Theriva Biologics, Inc. annual report, FY2020

Business context and reporting period

The supplied filing is Synthetic Biologics, Inc.’s Form 10-K for the fiscal year ended December 31, 2020, filed March 4, 2021. It is not a Theriva Biologics, Inc. filing; investors should confirm the intended issuer. The company was a clinical-stage biotechnology developer focused on gastrointestinal and microbiome-related therapies. This is an annual report, not a standalone fourth-quarter report.

Its lead programs were SYN-004 (ribaxamase), being developed for protection from antibiotic-related microbiome injury and related complications, and SYN-020, an oral intestinal alkaline phosphatase. The company had no products approved for sale and no significant revenue source.

Financial results and position

At December 31, 2020, cash and cash equivalents were $6.2 million, versus $15.0 million a year earlier. Total assets were $8.4 million; total liabilities were $3.2 million, including $0.5 million of operating lease liabilities. The company reported a $7.5 million stockholders’ deficit and an accumulated deficit of $248.1 million. No conventional borrowing balance is disclosed in the supplied financial statements; lease liabilities are reported. Gross margin is not meaningful because the company had no significant product revenue.

Changes versus the prior comparable period

• R&D expense fell 54% year over year, primarily due to reduced preclinical and manufacturing activity, COVID-related delays, and discontinuation of SYN-010 development.
• G&A expense increased 8.7%, with higher legal, insurance, registration, and other costs.
• Net loss narrowed to $10.1 million from $15.4 million, while operating cash use decreased to $12.2 million from $13.9 million.
• Cash declined by $8.8 million during 2020. The company raised approximately $3.4 million net through at-the-market share sales during the year.

Outlook, risks, and unusual items

• Funding and dilution: The company said year-end cash alone was insufficient to fund its plans indefinitely and that later-stage trials would require additional financing or a partner. After year-end through March 3, 2021, it reported approximately $63.8 million of net proceeds from at-the-market stock sales and $8.0 million from warrant exercises; it estimated cash of $72.6 million and runway through at least the end of Q1 2023. These financings materially increased the share count; 129.7 million common shares were outstanding on March 3, 2021.
• SYN-004: FDA clearance and Washington University IRB approval allowed a Phase 1b/2a trial in up to 36 allogeneic transplant recipients to proceed. Patient screening began in Q1 2021. The broader Phase 3 program for CDI prevention was estimated to cost more than $80 million and was contingent on financing or partnership.
• SYN-020: The FDA allowed a Phase 1 single-ascending-dose study to proceed. Management anticipated starting the study in Q2 2021 and a topline readout in Q3 2021, subject to pandemic conditions; a multiple-dose study was also planned.
• SYN-010: A planned interim futility analysis found the program unlikely to meet its primary endpoint. The Phase 2b study was discontinued and the CSMC license agreement was terminated in November 2020.
• COVID-19: The pandemic delayed clinical activities and could further disrupt enrollment, sites, suppliers, manufacturing, and timelines. Management said the full effect remained uncertain.
• Listing and capital risks: The company had a $7.5 million stockholders’ deficit and remained under an NYSE American compliance extension through May 25, 2021. Failure to regain compliance could lead to delisting.
• Unusual equity items: An at-the-market issuance triggered a reduction in the October 2018 warrants’ exercise price from $1.38 to $0.69 and an $880,000 deemed dividend. Series B preferred-stock conversions also generated $1.4 million of deemed dividends in 2020. All Series A preferred shares were converted into approximately 9.0 million common shares in January–February 2021.
• Audit and controls: The independent auditor issued an unqualified opinion on the financial statements and identified liquidity evaluation as a critical audit matter. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not audit internal controls.

Important facts for investors to verify

• Confirm the requested issuer: the filing is for Synthetic Biologics, Inc., not Theriva Biologics, Inc.
• Verify subsequent financing proceeds, cash available, post-financing share count, and potential additional dilution from warrants and preferred-stock conversions.
• Check current NYSE American listing compliance and the outcome of the compliance extension.
• Confirm actual SYN-004 and SYN-020 trial start dates, enrollment, results, costs, and any partnership or financing arrangements.
• Review the full audited statements and notes for preferred-stock terms, warrant dilution, lease obligations, and the tax-footnote revision related to net operating loss limitations.