This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, statements contained in this Quarterly Report on Form 10-Q, including but not limited to, statements regarding the timing of our clinical trials, the development and commercialization of our pipeline products, the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities and the timing of any such financing, our future results of operations and financial position, business strategy and plan prospects, or costs and objectives of management for future research, development or operations, are forward-looking statements. These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “seeks,” “goals,” “estimates,” “predicts,” “potential” and “continue” or similar words. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, and those identified under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~“2020 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on ~~February 20, 2020.~~March 4, 2021. Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Throughout this Quarterly Report on Form 10-Q, “Synthetic Biologics,” the “Company,” “we,” “us” and “our” refer to Synthetic Biologics, Inc.

All trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

SYNTHETIC BIOLOGICS, INC.

FORM 10-Q

TABLE OF CONTENTS

			Page
		PART I. FINANCIAL INFORMATION	3

Item 1.		Financial Statements (Unaudited)	3

		Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020	3
		Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	4
		Condensed Consolidated Statements of Stockholders’ Equity (Deficit) ~~Equity~~ for the ~~Nine~~Six Months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	5
		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020	6
		Notes to Condensed Consolidated Financial Statements	7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	35 34
Item 4.		Controls and Procedures	35

		PART II. OTHER INFORMATION	35

Item 1.		Legal Proceedings	35
Item 1A.		Risk Factors	35
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	38 40
Item 3.		Defaults Upon Senior Securities	39 40
Item 4.		Mine Safety Disclosures	39 40
Item 5.		Other Information	39 40
Item 6.	Exhibits	~~Exhibits~~	39 40

SIGNATURES		40 41

Table of Contents

PART I–FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Synthetic Biologics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands except share and par value amounts)

September 30,
2020

December 31,
2019

Assets

Current Assets
Cash and cash equivalents $ 6,005 $ 15,045
Prepaid expenses and other current assets 657 1,381
Total Current Assets 6,662 16,426

Property and equipment, net 202 367

Right of use asset 316 419

Deposits and other assets 23 23

Total Assets $ 7,203 $ 17,235

Liabilities and Stockholders' Deficit

Current Liabilities:
Accounts payable $ 992 $ 2,315
Accrued expenses 988 1,776
Accrued employee benefits 752 935
Lease liability 278 249
Total Current Liabilities 3,010 5,275

Lease liability - Long term 261 473

Total Liabilities 3,271 5,748
Series A convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 120,000 issued and outstanding 12,733 12,544
Stockholders' Deficit:
Series B convertible preferred stock, $1,000 par value; 10,000,000 shares authorized, 4,146 issued and outstanding and 7,638 issued and outstanding 2,584 4,761
Common Stock, $0.001 par value; 200,000,000 shares authorized, 19,845,283 and 16,808,758 issued and 19,842,955 and 16,806,430 outstanding 20 17
Additional paid-in capital 236,320 232,580
Accumulated deficit (244,975 ) (235,537 )
Total Synthetic Biologics, Inc. and Subsidiaries Deficit (6,051 ) 1,821
Non-controlling interest (2,750 ) (2,878 )
Total Stockholders' Deficit (8,801 ) (1,057 )

Total Liabilities and Stockholders' Deficit $ 7,203 $ 17,235


June 30, 2021

December 31, 2020
Assets





Current Assets




Cash and cash equivalents

$
74,291

$
6,227
Prepaid expenses and other current assets

1,341

1,707
Total Current Assets

75,632

7,934

Property and equipment, net

132

174

Right of use asset

1,468

279

Deposits and other assets

23

23

Total Assets

$
77,255

$
8,410

Liabilities and Stockholders' Deficit



Current Liabilities:


Accounts payable

$
568

$
886
Accrued expenses

794

925
Accrued employee benefits

540

868
Operating lease liability

196

287
Total Current Liabilities

2,098

2,966

Lease liability - Long term

1,426

186

Total Liabilities

3,524

3,152
Commitments and Contingencies


Series A convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 and 120,000 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

0

12,798
Stockholders' Equity (Deficit):


Series B convertible preferred stock, $1,000 par value; 10,000,000 shares authorized, 0 issued and outstanding and 3,973 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

0

2,477
Common stock, $0.001 par value; 200,000,000 shares authorized, 132,044,866 issued and 132,042,538 outstanding at June 30, 2021 and 29,252,253 issued and 29,249,925 outstanding at December 31, 2020

132

29
Additional paid-in capital

339,121

240,821
Accumulated deficit

(262,748)

(248,094)
Total Synthetic Biologics, Inc. and Subsidiaries Equity (Deficit)

76,505

(4,767)
Non-controlling interest

(2,774)

(2,773)
Total Stockholders' Equity (Deficit)

73,731

(7,540)

Total Liabilities and Stockholders' Equity (Deficit)

$
77,255

$
8,410

See accompanying notes to unaudited condensed consolidated financial statements.

3
3

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)


For the three months ended June 30,

For the six months ended June 30,

2021

2020

2021

2020
Operating Costs and Expenses:








General and administrative

$
1,265

$
1,286

$
2,685

$
2,679
Research and development

1,932

1,603

3,049

3,238
Total Operating Costs and Expenses

3,197

2,889

5,734

5,917

Loss from Operations

(3,197)

(2,889)

(5,734)

(5,917)

Other Income:

Interest income

2

6

2

44
Total Other Income

2

6

2

44

Net Loss

(3,195)

(2,883)

(5,732)

(5,873)

Net Loss Attributable to Non-controlling Interest

0

(16)

(1)

(42)

Net Loss Attributable to Synthetic Biologics, Inc. and Subsidiaries

$
(3,195)

$
(2,867)

$
(5,731)

$
(5,831)
Series A Preferred Stock Dividends

0

(63)

(24)

(125)
Effect of Series A Preferred Stock price adjustment

0

0

(7,402)

0
Series B Preferred Stock Dividends

0

(392)

(1,497)

(796)

Net Loss Attributable to Common Stockholders

$
(3,195)

$
(3,322)

$
(14,654)

$
(6,752)

Net Loss Per Share - Basic and Dilutive

$
(0.02)

$
(0.18)

$
(0.13)

$
(0.38)

Weighted average number of shares outstanding during the period - Basic and Dilutive

132,042,538

18,405,884

111,539,024

17,748,688

For the three months
ended September 30,

For the nine months
ended September 30,

2020 2019 2020 2019
Operating Costs and Expenses:
General and administrative $ 1,197 $ 1,098 $ 3,876 $ 3,297
Research and development 914 4,144 4,152 9,156
Total Operating Costs and Expenses 2,111 5,242 8,028 12,453

Loss from Operations (2,111 ) (5,242 ) (8,028 ) (12,453 )

Other Income:
Interest income - 92 44 217
Total Other Income - 92 44 217

Net Loss (2,111 ) (5,150 ) (7,984 ) (12,236 )

Net Loss Attributable to Non-controlling Interest (8 ) (30 ) (50 ) (73 )

Net Loss Attributable to Synthetic Biologics, Inc. and Subsidiaries $ (2,103 ) $ (5,120 ) $ (7,934 ) $ (12,163 )

Series A Preferred Stock Dividends (64 ) (63 ) (189 ) (185 )
Series B Preferred Stock Dividends (519 ) (70 ) (1,315 ) (585 )

Net Loss Attributable to Common Stockholders $ (2,686 ) $ (5,253 ) $ (9,438 ) $ (12,933 )

Net Loss Per Share - Basic and Dilutive $ (0.14 ) $ (0.31 ) $ (0.52 ) $ (0.79 )

Weighted average number of shares outstanding during the period - Basic and Dilutive 19,398,339 16,805,257 18,302,585 16,313,326

See accompanying notes to unaudited condensed consolidated financial statements.

4
4

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders Equity (Deficit)
(In thousands, except share and par value amounts)

Common Stock Series B Preferred
Shares Amount Shares Amount APIC Accumulated
Deficit Non-
Controlling
Interest Total
Stockholders'
Equity (Deficit)
Balance at December 31, 2019 16,806,430 $ 17 7,638 $ 4,761 $ 232,580 $ (235,537 ) $ (2,878 ) $ (1,057 )

Stock-based compensation - - - - 83 - - 83
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (62 ) - (62 )
Issuance of SYN Biomics Stock - - - - - 26 26
Conversion of Series B Preferred Stock to Common ($0.03 per share) 933,045 1 (1,073 ) (669 ) 1,072 (404 ) - -
Net loss - - - - - (2,964 ) - (2,964 )
Non-controlling interest - - - - - - (26 ) (26 )

Balance at March 31, 2020 17,739,475 $ 18 6,565 $ 4,092 $ 233,735 $ (238,967 ) $ (2,878 ) $ (4,000 )

Stock-based compensation - - - - 86 - - 86
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (63 ) - (63 )
Issuance of SYN Biomics Stock - - - - - - 10 10
Conversion of Series B Preferred Stock to Common ($0.03 per share) 904,349 1 (1,040 ) (648 ) 1,039 (392 ) - -
Net loss - - - - - (2,867 ) - (2,867 )
Non-controlling interest - - - - - - (16 ) (16 )

Balance at June 30, 2020 18,643,824 $ 19 5,525 $ 3,444 $ 234,860 $ (242,289 ) $ (2,884 ) $ (6,850 )

Stock-based compensation - - - - 82 - - 82
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (64 ) - (64 )
Issuance of SYN Biomics Stock - - - - - - 142 142
Conversion of Series B Preferred Stock to Common ($0.03 per share) 1,199,131 1 (1,379 ) (860 ) 1,378 (519 ) - -
Net loss - - - - - (2,103 ) - (2,103 )
Non-controlling interest - - - - - - (8 ) (8 )

Balance at September 30, 2020 19,842,955 $ 20 4,146 $ 2,584 $ 236,320 $ (244,975 ) $ (2,750 ) $ (8,801 )

Common Stock $0.001 Par Value

Series B Preferred

Accumulated

Non-Controlling

Total Stockholders’


Shares

Amount

Shares

Amount

APIC

Deficit

Interest

Deficit

Balance at December 31, 2020

29,249,925

$
29

3,973

$
2,477

$
240,821

$
(248,094)

$
(2,773)

$
(7,540)

Stock-based compensation

0

0

0

0

101

0

0

101
Stock issued under "at-the-market" offering

78,685,315

79

0

0

65,881

0

0

65,960
Warrants Exercised

11,655,747

12

0

0

8,030

0

0

8,042
Series A Preferred Stock Dividends

-

0

-

0

0

(24)

-

(24)
Effect of Series A Preferred Stock price adjustment

0

0

0

0

7,402

(7,402)

0

0
Conversion of Series A Preferred Stock to Common

8,996,768

9

0

0

12,813

0

0

12,822
Conversion of Series B Preferred Stock to Common

3,454,783

3

(3,973)

(2,477)

3,971

(1,497)

0

0
Net loss

-

0

-

0

0

(2,536)

-

(2,536)
Non-controlling interest

-

0

-

0

0

-

(1)

(1)

Balance at March 31, 2021

132,042,538

$
132

-

$
0

$
339,019

$
(259,553)

$
(2,774)

$
76,824

Stock-based compensation

-

0

-

0

102

-

-

102
Net loss

-

0

-

0

0

(3,195)

-

(3,195)

Balance at June 30, 2021

132,042,538

$
132

-

$
0

$
339,121

$
(262,748)

$
(2,774)

$
73,731

Common Stock Series B Preferred
Shares Amount Shares Amount APIC Accumulated
Deficit Non-
Controlling
Interest Total
Stockholders'
Equity (Deficit)
Balance at December 31, 2018 15,482,083 $ 15 9,161 $ 5,760 $ 230,754 $ (219,461 ) $ (2,909 ) $ 14,159

Stock-based compensation - - - - 64 - - 64
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (61 ) - (61 )
Issuance of SYN Biomics Stock - - - - (36 ) - 53 17
Conversion of Series B Preferred Stock to Common ($0.03 per share) 900,869 1 (1,036 ) (638 ) 1,035 (398 ) - -
Net loss - - - - - (3,512 ) - (3,512 )
Non-controlling interest - - - - - - (16 ) (16 )

Balance at March 31, 2019 16,382,952 $ 16 8,125 $ 5,122 $ 231,817 $ (223,432 ) $ (2,872 ) $ 10,651

Stock-based compensation - - - - 91 - - 91
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (61 ) - (61 )
Issuance of SYN Biomics Stock - - - - - - 45 45
Conversion of Series B Preferred Stock to Common ($0.03 per share) 262,608 1 (302 ) (187 ) 303 (117 ) - -
Net loss - - - - - (3,531 ) - (3,531 )
Non-controlling interest - - - - - - (27 ) (27 )

Balance at June 30, 2019 16,645,560 $ 17 7,823 $ 4,935 $ 232,211 $ (227,141 ) $ (2,854 ) $ 7,168

Stock-based compensation - - - - 91 - - 91
Series A Preferred Stock Dividends ($0.01 per share) - - - - - (63 ) - (63 )
Issuance of SYN Biomics Stock - - - - - - 43 43
Conversion of Series B Preferred Stock to Common ($0.03 per share) 160,870 (185 ) (113 ) 183 (70 ) - -
Net loss - - - - - (5,120 ) - (5,120 )
Non-controlling interest - - - - - - (30 ) (30 )
Balance at September 30, 2019 16,806,430 $ 17 7,638 $ 4,822 $ 232,485 $ (232,394 ) $ (2,854 ) $ 2,089

Common Stock $0.001 Par Value

Series B Preferred

Accumulated

Non-Controlling

Total Stockholders’

Shares

Amount

Shares

Amount

APIC

Equity

Interest

Deficit

Balance at December 31, 2019

16,806,430

$
17

7,638

$
4,761

$
232,580

$
(235,537)

$
(2,878)

$
(1,057)

Stock-based compensation

0

0

0

0

83

0

0

83
Series A Preferred Stock Dividends ($0.01 per share)

0

0

0

0

0

(62)

0

(62)
Issuance of SYN Biomics Stock

0

0

0

0

0

0

26

26
Conversion of Series B Preferred Stock to Common ($0.03 per share)

933,045

1

(1,073)

(669)

1,072

(404)

0

0
Net loss

-

0

-

0

0

(2,964)

-

(2,964)
Non-controlling interest

-

0

-

0

0

-

(26)

(26)

Balance at March 31, 2020

17,739,475

$
18

6,565

$
4,092

$
233,735

$
(238,967)

$
(2,878)

$
(4,000)

Stock-based compensation

-

0

-

0

86

-

-

86
Series A Preferred Stock Dividends ($0.01 per share)

-

0

-

0

0

(63)

-

(63)
Issuance of SYN Biomics Stock

-

0

-

0

0

-

10

10
Conversion of Series B Preferred Stock to Common ($0.03 per share)

904,349

1

(1,040)

(648)

1,039

(392)

-

0
Net loss

-

0

-

0

0

(2,867)

-

(2,867)
Non-controlling interest

-

0

-

-

0

-

(16)

(16)

Balance at June 30, 2020

18,643,824

$
19

5,525

$
3,444

$
234,860

$
(242,289)

$
(2,884)

$
(6,850)

See accompanying notes to unaudited condensed consolidated financial statements.

5
5

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

For the nine months
ended September 30,

2020 2019
Cash Flows From Operating Activities:
Net loss $ (7,984 ) $ (12,236 )
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation 251 246
Subsidiary stock issued to vendor 178 104
Depreciation 169 182
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 724 (600 )
Right of use asset 103 86
Accounts payable (1,324 ) 1,419
Accrued expenses (788 ) 1,403
Accrued employee benefits (182 ) (713 )
Lease liability (183 ) (159 )
Net Cash Used In Operating Activities (9,036 ) (10,268 )

Cash Flows From Investing Activities
   Purchase of property and equipment (4 ) -
Net Cash Used In Investing Activities (4 ) -

Net Cash From Financing Activities - -

Net decrease in cash and cash equivalents (9,040 ) (10,268 )

Cash and cash equivalents at beginning of period 15,045 28,918

Cash and cash equivalents at end of period $ 6,005 $ 18,650

Noncash Financing Activities:
Conversion of Series B Preferred Stock $ 2,177 $ 938
Deemed dividends for accretion of Series B Preferred Stock discount $ 1,315 $ 585
In-kind dividends paid in preferred stock $ 189 $ 185
Right of use asset from operating lease $ - $ 538

For the Six Months Ended June 30,


2021

2020
Cash Flows From Operating Activities:




Net loss

$
(5,732)

$
(5,873)
Adjustments to reconcile net loss to net cash used in operating activities:


Stock-based compensation

203

169
Subsidiary stock issued to vendor

0

36
Depreciation

56

116
Changes in operating assets and liabilities:

Prepaid expenses and other current assets

366

484
Right of use asset

81

67
Accounts payable

(318)

(1,290)
Accrued expenses

(131)

(567)
Accrued employee benefits

(328)

(8)
Operating Lease liability

(121)

(120)
Net Cash Used in Operating Activities

(5,924)

(6,986)

Cash Flows from Investing Activities

Purchase of property and equipment

(14)

0
Net Cash Used in Investing Activities

(14)

0

Cash Flows from Financing Activities

Proceeds from "at the market" stock issuance

65,960

0
Proceeds from issuance of common stock for warrant exercises

8,042

0
Net Cash Provided by Financing Activities

74,002

0

Net increase (decrease) in cash and cash equivalents

68,064

(6,986)

Cash and cash equivalents at the beginning of this period

6,227

15,045

Cash and cash equivalents at the end of this period

$
74,291

$
8,059

Noncash Financing Activities:

Effect of Series A Preferred Stock price adjustment

$
7,402

$
0
Right of use asset from operating lease

$
1,270

$
0
Conversion of Series B Preferred Stock

$
2,477

$
1,317
Deemed dividends for accretion of Series B Preferred Stock discount

$
1,497

$
796
In-kind dividends paid in preferred stock

$
23

$
125

See accompanying notes to unaudited condensed consolidated financial statements.

6
6

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Nature of Operations and Basis of Presentation
Description of Business
Synthetic Biologics, Inc. (the “Company” or “Synthetic Biologics”) is a diversified clinical-stage company developing therapeutics designed to prevent and treat gastrointestinal (GI) diseases in areas of high unmet need. The Company’s lead clinical development candidates are: (1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the gastrointestinal (GI) tract to prevent (a) microbiome damage, (b) Clostridioides difficile infection (CDI), (c) overgrowth of pathogenic organisms, (d) the emergence of antimicrobial resistance (AMR) and (e) acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under ~~cGMP~~Current Good Manufacturing Practice (cGMP) conditions and intended to treat both local GI and systemic diseases. .
The Company was also developing SYN-010 to reduce the impact of methane-producing organisms in the gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C). On September 30, 2020, Cedars Sinai Medical Center’s (CSMC) (the Company’s SYN-010 clinical development partner) informed the Company that it agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 IBS-C patients. Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated, it was unlikely to meet its primary endpoint by the time enrollment is completed.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”) for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, comprised of normal recurring adjustments, considered necessary by management to fairly state the Company’s results of operations, financial position and cash flows. The operating results for the interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s ~~2019~~2020 Form 10-K. ~~The interim results for the three and nine months ended September 30, 2020 are not necessarily indicative of results for the full year.~~
The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. The Company believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods.
Recent Accounting Pronouncements and Developments
In August 2020, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own ~~Equity.~~Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related ~~EPS~~earnings per share guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company is currently assessing the impact of ASU 2020-06 on ~~our~~its consolidated financial statements.
On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak or “COVID-19”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was enacted. The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States’ economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company has assessed the impact of the CARES Act and, based upon our initial assessment, we do not believe that it will have a significant effect on our financial position, results of operations or cash flows. The Company continues to evaluate its impact as new information becomes available.
7
7

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

1. Organization, Nature of Operations and Basis of Presentation – (continued)

~~(Unaudited)~~

Impairment of Long-Lived Assets

Long-lived assets include property, equipment and right-of-use assets. In accordance with ~~Accounting Standards Codification (“ASC”)~~ASC 360, - Property, Plant and Equipment (“ASC 360”), management reviews the Company’s ~~recorded~~ long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability as well as whether there is reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and the carrying value of the asset. During the ~~quarter ending~~three months ended March 31, 2020, the Company identified COVID-19 as a triggering event and performed a qualitative assessment of the fair value of its long-lived assets. The results from this analysis determined that it is still more likely than not that the fair value of its long-lived assets remain higher than the carrying value of these assets. As a result, no0 impairment charges were recorded during the three and ~~nine~~six months ~~ended September 30, 2020.~~

~~2. Going Concern~~

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company continues to incur losses and, as of September 30, 2020, the Company had an accumulated deficit of approximately $245 million. Since inception, the Company has financed its activities primarily from the proceeds from the issuance of equity securities.

The Company does not have sufficient capital to fund its operations for the next twelve months following the issuance date of its Quarterly Report on Form 10-Q. The Company’s ability to continue as a going concern, address its capital needs, and execute the required clinical trials, is therefore dependent upon the Company’s ability to obtain capital through the issuance of debt and/or additional equity offerings. The Company is actively pursuing additional equity or debt financing in the form of either a private placement or a public offering and the Company continues ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings. Included in these options is utilizing the “at-the-market” Issuance Sales Agreement (the “FBR Sales Agreement”) that the Company entered into with B. Riley Securities (formerly FBR Capital Markets & Co.) in August 2016. Nonetheless, there can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to the Company when and if needed or that the Company will meet the requirements for use of the FBR Sales Agreement.

If the Company is unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances, the Company’s operating results and prospects will be adversely affected. These factors individually and collectively, including the Company’s dependence on its ability to raise additional capital to fund its operations for the next twelve months following the issuance date of these financial statements raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of the recorded assets or the classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

In January 2020, the World Health Organization declared a global pandemic for the novel strain of coronavirus, COVID-19. Since then, COVID-19 has spread to the United States and countries worldwide. As COVID-19 continues to spread around the globe, the Company has experienced disruptions that impact our business and clinical trials, including the temporary halt of the enrollment of new patients in its SYN-010 Phase 2b clinical study during the quarter ended June 30, 2020_and the postponement of clinical site initiation for its SYN-004 Phase 1b/2a clinical study. While the Company has experienced limited financial impact at this time, given the global economic slowdown, the overall disruption of global healthcare systems2021 and the other risks and uncertainties associated with the pandemic, the Company’s business, financial condition, results of operations and growth prospects could be materially adversely affected, including its ability to raise capital. To maximize patient participation and safeguard the trial’s integrity and patient safety, initiation of the Company’s Phase 1b/2a clinical study of SYN-004 to be conducted by Washington University in Allogeneic HCT Recipients is deferred until Q1 2021, pandemic conditions permitting.2020.

At September 30, 2020, the Company had cash and cash equivalents of approximately $6.0 million. Management has been able to extend its cash runway since its clinical development partners CSMC and Washington University continued to limit non-essential activities during the third quarter, which included the SYN-010 Phase 2b clinical study and SYN-004 Phase 1b/2a clinical study. The Company anticipates its current cash will allow it to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including funding requirements to initiate its planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients and Phase 1-enabling assay development and manufacturing of drug supply in support of the planned Phase 1 single ascending dose (SAD) study of SYN-020 intestinal alkaline phosphatase (IAP).

The Company does not anticipate any additional expense related to the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared for commencement by Washington University (expected Q1 2021). Commencement of the FDA-agreed Phase 3 clinical trial of SYN-004 for the prevention of C. difficile infection in the future is subject to the Company’s successful pursuit of opportunities that will allow it to establish the clinical infrastructure and financial resources necessary to successfully initiate and complete its plan. The Company will be required to obtain additional funding in order to continue the development of its current product candidates beyond its planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients, its planned Phase 1 SAD study of SYN-020 IAP in healthy volunteers, and to continue to fund operations at the current cash expenditure levels. Currently, the Company does not have commitments from any third parties to provide it with capital. If the Company fails to obtain additional funding for its clinical trials, it will not be able to fully execute its business plan as planned and will be forced to cease certain development activities until funding is received.

~~Synthetic Biologics, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

2. ~~Going Concern – (continued)~~

Further, on September 30, 2020, the Company and CSMC agreed to discontinue the ongoing Phase 2b investigator -sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is unlikely to meet its primary endpoint by the time enrollment is completed. The Company anticipates additional reductions in clinical development expense during the remainder of 2020 as a result of the discontinuation of this clinical program.

~~The actual amount of funds the Company will need to operate is subject to many factors, some of which are beyond its control. These factors include the following:~~

~~the progress of its research activities;~~

	·	~~the number and scope of its research programs;~~

	·	~~the ability to recruit patients for clinical studies in a timely manner;~~

~~the progress of its preclinical and clinical development activities;~~

~~the progress of the development efforts of parties with whom the Company has entered into research and development agreements and amount of funding received from partners and collaborators;~~

~~its ability to maintain current research and development licensing arrangements and to establish new research and development and licensing arrangements;~~

~~its ability to achieve milestones under licensing arrangements;~~

~~the costs associated with manufacturing-related services to produce material for use in clinical trials;~~

~~the costs involved in prosecuting and enforcing patent claims and other intellectual property rights;~~

~~the costs and timing of regulatory approvals; and~~

~~the ability to commence or complete clinical trials due to the ongoing impact of the COVID-19 global pandemic.~~

The Company has based its estimates of funding requirements on assumptions that may prove to be wrong. The Company may need to obtain additional funds sooner or in greater amounts than it currently anticipates.

If the Company raises funds by selling additional shares of Common Stock or other securities convertible into Common Stock, the ownership interest of the existing stockholders will be diluted. If the Company is not able to obtain financing when needed, it may be unable to carry out its business plan. As a result, the Company may have to significantly limit its operations and its business, financial condition and results of operations would be materially harmed.

~~Synthetic Biologics, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

3. Fair Value of Financial Instruments

~~ASC~~Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement, defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:

·●

Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;

·●

Level 2 inputs: Inputs, other than quoted prices, included in Level 1 that are observable either directly or indirectly; and

·●

Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy described above. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

The carrying amounts of the Company’s short-term financial instruments, including cash and cash equivalents, other current assets, accounts payable and accrued liabilities approximate fair value due to the relatively short period to maturity for these instruments.

~~Cash~~

Table of Contents

Synthetic Biologics, Inc. and ~~cash equivalents include money market accounts of $114,000 as of September 30, 2020 and $98,000 as of December 31, 2019 that are measured using Level 1 inputs.~~ Subsidiaries

Notes to Condensed Consolidated Financial Statements

4.3. Selected Balance Sheet Information
Prepaid expenses and other current assets (in thousands)

September 30,
2020 December 31,
2019

June 30,

December 31,


2021

2020
Prepaid clinical research organizations $ 471 $ 48

$
880

$
470
Prepaid insurances

280

639
Prepaid consulting, subscriptions and other expenses 74 134

181

90
Prepaid insurances 73 549
Stock sales receivable

0

469
Prepaid manufacturing expenses 39 622

0

39
Prepaid conferences, travel and other expenses - 25
Other receivables - 3

Total $ 657 $ 1,381

$
1,341

$
1,707

~~Amounts prepaid to~~Prepaid clinical research organizations (CROs) ~~were~~expense is classified as a current ~~assets.~~asset. The Company makes payments to the CROs based on agreed upon terms that include payments in advance of study services.

Property and equipment, net (in thousands)


June 30,

December 31,

2021

2020
Computers and office equipment

$
827

$
813
Leasehold improvements

94

439
Software

11

11

932

1,263
Less: accumulated depreciation and amortization

(800)

(1,089)

Total

$
132

$
174

Accrued expenses (in thousands)
10


June 30,

December 31,

2021

2020
Accrued clinical consulting services

$
700

$
700
Accrued vendor payments

92

225
Other accrued expenses

2

0

Total

$
794

$
925

Accrued employee benefits (in thousands)


June 30,

December 31,

2021

2020
Accrued bonus expense

$
361

$
724
Accrued vacation expense

179

144

Total

$
540

$
868

9

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

4. ~~Selected Balance Sheet Information – (continued)~~

~~Property and equipment, net (in thousands)~~

September 30,
2020 December 31,
2019
Computers and office equipment $ 808 $ 804
Leasehold improvements 439 439
Software 11 11
1,258 1,254
Less: accumulated depreciation and amortization (1,056 ) (887 )

Total $ 202 $ 367
~~Accrued expenses (in thousands)~~
September 30,
2020 December 31,
2019
Accrued clinical consulting services $ 660 $ 684
Accrued vendor payments 309 456
Accrued manufacturing costs 18 635
Other accrued expenses 1 1

Total $ 988 $ 1,776
~~Accrued employee benefits (in thousands)~~
September 30,
2020 December 31,
2019
Accrued bonus expense $ 594 $ 858
Accrued vacation expense 158 77

Total $ 752 $ 935
5. Stock-Based Compensation
Stock Incentive Plans
On March 20, 2007, the Company’s Board of Directors approved the 2007 Stock Incentive Plan (the “2007 Stock Plan”) for the issuance of up to 71,429 shares of ~~Common Stock~~common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. This plan was approved by the stockholders on November 2, 2007. The exercise price of stock options under the 2007 Stock Plan iswas determined by the compensation committee of the Board of Directors and ~~may~~could be equal to or greater than the fair market value of the Company’s ~~Common Stock~~common stock on the date the option is granted. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one-year period under the 2007 stock plan shall not exceed 7,143. Options become exercisable over various periods from the date of grant and generally expire ten years after the grant date. As of ~~September~~June 30, ~~2020,~~2021, there were ~~7,052~~5,145 options issued and outstanding under the 2007 Stock Plan.
11
~~Synthetic Biologics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~
~~5. Stock-Based Compensation – (continued)~~
On November 2, 2010, the Board of Directors and stockholders adopted the 2010 Stock Incentive Plan (“2010 Stock Plan”) for the issuance of up to 85,714 shares of ~~Common Stock~~common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. On October 22, 2013, the stockholders approved and adopted an amendment to the Company’s 2010 Stock Plan to increase the number of shares of the Company’s Common Stock reserved for issuance under the Plan from 85,714 to 171,429. On May 15, 2015, the stockholders approved and adopted an amendment to the Company’s 2010 Stock Plan to increase the number of shares of the Company’s Common Stock reserved for issuance under the Plan from 171,429 to 228,572. On August 25, 2016, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s Common Stock reserved for issuance under the 2010 Stock Plan from 228,572 to 400,000. On September 7, 2017, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s Common Stock reserved for issuance under the 2010 Stock Plan from 400,000 to 500,000. On September 24, 2018, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Company’s Common Stock reserved for issuance under the 2010 Stock Plan from 500,000 to 1,000,000. On September 5, 2019, the stockholders approved and adopted an amendment to the 2010 Stock Plan to increase the number of shares of the Common Stock reserved for issuance under the 2010 Stock Plan from 1,000,000 to 4,000,000. The exercise price of stock options under the 2010 Stock Plan is determined by the compensation committee of the Board of Directors and may be equal to or greater than the fair market value of the Company’s ~~Common Stock~~common stock on the date the option is granted. Options become exercisable over various periods from the date of grant and expire between five and ten years after the grant date. As of ~~September~~June 30, ~~2020,~~2021, there were ~~2,453,273~~2,452,273 options issued and outstanding under the 2010 Stock Plan.
On September 17, 2020, the stockholders approved and adopted the 2020 Stock Incentive Plan (“2020 Stock Plan”) for the issuance of up to 4,000,000 shares of Common Stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. As of ~~September~~June 30, ~~2020,~~2021, there were no1,540,000 options issued and outstanding under the ~~2020~~2010 Stock Plan.
In the event of an employee’s termination, the Company will cease to recognize compensation expense for that ~~employee.~~employee’s options. Stock forfeitures are recognized as incurred. There is no deferred compensation recorded upon initial grant date. Instead, the fair value of the stock-based payment is recognized ~~as compensation expense~~ over the stated vesting period.
The Company has applied fair value accounting for all stock-based payment awards ~~since inception.~~at grant date. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model. There were no0 options granted during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

4. Stock-Based Compensation – (continued)
12
Expected dividends—The Company has never declared or paid dividends on its common stock and has no plans to do so in the foreseeable future.
Expected volatility—Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The expected volatility assumption is derived from the historical volatility of the Company’s common stock over a period approximately equal to the expected term.
Risk-free interest rate—The assumed risk-free rate used is a zero coupon U.S. Treasury security with a maturity that approximates the expected term of the option.
10

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

Expected life of the option

~~5. Stock-Based Compensation – (continued)~~

—The period of time that the options granted are expected to remain unexercised. Options granted during the year have a maximum term of seven years. The Company estimates the expected life of the option term based on the weighted average life between the dates that options become fully vested and the maximum life of options granted.

The Company records stock-based compensation based upon the stated vesting provisions in the related agreements. The vesting provisions for these agreements have various terms as follows:

·●

immediate ~~vesting;~~vesting,

·●

in full on the ~~six-month anniversary of grant date;~~

~~in full on~~ one-year anniversary date of the grant ~~date;~~date,

·●

half vesting immediately and the remaining over three years,

●

quarterly over three ~~years;~~years,

·●

annually over three ~~years;~~years,

·●

one-third immediate vesting and the remaining annually over two ~~years; and~~years,

·●

one-half immediate vesting and the remaining over nine months,

●

one-quarter immediate vesting and the remaining over three years,

●

one-quarter immediate vesting and the remaining over 33 months,

●

monthly over one year, and

●

monthly over three years.

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~
5.4. Stock-Based Compensation – (continued)
A summary of stock option activity for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and the year ended December 31, ~~2019~~2020 is as follows:

Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value
Balance - December 31, 2018 938,982 $ 15.18 6.19 years $ -




Weighted

Weighted Average

Aggregate

Average Exercise

Remaining

Intrinsic

Options

Price

Contractual Life

Value

Balance - December 31, 2019

2,502,012

$
3.62

6.51 years

$
153,353

Granted 1,725,000 0.42

1,540,000

0.42

Exercised - -

0

0

Expired (94,738 ) 58.25

(14,944)

17.57

Forfeited (67,232 ) 5.95

(29,650)

0.55

Balance - December 31, 2019 2,502,012 3.62 6.51 years 153,353

Balance - December 31, 2020

3,997,418

2.35

6.09 years

0

Granted - -

0

0

Exercised - -

0

0

Expired (12,037 ) 10.89

0

0

Forfeited (29,650 ) 0.55

0

0

Balance – September 30, 2020 - outstanding 2,460,325 $ 3.62 5.79 years $ 96,106

Balance – September 30, 2020 - exercisable 747,781 $ 10.80 5.14 years $ 13,196

Grant date fair value of options granted – nine months ended September 30, 2020 $ -

Weighted average grant date fair value – nine months ended September 30, 2020 $ -

Grant date fair value of options granted – year ended December 31, 2019 $ 470,000

Weighted average grant date fair value – year ended December 31, 2019 $ 0.27

Balance - June 30, 2021 - outstanding

3,997,418

$
2.35

5.28 years

$
598,074

Balance - June 30, 2021 - exercisable

1,970,911

$
4.33

4.55 years

$
239,357

Grant date fair value of options granted – three months ended June 30, 2021

$
0





Weighted average grant date fair value – three months ended June 30, 2021

$
0





Grant date fair value of options granted – year ended December 31, 2020

$
412,000





Weighted average grant date fair value – year ended December 31, 2020

$
0.27





Stock-based compensation expense included in general and administrative expenses relating to stock options issued to employees for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$41,000~~$34,000 and ~~$120,000,~~$67,000, respectively, and ~~$59,000~~$40,000 and ~~$165,000~~$79,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. Stock-based compensation expense included in research and development expenses relating to stock options issued to employees for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$14,000~~$16,000 and ~~$45,000,~~ $31,000,respectively, and ~~$22,000~~$15,000 and ~~$52,000~~$31,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively.
Stock-based compensation expense included in general and administrative expenses relating to stock options issued to consultants for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$26,000~~$49,000 and ~~$79,000,~~$98,000, respectively, and ~~$9,000~~$27,000 and ~~$28,000~~$53,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. Stock-based compensation expense included in research and development expenses relating to stock options issued to consultants for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$1,000~~$3,000 and $7,000, respectively, and ~~$1,000~~$4,000 and $6,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.
14
12

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

5.4. Stock-Based Compensation – (continued)

As of ~~September~~June 30, ~~2020,~~2021, total unrecognized stock-based compensation expense related to stock options was ~~$406,000,~~$483,000, which is expected to be expensed through ~~August 2022.~~

April 2023.

The FASB’s guidance for stock-based payments requires cash flows from excess tax benefits to be classified as a part of cash flows from operating activities. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. The Company did not record any excess tax benefits during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~ 2020.

6.5. Stock Warrants

On October 15, 2018, the Company closed its underwritten public offering pursuant to which it received gross proceeds of approximately $18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by the Company and sold an aggregate of (i) 2,520,000 Class A Units (the “Class A Units”), with each Class A Unit consisting of one share of the Common Stock, and one five-year warrant to purchase one share of Common Stock at an initial exercise price of $1.38 per share, which subsequently was reduced to $0.69 per share (each a “Warrant” and collectively, the “Warrants”), with each Class A Unit to be offered to the public at a public offering price of $1.15, and (ii) 15,723 Class B Units (the “Class B Units”, and together with the Class A Units, the “Units”), with each Class B Unit offered to the public at a public offering price of $1,000 per Class B Unit and consisting of one share of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $1.15 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 13,672,173 shares of Common Stock, and issued with an aggregate of 13,672,173 Warrants. On November 16, 2020, the exercise price of the Warrants was reduced from $1.38 per Warrant per full share of the Company’s common stock, $0.001 par value per share (the “Common Stock”), to $0.69 per Warrant per full share of Common Stock in accordance with the anti-dilution terms of the Warrant. The reduction was the result of the issuance of shares of Common Stock by the Company through its “at the market offering” facility. The effect of the change in the exercise price of the warrants as a result of the triggering of the down round protection clause in the Warrants was recorded as a deemed dividend of $880,000 during the year ended December 31, 2020, which reduces the income available to common stockholders. In addition, pursuant to the underwriting agreement that the Company had entered into with A.G.P./Alliance Global Partners (the “Underwriters”), as representative of the underwriters, the Company granted the Underwriters a 45 day option (the “Over-allotment Option”) to purchase up to an additional 2,428,825 shares of Common Stock and/or additional Warrants to purchase an additional 2,428,825 shares of Common Stock. The Underwriters partially exercised the Over-allotment Option by electing to purchase from the Company additional Warrants to purchase 1,807,826 shares of Common Stock.

~~The Warrants are immediately exercisable at a price of $1.38 per share of Common Stock (which is 120% of the public offering price of the Class A Units) and expire on October 15, 2023.~~ If, at the time of exercise, there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares of Common Stock to the holder, then the Warrants may only be exercised through a cashless exercise. NoNaN fractional shares of Common Stock will be issued in connection with the exercise of a Warrant. In lieu of fractional shares, the holder will receive an amount in cash equal to the fractional amount multiplied by the fair market value of any such fractional shares. The Company has concluded that the Warrants are required to be equity classified. The Warrants were valued on the date of grant using Monte Carlo simulations. During the six months ended June 30, 2021, 11,655,747 warrants were exercised for cash proceeds of $8.0 million. There were 0 warrants exercised during the 3 months ended June 30, 2021.

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

5. Stock Warrants – (continued)
On November 18, 2016, the Company completed a public offering of 714,286 shares of ~~Common Stock~~common stock in combination with accompanying warrants to purchase an aggregate of 1,428,571 shares of ~~Common Stock.~~the common stock. The stock and warrants were sold in combination, with ~~two~~2 warrants for each share of ~~Common Stock~~common stock sold, a Series A warrant and a Series B warrant, each representing the right to purchase ~~one~~1 share of ~~Common Stock.~~common stock. The purchase price for each share of common stock and accompanying warrants was $35.00. The shares of ~~Common Stock~~common stock were immediately separable from the warrants and were issued separately. The initial per share exercise price of the Series A warrants iswas $50.05 and the per share exercise price of the Series B warrants iswas $60.20, each subject to adjustment as specified in the warrant agreements. The Series A and Series B warrants ~~may~~could be exercised at any time on or after the date of issuance. The Series A warrants ~~are~~were exercisable until the four-year anniversary of the issuance date. The Series B warrants expired on December 31, 2017 and none were exercised prior to expiration. The Series A warrants ~~include~~expired November 18, 2020 and none were exercised prior to expiration. The warrants included a provision, that if the Company were to enter into a certain transaction, as defined in the agreement, the warrants would be purchased from the holder for cash. Accordingly, the Company recorded the warrants as a liability at their estimated fair value on the issuance date of $15.7 million and changes in estimated fair value ~~are being~~will be recorded as non-cash income or expense in the Company’s ~~Condensed Consolidated Statements~~Statement of Operations at each subsequent period. At ~~September 30,~~November 18, 2020, ~~and September 30, 2019,~~ the fair value of the warrant liability was ~~nominal. In 2020 and 2019, the Monte Carlo simulations were not used as the value of the~~$100. The warrants were ~~deemed to be minimal based~~valued on the ~~historical fair value~~date of ~~the warrants~~grant and ~~the Company’s current stock price.~~
15
~~Synthetic Biologics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~
~~6. Stock Warrants – (continued)~~
On October 10, 2014, the Company raised net proceeds of $19.1 million through the sale of 14,059,616 units at a price of $1.47 per unit to certain institutional investors in a registered direct offering. Each unit consisted of one share of the Company’s Common Stock and a warrant to purchase 0.50 shares of Common Stock. The warrants, exercisable for an aggregate of 200,852 shares of Common Stock, had an exercise price of $61.25 per share and a life of five years. The warrants vested immediately and expired on ~~October 10, 2019.~~
each remeasurement period.
A summary of all warrant activity for the Company for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and the year ended December 31, ~~2019~~2020 is as follows:

Number of
Warrants Weighted
Average
Exercise
Price
Balance at December 31, 2018 18,915,851 $ 3.85
Granted - -
Exercised - -
Forfeited (200,852 ) 61.25


Number of

Weighted Average

Warrants

Exercise Price

Balance at December 31, 2019 18,714,999 3.24

18,714,999

$
3.24
Granted - -

-

-
Exercised - -

-

-
Forfeited - -

(714,286)

50.05
Balance at September 30, 2020 18,714,999 $ 3.24
Balance at December 31, 2020

18,000,713

$
0.69
Granted

0

0
Exercised

11,655,747

0.69
Forfeited

0

0
Balance at June 30, 2021

6,344,966

$
0.69
On December 26, 2017, the Company entered into a consulting agreement for advisory services for a period of six months. As compensation for such services, the consultant was paid an upfront payment, was paid a monthly fee, and on January 24, 2018 was issued a warrant exercisable for 714 shares of the Company’s Common Stock on the date of issuance. The warrant is equity classified and the fair value of the warrant approximated $9,000 on the date of grant and was measured using the Black-Scholes option pricing model. This entire expense was recorded in the quarter ended March 31, 2018.

A summary of all outstanding and exercisable common stock warrants as of ~~September~~June 30, ~~2020~~2021 is as follows:






Weighted Average
Weighted Average
Weighted Average

Warrants

Warrants

Remaining
Exercise Price Exercise Price Warrants
Outstanding Warrants
Exercisable Weighted Average
Remaining
Contractual Life
Exercise Price

Outstanding

Exercisable

Contractual Life
$ 1.38 17,999,999 17,999,999 3.03 years
0.69

6,344,252

6,344,252

2.28 years
18.20 714 714 2.24 years
50.05 714,286 714,286 0.13 years

18.20

714

714

1.49 years
$ 3.24 18,714,999 18,714,999 2.92 years
0.69

6,344,966

6,344,966

2.28 years

16

~~Synthetic Biologics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~
7.6. Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding including the effect of common share equivalents. Diluted net loss per share assumes the issuance of potential dilutive common shares outstanding for the period and adjusts for any changes in income and the repurchase of common shares that would have occurred from the assumed issuance, unless such effect is anti-dilutive. Net loss attributable to common

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

stockholders for the six months ended June 30, 2021 excludes net loss attributable to non-controlling interest of $0.1 million and includes the accretion of the Series B preferred discount of $1.5 million as a result of converted shares and Series A preferred stock accrued dividends of $0.1 million and the deemed dividend of $7.4 million resulting from the effect of the Series A preferred stock price adjustment during the first quarter of 2021. Net loss attributable to common stockholders for the three and ~~nine~~six months ended ~~September~~June 30, 2020 excludes net loss attributable to non-controlling interest of $0.1 million and includes the accretion of Series B preferred discount of ~~$0.5~~$0.4 million and ~~$1.3~~$0.8 million, respectively, on converted shares and Series A preferred stock accrued dividends of $0.1 million and $0.2 million, respectively. Net loss attributable to common stockholders for the three and nine months ended September 30, 2019 excludes net loss attributable to non-controlling interest of $0.1 million and includes the accretion of Series B preferred discount of $0.1 million and $0.6 million, respectively, on converted shares and Series A preferred stock accrued dividends of $0.1 million and $0.2 million, respectively. The number ofmillion. There were 0 shares of common stock underlying Series B ~~Preferred~~preferred shares convertible to common stock that were excluded from the computations of net loss per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 since all remaining Series B preferred stock were converted to common stock. A total of 4,804,348 shares of common stock underlying Series B preferred shares convertible to common stock were excluded from the computations of net loss per common share for the three and ~~2019 were 3,605,217 and 6,641,739, respectively.~~six months ended June 30, 2020. The number of options and warrants for the purchase of common stock ~~that~~ were excluded from the computations of net loss per common share and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 were ~~2,460,325~~3,997,418 and ~~18,714,999,~~6,344,966, respectively, and for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019~~2020 were ~~803,577~~2,472,362 and ~~18,915,851,~~18,714,999, respectively, because their effect is anti-dilutive.

8.7. Non-controlling Interest

The Company’s non-controlling interest is accounted for under ASC 810, Consolidation(“ (“ASC 810”), and represents the minority shareholder’s ownership interest related to the Company’s subsidiary, Synthetic Biomics, Inc. (“SYN Biomics”). In accordance with ASC 810, the Company reports its non-controlling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net loss attributable to the non-controlling interest and net loss attributable to the Company’s common stockholders on the face of the Consolidated Statements of Operations. On September 5, 2018, the Company entered into an agreement with ~~Cedars-Sinai Medical Center (CSMC)~~CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by the Company and CSMC (the “Study”). The Study was to provide further evaluation of the efficacy and safety of SYN-010, the Company’s modified-release reformulation of lovastatin lactone, which iswas exclusively licensed to the Company by CSMC. SYN-010 ~~was~~is designed to reduce methane production by certain microorganisms (M. smithii) in the gut to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C). After the 2018 transaction with CSMC, the Company’s equity interest in SYN Biomics ~~was~~is 83% and the non-controlling stockholder’s interest is 17%. As of ~~September~~June 30, 2021 and 2020, the accumulated net loss attributable to the non-controlling interest is $2.8 ~~million.~~

million and $2.9 million, respectively.

In consideration of the support provided by CSMC for the Study, the Company ~~agreed to pay $441,000~~paid $328,000 to support the Study and the Company entered into a Stock Purchase Agreement with CSMC pursuant to which the Company, upon the approval of the Study protocol by the Institutional Review Board (IRB): (i) issued to CSMC fifty thousand (50,000) shares of common stock of the Company; and (ii) transferred to CSMC an additional two million four hundred twenty thousand (2,420,000) shares of common stock of its subsidiary SYN Biomics, Inc. (“Synbiomics”) owned by the Company, such that after such issuance CSMC owns an aggregate of seven million four hundred eighty thousand (7,480,000) shares of common stock of SYN Biomics, representing seventeen percent (17%) of the issued and outstanding shares of SYN Biomics’ common stock. The services rendered are recorded to research and development expense in proportion with the progress of the study and based overall on the fair value of the shares ($285,000) as determined at the date of IRB approval. During the three and ~~nine~~six months ended ~~September~~June 30, 2020, research and development expense recorded related to this transaction approximated ~~$134,000~~$25,000 and ~~$225,000,~~$92,000, respectively. ~~During the three and nine months ended September 30, 2019, research and development~~There was 0 expense recorded related to this transaction ~~approximated~~ ~~$108,000 and $318,000, respectively.~~ On September 30, 2020, CSMC MAST formally agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is unlikely to meet its primary endpoint by the time enrollment is completed. As a result, the Company anticipates additional reductions in clinical development expense during the ~~remainder of 2020 resulting from the discontinuation of this clinical program.~~three and six months ended June 30, 2021.

7. Non-controlling Interest – (continued)

The Agreement also ~~provides~~provided CSMC with a right, commencing on the six month anniversary of issuance of the stock under certain circumstances in the event that the shares of stock of SYN Biomics are not then freely tradeable, and subject to NYSE American, LLC approval, to exchange its SYN Biomics shares for unregistered shares of the Company’s common stock, with the rate of exchange based upon the relative contribution of the valuation of SYN Biomics to the public market

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

valuation of the Company at the time of each exchange. The Stock Purchase Agreement also provides for tag-along rights in the event of the sale by the Company of its shares of SYN Biomics.

On September 30, 2020, CSMC MAST formally agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, SYN-010 was unlikely to meet its primary endpoint by the time enrollment is completed.

On November 9, 2020, the Company and its subsidiary, Synthetic ~~Biologics,~~Biomics, Inc. and ~~Subsidiaries~~CSMC mutually agreed to terminate the exclusive license agreement dated December 5, 2013 and all amendments thereto and the clinical trial agreement relating to SYN-010. The determination to terminate the SYN-010 license agreement was agreed following the completion of a planned interim futility analysis of the Phase 2b investigator-sponsored clinical trial of SYN-010. On September 30, 2020, CSMC (the Company’s SYN-010 clinical development partner) informed the Company that it discontinued the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 IBS-C patients.

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

9.8. Common and Preferred Stock

Series B Preferred Stock

In addition, pursuant to the Underwriting Agreement that the Company entered into with the Underwriters on October 10, 2018, the Company granted the Underwriters a 45 day option (the “Over-allotment Option”) to purchase up to an additional 2,428,825 shares of Common Stock and/or additional warrants to purchase an additional 2,428,825 shares of Common Stock. Each Warrant is exercisable for one share of common stock. The Underwriters partially exercised the Over-allotment Option by electing to purchase from the Company additional Warrants to purchase 1,807,826 shares of Common Stock.

The Units were offered by the Company pursuant to a registration statement on Form S-1 (File No. 333-227400), as amended, filed with the SEC, which was declared effective by the SEC on October 10, 2018.

The conversion price of the Series B Preferred Stock and exercise price of the October 2018 Warrants ~~are~~is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Common Stock. The exercise price of the Warrants is subject to adjustment in the event of certain dilutive issuances.

Table of Contents

~~During~~Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

8. Common and Preferred Stock – (continued)

On November 16, 2020, the ~~three and nine months ended September 30, 2020, 1,379 and 3,492 Series B shares, respectively, have been converted into~~exercise price of the Warrants was reduced from $1.38 per Warrant per full share of common stock ~~resulting~~to $0.69 per Warrant per full share of common stock. The reduction was the result of the issuance of shares of Common Stock by the Company through its “at the market offering” facility. The effect of the change in the ~~recognition~~exercise price of ~~$519,000 and $1,315,000, respectively,~~the warrants as a result of ~~unamortized discount from~~ the ~~conversion. During~~triggering of the ~~three and nine months ended September 30, 2019, 185 and 1,523 Series B shares, respectively, have been converted into common stock resulting~~down round protection clause in the recognition of $71,000 and $585,000, respectively, of unamortized discount from the conversion. As of September 30, 2020, 11,577 shares have been converted resulting in the recognition of $4.4 million of unamortized discount. This isWarrants was recorded as a deemed dividend in accumulated ~~deficit.~~

deficit of $880,000, which reduces the income available to common stockholders for the year ended December 31, 2020.

The October 2018 Warrants are immediately exercisable at a price of $1.38 ($0.69 effective November 16, 2020) per share of common stock (which iswas 120% of the public offering price of the Class A Units) and will expire on October 15, 2023. If, at the time of exercise, there is no effective registration statement registering, or no current prospectus available for, the issuance of the shares of common stock to the holder, then the October 2018 warrants may only be exercised through a cashless exercise. No fractional shares of common stock will be issued in connection with the exercise of any October 2018 warrants. In lieu of fractional shares, the holder will receive an amount in cash equal to the fractional amount multiplied by the fair market value of any such fractional shares.

The Company may not effect, and the holder will not be entitled to, exercise any Warrants or conversion of the Series B Preferred Stock, which, upon giving effect to such exercise, would cause (i) the aggregate number of shares of Common Stock beneficially owned by the holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, or (ii) the combined voting power of the Company’s securities beneficially owned by the holder (together with its affiliates) to exceed 4.99% (or, at the election of the holder, 9.99%) of the combined voting power of all of the Company’s securities then outstanding immediately after giving effect to the exercise or conversion, as such percentage ownership is determined in accordance with the terms of the October 2018 Warrants or Series B Preferred Stock. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99% upon at least 61 days’ prior notice from the holder to the Company. The holders of the Series B Preferred will participate, on an as-if-converted-to-common stock basis, in any dividends to the holders of common stock. Upon a defined Fundamental Transaction, the holders of the Series B Preferred Stock are entitled to the same consideration as are holders of Common Stock. The Series B Preferred Stock ranks junior to existing Series A Preferred Stock but on parity with common stock. Liquidation preference is equal to an amount pari passu with the common stock on an as converted basis (i.e., there is no preference to common stock).

~~Synthetic Biologics, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~9. Common and Preferred Stock – (continued)~~

Since the effective conversion price of the Series B Preferred Stock ~~was~~is less than the fair value of the underlying common stock at the date of issuance, there ~~was~~is a beneficial conversion feature (“BCF”) at the issuance date. Because the Series B Preferred Stock ~~had~~has no stated maturity or redemption date and ~~was~~is immediately convertible at the option of the holder, the discount created by the BCF is immediately charged to accumulated deficit as a “deemed dividend” and impacts earnings per share. During the ~~year~~six months ended ~~December 31, 2018,~~June 30, 2021 and 2020, 3,973 and 2,113 shares, respectively, were converted resulting in the ~~Company recorded~~recognition of a ~~discount~~deemed dividends of ~~$9.1~~$1.5 million and ~~immediately amortized~~$795,000, respectively, for the amortization of the Series B Preferred Stock discount ~~to record~~upon conversion. There we 0 shares converted during the three months ended June 30, 2021. During the three months ended June 30, 2020, 1,040 shares were converted resulting in the recognition of a deemed ~~dividend.~~dividends of $392,000 for the amortization of the Series B Preferred Stock discount upon conversion.

Series A Preferred Stock

On September 11, 2017, the Company entered into a share purchase agreement (the “Purchase Agreement”) with an investor (the “Investor”), pursuant to which the Company offered and sold in a private placement 120,000 shares of its Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) for an aggregate purchase price of $12 million, or $100 per share.

The Series A Preferred Stock ranks senior to the shares of the ~~Company’s~~Company's common stock, and any other class or series of stock issued by the Company with respect to dividend rights, redemption rights and rights onto the distribution of assets ~~upon~~on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Holders of Series A Preferred Stock are entitled to a cumulative dividend at the rate of 2.0% per annum, payable quarterly in arrears, as set forth in the Certificate of Designation of Series A Preferred Stock classifying the Series A Preferred Stock. The Series A Preferred Stock is convertible at the option of the holders at any time into shares of common stock at an initial conversion price of ~~$18.90~~$0.54 per share which was increased to $18.90 after taking into account the 2018 reverse stock split, subject to certain customary anti-dilution ~~adjustments.~~

adjustments, and was decreased to $1.50 on January 27, 2021, see below.

Any conversion of Series A Preferred Stock may be settled by the Company in shares of common stock only.

The holder’s ability to convert the Series A Preferred Stock into common stock was subject to (i) a 19.99% blocker provision to comply with NYSE American Listing Rules, (ii) if so elected by the Investor, a 4.99% blocker provision that would prohibit beneficial ownership of more than 4.99% of the outstanding shares of the Company’s common stock or voting power at any time, and (iii) applicable regulatory restrictions.

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

8. Common and Preferred Stock – (continued)

In the event of any liquidation, dissolution or winding-up of the Company, holders of the Series A Preferred Stock were entitled to a preference on liquidation equal to the greater of (i) an amount per share equal to the stated value plus any accrued and unpaid dividends on such share of Series A Preferred Stock (the “Accreted Value”), and (ii) the amount such holders would have received in such liquidation if they converted their shares of Series A Preferred Stock (based on the Accreted Value and without regard to any conversion limitation) into shares of the common stock immediately prior to any such liquidation, dissolution or winding-up (the greater of (i) and (ii), is referred to as the “Liquidation Value”).

Except as otherwise required by law, the holders of Series A Preferred Stock have no voting rights, other than customary protections against adverse amendments and issuance of pari passu or senior preferred stock. Upon certain change of control events involving the Company, prior to the filing of the amendment to the Certificate of Designation for the Series A Preferred Stock described below, the Company will be required to repurchase all of the Series A Preferred Stock at a redemption price equal to the greater of (i) the Accreted Value and (ii) the amount that would be payable upon a change of control (as defined in the Certificate of Designation) in respect of common stock issuable upon conversion of such share of Series A Preferred Stock if all outstanding shares of Series A Preferred Stock were converted into common stock immediately prior to the change of control.

On or at any time after (i) the VWAP (as defined in the Certificate of Designation) for at least 20 trading days in any 30 trading day period is greater than $70.00, subject to adjustment in the case of stock split, stock dividends or the like the Company has the right, after providing notice not less than 6 months prior to the redemption date, to redeem, in whole or in part, on a pro rata basis from all holders thereof based on the number of shares of Series A Preferred Stock then held, the outstanding Series A Preferred Stock, for cash, at a redemption price per share of Series A Preferred Stock of ~~$7,875,~~$7,875.00, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Convertible Preferred Stock or (ii) the five year anniversary of the ~~issuance~~issue date, the Company ~~has~~shall have the right to redeem, in whole or in part, on a pro rata basis from all holders thereof based on the number of shares of Series A Convertible Preferred Stock then held, the outstanding Series A Preferred Stock, for cash, at a redemption price per share equal to the Liquidation ~~Value (as defined in the Certificate of Designations).~~

Value.

The Series A Preferred Stock iswas classified as temporary equity due to the shares being redeemable based on contingent events outside of the Company’s control. Since the effective conversion price of the Series A Preferred Stock iswas less than the fair value of the underlying common stock at the date of issuance, there iswas a beneficial conversion feature (“BCF”) at the issuance date. Because the Series A Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by the BCF is immediately charged to accumulated deficit as a “deemed dividend” and impacts earnings per share. During the year ended December 31, 2017, the Company recorded a discount of $6.9 million. Because the Series A Preferred Stock is not currently redeemable, the discount arising from issuance costs was allocated to temporary equity and will not be accreted until such time that redemption becomes probable. The stated dividend rate of 2% per annum is cumulative and the Company accrues the dividend on a quarterly basis (in effect accreting the dividend regardless of declaration because the dividend is cumulative). During the three ~~and nine~~ months ended ~~September~~June 30, 2021, the Company did not record any Series A Preferred Stock dividends since all shares were converted to shares of common stock during the three months ended March 31, 2021. During the six months ended June 30, 2021, the Company accrued dividends of $24,000. During the three and six months ended June 30, 2020, the Company accrued dividends of ~~$64,000~~$63,000 and ~~$189,000,~~$125,000, respectively. ~~During~~

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

8. Common and Preferred Stock – (continued)

On January 27, 2021, the ~~three and nine months ended~~Company filed an amendment to the Certificate of Designation for the Series A Preferred Stock to (i) lower the stated Conversion Price through September 30, ~~2019,~~2021 and (ii) remove their change in control put, as an inducement for the ~~Company accrued dividends~~holder to fully convert its Series A Preferred Stock. The Amendment to the Certificate of ~~$63,000~~Designation for its Series A Convertible Preferred Stock (the “Certificate of Amendment”) with the Secretary of State of the State of Nevada adjusted the conversion price from $18.90 per share to $1.50 per share and ~~$185,000, respectively. Once the dividend is declared, the Company will reclassify the declared amount from temporary equity to a dividends payable liability. When~~removed the redemption upon change of control. The Company received notice from the holder of the Series A Preferred Stock ~~becomes probable,~~that it was increasing the ~~temporary equity will~~Maximum Percentage as defined in the “Certificate of Designation” from 4.99% to 9.99%, such increase to be ~~accreted~~effective 61 days from the date hereof. During the three months ended March 31, 2021, all outstanding shares of Series A Convertible Preferred Stock were converted to ~~redemption~~approximately 9.0 million shares of the Company’s common stock. There are no remaining shares of the Series A Convertible Preferred stock outstanding after these conversions. During January and February 2021, the Company issued 8,996,768 shares of its common stock upon the conversion effected on such date by the holder of 120,000 shares of its Series A Convertible Preferred Stock. The fair value of the consideration issued to the holder to induce conversion is accounted for as a deemed ~~dividend.~~dividend and increased net loss available to common shareholders for purposes of calculating loss per share. The Company estimated fair value of the inducement consideration of $7.4 million and as a result has recorded a corresponding deemed dividend of $7.4 million during the six months ended June 30, 2021.

~~Synthetic Biologics, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~9. Common and Preferred Stock – (continued)~~

B. Riley ~~FBR~~Securities Sales Agreement

On August 5, 2016, the Company entered into the B. Riley FBR Sales Agreement with FBR Capital Markets & Co. (now known as B. Riley Securities), which enables the Company to offer and sell shares of ~~the Company’s~~ common stock ~~with an aggregate sales price of up to $40.0 million~~ from time to time through B. Riley ~~FBR,~~Securities, Inc. as the Company’s sales agent. Sales of common stock under the B. Riley ~~FBR~~Securities Sales Agreement are made in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act. B. Riley ~~FBR,~~Securities, Inc. is entitled to receive a commission rate of up to 3.0% of gross sales in connection with the sale of the ~~Company’s common stock~~Common Stock sold on the Company’s behalf. The Company ~~has~~did not ~~sold~~sell any shares of common stock during ~~2020~~the three and ~~2019~~six months ended June 30, 2020 through the Riley Securities Sales Agreement.

On February 9, 2021, the Company entered into an amended and restated sales agreement with B. Riley Securities, Inc. (“B. Riley”) and A.G.P./Alliance Global Partners (“AGP”) in order to include AGP as an additional sales agent for the Company’s “at the market offering” program (the “Amended and Restated Sales Agreement”). The Sales Agreement amended and restated the At Market Issuance Sales Agreement, dated August 5, 2016, with B. Riley Securities, Inc. (formerly known as B. Riley FBR, Inc.), as amended by amendment no. 1, dated May 7, 2018, to the At Market Issuance Sales Agreement.

During the six months ended June 30, 2021, the Company sold through the At Market Issuance Sales Agreement and the Amended and Restated Sales Agreement approximately 78.7 million shares of the Company’s common stock and received net proceeds of approximately $66.0 million. The Company did not sell any shares of common stock during the three months ended June 30, 2021 through the Riley Securities Sales Agreement.

~~10.~~

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

9. Related Party Transactions

On September 5, 2018, the Company entered into an agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by the Company and CSMC (the “Study”). The Study was ~~intended~~ to provide further evaluation of the efficacy and safety of SYN-010, the Company’s modified-release reformulation of lovastatin lactone, which iswas exclusively licensed to the Company by CSMC. SYN-010 ~~was~~is designed to reduce methane production by certain microorganisms (M. smithii) in the gut to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C).

In consideration of the support provided by CSMC for the Study, the Company entered into a Stock Purchase Agreement with CSMC pursuant to which the ~~Company, upon the approval of the Study protocol by the Institutional Review Board (IRB) to:~~Company: (i) issued to CSMC fifty thousand (50,000) shares of common stock of the Company; and (ii) transferred to CSMC an additional two million four hundred twenty thousand (2,420,000) shares of common stock of its subsidiary Synthetic Biomics, Inc. (“SYN Biomics”) owned by the Company, such that after such issuance CSMC owns an aggregate of seven million four hundred eighty thousand (7,480,000) shares of common stock of SYN Biomics, representing seventeen percent (17%) of the issued and outstanding shares of SYN Biomics’ common stock.

On September 30, 2020, CSMC MAST formally agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, SYN-010 iswas unlikely to meet its primary endpoint by the time enrollment iswas completed.

SYN-010.

In December 2013, through ~~the Company’s subsidiary, Synthetic~~SYN Biomics, ~~Inc.,~~ the Company entered into a worldwide exclusive license agreement with CSMC and acquired the rights to develop products for therapeutic and prophylactic treatments of acute and chronic diseases, including the development of SYN-010 to target IBS-C. The Company licensed from CSMC a portfolio of intellectual property comprised of several U.S. and foreign patents and pending patent applications for various fields of use, including IBS-C, obesity and diabetes. An investigational team led by Mark Pimentel, M.D. at CSMC discovered that these products may reduce the production of methane gas by certain GI microorganisms. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, the Company did not owe and did not pay CSMC for milestone payments related to this license agreement.

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

~~(Unaudited)~~

~~11.~~10. Commitments and Contingencies
Leases
All of the Company’s existing leases as of ~~September~~June 30, ~~2020~~2021 are classified as operating leases. As of ~~September~~June 30, ~~2020,~~2021, the Company has ~~one material~~1 operating lease for facilities with a remaining term expiring in ~~2022.~~2027. During the quarter ended June 30, 2021, the Company renewed its facility lease by entering into a Second Lease Amendment which extends the lease term for 63 months beginning on September 1, 2022 and ending on December 31, 2027 at stated rental rates and including a 3 month rent abatement. The ~~existing lease~~Second Amendment also has ~~fair value renewal~~ options ~~none~~for a Tenant Improvement Allowance and a Second Extension Term. The Second Amendment also gives the Company the Right to Expand their space by giving notice to the landlord before December 31, 2021. The Second Extension Term is offered at market rates and there is no economic incentive for the lessee, therefore the Company has determined that it is not part of ~~which are considered certain of being exercised or included in~~ the ~~minimum~~original lease term. ~~The~~There is an option in this Second Amendment to Lease for the Company to borrow funds for tenant improvements subject to an 8.5% interest rate, which is the discount rate used in the calculation of the lease liability was 9.9%. The rates implicit within the Company's leases are generally not determinable, therefore, the Company's incremental borrowing rate is used to determine the present value of lease payments. The determination of the Company’s incremental borrowing rate requires judgment. Because the Company currently has no outstanding debt, the incremental borrowing rate for each lease is primarily based on publicly-available information for companies within the same industry and with similar credit profiles. The rate is then adjusted for the impact of collateralization, the lease term and other specific terms included in the Company’s lease arrangements. The incremental borrowing rate is determined at lease commencement, or as of January 1, 2019 for operating leases in existence upon adoption of ~~ASC 842,~~ ~~Leases~~ ~~(ASC 842). The incremental borrowing rate is subsequently reassessed upon a~~this modification ~~to the lease arrangement. ROU assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets.~~analysis. Operating lease costs are presented as part of general and administrative expenses in the condensed consolidated statements of operations, and for the three and ~~nine~~six months ended ~~September~~June 30, 2021 approximated $68,000 and $118,000, respectively and for the three and six months ended June 30, 2020 approximated $50,000 and ~~$151,000, respectively, and for three and nine months ended September 30, 2019 approximated $50,000 and $151,000,~~$101,000, respectively. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, operating cash flows used for operating leases approximated ~~$77,000~~$80,000 and ~~$231,000,~~$160,000, respectively, and for three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 approximated ~~$75,000~~$77,000 and ~~$224,000, respectively.~~
$154,000, respectively, and right of use assets exchanged for operating lease obligations was $1.3 million. The day one non-cash addition of right of use assets due to adoption of ASC 842 was $538,000.
A maturity analysis of our operating leases as of ~~September~~June 30, ~~2020~~2021 is as follows (amounts in thousands of dollars):

Future undiscounted cash flow for the years ending December 31:
2020 $ 79

Future undiscounted cash flow for the years ending June 30:

2021 321

$
163
2022 192

247
2023

327
2024

337
2025

347
2026

357
2027

368
Total 592

2,146

Discount factor (53 )

(524)
Lease liability 539

1,622
Amount due within 12 months (278 )
Lease liability – current

(196)
Lease liability – long term $ 261

$
1,426

Table of Contents

Synthetic Biologics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

10. Commitments and Contingencies – (continued)

Risks and Uncertainties

On January 30, 2020, the World Health Organization ~~(WHO)~~(“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the ~~COVID-19~~“COVID-19” outbreak) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

As ~~the~~ COVID-19 continued to spread around the globe, the Company experienced disruptions that ~~impact~~impacted its business and clinical trials, including halting the postponement of clinical site initiation of the Phase 1b/2a clinical trial of SYN-004. The extent to which the COVID-19 pandemic impacts the Company’s business, the clinical development of SYN-004 (ribaxamase) and SYN-020, the business of the Company’s suppliers and other commercial partners, the Company’s corporate development objectives and the value of and market for the Company’s common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, especially in light of the new variants, such as the ultimate duration of the pandemic, travel restrictions, quarantines, social distancing and business closure requirements in the United States, Europe and other countries, and the effectiveness of actions taken globally to contain and treat the disease. The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on the ~~Company’s~~Company's business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company’s business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties which the Company faces.

~~Synthetic Biologics, Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~12. Subsequent Events~~

On November 9, 2020, the Company and its subsidiary, Synthetic Biomics, Inc. and CSMC mutually agreed to terminate the exclusive license agreement dated December 5, 2013 and all amendments thereto and the clinical trial agreement relating to SYN-010. The determination to terminate the SYN-010 license agreement was agreed following the completionTable of a planned interim futility analysis of the Phase 2b investigator-sponsored clinical trial of SYN-010. On September 30, 2020, CSMC (the Company’s SYN-010 clinical development partner) informed the Company that it discontinued the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 IBS-C patients. Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated, it was unlikely to meet its primary endpoint by the time enrollment is completed. The patent rights previously licensed to the Company covering the use of SYN-010 will remain the property of CSMC.Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q, and our audited consolidated financial statements and notes thereto for the year ended December 31, ~~2019~~2020 included in our ~~2019~~2020 Form 10-K. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and elsewhere herein, and those identified under Part I, Item 1A of our ~~2019~~2020 Form 10-K. All share and per share numbers set forth in this Management’s Discussion and Analysis of Financial Conditions and Results of Operations reflect the one-for-thirty five reverse stock split effected August 10, 2018.

Overview

We are a diversified clinical-stage company developing therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need. Our lead clinical development candidates are: (1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within the GI tract to prevent microbiome damage, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions and intended to treat both local GI and systemic diseases.

We were also developing SYN-010 to reduce the impact of methane-producing organisms in the gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation (IBS-C). On September 30, 2020, Cedars Sinai Medical Center’s (CSMC) (the Company’s SYN-010 clinical development partner) informed the Company that it agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 in IBS-C patients. Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated, it was unlikely to meet its primary endpoint by the time enrollment is completed.

~~As a result of the decision to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010, we~~ plan to explore and evaluate a range of strategic options, which may include: in-licensing opportunities; evaluation of potential acquisitions; or other potential strategic transactions. In the meantime, we remain focused on working with our clinical development partners to advance the planned Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic ~~hematopoietic cell transplant (HCT)~~HCT patients, and advancing the clinical development program for SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications. ~~Both~~

We are continuing to assess the potential impact of ~~these programs are unrelated to SYN-010, and therefore, we remain encouraged by~~ the ~~outlook and potential for these programs in addressing large, underserved markets.~~

COVID-19 pandemic. We are in close contact with our clinical ~~sites and are assessing~~development partners in order to assess the impact of COVID-19 on our studies and current timelines and costs. ~~To maximize patient participation and safeguard the trials integrity and patient safety, initiation of the Company’s Phase 1b/2a clinical study of SYN-004~~While we currently do not anticipate any interruptions in our operations due to ~~be conducted by Washington University in Allogeneic HCT Recipients~~COVID-19, it is ~~deferred until Q1 2021, pandemic conditions permitting. If~~possible that if the COVID-19 pandemic ~~continues and persists~~were to increase in severity for an extended period of time, we could once again experience delays in our clinical trials which could result in significant disruptions to our clinical development ~~timeline,~~timelines due to the COVID-19 pandemic, which would adversely affect our business, financial condition, results of operations and growth prospects.

In response to the spread of COVID-19 as well as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity. We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state and local government and health authorities. The full extent to which the COVID-19 outbreak will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted. The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

Table of Contents

Our Product Pipeline:

*Based on management’s current beliefs and expectations

aGVHD acute graft-vs-host disease; allo-HCT allogeneic hematopoietic cell transplant patients; AMR antimicrobial resistance; CDI Clostridioides difficile infection. SAD single ascending dose

¹Additional products with preclinical proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD and infection by ~~vancomycin~~carbapenem resistant enterococci and SYN-007 (ribaxamase) DR to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

²Dependent on funding/partnership.

³Announced option-license agreement with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

*Based on management’s current beliefs

Additional pipeline products with preclinical proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD, microbiome damage and ~~expectations.~~infection due to treatment with carbapenem antibiotics, and SYN-007 (ribaxamase) delayed release (“DR”) being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

Table of Contents

Summary of ~~Current~~ Clinical and Preclinical Programs

Therapeutic Area	Product Candidate	~~Developments & Milestones~~ Current Status

Prevention of microbiome damage, CDI, overgrowth of pathogenic organisms, AMR, and aGVHD in allogeneic HCT recipients (Degrade IV beta-lactam antibiotics)	SYN-004 (ribaxamase) (oral enzyme)	· ● Announced outcomes from End of Phase 2 meeting, including ~~FDA-proposed~~Food and Drug Administration (FDA)-proposed criteria for Phase 3 clinical efficacy and safety which, if achieved, may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018) · ~~Anticipate initiation of the Phase 3 clinical program proposed by the FDA for the prevention of CDI only after securing additional potential funding via a strategic partnership~~ · ● Clarified market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic hematopoietic cell transplant (HCT) patients · ● Announced clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate safety, tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019) · ● Received official meeting minutes from FDA Type-C meeting held on December 2, 2019 to discuss development in allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever (Q1 2020) · ● Received written notification from the FDA informing the Company that the FDA determined the Phase 1b/2a clinical program in adult allogeneic hematopoietic cell transplant (HCT) recipients may proceed per the submitted clinical program protocol (Q3 2020) · ~~Proposed~~ ● Washington University began enrollment and the first patient was dosed in the first of three antibiotic cohorts for the Phase 1b/2a clinical trial ~~to be conducted by Washington University~~of SYN-004 in adult ~~allogeneic~~ HCT ~~is anticipated to commence during Q1 2021, subject to COVID-19 global pandemic~~

~~Treatment of IBS-C~~	~~SYN-010~~ ~~(oral modified-release~~ ~~lovastatin lactone)~~	recipients (Q2 2021) · ~~Confirmed key elements of Pivotal Phase 2b/3 clinical trial design pursuant to consultations with FDA (Q1 2017)~~ · ~~Entered into agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to evaluate SYN-010 dose response and inform Phase 3 clinical development (Q3 2018)~~ · ~~Patient recruitment and enrollment in the Phase 2b investigator-sponsored clinical study recommenced following a temporary halt in Q1 and Q2 due to the COVID-19 global pandemic (Q3 2020)~~ · Announced results from a planned interim futility analysis which concluded that although SYN-010 was well-tolerated, it was unlikely to meet its primary objective by the time enrollment is completed. As a result, CSMC has agreed to discontinue the trial and will conduct a comprehensive review of the final data set and publish its findings (Q3 2020)

Table of Contents

Preserve gut barrier, treat local GI inflammation, and restore gut microbiome

SYN-020

(oral IAP enzyme)

●

Generated high expressing manufacturing cell lines for intestinal alkaline phosphatase (IAP) (1H 2017)

●

Identified basic ~~drug supply~~Drug Supply manufacturing process and potential tablet ~~and capsule formulations~~formulation (2H 2017)

●

Identified potential clinical indications with unmet medical need including enterocolitis associated with radiation therapy for cancer (Q1 2019)

●

Completed pre-IND (Investigational New Drug) meeting with the FDA to clarify requirements for IND-enabling toxicology studies and manufacturing requirements (Q2 2019)

●

Entered into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases (Q2 2020)

●

Submitted IND application with U.S. FDA supporting an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy (Q2 2020)

●

Received study-may-proceed letter from U.S. FDA to conduct a Phase 1 single ascending dose (“SAD”) study in healthy volunteers, designed to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

●

Announced enrollment commenced and three out of a total of four cohorts have been dosed in a Phase 1SAD study of SYN-020 (Q2 2021)

●

Announced that patient enrollment, dosing and observation has been completed in the Phase 1, open label, SAD clinical trial. Analyses of preliminary data demonstrated SYN-020 maintained a favorable safety profile and was well tolerated at all dose levels (Q2 2021)

Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade IV carbapenem antibiotics)

SYN-006

(oral enzyme)

●

Identified P2A as a potent carbapenemase that is stable in the GI tract

●

Manufactured a formulated research lot for oral delivery (2017)

●

Demonstrated microbiome protection in a pig model of ertapenem administration (Q1 2018)

Table of Contents

●

Reported supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance ~~genes~~ in a pig model, including ~~those encoding~~encoded beta-lactamases and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of ~~CDI,~~antibiotic-associated diarrhea (AAD), overgrowth of pathogenic organisms and AMR (Degrade oral beta-lactam antibiotics)		SYN-007 (oral enzyme)	·	● Preclinical work ongoing to expand the utility of SYN-004 (ribaxamase) for use with oral beta-lactam antibiotics · ● Reported supportive data from a second canine animal model demonstrating that when co-administered with oral ~~amoxicillin~~Amoxicillin and oral Augmentin (combination amoxicillin/clavulanate), oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these antibiotics (Q2 2018)
	·		● Reported supportive data demonstrating SYN-007 mitigated antibiotic-mediated gut microbiome alterations and maintained gut microbiome integrity when co-administered with oral amoxicillin in a dose-response canine study (Q2 2019) · ● Reported supportive data demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase inhibitor ~~combination amoxicillin/clavulanate~~Augmentin and also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Prevention and treatment of pertussis		SYN-005 (monoclonal antibody therapies)	·	● Reported supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection from pertussis for five weeks in a neonatal non-human primate study (Q4 ~~2017~~) 2017) ● Collaboration with UT Austin

Recent Developments

Our Gastrointestinal (GI) and Microbiome-Focused Pipeline

Our SYN-004 (ribaxamase) and SYN-020 clinical programs are focused on the gastrointestinal tract (GI) and the gut microbiome, which is home to billions of microbial species and composed of a natural balance of both “good” beneficial species and potentially “bad” pathogenic species. When the natural balance or normal function of these microbial species is disrupted, a person’s health can be compromised. All of our programs are supported by our growing intellectual property portfolio. We are maintaining and building our patent portfolio through: filing new patent applications; prosecuting existing applications; and licensing and acquiring new patents and patent applications.

Table of Contents

~~Recent Developments~~

Clinical and Pre-Clinical Update

SYN-004 (ribaxamase) — Prevention of antibiotic-mediated microbiome damage, C. difficile infections (CDI), overgrowth of pathogenic organisms, the emergence of antimicrobial resistance (AMR) and acute graft-versus-host disease (aGVHD) in allogeneic HCT recipients

Phase 1b/2a Clinical Study in Allogeneic HCT Recipients

In August 2019, we entered into a Clinical Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004 (ribaxamase). for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever. Under the terms of this agreement, we ~~will~~ serve as the sponsor of the study and supply SYN-004 (ribaxamase). Dr. Erik R. Dubberke, Professor of Medicine and Clinical Director, Transplant Infectious Diseases at Washington University and a member of the SYN-004 (ribaxamase) steering committee ~~will serve~~serves as the principal investigator of the clinical trial in collaboration with his Washington University colleague Dr. Mark A. Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow Transplantation and Leukemia.

On January 7, 2020, we announced the receipt of official meeting minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever. Based on the final meeting minutes, theThe Phase 1b/2a clinical trial ~~will comprise~~is a single center, randomized, double-blinded, placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients. The goal of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg oral SYN-004 (ribaxamase) administered to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic to treat fever. Study participants ~~will be~~are being enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam antibiotic. Eight participants in each cohort will receive SYN-004 (ribaxamase) and four will receive placebo. On July 30, 2020 we received written notification from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic HCT recipients may proceed per the submitted clinical program protocol.

Safety and pharmacokinetic data for each cohort will be reviewed by an independent Data and Safety Monitoring Committee, ~~(DSMC),~~ which will make a recommendation on whether to proceed to the next IV beta-lactam antibiotic. The clinical trial will also evaluate potential protective effects of SYN-004 (ribaxamase) on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 (ribaxamase) in allogeneic HCT recipients.

On April 14, 2021, we announced that enrollment has commenced and the first patient of the first antibiotic cohort of this study had been dosed. If enrollment proceeds as planned, a data readout for the first cohort is anticipated in Q4 2021.

Due to the unique challenges posed by the global COVID-19 pandemic, Washington University continues to evaluate non-essential activities which may have a direct impact on planned and ongoing clinical trials. ~~Initiation~~Continuation of the Phase 1b/2a clinical trial including, but not limited to, the enrollment of new patients remains largely at ~~their~~the discretion of Washington University and is contingent upon ~~Washington University’s~~their ability to conduct this clinical program free from the impact of COVID-19, and approval from their IRB and the FDA. At this time, we have determined that postponing the initiation of the planned Phase 1b/2a clinical trial in allogeneic HCT recipients until at least the first quarter of 2021 remains the appropriate course of action in the current operating environment.COVID-19. We remain in close contact with Washington University and are actively monitoring the crisis caused by the spread of COVID-19 and its impact to the clinical development plans for our SYN-004 (ribaxamase) program.

~~SYN-010 — Treatment~~Table of ~~Irritable Bowel Syndrome with Constipation (IBS-C)~~Contents

On September 5, 2018, we entered into an agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by us and CSMC. The Phase 2b study was being conducted out of the Medically Associated Science and Technology (MAST) Program at CSMC and was a 12-week, placebo-controlled, double-blind, randomized clinical trial to evaluate two dose strengths of oral SYN-010 21 mg and 42 mg in as many as 150 patients diagnosed with IBS-C using a breath methane screening level as a criterion for patient enrollment.

The primary objective for the study was to determine the efficacy of SYN-010, measured as an improvement from baseline in the weekly average number of complete spontaneous bowel movements (CSBMs) during the 12-week treatment period for SYN-010 21 mg and 42 mg daily doses relative to placebo. Secondary efficacy endpoints for both dose strengths of SYN-010 were intended measure changes from baseline in abdominal pain, bloating, stool frequency as well as the use of rescue medication relative to placebo. Exploratory outcomes included Adequate Relief and quality of life measures using the well-validated EQ-5D-5L and PAC-SYM patient questionnaires. Importantly, this study was intended to generate a comprehensive and meaningful data set to provide additional insights and address specific queries into potential SYN-010 clinical efficacy, including dose response, length of treatment and microbiome effects, intended to be evaluated in the FDA-agreed Phase 2b/3 adaptive design clinical program.

Enrollment in this study commenced in January 2019 and was temporarily halted during the first and second quarter of 2020 due to the unique challenges posed by the global COVID-19 pandemic which required CSMC to temporarily limit all non-essential activities, directly impacting their ability to actively recruit and screen new patients. During this time, active study participants who did not complete the study prior to the decision to halt all non-essential activities were given the opportunity to complete the study as CSMC took steps to ensure data from this group was collected in accordance with the clinical trial protocol.

During the third quarter of 2020, a planned interim futility analysis of the Phase 2b investigator-sponsored clinical study was completed. Based on the review of the interim analysis, it was concluded that although SYN-010 was well-tolerated, it failed to meet the prespecified efficacy criteria and was unlikely to meet the primary objective of the study by the time enrollment is completed. On September 30, 2020 CSMC formally agreed to discontinue the study. CSMC has been unblinded and intends to conduct a comprehensive review of the data set and publish its findings.

SYN-020 — Oral Intestinal Alkaline Phosphatase

SYN-020 is a quality-controlled, recombinant version of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery. The published literature indicates that IAP functions to diminish GI and systemic inflammation, tighten the gut barrier to diminish “leaky gut,” and promote a healthy microbiome, and diminish GI and systemic inflammation. Based on these known mechanisms as well as our own supporting animal model data, we are initially developing SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers, including the treatment and prevention of radiation enteropathy secondary to cancer therapy.microbiome. Despite its broad therapeutic potential, a key hurdle to commercialization has been the high cost of IAP manufacture which is commercially available for as much as $10,000 per gram. We believe we have developed technologies to traverse this hurdle and now have the ability to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per gram at commercial scale.

Based on the known mechanisms as well as our own supporting animal model data, we intended to initially develop SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers. And, while we believe SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we have also begun planning to develop SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also addressing significant unmet medical needs. Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”), and indications to treat and prevent metabolic and inflammatory disorders associated with aging which are supported by our collaboration with Massachusetts General Hospital (“MGH”). Across the six major markets, the total prevalent cases of celiac disease are expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately 4%. During the same period, prevalent cases in the U.S. are expected to increase from 2.8 million in 2013 to an expected 4.3 million in 2023, representing a significant market opportunity.

On June 30, 2020, we submitted an ~~Investigational New Drug (IND)~~IND application to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy. On July 30, 2020, we announced that we received a study-may-proceed letter from the FDA to conduct a Phase ~~1 single ascending dose~~1a single-ascending-dose (“SAD”) study in healthy volunteers designed to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters. ~~The~~On April 1, 2021, we announced that enrollment had commenced in the Phase 1 SAD clinical ~~program~~trial of SYN-020. On June 29, 2021, we announced that enrollment, patient dosing and observation had been completed in its Phase 1, open-label, SAD study of SYN-020. The SAD study enrolled 6 healthy adult volunteers into each of four cohorts with SYN-020 given orally as single doses ranging from 5 mg to 150 mg. Analyses of preliminary data demonstrated that SYN-020 maintained a favorable safety profile, was well tolerated at all dose levels, and no adverse events were attributed to study drug. No serious adverse events were reported. Additional data from this clinical trial is expected during the third quarter of 2021. Planning for a second Phase 1 study evaluating multiple-ascending doses (“MAD”) of SYN-020 is also underway and participant screening is anticipated to commence during the ~~first~~third quarter of ~~2021 and~~2021. A topline data readout of the Phase 1 MAD clinical study is ~~intended~~anticipated during the second quarter of 2022, pandemic conditions permitting. Following the completion of Phase 1 safety studies, we may consider conducting a placebo-controlled Phase 1b/2a gluten challenge study in as many as 40 celiac patients who present with predominantly GI symptoms followed by a Phase 2b proof-of-concept clinical trial in a similar patient population. We may also seek to ~~support the~~initiate clinical ~~development~~trials of SYN-020 ~~for multiple indications.~~

evaluating its potential therapeutic benefit in NAFLD patients.

During the second quarter of 2020, we ~~also~~ announced that we entered into an agreement with Massachusetts General Hospital ~~(“MGH”)~~ granting us an option for an exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases. During the second quarter of 2021, we announced an amendment to our option for an exclusive license agreement with MGH to include intellectual property and technology related to the use of SYN-020 to inhibit liver fibrosis in select diseases, including NAFLD. Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General and Gastrointestinal Surgery and Professor of Surgery, Harvard Medical School, evaluated long-term oral supplementation of IAP, including SYN-020, in mice. Dr. Hodin’s research demonstrated that IAP administration, starting at 10 months of age, slowed the microbiome changes, gut-barrier dysfunction, and gastrointestinal and systemic inflammation that normally accompany aging. Additionally, the IAP administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan. Under the terms of the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and prevent metabolic and inflammatory diseases associated with aging. If executed, we plan to use this license in the advancement of an expanded clinical development program for SYN-020. In addition, we continue to explore and evaluate potential future indications that have been associated with decreased IAP expression and intestinal barrier dysfunction. Such potential indications include inflammatory bowel disease (IBD) and celiac disease, as well as metabolic syndrome and associated non-alcoholic fatty liver-disease (NAFLD).

Table of Contents

Intellectual Property

All of our programs are supported by growing patent ~~estates that we either own or exclusively license. Each potential product has issued patents that provide protection.~~estates. In total, we have over ~~110~~80 U.S. and foreign patents and over ~~100~~65 U.S. and foreign patents pending. The SYN-004 (ribaxamase) program is supported by IP that is assigned to Synthetic Biologics, namely U.S. patents and foreign patents (in most major markets, e.g. Europe (including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S. and foreign patents pending in most major markets, e.g. Europe (including Germany, Great Britain and France), Japan, China and Canada, among others). For instance, U.S. Patent Nos. 8,894,994 and 9,587,234, which include claims to compositions of matter and pharmaceutical compositions of beta-lactamases, including SYN-004 (ribaxamase), have patent terms to at least 2031. Further, U.S. Patent 9,301,995 and 9,301,996, both of which will expire in 2031, cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S. Patent Nos. 9,290,754, 9,376,673, 9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase compositions of matter related to SYN-004 (ribaxamase).

The ~~SYN-010~~SYN-020 (oral intestinal alkaline phosphatase (IAP)) program is supported by IP that is ~~exclusively licensed~~assigned to ~~(and, in some cases co-owned by)~~ Synthetic Biologics, namely U.S. ~~patents~~ and foreign ~~patents~~patent applications (in ~~most~~many major markets, e.g. Europe, ~~(including Germany, Great Britain~~Canada, and ~~France),~~Australia). These patent applications, which cover various formulations, medical uses and Canada, among others) and U.S. and foreign patents pending in most major markets, e.g. Europe (including Germany, Great Britain and France), Japan, China and Canada, among others). For instance, U.S. Patent No. 9,192,618, which expires in at least 2023, includes claims that cover usemanufacture of statins, including SYN-010, for the treatment of IBS-C. U.S. Patent No. 9,289,418, which expires in at least 2033, includes claims that cover the use of a variety of compounds, including the active agent of SYN-010,SYN-020, are expected to treat constipation in certain screened patients. U.S. Patent No. 9,744,208 covers methods of use of the active agent of SYN-010 for the treatment of constipation until at least 2034. U.S. Patent No. 9,956,292 includes claims related to composition of matter of anti-methanogenic compositions that find use in treating IBS-C and will expire in ~~at least 2035. Further,~~ ~~U.S. Patent No. 10,328,151, covers the composition of matter of the SYN-010 clinical agent~~2038-2040, if granted, and ~~U.S. Patent~~ ~~10,519,515covers methods of treating IBS-C with a statin, inclusive of SYN-010, in a selected patient population.~~

without taking potential patent term extensions or patent term adjustment into account.

Our goal is to (i) obtain, maintain, and enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve our trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide. We seek, where appropriate, the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination of contractual arrangements and patents.

Critical Accounting Policies

The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results may differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our ~~2019~~2020 Form 10-K.

Results of Operations

Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020

General and Administrative Expenses

General and administrative expenses ~~increased~~decreased by 9%2% to ~~$1.2~~approximately $1.26 million for the three months ended ~~September~~June 30, ~~2020,~~2021, from ~~$1.1~~approximately $1.29 million for the three months ended ~~September~~June 30, ~~2019.~~2020. This ~~increase~~decrease is primarily due to ~~increased~~lower legal costs and vacation expense offset by higher insurance costs, audit fees and ~~stock~~ registration ~~fees, offset by a decrease in legal costs.~~fees. The charge related to stock-based compensation expense was $83,000 for the three months ended June 30, 2021, compared to $67,000 for the three months ended ~~September~~June 30, ~~2020, compared to $68,000 the three months ended September~~ 2020.

30 ~~2019.~~

Table of Contents

Research and Development Expenses

Research and development expenses ~~decreased~~increased by ~~78%~~21% to ~~$0.9~~approximately $1.9 million for the three months ended ~~September~~June 30, ~~2020,~~2021, from ~~$4.1~~approximately $1.6 million for the three months ended ~~September~~June 30, ~~2019.~~2020. This ~~decrease~~increase is primarily the result of ~~the response to the global COVID-19 pandemic by our~~increased clinical ~~development partners which led to the postponement of~~trial expenses as we began dosing patients in the Phase 1b/2a clinical trial of SYN-004 ~~(ribaxamase) in allogeneic HCT recipients as well as the discontinuation of the~~and Phase ~~2b investigator sponsored~~1 SAD clinical trial of ~~SYN-010.~~SYN-020 during the three months ended June 30, 2021, offset by lower indirect program costs for the three months ended June 30, 2021, including salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research. In addition, as a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 to include only essential activities as part of their pandemic response, which delayed the start of our clinical trial until 2021. We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients. The charge related to stock-based compensation expense was ~~$15,000~~$19,000 for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~$23,000~~$19,000 related to stock-based compensation expense for the three months ended ~~September~~June 30, ~~2019.~~

2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. These direct expenses were external costs associated with preclinical studies and clinical trials. Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific drug candidates.

Therapeutic Areas *(in thousands)*	September 30, 2020		September 30, 2019
SYN-004 (ribaxamase	$	76	$	73

					June 30,		June 30,
Therapeutic Areas					2021		2020
SYN-020					$	697	$	-
Ribaxamase						332		40
SYN-010		45		174		-		94
SYN-005		1		7		-		4


Total direct costs		122		254		1,029		138
Total indirect costs		792		3,890		903		1,465

Total	$	914	$	4,144

Total Research and Development					$	1,932	$	1,603

Other Income/Expense

Other income was ~~$134~~$2,000 for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to other income of ~~$92,000~~$6,000 for the three months ended ~~September~~June 30, ~~2019.~~2020. Other income for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders was ~~$2.7~~approximately $3.2 million, or ~~$0.14~~$0.02 per basic and dilutive common share for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to a net loss of ~~$5.3~~approximately $3.3 million, or ~~$0.31~~$0.18 per basic common share and dilutive common share for the three months ended ~~September~~June 30, ~~2019.~~2020. Net loss attributable to common stockholders for the three months ended ~~September~~June 30, 2020 excludes net loss attributable to non-controlling interest of ~~$8,000~~$16,000 and includes the accretion of Series B preferred discount of ~~$519,000~~$392,000 on converted shares and Series A Preferred Stock accrued dividends of ~~$64,000. Net loss attributable to common stockholders for the three months ended September 30, 2019 excludes net loss attributable to non-controlling interest~~$63,000.

Table of ~~$30,000 and includes the accretion of Series B preferred discount of $70,000 on converted shares and $63,000 of Series A accrued dividends.~~Contents

~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~

2020

General and Administrative Expenses

General and administrative expenses ~~increased by 18% to $3.9 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021 of $2.69 million were relatively unchanged from ~~$3.3 million~~six months ended June 30, 2020. The movement for the ~~nine months ended September 30, 2019. This increase is~~period primarily ~~due to increased~~consisted of decreased legal costs related to business development, patent execution and employee contract matters, vacation expense and travel, offset by insurance costs, audit fees and registration fees. The charge related to stock-based compensation expense was ~~$199,000~~$165,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~$193,000~~$132,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~

2020.

Research and Development Expenses

Research and development expenses decreased by ~~55%~~6% to ~~$4.1~~$3.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, from ~~$9.2~~$3.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. This decrease is primarily the result of lower indirect program costs for the ~~response to the global COVID-19 pandemic~~six months ended June 30, 2021, including salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research offset by ~~our~~increased clinical ~~development partners which led to the postponement of~~trial expenses as we began dosing patients in the Phase 1b/2a clinical trial of SYN-004 ~~(ribaxamase) in allogeneic HCT recipients~~ and ~~a temporary the discontinuation of the~~ Phase ~~2b investigator sponsored~~1 SAD clinical trial of ~~SYN-010.~~SYN-020. In addition, as a result of the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2020 to include only essential activities as part of their pandemic response, which delayed the start of our clinical trial until 2021. We anticipate research and development expense to increase as our ongoing clinical trials continue to enroll patients. Research and development expenses also include a charge relating to stock-based compensation expense of ~~$52,000~~$38,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~$53,000~~$37,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~

2020.

The following table sets forth our research and development expenses directly related to our therapeutic areas for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020. These direct expenses were external costs associated with preclinical studies and clinical trials. Indirect research and development expenses related to employee costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific drug candidates.

June 30,

June 30,
Therapeutic Areas

2021

2020
SYN-020

$
869

$
-
Ribaxamase

480

105
SYN-010

3

248
SYN-005

-

28

Total direct costs

1,352

381
Total indirect costs

1,697

2,857

Total Research and Development Expenses

$
3,049

$
3,238
Therapeutic Areas (in thousands)
September 30,
2020

September 30,
2019

SYN-010 $ 293 $ 426
SYN-004 (ribaxamase) 181 185
Other therapeutic areas 30 23
Total direct costs 504 634
Total indirect costs 3,648 8,522

Total $ 4,152 $ 9,156

Other ~~Income~~Income/Expense
Other income was ~~$44,000~~$2,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to other income of ~~$217,000~~$44,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. Other income for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019~~2020 is primarily comprised of interest income.
Net Loss Attributable to Common Stockholders
Our net loss attributable to common stockholders was ~~$9.4~~approximately $5.7 million, or ~~$0.52~~$0.13 per basic and dilutive common share for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to a net loss of ~~$12.9~~approximately $5.8 million, or ~~$0.79~~$0.38 per basic common share and dilutive common share for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. Net loss attributable to common stockholders for the ~~nine~~six months ended ~~September~~June 30, 2021 excludes net loss attributable to non-controlling interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of

Table of Contents

$7.4 million. Net loss attributable to common stockholders for the six months ended June 30, 2020 excludes net loss attributable to non-controlling interest of ~~$50,000~~$42,000 and includes the accretion of Series B preferred discount of ~~$1.3 million~~$796,000 on converted shares and Series A Preferred Stock accrued dividends of $189,000. Net loss attributable to common stockholders for the nine months ended September 30, 2019 excludes net loss attributable to non-controlling interest of $73,000 and includes the accretion of Series B preferred discount of $585,000 on converted shares and $185,000 of Series A accrued dividends.$125,000.

Liquidity and Capital Resources

With the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred negative cash flows from operations, and have a significant accumulated deficit. We have incurred an accumulated deficit of ~~$245~~$262.7 million as of ~~September~~June 30, ~~2020~~2021 and expect to continue to incur losses in the foreseeable future. Our ability to continue as a going concern is dependent upon our ability to raise additional debt and equity capital. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to us. These factors raise substantial doubt about our ability to continue as a going concern.

~~We do not have sufficient capital to fund our operations beyond~~During the next twelve months. In order to address our capital needs, including our planned clinical trials, we are actively pursuing additional equity or debt financing in the form of either a private placement or a public offering. We have been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings. Such additional financing opportunities might not be available to us when and if needed, on acceptable terms or at all. If we are unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances,six months ended June 30, 2021, our operating ~~results and prospects will be adversely affected.~~

activities used net cash of approximately $5.9 million.

Our cash and cash equivalents totaled ~~$6.0~~$74.3 million as of ~~September~~June 30, ~~2020, a decrease~~2021, an increase of ~~$9.0~~$68.1 million from December 31, ~~2019.~~2020. During the three and six months ended ~~September~~June 30, ~~2020,~~2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of ~~$2.1~~$3.2 million and 5.7 million for the three and six months ended ~~September~~June 30, ~~2020. With~~2021, respectively. During the six months ended June 30, 2021, we raised approximately $74.0 million from cash ~~available~~received via the exercise of approximately 65% of the 2018 Warrants and sales of our common stock in ~~early November 2020,~~“at the market” offerings pursuant to the Sales Agreement that we had entered into in 2016 with FBR Capital Markets & Co. (now known as B. Riley Securities) (the “Original ATM Sales Agreement”) and the Amended and Restated ATM Sales Agreement. During the three months ended June 30, 2021 we did not sell any of our common stock through the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement. We believe ~~these resources~~that our cash and cash equivalents at June 30, 2021 will be sufficient to fund our operations through at least the end of the first quarter of ~~2021.~~

2023.

As a result of the global COVID-19 pandemic, ~~management has been able to further extend our cash runway since~~ our clinical development ~~partners CSMC and Washington~~partner (Washington University) reduced their operating capacity ~~when necessary~~ during 2020 and the first quarter of 2021 to include only essential activities as part of their pandemic response. These delays impacted the timelines for our clinical programs, which excluded all planned and ongoing clinical trials of SYN-004 and SYN-010. However, this reduction in operating activity has adversely impacted our planned clinical trial timelines. We anticipate reduced research and development costs through the endincluded delaying commencement of the ~~year, since we anticipate that our proposed~~ Phase 1b/2a clinical trial ~~to be~~of SYN-004 until the second quarter of 2021. These delays also resulted in a decrease in anticipated expenses as no clinical trials had yet commenced during that period. If enrollment in our ongoing Phase 1b/2a clinical trial being conducted by Washington University ~~will be postponed until 2021, subject to further COVID-19 developments.~~

On September 30, 2020, CSMC agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis. Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is ~~unlikely to meet its primary endpoint by the time enrollment is completed. As a result, the Company anticipates additional reductions in clinical development expense during the remainder of 2020~~halted due to ~~the discontinuation of this clinical study.~~COVID-19 developments, we may experience reduced expenses until such time as enrollment resumes.

We anticipate our current cash will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research efforts, including completing our funding requirements for the initiation of the Phase 1b/2a SYN-004 (ribaxamase) clinical trial and the planned Phase 1 single ascending dose (SAD) study of SYN-020. Due to the unique challenges posed by the global COVID-19 pandemic, we have determined that postponing the commencement of the planned Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients until the first quarter of 2021 remains the appropriate response to the novel coronavirus pandemic. We do not anticipate any additional expense related to the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared for commencement by Washington University. Commencement of a future Phase 3 clinical trial of SYN-004 remains subject to our successful pursuit of opportunities that will allow us to establish the clinical infrastructure and financial resources necessary to successfully initiate and complete our plan. We will be required to obtain additional funding in order to continue the development of our current product candidates beyond our planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients, the planned Phase 1 SAD study of SYN-020 in healthy volunteers within the anticipated time periods, if at all, and to continue to fund operations at the current cash expenditure levels. Currently, we do not have commitments from any third parties to provide us with capital. If we fail to obtain additional funding for our clinical trials, whether through the sale of securities or a partner or collaborator, and otherwise when needed, we will not be able to fully execute our business plan as planned and we will be forced to cease certain development activities until funding is received and our business will suffer, which would have a material adverse effect on our financial position, results of operations and cash flows.

~~While~~Although we are experiencing limited, if any, adverse impact to our financial ~~impacts at this time, given~~stability stemming from the global economic slowdown, the overall disruption of global healthcare systems and ~~the~~ other risks and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical timelines, our business, financial condition, results of operations and growth prospects could be materially adversely affected.

Historically, we have financed our operations primarily through public and private sales of our securities, and we expect to continue to seek toand obtain ~~our required~~additional capital in a similar manner. During the year ended December 31, ~~2019 and the nine months ended September 30,~~ 2020, we did not engage in any financing activity as our financings conducted during the year ended December 31, 2018 were sufficient to satisfy our cash needs during 2019 and the nine months ended September 30, 2020. During the year ended December 31, 2018, our only ~~sources~~source of ~~funding were~~financing was from ~~our underwritten public offering (the “Offering”) described below pursuant to which we received net proceeds of approximately $16.7 million and~~ sales of ~~3.5~~9.2 million shares of our ~~Common Stock in~~common stock utilizing our at-the-market offering program through the ~~FBR~~Original ATM Sales Agreement pursuant to which we received net proceeds of approximately ~~$12.2~~$3.4 million. During the six months ended June 30, 2021, we received proceeds of approximately $8.0 million from the cash exercise of approximately 11.6 million of our 2018 warrants and sold approximately 78.7 million shares of our common stock for net proceeds of approximately $66.0 million pursuant to the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement, all of which were received during the three months ended March 31, 2021.

The ~~FBR~~Amended and Restated ATM Sales Agreement enables us to offer and sell shares of our ~~Common Stock~~common stock from time to time through ~~FBR Capital Markets & Co.~~B Riley and AGP as our sales ~~agent, provided that we meet certain conditions.~~agents. Sales of ~~Common Stock~~common stock under the ~~FBR~~Amended and Restated ATM Sales Agreement are made in sales deemed to be ~~“at-the-market” equity offerings~~an “at the market offering” as defined in Rule 415 promulgated under the Securities Act. ~~FBR Capital Markets & Co. is~~B Riley and AGP are entitled to receive a commission rate of up to 3.0% of gross sales in connection with the sale of our ~~Common Stock~~common stock sold on our behalf.

On October 15, 2018, we closed the Offering pursuant to which we received gross proceeds of approximately $18.6 million before deducting underwriting discounts, commissions and other offering expenses payable by us and sold an aggregate of (i) 2,520,000 Class A Units (the “Class A Units”), with each Class A Unit consisting of one share of Common Stock, and one five-year warrant to purchase one share of Common Stock at an exercise price of $1.38 per share (the “October 2018 Warrants”), with each Class A Unit offered to the public at a public offering price of $1.15, and (ii) 15,723 Class B Units (the “Class B Units), with each Class B Unit offered to the public at a public offering price of $1,000 per Class B Unit and consisting of one share of our Series B Convertible Preferred Stock (the “Series B Preferred Stock”), with a stated value of $1,000 and convertible into shares of Common Stock at the stated value divided by a conversion price of $1.15 per share, with all shares of Series B Preferred Stock convertible into an aggregate of 13,672,173 shares of Common Stock, and issued with an aggregate of 13,672,173 October 2018 Warrants. A.G.P./Alliance Global Partners (the “Underwriters”) acted as sole book-running manager for the Offering. In addition, pursuant to the Underwriting Agreement that we entered into with the Underwriters on October 10, 2018, we granted the Underwriters a 45 day option (the “Over-allotment Option”) to purchase up to an additional 2,428,825 shares of Common Stock and/or additional October 2018 Warrants to purchase an additional 2,428,825 shares of Common Stock. The Underwriters partially exercised the Over-allotment Option by electing to purchase from us additional October 2018 Warrants to purchase 1,807,826 shares of Common Stock. The Units were offered by us pursuant to a registration statement on Form S-1 (File No. 333-227400), as amended, filed with the SEC, which was declared effective by the SEC on October 10, 2018. As of December 31, 2019, 8,085 shares of Series B Preferred Stock have been converted to Common Stock and 7,638 shares of Series B Preferred Stock remain outstanding.

We have spent, and expect to continue to spend, a substantial amount of funds in connection with implementing our business strategy, including our planned product development efforts, preparation for our planned clinical trials, performance of clinical trials and our research and discovery efforts. Based on our current plans, our cash and cash equivalents will not be sufficient to enable us to meet our long-term expected plans as it is anticipated that we will not have enough cash to continue our operations beyond the next twelve months. We will be required to obtain additional funding in order to continue the development of certain product candidates within the anticipated time periods, if at all, and to continue to fund operations at the current cash expenditure levels.

Our ability to continue as a going concern is dependent upon our ability to raise additional capital. Our cash and cash equivalents will not be sufficient to enable us to meet our long-term expected plans, including initiation or completion of a future potential Phase 3 clinical program of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020. Therefore, we do not intend to commence future Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020 until we are confident that we have funding necessary to complete such trials. We are actively pursuing additional equity or debt financing, in the form of either a private placement or a public offering and have been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings. However, we do not currently have commitments from any third parties to provide us with capital. Potential sources of financing that we are pursuing include strategic relationships, public or private sales of our equity (including through the FBR Sales Agreement) or debt and other sources. Such additional financing opportunities might not be available to the Company when and if needed, on acceptable terms or at all. We cannot assure that we will meet the requirements for use of the FBR Sales Agreement especially in light of the fact that we are currently limited by rules of the SEC as to the number of shares of Common Stock that we can sell pursuant to the FBR Sales Agreement due to the market value of our Common Stock held by non-affiliates. Even if we meet the requirements for use of the FBR Sales Agreement, there There can be no assurance that we will be able to continue to raise funds through the sale of shares of ~~Common Stock~~common stock through the ~~FBR~~Amended and Restated ATM Sales Agreement. Additionally, we may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. If we are unable to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished and we may be forced to cease certain development activities. More specifically, the completion of future Phase 3 and/or registrational clinical studies will require significant financing or a significant partnership. If we raise funds by selling additional shares of ~~Common Stock~~common stock or other securities convertible into ~~Common Stock,~~common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain funding for future clinical trials when needed, we

Table of Contents

will be unable to carry out our business plan and we will be forced to delay the initiation of future clinical trials until such time as we obtain adequate ~~financing~~financing.

We have committed, and expect to continue to commit, substantial capital in order to implement our business strategy, including our planned product development efforts, preparation for our planned clinical trials, and performance of clinical trials and our ~~operating results~~research and ~~prospects will be adversely affected.~~

~~Following~~discovery efforts. We believe our cash position of $74.3 million as of June 30, 2021 is sufficient to fund our operations through at least the ~~completion~~end of the first quarter of 2023, including continuation of our ~~planned~~ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD, as well as our ongoing Phase 1 SAD study and planned Phase 1 MAD study and Phase 2 clinical programs for SYN-020.

Following the anticipated completion of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the ongoing Phase 1 SAD ~~study~~and planned MAD studies and planned Phase 2a clinical trial of SYN-020, we ~~will~~may need to obtain additional funds for future clinical ~~trials.~~trials, the amount of which will depend upon the trial size and number of clinical sites. We anticipate that our future clinical trials will be much larger in size and require larger cash expenditures than the ~~current planned Phase 1b/2a~~aforementioned clinical ~~trial of SYN-004 (ribaxamase) to be conducted by Washington University and Phase 1 SAD study of SYN-020 IAP.~~programs. We do not have any committed sources of financing for future clinical trials at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all.

On January 30, 2020, the World Health Organization (WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. As the COVID-19 coronavirus continues to spread around the globe, we have experienced disruptions that ~~impact~~impacted our business and clinical trials, including ~~halting the enrollment of new patients in our ongoing Phase 2b investigator-sponsored clinical trial of SYN-010 clinical study and~~ postponement of ~~clinical site initiation~~commencement of the now ongoing Phase 1b/2a clinical trial of SYN-004. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition, liquidity, and future results of operations. We are actively monitoring the global situation and its potential impact on our financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our results of operations, financial condition, or liquidity.

Off-Balance Sheet Arrangements

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

Leases

At the inception of a contract we determine if the arrangement is, or contains, a lease. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

We have made certain accounting policy elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combine lease and non-lease elements of our operating leases. ROU assets are included in other noncurrent assets and lease liabilities are included in other current and non-current liabilities in our condensed consolidated balance sheets. As of ~~September~~June 30, ~~2020,~~2021, we did not have any material finance leases.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk. Our exposure to market risk is confined to our cash and cash equivalents. As of ~~September~~June 30, ~~2020,~~2021, our cash and cash equivalents consisted primarily of investments in treasury securities. We do not engage in any hedging activities against changes in interest rates. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, we would not expect our operating results or cash

Table of Contents

flows to be affected to any significant degree by the effect of a sudden change in market interest rates or credit conditions on our securities portfolio. We may, however, require additional financing to fund future obligations and no assurance can be given that the terms of future sources of financing will not expose us to material market risk.

ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures (as defined Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Chief Executive Officer, who also serves as the Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2020,~~2021, the end of the period covered by this Quarterly Report on Form 10-Q, has concluded that based on such evaluation, the Company’s disclosure controls and procedures are effective as of ~~September~~June 30, ~~2020~~2021 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control over Financial Reporting
There have not been any changes in our internal controls over financial reporting during the three months ended ~~September~~June 30, ~~2020~~2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II–OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

ITEM 1A. RISK FACTORS.
The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our ~~2019~~2020 Form 10-K. Except as disclosed below, there have been no material changes from the risk factors disclosed in our ~~2019~~2020 Form 10-K.

Table of Contents

RISKS RELATING TO OUR BUSINESS

Our auditor’s report on our consolidated financial statements for the years ended December 31, 2019 and 2018 contains an explanatory paragraph regarding our ability to continue as a going concern and the notes to our financial statements for the quarter ended September 30, 2020 mention there being substantial doubt about our ability to continue as a going concern.

Our consolidated financial statements as of December 31, 2019 have been prepared under the assumption that we will continue as a going concern for the next twelve months. In addition, our independent registered public accounting firm has issued a report that includes an explanatory paragraph referring to our recurring losses from operations (anticipated continued losses in the future) and net capital deficiency that raise substantial doubt about our ability to continue as a going concern without additional capital becoming available. Our consolidated financial statements as of December 31, 2019 did not include any adjustments that might result from the outcome of this uncertainty.

The consolidated financial statements for the quarter ended September 30, 2020 have been prepared assuming we will continue as a going concern. We continue to incur losses and, as of September 30, 2020, we had an accumulated deficit of approximately $245 million. Our consolidated financial statements as of September 30, 2020 do not include any adjustments that might result from the outcome of this uncertainty.

Our ability to continue as a going concern is dependent upon our ability to raise additional debt and equity capital. There can be no assurance that such capital will be available in sufficient amounts or on terms acceptable to us. These factors raise substantial doubt about our ability to continue as a going concern.

We will need to raise additional capital to operate our business and our failure to obtain funding when needed may force us to delay, reduce or eliminate our development programs or commercialization efforts.

In addition, potential capital raises and strategic opportunities may require the issuance of additional securities.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, our operating activities used net cash of approximately ~~$9.0~~$5.9 million and our cash and cash equivalents were ~~$6.0~~approximately $74.3 million as of ~~September~~June 30, ~~2020.~~2021. With the exception of the three months ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses since inception and have a significant accumulated deficit. As of ~~September~~June 30, ~~2020,~~2021, our accumulated deficit totaled approximately ~~$245~~$262.7 million on a consolidated basis. ~~We do not have sufficient capital to fund our operations beyond twelve months following the issuance date of this Quarterly Report on Form 10-Q.~~ We expect to incur additional operating losses in the future and therefore expect our cumulative losses to increase. With the exception of the quarter ended September 30, 2010, and limited laboratory revenues from Adeona Clinical Laboratory, which we sold in March 2012, we have generated very minimal revenues. We do not expect to derive revenue from any source in the near future until we or our potential partners successfully commercialize our ~~products.~~products, if ever. We expect our expenses to increase in connection with our anticipated activities, particularly as we continue research and development, initiate and conduct later stage clinical trials, ~~recommence clinical trials that have been postponed~~ and seek marketing approval for our product candidates. Until such time as we receive approval from the FDA and other regulatory authorities for our product candidates, we will not be permitted to sell our products and therefore we will not have product revenues from the sale of products. For the foreseeable future we will have to fund all of our operations and capital expenditures from equity and debt offerings, cash on hand, licensing and collaboration fees and grants, if any.

We will need to raise additional capital to fund our operations and meet our current timelines and we cannot be certain that funding will be available on acceptable terms on a timely basis, or at all. Any failure to raise additional capital as and when needed, as a result of insufficient authorized shares or otherwise, could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. Based on our current plans, our cash and cash equivalents will ~~not~~ be sufficient to complete our planned Phase 31a/2a clinical trial of SYN-004, our planned Phase 1 single-ascending and multiple-ascending dose clinical trials of SYN-020, and a potential Phase 2a clinical trial of SYN-020 but, may not be sufficient for ~~SYN-004 or~~ post-Phase 12a future clinical programs for SYN-020 or additional trials of SYN-004, which are expected to require significant cash expenditures. In addition, based on the significant anticipated ~~significant~~ cost of a Phase 3 clinical program in a broad indication for SYN-004, we expect it will not be feasible for us to initiate and complete this trial at this time without a partner given the capital constraints tied to our current market cap and share price. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. We may also issue shares of our common stock in connection with strategic opportunities. However, our remaining authorized and unissued shares of common stock available may be insufficient to complete potential future equity financing transactions and/or strategic transactions we may seek to undertake. Accordingly, we anticipate taking steps, when appropriate, to increase our number of available shares which may have the effect of facilitating such transactions. Any debt financing, if available, may involve restrictive covenants that may impact our ability to conduct our business and also have a dilutive effect on our stockholders. A failure otherwise to secure additional funds when needed in the future whether through an equity or debt financing or a sufficient amount of capital without a strategic partnership could result in us being unable to complete planned preclinical and clinical trials or obtain approval of our product candidates from the FDA and other regulatory authorities. In addition, we could be forced to delay, discontinue or curtail product development, forego sales and marketing efforts, and forego licensing in attractive business opportunities. Our ability to raise capital through the sale of securities is currently limited by the rules of the SEC and NYSE American that place limits on the number and dollar amount of securities that may be sold. There can be no assurances that we will be able to raise the funds needed, especially in light of the fact that our ability to sell securities registered on registration statement Form S-3 will be limited until such time the market value of our voting securities held by non-affiliates is $75 million or more. We also may be required to seek collaborators for our product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available.

Table of Contents

The market price of our common stock has been and may continue to be volatile and adversely affected by various factors.

~~The COVID-19 global health crisis~~Our stock price has ~~impacted~~fluctuated in the past, has recently been volatile and may be volatile in the future. By way of example, on February 8, 2021, the price of our ~~planned operations, including~~common stock closed at $1.17 per share while on April 19, 2021, our ~~clinical studies~~

stock price closed at $0.52 per share with no discernable announcements or developments by the company or third parties. On February 9, 2021, the intra-day sales price of our common stock fluctuated between a reported low sale price of $0.91 and a reported high sales price of $1.19. We may incur rapid and substantial decreases in our stock price in the foreseeable future that are unrelated to our operating performance or prospects. In ~~January 2020,~~addition, the ~~World Health Organization declared a global pandemic for~~recent outbreak of the novel strain of coronavirus ~~COVID-19. Since then,~~(COVID-19) has caused broad stock market and industry fluctuations. The stock market in general and the ~~COVID-19 coronavirus has spread to multiple countries, including throughout the United States. We~~market for biotechnology and pharmaceutical companies in particular have experienced ~~disruptions~~extreme volatility that ~~have impacted~~has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may experience losses on their investment in our ~~business~~common stock. The market price of our common stock could fluctuate significantly in response to various factors and ~~clinical trials and expect to experience additional disruptions as the pandemic continues,~~events, including:

~~unwillingness of potential study participants to enroll in new clinical trials and/or visit healthcare facilities;~~

•●

~~postponement~~investor reaction to our business strategy;

●

the success of competitive products or technologies;

●

our continued compliance with the listing standards of the NYSE American;

●

regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our products;

●

results of our clinical ~~site initiation~~trials;

●

actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms;

●

variations in our financial results or those of companies that are perceived to be similar to us;

●

the success of our efforts to acquire or in-license additional products or product candidates;

●

developments concerning our collaborations or partners;

●

developments or disputes concerning patents or other proprietary rights, including litigation matters and our ability to obtain patent protection for our ~~SYN-004 clinical study;~~products;

●

our ability or inability to raise additional capital and the terms on which we raise it;

•●

~~postponement~~declines in the market prices of ~~the initiation~~stocks generally;

●

trading volume of our ~~SYN-020 single ascending dose (SAD) study~~common stock;

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

interruption of key clinical trial activities, such as clinical site visits by study participants and clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

~~delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;~~

36●

sales of our common stock by us or our stockholders;

●

general economic, industry and market conditions; and

Table of Contents

●

other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as the recent outbreak of the novel coronavirus (COVID-19), and natural disasters such as fire, hurricanes, earthquakes, tornados or other adverse weather and climate conditions, whether occurring in the United States or elsewhere, could disrupt our operations, disrupt the operations of our suppliers or result in political or economic instability.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. Further, recent increases are significantly inconsistent with any improvements in actual or expected operating performance, financial condition or other indicators of value. Since the stock price of our common stock has fluctuated in the past, has been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects. There can be no guarantee that our stock price will remain at current prices or that future sales of our common stock will not be at prices lower than those sold to investors.

~~delays~~Additionally, recently, securities of certain companies have experienced significant and extreme volatility in ~~clinical sites receiving~~stock price due to short sellers of shares of common stock, known as a “short squeeze.” These short squeezes have caused extreme volatility in those companies and in the ~~supplies~~market and ~~materials needed~~have led to ~~conduct~~the price per share of those companies to trade at a significantly inflated rate that is disconnected from the underlying value of the company. Many investors who have purchased shares in those companies at an inflated price face the risk of losing a significant portion of their original investment as the price per share has declined steadily as interest in those stocks has abated. While we have no reason to believe our ~~clinical trials;~~

~~interruption~~shares would be the target of a short squeeze, there can be no assurance that we won’t be in ~~global shipping~~the future, and you may lose a significant portion or all of your investment if you purchase our shares at a price that is significantly disconnected from our underlying value.
We expect to seek to raise additional capital in the future, which may be dilutive to stockholders or impose operational restrictions.
We expect to seek to raise additional capital in the future to help fund development of our proposed products. If we raise additional capital through the issuance of equity or of debt securities, the percentage ownership of our current stockholders will be reduced. We may also enter into strategic transactions, issue equity as consideration for acquisitions or part of license issue fees to our licensors, compensate consultants or settle outstanding payables using equity that may ~~affect~~be dilutive. We are authorized to issue 200,000,000 shares of common stock, of which 132,042,548 shares of common stock were issued and outstanding as of August 3, 2021. At August 3, 2021, we had reserved 10,342,384 shares of common stock for issuance upon exercise of our outstanding options and warrants. In addition, at such date, we had 2,460,000 shares of our common stock reserved for future issuance under our equity incentive plans. If all of these securities were to be exercised, the ~~transport~~total number of ~~clinical trial materials,~~shares of our common stock that we would be required to issue is 12,802,384, which in addition to the 132,042,548 shares issued and outstanding, would leave 55,155,079 authorized but unissued shares of common stock. As a result of our limited number of authorized and unissued shares of common stock, we may have insufficient shares of common stock available to issue in connection with any future equity financing transactions or strategic transactions we may seek to undertake. Accordingly, we anticipate taking steps, when appropriate, to increase our number of available shares which may have the effect of facilitating such transactions.
Our stockholders may experience additional dilution in net book value per share and any additional equity securities may have rights, preferences and privileges senior to those of the holders of our common stock.

Table of Contents

In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as ~~investigational drug product used~~the price per share paid by existing stockholders, thereby subjecting such stockholders to dilution. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by existing stockholders, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. In the event that we sell shares or other securities at prices below the exercise price of the warrants that we issued in our ~~clinical trials;~~

~~changes~~October 2018 offering, the price protection anti-dilution provisions of the warrant provide that the exercise price of the warrants sold in ~~local regulations as part of a response~~our October 2018 offering is to ~~the COVID-19 coronavirus outbreak which may require us to change the ways in which our clinical trials are conducted,~~be reduced which may result in ~~unexpected costs, or~~additional warrant exercises and additional dilution to ~~discontinue~~stockholders as was the ~~clinical trials altogether;~~

~~delays~~case in ~~necessary interactions with local regulators, ethics committees~~2020 and ~~other important agencies and contractors due to limitations in employee resources or forced furlough~~during the first quarter of ~~government employees;~~

delay in the timing of interactions with the FDA due to absenteeism by federal employees or by the diversion of their efforts and attention to approval of other therapeutics or other activities related to COVID-19.

~~Our business~~2021 when we utilized our at-the-market facility and the ~~business of the suppliers~~warrant exercise price was reduced. The price per share at which we sell additional shares of our ~~clinical product candidates has been and is expected to continue to~~common stock, or securities convertible or exchangeable into common stock, in future transactions may be ~~materially and adversely affected~~higher or lower than the price per share paid by the pandemic. Such events could result in the complete or partial closure of clinical trial sites or one or more manufacturing facilities which could impact our supply of our clinical product candidates. In addition, it could impact economies and financial markets, resulting in an economic downturn that could impact our ability to raise capital or slow down potential partnering relationships.existing stockholders.

In response to the spread of COVID-19 as well as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity. We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state and local government and health authorities. The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

In addition. the COVID-19 outbreak could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office, or due to quarantines. The COVID-19 illness could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors, and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.

The global outbreak of the virus continues to rapidly evolve. The extent to which the virus may impact our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole. While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business.

~~Difficulties enrolling patients in our clinical trials or delays in enrollment are expected to result in our clinical development activities being delayed or otherwise adversely affected.~~

Delays in patient enrollment may result in increased cost or may adversely affect timing or outcome of planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates. In some cases, generating meaningful clinical data may require rigorous screening criteria which may result in unintended and higher than anticipated patient-related screen-fail rates, as had occurred with our current investigator-sponsored Phase 2b clinical study conducted by CSMC. This can lead to delays in completion of clinical trials as well as additional expense for recruitment of patients. In addition, the COVID-19 pandemic may result in fewer technicians being available to conduct clinical testing for patients currently enrolled in our clinical trial.

~~Delays in clinical testing could result in increased costs to us and delay our ability to generate revenue.~~

We recently have experienced delays in clinical testing of our product candidates due to COVID-19 and may in the future experience other delays. We do not know when the planned SYN-004 clinical trial or planned SYN-020 SAD study will initiate. These delays may result in the need for trials to be redesigned and will impact whether they will be completed on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including the COVID-19 pandemic, delays in obtaining regulatory approval to commence a clinical trial, in securing clinical trial agreements with prospective sites with acceptable terms, in obtaining institutional review board approval to conduct a clinical trial at a prospective site, in recruiting patients to participate in a clinical trial or in obtaining sufficient supplies of clinical trial materials. Manufacturing considerations for clinical development candidates may include an expected several month lead time following a decision to commence any clinical trial(s) and capacity considerations of our third-party contract manufacturers to provide clinical supply of our product candidates could cause delays in clinical trials. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, competing clinical trials and new drugs approved for the conditions we are investigating. Clinical investigators will need to decide whether to offer their patients enrollment in clinical trials of our product candidates versus treating these patients with commercially available drugs that have established safety and efficacy profiles. Any delays in completing our clinical trials will increase our costs, slow down our product development and timeliness and approval process and delay our ability to generate revenue.

RISKS RELATING TO OUR SECURITIES

We cannot assure you that our ~~Common Stock~~common stock will be liquid or that it will remain listed on the NYSE American. A failure to regain compliance with the NYSE American stockholders’ equity listing requirements or failure to continue to meet the other listing requirements could result in a de-listing of our Common Stock.

Our ~~Common Stock~~common stock is listed on the NYSE American. The NYSE American’s listing standards generally mandate that we meet certain requirements relating to stockholders’ equity, stock price, market capitalization, aggregate market value of publicly held shares and distribution requirements. We cannot assure you that we will be able to maintain the continued listing standards of the NYSE American. ~~More specifically, the~~The NYSE American requires companies to meet certain continued listing criteria including a minimum stockholders’ equity of $6.0 million if an issuer has sustained losses from continuing operations and/or net losses in its five most recent years, as outlined in the NYSE American Company Guide. At ~~September 30,~~December 31, 2020, we had a stockholders’ deficit of ~~$8.8~~$7.5 million. The NYSE American Company Guide also states that the NYSE normally will not consider removing from listing securities of an issuer if it is in compliance with all of the following: a total value of market capitalization of at least $50.0 ~~million and~~million; 1,100,000 ~~shares publicly held,~~publicly-held shares; a market value of publicly held shares of at least $15.0 ~~million~~million; and 400 round lot shareholders. Although we have more than 1,100,000 shares publicly held and 400 round lot shareholders, our stock price is volatile and, during ~~the first two quarters of 2018,~~2019 and 2020, the price of our ~~Common Stock~~common stock experienced a sustained decrease resulting in a period where our market capitalization fell below $50.0 million. Our market capitalization is currently above $50.0 million.

If our common stock falls below ~~$50.0 million~~

~~On November 25, 2019, we announced that we received written communication from~~$0.20 per share on a 30-trading-day average it will become subject to the ~~NYSE American stating we were no longer in compliance with certain~~ continued listing ~~standards as~~evaluation and follow-up procedures set forth in Section 1009 of the NYSE American Company Guide ~~relating to stockholders’ equity as~~which could, among other things, result in initiation of ~~September 30, 2019. Specifically,~~immediate delisting procedures. In the ~~Deficiency Letter stated~~event that we were ~~not in compliance with Section 1003(a)(iii) (requiring~~to fail to meet the requirements of NYSE American per share price requirement or stockholders’ equity ~~of $6.0 million or more if~~requirement and we could not timely cure such deficiency, our listing could become subject to NYSE American continued listing evaluation and follow-up procedures, which could result in delisting procedures.

On May 25, 2021, we received notification from the ~~Company has reported losses from continuing operations and/or net losses in its five most recent fiscal years). The Deficiency Letter noted~~NYSE American that the Company had ~~stockholders’ equity~~regained compliance with all of ~~$4.9 million as~~the continued listing standards set forth in Part 10, Section 1003 of ~~September 30, 2019 and had reported net losses in its five most recent fiscal years. On December 20, 2019, we submitted a plan of compliance to~~ the NYSE American ~~outlining our plan~~Company Guide (the “Company Guide”) relating to ~~regain compliance with certain~~the Exchange’s continued listing ~~standards~~requirements.

We previously received notification from the NYSE American citing failure to comply with the minimum stockholders’ equity continued listing standard as set forth in Part 10, Section 1003(iii) of the NYSE American Company Guide by November 25, 2020, the conclusion of the compliance plan period. On February 7, 2020, we received notice from the NYSE American that it had accepted our plan and granted a plan period through November 25, 2020 to regain compliance. On July 30, 2020 we received written communication from NYSE American stating that in addition to Section 1003(iii), we were also not in compliance with Section 1003(i) and Section 1003(ii) of the NYSE American Company Guide since we reported a stockholders’ deficit of ($4.0) million as of March 31, 2020 and losses from continuing operations and/or net losses in its five most recent fiscal years ended December 31, 2019. As a result, the Company is now subject to the procedures and requirements set forth in Section 10091003 of the Company Guide. ~~The~~As a result of management’s efforts to regain compliance, the Exchange has informed the Company ~~remains subject to~~that it has cured the ~~conditions set forth~~previously cited deficiencies and is in the Exchange’s letter dated November 25, 2019 for the initial equity noncompliance. The NYSE Regulation staff will review our company periodically for compliance with the initiatives outlined in the plan. If we are not infull compliance with the continued listing standards ~~by November 25, 2020 or if we do not make progress consistent~~set forth in Part 10, Sections 1003 (i), (ii), and (iii) of the Company Guide. We reported stockholders’ equity of approximately $79.6 million in its most recent Form 10-Q, filed with the ~~plan during~~Securities and Exchange Commission (SEC) on May 5, 2021. Effective at the ~~plan period,~~start of trading on May 26, 2021, the “.BC” designation, signifying non-compliance with NYSE ~~Regulation staff may initiate a delisting proceeding as appropriate.~~

~~There~~American listing standards, was removed from the “SYN” trading symbol. However, there can be no assurance that we ~~can regain compliance with the listing standards of the NYSE American, or that the NYSE American~~ will continue to list our Common Stock if we regain compliance, or if we should continue to fail to maintain the minimum stockholders’ equity. In addition, in the future we may not be able to maintain such minimum stockholders’ equity and/or issue additional equity securities in exchange for cash or other assets, if available, to maintain certain minimum stockholders’ equity required by the NYSE American. If we are delisted from the NYSE American then our Common Stock will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board securities market, and then only if one or more registered broker-dealer market makers comply with quotation requirements. If our Common Stock is delisted from the NYSE American due to our failure to regain compliance with the listing standards by the end of the compliance period or for any other reason, and the market value of our shares of Common Stock held by non-affiliates remains below $75 million, we will likely no longer be eligible to sell Common Stock pursuant to the B. Riley FBR Sales Agreement or otherwise utilize our shelf registration statement. In addition, delisting of our Common Stock could depress our stock price, substantially limit liquidity of our Common Stock and materially adversely affect our ability to raise capital on terms acceptable to us, or at all. Delisting from the NYSE American could also have other negative results, including the potential loss of confidence by suppliers and employees, the loss of institutional investor interest and fewer business development opportunities. We cannot assure you that our Common Stock will be liquid or that it will remain listed on the NYSE American. A failure to regain compliance with the NYSE American stockholders’ equity requirements or failure to continue to meet the ~~other~~NYSE American continued listing ~~requirements could result in a de-listing~~requirements.

Table of ~~our Common Stock.~~Contents

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
We did not sell any equity securities during the ~~three and nine months~~quarter ended ~~September~~June 30, ~~2020~~2021 in transactions that were not registered under the Securities ~~Act.~~Act

38
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.

ITEM 5. OTHER INFORMATION.
Not applicable
On November 9, 2020, we and CSMC mutually agreed to terminate the exclusive license agreement that we and our subsidiary, Synthetic Biomics, Inc. entered into with CSMC date December 5, 2013 and all amendments thereto and the clinical trial agreement relating to SYN-010. The determination to terminate the SYN-010 license agreement was agreed following the completion of a planned interim futility analysis of the Phase 2b investigator-sponsored clinical trial of SYN-010. On September 30, 2020, CSMC informed us that it discontinued the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 IBS-C patients. Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated, it was unlikely to meet its primary endpoint by the time enrollment is completed. The patent rights previously licensed to us covering the use of SYN-010 will remain the property of CSMC.
ITEM 6. EXHIBITS
The exhibits filed or furnished as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.

39
40

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SYNTHETIC BIOLOGICS, INC.

By:
/s/ Steven A. Shallcross

Steven A. Shallcross

Chief Executive Officer, Chief Financial Officer

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Date: ~~November 10, 2020~~August 5, 2021

40

41

Table of Contents

EXHIBIT INDEX

Exhibit

Number
Exhibit Title
~~10.1~~
1.1

~~Termination of Exclusive License~~Amended and Restated At Market Issuance Sales Agreement ~~effective November~~dated February 9, ~~2020,~~2021 by and among ~~Cedars- Sinai Medical Center,~~ Synthetic Biologics, Inc. and ~~Synthetic Biomics,~~B. Riley Securities, Inc.* and A.G.P./Alliance Global Partners (Incorporated by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K filed February 10, 2021, File No. 001-12584.)

~~31.1~~
3.1

Certificate of Incorporation, as amended (Incorporated by reference to (i) Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 16, 2008, File No. 001-12584, (ii) Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 filed August 14, 2001, File No. 001-12584; and (iii) Exhibits 3.1, 4.1 and 4.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 filed August 14, 1998, File No. 001-12584.)

3.2

Articles of Merger (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.3

Certificate of Merger filed with the Secretary of State of Delaware (Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.4

Articles of Incorporation filed with the Nevada Secretary of State (Incorporated by reference to Exhibit 3.3 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.5

Amended and Restated Bylaws Adopted and Effective October 31, 2011 (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed November 2, 2011, File No. 001-12584.)

3.6

Certificate of Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed February 16, 2012, File No. 001-12584.)

3.7

Certificate of Amendment to Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed May 18, 2015, File No. 001-12584.)

3.8

Certificate of Amendment to Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 8, 2017, File No. 001-12584.)

3.9

Certificate of Designations for Series A Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 12, 2017, File No. 001-12584.)

3.10

Certificate of Change Pursuant to NRS 78. 209 (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed August 13, 2018, File No. 001-12584.)

3.11

Certificate of Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 26, 2018, File No. 001-12584.)

3.12

Certificate of Designations for Series B Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 15, 2018, File No. 001-12584.)

3.13

Certificate of Amendment to Certificate of Designations for Series B Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed October 15, 2018, File No. 001-12584.)

Table of Contents

3.14		Certificate of Amendment to the Certificate of Designation for the Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K/A filed on February 1, 2021 File No. 001-12584.)

31.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)*

32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.INS		XBRL Instance DocumentDocument - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase*

101.DEF		XBRL Taxonomy Extension Definition Linkbase*

101.LAB		XBRL Taxonomy Extension Label Linkbase*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase*

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

*Filed herewith.

Nevada	13-3808303
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

9605 Medical Center Drive, Suite 270
Rockville, MD	20850
(Address of Principal Executive Offices)	(Zip Code)

Large Accelerated Filer	☐	¨	Accelerated Filer	¨ ☐

Non-accelerated Filer	☒	x	Smaller Reporting Company	x ☒

			Emerging growth company	¨ ☐

	x
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	¨
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SYN	NYSE American

	September 30, 2020			December 31, 2019
Assets

Current Assets
Cash and cash equivalents	$	6,005		$	15,045
Prepaid expenses and other current assets		657			1,381
Total Current Assets		6,662			16,426

Property and equipment, net		202			367

Right of use asset		316			419

Deposits and other assets		23			23

Total Assets	$	7,203		$	17,235

Liabilities and Stockholders' Deficit

Current Liabilities:
Accounts payable	$	992		$	2,315
Accrued expenses		988			1,776
Accrued employee benefits		752			935
Lease liability		278			249
Total Current Liabilities		3,010			5,275

Lease liability - Long term		261			473

Total Liabilities		3,271			5,748
Series A convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 120,000 issued and outstanding		12,733			12,544
Stockholders' Deficit:
Series B convertible preferred stock, $1,000 par value; 10,000,000 shares authorized, 4,146 issued and outstanding and 7,638 issued and outstanding		2,584			4,761
Common Stock, $0.001 par value; 200,000,000 shares authorized, 19,845,283 and 16,808,758 issued and 19,842,955 and 16,806,430 outstanding		20			17
Additional paid-in capital		236,320			232,580
Accumulated deficit		(244,975	)		(235,537	)
Total Synthetic Biologics, Inc. and Subsidiaries Deficit		(6,051	)		1,821
Non-controlling interest		(2,750	)		(2,878	)
Total Stockholders' Deficit		(8,801	)		(1,057	)

Total Liabilities and Stockholders' Deficit	$	7,203		$	17,235


	June 30, 2021		December 31, 2020
Assets

Current Assets
Cash and cash equivalents	$	74,291	$	6,227
Prepaid expenses and other current assets		1,341		1,707
Total Current Assets		75,632		7,934

Property and equipment, net		132		174

Right of use asset		1,468		279

Deposits and other assets		23		23

Total Assets	$	77,255	$	8,410

Liabilities and Stockholders' Deficit

Current Liabilities:
Accounts payable	$	568	$	886
Accrued expenses		794		925
Accrued employee benefits		540		868
Operating lease liability		196		287
Total Current Liabilities		2,098		2,966

Lease liability - Long term		1,426		186

Total Liabilities		3,524		3,152
Commitments and Contingencies
Series A convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 and 120,000 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		0		12,798
Stockholders' Equity (Deficit):
Series B convertible preferred stock, $1,000 par value; 10,000,000 shares authorized, 0 issued and outstanding and 3,973 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		0		2,477
Common stock, $0.001 par value; 200,000,000 shares authorized, 132,044,866 issued and 132,042,538 outstanding at June 30, 2021 and 29,252,253 issued and 29,249,925 outstanding at December 31, 2020		132		29
Additional paid-in capital		339,121		240,821
Accumulated deficit		(262,748)		(248,094)
Total Synthetic Biologics, Inc. and Subsidiaries Equity (Deficit)		76,505		(4,767)
Non-controlling interest		(2,774)		(2,773)
Total Stockholders' Equity (Deficit)		73,731		(7,540)

Total Liabilities and Stockholders' Equity (Deficit)	$	77,255	$	8,410


	For the three months ended June 30,				For the six months ended June 30,
	2021		2020		2021		2020
Operating Costs and Expenses:
General and administrative	$	1,265	$	1,286	$	2,685	$	2,679
Research and development		1,932		1,603		3,049		3,238
Total Operating Costs and Expenses		3,197		2,889		5,734		5,917

Loss from Operations		(3,197)		(2,889)		(5,734)		(5,917)

Other Income:
Interest income		2		6		2		44
Total Other Income		2		6		2		44

Net Loss		(3,195)		(2,883)		(5,732)		(5,873)

Net Loss Attributable to Non-controlling Interest		0		(16)		(1)		(42)

Net Loss Attributable to Synthetic Biologics, Inc. and Subsidiaries	$	(3,195)	$	(2,867)	$	(5,731)	$	(5,831)
Series A Preferred Stock Dividends		0		(63)		(24)		(125)
Effect of Series A Preferred Stock price adjustment		0		0		(7,402)		0
Series B Preferred Stock Dividends		0		(392)		(1,497)		(796)

Net Loss Attributable to Common Stockholders	$	(3,195)	$	(3,322)	$	(14,654)	$	(6,752)

Net Loss Per Share - Basic and Dilutive	$	(0.02)	$	(0.18)	$	(0.13)	$	(0.38)

Weighted average number of shares outstanding during the period - Basic and Dilutive		132,042,538		18,405,884		111,539,024		17,748,688

	For the three months ended September 30,						For the nine months ended September 30,
	2020			2019			2020			2019
Operating Costs and Expenses:
General and administrative	$	1,197		$	1,098		$	3,876		$	3,297
Research and development		914			4,144			4,152			9,156
Total Operating Costs and Expenses		2,111			5,242			8,028			12,453

Loss from Operations		(2,111	)		(5,242	)		(8,028	)		(12,453	)

Other Income:
Interest income		-			92			44			217
Total Other Income		-			92			44			217

Net Loss		(2,111	)		(5,150	)		(7,984	)		(12,236	)

Net Loss Attributable to Non-controlling Interest		(8	)		(30	)		(50	)		(73	)

Net Loss Attributable to Synthetic Biologics, Inc. and Subsidiaries	$	(2,103	)	$	(5,120	)	$	(7,934	)	$	(12,163	)

Series A Preferred Stock Dividends		(64	)		(63	)		(189	)		(185	)
Series B Preferred Stock Dividends		(519	)		(70	)		(1,315	)		(585	)

Net Loss Attributable to Common Stockholders	$	(2,686	)	$	(5,253	)	$	(9,438	)	$	(12,933	)

Net Loss Per Share - Basic and Dilutive	$	(0.14	)	$	(0.31	)	$	(0.52	)	$	(0.79	)

Weighted average number of shares outstanding during the period - Basic and Dilutive		19,398,339			16,805,257			18,302,585			16,313,326

	Common Stock				Series B Preferred
	Shares		Amount		Shares			Amount			APIC		Accumulated Deficit			Non- Controlling Interest			Total Stockholders' Equity (Deficit)
Balance at December 31, 2019		16,806,430	$	17		7,638		$	4,761		$	232,580	$	(235,537	)	$	(2,878	)	$	(1,057	)

Stock-based compensation		-		-		-			-			83		-			-			83
Series A Preferred Stock Dividends ($0.01 per share)		-		-		-			-			-		(62	)		-			(62	)
Issuance of SYN Biomics Stock		-		-		-			-					-			26			26
Conversion of Series B Preferred Stock to Common ($0.03 per share)		933,045		1		(1,073	)		(669	)		1,072		(404	)		-			-
Net loss		-		-		-			-			-		(2,964	)		-			(2,964	)
Non-controlling interest		-		-		-			-			-		-			(26	)		(26	)

Balance at March 31, 2020		17,739,475	$	18		6,565		$	4,092		$	233,735	$	(238,967	)	$	(2,878	)	$	(4,000	)

Stock-based compensation		-		-		-			-			86		-			-			86
Series A Preferred Stock Dividends ($0.01 per share)		-		-		-			-			-		(63	)		-			(63	)
Issuance of SYN Biomics Stock		-		-		-			-			-		-			10			10
Conversion of Series B Preferred Stock to Common ($0.03 per share)		904,349		1		(1,040	)		(648	)		1,039		(392	)		-			-
Net loss		-		-		-			-			-		(2,867	)		-			(2,867	)
Non-controlling interest		-		-		-			-			-		-			(16	)		(16	)

Balance at June 30, 2020		18,643,824	$	19		5,525		$	3,444		$	234,860	$	(242,289	)	$	(2,884	)	$	(6,850	)

Stock-based compensation		-		-		-			-			82		-			-			82
Series A Preferred Stock Dividends ($0.01 per share)		-		-		-			-			-		(64	)		-			(64	)
Issuance of SYN Biomics Stock		-		-		-			-			-		-			142			142
Conversion of Series B Preferred Stock to Common ($0.03 per share)		1,199,131		1		(1,379	)		(860	)		1,378		(519	)		-			-
Net loss		-		-		-			-			-		(2,103	)		-			(2,103	)
Non-controlling interest		-		-		-			-			-		-			(8	)		(8	)

Balance at September 30, 2020		19,842,955	$	20		4,146		$	2,584		$	236,320	$	(244,975	)	$	(2,750	)	$	(8,801	)


	Common Stock $0.001 Par Value			Series B Preferred					Accumulated		Non-Controlling		Total Stockholders’
	Shares	Amount		Shares	Amount		APIC		Deficit		Interest		Deficit

Balance at December 31, 2020	29,249,925	$	29	3,973	$	2,477	$	240,821	$	(248,094)	$	(2,773)	$	(7,540)

Stock-based compensation	0		0	0		0		101		0		0		101
Stock issued under "at-the-market" offering	78,685,315		79	0		0		65,881		0		0		65,960
Warrants Exercised	11,655,747		12	0		0		8,030		0		0		8,042
Series A Preferred Stock Dividends	-		0	-		0		0		(24)		-		(24)
Effect of Series A Preferred Stock price adjustment	0		0	0		0		7,402		(7,402)		0		0
Conversion of Series A Preferred Stock to Common	8,996,768		9	0		0		12,813		0		0		12,822
Conversion of Series B Preferred Stock to Common	3,454,783		3	(3,973)		(2,477)		3,971		(1,497)		0		0
Net loss	-		0	-		0		0		(2,536)		-		(2,536)
Non-controlling interest	-		0	-		0		0		-		(1)		(1)

Balance at March 31, 2021	132,042,538	$	132	-	$	0	$	339,019	$	(259,553)	$	(2,774)	$	76,824

Stock-based compensation	-		0	-		0		102		-		-		102
Net loss	-		0	-		0		0		(3,195)		-		(3,195)

Balance at June 30, 2021	132,042,538	$	132	-	$	0	$	339,121	$	(262,748)	$	(2,774)	$	73,731


	For the Six Months Ended June 30,
	2021		2020
Cash Flows From Operating Activities:
Net loss	$	(5,732)	$	(5,873)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		203		169
Subsidiary stock issued to vendor		0		36
Depreciation		56		116
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		366		484
Right of use asset		81		67
Accounts payable		(318)		(1,290)
Accrued expenses		(131)		(567)
Accrued employee benefits		(328)		(8)
Operating Lease liability		(121)		(120)
Net Cash Used in Operating Activities		(5,924)		(6,986)

Cash Flows from Investing Activities
Purchase of property and equipment		(14)		0
Net Cash Used in Investing Activities		(14)		0

Cash Flows from Financing Activities
Proceeds from "at the market" stock issuance		65,960		0
Proceeds from issuance of common stock for warrant exercises		8,042		0
Net Cash Provided by Financing Activities		74,002		0

Net increase (decrease) in cash and cash equivalents		68,064		(6,986)

Cash and cash equivalents at the beginning of this period		6,227		15,045

Cash and cash equivalents at the end of this period	$	74,291	$	8,059

Noncash Financing Activities:
Effect of Series A Preferred Stock price adjustment	$	7,402	$	0
Right of use asset from operating lease	$	1,270	$	0
Conversion of Series B Preferred Stock	$	2,477	$	1,317
Deemed dividends for accretion of Series B Preferred Stock discount	$	1,497	$	796
In-kind dividends paid in preferred stock	$	23	$	125


	June 30,		December 31,
	2021		2020
Computers and office equipment	$	827	$	813
Leasehold improvements		94		439
Software		11		11
		932		1,263
Less: accumulated depreciation and amortization		(800)		(1,089)

Total	$	132	$	174

	September 30, 2020		December 31, 2019
Accrued clinical consulting services	$	660	$	684
Accrued vendor payments		309		456
Accrued manufacturing costs		18		635
Other accrued expenses		1		1

Total	$	988	$	1,776

	September 30, 2020		December 31, 2019
Accrued bonus expense	$	594	$	858
Accrued vacation expense		158		77

Total	$	752	$	935

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Balance - December 31, 2018		938,982		$	15.18	6.19 years	$	-


										Weighted		Weighted Average	Aggregate
										Average Exercise		Remaining	Intrinsic
									Options	Price		Contractual Life	Value

Balance - December 31, 2019									2,502,012	$	3.62	6.51 years	$	153,353

Granted		1,725,000			0.42				1,540,000		0.42
Exercised		-			-				0		0
Expired		(94,738	)		58.25				(14,944)		17.57
Forfeited		(67,232	)		5.95				(29,650)		0.55
Balance - December 31, 2019		2,502,012			3.62	6.51 years		153,353

Balance - December 31, 2020									3,997,418		2.35	6.09 years		0

Granted		-			-				0		0
Exercised		-			-				0		0
Expired		(12,037	)		10.89				0		0
Forfeited		(29,650	)		0.55				0		0

Balance – September 30, 2020 - outstanding		2,460,325		$	3.62	5.79 years	$	96,106

Balance – September 30, 2020 - exercisable		747,781		$	10.80	5.14 years	$	13,196

Grant date fair value of options granted – nine months ended September 30, 2020				$	-

Weighted average grant date fair value – nine months ended September 30, 2020				$	-

Grant date fair value of options granted – year ended December 31, 2019				$	470,000

Weighted average grant date fair value – year ended December 31, 2019				$	0.27

Balance - June 30, 2021 - outstanding									3,997,418	$	2.35	5.28 years	$	598,074

Balance - June 30, 2021 - exercisable									1,970,911	$	4.33	4.55 years	$	239,357

Grant date fair value of options granted – three months ended June 30, 2021										$	0

Weighted average grant date fair value – three months ended June 30, 2021										$	0

Grant date fair value of options granted – year ended December 31, 2020										$	412,000

Weighted average grant date fair value – year ended December 31, 2020										$	0.27

	Number of Warrants			Weighted Average Exercise Price
Balance at December 31, 2018		18,915,851		$	3.85
Granted		-			-
Exercised		-			-
Forfeited		(200,852	)		61.25

						Number of	Weighted Average
						Warrants	Exercise Price

Balance at December 31, 2019		18,714,999			3.24	18,714,999	$	3.24
Granted		-			-	-		-
Exercised		-			-	-		-
Forfeited		-			-	(714,286)		50.05
Balance at September 30, 2020		18,714,999		$	3.24
Balance at December 31, 2020						18,000,713	$	0.69
Granted						0		0
Exercised						11,655,747		0.69
Forfeited						0		0
Balance at June 30, 2021						6,344,966	$	0.69

Future undiscounted cash flow for the years ending December 31:
2020	$	79

Future undiscounted cash flow for the years ending June 30:
2021		321		$	163
2022		192			247
2023					327
2024					337
2025					347
2026					357
2027					368
Total		592			2,146


Discount factor		(53	)		(524)
Lease liability		539			1,622
Amount due within 12 months		(278	)
Lease liability – current					(196)
Lease liability – long term	$	261		$	1,426

Therapeutic Areas (in thousands)	September 30, 2020		September 30, 2019
SYN-010	$	293	$	426
SYN-004 (ribaxamase)		181		185
Other therapeutic areas		30		23
Total direct costs		504		634
Total indirect costs		3,648		8,522

Total	$	4,152	$	9,156

	SYNTHETIC BIOLOGICS, INC.

	By:	/s/ Steven A. Shallcross
		Steven A. Shallcross
		Chief Executive Officer, Chief Financial Officer
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

		Date: ~~November 10, 2020~~August 5, 2021

~~10.1~~ 1.1		~~Termination of Exclusive License~~Amended and Restated At Market Issuance Sales Agreement ~~effective November~~dated February 9, ~~2020,~~2021 by and among ~~Cedars- Sinai Medical Center,~~ Synthetic Biologics, Inc. and ~~Synthetic Biomics,~~B. Riley Securities, Inc.* and A.G.P./Alliance Global Partners (Incorporated by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K filed February 10, 2021, File No. 001-12584.)

~~31.1~~ 3.1		Certificate of Incorporation, as amended (Incorporated by reference to (i) Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 16, 2008, File No. 001-12584, (ii) Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 filed August 14, 2001, File No. 001-12584; and (iii) Exhibits 3.1, 4.1 and 4.2 of the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 filed August 14, 1998, File No. 001-12584.)

3.2		Articles of Merger (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.3		Certificate of Merger filed with the Secretary of State of Delaware (Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.4		Articles of Incorporation filed with the Nevada Secretary of State (Incorporated by reference to Exhibit 3.3 of the Registrant’s Current Report on Form 8-K filed October 19, 2009, File No. 001-12584.)

3.5		Amended and Restated Bylaws Adopted and Effective October 31, 2011 (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed November 2, 2011, File No. 001-12584.)

3.6		Certificate of Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed February 16, 2012, File No. 001-12584.)

3.7		Certificate of Amendment to Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed May 18, 2015, File No. 001-12584.)

3.8		Certificate of Amendment to Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 8, 2017, File No. 001-12584.)

3.9		Certificate of Designations for Series A Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 12, 2017, File No. 001-12584.)

3.10		Certificate of Change Pursuant to NRS 78. 209 (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed August 13, 2018, File No. 001-12584.)

3.11		Certificate of Amendment to Articles of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 26, 2018, File No. 001-12584.)

3.12		Certificate of Designations for Series B Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed October 15, 2018, File No. 001-12584.)

3.13		Certificate of Amendment to Certificate of Designations for Series B Preferred Stock to Certificate of Incorporation (Incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed October 15, 2018, File No. 001-12584.)