Business context and reporting period
This Form 10-Q covers the quarter and nine months ended September 30, 2020. The filing’s registrant is Synaptogenix, Inc. (then a Neurotrope subsidiary), not TAO Synergies Inc.; confirm that this is the intended filing.
Synaptogenix is a clinical-stage biopharmaceutical company focused principally on bryostatin for Alzheimer’s disease. The financial statements reflect the pre-spin-off business. The separation from Neurotrope became effective December 7, 2020, after the quarter; the filing reports that approximately $19.4 million was transferred to Petros in connection with the related merger.
Financial performance and position
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $2.58 million | $3.91 million | $8.19 million | $12.82 million |
| Net loss | $4.27 million | $3.82 million | $9.74 million | $12.52 million |
| Basic and diluted loss per share | $(0.90) | $(1.48) | $(2.28) | $(4.83) |
| Cash used in operating activities | Not provided for the quarter | Not provided for the quarter | $6.90 million | $10.37 million |
No revenue was reported, so revenue margins are not meaningful. Q3 loss included a $1.7 million non-cash warrant-amendment expense; without that item, the quarter’s net loss would have been lower. Nine-month operating expenses fell about 36%, chiefly from lower R&D and stock compensation, while G&A increased.
At September 30, cash and equivalents were $27.0 million, current assets $29.1 million, and current liabilities $1.30 million. The balance sheet reported no debt. Nine-month investing cash outflow was $5,413 and financing cash inflow, primarily parent transfers, was $16.52 million. Following the separation and transfer to Petros, management cited approximately $6.0 million of cash plus about $1.7 million of NIH grant funding remaining; it expected resources to fund at least 12 months from the filing date. Additional financing would be needed for development beyond that period.
Material changes, outlook and risks
- The prior confirmatory Phase 2 Alzheimer’s trial did not meet its primary endpoint. A post-hoc moderate-stratum analysis showed improvement from baseline in both treatment and placebo groups, but the difference between groups was not statistically significant (p=0.2727).
- A new Phase 2 study targeting moderately severe Alzheimer’s patients not taking memantine began site initiation in September 2020. Its estimated total budget is $9.8 million, with a $2.7 million NIH grant and estimated company cost of $7.1 million. The filing also describes enrollment as paused because of COVID-19, while another section says enrollment was underway; verify current trial status.
- Management expected near-term R&D spending to rise as the new trial proceeds. The company had no approved products or revenue and anticipated future operating losses and a need for additional capital, collaboration, or licensing arrangements.
- Key risks include clinical and regulatory uncertainty, reliance on CROs and bryostatin supply, the CRE license and other intellectual-property rights, COVID-19 disruption, potential dilution or restrictive financing, and limited trading liquidity. The filing says the common stock traded on OTC Pink and that OTCQB quotation was expected but not assured.
- Disclosure controls and internal control over financial reporting were deemed ineffective. Cited weaknesses included segregation of duties, financial reporting and close processes, and IT general controls. Management nevertheless stated that the reported financial statements fairly presented the periods shown. No legal proceedings were reported.
Important facts for investors to verify
- Confirm the issuer identity and that this Synaptogenix 10-Q is the intended document.
- Reconcile the $27.0 million September 30 cash balance with the post-separation transfer and the approximately $6.0 million cash cited after the spin-off.
- Check the new Phase 2 trial’s enrollment status, timing, costs, NIH reimbursements, and any subsequent clinical or FDA updates.
- Review the $1.7 million warrant-amendment charge and related spin-off warrant terms, as well as the separation and indemnification agreements.
- Assess remediation of the disclosed control weaknesses, financing needs, and the company’s ability to maintain an active public trading market.