Business context and reporting period
This filing is Synaptogenix, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2021; the supplied metadata names TAO Synergies Inc., which does not match the registrant identified in the filing. Synaptogenix is a clinical-stage biopharmaceutical company developing bryostatin-1, principally for Alzheimer’s disease. It became independent following its December 2020 spin-off from Neurotrope.
Key financial metrics
| Metric | Q1 2021 / March 31, 2021 | Comparable period / December 31, 2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.15 million | $0.39 million |
| General and administrative expense | $2.00 million | $2.21 million |
| Operating expenses | $3.16 million | $2.61 million |
| Net loss | $3.15 million; $0.27 per share | $2.54 million; $0.50 per share |
| Cash and cash equivalents | $14.85 million | $5.80 million |
| Working capital | $15.39 million | $5.12 million |
| Current liabilities | $0.94 million | $1.61 million |
| Total assets / shareholders’ equity | $16.35 million / $15.41 million | $6.75 million / $5.14 million |
Cash used in operating activities was $3.59 million in the financial statements, versus $1.74 million in Q1 2020. Financing activities provided $12.64 million, including $12.51 million net proceeds from the January private placement and $0.13 million in grant funding. No debt is reported on the balance sheet. With no revenue, operating margins are not meaningful.
Material changes versus the prior comparable period
- Net loss increased $0.62 million, or 24%, as R&D expense rose $0.76 million; lower G&A expense and interest income partly offset the increase.
- Cash increased by $9.05 million from year-end, primarily reflecting the private placement. The placement raised about $14.0 million gross and $12.5 million net.
- Common shares outstanding increased from 5.03 million at year-end to 14.03 million at March 31. The placement also included warrants and pre-funded warrants that could result in further dilution.
- Q1 2020 comparative financials reflect the business as part of former parent Neurotrope, while Q1 2021 reflects Synaptogenix as an independent company; the periods are not fully like-for-like.
Outlook, risks and unusual items
- Management said available cash was expected to fund projected operations for at least 12 months from the filing date, including the current Phase 2 Alzheimer’s trial. The filing gives different cash outlook figures: approximately $14.1 million at financial-statement issuance and approximately $15.8 million in MD&A including expected NIH grant funding.
- The Phase 2 study targets approximately 100 moderately severe Alzheimer’s patients not taking memantine. Estimated gross trial budget is about $9.6 million, with an estimated company cost of $6.9 million after the $2.7 million NIH grant. Management expects R&D spending to increase.
- The earlier confirmatory Phase 2 study failed to achieve statistical significance on its primary endpoint. A post-hoc moderate-stratum analysis showed a treatment signal, but the difference versus placebo was not statistically significant. The filing does not provide a definitive development decision for subsequent trials.
- Management cited future financing needs for additional development; equity financing could be dilutive, debt may carry restrictive covenants, and collaboration or licensing could require relinquishing rights. Other risks include clinical and regulatory uncertainty, bryostatin supply, COVID-related trial delays, and potential tax or other uncapped spin-off indemnification obligations.
- The company reported ineffective disclosure controls due to material weaknesses involving segregation of duties, financial reporting processes, and IT controls. It said the financial statements nevertheless fairly present results in all material respects.
- The January financing and related warrants, $344,000 of consulting-warrant expense, and a $568,000 stock-based compensation charge were notable financing and non-cash items. A shareholder rights plan and authorization for a possible reverse split were also disclosed.
Important facts for investors to verify
- Confirm the intended issuer: the filing is for Synaptogenix, Inc., not TAO Synergies Inc.
- Reconcile cash-flow figures: the cash-flow statement reports operating cash use of $3.59 million, while MD&A reports $3.46 million; financing cash flows also differ in presentation.
- Clarify the liquidity outlook figures and timing of expected NIH grant receipts, and assess whether cash covers the planned trial and other commitments.
- Track enrollment, costs, and results of the ongoing Phase 2 study, and management’s response to the prior study’s failure on its primary endpoint.
- Assess potential dilution from outstanding warrants, pre-funded warrants, options, and the January private placement; verify registration and exercise terms.
- Review remediation of the disclosed control weaknesses and assess contingent exposure under spin-off tax and indemnification agreements.