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Item 7. Management’s Discussion and Analysis

2025-03-06 compared with 2024-03-25 · 111 added, 75 removed, 129 unchanged (59% of the section changed)

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("VCN", formerly named VCN Biosciences, S.L.), described in more detail below (the "Acquisition"), we began transitioning our strategic focus to oncology, which is now our primary focus, through the development of VCN's new oncolytic adenovirus platform designed for intravenous and intravitreal delivery to trigger tumor cell death, to improve access of co - administered cancer therapies to the tumor, and to promote a robust and sustained anti - tumor response by the patient's immune system.

Our lead product candidate, VCN-01, a clinical stage oncolytic human adenovirus that is modified to express an enzyme, PH20 hyaluronidase, is currently being administered in a Phase 2 clinical study for the treatment of pancreatic cancer, a Phase 1 clinical study for the treatment of retinalblastoma, a Phase 1 clinical study for the treatment of head and neck squamous cell carcinoma and a Phase 1 clinical study for the treatment of solid tumors.

Our lead product candidate, VCN - 01, a clinical stage oncolytic human adenovirus that is modified for tumor - selective replication and to express an enzyme, PH20 hyaluronidase, is currently being evaluated in a Phase 2 clinical study for the treatment of pancreatic cancer ("VIRAGE"), and has recently been used to treat patients in a Phase 1 clinical study for the treatment of retinoblastoma, and Phase 1 clinical studies for the treatment of other solid tumors including head and neck squamous cell carcinoma.

Prior to the Acquisition, our focus was on developing therapeutics designed to treat gastrointestinal (GI) diseases which included our clinical development candidates:

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Financial Developments

Reverse Stock Split

On August 15, 2024, we announced a reverse stock split (the “Reverse Stock Split”) of our issued and outstanding Common Stock, at a ratio of one (1) share of Common Stock for every twenty-five (25) shares of Common Stock, effective August 25, 2024 (the “Effective Date”).

Our Common Stock began trading on a split-adjusted basis on the NYSE American when the market opened on August 25, 2024.

The Reverse Stock Split was authorized by our Board of Directors on August 15, 2024.

Public Offering

On September 27, 2024, we consummated a public offering (the “Offering”) of an aggregate of (i) 918,600 shares (the “Shares”) of Common Stock, (ii) pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 510,000 shares of Common Stock (the “Pre-Funded Warrant Shares”), and (iii) Common Stock purchase warrants (“Common Warrants”) to purchase up to 1,428,600 shares of Common Stock (the “Common Warrant Shares”).

Each Share and associated Common Warrant to purchase one (1) Common Warrant Share was sold at a combined public offering price of $1.75.

Each Pre-Funded Warrant and associated Common Warrant to purchase one (1) Common Warrant Share was sold at a combined public offering price of $1.7499.

We received aggregate gross proceeds from the Offering of approximately $2.5 million, before deducting placement agent fees and other offering expenses.

We intend to use the proceeds of the Offering primarily for working capital and general corporate purposes, including for research and development and manufacturing scale-up and may use a portion of the proceeds to invest in or acquire other products, businesses or technologies.

Each Pre-Funded Warrant was immediately exercisable for one (1) Pre-Funded Warrant Shares at an exercise price of $0.0001 per share.

Each Common Warrant has an exercise price of $2.00 per share, is immediately exercisable for one (1) Common Warrant Share, and expires five (5) years from its issuance date.

The Shares, Pre-Funded Warrants and accompanying Common Warrants were issued separately.

The exercise price of the Common Warrants and number of shares of Common Stock issuable upon exercise will adjust in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events.

The Common Warrants may be exercised on a cashless basis if at the time of exercise thereof there is no effective registration statement registering, or the prospectus contained therein is not available for, the issuance of the Common Warrant Shares to the holder.

The Pre-Funded Warrants were exercisable on a cashless basis at any time.

A holder of the Common Warrants and the Pre-Funded Warrants (together with its affiliates) may not exercise any portion of the Common Warrant or Pre-Funded Warrant to the extent that the holder would own more than 4.99% (or 9.99%, at the election of the holder) of the outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the amount of beneficial ownership of outstanding shares after exercising the holder’s Common Warrants or Pre-Funded Warrants up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.

As of October 3, 2024, all of the Pre-Funded Warrants were exercised.

Preferred Shares Conversion

On September 6, 2024, we received a notice of conversion from the holder of all of our outstanding shares of our Series C Convertible Preferred Stock and our Series D Convertible Preferred Stock to convert the 4,138 shares of Series C Convertible Preferred Stock held by them into 1,086 shares of our Common Stock at a conversion price of $30.50 per share and to convert the 100,000 shares of Series D Convertible Preferred Stock held by them into 26,230 shares of Common Stock at a conversion price of $30.50 per share.

On September 6, 2024, we issued an aggregate of 27,316 shares of Common Stock upon conversion of such shares of Series C Convertible Preferred Stock and Series D Convertible Preferred Stock.

Upon such conversion there are no shares of Series C Convertible Preferred Stock or Series D Convertible Preferred Stock outstanding.

On July 30, 2024, we received a notice of conversion from the holder of shares of our Series C Convertible Preferred Stock to convert 135,431 shares of Series C Convertible Preferred Stock into 35,523 shares of Common Stock at a conversion price of $30.50 per share.

On May 13, 2024, we received a notice of conversion from the holder of shares of our Series C Convertible Preferred Stock to convert 135,431 shares of Series C Convertible Preferred Stock into 35,523 shares of Common Stock at a conversion price of $30.50 per share.

Other Financial Developments

On September 16, 2024, we announced that the THERICEL project had been awarded funding of €2.28 million ($2.54 million) from the National Knowledge Transfer Program of the Spanish government’s Ministry of Science, Innovation & Universities to support a collaboration between us and the Universitat Autònoma de Barcelona (“UAB”) to advance our suspension cell platform for the clinical manufacture of adenovirus- and adeno-associated virus (“AAV”) therapies.

Under the award, we received an unsecured loan of €1.33 million ($1.48 million) as a lump sum payment in the first quarter of 2025 which bears interest at a rate of 4.015% and is to be repaid over 7 years commencing three years from the date of award, and UAB will receive a grant of €0.95 million ($1.06 million) dedicated to the THERICEL project and paid in annual installments over the next 3 years.

2024 Annual Stockholder’s Meeting

On October 31, 2024, we held our 2024 Annual Meeting of Stockholders (the “Annual Meeting”).

At the Annual Meeting, our stockholders (i) elected Jeffrey J.

Kraws, John Monahan, Steven A.

Shallcross and Jeffery Wolf as directors;

(ii) ratified the appointment of BDO USA P.C.

as our independent registered public accounting firm for the year ending December 31, 2024;

(iii) approved an amendment (“Amendment No.

2”) to our 2020 Stock Incentive Plan (the “2020 Stock Incentive Plan”) to (a) increase the number of shares of Common Stock that we will have authority to grant under the 2020 Stock Incentive Plan from 280,000 shares of Common Stock to 2,500,000 shares of Common Stock and (b) to amend the annual non-employee director grant limit to 250,000 shares of Common Stock;

and (iv) approved an amendment to our Articles of Incorporation to increase the number of authorized shares of Common Stock to 350,000,000 shares.

On November 1, 2024, we filed a Certificate of Change to our Articles of Incorporation with the Secretary of State of the State of Nevada (the “Certificate of Change”) that was effective on such date that increased the number of our authorized shares of Common Stock, from 14,000,000 shares to 350,000,000 shares.

Tax Credit Receivable

During the year ended December 31, 2023, we recognized a $1.8 million tax credit receivable and offsetting deferred R&D tax credit.

During the years ended December 31, 2024 and 2023, we recognized a $1.4 million and $1.8 million, respectively, tax credit receivable and offsetting deferred R&D tax credit.

We participate in a research and development program sponsored by the Spanish government.

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The credit will be amortized as a contra-expense over the two-year period 2024 and 2025.

B Riley and AGP Securities Sales Agreement

During the year ended December 31, 2023, we sold an aggregate of 2.0 million shares of our common stock and received net proceeds of approximately $2.2 million before deducting issuance expenses.

During the quarter ended December 31, 2023, we sold an aggregate of 105,284 shares of our common stock and received net proceeds of approximately $62,000.

In the quarter ended June 30, 2024, we completed the certification and applied for direct reimbursement, for our qualifying research and development expenses incurred in the year ended December 31, 2023.

We received approvals from the Spanish government in December 2024.

The credit will be amortized as a contra - expense over the two - year period 2025 and 2026.

At Market Issuance Sales Agreement

On May 2, 2024, the Company and A.G.P./Alliance Global Partners (“AGP”) entered into Amendment No.

2 (“Amendment No.

2”) to that certain Amended and Restated Sales Agreement among the Company, AGP and FBR Capital Markets & Co.

(now known as B.

Riley Securities) dated as of February 9, 2021, as amended by Amendment No.

1 thereto dated May 3, 2021 (the “Sales Agreement”), pursuant to which the Company may offer and sell, from time to time, at its option, shares of the Common Stock through A.G.P./Alliance Global Partners, as sales agent, in an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”).

Sales in the “at the market offering” may occur under the Company’s current effective registration statement on Form S-3 (File No.

333-279077) declared effective on September 25, 2024.

In addition, on May 1, 2024, the Company and B.

Riley Securities, Inc.

mutually agreed to enter into a notice of termination whereby B.

Riley Securities, Inc.

would no longer be a party to the Sales Agreement.

During the year ended December 31, 2024, the Company sold through the Sales Agreement approximately 569,000 shares of the Company’s Common Stock and received net proceeds of approximately $3.6 million.

Our Current Product Pipeline

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allo-HCT allogeneic hematopoietic cell transplant.

CPI immune checkpoint inhibitor.

CSR clinical study report.

HNSCC head and neck squamous cell carcinoma.

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IVit intravitreal.

ODD Orphan Drug Designation.

For other abbreviations see the text.

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.

¹Additional products with preclinical proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD, CDI, and microbiome damage in patients treated with carbapenem antibiotics and SYN-007 (ribaxamase) DR to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

²Depending on funding/partnership.

SYN-004 may enter an FDA-agreed Phase 3 clinical trial for the treatment of CDI.

³We have an option-license agreement with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

SYN-004 may enter a U.S.

Food and Drug Administration (“FDA”)-agreed Phase 3 clinical trial for the treatment of CDI.

Critical Accounting Estimates

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There are accounting policies, each of which requires significant judgments and estimates on the part of management, that we believe are significant to the presentation of our consolidated financial statements.

The most significant accounting estimates relate to research and development costs, business combinations, contingent consideration, and impairment of long-lived assets.

Business Combination

We account for acquisitions using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions.

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

As a result of the acquisition of VCN (see Note 5), we recorded two intangible assets:

in-process research and development (“IPR&D”) and goodwill.

The IPR&D and goodwill are deemed to have indefinite lives and therefore not amortized.

The most significant accounting estimates relate to research and development costs, valuation of Goodwill and IPRD, contingent consideration, and impairment of long-lived assets.

Goodwill and IPR&D

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IPR&D assets represent the fair value assigned to technologies that we acquire, which at the time of acquisition have not reached technological feasibility and have no alternative future use.

IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred.

During the period that the assets are considered indefinite-lived, they are tested for impairment on an annual basis, or more frequently if we become aware of any events occurring or changes in circumstances that indicate that the fair value of the IPR&D assets are less than their carrying amounts.

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Goodwill represents the excess of the purchase price paid when we acquired VCN in March 2022, over the fair values of the acquired tangible or intangible assets and assumed liabilities.

We will conduct an impairment test of goodwill on an annual basis as of October 1 of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce our fair value below our net equity value.

During the quarters ended September 30, 2023 and December 31, 2022, we experienced a sustained decline in the quoted market price of our common stock and we deemed this to be a triggering event.

We performed an impairment analysis and concluded that the Goodwill and IPR&D was not impaired.

There were no impairment changes recorded in 2023 or 2022.

We conduct an impairment test of goodwill on an annual basis as of October 1 of each year and will also conduct tests if events occur or circumstances change that would, more likely than not, reduce our fair value below our net equity value.

Contingent Consideration

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If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of assets exceeds the fair value of the assets.

Acquired In-Process Research & Development represents the fair value assigned to those research and development projects that were acquired in a business combination for which the related products have not received regulatory approval and have no alternative future use.

IPR&D is capitalized at its fair value as an indefinite-lived intangible asset, and any development costs incurred after the acquisition are expensed as incurred.

Upon achieving regulatory approval or commercial viability for the related product, the indefinite-lived intangible asset is accounted for as a finite-lived asset and is amortized on a straight-line basis over the estimated useful life.

If the project is not completed or is terminated or abandoned, we may have an impairment related to the IPR&D which is charged to expense.

Indefinite-lived intangible assets are tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount may be impaired.

Impairment is calculated as the excess of the asset’s carrying value over its fair value.

During the quarters ended September 30, 2023 and December 31, 2022, we experienced a sustained decline in the quoted market price of our common stock and we deemed this to be a triggering event.

We performed an impairment analysis and concluded that the Goodwill and IPR&D was not impaired.

Research and Development Costs

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Research and development costs consist primarily of license fees (including upfront payments), milestone payments, manufacturing costs, salaries, stock-based compensation and related employee costs, fees paid to consultants and outside service providers for laboratory development, legal expenses resulting from intellectual property prosecution and other expenses relating to the design, development, testing and enhancement of our product candidates.

Research and development expenses include external contract research organization (“CRO”) services.

We make payments to the CROs based on agreed upon terms and may include payments in advance of study services.

Research and development expenses include external CRO services.

We make payments to the CROs based on agreed upon terms and may include payments in advance of study

We review and accrue CRO expenses based on services performed and rely on estimates of those costs applicable to the stage of completion of study as provided by the CRO.

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At December 31, 2024 and 2023, we have accrued CRO expenses of $2.4 million and $1.7 million, respectively, that are included in accrued expenses.

As of December 31, 2023, and 2022, we have prepaid CRO costs of $1.1 million and $2.3 million, respectively, that are included in prepaid expenses.

As of December 31, 2024, and 2023, we have prepaid CRO costs of $365,000 and $1.1 million, respectively, that are included in prepaid expenses.

Results of Operations

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General and Administrative Expenses

General and administrative expenses decreased to $7.1 million for the year ended December 31, 2023, from $9.9 million for the year ended December 31, 2022.

This decrease of 28% is primarily comprised of the decrease in the expense related to the fair value of the contingent consideration of $2.8 million, along with lower salary, investor relations, legal costs, consulting related to the VCN acquisition, and director and officer insurance offset by higher audit fees, and other consulting fees.

The charge relating to stock-based compensation expense was $0.4 million for the year ended December 31, 2023, compared to $0.4 million for the year ended December 31, 2022.

General and administrative expenses increased to $7.4 million for the year ended December 31, 2024, from $7.1 million for the year ended December 31, 2023.

This increase of 4% is primarily comprised of the contingent consideration adjustment of $700,000 in the current year compared to a decrease of $660,000 in the prior, year having a cumulative of $1.4 million, offset by a decrease in compensation costs, consulting fees, and lower director and officer insurance.

The charge relating to stock-based compensation expense was $438,000 for the year ended December 31, 2024, compared to $388,000 for the year ended December 31, 2023.

Research and Development Expenses

Research and development expenses increased to $14.3 million for the year ended December 31, 2023, from $11.7 million for the year ended December 31, 2022.

This increase of 22% is primarily the result of higher clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, offset by lower expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients, the completed Phase 1a clinical trial of SYN-020, decreased manufacturing expenses related to our Phase 1a clinical trial of SYN-020 and lower other indirect costs.

We anticipate research and development expense to increase as we continue enrollment in our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC and finalize our Phase 1 clinical trial in retinoblastoma, expand GMP manufacturing activities for VCN-01, and continue supporting our VCN-11 and other preclinical and discovery initiatives.

Research and development expenses decreased to $12.0 million for the year ended December 31, 2024, from $14.3 million for the year ended December 31, 2023.

This decrease of 16% is primarily the result of lower clinical trial expenses related to our VIRAGE Phase 2 clinical trial of VCN-01 in PDAC, lower expenses related to our Phase 1a clinical trial of SYN-020, decreased expenses related to our Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and the recognition of the research and development tax credit, offset by increased expenses related to the Phase 1 trial of intravitreal VCN-01 in patients with retinoblastoma.

We anticipate research and development expense to increase as we complete our VIRAGE Phase 2 clinical trial of VCN-01and plan for our Phase 3 clinical trial of VCN-01 in PDAC, advance our VCN-01 program in retinoblastoma, expand GMP scale-up manufacturing activities for VCN-01, and continue supporting our other preclinical and discovery initiatives.

Research and development expenses also include a charge relating to non-cash stock-based compensation expense of $233,000 for the year ended December 31, 2024, compared to $165,000 for the year ended December 31, 2023.

In addition, we expect research and development expenses to increase as we incur higher clinical program costs for our VCN product candidates.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the years ended December 31, 2024 and 2023.

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Total research and development

IPRD and Goodwill Impairment

During the year ended December 31, 2024, we experienced a sustained decline in the quoted market price of our Common Stock and we deemed this to be a triggering event for impairment.

We performed an interim impairment analysis using the "Income approach" that requires significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post - launch cash flows and a risk - adjusted weighted average cost of capital.

We concluded that the in - process R&D with a carrying value of $19.8 million was written down to its estimated fair value of $18.6 million and an impairment charge of $1.3 million was recorded, and goodwill with a carrying value of $5.6 million was written down to its estimated fair value of zero and an impairment charge of $5.6 million was recorded during the year ended December 31, 2024.

The decrease in the valuation was primarily driven by an increase in the discount rate which was impacted by an increase in the company specific risk premium, and not by material changes to the clinical and administrative operations of the business.

Total Other Income

Other income was $693,000 for the year ended December 31, 2024, compared to other income of $1,442,000 for the year ended December 31, 2023.

Other income for the year ended December 31, 2023 is primarily comprised of interest income of $1,439,000 and an exchange gain of $3,000.

Other income for the year ended December 31, 2022 is primarily comprised of interest income of $512,000 offset by an exchange loss of $41,000

Other income for the year ended December 31, 2024 is primarily comprised of interest income of $697,000 and an exchange loss of $4,000.

Other income for the year ended December 31, 2023 is primarily comprised of interest income of $1,439,000 offset by an exchange gain of $3,000.

Income Tax Benefit

Our income tax benefit was $1.6 million and $1.4 million for the years ended December 31, 2023 and 2022 respectively, solely as a result of net operating losses incurred by our VCN subsidiary acquired in 2022.

Our effective tax rate for the years ended December 31, 2023 and 2022 was 8.2% and 6.75%, respectively, which differs from the federal statutory rate of 21% primarily due to the change in our valuation allowance, VCN’s foreign tax benefit, the fair market value adjustment for the contingent consideration, along with the effects of other nondeductible permanent differences.

Our income tax benefit was $1.6 million for the year ended December 31, 2023, solely as a result of net operating losses incurred by our VCN subsidiary acquired in 2022.

There was no income tax benefit recorded for the year ended December 31, 2024.

Our effective tax rate for the years ended December 31, 2024 and 2023 was zero and 8.2%, respectively, which differs from the federal statutory rate of 21% primarily due to the change in our valuation allowance, net operating loss true ups, VCN’s foreign tax benefit, the fair market value adjustment for the contingent consideration, along with the effects of other nondeductible permanent differences.

Our net loss for the year ended December 31, 2024 was $25.7 million, or ($19.03) per common share, compared to $18.3 million, or ($28.48) per common share for the year ended December 31, 2023.

Net loss attributable to common stockholders for the year ended December 31, 2022 was $20 million and includes the deemed dividend for the effect of the Series C Preferred Stock and Series D Preferred Stock price adjustment of $0.3 million.

There was no deemed dividend adjustment in 2023.

Liquidity and Capital Resources

As of December 31, 2023, the Company has a significant accumulated deficit, and with the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, the Company has experienced significant losses and incurred negative cash flows since inception.

As of December 31, 2024, we have a significant accumulated deficit, and with the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, the Company has experienced significant losses and incurred negative cash flows since inception.

We have incurred an accumulated deficit of $335 million as of December 31, 2024, and expect to continue to incur losses in the foreseeable future with the recognition of revenue being contingent on successful phase 3 clinical trials and requisite approvals by the FDA or foreign equivalents.

Our cash and cash equivalents totaled $11.6 million as of December 31, 2024, a decrease of $11.6 million from December 31, 2023.

During the year ended December 31, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $18.3 million for the year ended December 31, 2023.

With our cash position of $19.0 million in early March 2024, we believe we will be able to fund our operations through the fourth quarter of 2024 and into the first quarter of 2025.

Following the anticipated completion of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, and the preclinical studies of VCN-11, and related discovery initiatives, we will need to obtain additional funds for future clinical trials.

During the year ended December 31, 2024 and December 31, 2023, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $25.7 million and $18.3 million, respectively.

With our cash position of approximately $10.5 million in early March 2025, we believe we will be able to fund our operations into the third quarter of 2025.

Based on our current plans, our cash and cash equivalents will be sufficient to complete our ongoing clinical trial of VCN-01 in PDAC and finalize the clinical study report from the trial of VCN-01 in retinoblastoma, but may not be sufficient for additional trials of VCN-01, SYN-020 or SYN-004, or to complete the last cohort of the Phase 1a/2a clinical trial of SYN-004, which are expected to require significant cash expenditures.

Following the anticipated completion of our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, and preclinical studies supporting VCN-01 and our discovery initiatives, we will need to obtain additional funds for future clinical trials.

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

Management believes its plan, which includes the advancement of VCN-01 and the additional testing of SYN-004 (ribaxamase) will allow us to meet our financial obligations, further advance key products, and maintain our planned operations.

However, the amount of additional capital needed by us will also depend upon the costs to advance our VCN-01 clinical programs and whether we continue to develop SYN-004 internally, or out-license or partner such development.

If necessary, we may attempt to utilize the ATM or seek to raise additional capital in other financing transactions, neither of which is guaranteed.

Management believes its plan, which is focused on the advancement of VCN-01 will allow us to meet our financial obligations, further advance key products, and maintain our planned operations.

Based upon our current available funding and our focus on our clinical development of VCN-01 we do not anticipate that we will fund the last cohort of the Phase 1a/2a clinical trial of SYN-004 and enrollment in this cohort will not commence unless we obtain grant funding, or find a licensee or partner for the SYN-004 development program.

However, the amount of additional capital needed by us will also depend upon the costs to advance our VCN-01 clinical programs.

If necessary, we may attempt to utilize the at the market sales facility (the “ATM”) or seek to raise additional capital in other financing transactions, neither of which is guaranteed.

Use of the ATM is limited by certain restrictions and management’s plan does not rely on additional capital from either of these sources.

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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, 2023, our only source of cash was from sales of our common stock through the Amended and Restated ATM Sales Agreement in which we sold 2.0 million shares of our stock for net proceeds of $2.2 million.

During the year ended December 31, 2022, our only source of cash was from the sales of our Series C Preferred Stock and Series D Preferred Stock.

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 or other equity financings.

During the year ended December 31, 2023, our only source of cash was from sales of our Common Stock through the ATM pursuant to which we sold 81,000 shares of our Common Stock for net proceeds of $2.2 million.

During the year ended December 31, 2024, our only source of cash was from sales of our Common Stock through the Amended and Restated ATM Sales Agreement pursuant to which we sold 569,000 shares of our Common Stock for net proceeds of $3.6 million and from the sale of our securities in our public offering of 918,600 shares of Common Stock in combination with accompanying warrants to purchase an aggregate of 1,428,600 shares of the Common Stock for gross proceeds of $2.5 million (net proceeds of $2.0 million, after deducting underwriting discounts and estimated expenses).

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 ATM or other equity financings.

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 $19.0 million in early March 2024 is sufficient to fund our operations through at least the end of the fourth quarter of 2024 and into the first quarter 2025, including continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, preclinical studies of VCN-11 and related discovery initiatives, and to fund our committed obligations under the VCN Purchase Agreement for the VCN Acquisition.

We have spent, and expect to continue to spend, a substantial amount of funds in connection with implementing our business strategy, including our planned product development efforts, preparation for our planned clinical trials, performance of clinical trials and our research and discovery efforts.

Based on our current plans, our cash and cash equivalents will not be sufficient to enable us to meet our near term or long-term expected plans as it is anticipated that we will not have enough cash to continue our operations for the next twelve months from the date of the filing of this Annual Report.

We will be required to obtain additional funding in order to continue the development of certain product candidates within the anticipated time periods (including initiation of planned clinical trials), if at all, and to continue to fund operations at the current cash expenditure levels.

We do anticipate that our current cash will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including completing our funding requirements for our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, preclinical studies of VCN-11 and related discovery initiatives, and to fund our committed obligations under the VCN Purchase Agreement for the VCN Acquisition..

Our independent registered public accounting firm has issued a report that includes an explanatory paragraph referring to our recurring losses from operations (anticipated continued losses in the future) and net capital deficiency that raise substantial doubt in our ability to continue as a going concern without additional capital becoming available.

We do anticipate that our current cash of approximately $10.5 million as of early March 2025 will allow us to cover overhead costs, manufacturing costs for near-term clinical supply, manufacturing costs of VCN-01 for clinical trial use and limited research efforts, including our ongoing Phase 1 and Phase 2 clinical trials for VCN-01, preclinical studies supporting VCN-01 and our ongoing discovery initiatives, and to fund our committed obligations under the terms of the VCN Share Purchase Agreement (the “VCN Purchase Agreement”) related to the VCN Acquisition into the third quarter of 2025.

Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue.

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We cannot provide any assurance that we will be able to obtain the required funding to achieve our current business plan, obtain the required regulatory approvals for our product candidates or complete additional corporate partnering or acquisition transactions in order to commercialize such product candidates once regulatory approval is received.

If we fail to obtain additional funding for its clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, we will not be able to execute our business plan as planned and will be forced to cease certain development activities (including initiation of planned clinical trials) until funding is received and our business will suffer, which would have a material adverse effect on our financial position, results of operations and cash flows.

If we fail to obtain additional funding for our clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, we will not be able to execute our business plan as planned and will be forced to cease certain development activities (including initiation of planned clinical trials) until funding is received and our business will suffer, which would have a material adverse effect on our financial position, results of operations and cash flows.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital.

Our cash and cash equivalents will not be sufficient to enable us to meet our long-term expected plans, including initiation or completion of future registrational studies for VCN-01, any potential future trials of SYN-004 including Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020.

Our cash and cash equivalents will not be sufficient to initiate or complete future registrational studies for VCN-01, any potential future trials of SYN-004 including Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI or the Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, or later-stage clinical trials of SYN-020.

Therefore, we do not intend to commence future new studies of VCN-01, SYN-004 (ribaxamase) or SYN-020 until we are confident that we have funding necessary to complete such trials.

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

Potential sources of financing that we are pursuing include strategic relationships, public or private sales of our equity (including through the FBR Sales Agreement) or debt and other sources.

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

We cannot assure that we will meet the requirements for use of the FBR Sales Agreement especially in light of the fact that we are currently limited by rules of the SEC as to the number of shares of common stock that we can sell pursuant to the FBR Sales Agreement due to the market value of our common stock held by non-affiliates.

Even if we meet the requirements for use of the FBR Sales Agreement, there can be no assurance that we will be able to continue to raise funds through the sale of shares of common stock through the FBR Sales Agreement.

Potential sources of financing that we are pursuing include strategic relationships, licensing arrangements, public or private sales of our equity (including through the ATM) or debt and other sources.

Such additional financing opportunities might not be available to us when and if needed, on acceptable terms or at all.

We cannot assure that we will meet the requirements for use of the ATM especially in light of the fact that we are currently limited by rules of the Securities and Exchange Commission (the “SEC”) as to the number of shares of Common Stock that we can sell pursuant to the ATM due to the market value of our Common Stock held by non-affiliates.

Even if we meet the requirements for use of the ATM, there can be no assurance that we will be able to raise funds through the sale of shares of Common Stock through the ATM.

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

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Net cash used in operating activities was $16.9 million and $19.0 million during the years ended December 31, 2024 and 2023, respectively, which was primarily due to the use of funds in our operations related to the development of VCN-01 our product candidate.

Cash used in operating activities for the years ended December 31, 2023 decreased compared to the same period in 2022 due primarily to the payment of contingent consideration to Grifols of $1.7 million and an increase in interest income, which led to a decrease in net loss.

Cash used in operating activities for the years ended December 31, 2024 decreased compared to the same period in 2023 due primarily to lower research and development expenses and a decrease in interest income, which led to a decrease in net loss.

Cash Used In Investing Activities

Cash used in investing activities during the years ended December 31, 2023 was $202,000 for equipment purchases as compared to $4.4 million during the same period in the prior year, which were primarily related to the cash payment for the acquisition of VCN and a pre-acquisition loan to VCN.

Cash Used In Financing Activities

Cash used in financing activities during the year ended December 31, 2023 included at the market offering proceeds of $2.2 million from sales of 2.0 million shares of our common stock which was offset by payment of contingent consideration to Grifols of $1.5 million and $75,000 of payments of debt that we incurred when we acquired VCN.

Cash used in financing activities during the year ended December 31, 2022 related to the proceeds received from the issuance of Series C and D preferred stock offset by the payments of contingent consideration of $3.0 million and $1.4 million of debt payments related to loans extended by certain Spanish institutions.

Cash used in investing activities during the years ended December 31, 2024 and 2023 was $1,000 and $202,000, respectively for equipment purchases.

Cash Provided By Financing Activities

Cash provided by financing activities was $5.5 million during the year ended December 31, 2024 compared to $625,000 during the year ended December 31, 2023.

Cash provided by financing activities during the year ended December 31, 2024 included at the market offering proceeds of $3.6 million from sales of 569,000 shares of our Common Stock offset by payments related to loans extended by certain Spanish institutions of $67,000 and net proceeds of $2.0 million from the sale of our securities in our public offering of 918,600 shares of Common Stock in combination with accompanying warrants to purchase an aggregate of 1,428,600 shares.

Cash provided by financing activities during the year ended December 31, 2023 included at the market offering proceeds of $2.2 million from sales of 81,000 million shares of our common stock which was offset by payment of contingent consideration to Grifols of $1.5 million and $75,000 of payments of debt that we incurred when we acquired VCN.

License and Contractual Agreement Obligations

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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-K

Item 7. Management’s Discussion and Analysis