammatory diseases associated with aging.

If executed, we plan to use this license in the advancement of an expanded clinical development program for SYN-020.

Intellectual Property

All of our programs are supported by growing patent

All of our programs are supported by growing patent estates.

In total, we have over 80 U.S.

1 unchanged sentence

and foreign patents pending.

The SYN-004 (ribaxamase) program

is supported by IP that is assigned to Synthetic Biologics, namely U.S.

The SYN-004 (ribaxamase) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

patents and foreign patents (in most major markets, e.g.

(including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S.

and foreign patents pending in most major

markets, e.g.

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S.

and foreign patents pending in most major markets, e.g.

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others).

For instance, U.S.

8,894,994 and 9,587,234, which include claims to compositions of matter and pharmaceutical compositions of beta-lactamases, including

SYN-004 (ribaxamase), have patent terms to at least 2031.

8,894,994 and 9,587,234, which include claims to compositions of matter and pharmaceutical compositions of beta-lactamases, including SYN-004 (ribaxamase), have patent terms to at least 2031.

Further, U.S.

Patent 9,301,995 and 9,301,996, both of which will expire in 2031,

cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

9,290,754, 9,376,673,

9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase compositions of matter related to

SYN-004 (ribaxamase).

The SYN-020 (oral intestinal alkaline phosphatase

(IAP)) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

and foreign patent applications (in many major

markets, e.g.

Patent 9,301,995 and 9,301,996, both of which will expire in 2031, cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

9,290,754, 9,376,673, 9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase compositions of matter related to SYN-004 (ribaxamase).

The SYN-020 (oral intestinal alkaline phosphatase (IAP)) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

and foreign patent applications (in many major markets, e.g.

Europe, Canada, and Australia).

These patent applications, which cover various formulations, medical uses and manufacture

of SYN-020, are expected to expire in 2038-2040, if granted, and without taking potential patent term extensions or patent term adjustment

into account.

Our goal is to (i) obtain, maintain, and

enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve our

trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide.

We seek, where appropriate,

the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination

of contractual arrangements and patents.

These patent applications, which cover various formulations, medical uses and manufacture of SYN-020, are expected to expire in 2038-2040, if granted, and without taking potential patent term extensions or patent term adjustment into account.

Our goal is to (i) obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve our trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide.

We seek, where appropriate, the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination of contractual arrangements and patents.

Critical Accounting Policies

The condensed consolidated financial statements

are prepared in conformity with U.S.

GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts

of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements,

and the reported amounts of revenues and expenses in the periods presented.

We believe that the accounting estimates employed are appropriate

and resulting balances are reasonable;

however, due to inherent uncertainties in making estimates, actual results may differ from the

original estimates, requiring adjustments to these balances in future periods.

The critical accounting estimates that affect the condensed

consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of

our 2020 Form 10-K.

The condensed consolidated financial statements are prepared in conformity with U.S.

GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented.

We believe that the accounting estimates employed are appropriate and resulting balances are reasonable;

however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.

The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our 2020 Form 10-K.

Results of Operations

Three Months Ended March 31, 2021 and 2020

Three Months Ended June 30, 2021 and 2020

General and Administrative Expenses

General and administrative expenses increased

by 2% to approximately $1.42 million for the three months ended March 31, 2021, from approximately $1.39 million for the three months

ended March 31, 2020.

This increase is primarily due to higher insurance costs, audit fees, and legal costs offset by a reduction

in patent related legal fees, consulting fees and travel expense.

The charge related to stock-based compensation expense was $82,000 for

the three months ended March 31, 2021, compared to $65,000 the three months ended March 31, 2020.

General and administrative expenses decreased by 2% to approximately $1.26 million for the three months ended June 30, 2021, from approximately $1.29 million for the three months ended June 30, 2020.

This decrease is primarily due to lower legal costs and vacation expense offset by higher insurance costs, audit fees and registration fees.

The charge related to stock-based compensation expense was $83,000 for the three months ended June 30, 2021, compared to $67,000 for the three months ended June 30, 2020.

Research and Development Expenses

Research and development expenses decreased by

32% to approximately $1.1 million for the three months ended March 31, 2021, from approximately $1.6 million for the three months ended

March 31, 2020.

This decrease is primarily the result of lower indirect program costs for the three months ended March 31, 2021, including

salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research.

In addition, as a result of

the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2021 to

include only essential activities as part of their pandemic response, which delayed the start of our clinical trial, resulting in lower

clinical trial expenses for the quarter.

The research and development costs incurred during the quarter were primarily related to our

Phase 1a clinical trial of SYN-020 and the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

We anticipate

research and development expense to increase as our ongoing clinical trials continue to enroll patients.

The charge related

to stock-based compensation expense was $19,000 for the three months ended March 31, 2021, compared to $18,000 related to stock-based

compensation expense for the three months ended March 31, 2020.

The following table sets forth our research and

development expenses directly related to our therapeutic areas for the three months ended March 31, 2021 and 2020.

These 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.

Research and development expenses increased by 21% to approximately $1.9 million for the three months ended June 30, 2021, from approximately $1.6 million for the three months ended June 30, 2020.

This increase is primarily the result of increased clinical trial expenses as we began dosing patients in the Phase 1b/2a clinical trial of SYN-004 and Phase 1 SAD clinical trial of SYN-020 during the three months ended June 30, 2021, offset by lower indirect program costs for the three months ended June 30, 2021, including salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research.

In addition, as a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 to include only essential activities as part of their pandemic response, which delayed the start of our clinical trial until 2021.

We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients.

The charge related to stock-based compensation expense was $19,000 for the three months ended June 30, 2021, compared to $19,000 related to stock-based compensation expense for the three months ended June 30, 2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended June 30, 2021 and 2020.

These 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

3 unchanged sentences

Other Income/Expense

Other income was $347 for the three months ended

March 31, 2021, compared to other income of $38,000 for the three months ended March 31, 2020.

Other income for the three months ended

March 31, 2021 and 2020 is primarily comprised of interest income.

Other income was $2,000 for the three months ended June 30, 2021, compared to other income of $6,000 for the three months ended June 30, 2020.

Other income for the three months ended June 30, 2021 and 2020 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders

was approximately $11.5 million, or $0.13 per basic and dilutive common share for the three months ended March 31, 2021, compared to a

net loss of approximately $3.4 million, or $0.20 per basic common share and dilutive common share for the three months ended March 31,

Net loss attributable to common stockholders for the three months ended March 31, 2021 excludes net loss attributable to non-controlling

interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred

Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of $7.4 million.

Net loss attributable to common stockholders for the three months ended March 31, 2020 excludes net loss attributable to non-controlling

interest of $24,000 and includes the accretion of Series B preferred discount of $404,000 on converted shares and Series A Preferred Stock

accrued dividends of $62,000.

Our net loss attributable to common stockholders was approximately $3.2 million, or $0.02 per basic and dilutive common share for the three months ended June 30, 2021, compared to a net loss of approximately $3.3 million, or $0.18 per basic common share and dilutive common share for the three months ended June 30, 2020.

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.

Six Months Ended June 30, 2021 and 2020

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2021 of $2.69 million were relatively unchanged from six months ended June 30, 2020.

The movement for the period primarily consisted of decreased legal costs related to business development, patent execution and employee contract matters, vacation expense and travel, offset by insurance costs, audit fees and registration fees.

The charge related to stock-based compensation expense was $165,000 for the six months ended June 30, 2021, compared to $132,000 for the six months ended June 30, 2020.

Research and Development Expenses

Research and development expenses decreased by 6% to $3.0 million for the six months ended June 30, 2021, from $3.2 million for the six months ended June 30, 2020.

This decrease is primarily the result of lower indirect program costs for the six months ended June 30, 2021, including salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research offset by increased clinical trial expenses as we began dosing patients in the Phase 1b/2a clinical trial of SYN-004 and Phase 1 SAD clinical trial of SYN-020.

We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients.

Research and development expenses also include a charge relating to stock-based compensation expense of $38,000 for the six months ended June 30, 2021, compared to $37,000 for the six months ended June 30, 2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the six months ended June 30, 2021 and 2020.

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

Therapeutic Areas

Total direct costs

Total indirect costs

Total Research and Development Expenses

Other Income/Expense

Other income was $2,000 for the six months ended June 30, 2021, compared to other income of $44,000 for the six months ended June 30, 2020.

Other income for the six months ended June 30, 2021 and 2020 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was approximately $5.7 million, or $0.13 per basic and dilutive common share for the six months ended June 30, 2021, compared to a net loss of approximately $5.8 million, or $0.38 per basic common share and dilutive common share for the six months ended June 30, 2020.

Net loss attributable to common stockholders for the six months ended June 30, 2021 excludes net loss attributable to non-controlling interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of

$7.4 million.

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.

Liquidity and Capital Resources

With the exception of the three months ended June 30,

2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred negative cash

flows from operations, and have a significant accumulated deficit.

We have incurred an accumulated deficit of $259.6 million as of March 31,

2021 and expect to continue to incur losses in the foreseeable future.

Our cash and cash equivalents totaled $76.9 million

as of March 31, 2021, an increase of $70.6 million from December 31, 2020.

During the three months ended March 31,

2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $2.5 million

for the three months ended March 31, 2021.

During the three months ended March 31, 2021, we raised approximately $74.0 million from

cash received via the exercise of approximately 65% of the 2018 Warrants and sales of our common stock in “at the market offerings

pursuant to the Sales Agreement that we had entered into in 2016 with FBR Capital Markets & Co.

With the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred negative cash flows from operations, and have a significant accumulated deficit.

We have incurred an accumulated deficit of $262.7 million as of June 30, 2021 and expect to continue to incur losses in the foreseeable future.

During the six months ended June 30, 2021, our operating activities used net cash of approximately $5.9 million.

Our cash and cash equivalents totaled $74.3 million as of June 30, 2021, an increase of $68.1 million from December 31, 2020.

During the three and six months ended June 30, 2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $3.2 million and 5.7 million for the three and six months ended June 30, 2021, respectively.

During the six months ended June 30, 2021, we raised approximately $74.0 million from cash received via the exercise of approximately 65% of the 2018 Warrants and sales of our common stock in “at the market” offerings pursuant to the Sales Agreement that we had entered into in 2016 with FBR Capital Markets & Co.

(now known as B.

Riley Securities)

(the “Original ATM Sales Agreement”) and the Amended and Restated ATM Sales Agreement.

At March 31, 2021 our cash position

was $76.9 million, which we believe will be sufficient to fund our operations through at least the end of the first quarter of 2023.

As a result of the global COVID-19 pandemic, our

clinical development partner (Washington University) reduced their operating capacity during 2020 and 2021 to include only essential activities

as part of their pandemic response.

These delays impacted the timelines for our clinical programs, which included delaying commencement

of the Phase 1b/2a clinical trial of SYN-004 until the second quarter of 2021.

These delays also resulted in a decrease in expenses as

no clinical trials had yet commenced during that period.

If enrollment in our ongoing Phase 1b/2a clinical trial being conducted by Washington

University is halted due to COVID-19 developments, we may experience reduced expenses until such time as enrollment resumes.

Although we are experiencing limited, if any,

adverse impact to our financial stability stemming from the global economic slowdown, the overall disruption of global healthcare systems

and other risks 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

primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar

During the year ended December 31, 2020, our only source of financing was from sales of 9.2 million shares of our common

stock utilizing our at-the-market offering program through the Original ATM Sales Agreement pursuant to which we received net proceeds

of approximately $3.4 million.

During the three months ended March 31, 2021, we received proceeds of approximately $8.0 million from the

cash exercise of approximately 11.6 million of our 2018 warrants and sold approximately 78.7 million shares of our common stock for net

proceeds of approximately $66.0 million pursuant to the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement.

The Amended and Restated ATM Sales Agreement enables

us to offer and sell shares of our common stock from time to time through B Riley and AGP as our sales agents.

Sales of common stock under

the Amended and Restated ATM Sales Agreement are made in sales deemed to be an “at the market offering” as defined in Rule 415

promulgated under the Securities Act.

B Riley and AGP are 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.

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 Amended and Restated ATM Sales Agreement.

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.

We have committed, and expect to continue to commit,

substantial capital in order to implement our business strategy, including our planned product development efforts, preparation for our

planned clinical trials, and performance of clinical trials and our research and discovery efforts.

We believe our cash position of $76.9.

million as of March 31, 2021 is sufficient to fund our operations through at least the end of the first quarter of 2023, including

continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD,

as well as our ongoing Phase 1 SAD study and planned Phase 1 MAD study and Phase 2 clinical programs for SYN-020.

Following the anticipated completion of our ongoing

Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the ongoing Phase 1 SAD and planned MAD studies and planned

Phase 2a clinical trial of SYN-020, we may need to obtain additional funds for future clinical trials, the amount of which will depend

upon the trial size and number of clinical sites.

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

larger cash expenditures than the aforementioned clinical programs.

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.

As the COVID-19 coronavirus continues to

spread around the globe, we have experienced disruptions that impacted our business and clinical trials, including postponement of

commencement of the now ongoing Phase 1b/2a clinical trial of SYN-004.

The full impact of the COVID-19 outbreak continues to evolve

as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on our financial

condition, liquidity, and future results of operations.

We are actively monitoring the global situation and its potential impact on

our financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19

outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our

results of operations, financial condition, or liquidity.

Riley Securities) (the “Original ATM Sales Agreement”) and the Amended and Restated ATM Sales Agreement.

During the three months ended June 30, 2021 we did not sell any of our common stock through the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement.

We believe that our cash and cash equivalents at June 30, 2021 will be sufficient to fund our operations through at least the end of the first quarter of 2023.

As a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 and the first quarter of 2021 to include only essential activities as part of their pandemic response.

These delays impacted the timelines for our clinical programs, which included delaying commencement of the Phase 1b/2a clinical trial of SYN-004 until the second quarter of 2021.

These delays also resulted in a decrease in anticipated expenses as no clinical trials had yet commenced during that period.

If enrollment in our ongoing Phase 1b/2a clinical trial being conducted by Washington University is halted due to COVID-19 developments, we may experience reduced expenses until such time as enrollment resumes.

Although we are experiencing limited, if any, adverse impact to our financial stability stemming from the global economic slowdown, the overall disruption of global healthcare systems and other risks 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 primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner.

During the year ended December 31, 2020, our only source of financing was from sales of 9.2 million shares of our common stock utilizing our at-the-market offering program through the Original ATM Sales Agreement pursuant to which we received net proceeds of approximately $3.4 million.

During the six months ended June 30, 2021, we received proceeds of approximately $8.0 million from the cash exercise of approximately 11.6 million of our 2018 warrants and sold approximately 78.7 million shares of our common stock for net proceeds of approximately $66.0 million pursuant to the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement, all of which were received during the three months ended March 31, 2021.

The Amended and Restated ATM Sales Agreement enables us to offer and sell shares of our common stock from time to time through B Riley and AGP as our sales agents.

Sales of common stock under the Amended and Restated ATM Sales Agreement are made in sales deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act.

B Riley and AGP are 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.

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 Amended and Restated ATM Sales Agreement.

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.

We have committed, and expect to continue to commit, substantial capital in order to implement our business strategy, including our planned product development efforts, preparation for our planned clinical trials, and performance of clinical trials and our research and discovery efforts.

We believe our cash position of $74.3 million as of June 30, 2021 is sufficient to fund our operations through at least the end of the first quarter of 2023, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, as well as our ongoing Phase 1 SAD study and planned Phase 1 MAD study and Phase 2 clinical programs for SYN-020.

Following the anticipated completion of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the ongoing Phase 1 SAD and planned MAD studies and planned Phase 2a clinical trial of SYN-020, we may need to obtain additional funds for future clinical trials, the amount of which will depend upon the trial size and number of clinical sites.

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

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.

As the COVID-19 coronavirus continues to spread around the globe, we have experienced disruptions that impacted our business and clinical trials, including postponement of commencement of the now ongoing Phase 1b/2a clinical trial of SYN-004.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations.

We are actively monitoring the global situation and its potential impact on our financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity.

Off-Balance Sheet Arrangements

During the three months ended March 31, 2021,

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

During the three and six months ended June 30, 2021, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

At the inception of a contract we determine if

the arrangement is, or contains, a lease.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the

lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and 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 March 31, 2021, we did not

have any material finance leases.

At the inception of a contract we determine if the arrangement is, or contains, a lease.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and 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, 2021, 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