Filing summary
Issuer and period: The supplied filing is Synthetic Biologics, Inc.’s Form 10-K for the fiscal year ended December 31, 2017, not a filing under the name Theriva Biologics, Inc. It includes unaudited fourth-quarter results. The company described itself as a clinical-stage therapeutics developer focused on microbiome-related products.
Financial condition and results
| Metric | FY 2017 | FY 2016 |
|---|---|---|
| Revenue | None reported | None reported |
| Operating expenses | $26.3 million | $39.3 million |
| Operating loss | $26.3 million | $39.3 million |
| Net loss | $15.5 million | $27.8 million |
| Net loss attributable to common stockholders | $22.1 million, including $6.9 million preferred-stock deemed dividend and $73,000 accrued preferred dividends | $27.3 million |
| Basic and diluted loss per share | $0.18 | $0.29 |
| Net cash used in operating activities | $20.2 million | $27.9 million |
| Cash and cash equivalents at year-end | $17.1 million | $19.1 million |
| Working capital | $8.2 million | $1.8 million |
| Total assets | $18.8 million | $22.5 million |
| Total stockholders’ equity (deficit) | $(3.4) million | $2.2 million |
All amounts are approximate; financial statement amounts are in U.S. dollars. No meaningful operating margin is available because the company reported no revenue. The filing does not show conventional interest-bearing debt; current liabilities included $4.1 million of warrant liabilities, which are derivative liabilities measured at fair value.
Material changes versus prior year
- Operating expenses fell 33%, with research and development down 35% to $18.8 million and general and administrative expenses down 26% to $7.5 million. Management attributed the R&D decrease mainly to lower lead-program spending while preparing for later-stage trials and seeking financing.
- Net loss narrowed, but results included $10.7 million of noncash income from the decrease in the fair value of warrant liabilities. The 2016 comparable included $11.4 million of such noncash income. These gains do not represent operating cash generation.
- Operating cash use improved by $7.7 million year over year, while cash declined by $1.9 million. The company raised $12.0 million gross through preferred stock and received about $6.4 million net from at-the-market common-stock sales during 2017.
- Share dilution continued: about 11.0 million common shares were sold through the at-the-market program, and common shares outstanding rose to 128.6 million at year-end. The 2016 Series B warrants expired unexercised.
- The company issued $12 million of Series A convertible preferred stock, with a 2% cumulative dividend, senior rights and an initial common-stock conversion price of $0.54 per share. The beneficial conversion feature produced the $6.9 million deemed dividend.
Pipeline, outlook and risks
- SYN-004 (ribaxamase): The company reported Phase 2b topline results showing 7 CDI cases in placebo versus 2 in treatment, a reported 71.4% relative risk reduction (p=0.045). FDA granted Breakthrough Therapy Designation for CDI prevention. The company anticipated further FDA discussions and an End-of-Phase-2 meeting in the second half of 2018, with Phase 3 trials targeted for 2019 or later, subject to funding and regulatory requirements.
- SYN-010: Following Phase 2 studies, the company planned a pivotal adaptive Phase 2b/3 study, but initiation was contingent on financing and clinical infrastructure. The proposed study was approximately 840 patients over 12 weeks.
- Other programs—SYN-006, SYN-007, SYN-020, SYN-005 and SYN-200—were preclinical or discovery-stage. The filing describes supportive research findings but no approved products.
- Funding and going concern: Management said available cash was insufficient to execute near-term plans, including planned clinical trials, and that additional capital was required. The auditor’s report and financial-statement notes state that recurring losses and a capital deficiency raise substantial doubt about the company’s ability to continue as a going concern. Management warned that trials could be delayed or development curtailed if financing was not obtained.
- Other risks and obligations: Development depends on clinical and regulatory success, outside manufacturers and collaborators, and additional financing; lead candidates relied on single contract manufacturers. The company reported a $1.4 million operating-lease commitment and a regulatory consultant success fee of up to $5.5 million tied to milestones. No material pending legal proceedings were reported.
- Unusual quarterly item: Fourth-quarter 2017 net income was $2.8 million despite a $5.8 million operating loss, principally because of the noncash warrant-liability remeasurement gain.
- The company reported effective disclosure controls and internal control over financial reporting; the auditor issued unqualified opinions on the financial statements and internal controls, while separately highlighting going-concern uncertainty.
Investor facts to verify
- Confirm the issuer identity: this source is a Synthetic Biologics, Inc. 2017 Form 10-K, notwithstanding the request metadata naming Theriva Biologics, Inc.
- Review subsequent financing, cash runway, and any changes to the stated going-concern assessment; the filing says cash was inadequate for planned trials.
- Check whether FDA discussions changed SYN-004’s required study design, antibiotic scope, regulatory pathway or timing, and whether a Phase 3 trial was actually initiated.
- Assess the underlying Phase 2b SYN-004 data and the small number of CDI cases behind the reported primary-endpoint result.
- Review the terms and potential dilution or cash obligations of the Series A preferred stock, outstanding warrants and future equity financing.
- Separate operating performance and cash burn from noncash warrant gains when evaluating reported net results.