Synlogic, Inc. (SYBX) is a biopharmaceutical company at the forefront of developing innovative, non-systemically absorbed Synthetic Biotic therapeutics to revolutionize the treatment of serious diseases. With a strong scientific foundation and a commitment to addressing unmet medical needs, Synlogic has navigated a path of steady progress, positioning itself as a trailblazer in the dynamic landscape of biotechnology.
Business Overview Synlogic was founded in 2014, leveraging pioneering research from the Massachusetts Institute of Technology (MIT) to advance the field of synthetic biology. The company's core focus has been on developing Synthetic Biotic product candidates, which are engineered probiotic organisms designed to perform specific functions within the gastrointestinal (GI) tract. This unique approach aims to address a wide range of diseases, including rare metabolic disorders, by harnessing the potential of these customized microbial therapeutics.
Since its inception, Synlogic has dedicated substantially all of its activities to research and development of its product candidates. The company has funded its operations through various means, including the sale of preferred stock, common stock, preferred units, warrants, and payments received under collaboration agreements, such as those with Roche and Ginkgo. A significant financial event in the company's history was the 2017 merger with Mirna Therapeutics, which provided additional cash resources.
Synlogic's innovative approach involves creating Synthetic Biotics using a proprietary platform that employs a reproducible, modular approach to generate novel drug candidates. These Synthetic Biotics are engineered to perform critical therapeutic functions, such as metabolizing toxic substances, compensating for missing or damaged metabolic pathways, or delivering combinations of therapeutic factors.
Throughout its history, Synlogic has experienced significant operating losses, which is typical for clinical-stage biotechnology companies. As of December 31, 2023, the company had accumulated a deficit of $414.3 million, reflecting the substantial investments made in research and development activities over the years.
Synlogic's pipeline includes several promising product candidates, each targeting a specific disease or condition. The lead program, labafenogene marselecobac (SYNB1934), was being evaluated in a pivotal Phase 3 study for the treatment of phenylketonuria (PKU), a rare genetic disorder. However, in February 2024, the company made the strategic decision to discontinue the Synpheny-3 trial after an internal review indicated the study was unlikely to meet its primary endpoint.
While the discontinuation of the Synpheny-3 trial was a setback, Synlogic remains committed to exploring strategic alternatives to maximize shareholder value. The company has retained Lucid Capital Markets, LLC as a financial advisor to assist in the evaluation of potential options, including the possibility of a merger, acquisition, or other strategic transaction.
Financial Performance Synlogic's financial performance has been consistent with the industry's typical trajectory for a clinical-stage biotechnology company. The company has historically reported net losses, reflecting the significant investments required for research, development, and clinical trials of its product candidates.
For the full year 2023, Synlogic reported revenue of $3.37 million, a net loss of $57.28 million, operating cash flow of -$51.61 million, and free cash flow of -$51.83 million. As of December 31, 2023, Synlogic reported cash, cash equivalents, and short-term marketable securities of $47.7 million.
In the most recent quarter (Q3 2024), Synlogic reported no revenue, compared to $393,000 in Q3 2023. This lack of revenue was due to the conclusion of the Roche collaboration in October 2023. The company's net loss for Q3 2024 was $117,000, with an operating cash flow and free cash flow of -$649,000.
Liquidity In terms of liquidity, Synlogic's current ratio stood at 2.71 as of September 30, 2024, indicating a strong ability to meet short-term obligations. The company's quick ratio, a more stringent measure of liquidity, was also 2.71, suggesting a healthy financial position. As of September 30, 2024, the company had $19.39 million in cash and cash equivalents. Notably, Synlogic does not have any debt, resulting in a debt-to-equity ratio of 0.
Pipeline and Clinical Progress While the discontinuation of the Synpheny-3 trial was a significant setback, Synlogic's pipeline remains diverse and promising. The company's other key product candidates include:
1. SYNB1353: A potential treatment for homocystinuria (HCU), a rare genetic disorder. SYNB1353 has demonstrated positive proof of mechanism in a Phase 1 study, successfully degrading methionine, a precursor to homocysteine.
2. SYNB2081: A drug candidate for the treatment of gout, which was in IND-enabling studies.
3. Preclinical research focused on novel, locally-acting, GI-restricted biotherapeutics for indications in inflammatory bowel disease (IBD).
4. A potential drug candidate for cystinuria, a rare genetic cause of recurrent kidney stones.
Synlogic has been actively engaged in the research and development of these programs, leveraging its proprietary platform to advance its pipeline. The company's commitment to innovation and its focus on addressing unmet medical needs have been central to its efforts.
Risks and Challenges As a clinical-stage biotechnology company, Synlogic faces the inherent risks and challenges associated with the drug development process. The discontinuation of the Synpheny-3 trial for SYNB1934 in PKU has highlighted the unpredictable nature of clinical studies and the potential for setbacks.
Additionally, Synlogic's reliance on strategic partnerships and collaborations, such as the now-concluded Roche Collaboration and Option Agreement, presents additional risks. The company's ability to successfully navigate the regulatory landscape and secure necessary approvals for its product candidates remains a critical factor in its long-term success.
Financial constraints and the need for ongoing capital raises to fund research and development activities are also significant challenges for Synlogic. The company's ability to attract and retain key talent, as well as manage its operational expenses, will be crucial in ensuring its continued progress.
In the nine months ended September 30, 2024, Synlogic incurred $9.2 million in research and development expenses and $5.2 million in general and administrative expenses. The company also recorded $24.8 million in restructuring and other charges during this period, primarily related to the discontinuation of the Synpheny-3 trial and a corporate restructuring that resulted in a significant workforce reduction.
Outlook and Conclusion Synlogic's decision to discontinue the Synpheny-3 trial and explore strategic alternatives represents a pivotal moment in the company's journey. While the setback with SYNB1934 is undoubtedly disappointing, Synlogic remains committed to leveraging its innovative Synthetic Biotic platform to address unmet medical needs in rare metabolic disorders and other therapeutic areas.
The company's pipeline, including the potential treatments for HCU and gout, as well as its preclinical work in IBD and cystinuria, demonstrates Synlogic's resilience and its ability to adapt to challenges. As the strategic review process unfolds, investors will be closely watching for any developments that could unlock further value for shareholders.
Synlogic believes its current cash and cash equivalents will be sufficient to fund its operations at the current levels for at least the next 12 months from the date of the most recent 10-Q filing. However, the company's future capital requirements will depend on the outcome of its strategic review process, as well as the success and timing of any future clinical development and commercialization efforts for its product candidates.
Despite the recent challenges, Synlogic's strong scientific foundation, talented team, and unwavering dedication to its mission position the company as a compelling player in the dynamic biotechnology landscape. As Synlogic navigates this pivotal juncture, the company's ability to capitalize on its innovative capabilities and forge strategic partnerships will be crucial in determining its long-term success.