|6 Months Ended|
Jun. 30, 2020
2. Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company continues to incur losses and, as of June 30, 2020, the Company had an accumulated deficit of approximately $242.3 million. Since inception, the Company has financed its activities principally from the proceeds from the issuance of equity securities.
The Company’s ability to continue as a going concern is dependent upon the Company’s ability to raise additional debt and equity capital. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
The Company does not have sufficient capital to fund its operations for the next twelve months following the issuance date of its Quarterly Report on Form 10-Q. In order to address its capital needs, including its planned clinical trials, the Company is actively pursuing additional equity or debt financing in the form of either a private placement or a public offering. The Company has been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings. Such additional financing opportunities might not be available to the Company when and if needed, on acceptable terms or at all. If the Company is unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances, the Company’s operating results and prospects will be adversely affected.
In January 2020, the World Health Organization declared a global pandemic for the novel strain of coronavirus, COVID-19. Since then, the COVID-19 coronavirus has spread to multiple countries, including throughout the United States. As the COVID-19 coronavirus continues to spread around the globe, the Company has experienced disruptions that impact our business and clinical trials, including temporarily halting the enrollment of new patients in its SYN-010 Phase 2b clinical study and the postponement of clinical site initiation for its SYN-004 Phase 1b/2a clinical study. While the Company is experiencing limited financial impacts at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, the Company’s business, financial condition, results of operations and growth prospects could be materially adversely affected. With the recent and rapidly evolving impact of COVID-19 on patient recruitment in clinical trials and considering patient safety and trial integrity, initiation of the Company's Phase 1b/2a clinical study of SYN-004 to be conducted by Washington University in Allogeneic HCT Recipients has been postponed until Q1 2021, subject to COVID-19 global pandemic. Enrollment of new patients in the Company's Phase 2b clinical study of SYN-010 was temporarily halted during the first and second quarter of 2020 due to the COVID-19 pandemic and has since recommenced. However, the ability to continue to recruit new patients into this clinical trial remains at the discretion of CSMC and contingent upon the COVID-19 global pandemic.
At June 30, 2020, the Company had cash and cash equivalents of approximately $8.1 million. As a result of the global COVID-19 pandemic, management has been able to extend its cash runway since its clinical development partners (Cedars-Sinai Medical Center (CSMC) and Washington University) continued to limit non-essential activities during the second quarter, which included the halting of enrollment in the ongoing Phase 2b clinical trial of SYN-010 and postponement of the planned Phase 1b/2a clinical trial of SYN-004 (ribaxamase). The Company anticipates its current cash will allow it to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including completing its funding requirements for its ongoing Phase 2b investigator-sponsored clinical study of SYN-010 and its planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients.
The Company does not anticipate any additional expense related to the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared for commencement by Washington University. Commencement of planned future Phase 3 clinical trials of SYN-004 and SYN-010 are subject to the Company’s successful pursuit of opportunities that will allow it to establish the clinical infrastructure and financial resources necessary to successfully initiate and complete its plan. The Company will be required to obtain additional funding in order to continue the development of its current product candidates beyond its Phase 2b investigator-sponsored clinical study of SYN-010 and its planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients within the anticipated time periods, if at all, and to continue to fund operations at the current cash expenditure levels. Currently, the Company does not have commitments from any third parties to provide it with capital. If the Company fails to obtain additional funding for its clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, it will not be able to fully execute its business plan as planned and will be forced to cease certain development activities until funding is received and its business will suffer, which would have a material adverse effect on its financial position, results of operations and cash flows.Potential sources of financing include strategic relationships, public or private sales of equity (including through the “at-the-market” Issuance Sales Agreement (the “FBR Sales Agreement”) that the Company entered into with FBR Capital Markets & Co. in August 2016) or debt and other sources. The Company cannot assure that it will meet the requirements for use of the FBR Sales Agreement or that additional funding will be available on favorable terms, or at all. Current cash is expected to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts.
The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond its control. These factors include the following:
The Company has based its estimates of funding requirements on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greater amounts than it currently anticipates.
If the Company raises funds by selling additional shares of Common Stock or other securities convertible into Common Stock, the ownership interest of the existing stockholders will be diluted. If the Company is not able to obtain financing when needed, it may be unable to carry out its business plan. As a result, the Company may have to significantly limit its operations and its business, financial condition and results of operations would be materially harmed.
The entire disclosure when substantial doubt is raised about the ability to continue as a going concern. Includes, but is not limited to, principal conditions or events that raised substantial doubt about the ability to continue as a going concern, management's evaluation of the significance of those conditions or events in relation to the ability to meet its obligations, and management's plans that alleviated or are intended to mitigate the conditions or events that raise substantial doubt about the ability to continue as a going concern.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef