10-Q
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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 June 30, 2023

 

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 August 3, 2023, there were 68,604,305 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 fact 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; 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

 

59

 

 

 

Item 3. Defaults Upon Senior Securities

 

59

 

 

 

Item 4. Mine Safety Disclosures

 

59

 

 

 

Item 5. Other Information

 

59

 

 

 

Item 6. Exhibits

 

60

 

 

 

Signatures

 

61

 

 


 

SYNlogic, Inc. and SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(In thousands, except share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,261

 

 

$

15,861

 

Short-term marketable securities

 

 

 

 

 

61,768

 

Prepaid expenses and other current assets

 

 

3,296

 

 

 

2,153

 

Total current assets

 

 

49,557

 

 

 

79,782

 

Property and equipment, net

 

 

6,398

 

 

 

7,323

 

Right of use asset - operating lease

 

 

13,662

 

 

 

14,356

 

Restricted cash

 

 

1,097

 

 

 

1,097

 

Prepaid research and development, net of current portion

 

 

8,554

 

 

 

8,300

 

Other assets

 

 

16

 

 

 

7

 

Total assets

 

$

79,284

 

 

$

110,865

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,082

 

 

$

1,785

 

Accrued expenses

 

 

3,543

 

 

 

5,290

 

Deferred revenue

 

 

657

 

 

 

882

 

Lease liability - operating lease

 

 

4,339

 

 

 

4,152

 

Finance lease obligations

 

 

11

 

 

 

13

 

Total current liabilities

 

 

9,632

 

 

 

12,122

 

Long-term liabilities:

 

 

 

 

 

 

Lease liability - operating lease, net of current portion

 

 

14,878

 

 

 

16,129

 

Finance lease obligations, net of current portion

 

 

 

 

 

4

 

Total long-term liabilities

 

 

14,878

 

 

 

16,133

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.001 par value

 

 

 

 

 

 

250,000,000 shares authorized as of June 30, 2023 and December 31, 2022;
  
72,810,751 shares issued and 68,613,862 shares outstanding as of June 30, 2023 and
  
70,933,140 shares issued and 66,736,251 shares outstanding as of December 31, 2022

 

 

73

 

 

 

71

 

Additional paid-in capital

 

 

444,906

 

 

 

442,237

 

Accumulated other comprehensive income (loss)

 

 

2

 

 

 

(161

)

Accumulated deficit

 

 

(387,689

)

 

 

(357,019

)

Treasury stock, at cost (4,196,889 shares at June 30, 2023 and at December 31, 2022)

 

 

(2,518

)

 

 

(2,518

)

Total stockholders' equity

 

 

54,774

 

 

 

82,610

 

Total liabilities and stockholders' equity

 

$

79,284

 

 

$

110,865

 

 

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

 

 

For the Six Months Ended

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Revenue

$

35

 

 

$

152

 

 

$

209

 

 

$

396

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

11,765

 

 

 

12,057

 

 

 

24,215

 

 

 

23,795

 

General and administrative

 

3,924

 

 

 

4,112

 

 

 

7,891

 

 

 

8,383

 

Total operating expenses

 

15,689

 

 

 

16,169

 

 

 

32,106

 

 

 

32,178

 

Loss from operations

 

(15,654

)

 

 

(16,017

)

 

 

(31,897

)

 

 

(31,782

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest and investment income

 

617

 

 

 

169

 

 

 

1,245

 

 

 

236

 

Interest expense

 

 

 

 

(1

)

 

 

(1

)

 

 

(2

)

Other income (expense)

 

(2

)

 

 

7

 

 

 

(8

)

 

 

9

 

Total other income, net

 

615

 

 

 

175

 

 

 

1,236

 

 

 

243

 

Loss before income taxes

 

(15,039

)

 

 

(15,842

)

 

 

(30,661

)

 

 

(31,539

)

Income tax expense

 

(9

)

 

 

 

 

 

(9

)

 

 

 

Net loss

$

(15,048

)

 

$

(15,842

)

 

$

(30,670

)

 

$

(31,539

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

$

(0.21

)

 

$

(0.22

)

 

$

(0.44

)

 

$

(0.44

)

Weighted-average common stock outstanding - basic and diluted

 

70,219,442

 

 

 

72,106,224

 

 

 

69,651,392

 

 

 

72,038,460

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(15,048

)

 

$

(15,842

)

 

$

(30,670

)

 

$

(31,539

)

Net unrealized (loss) gain on marketable securities

 

32

 

 

 

(88

)

 

 

163

 

 

 

(388

)

Comprehensive loss

$

(15,016

)

 

$

(15,930

)

 

$

(30,507

)

 

$

(31,927

)

 

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

 

Treasury Stock

 

Total

 

 

Shares

 

Amount

 

capital

 

income (loss)

 

deficit

 

Shares

 

Amount

 

equity

 

 

For the Three Months Ended June 30, 2023

 

Balance at March 31, 2023

 

72,238,745

 

$

72

 

$

443,829

 

$

(30

)

$

(372,641

)

 

(4,196,889

)

$

(2,518

)

$

68,712

 

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

 

706,089

 

 

1

 

 

432

 

 

 

 

 

 

 

 

 

 

433

 

Cancellation of restricted stock

 

(134,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

645

 

 

 

 

 

 

 

 

 

 

645

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

32

 

Net loss

 

 

 

 

 

 

 

 

 

(15,048

)

 

 

 

 

 

(15,048

)

Balance at June 30, 2023

 

72,810,751

 

$

73

 

$

444,906

 

$

2

 

$

(387,689

)

 

(4,196,889

)

$

(2,518

)

$

54,774

 

 

For the Three Months Ended June 30, 2022

 

Balance at March 31, 2022

 

70,267,586

 

$

70

 

$

439,138

 

$

(345

)

$

(306,569

)

 

 

$

 

$

132,294

 

Exercise of options

 

4,940

 

 

 

9

 

 

 

 

 

 

 

 

9

 

Issuance of common stock under employee stock purchase plan

 

(38

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of restricted stock

 

(42,253

)

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

977

 

 

 

 

 

 

 

 

977

 

Unrealized gain (loss) on securities

 

 

 

 

(88

)

 

 

 

 

 

 

(88

)

Net loss

 

 

 

 

 

(15,842

)

 

 

 

 

 

(15,842

)

Balance at June 30, 2022

 

70,230,235

 

$

70

 

$

440,124

 

$

(433

)

$

(322,411

)

 

 

$

 

$

117,350

 

 

For the Six Months Ended June 30, 2023

 

Balance at December 31, 2022

 

70,933,140

 

$

71

 

$

442,237

 

$

(161

)

$

(357,019

)

 

(4,196,889

)

$

(2,518

)

$

82,610

 

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

 

1,739,487

 

 

2

 

 

1,247

 

 

 

 

 

 

 

 

 

 

1,249

 

Issuance of restricted stock

 

162,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

109,997

 

 

 

 

59

 

 

 

 

 

 

 

 

 

 

59

 

Cancellation of restricted stock

 

(134,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

1,363

 

 

 

 

 

 

 

 

 

 

1,363

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

163

 

 

 

 

 

 

 

 

163

 

Net loss

 

 

 

 

 

 

 

 

 

(30,670

)

 

 

 

 

 

(30,670

)

Balance at June 30, 2023

 

72,810,751

 

$

73

 

$

444,906

 

$

2

 

$

(387,689

)

 

(4,196,889

)

$

(2,518

)

$

54,774

 

For the Six Months Ended June 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

 

40,490

 

 

 

83

 

 

 

 

 

 

 

 

83

 

Cancellation of restricted stock

 

(51,921

)

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

1,867

 

 

 

 

 

 

 

 

1,867

 

Unrealized gain (loss) on securities

 

 

 

 

(388

)

 

 

 

 

 

 

(388

)

Net loss

 

 

 

 

 

(31,539

)

 

 

 

 

 

(31,539

)

Balance at June 30, 2022

 

70,230,235

 

$

70

 

$

440,124

 

$

(433

)

$

(322,411

)

 

 

$

 

$

117,350

 

 

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)

 

 

Six Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(30,670

)

 

$

(31,539

)

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

 

 

 

 

 

 

Depreciation

 

 

1,106

 

 

 

1,257

 

Gain on disposal of property and equipment

 

 

(11

)

 

 

 

Equity-based compensation expense

 

 

1,363

 

 

 

1,867

 

Accretion/amortization of investment securities

 

 

(468

)

 

 

(87

)

Change in carrying amount of operating lease right of use asset

 

 

1,634

 

 

 

1,554

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(1,143

)

 

 

415

 

Prepaid research and development, net of current portion

 

 

(254

)

 

 

1,473

 

Accounts payable and accrued expenses

 

 

(2,450

)

 

 

(1,599

)

Deferred revenue

 

 

(225

)

 

 

(382

)

Operating lease liabilities

 

 

(2,004

)

 

 

(1,991

)

Other assets

 

 

(9