Item 2. Management’s Discussion and Analysis
ITEM 2. 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. 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.
Overview
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: 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 complete the ongoing 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.
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Our Product Pipeline:
*Based on management’s current beliefs and expectations
aGVHD acute graft-vs-host disease; allo-HCT allogeneic hematopoietic cell transplant patients; AMR antimicrobial resistance; CDI Clostridioides difficile infection. 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) delayed release (“DR”) being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.
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Summary of Clinical and Preclinical Programs
Therapeutic Area
Product
Candidate
Current Status
Prevention of microbiome damage, CDI, overgrowth of pathogenic organisms, AMR, and aGVHD in allogeneic HCT recipients (Degrade IV beta-lactam antibiotics)
SYN-004
(ribaxamase)
(oral enzyme)
●
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)
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Preserve gut barrier, treat local GI inflammation, and restore gut microbiome
SYN-020
(oral IAP enzyme)
●
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)
●
Commenced enrollment, dosing and observation in a Phase 1 SAD study of SYN-020 (Q2 2021)
●
Announced that 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)
●
Commenced enrollment, dosing and observation in a Phase 1, multiple ascending dose (“MAD”) clinical trial of SYN-020 in healthy, adult volunteers (Q3 2021). A data readout is anticipated during the second quarter of 2022
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Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade IV carbapenem antibiotics)
SYN-006
(oral enzyme)
●
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)
SYN-007
(oral enzyme)
●
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
SYN-005
(monoclonal antibody
therapies)
●
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
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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. We are maintaining and building our patent portfolio through: filing new patent applications; prosecuting existing applications; and licensing and acquiring new patents and patent applications.
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 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). Dr. Erik R. 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. Mark A. Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow Transplantation and Leukemia.
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. At this time, enrollment remains ongoing and a data readout for the first antibiotic cohort is anticipated in Q1 2022.
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.
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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. 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.
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 the study drug. No serious adverse events were reported.
During the third quarter of 2021 we initiated a Phase 1 clinical study evaluating multiple ascending doses (“MAD”) of SYN-020. On October 21, 2021 we announced that patient enrollment, dosing and observation commenced in the Phase 1 MAD of SYN-020. The ongoing Phase 1, placebo-controlled MAD study is intended to evaluate the safety, tolerability and biodistribution of SYN-020 upon repeated dosing and is expected to enroll 8 healthy adult volunteers into each of four cohorts (32 total study participants) with SYN-020 given orally twice daily for fourteen days as multiple ascending doses ranging from 5 mg to 75 mg. A safety review will be conducted at the end of each cohort to determine whether progression into the next higher dose cohort is permissible. At this time, the first cohort of 8 study participants is nearing completion and dosing of the second cohort of 8 study participants is expected to begin shortly thereafter, pending a safety review A topline data readout of the Phase 1 MAD clinical study is anticipated during the second quarter of 2022, pandemic conditions permitting. Both studies are intended to support the development of SYN-020 in multiple potential clinical indications including celiac disease, NAFLD, radiation enteritis, as well as indications supported by our collaboration with Massachusetts General Hospital. 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
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oral supplementation of IAP, including SYN-020, in mice. Dr. 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 estates. In total, we have over 80 U.S. and foreign patents and over 65 U.S. and foreign patents pending. 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. 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. Patent Nos. 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. Patent Nos. 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.
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.
Results of Operations
Three Months Ended September 30, 2021 and 2020
General and Administrative Expenses
General and administrative expenses increased by 9% to approximately $1.3 million for the three months ended September 30, 2021, from approximately $1.2 million for the three months ended September 30, 2020. This increase is primarily due to higher insurance costs, audit fees and registration fees offset by lower legal costs and vacation expense. The charge related to stock-based compensation expense was $83,000 for the three months ended September 30, 2021, compared to $67,000 for the three months ended September 30, 2020.
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Research and Development Expenses
Research and development expenses increased by 116% to approximately $2.0 million for the three months ended September 30, 2021, from approximately $900,000 for the three months ended September 30, 2020. This increase is primarily the result of increased clinical trial expenses as we continued dosing patients in the Phase 1b/2a clinical trial of SYN-004 and by higher indirect program costs for the three months ended September 30, 2021, including an increase in manufacturing costs for SYN-020. 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 September 30, 2021, compared to $15,000 related to stock-based compensation expense for the three months ended September 30, 2020.
The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended September 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.
September 30,
September 30,
Therapeutic Areas
2021
2020
Ribaxamase (SYN-004)
$
457
$
76
SYN-020
92
-
SYN-005
1
1
SYN-010
-
45
Total direct costs
550
122
Total indirect costs
1,422
792
Total Research and Development
$
1,972
$
914
Other Income/Expense
Other income was $2,000 for the three months ended September 30, 2021, compared to other income of $134 for the three months ended September 30, 2020. Other income for the three months ended September 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 $3.3 million, or $0.02 per basic and dilutive common share for the three months ended September 30, 2021, compared to a net loss of approximately $2.7 million, or $0.14 per basic common share and dilutive common share for the three months ended September 30, 2020. 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.
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Nine Months Ended September 30, 2021 and 2020
General and Administrative Expenses
General and administrative expenses increased by 3% to approximately $4.0 million for the nine months ended September 30, 2021, from approximately $3.9 million for the nine months ended September 30, 2020. The movement for the period primarily consisted of increased insurance costs, audit fees and registration fees offset by lower legal costs related to business development, patent execution and employee contract matters, vacation expense and travel. The charge related to stock-based compensation expense was $248,000 for the nine months ended September 30, 2021, compared to $193,000 for the nine months ended September 30, 2020.
Research and Development Expenses
Research and development expenses increased by 21% to $5.0 million for the nine months ended September 30, 2021, from $4.1 million for the nine months ended September 30, 2020. This increase is primarily the result of the 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 offset by lower indirect program costs for the nine months ended September 30, 2021, including salary and related expense reductions, a decrease in clinical contract service costs for SYN-004 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. Research and development expenses also include a charge relating to stock-based compensation expense of $57,000 for the nine months ended September 30, 2021, compared to $52,000 for the nine months ended September 30, 2020.
The following table sets forth our research and development expenses directly related to our therapeutic areas for the nine months ended September 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.
September 30,
September 30,
Therapeutic Areas
2021
2020
SYN-020
$
961
$
-
Ribaxamase
937
181
SYN-010
3
293
SYN-005
1
30
Total direct costs
1,902
504
Total indirect costs
3,119
3,648
Total Research and Development Expenses
$
5,021
$
4,152
Other Income/Expense
Other income was $4,000 for the nine months ended September 30, 2021, compared to other income of $44,000 for the nine months ended September 30, 2020. Other income for the nine months ended September 30, 2021 and 2020 is primarily comprised of interest income.
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Net Loss Attributable to Common Stockholders
Our net loss attributable to common stockholders was approximately $17.9 million, or $0.15 per basic and dilutive common share for the nine months ended September 30, 2021, compared to a net loss of approximately $9.4 million, or $0.52 per basic common share and dilutive common share for the nine months ended September 30, 2020. Net loss attributable to common stockholders for the nine months ended September 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 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.
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 approximately $266 million as of September 30, 2021 and expect to continue to incur losses in the foreseeable future. During the nine months ended September 30, 2021, our operating activities used net cash of approximately $8.1 million. Our cash and cash equivalents totaled approximately $72.1 million as of September 30, 2021, an increase of approximately $65.9 million from December 31, 2020. During the three and nine months ended September 30, 2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of approximately $3.3 million and approximately $9.0 million for the three and nine months ended September 30, 2021, respectively.
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 approximately 9.2 million shares of our common stock utilizing our at-the-market offering program through the Original ATM Sales Agreement (as defined below) pursuant to which we received net proceeds of approximately $3.4 million. During the nine months ended September 30, 2021, we raised approximately $74.0 million, of which (i) approximately $8.0 million was raised from cash received from the issuance of approximately 11.6 million shares of our common stock upon the exercise of approximately 65% of the 2018 Warrants during the three months ended March 31, 2021 and (ii) approximately $66.0 million of net proceeds was raised from the sale of approximately 78.7 million shares of our common stock during the three months ended March 31, 2021 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. During the three months ended September 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 September 30, 2021 will be sufficient to fund our operations through at least the end of the first quarter of 2023.
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.
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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 $72.1 million as of September 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 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 MAD study 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 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.
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. Although we are currently 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. 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 and nine months ended September 30, 2021, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.
Contractual Obligations
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 September 30, 2021, we did not have any material finance leases.
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