Financial Overview and Outlook for Synlogic

Synlogic, a biopharmaceutical company focused on rare metabolic disorders, has faced significant challenges in recent years as it has worked to advance its pipeline of Synthetic Biotics drug candidates. After discontinuing its lead program, labafenogene marselecobac (SYNB1934), in early 2024, the company is now focused on exploring strategic alternatives to enhance shareholder value.

Discontinuation of Lead Program

In February 2024, Synlogic made the difficult decision to discontinue its pivotal Synpheny-3 study of SYNB1934 as a potential treatment for phenylketonuria (PKU). This decision was based on an internal review indicating the trial was unlikely to meet its primary endpoint, though there were no safety or tolerability concerns. As a result, Synlogic has shifted its focus to pursuing strategic initiatives, including a potential merger or sale of the company.

Financial Performance in 2024

Synlogic’s financial performance in 2024 reflects the impact of the SYNB1934 program discontinuation. Revenue for the year was just $8,000, down significantly from $3.4 million in 2023, as the company’s prior collaboration with Roche concluded in 2023 without Roche exercising its option to further develop the asset.

Total operating expenses decreased 30% to $41.0 million in 2024, down from $58.5 million in 2023. This was driven by a 79% decline in research and development (R&D) spending to $9.2 million, as the company wound down the Synpheny-3 trial. However, Synlogic incurred $25.2 million in restructuring and other charges related to the discontinuation, including impairment charges, severance costs, and other expenses.

Despite the reduction in operating expenses, Synlogic reported a net loss of $23.4 million in 2024, compared to a net loss of $61.3 million in 2023. The company was able to generate $17.6 million in other income, primarily from a change in the fair value of purchase warrants, which helped offset the operating loss.

Cash Position and Funding

As of December 31, 2024, Synlogic had $18.9 million in cash and cash equivalents, down from $25.0 million at the end of 2023. The company used $31.7 million in cash for operating activities during 2024, partially offset by $25.3 million in net cash provided by investing activities, primarily from the maturity of marketable securities.

Synlogic believes its current cash position will be sufficient to fund operations for at least the next 12 months as it explores strategic alternatives. However, the company’s long-term funding requirements will depend on the outcome of these strategic initiatives, as well as any future research and development activities it may pursue.

Pipeline and R&D Efforts

Prior to the discontinuation of SYNB1934, Synlogic had built a pipeline of Synthetic Biotics drug candidates targeting rare metabolic disorders, including:

• SYNB1353, a potential treatment for homocystinuria (HCU), which has achieved proof of mechanism in a Phase 1 study
• Preclinical programs for cystinuria, gout, and inflammatory bowel disease

The company’s early-stage pipeline was fueled by its proprietary approach of creating GI-restricted, oral medicines with new enzymatic pathways. However, with the discontinuation of SYNB1934, Synlogic has shifted its focus away from advancing these internal programs in the near-term.

Strengths and Weaknesses

Synlogic’s key strengths include its innovative Synthetic Biotics platform, which has produced multiple drug candidates targeting rare metabolic disorders. The company’s pipeline was diverse, with programs spanning different stages of development. Additionally, Synlogic’s drug candidates were designed to be GI-restricted, potentially offering safety and tolerability advantages.

However, the company’s major weakness has been its inability to successfully advance its lead program, SYNB1934, through late-stage clinical development. The discontinuation of the Synpheny-3 trial represents a significant setback for Synlogic and has forced the company to shift its focus to exploring strategic alternatives rather than continuing to invest in its internal R&D efforts.

Synlogic’s financial position has also been a concern, with the company reporting significant losses since its inception and relying on external funding to support its operations. The company’s cash runway, while sufficient for the near-term, remains limited, particularly if it is unable to execute on a strategic transaction.

Outlook and Conclusion

With the discontinuation of SYNB1934 and the shift to a strategic review process, Synlogic’s future remains highly uncertain. The company is now focused on pursuing initiatives that may enhance shareholder value, including a potential merger or sale. However, there is no guarantee that such efforts will be successful, and Synlogic may be forced to consider additional alternatives if it is unable to secure a favorable transaction.

Investors should closely monitor Synlogic’s progress in the strategic review process and any updates on the company’s financial position and pipeline. While the Synthetic Biotics platform remains a promising technology, Synlogic’s inability to advance its lead program has significantly undermined confidence in the company’s ability to successfully develop and commercialize its drug candidates. Successful execution of a strategic transaction may be critical to unlocking value for shareholders, but the outcome remains highly uncertain at this time.