Synaptogenix, Inc. — Form 10-Q Summary
Entity note: The supplied filing is for Synaptogenix, Inc. (Nasdaq: SNPX), not TAO Synergies Inc. It covers the quarter and nine months ended September 30, 2021; the financial statements are unaudited.
Business context and reporting period
Synaptogenix is a clinical-stage biopharmaceutical company developing bryostatin-1, principally for Alzheimer’s disease (AD), with potential additional programs including Fragile X syndrome. The company became independent following its December 2020 spin-off from Neurotrope. Comparative 2020 results include periods when the business was part of its former parent, so they are not fully like-for-like with standalone 2021 results.
Key financial metrics
| Metric | Three months ended Sept. 30, 2021 | Nine months ended Sept. 30, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $2.93 million | $8.38 million | $2.58 million / $8.19 million |
| Net loss | $2.93 million | $8.38 million | $4.27 million / $9.74 million |
| Basic and diluted loss per share | $0.47 | $1.89 | $0.90 / $2.28 |
| Cash used in operating activities | Not separately stated | $6.67 million | $6.90 million |
- Research and development expense was $0.84 million for the quarter and $2.97 million year to date, up 48.5% and 91.1%, respectively, from the comparable periods. General and administrative expense was $2.09 million for the quarter and $5.40 million year to date.
- At September 30, cash and cash equivalents were $31.29 million; current assets were $32.34 million and current liabilities $1.01 million, yielding working capital of $31.33 million. Total assets were $32.36 million and shareholders’ equity $31.35 million.
- The balance sheet reports no borrowings or other debt. Cash increased from $5.80 million at December 31, 2020, largely from equity financings and warrant exercises.
- For the nine months, financing activities provided $32.17 million, including approximately $23.8 million net proceeds from two private placements and $8.4 million from warrant exercises. The company reported 6.14 million common shares outstanding at September 30 and 6.67 million as of November 10.
- Margins are not meaningful because the company had no revenue. No income tax provision was recorded.
Material changes versus prior period
- Year-to-date net loss narrowed by 14% versus 2020, primarily because of lower general and administrative expense and the absence of the prior-year $1.7 million warrant amendment expense; higher R&D expense partly offset these reductions.
- Quarterly net loss also decreased from $4.27 million to $2.93 million, largely reflecting the absence of the 2020 warrant amendment charge, despite higher quarterly operating expenses.
- Cash and working capital rose substantially following the January and June 2021 private placements and warrant exercises. This funding came with dilution: common shares outstanding increased from 1.26 million at year-end 2020 to 6.14 million at September 30, 2021.
Outlook, risks, contingencies and unusual items
- Management expected approximately $35 million of cash as of the filing date, including approximately $5 million received after quarter-end from warrant exercises and NIH trial-expense reimbursement. It stated this should fund projected operating requirements for at least 12 months from the filing date, including the current Phase 2 AD program.
- The current Phase 2 study is intended to assess bryostatin’s safety, tolerability and longer-term efficacy in approximately 100 moderately severe AD patients not taking memantine. The estimated gross study budget is $9.6 million, with an estimated company-funded net cost of $6.9 million after a $2.7 million NIH grant. The company expects R&D expense to increase.
- The company’s earlier confirmatory Phase 2 trial did not meet its primary endpoint with statistical significance. 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. This history is a key clinical risk.
- A memorandum of understanding with Nemours contemplated a Fragile X trial; the company estimated trial and IND costs of approximately $700,000, with no related expense incurred by September 30.
- Management said additional capital would be needed for development beyond the current plan and for potential additional trials. Future equity funding could dilute shareholders; debt could include restrictive covenants; licensing or collaboration could require surrendering rights.
- Key risks include clinical and regulatory uncertainty, possible trial delays from COVID-19, and dependence on securing adequate bryostatin supply. Existing NIH supply arrangements may not cover all trials; the company also has an exclusive synthetic bryostatin supplier agreement.
- The filing describes potentially uncapped tax and other indemnification obligations related to the spin-off. It says no indemnification claims were outstanding as of the reporting date. Potential tax exposure could arise if the spin-off is ultimately determined taxable.
- Disclosure controls and procedures were deemed ineffective due to material weaknesses involving segregation of duties, financial close and reporting processes, and IT general controls. Management nevertheless concluded the financial statements fairly present the company’s financial condition and results.
Important facts for investors to verify
- Confirm the correct issuer: the filing is for Synaptogenix, Inc., despite the request metadata naming TAO Synergies Inc.
- Review current cash, subsequent warrant exercises and the assumptions behind management’s stated 12-month runway; the company remains loss-making and relies on external capital.
- Track enrollment, timing, costs and results of the current Phase 2 AD study, as well as any FDA feedback and plans following the prior trial’s missed primary endpoint.
- Assess dilution from outstanding warrants, options and restricted stock units, and potential placement-agent fees or warrant exercise obligations.
- Monitor bryostatin supply arrangements, the NIH grant reimbursements, the proposed Nemours program, and the potential spin-off-related tax and indemnification exposure.
- Reconcile a filing inconsistency: the nine-month MD&A comparison table gives 2020 general and administrative expense as $6.736 million, while the financial statements and related narrative show $6.636 million. The filing text does not provide a clear explanation for the discrepancy.