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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM             TO

 

Commission File Number 001-37566

 

SYNLOGIC, INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

26-1824804

(I.R.S. Employer

Identification No.)

 

 

 

301 Binney St., Suite 402

Cambridge, MA

(Address of principal executive offices)

 

02142

(Zip Code)

(617) 401-9975

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of exchange on which registered

Common Stock, par value $0.001 per share

SYBX

The Nasdaq Capital Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

As of May 5, 2022, there were 70,250,681 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained herein are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

 

the success of our research and development efforts;

 

the initiation, progress, timing, costs and results of clinical trials for our product candidates;

 

the time and costs involved in obtaining regulatory approvals for our product candidates;

 

the success of our collaborations with third parties;

 

the progress, timing and costs involved in developing manufacturing processes and in manufacturing products, as well as agreements with third-party manufacturers;

 

the rate of progress and cost of our commercialization activities;

 

the expenses we incur in marketing and selling our product candidates, if approved;

 

the revenue generated by sales of our product candidates, if approved;

 

the emergence of competing or complementary technological developments;

 

the terms and timing of any additional collaborative, licensing or other arrangements that we may establish;

 

the acquisition of businesses, products and technologies;

 

our need to implement additional infrastructure and internal systems;

 

our need to add personnel and financial and management information systems to support our product development and potential future commercialization efforts, and to enable us to operate as a public company;

 

the development of major public health concerns, including the novel coronavirus outbreak or other pandemics arising globally, and the current and future impact of it and COVID-19 on our clinical trials, business operations and funding requirements; and

 

other risks and uncertainties, including those listed under Part II, Item 1A. “Risk Factors”.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

 

 


 

SYNLOGIC, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Unaudited Consolidated Balance Sheets

 

1

 

 

 

Unaudited Consolidated Statements of Operations and Comprehensive Loss

 

2

 

 

 

Unaudited Consolidated Statements of Stockholders’ Equity

 

3

 

 

 

Unaudited Consolidated Statements of Cash Flows

 

4

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

5

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

12

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

22

 

 

 

Item 4. Controls and Procedures

 

22

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

23

 

 

 

Item 1A. Risk Factors

 

23

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

56

 

 

 

Item 3. Defaults Upon Senior Securities

 

56

 

 

 

Item 4. Mine Safety Disclosures

 

56

 

 

 

Item 5. Other Information

 

56

 

 

 

Item 6. Exhibits

 

57

 

 

 

Signatures

 

58

 

 

 

 


 

SYNlogic, Inc. and SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(In thousands, except share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,851

 

 

$

16,438

 

Short-term marketable securities

 

 

99,667

 

 

 

112,150

 

Prepaid expenses and other current assets

 

 

3,900

 

 

 

4,721

 

Total current assets

 

 

124,418

 

 

 

133,309

 

Long-term marketable securities

 

 

 

 

 

8,041

 

Property and equipment, net

 

 

9,082

 

 

 

9,088

 

Right of use asset - operating lease

 

 

14,893

 

 

 

13,889

 

Restricted cash

 

 

1,097

 

 

 

1,097

 

Prepaid research and development, net of current portion

 

 

9,797

 

 

 

9,309

 

Other assets

 

 

22

 

 

 

3

 

Total assets

 

$

159,309

 

 

$

174,736

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,409

 

 

$

1,944

 

Accrued expenses

 

 

2,668

 

 

 

4,402

 

Deferred revenue

 

 

314

 

 

 

531

 

Lease liability - operating lease

 

 

4,261

 

 

 

3,191

 

Finance lease obligations

 

 

12

 

 

 

12

 

Total current liabilities

 

 

9,664

 

 

 

10,080

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Lease liability - operating lease, net of current portion

 

 

17,336

 

 

 

17,372

 

Finance lease obligations, net of current portion

 

 

15

 

 

 

18

 

Total long-term liabilities

 

 

17,351

 

 

 

17,390

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

 

 

 

 

 

 

 

 

250,000,000 shares authorized as of March 31, 2022 and December 31, 2021.

   70,267,586 shares issued and outstanding as of March 31, 2022 and

   69,698,844 shares issued and outstanding as of December 31, 2021.

 

 

70

 

 

 

70

 

Additional paid-in capital

 

 

439,138

 

 

 

438,113

 

Accumulated other comprehensive loss

 

 

(345

)

 

 

(45

)

Accumulated deficit

 

 

(306,569

)

 

 

(290,872

)

Total stockholders' equity

 

 

132,294

 

 

 

147,266

 

Total liabilities and stockholders' equity

 

$

159,309

 

 

$

174,736

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

1


 

Synlogic, INC. aND SUBSIDIARIES

Unaudited Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

 

 

For the Three Months Ended

 

 

March 31, 2022

 

 

March 31, 2021

 

Revenue

$

244

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

11,738

 

 

 

11,180

 

General and administrative

 

4,271

 

 

 

3,851

 

Total operating expenses

 

16,009

 

 

 

15,031

 

Loss from operations

 

(15,765

)

 

 

(15,031

)

Other income (expense):

 

 

 

 

 

 

 

Interest and investment income

 

67

 

 

 

60

 

Interest expense

 

(1

)

 

 

 

Other income

 

2

 

 

 

 

Other income (expense), net

 

68

 

 

 

60

 

Net loss

$

(15,697

)

 

$

(14,971

)

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

$

(0.22

)

 

$

(0.36

)

Weighted-average common stock outstanding - basic and diluted

 

71,969,007

 

 

 

41,545,050

 

Comprehensive loss:

 

 

 

 

 

 

 

Net loss

$

(15,697

)

 

$

(14,971

)

Net unrealized (loss) gain on marketable securities

 

(300

)

 

 

(9

)

Comprehensive loss

$

(15,997

)

 

$

(14,980

)

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

2


 

Synlogic, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

 

 

Common stock

$0.001 par value

 

Additional

paid-in

 

Accumulated

other

comprehensive

 

Accumulated

 

Total

 

 

Shares

 

Amount

 

capital

 

income (loss)

 

deficit

 

equity

 

Balance at December 31, 2021

 

69,698,844

 

$

70

 

$

438,113

 

$

(45

)

$

(290,872

)

$

147,266

 

Exercise of options

 

30,622

 

 

 

 

52

 

 

 

 

 

 

52

 

Issuance of restricted stock

 

507,260

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

40,528

 

 

 

 

83

 

 

 

 

 

 

83

 

Cancellation of restricted stock

 

(9,668

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

890

 

 

 

 

 

 

890

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

(300

)

 

 

 

(300

)

Net loss

 

 

 

 

 

 

 

 

 

(15,697

)

 

(15,697

)

Balance at March 31, 2022

 

70,267,586

 

$

70

 

$

439,138

 

$

(345

)

$

(306,569

)

$

132,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

38,183,273

 

$

38

 

$

345,394

 

$

14

 

$

(230,311

)

$

115,135

 

Proceeds from issuance of common stock in connection with ATM offering, net of issuance costs

 

2,447,211

 

 

3

 

 

8,047

 

 

 

 

 

 

8,050

 

Exercise of options

 

216

 

 

 

 

 

 

 

 

 

 

 

Issuance of restricted stock

 

242,454

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

19,061

 

 

 

 

33

 

 

 

 

 

 

33

 

Restricted stock awards withheld for payment of employees' withholding tax liability

 

(15,970

)

 

 

 

(65

)

 

 

 

 

 

(65

)

Cancellation of restricted stock

 

(2,719

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

877

 

 

 

 

 

 

877

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

(9

)

 

 

 

(9

)

Net loss

 

 

 

 

 

 

 

 

 

(14,971

)

 

(14,971

)

Balance at March 31, 2021

 

40,873,526

 

$

41

 

$

354,286

 

$

5

 

$

(245,282

)

$

109,050

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3


 

Synlogic, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(15,697

)

 

$

(14,971

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

601

 

 

 

626

 

Equity-based compensation expense

 

 

890

 

 

 

877

 

Accretion/amortization of investment securities

 

 

(11

)

 

 

105

 

Change in carrying amount of operating lease right of use asset

 

 

769

 

 

 

462

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

821

 

 

 

(443

)

Prepaid research and development, net of current portion

 

 

(488

)

 

 

1,382

 

Accounts payable and accrued expenses

 

 

(1,387

)

 

 

(1,408

)

Deferred revenue

 

 

(217

)

 

 

 

Operating lease liabilities

 

 

(739

)

 

 

(606

)

Other assets

 

 

(19

)

 

 

 

Net cash used in operating activities

 

 

(15,477

)

 

 

(13,976

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(12,121

)

 

 

(27,091

)

Proceeds from maturity of marketable securities

 

 

32,356

 

 

 

25,996

 

Proceeds from redemption of marketable securities

 

 

 

 

 

1,270

 

Purchases of property and equipment

 

 

(477

)

 

 

(21

)

Net cash provided by investing activities

 

 

19,758

 

 

 

154

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments on finance lease obligations

 

 

(3

)

 

 

(1

)

Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs

 

 

 

 

 

8,052

 

Proceeds from employee stock purchases and exercise of stock options

 

 

135

 

 

 

33

 

Payment of employee withholding taxes relating to restricted stock awards

 

 

 

 

 

(65

)

Net cash provided by financing activities

 

 

132

 

 

 

8,019

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

4,413

 

 

 

(5,803

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

17,535

 

 

 

33,604

 

Cash, cash equivalents and restricted cash at end of period

 

$

21,948

 

 

$

27,801

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

 

 

Assets acquired under operating lease obligation

 

$

1,773

 

 

$

 

Property and equipment purchases included in accounts payable and accrued expenses

 

$

118

 

 

$

3

 

Supplemental disclosure of non-cash financing activities:

 

 

 

 

 

 

 

 

Issuance costs included in accounts payable and accrued expenses

 

$

 

 

$

2

 

Cash paid for interest

 

$

1

 

 

$

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

4


 

 

SYNLOGIC, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1)

Nature of Business

Organization

Synlogic, Inc., together with its wholly owned and consolidated subsidiaries (“Synlogic” or “the Company”), is a clinical-stage biopharmaceutical company applying synthetic biology to the discovery and development of Synthetic Biotics. Synthetic Biotics are generated from Synlogic’s proprietary platform, leveraging a reproducible, modular approach to the generation of novel drug candidates that perform or deliver critical therapeutic functions. Synthetic Biotics are designed to metabolize a toxic substance, compensate for missing or damaged metabolic pathways or deliver combinations of therapeutic factors. Synlogic’s goal is to discover, develop and ultimately commercialize Synthetic Biotics. Since incorporation, the Company has devoted substantially all of its efforts to the research and development of its product candidates.

Risks and Uncertainties

At March 31, 2022, the Company had approximately $120.5 million in cash, cash equivalents, and short-term marketable securities, $1.1 million of restricted cash and an accumulated deficit of approximately $306.6 million. Since its inception through March 31, 2022, the Company has primarily financed its operations through the issuance of preferred stock, units and warrants, the sale of its common stock, the collaborations with Roche and AbbVie, and cash received in the Merger (defined below). In the absence of positive cash flows from operations, the Company is highly dependent on its ability to find additional sources of funding in the form of debt or equity financing. Management believes that the Company has sufficient cash to fund its operations through at least twelve months from the issuance of these financial statements.

As an early-stage company, the Company is subject to a number of risks common to other life science companies, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (CROs) and contract manufacturing organizations (CMOs), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology. The Company’s therapeutic programs are currently pre-commercial, spanning discovery through early development and will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization of any product candidates. These efforts require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital or obtain financing from other sources, such as strategic collaborations or alliances.

COVID-19

While the Company is not aware of a material impact from the continuation of the COVID-19 pandemic through March 31, 2022, the full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations, and financial condition, including expenses and manufacturing, clinical trials, and research and development costs, depends on future developments that are highly uncertain at this time.

(2)

Summary of Significant Accounting Policies

The significant accounting policies described in the Company’s audited financial statements as of and for the year ended December 31, 2021, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (SEC) on March 17, 2022 (the 2021 Annual Report), have had no material changes during the three months ended March 31, 2022.

 

 

Basis of Presentation

The accompanying consolidated financial statements and the related disclosures as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the rules and regulations of the SEC for interim financial statements.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  These interim consolidated financial statements should be read in conjunction with the Company’s 2021 and 2020 audited consolidated financial statements and notes included in the 2021 Annual Report. The consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial

5


 

statements as of that date but does not include all disclosures including notes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position and results of operations for the three months ended March 31, 2022 and 2021.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or any other interim period or future year or period.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Synlogic and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

 

Recently Issued Accounting Pronouncements

 

New accounting pronouncements are issued by the FASB from time to time, and rules are issued by the SEC that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future financial statements.    

 

(3)

Fair Value of Financial Instruments

The tables below present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, as described under Note 2, Summary of Significant Accounting Policies, in the audited financial statements included in the 2021 Annual Report.  

The Company’s investment portfolio includes many fixed income securities that do not always trade on a daily basis.  As a result, the pricing services used by the Company applied other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations.  In addition, model processes were used to assess interest rate impact and develop prepayment scenarios.  These models take into consideration relevant credit information, perceived market movements, sector news and economic events.  The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data.

At March 31, 2022 and December 31, 2021, the Company has classified assets measured at fair value on a recurring basis as follows (in thousands):

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

March 31,

 

 

Quoted Prices in Active

Markets for Identical

Assets

 

 

Significant Other

Observable Inputs

 

 

Significant

Unobservable Inputs

 

Description

 

2022

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

20,851

 

 

$

20,851

 

 

$

 

 

$

 

Commercial paper

 

 

88,100

 

 

 

 

 

 

88,100

 

 

 

 

Corporate debt securities

 

 

3,617

 

 

 

 

 

 

3,617

 

 

 

 

U.S. government agency securities and treasuries

 

 

7,950

 

 

 

7,950

 

 

 

 

 

 

 

Total

 

$

120,518

 

 

$

28,801

 

 

$

91,717

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

December 31,

 

 

Quoted Prices in Active

Markets for Identical

Assets

 

 

Significant Other

Observable Inputs

 

 

Significant

Unobservable Inputs

 

Description

 

2021

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

16,437

 

 

$

16,437

 

 

$

 

 

$

 

Commercial paper

 

 

106,277

 

 

 

 

 

 

106,277

 

 

 

 

Corporate debt securities

 

 

5,873

 

 

 

 

 

 

5,873

 

 

 

 

U.S. government agency securities and treasuries

 

 

8,041

 

 

 

8,041

 

 

 

 

 

 

 

Total

 

$

136,628

 

 

$

24,478

 

 

$

112,150

 

 

$

 

6


 

 

 

Cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses at March 31, 2022 and December 31, 2021 are carried at amounts that approximate fair value due to their short-term maturities. Finance lease obligations at March 31, 2022 and December 31, 2021 approximate fair value as they bear interest at a rate approximating a market interest rate.

(4)

Available-for-Sale Investments

 

The following tables summarize the available-for-sale securities held at March 31, 2022 and December 31, 2021 (in thousands):

 

March 31, 2022

 

Amortized cost

 

 

Gross unrealized

gains

 

 

Gross unrealized

losses

 

 

Fair Value

 

Commercial paper

 

$

88,342

 

 

$

 

 

$

(242

)

 

$

88,100

 

Corporate debt securities

 

 

3,620

 

 

 

 

 

 

(3

)

 

 

3,617

 

U.S. government agency securities and treasuries

 

 

8,050

 

 

 

 

 

 

(100

)

 

 

7,950

 

Total

 

$

100,012

 

 

$

 

 

$

(345

)

 

$

99,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

Amortized cost

 

 

Gross unrealized

gains

 

 

Gross unrealized

losses

 

 

Fair Value

 

Commercial paper

 

$

106,298

 

 

$

8

 

 

$

(29

)

 

$

106,277

 

Corporate debt securities

 

 

5,876

 

 

 

 

 

 

(3

)

 

 

5,873

 

U.S. government agency securities and treasuries

 

 

8,062

 

 

 

 

 

 

(21

)

 

 

8,041

 

Total

 

$

120,236

 

 

$

8

 

 

$

(53

)

 

$

120,191

 

 

The contractual maturity of all securities held at March 31, 2022 was twelve months or less.  There were 28 and 20 investments in an unrealized loss position at March 31, 2022 and December 31, 2021, respectively, none of which had been in an unrealized loss position for more than twelve months. The aggregate fair value of the securities in an unrealized loss position at March 31, 2022 and December 31, 2021 was $99.7 million and $72.2 million, respectively. The Company reviews its investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary.  The Company did not hold any securities with an other-than-temporary impairment at March 31, 2022.

Gross realized gains and losses on the sales of investments have not been material to the Company’s consolidated statement of operations.

 

(5)

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Laboratory equipment

 

$

8,600

 

 

$

8,274

 

Computer and office equipment

 

 

795

 

 

 

756

 

Furniture and fixtures

 

 

500

 

 

 

500

 

Leasehold improvements

 

 

9,566

 

 

 

9,561

 

Construction in progress

 

 

848

 

 

 

623

 

 

 

 

20,309

 

 

 

19,714

 

Less accumulated depreciation

 

 

(11,227

)

 

 

(10,626

)

Property and equipment, net

 

$

9,082

 

 

$

9,088

 

 

7


 

 

(6)

Accrued Expenses

Accrued expenses consist of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Payroll related

 

$

1,546

 

 

$

3,495

 

Professional fees

 

 

398

 

 

 

298

 

Research and development

 

 

450

 

 

 

336

 

Other

 

 

274

 

 

 

273

 

Total accrued expenses

 

$

2,668

 

 

$

4,402

 

  

 

(7)

Stockholders’ Equity

In June 2019, the Company issued to Ginkgo Bioworks, Inc. (Ginkgo) an aggregate of 6,340,771 shares of common stock at a purchase price per share of $9.00, and pre-funded warrants (the Pre-Funded Warrants) to purchase an aggregate of 2,548,117 shares of common stock at an exercise price of $9.00 per share, with $8.99 of such exercise price paid at the closing of the offering. The net proceeds to the Company were approximately $79.9 million. None of the Pre-Funded Warrants have been exercised as of March 31, 2022. (See Note 9, Collaboration Agreements: Ginkgo Collaboration).

 

The Company had a previous sales agreement with Cowen and Company, LLC (Cowen) with respect to an at-the-market (ATM) offering program, which was entered into on October 13, 2017. In an ATM offering, exchange-listed companies incrementally sell newly issued shares into the secondary trading market through a designated broker-dealer at prevailing market prices. During the three months ended March 31, 2021, 2,447,211 shares of common stock were sold pursuant to the ATM, resulting in net proceeds of approximately $8.1 million. There were no sales pursuant to the Cowen ATM subsequent to March 31, 2021.

 

In July 2021, the Company entered into a new sales agreement with Jefferies, LLC (Jefferies) with respect to an ATM, under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock having aggregate sales proceeds of up to $50.0 million. Jefferies is not required to sell any specific amount but acts as the Company’s sales agent using commercially reasonable efforts consistent with its normal trading and sales practices. During the three months ended March 31, 2022,  no shares of common stock were sold pursuant to the sales agreement with Jefferies.

 

The Company has reserved for future issuance the following shares of common stock related to the potential exercise of Pre-Funded Warrants, exercise of stock options, and the employee stock purchase plan:  

 

 

March 31, 2022

 

Common stock issuable under pre-funded warrants

 

2,548,117

 

Options exercisable to purchase common stock