Can Synthetic Biologics Inc (NYSEMKT:SYN) Keep Hope Alive?

Synthetic Biologics Inc (NYSEMKT:SYN)

Synthetic Biologics Inc (NYSEMKT:SYN)’s annual financial results released on Thursday showed the company swung to a loss in 2016. But the management still sought to keep hope alive, citing the potential in the company’s pipeline candidates to drive future growth and profitability.

Anxious investors sold the stock ahead of the earnings release, causing the stock to fall nearly 2% in regular session. But the stock bounced back in extended trading Thursday after Synthetic released the earnings and the management seemed to maintain an upbeat tone for the future.

Synthetic Biologics Inc (NYSEMKT:SYN) plunged into EPS loss of $0.29 in 2016, worse than EPS loss of $0.08 that analysts were expecting for the year.

What caused the losses?

Synthetic’s losses in 2016 stemmed from a spike in expenses, especially the G&A tab. G&A costs rose to $10.1 million from $8.1 million in the previous year. The company blamed higher bank and legal fees for the increase in G&A costs in the latest year. Synthetic’s bottom line also suffered the impact of costs associated with the relocation of administrative and finance offices to its headquarters in Maryland. Higher staff costs and increase in stock-based compensation also weighed on the bottom line in 2016.

However, the company still managed to reign on costs in its R&D department. R&D costs fell to $29.1 million from $32.9 million in 2015 lower costs associated with research activities, especially clinical development programs, helped reduce R&D costs.

Synthetic Biologics Inc (NYSEMKT:SYN) booked Other Income of $11.4 million in 2016, a dramatic improvement from Other Expenses of $3.8 million in 2015. But it ended the year with a small cash of just $19.1 million, down $1.8 million from the previous year.

Pipeline update

Synthetic Biologics Inc (NYSEMKT:SYN) provided an update on the development progress of its candidate called SYN-010, which is being developed as a treatment of irritable bowel syndrome with constipation (IBS-C).

It said Phase 2 proof-of-concept blind study of the compound yielded positive results compared to placebo, just as it expected.  The trial was carried out on 412 patients. The outcome showed that SYN-010 met, based on CDI rates, the primary endpoint that was demonstrating statistically significant risk reduction of 71.4% compared to the placebo.

Synthetic plans to request end of Phase 2 meeting with the FDA in the back half of 2017. It also expects to initiate Phase 3 study of the compound in the first half of 2018.

Stock performance

Shares of Synthetic Biologics Inc (NYSEMKT:SYN) fell 2.61% to $0.785 and closed at $0.765. The stock is up nearly 3% year-to-date and down more than 54% over the last 12 months.

03/03/2017
Ticker Symbol SYN
Last Price a/o, 4:02PM EST  $0.765
Average Volume 489,032
Market Cap (mlns) $89.90
Sales (mlns)
Shares Outstanding (mlns) 115.18
Share Float (mlns) 115.18
Shortable Yes
Optionable No
Inside Ownership 0.30%
Short Float 7.23%
Short Interest Ratio 10.92
Quarterly Return -6.78%
YTD Return 2.99%
Year Return -59.72%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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