|9 Months Ended|
Sep. 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 September 30, 2020, the Company had an accumulated deficit of approximately $245 million. Since inception, the Company has financed its activities primarily from the proceeds from the issuance of equity securities.
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. The Company’s ability to continue as a going concern, address its capital needs, and execute the required clinical trials, is therefore dependent upon the Company’s ability to obtain capital through the issuance of debt and/or additional equity offerings. The Company is actively pursuing additional equity or debt financing in the form of either a private placement or a public offering and the Company continues ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings. Included in these options is utilizing the “at-the-market” Issuance Sales Agreement (the “FBR Sales Agreement”) that the Company entered into with B. Riley Securities (formerly FBR Capital Markets & Co.) in August 2016. Nonetheless, there can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to the Company when and if needed or that the Company will meet the requirements for use of the FBR Sales Agreement.
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. These factors individually and collectively, including the Company’s dependence on its ability to raise additional capital to fund its operations for the next twelve months following the issuance date of these financial statements 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.
In January 2020, the World Health Organization declared a global pandemic for the novel strain of coronavirus, COVID-19. Since then, COVID-19 has spread to the United States and countries worldwide. As COVID-19 continues to spread around the globe, the Company has experienced disruptions that impact our business and clinical trials, including the temporary halt of the enrollment of new patients in its SYN-010 Phase 2b clinical study during the quarter ended June 30, 2020 and the postponement of clinical site initiation for its SYN-004 Phase 1b/2a clinical study. While the Company has experienced limited financial impact 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, including its ability to raise capital. To maximize patient participation and safeguard the trials integrity and patient safety, initiation of the Company’s Phase 1b/2a clinical study of SYN-004 to be conducted by Washington University in Allogeneic HCT Recipients is deferred until Q1 2021, pandemic conditions permitting.
At September 30, 2020, the Company had cash and cash equivalents of approximately $6.0 million. Management has been able to extend its cash runway since its clinical development partners CSMC and Washington University continued to limit non-essential activities during the third quarter, which included the SYN-010 Phase 2b clinical study and SYN-004 Phase 1b/2a clinical study. The Company anticipates its current cash will allow it to cover overhead costs, manufacturing costs for clinical supply and limited research efforts, including funding requirements to initiate its planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients and Phase 1-enabling assay development and manufacturing of drug supply in support of the planned Phase 1 single ascending dose (SAD) study of SYN-020 intestinal alkaline phosphatase (IAP).
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 (expected Q1 2021). Commencement of the FDA-agreed Phase 3 clinical trial of SYN-004 for the prevention of C. difficile infection in the future is 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 planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients, its planned Phase 1 SAD study of SYN-020 IAP in healthy volunteers, 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, 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.
Further, on September 30, 2020, the Company and CSMC agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is unlikely to meet its primary endpoint by the time enrollment is completed. The Company anticipates additional reductions in clinical development expense during the remainder of 2020 as a result of the discontinuation of this clinical program.
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