Synlogic Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Synlogic, Inc. (Nasdaq: SYBX) reported its Q2 2024 financial results and provided a corporate update. Key points include:

1. Cash and cash equivalents of $20.0 million as of June 30, 2024.
2. No revenue for Q2 2024, compared to $35,000 in Q2 2023.
3. R&D expenses decreased to $2.2 million from $11.8 million year-over-year.
4. G&A expenses reduced to $1.2 million from $3.9 million year-over-year.
5. Reported a net income of $2.0 million ($0.16 per share) due to restructuring gains, compared to a net loss of $15.0 million in Q2 2023.
6. The company is exploring strategic options, including potential acquisition or merger, to maximize shareholder value.

Positive

• Net income of $2.0 million ($0.16 per share) in Q2 2024, compared to a net loss in Q2 2023
• Significant reduction in R&D expenses from $11.8 million to $2.2 million year-over-year
• Decrease in G&A expenses from $3.9 million to $1.2 million year-over-year
• Gain on restructuring charges of $3.8 million in Q2 2024

Negative

• No revenue generated in Q2 2024, compared to $35,000 in Q2 2023
• Cash and cash equivalents of only $20.0 million as of June 30, 2024
• Discontinuation of pivotal study Synpheny-3 for labafenogene marselecobac in PKU
• Reduction in workforce as part of restructuring efforts

Insights

Financial Analyst

Synlogic's Q2 2024 financial results reveal a significant shift in the company's financial position and strategy. The $20.0 million cash reserve, while providing some runway, is concerning given the absence of revenue. The dramatic reduction in R&D expenses from $11.8 million to $2.2 million indicates a substantial scale-back in research activities, likely due to the discontinuation of the Synpheny-3 study.

The net income of $2.0 million is misleading as it's primarily due to a $3.8 million gain on restructuring charges, masking the underlying operational challenges. The company's focus on exploring strategic options, including potential M&A, suggests a struggle to continue as a standalone entity. Investors should be cautious, as the company's future is highly uncertain and dependent on finding a strategic partner or buyer.

Biotech Industry Expert

Synlogic's decision to discontinue the Synpheny-3 pivotal study for labafenogene marselecobac (SYNB1934) in PKU is a major setback. This move, coupled with the significant reduction in R&D spending, indicates a shift away from active drug development. The company's pivot to exploring strategic options, including potential M&A, suggests a lack of confidence in its current pipeline.

The biotech landscape is challenging and Synlogic's situation reflects the risks inherent in developing novel therapeutics. The company's cash position of $20 million provides runway, making a strategic transaction increasingly crucial. Investors should be aware that the value of Synlogic's assets, including its synthetic biology platform, may be difficult to assess in the current market, potentially impacting any merger or acquisition prospects.

WINCHESTER, Mass., Aug. 08, 2024 (GLOBE NEWSWIRE) -- Synlogic, Inc. (Nasdaq: SYBX), a biopharmaceutical company advancing novel therapeutics to transform the care of serious diseases, today reported financial results for the second quarter 2024 and provided a corporate update.

In March 2024, the Company retained Lucid Capital Markets, LLC to act as its financial advisor to explore and evaluate strategic options for maximizing shareholder value. Potential strategic alternatives that may be explored or evaluated as part of this process include the potential for an acquisition, merger, business combination or other strategic transaction involving the Company. The Board has not set a timetable for the conclusion of this review, nor has it made any decisions related to any further actions or potential strategic options at this time. There can be no assurance, however, that this process will result in any such transaction.

Second Quarter 2024 Financial Results

As of June 30, 2024 Synlogic had cash and cash equivalents of $20.0 million.

There was no revenue for the three months ended June 30, 2024, compared to $35 thousand for the corresponding period in 2023. Revenue for the three months ended June 30, 2023 was associated with the prior research collaboration with Roche.

Research and development expenses were $2.2 million for the three months ended June 30, 2024, compared to $11.8 million for the corresponding period in 2023.

General and administrative expenses for the three months ended June 30, 2024 were $1.2 million compared to $3.9 million for the corresponding period in 2023.

There was a gain on restructuring charges of $3.8 million for the three months ended June 30, 2024. The restructuring and other charges were a result of the Company’s decision in February 2024 to discontinue Synpheny-3, its pivotal study of labafenogene marselecobac (SYNB1934) in phenylketonuria (PKU) and evaluate strategic options for the Company. The restructuring gain was primarily due to the lease termination and the sale of property and equipment, offset by severance expense relating to the reduction in workforce, and accelerated stock compensation expense.

For the three months ended June 30, 2024 Synlogic reported a consolidated net income of $2.0 million, or $0.16 per share, due to the gain on restructuring for the lease termination, compared to a consolidated net loss of $(15.0) million, or $(3.21) per share, for the corresponding period in 2023.

About Synlogic

Synlogic is a biopharmaceutical company advancing novel therapeutics to transform the care of serious diseases in need of new treatment options. Synlogic designs, develops and manufactures these drug candidates, which are produced by applying precision genetic engineering to well-characterized probiotics.

Forward Looking Statements

This press release contains "forward-looking statements" that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations, clinical development plans, future financial position, future revenue, projected expenses, prospects, plans and objectives of management are forward-looking statements. In addition, when or if used in this press release, the words "may," "could," "should," "anticipate," "believe," "look forward," "estimate," "expect," “focused on,” "intend," "on track," "plan," "predict" and similar expressions and their variants, as they relate to Synlogic, may identify forward-looking statements. Actual results could differ materially from those contained in any forward-looking statements as a result of various factors, including: the Company may not execute on its planned exploration and evaluation of strategic alternatives; the availability of suitable third parties with which to conduct contemplated strategic transactions; the risk that the Company's reduction in force efforts may not generate their intended benefits to the extent or as quickly as anticipated; and the risk that the Company's reduction in force efforts may negatively impact the Company's business operations and reputation as well as those risks identified under the heading "Risk Factors" in Synlogic's filings with the U.S. Securities and Exchange Commission. The forward-looking statements contained in this press release reflect Synlogic's current views with respect to future events. Synlogic anticipates that subsequent events and developments will cause its views to change. However, while Synlogic may elect to update these forward-looking statements in the future, Synlogic specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Synlogic's view as of any date subsequent to the date hereof.

Contact: info@synlogictx.com

Synlogic, Inc. Condensed Consolidated Statements of Operations (unaudited)
(in thousands, except share and per share data)	For the Three Months Ended June 30								For the Six Months Ended June 30
		2024				2023				2024				2023
Revenue	$	—			$	35			$	8			$	209
Operating expenses
Research and development		2,197				11,765				9,877				24,215
General and administrative		1,179				3,924				4,063				7,891
Restructuring and other charges		(3,795	)			—				24,494				—
Total operating expenses		(419	)			15,689				38,434				32,106
Income (loss) from operations		419				(15,654	)			(38,426	)			(31,897	)
Total other income, net		1,598				615				8,879				1,236
Income (loss) before income taxes		2,017				(15,039	)			(29,547	)			(30,661	)
Income tax expense		(5	)			(9	)			(5	)			(9	)
Net income (loss)	$	2,012			$	(15,048	)		$	(29,552	)		$	(30,670	)
Net income (loss) per share - basic and diluted	$	0.16			$	(3.21	)		$	(2.43	)		$	(6.61	)
Weighted-average common shares - basic		12,203,956				4,681,287				12,168,081				4,643,422
Weighted-average common shares - diluted		12,399,068				4,681,287				12,168,081				4,643,422

Synlogic, Inc. Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except share data)
	June 30, 2024				December 31, 2023
Assets
Cash, cash equivalents & marketable securities	$	19,966			$	47,746
Property and equipment, net		—				5,603
Other assets		1,669				22,201
Total assets	$	21,635			$	75,550
Liabilities and stockholders' equity
Current liabilities	$	5,652			$	20,404
Long-term liabilities		—				12,491
Total liabilities		5,652				32,895
Total stockholders' equity		15,983				42,655
Total liabilities and stockholders' equity	$	21,635			$	75,550
Common stock and common stock equivalents
Common stock		11,698,989				9,186,157
Common stock warrants (pre-funded)		722,183				2,973,183
Total common stock		12,421,172				12,159,340

FAQ

What were Synlogic's (SYBX) Q2 2024 financial results?

Synlogic reported a net income of $2.0 million ($0.16 per share) in Q2 2024, with cash and cash equivalents of $20.0 million. The company had no revenue, R&D expenses of $2.2 million, and G&A expenses of $1.2 million.

Why did Synlogic (SYBX) report a net income in Q2 2024 despite no revenue?

Synlogic reported a net income due to a gain on restructuring charges of $3.8 million, primarily from lease termination and sale of property and equipment, which offset other expenses.

What strategic options is Synlogic (SYBX) exploring as of Q2 2024?

Synlogic is exploring strategic options to maximize shareholder value, including potential acquisition, merger, business combination, or other strategic transactions involving the company.

Why did Synlogic (SYBX) discontinue the Synpheny-3 study in Q2 2024?

Synlogic discontinued the Synpheny-3 pivotal study of labafenogene marselecobac in phenylketonuria (PKU) in February 2024 as part of its decision to evaluate strategic options for the company.