Synthetic Biologics Inc (NYSEMKT:SYN), a clinical-stage company focused on developing therapeutics to protect the microbiome while targeting pathogen-specific diseases, reported financial results for the three and six months ended June 30, 2015, and provided an operational update.
“We continue to successfully execute against our planned milestones and are encouraged by the progress of our two lead microbiome drug candidates,” said Jeffrey Riley, Chief Executive Officer. “We initiated Phase 2a clinical trials for SYN-004, which is designed to protect the gut microbiome from the effects of certain commonly used intravenous (IV) antibiotics for the prevention of C. difficileinfection and antibiotic-associated diarrhea (AAD). We also initiated a Phase 2 clinical trial for SYN-010 to evaluate the efficacy in reducing the production of methane in the gut which is perceived as the underlying cause of pain, bloating and constipation associated with irritable bowel syndrome and constipation (IBS-C).”
Mr. Riley added, “This continued progress combined with investor interest related to the microbiome enabled us to strengthen our balance sheet with net proceeds of $42.6 million in a successful July public offering. Our increased cash position provides resources to support our lead microbiome drug candidates’ continued progress in the clinic. And, with the recent additions of industry veterans with proven track records to our management team, we are better positioned to develop operational and commercial strategies as we navigate through clinical trials. Looking ahead, we feel confident that we will achieve our milestones and look forward to reporting important microbiome program developments including, topline data from the two SYN-004 Phase 2a trials and topline data from the first SYN-010 Phase 2 trial. Accomplishing each of these milestones would position us to create value for our shareholders while we work to address significant unmet medical needs with our novel microbiome drug candidates.”
Clinical Program Progress
Prevention of C. difficile infection and AAD – SYN-004:
- Dosed first participant in second Phase 2a clinical trial to evaluate the GI antibiotic-degrading effects and safety of SYN-004 in the presence of the proton pump inhibitor (PPI), esomeprazole
- Reported data from first four of 12 expected participants in first Phase 2a open-label clinical trial; data showed that SYN-004 degraded IV ceftriaxone in the chyme of the four healthy participants with functioning ileostomies without affecting ceftriaxone in the bloodstream
- Expect topline data from first Phase 2a clinical trial (3Q 2015)
- Plan to initiate a Phase 2b proof-of-concept clinical trial (3Q 2015); anticipate enrolling approximately 370 patients at up to 75 global sites; anticipate interim analysis of blinded data (2H 2015)
- Expect topline data from second Phase 2a clinical trial (2H 2015)
IBS-C – SYN-010:
- Initiated first Phase 2 clinical trial to evaluate change from baseline in breath methane, as determined by a lactulose breath test, in methane-positive patients with IBS-C after seven days of treatment with one of two formulations of SYN-010 compared with placebo
- Expect topline data from first Phase 2 clinical trial (2H 2015)
- Plan to initiate second Phase 2 clinical trial (2H 2015); expect topline data (1H 2016)
TrimestaTM, an oral estriol drug for the treatment of relapsing-remitting multiple sclerosis (MS) and cognitive dysfunction in MS:
- Amended license and clinical trial agreements with University of California, Los Angeles (UCLA) in July 2015
- Informed by UCLA that MRI analyses are ongoing to evaluate changes in the brain that correlate with improvements seen in clinical outcomes
- Expect to report topline MRI data 30 days following receipt of this data from UCLA
- A separate UCLA-led, multi-center U.S. Phase 2 trial is underway focused exclusively on cognition utilizing Trimesta with a variety of currently marketed MS drugs
Pertussis (whooping cough) – SYN-005:
- Seeking non-dilutive funding to support preclinical and clinical development (ongoing)
Operational Update – Expanded Leadership Team
- Steven A. Shallcross named Chief Financial Officer, Treasurer and Secretary, bringing operational, financial and international biotech industry experience, as well as an established track record of leading the financial development and strategy for several publicly traded biotech companies
- Klaus Gottlieb, MD, FACG, joined the Company as Vice President, Clinical & Regulatory Affairs, bringing his knowledge of clinical pathways to commercialize products for the treatment of GI diseases
- Maureen Early joined the team in a newly created position of Vice President, Commercial, to lead all commercial and marketing efforts
Three and Six Months Ended June 30, 2015 Financial Results
General and administrative expenses increased to $2.2 million and $3.9 million for the three and six months ended June 30, 2015, respectively, compared to $1.8 million and $2.9 million for the same periods in 2014. The increase of approximately 22% for the three months ended June 30, 2015 is primarily the result of increased employee costs and legal fees, offset by a decrease in stock-based compensation expense. The increase of approximately 34% for the six months ended June 30, 2015 is primarily the result of increased employee costs, legal fees and audit fees related to the additional procedures required under the accelerated filer status. Non-cash charges related to stock-based compensation were $335,000 and $915,000 for the three and six months ended June 30, 2015, respectively, compared to $645,000 and $899,000 for the same periods in 2014.
Research and development expenses increased to $7.5 million and $14.0 million for the three and six months ended June 30, 2015, respectively, compared to $2.8 million and $5.6 million for the same periods in 2014. The increases of approximately 165% and 152% for the three and six months ended June 30, 2015, respectively, are primarily the result of increased program costs associated with expanded clinical development, manufacturing and research activities for our microbiome-focused pipeline, including the Company’sC. difficile and IBS-C programs. For the six months ended June 30, 2015, research and development expenses also include a $1.0 million expense for achieving the third milestone as set forth in the Asset Purchase Agreement with Prev ABR LLC, dated November 28, 2012, related to the C. difficile program. Prev ABR LLC exercised its option to receive the milestone payments in shares of Synthetic Biologics’ common stock that were issued in April 2015. Non-cash charges related to stock-based compensation were$252,000 and $498,000 for the three and six months ended June 30, 2015, respectively, compared to $210,000 and $318,000 for the same periods in 2014.
Other expense was $3.9 million and $8.0 million for the three and six months ended June 30, 2015, respectively, compared to other income of $95,000 and $96,000 for the same periods in 2014. Other expense for the three and six months ended June 30, 2015 was primarily the result of a non-cash charge of $3.9 million and $8.0 million, respectively, related to the change in fair value of warrants due to the increase in the stock price from the previous quarter. There was no non-cash income or expense relating to fair value warrants for the three and six months ended June 30, 2014.
Cash and cash equivalents at June 30, 2015 was $4.8 million. Subsequent to the end of the second quarter, a public offering was completed for net proceeds of approximately $42.6 million. The strengthened balance sheet provides the Company with the resources to fund its clinical development programs. (Original Source)
Shares of Synthetic Biologics closed last Friday at $3.20. SYN has a 1-year high of $4.32 and a 1-year low of $1.34. The stock’s 50-day moving average is $3.11 and its 200-day moving average is $2.43.
On the ratings front, Synthetic has been the subject of a number of recent research reports. In a report issued on June 5, William Blair analyst Jonathan Ho reiterated a Buy rating on SYN, with a price target of $12, which implies an upside of 275.0% from current levels. Separately, on June 4, H.C. Wainwright’s Andrew Fein maintained a Buy rating on the stock and has a price target of $4.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jonathan Ho and Andrew Fein have a total average return of 21.9% and 21.9% respectively. Ho has a success rate of 70.4% and is ranked #400 out of 3728 analysts, while Fein has a success rate of 57.5% and is ranked #159.
Synthetic Biologics Inc is a biotechnology company focused on the development of novel anti-infective biologic and drug candidates targeting specific pathogens that cause serious infections and other diseases.