Synthetic Biologics(TOVX) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the period ended September 30, 2019, detailing the company's financial position, performance, and cash flows Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2019, shows a decrease in total assets to $20.7 million and a significant decline in stockholders' equity to $2.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $18,650 | $28,918 | | Total Assets | $20,742 | $30,141 | | Total Liabilities | $6,172 | $3,686 | | Total Stockholders' Equity | $2,089 | $14,159 | Condensed Consolidated Statements of Operations The company reported a net loss attributable to common stockholders of $5.3 million for Q3 2019 and $12.9 million for the nine-month period, driven by increased R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $1,098 | $1,474 | $3,297 | $4,525 | | Research and development | $4,144 | $2,846 | $9,156 | $9,788 | | Loss from Operations | $(5,242) | $(4,320) | $(12,453) | $(14,313) | | Net Loss Attributable to Common Stockholders | $(5,253) | $(3,741) | $(12,934) | $(10,375) | | Net Loss Per Share - Basic and Dilutive | $(0.31) | $(0.93) | $(0.79) | $(2.73) | Condensed Consolidated Statements of Stockholders Equity Stockholders' equity significantly declined from $14.2 million at year-end 2018 to $2.1 million as of September 30, 2019, primarily due to the net loss - Total stockholders' equity decreased from $14,159 thousand at December 31, 2018 to $2,089 thousand at September 30, 2019, mainly due to the net loss for the period[22] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $10.3 million for the nine months ended September 30, 2019, with cash and cash equivalents decreasing to $18.7 million Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | $(10,268) | $(13,989) | | Net Cash Provided By Financing Activities | $0 | $6,422 | | Net decrease in cash | $(10,268) | $(7,567) | | Cash and cash equivalents at end of period | $18,650 | $9,549 | Notes to Condensed Consolidated Financial Statements These notes detail the company's business, accounting policies, clinical pipeline, liquidity, and significant financing events, highlighting the need for additional funding for future trials - The company is a clinical-stage company focused on GI diseases with lead candidates SYN-004 (ribaxamase), SYN-010, and SYN-020[27] - As of September 30, 2019, the company had $18.7 million in cash, sufficient to fund operations through Q4 2020, but additional financing or a partnership is required for Phase 3 clinical trials[30][31] - The company adopted ASC 842 on January 1, 2019, recording an ROU asset of approximately $537,000 and a lease liability of approximately $939,000[39] - In October 2018, the company completed a public offering of Class A and Class B Units, raising gross proceeds of approximately $18.6 million[57][69] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses clinical pipeline advancements, operational results, and liquidity, highlighting increased R&D expenses and the need for additional capital for late-stage trials despite current cash reserves - The company's lead candidates include SYN-004 (ribaxamase), SYN-010 for IBS-C, and SYN-020 for local GI and systemic diseases[90] - Key milestones include a SYN-010 Phase 2b data readout in 1H 2020, SYN-004 Phase 1b/2a enrollment in Q1 2020, and SYN-020 IND submission in Q1 2020[91] Q3 2019 vs Q3 2018 Operating Expenses (in millions) | Expense Category | Q3 2019 | Q3 2018 | Change | | :--- | :--- | :--- | :--- | | General and administrative | $1.1 | $1.5 | -26% | | Research and development | $4.1 | $2.8 | +46% | - The company held $18.7 million in cash as of September 30, 2019, sufficient for operations through Q4 2020, but insufficient for planned Phase 3 trials without additional capital or a partner[127][130][131] Quantitative and Qualitative Disclosures About Market Risk The company's market risk is limited to low-risk cash and cash equivalents, with no significant impact expected from interest rate changes - The company's primary market risk is confined to its cash and cash equivalents, consisting mainly of low-risk money market securities[137] - Due to the short-term, low-risk profile of its investments, the company does not anticipate a significant impact from changes in market interest rates[137] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[138] - There were no material changes in internal controls over financial reporting during the third quarter of 2019[139] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings that would materially adversely affect its business or financial condition - The company is not presently a party to any legal proceedings expected to have a material adverse effect on its business[141] Risk Factors This section updates risk factors, emphasizing the critical need for additional capital for future clinical trials, with fundraising limited by market capitalization - The company will need to raise additional capital to fund operations and its development programs[143] - Current cash is insufficient to complete planned Phase 3 clinical trials for SYN-004 and SYN-010 or late-stage trials for SYN-020, requiring significant expenditures or a strategic partnership[144] - The company's ability to raise capital through security sales is currently limited by SEC and NYSE American rules due to its market value[144] Unregistered Sales of Equity Securities and Use of Proceeds The company did not sell any unregistered equity securities during the third quarter of 2019 - No equity securities were sold in unregistered transactions during the quarter ended September 30, 2019[145] Defaults Upon Senior Securities This item is not applicable to the company - Not applicable[146] Mine Safety Disclosures This item is not applicable to the company - Not applicable[147] Other Information This item is not applicable to the company - Not applicable[148] Exhibits This section lists exhibits filed with the Form 10-Q, including a Clinical Trial Agreement, CEO/CFO certifications, and XBRL data files - Exhibits filed with the report include the Clinical Trial Agreement with Washington University School of Medicine, officer certifications, and XBRL data[155] Signatures