SEC Filing - Synlogic

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10-Q

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 September 30, 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 November 3, 2022, there were 70,519,940 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, or geopolitical tensions, such as the armed conflict between Russia and Ukraine, 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		26

Item 4. Controls and Procedures		26

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		27

Item 1A. Risk Factors		27

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		60

Item 3. Defaults Upon Senior Securities		60

Item 4. Mine Safety Disclosures		60

Item 5. Other Information		60

Item 6. Exhibits		61

Signatures		62

SYNlogic, Inc. and SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(In thousands, except share amounts)


	September 30,			December 31,
	2022			2021
Assets
Current assets:
Cash and cash equivalents	$	15,622		$	16,438
Short-term marketable securities		76,034			112,150
Accounts receivable		1,500			—
Prepaid expenses and other current assets		4,302			4,721
Total current assets		97,458			133,309
Long-term marketable securities		—			8,041
Property and equipment, net		7,901			9,088
Right of use asset - operating lease		14,240			13,889
Restricted cash		1,097			1,097
Prepaid research and development, net of current portion		7,529			9,309
Other assets		12			3
Total assets	$	128,237		$	174,736
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,718		$	1,944
Accrued expenses		4,770			4,402
Deferred revenue		971			531
Lease liability - operating lease		4,130			3,191
Finance lease obligations		13			12
Total current liabilities		11,602			10,080
Long-term liabilities:
Lease liability - operating lease, net of current portion		16,199			17,372
Finance lease obligations, net of current portion		8			18
Total long-term liabilities		16,207			17,390
Commitments and contingencies (Note 11)
Stockholders' equity
Common stock, $0.001 par value
250,000,000 shares authorized as of September 30, 2022 and December 31, 2021. 70,285,495 shares issued and outstanding as of September 30, 2022 and 69,698,844 shares issued and outstanding as of December 31, 2021.		70			70
Additional paid-in capital		441,072			438,113
Accumulated other comprehensive loss		(391	)		(45	)
Accumulated deficit		(340,323	)		(290,872	)
Total stockholders' equity		100,428			147,266
Total liabilities and stockholders' equity	$	128,237		$	174,736

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

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						For the Nine Months Ended
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenue	$	678		$	916		$	1,074		$	1,162
Operating expenses:
Research and development		14,610			13,355			38,405			35,254
General and administrative		4,402			3,616			12,785			11,528
Total operating expenses		19,012			16,971			51,190			46,782
Loss from operations		(18,334	)		(16,055	)		(50,116	)		(45,620	)
Other income (expense):
Interest and investment income		422			41			658			151
Interest expense		(1	)		(1	)		(3	)		(2	)
Other income (expense)		1			(1	)		10			(1	)
Total other income, net		422			39			665			148
Net loss	$	(17,912	)	$	(16,016	)	$	(49,451	)	$	(45,472	)

Net loss per share - basic and diluted	$	(0.25	)	$	(0.29	)	$	(0.69	)	$	(0.91	)
Weighted-average common stock outstanding - basic and diluted		72,108,113			55,336,936			72,061,935			49,730,231
Comprehensive loss:
Net loss	$	(17,912	)	$	(16,016	)	$	(49,451	)	$	(45,472	)
Net unrealized (loss) gain on marketable securities		42			(2	)		(346	)		(5	)
Comprehensive loss	$	(17,870	)	$	(16,018	)	$	(49,797	)	$	(45,477	)

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

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
	For the Three Months Ended September 30, 2022
Balance at June 30, 2022		70,230,235		$	70	$	440,124		$	(433	)	$	(322,411	)	$	117,350
Issuance of common stock under employee stock purchase plan		66,139			—		54			—			—			54
Cancellation of restricted stock		(10,879	)		—		—			—			—			—
Equity-based compensation expense		—			—		894			—			—			894
Unrealized gain (loss) on securities		—			—		—			42			—			42
Net loss		—			—		—			—			(17,912	)		(17,912	)
Balance at September 30, 2022		70,285,495		$	70	$	441,072		$	(391	)	$	(340,323	)	$	100,428
	For the Three Months Ended September 30, 2021
Balance at June 30, 2021		52,375,344		$	52	$	387,782		$	11		$	(259,767	)	$	128,078
Proceeds from issuance of common stock, net of issuance costs		17,250,000			18		48,426		—			—				48,444
Exercise of options		93,033		—			209		—			—				209
Issuance of common stock under employee stock purchase plan		23,592		—			61			—			—			61
Cancellation of restricted stock		(34,428	)	—		—			—			—			—
Equity-based compensation expense	—			—			808		—			—				808
Unrealized gain (loss) on securities	—			—		—				(2	)	—				(2	)
Net loss	—			—		—			—				(16,016	)		(16,016	)
Balance at September 30, 2021		69,707,541		$	70	$	437,286		$	9		$	(275,783	)	$	161,582
	For the Nine Months Ended September 30, 2022
Balance at December 31, 2021		69,698,844		$	70	$	438,113		$	(45	)	$	(290,872	)	$	147,266
Exercise of options		35,562			—		61			—			—			61
Issuance of restricted stock		507,260			—		—			—			—			—
Issuance of common stock under employee stock purchase plan		106,629			—		137			—			—			137
Cancellation of restricted stock		(62,800	)		—		—			—			—			—
Equity-based compensation expense		—			—		2,761			—			—			2,761
Unrealized gain (loss) on securities		—			—		—			(346	)		—			(346	)
Net loss		—			—		—			—			(49,451	)		(49,451	)
Balance at September 30, 2022		70,285,495		$	70	$	441,072		$	(391	)	$	(340,323	)	$	100,428
	For the Nine Months Ended September 30, 2021
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
Proceeds from issuance of common stock, net of issuance costs		28,750,000			29		80,990			—			—			81,019
Exercise of options		125,146		—			273		—			—				273
Issuance of restricted stock		242,454		—		—			—			—			—
Issuance of common stock under employee stock purchase plan		42,653		—			94		—			—				94
Restricted stock awards withheld for payment of employees' withholding tax liability		(18,187	)	—			(73	)	—			—				(73	)
Cancellation of restricted stock		(65,009	)	—		—			—			—			—
Equity-based compensation expense	—			—			2,561		—			—				2,561
Unrealized gain (loss) on securities	—			—		—				(5	)	—				(5	)
Net loss	—			—		—			—				(45,472	)		(45,472	)
Balance at September 30, 2021		69,707,541		$	70	$	437,286		$	9		$	(275,783	)	$	161,582

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

Synlogic, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)


	Nine Months Ended			Nine Months Ended
	September 30, 2022			September 30, 2021
Cash flows from operating activities:
Net loss	$	(49,451	)	$	(45,472	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,907			1,832
Equity-based compensation expense		2,761			2,561
Accretion/amortization of investment securities		(364	)		243
Change in carrying amount of operating lease right of use asset		2,347			1,532
Changes in operating assets and liabilities:
Accounts receivable		(1,500	)		(1,000	)
Prepaid expenses and other current assets		419			854
Prepaid research and development, net of current portion		1,780			840
Accounts payable and accrued expenses		107			455
Deferred revenue		440			988
Operating lease liabilities		(2,932	)		(1,968	)
Other assets		(9	)		(3	)
Net cash used in operating activities		(44,495	)		(39,138	)
Cash flows from investing activities:
Purchases of marketable securities		(66,191	)		(97,981	)
Proceeds from maturity of marketable securities		110,366			77,272
Proceeds from redemption of marketable securities		—			1,270
Purchases of property and equipment		(685	)		(507	)
Net cash provided by (used in) investing activities		43,490			(19,946	)
Cash flows from financing activities:
Payments on finance lease obligations		(