What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-05-16 compared with 2021-11-03 · 24 added, 77 removed, 30 unchanged (77% of the section changed)

3 unchanged sentences

RISKS RELATING TO OUR BUSINESS

We will need to raise additional capital to operate our business and our failure to obtain funding when needed may force us to delay, reduce or eliminate our development programs or commercialization efforts.

In addition, potential capital raises and strategic opportunities may require the issuance of additional securities.

During the nine months ended September 30, 2021, our operating activities used net cash of approximately $8.1 million and our cash and cash equivalents were approximately $72.1 million as of September 30, 2021.

We will need to raise additional capital to operate our business and our failure to obtain funding when needed may force us to delay, reduce or eliminate certain of our development programs or commercialization efforts.

During the three months ended March 31, 2022, our operating activities used net cash of approximately $10.5 million and our cash and cash equivalents were approximately 54.9 million at the end of April 2022.

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 and have a significant accumulated deficit.

As of September 30, 2021, our accumulated deficit totaled approximately $266 million on a consolidated basis.

As of March 31, 2022, our accumulated deficit totaled approximately $275.6 million on a consolidated basis.

Pursuant to the Purchase Agreement, we have agreed to use reasonable efforts to commercialize VCN-01 and we agreed as a post- closing covenant to commit to fund VCN's research and development programs, including but not limited to VCN-01 PDAC phase 2 clinical trial, VCN-01 RB trial and necessary G&A within a budgetary plan of approximately $27.8 million over the next three years.

We expect to incur additional operating losses in the future and therefore expect our cumulative losses to increase.

With the exception of the quarter ended September 30, 2010, and limited laboratory revenues from Adeona Clinical Laboratory, which we sold in March 2012, we have generated very minimal revenues.

We do not expect to derive revenue from any source in the near future until we or our potential partners successfully commercialize our products, if ever.

We expect our expenses to increase in connection with our anticipated activities, particularly as we continue research and development, initiate and conduct later stage clinical trials, and seek marketing approval for our product candidates.

With the exception of the quarter ended June 30, 2010, and limited laboratory revenues from Adeona Clinical Laboratory, which we sold in March 2012, we have generated very minimal revenues.

We do not expect to derive revenue from any source in the near future until we or our potential partners successfully commercialize our products.

We expect our expenses to increase in connection with our anticipated activities, particularly as we continue research and development, initiate and conduct clinical trials, and seek marketing approval for our product candidates.

Until such time as we receive approval from the FDA and other regulatory authorities for our product candidates, we will not be permitted to sell our products and therefore will not have product revenues from the sale of products.

1 unchanged sentence

We will need to raise additional capital to fund our operations and meet our current timelines and we cannot be certain that funding will be available on acceptable terms on a timely basis, or at all.

Any failure to raise additional capital as and when needed, as a result of insufficient authorized shares or otherwise, could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

Based on our current plans, our cash and cash equivalents will be sufficient to complete our ongoing Phase 1a/2a clinical trial of SYN-004, our ongoing Phase 1 multiple ascending dose clinical trial of SYN-020, and a potential Phase 2a clinical trial of SYN-020 but, may not be sufficient for post-Phase 2a future clinical programs for SYN-020 or additional trials of SYN-004, which are expected to require significant cash expenditures.

Based on our current plans, our cash and cash equivalents will be sufficient to complete our planned later stage clinical trials of VCN-01 (our proposed clinical trials in PDAC and retinoblastoma), Phase 1a/2a clinical trial of SYN-004, our Phase 1 multiple-ascending dose clinical trials of SYN-020, but may not be sufficient additional trials of SYN-020 or SYN-004, which are expected to require significant cash expenditures.

In addition, based on the significant anticipated cost of a Phase 3 clinical program in a broad indication for SYN-004, we expect it will not be feasible for us to initiate and complete this trial at this time without a partner given the capital constraints tied to our current market cap and share price.

Further development of VCN’s product candidates will require additional funding.

To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution.

We may also issue shares of our common stock in connection with strategic opportunities.

However, our remaining authorized and unissued shares of common stock available may be insufficient to complete potential future equity financing transactions and/or strategic transactions we may seek to undertake.

At our 2021 Annual Meeting of Shareholders, we sought shareholder approval of an amendment to our Articles of Incorporation, as amended, to increase our authorized number of shares of common stock, which approval was not obtained.

Accordingly, we anticipate taking steps, when appropriate, to increase our number of available shares which may have the effect of facilitating such transactions;

however, there can be no assurance that we will be successful in obtaining the required approval for any such action.

Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business and also have a dilutive effect on our stockholders.

1 unchanged sentence

In addition, we could be forced to delay, discontinue or curtail product development, forego sales and marketing efforts, and forego licensing in attractive business opportunities.

Our ability to raise capital through the sale of securities may be limited by the rules of the SEC and NYSE American that place limits on the number and dollar amount of securities that may be sold.

There can be no assurances that we will be able to raise the funds needed, especially in light of the fact that our ability to sell securities registered on our registration statement on Form S-3 will be limited until such time the market value of our voting securities held by non-affiliates is $75 million or more.

We also may be required to seek collaborators for our product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available.

The market price of our common stock has been and may continue to be volatile and adversely affected by various factors.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future.

By way of example, on February 8, 2021, the price of our common stock closed at $1.17 per share while on October 18, 2021, our stock price closed at $0.4362 per share with no discernable announcements or developments by the company or third parties.

On February 9, 2021, the intra-day sales price of our common stock fluctuated between a reported low sale price of $0.91 and a reported high sales price of $1.19.

On October 18, 2021, the intra-day sales price of our common stock fluctuated between a reported low sale price of $0.43 and a reported high sales price of $0.44.

We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects.

In addition, the recent outbreak of the novel strain of coronavirus (COVID-19) has caused broad stock market and industry fluctuations.

The stock market in general and the market for biotechnology and pharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

As a result of this volatility, investors may experience losses on their investment in our common stock.

The market price of our common stock could fluctuate significantly in response to various factors and events, including:

● investor reaction to our business strategy;

● the success of competitive products or technologies;

● our continued compliance with the listing standards of the NYSE American;

● regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;

● results of our clinical trials;

● actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms;

● variations in our financial results or those of companies that are perceived to be similar to us;

● the success of our efforts to acquire or in-license additional products or product candidates;

● developments concerning our collaborations or partners;

● developments or disputes concerning patents or other proprietary rights, including litigation matters and our ability to obtain patent protection for our products;

● our ability or inability to raise additional capital and the terms on which we raise it;

● declines in the market prices of stocks generally;

● trading volume of our common stock;

● sales of our common stock by us or our stockholders;

● general economic, industry and market conditions;

● other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the recent outbreak of the novel coronavirus (COVID-19), and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial condition or other indicators of value.

Since the price of our common stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses.

In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors.

Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the market and have led to the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company.

Many investors who have purchased shares in those companies at an inflated price face the risk of losing a significant portion of their original investment as the price per share has declined steadily as interest in those stocks has abated.

While we have no reason to believe our shares would be the target of a short squeeze, there can be no assurance that we won’t be in the future, and you may lose a significant portion or all of your investment if you purchase our shares at a price that is significantly disconnected from our underlying value.

We expect to seek to raise additional capital in the future, which may be dilutive to stockholders or impose operational restrictions.

2 unchanged sentences

We may also enter into strategic transactions, issue equity as consideration for acquisitions or part of license issue fees to our licensors, compensate consultants or settle outstanding payables using equity that may be dilutive.

We are authorized to issue 200,000,000 shares of common stock, of which 132,042,548 shares of common stock were issued and outstanding as of November 3, 2021.

At November 3, 2021, we had reserved 10,342,384 shares of common stock for issuance upon exercise of our outstanding options and warrants.

We are authorized to issue 200,000,000 shares of common stock, of which 158,437,840 shares of common stock were issued and outstanding as of March 16, 2022.

At March 16, 2022, we had reserved 12,800,241 shares of common stock for issuance upon exercise of our outstanding options and warrants.

In addition, at such date, we had 200,000 shares of our common stock reserved for future issuance under our equity incentive plans.

9 unchanged sentences

The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by existing stockholders.

RISKS RELATING TO OUR SECURITIES

We cannot assure you that our common stock will be liquid or that it will remain listed on the NYSE American.

Our common stock is listed on the NYSE American.

The NYSE American’s listing standards generally mandate that we meet certain requirements relating to stockholders’ equity, stock price, market capitalization, aggregate market value of publicly held shares and distribution requirements.

We cannot assure you that we will be able to maintain the continued listing standards of the NYSE American.

The NYSE American requires companies to meet certain continued listing criteria including a minimum stockholders’ equity of $6.0 million if an issuer has sustained losses from continuing operations and/or net losses in its five most recent years, as outlined in the NYSE American Company Guide.

At December 31, 2020, we had a stockholders’ deficit of $7.5 million.

The NYSE American Company Guide also states that the NYSE normally will not consider removing from listing securities of an issuer if it is in compliance with all of the following:

a total value of market capitalization of at least $50.0 million;

1,100,000 publicly-held shares;

a market value of publicly held shares of at least $15.0 million;

and 400 round lot shareholders.

Although we have more than 1,100,000 shares publicly held and 400 round lot shareholders, our stock price is volatile and, during 2019 and 2020, the price of our common stock experienced a sustained decrease resulting in a period where our market capitalization fell below $50.0 million.

Our market capitalization is currently above $50.0 million.

If our common stock falls below $0.20 per share on a 30-trading-day average it will become subject to the continued listing evaluation and follow-up procedures set forth in Section 1009 of the NYSE American Company Guide which could, among other things, result in initiation of immediate delisting procedures.

In the event that we were to fail to meet the requirements of NYSE American per share price requirement or stockholders’ equity requirement and we could not timely cure such deficiency, our listing could become subject to NYSE American continued listing evaluation and follow-up procedures, which could result in delisting procedures.

On May 25, 2021, we received notification from the NYSE American that the Company had regained compliance with all of the continued listing standards set forth in Part 10, Section 1003 of the NYSE American Company Guide (the “Company Guide”) relating to the Exchange’s continued listing requirements.

We previously received notification from the NYSE American citing failure to comply with the minimum stockholders’ equity continued listing standard as set forth in Part 10, Section 1003 of the Company Guide.

As a result of management’s efforts to regain compliance, the Exchange has informed the Company that it has cured the previously cited deficiencies and is in full compliance with the continued listing standards set forth in Part 10, Sections 1003 (i), (ii), and (iii) of the Company Guide.

However, there can be no assurance that we will continue to meet the NYSE American continued listing requirements.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

We did not sell any equity securities during the quarter ended September 30, 2021 in transactions that were not registered under the Securities Act

DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

MINE SAFETY DISCLOSURES.

Not applicable.

We have identified a material weakness in our internal controls, and we cannot provide assurances that this weakness will be effectively remediated or that additional material weaknesses will not occur in the future.

In addition, we are not yet required to perform an assessment of internal controls for VCN.

If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a- 15(f) under the Exchange Act.

During the second quarter of 2022, we identified a material weakness in our controls over financial reporting related to the accounting for non-routine transactions.

Specifically, the controls related to the review of internal and externally prepared reports and analysis utilized in the financial reporting process and the related income tax implication of the non-routine transactions.

Although management believes that the control deficiencies will be remediated by the end of the fiscal year there can be no assurance that the deficiency will be remediated at such time or that the internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.

In addition, the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively.

As permitted by the SEC, we are permitted to exclude VCN from the assessment of internal control over financial reporting the year ending December 31, 2022.

In conjunction with the acquisition of VCN, we are currently in the process of integrating VCN's policies, processes, people, technology, and operations into the consolidated company, and integrating VCN’s operations into our system of internal control over financial reporting;

however, we cannot assure you that such integration will be successful to enable us to identify or avoid material weaknesses in the future.

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 1A. Risk Factors