TAOX 10-Q
TAO Synergies Inc. (TAOX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________________ to __________________ |
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or | (I.R.S. Employer |
organization) | Identification No.) |
(Address of principal executive offices) | (Zip code) |
(
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on |
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| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
As of May 14, 2025, there were
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect” and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our patent portfolio, our inability to expand our business, significant government regulation of pharmaceuticals and the healthcare industry, lack of product diversification, availability of our raw materials, existing or increased competition, stock volatility and illiquidity, and our failure to implement our business plans or strategies. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2025, as updated in our quarterly reports and current reports filed with the SEC from time to time. We advise you to carefully review the reports and documents we file from time to time with the SEC including our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under securities laws, we undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
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TABLE OF CONTENTS
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
SYNAPTOGENIX, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
| March 31, | December 31, | ||||
| 2025 |
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ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | | $ | | ||
Prepaid expenses and other current assets |
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TOTAL CURRENT ASSETS |
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Fixed assets, net of accumulated depreciation |
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TOTAL ASSETS | $ | | $ | | ||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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TOTAL CURRENT LIABILITIES |
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Warrant liability | | | ||||
Derivative liability | | | ||||
TOTAL LIABILITIES | | | ||||
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Commitments and contingencies |
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Series C Convertible redeemable preferred stock, $ | | | ||||
STOCKHOLDERS’ EQUITY | ||||||
Common stock - | |
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Additional paid-in capital | | | ||||
Accumulated other comprehensive income | | | ||||
Accumulated deficit | ( | ( | ||||
TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | | $ | | ||
See accompanying notes to condensed financial statements.
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SYNAPTOGENIX, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (INCOME) LOSS
(Unaudited)
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| Three Months Ended |
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| March 31, | March 31, | ||||
| 2025 | 2024 | ||||
OPERATING EXPENSES: | ||||||
Research and development |
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General and administrative |
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TOTAL OPERATING EXPENSES |
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OTHER INCOME: |
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Interest income |
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Share of net loss in equity investment | — | ( | ||||
Change in fair value of warrant liability | | | ||||
Change in fair value of derivative liability | ( | | ||||
TOTAL OTHER INCOME |
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Net income (loss) before income taxes |
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Provision for income taxes |
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Net income (loss) | | ( | ||||
Preferred Stock dividends | | | ||||
Allocation of undistributed income to Series C Convertible Preferred stockholders | | — | ||||
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Net income (loss) attributable to common stockholders | $ | | $ | ( | ||
Change in fair value of available for sale debt security | — | ( | ||||
Net comprehensive income (loss) attributable to common stockholders | $ | | $ | ( | ||
PER SHARE DATA: |
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Basic income (loss) per common share | $ | | $ | ( | ||
Fully diluted income (loss) per common share | $ | | $ | ( | ||
Basic weighted average common shares outstanding | | | ||||
Fully diluted weighted average common shares outstanding |
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See accompanying notes to condensed financial statements.
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SYNAPTOGENIX, INC.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||
Additional | Accumulated Other | |||||||||||||||||||||||||||
Series B Preferred Stock | Series C Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||
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Balance January 1, 2024 |
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Stock based compensation | — | — | — | — | — | — | | — | — | | ||||||||||||||||||
Issuance of common stock for consulting fees |
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Accrued preferred stock dividends |
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Preferred stock dividends paid | — | | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Deemed dividend - preferred stock | — | | — | — | — | — | — | ( | — | ( | ||||||||||||||||||
Preferred stock redemptions and conversions | ( | ( | — | — | | | | — | — | | ||||||||||||||||||
Accrual of preferred stock and dividend redemption |
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Preferred stock accretion | — | | — | — | — | — | ( | — | — | ( | ||||||||||||||||||
Comprehensive income | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||
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Net loss |
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Balance March 31, 2024 | | $ | | — | $ | — | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||
Additional | Accumulated Other | |||||||||||||||||||||||||||
Series B Preferred Stock | Series C Preferred Stock | Common Stock | Paid-In | Accumulated | Comprehensive | |||||||||||||||||||||||
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Balance January 1, 2025 |
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Stock based compensation |
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Issuance of common stock for consulting fees | — | — | — | — | | | | — | — | | ||||||||||||||||||
Preferred stock dividends | — | — | — | | — | — | — | ( | — | ( | ||||||||||||||||||
Deemed dividends on preferred stock | — | — | — | | — | — | — | ( | — | ( | ||||||||||||||||||
Preferred stock redemptions and conversions | — | — | ( | ( | — | — | — | — | — | — | ||||||||||||||||||
Preferred stock accretion | — | — | — | | — | — | ( | — | — | ( | ||||||||||||||||||
Net income |
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Balance March 31, 2025 | — | $ | — | | $ | | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||
See accompanying notes to condensed financial statements.
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SYNAPTOGENIX, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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| Three Months Ended |
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| March 31, 2025 | March 31, 2024 | ||||
CASH FLOW USED IN OPERATING ACTIVITIES | ||||||
Net income (loss) | $ | | $ | ( | ||
Adjustments to reconcile net income (loss) to net cash used by operating activities | ||||||
Stock based compensation | | | ||||
Change in fair value of warrant liability | ( | ( | ||||
Change in fair value of derivative liability | | ( | ||||
Share of net loss in equity investment |
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Consulting services paid by issuance of common stock | | | ||||
Depreciation expense |
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Change in assets and liabilities: | ||||||
Increase in prepaid expenses and other current assets |
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Decrease in accounts payable |
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Decrease in accrued expenses |
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Net Cash Used in Operating Activities |
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CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||
Purchase of available for sale debt security | — | ( | ||||
Net Cash Used in Investing Activities | — | ( | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Redemption of Series C Convertible Preferred Stock | ( | — | ||||
Dividends on Series C Convertible Preferred Stock | ( | — | ||||
Net Cash Used in Financing Activities | ( | — | ||||
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NET DECREASE IN CASH AND EQUIVALENTS |
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CASH AND EQUIVALENTS AT BEGINNING OF PERIOD |
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CASH AND EQUIVALENTS AT END OF PERIOD | $ | | $ | | ||
DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||
Issuance of Common Stock for Series B Convertible Preferred Stock installment conversions | $ | — | $ | | ||
Accretion of Series B Convertible Preferred Stock to redemption value | $ | — | $ | | ||
Accretion of Series C Convertible Preferred Stock to redemption value | $ | | $ | — | ||
Accrual of Series B Convertible Preferred Stock and Dividend Redemption | $ | — | $ | | ||
Change in fair value of available for sale debt security | $ | — | $ | ( | ||
See accompanying notes to condensed financial statements.
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SYNAPTOGENIX, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Unless the context otherwise indicates, references in these Notes to the accompanying financial statements to “we,” “us,” “our” and “the Company” refer to Synaptogenix, Inc. (formerly known as Neurotrope Bioscience, Inc.), a Delaware corporation. References to “Neurotrope”, “Parent Company” or “Parent” refer to Neurotrope, Inc., a Nevada corporation.
Note 1 – Organization, Business, Risks and Uncertainties:
Organization and Business
On May 17, 2020, Neurotrope, Inc. (“Neurotrope” or “the Parent”) announced plans for the complete legal and structural separation of its wholly owned subsidiary, Neurotrope Bioscience, Inc., from Neurotrope (the “Spin-Off”). Under the Separation and Distribution Agreement, Neurotrope distributed all of its equity interest in this wholly owned subsidiary to Neurotrope’s stockholders. Following the Spin-Off, Neurotrope does not own any equity interest in the Company, and the Company operates independently from Neurotrope. On December 7, 2020, the Company became an independent company, Synaptogenix, Inc., a Delaware corporation (formerly known as Neurotrope Bioscience, Inc.) (the “Company” or “Synaptogenix”) when the Company filed an amended and restated certificate of incorporation which, among other things, changed its name to Synaptogenix, Inc. The Company’s shares of common stock, par value $
Recent Developments
Exploring Strategic Alternatives
In December 2024, the Company announced via press release that the board of directors of the Company (the “Board”) had formed an independent special committee (the “Special Committee”) to explore strategic opportunities to create and enhance value for investors, including promising drug development platforms and/or compelling new technologies and services. Management has reviewed the Company’s financial position and has concluded that the Company’s continuing financial strength offset by anticipated future burn rate and publicly traded stock as currency allows the Special Committee to have the resources to continue evaluating potential strategic opportunities.
Liquidity Uncertainties
As of March 31, 2025, the Company had approximately $
The Company expects to need additional capital in order to initiate and pursue potential additional development projects, including the continuing development beyond the ongoing Phase 2 trial of Bryostatin-1. Any additional equity financing, if available, may not be on favorable terms and would likely be significantly dilutive to the Company’s current stockholders, and debt financing, if available, may involve restrictive covenants. If the Company is able to access funds through collaborative or licensing arrangements, it may be required to relinquish rights to some of its technologies or product candidates that the Company would otherwise seek to develop or commercialize on its own, on terms that are not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, will likely have a materially adverse effect on its business, financial condition and results of operations.
Other Risks and Uncertainties
The Company operates in an industry that is subject to rapid technological change, intense competition, and significant government regulation. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological and regulatory. Such factors include, but are not necessarily limited to, the results of clinical testing and trial activities, the ability to obtain regulatory approval, the limited supply of raw materials, the ability to obtain favorable licensing, manufacturing or
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other agreements, including risk associated with the Company’s Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”) licensing agreement, and the ability to raise capital to achieve strategic objectives.
CRE has entered into a material transfer agreement with the National Cancer Institute of the National Institutes of Health (“NCI”), pursuant to which the NCI has agreed to supply bryostatin required for the Company’s pre-clinical research and clinical trials. This agreement does not provide for a sufficient amount of bryostatin to support the completion of all of the clinical trials that the Company is required to conduct in order to seek U.S. Food and Drug Administration (“FDA”) approval. Therefore, CRE or the Company would have to enter into one or more subsequent agreements with the NCI for the supply of additional amounts of bryostatin. If CRE or the Company were unable to secure such additional agreements, or if the NCI otherwise discontinues the supply, the Company would have to either secure another source of bryostatin or discontinue its efforts to develop and commercialize Bryostatin-1 for the treatment of AD. In June 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to be the Company’s exclusive supplier of synthetic bryostatin. Pursuant to the terms of the Supply Agreement, the Company received its initial order of one gram of synthetic bryostatin. See Note 3.
Note 2 – Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2025 may not be indicative of results for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025.
The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2012, and has elected to comply with certain reduced public company reporting requirements, however, the Company may adopt accounting standards based on the effective dates for public entities.
Use of Estimates:
The preparation of financial statements in conformity with GAAP requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such these estimates may ultimately differ from actual results.
Comprehensive Income (Loss)
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). Since the Company has items of other comprehensive income (loss), comprehensive income (loss) has been reflected in the Company’s financial statements.
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Net Earnings or Loss per Share:
The Company computes earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series C Preferred Shares are considered participating securities as preferred shareholders are entitled to participate with common stockholders on an as-converted basis in any distributions of assets by the Company under the terms of the Certificate of Designations. During the three months ended March 31, 2024, the Company incurred losses attributable to common shareholders. Accordingly, the effects of any common stock equivalent would be anti-dilutive during the period and thus are not included in the calculation of diluted weighted average number of shares outstanding. The following table illustrates the computation of basic and diluted earnings per share for the three months ended March 31, 2025:
Three Months Ended March 31, | |||
| 2025 | ||
Net income/(loss) | $ | | |
Less: Series C convertible preferred stock dividends |
| ( | |
Less: allocation of undistributed income to Series C convertible preferred stockholders |
| ( | |
Undistributed income available to common stockholders - basic | $ | | |
Effect of dilutive instrument on net income |
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Undistributed income available to common stockholders - diluted | $ | | |
Weighted average shares outstanding - basic |
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Dilutive effect of warrants |
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Weighted average shares outstanding - diluted |
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Basic earnings per share | $ | | |
Diluted earnings per share | $ | | |
Because the Company reported a net loss for the three months ended March 31, 2024, common stock equivalents, including stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and diluted loss per share were the same.
The following potentially weighted average dilutive securities have been excluded from the calculation of diluted weighted average shares outstanding as they would be anti-dilutive as determined using the treasury stock method (for the Common Stock Options and Common Stock Warrants) or the if-converted method) for the Convertible Preferred Stock, are as follows:
For the Three Months Ended | ||||
| March 31, | |||
| 2025 |
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Common Stock Options |
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Convertible Preferred Stock | — | | ||
Common Stock Warrants |
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Total |
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Cash and Cash Equivalents and Concentration of Credit Risk:
The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At March 31, 2025, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $
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Fair Value of Financial Instruments:
The carrying amounts reflected in the balance sheets for prepaid expenses and payables approximate fair value due to the short maturities of these instruments. The carrying amounts for available for sale debt security, warrant liability and derivative liability approximate fair value based on level 3 of the fair value hierarchy.
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable markets.
Level 3 — Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.
Fixed Assets and Leases:
The Company has one lease which has a remaining term of
Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between and
Research and Development Costs:
All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. Non-refundable advance payments for research and development are capitalized because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were
Income Taxes:
The Company accounts for income taxes using the asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts reportable for income tax purposes under the “Separate return method.” Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company applies the provisions for accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has determined that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.
The Company had federal and state operating loss carryforwards for income tax purposes of approximately $
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March 31, 2025. Income tax effects of share-based payments are recognized in the financial statements for those awards that will normally result in tax deductions under existing tax law. However, the deferred tax asset is offset by a full valuation allowance.
The Company may be subject to significant U.S. federal income tax-related liabilities with respect to the Spin-Off if there is a determination that the Spin-Off is taxable for U.S. federal income tax purposes. In connection with the Spin-Off, the Company believes that, among other things, the Spin-Off should qualify as a tax-free transaction for U.S. federal income tax purposes under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code of 1986 (the “Code”). If the conclusions of the tax opinions are not correct, or if the Spin-Off is otherwise ultimately determined to be a taxable transaction, the Company would be liable for U.S. federal income tax related liabilities. Pursuant to the Separation and Distribution Agreement and the Tax Matters Agreement, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses. At March 31, 2025 and as of the financial statement issuance date, the Company does not have any indemnification liabilities.
Under Section 382 of the Code, as amended, changes in the Company’s ownership may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. In addition, the significant historical operating losses incurred by the Company may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. The Company believes that operating loss carryforwards may be limited under Section 382 limitations although Section 382 studies have not been conducted to determine the actual limitations.
The Company has concluded that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.
Recently Adopted Accounting Pronouncements:
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses and other segment items on an interim and annual basis, and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative threshold to determine its reportable segments. The new disclosure requirements are also applicable to entities that account and report as a single operating segment entity. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted the guidance for the annual reporting period ended December 31, 2024. There was no impact on the Company’s reportable segments identified and additional required disclosures have been included in Note 10, Segment Reporting in the Notes to Financial Statements.
Recently Issued Accounting Pronouncements:
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which requires public entities to disclose specific categories in the effective tax rate reconciliation, as well as expanded disclosures on income taxes paid by jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact related to the adoption of ASU 2023-09 on its financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Topic 220), which requires disclosure in the notes to financial statements about specific types of expenses included in the expense captions presented on the face of the statement of operations. The requirements of the ASU are effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact related to the adoption of ASU 2024-03 on its financial statement disclosures.
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Note 3 – Collaborative Agreements and Commitments:
Stanford License Agreements
On May 12, 2014, the Company entered into a license agreement (the “Stanford Agreement”) with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed patents. The Company is required to use commercially reasonable efforts to develop, manufacture and sell products (“Licensed Products”) in the Licensed Field of Use (as defined in the Stanford Agreement) during the term of the licensing agreement which expires upon the termination of the last valid claim of any licensed patent under this agreement. In addition, the Company must meet specific product development milestones, and upon meeting such milestones, make specific milestone payments to Stanford. The Company must also pay Stanford royalties of
On January 19, 2017, the Company entered into a second license agreement with Stanford, pursuant to which Stanford has granted to the Company a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin, for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for the life of the licensed patents. The Company paid Stanford $
The Company has advanced the development of synthetic bryostatin by demonstrating the equivalence of the synthetic to the natural bryostatin product. The estimated cost to initiate and produce sufficient quantities of the synthetic bryostatin drug product is approximately $
Mt. Sinai License Agreement
On July 14, 2014, the Company entered into an Exclusive License Agreement (the “Mount Sinai Agreement”) with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai Agreement, Mount Sinai granted the Company (a) a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as in certain results and data (the “Data Package”) and (b) a non-exclusive license, with the right to grant sublicenses on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (“PKC ε”), which includes Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai Agreement allows the Company to research, discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an Orphan Drug Designation Application covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined in the Mount Sinai Agreement).
The Company is required to pay Mt. Sinai milestone payments of $
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Agreements with BryoLogyx
On June 9, 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to serve as the Company’s exclusive supplier of synthetic bryostatin. Pursuant to the terms of the Supply Agreement, the Company placed an initial order and subsequently received one gram of current good manufacturing practice (“cGMP”) synthetic bryostatin as an active pharmaceutical ingredient to be used in a drug product (“API”). The Company may place additional orders for API beyond the initial order by making a written request to BryoLogyx no later than six months prior to the requested delivery date. The Company is not currently using synthetic bryostatin for its current Phase 2 clinical trial and will determine when to incorporate the synthetic into the clinical trial process.
In connection with the Supply Agreement, on June 9, 2020, the Company entered into a transfer agreement (the “Transfer Agreement”) with BryoLogyx. Pursuant to the terms of the Transfer Agreement, the Company agreed to assign and transfer to BryoLogyx all of the Company’s right, title and interest in and to that certain Cooperative Research and Development Agreement, dated as of January 29, 2019 (the “CRADA”), by and between the Company and the U.S. Department of Health and Human Services, as represented by the NCI, under which Bryostatin-1’s ability to modulate CD22 in patients with relapsed/refractory CD22+ disease has been evaluated to date. Pursuant to guidance provided by NCI, the Company CRADA has been cancelled and BryoLogyx has initiated a request for a new CRADA in its name. BryoLogyx will be filing its own investigational new drug application (“IND”) for CD22 with the FDA. As consideration for the transfer of rights to the CRADA, BryoLogyx has agreed to pay to the Company
Nemours Agreement
On September 5, 2018, the Company announced a collaboration with Nemours A.I. DuPont Hospital (“Nemours”), a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X syndrome, a genetic disorder. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, the Company announced its memorandum of understanding with Nemours to initiate a clinical trial using Bryostatin-1, under Orphan Drug Status, to treat Fragile X. The Company intends to provide the Bryostatin-1 and obtain the IND, and Nemours intends to provide the clinical site and attendant support for the trial. The Company and Nemours, jointly, will develop the trial protocol. The Company estimates its total trial and IND cost to be approximately $
The Company has filed an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. The Company is currently evaluating its plans to advance Fragile X development.
Cleveland Clinic
On February 23, 2022, the Company announced its collaboration with Cleveland Clinic to pursue possible treatments for Multiple Sclerosis (“MS”), and on July 19, 2023, the Company announced that it had entered into an agreement with Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. Cleveland Clinic will manage the clinical trial’s implementation, including an IND submission to the FDA and patient enrollment. Cleveland Clinic has enrolled
In December 2024, the Company announced via press release the termination of its agreement with the Cleveland Clinic due to the slow pace of enrollment in the Phase 1 clinical trial. The termination of the agreement was one of various actions authorized by the Board, designed to reduce cash burn rate.
Cognitive Research Enterprises, Inc. (“CRE”)
Effective October 31, 2012, the Company executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II, LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013, as amended and restated on February 4, 2015 (the “CRE License Agreement”). Pursuant to the CRE License
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Agreement, CRE and NRV II provide research services and have granted the Company the exclusive and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive dysfunctions in humans or animals (the “Field of Use”). Additionally, the CRE License Agreement specifies that all patents that issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last of the intellectual property enters the public domain.
After Neurotrope’s initial Series A Stock financing, the CRE License Agreement required the Company to enter into scope of work agreements with CRE as the preferred service provider for any research and development services or other related scientific assistance and support services. There were
In addition, on November 10, 2018, the Company and CRE entered into a second amendment (the “Second Amendment”) to the TLSA pursuant to which CRE granted certain patent prosecution and maintenance rights to the Company. Under the Second Amendment, the Company will have the sole and exclusive right and the obligation, to apply for, file, prosecute and maintain patents and applications for the intellectual property licensed to the Company, and pay all fees, costs and expenses related to the licensed intellectual property.
Note 4 – Related Party Transactions:
On August 4, 2016, Neurotrope entered into a consulting agreement with SM Capital Management, LLC (“SMCM”), a limited liability company owned and controlled by the Company’s Chairman of the Board, Mr. Joshua N. Silverman (the “Consulting Agreement”). Pursuant to the Consulting Agreement, SMCM shall provide consulting services which shall include, but not be limited to, providing business development, financial communications and management transition services, for a
Note 5 – Other Commitments:
Employment Agreements
On December 7, 2020, the Company entered into an offer letter (the “Offer Letter”) with Alan J. Tuchman, M.D., pursuant to which Dr. Tuchman agreed to serve as the Company’s Chief Executive Officer, commencing on December 7, 2020. In addition, in connection with his appointment as the Company’s Chief Executive Officer, Dr. Tuchman was appointed to the board of directors of the Company. Dr. Tuchman receives an annual base salary of $
Contingencies
Pursuant to the Separation Agreement and Tax Matters Agreement with Neurotrope, Neurotrope agreed to indemnify Synaptogenix for certain liabilities, and Synaptogenix agreed to indemnify Neurotrope for certain liabilities, in each case for uncapped amounts. Indemnities that Synaptogenix may be required to provide Neurotrope are not subject to any cap, may be significant and could negatively impact Synaptogenix’s business, particularly with respect to indemnities provided in the Tax Matters Agreement. Third parties could also seek to hold Synaptogenix responsible for any of the liabilities that Neurotrope has agreed to retain. Further, the indemnity from Neurotrope may not be sufficient to protect Synaptogenix against the full amount of such liabilities, and Neurotrope
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may not be able to fully satisfy its indemnification obligations. Moreover, even if Synaptogenix ultimately succeeds in recovering from Neurotrope any amounts for which Synaptogenix is held liable, Synaptogenix may be temporarily required to bear these losses. As of the reporting date, there are no claims relating to the indemnification agreement.
Note 6 – Stockholders’ Equity:
The Company’s amended and restated certificate of incorporation authorizes it to issue
The holders of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the Board from time to time may determine. To date, the Company has not paid dividends on its Common Stock. Holders of Common Stock are entitled to
September 2024 Private Placement
On September 10, 2024, the Company entered into a Securities Purchase Agreement (the “Series C Purchase Agreement”) with certain accredited investors (the “Series C Investors”), pursuant to which it agreed to sell to the Series C Investors (i) in a registered direct offering, an aggregate of
GP Nurmenkari Inc. acted as the Series C Placement Agent. In connection with the Series C Offering, pursuant to an Engagement Letter between the Company and the Series C Placement Agent, we agreed to pay the Series C Placement Agent (i) a cash fee equal to
The terms of the Series C Preferred Stock are as set forth in the Series C Certificate of Designations, which was filed with the Secretary of State for the State of Delaware on September 12, 2024. The Series C Preferred Stock is convertible into Series C Conversion Shares at the election of the holder at any time at the Series C Conversion Price. The Series C Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series C Conversion Price (subject to certain exceptions). We are required to redeem the Series C Preferred Shares in equal quarterly installments, commencing on October 31, 2024. The amortization payments due upon such redemption are payable in cash at
The holders of the Series C Preferred Shares are entitled to dividends of
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Following the first anniversary of the initial issuance of the Series C Preferred Shares through the date that is ten calendar days thereafter, holders of Series C Preferred Shares may require the Company to redeem all or any portion of their Series C Preferred Shares in cash, pursuant to the terms set forth in the Series C Certificate of Designation.
Notwithstanding the foregoing, the Company’s ability to settle conversions is subject to certain limitations set forth in the Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that the Company receives Nasdaq Stockholder Approval. The Company received Nasdaq Stockholder Approval of these matters at a meeting held on December 6, 2024. Further, the Series C Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Series C Certificate of Designations or Series C Warrants.
The Series C Certificate of Designations includes certain Triggering Events (as defined in the Series C Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Series C Registration Rights Agreement (defined below) and the Company’s failure to pay any amounts due to the holders of the Series C Preferred Shares when due. In connection with a Triggering Event, each holder of Series C Preferred Shares will be able to require the Company to redeem in cash any or all of the holder’s Series C Preferred Shares at a premium set forth in the Series C Certificate of Designations.
The Company is subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series C Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.
The Series C Warrants are exercisable immediately at the Series C Exercise Price and expire
In connection with the Series C Purchase Agreement, on September 10, 2024, the Company and the Series C Investors entered into a Registration Rights Agreement, pursuant to which the Company was required to file a resale registration statement with the SEC to register for resale
During the three months ended March 31, 2025, the Company redeemed $
Series B Common Stock Warrants
Pursuant to a November 17, 2022 private placement, the Company issued to investors warrants and, pursuant to its advisory agreements, the Company issued to its advisor additional warrants with the same terms to purchase
The warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at the Holders’ election upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the warrants as a liability at fair value with subsequent changes in fair value recognized in earnings.
During the three months ended March 31, 2025 and 2024, the Company recorded a gain of $
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Black Scholes Model using the following weighted average assumptions: dividend yield
Accounting Treatment of September 2024 Private Placement
Series C Preferred Shares
The Series C Preferred Shares were determined to be more akin to a debt-like host than an equity-like host. The Company identified the following embedded features that are not clearly and closely related to the debt host instrument: 1) certain contingent redemption options and 2) variable share-settled installment conversions. These features were bundled together, assigned probabilities of being affected and measured at fair value. Subsequent changes in fair value of these features are recognized in the Consolidated Statement of Operations. The Company estimated the approximately $
The discount to the fair value is included as a reduction to the carrying value of the Series C Preferred Shares. During 2024, the Company recorded a total discount of approximately $
During the quarter ended March 31, 2025, the Company recorded a loss of $
Series C Common Stock Warrants
Pursuant to the Series C Offering, the Company issued to investors Series C Warrants to purchase
The Series C Warrants were determined to be within the scope of ASC 480-10 as they are puttable to the Company at Holders’ election upon the occurrence of a Fundamental Transaction (as defined in the agreements). As such, the Company recorded the Series C Warrants as a liability at fair value with subsequent changes in fair value recognized in earnings.
During the three months ended March 31, 2025, the Company recorded a gain of approximately $
Reverse Stock Split
At the Company’s annual meeting of stockholders held on December 20, 2023, the stockholders approved an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the Company’s outstanding shares of Common Stock, at any ratio between and . On April 4, 2024, the Company effected the Reverse Stock Split. As a result of the Reverse Stock Split, every 25 shares of the Common Stock outstanding before the Reverse Stock Split was combined and
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reclassified into one share of Common Stock. These financial statements have been adjusted to retrospectively reflect the Reverse Stock Split.
Based upon the Reverse Stock Split and Series C Offering, the total number of Series B Warrants held by the Series B investors has been adjusted to
Note 7 – Stock Based Compensation:
2020 Equity Incentive Plan
Upon completion of the Spin-Off, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective on December 7, 2020. On December 20, 2023, the Company held its annual meeting of stockholders at which time the Company’s stockholders approved an amendment to the Company’s 2020 Plan was amended to increase the total number of shares of Common Stock authorized for issuance from
The Compensation Committee of the Company’s board of directors (the “Committee”) administers the 2020 Plan and has full power to grant stock options and Common Stock, construe and interpret the 2020 Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, as it believes reasonable and proper. The Committee, in its absolute discretion, may award Common Stock to employees, consultants, and directors of the Company, and such other persons as the Committee may select, and permit holders of options to exercise such options prior to full vesting.
Stock and Option Grants
The following is a summary of stock option activity under the stock option plans for the three months ended March 31, 2025:
|
|
| Weighted- |
| ||||||
Average | Aggregate | |||||||||
Weighted- | Remaining | Intrinsic | ||||||||
Number | Average | Contractual | Value | |||||||
of | Exercise | Term | (in | |||||||
Shares | Price | (Years) | millions) | |||||||
Options outstanding at January 1, 2025 |
| | $ | |
| $ | | |||
Options granted |
| — | $ | — |
| — |
| — | ||
Less options forfeited |
| — | $ | — |
| — |
| — | ||
Less options expired/cancelled |
| — | $ | — |
| — |
| — | ||
Less options exercised |
| — | $ | — |
| — |
| — | ||
Options outstanding at March 31, 2025 |
| | $ | |
| $ | | |||
Options exercisable at March 31, 2025 |
| | $ | |
| $ | | |||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing price of the Common Stock, which was $
As of March 31, 2025, the Company had unrecognized stock option expense of $
On April 3, 2025, Synaptogenix granted stock options to
Director’s Compensation Policy
On March 29, 2023, Synaptogenix adopted an amended and restated non-employee director compensation policy (the “Director Compensation Policy”). The Director Compensation Policy provides for the annual automatic grant of nonqualified stock options to
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purchase up to
The Company recorded total expenses relating to the outstanding stock options of $
Restricted Stock Issuances
On January 8, 2024, the Company issued
Stock Compensation Expense
Total stock-based compensation for the three months ended March 31, 2025 and 2024 was $
The Company currently estimates, beginning at the closing date of the Series B offering, implied volatility factor for all options and warrants based upon a blend of the Parent Company’s and Company’s historical volatility. Up until November 21, 2022, the Company computed implied volatility based upon a blend of the Parent Company’s and Company’s historical volatility along with the volatility of selected comparable publicly traded companies as, at that time, the Company lacked sufficient historical stock trading activity. It incorporated the historical volatility of the Parent Company as the Parent Company’s historical volatility provides a good estimation of the Company’s volatility since its operations were identical to the Company’s prior to the Spin-Off.
Note 8 – Common Stock Warrants:
As of March 31, 2025, the Company had warrants outstanding consisting of the following:
|
| Number |
| of shares | |
Warrants outstanding January 1, 2024 |
| |
Warrants issued |
| |
Warrants exercised |
| |
Warrants expired | | |
Warrants outstanding and exercisable December 31, 2024 and March 31, 2025 |
| |
As of March 31, 2025, the weighted average exercise price and the weighted average remaining life of the total warrants were $
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Note 9 - Fair Value on a Recurring Basis:
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. The estimated fair value of the warrant liability and bifurcated embedded derivatives represent Level 3 measurements. The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis at March 31, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
March 31, | December 31, | |||||||
Description |
| Level |
| 2025 |
| 2024 | ||
Liabilities: |
|
|
|
|
|
| ||
Warrant liability (Note 6) |
| 3 | $ | | $ | | ||
Derivative liability (Note 6) |
| 3 | $ | | $ | | ||
The following table sets forth a summary of the change in the fair value of the warrant liability that is measured at fair value on a recurring basis:
Balance on December 31, 2024 | $ | | |
Change in fair value of warrant liabilities Series C Preferred | ( | ||
Balance on March 31, 2025 | $ | |
The following table sets forth a summary of the change in the fair value of the bifurcated embedded derivative liability that is measured at fair value on a recurring basis:
Balance on December 31, 2024 | $ | | |
Change in fair value of derivative liability Series C Preferred | | ||
Balance on March 31, 2025 | $ | |
Note 10 – Business Segments:
The Company operates in
In addition to the significant expense categories included within net loss presented on the Company’s Statements of Comprehensive (Income) Loss, see below for disaggregated amounts that comprise research and development expenses:
Three Months Ended March 31, | ||||||
| 2025 |
| 2024 | |||
External clinical development expenses | $ | | $ | | ||
Personnel related and stock-based compensation |
| |
| | ||
Other research and development expenses |
| |
| | ||
Total research and development expenses | $ | | $ | | ||
Note 11 – Subsequent Events
Refer to Note 7 for disclosure of applicable subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2024.
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the unaudited financial statements contained in this report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Basis of Presentation
The unaudited financial statements for the three months ended March 31, 2025 and 2024 include a summary of our significant accounting policies and should be read in conjunction with the discussion below and our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in the financial statements. All such adjustments are of a normal recurring nature.
Overview
We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. We began operations in October 2012. We are principally focused on developing a product platform based upon a drug candidate called Bryostatin-1 for the treatment of Alzheimer’s disease, which is in the clinical testing stage. We are also evaluating Bryostatin-1 for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have undergone pre-clinical testing.
Neurotrope, our predecessor company, had been a party to a technology license and services agreement with the original Blanchette Rockefeller Neurosciences Institute (which has been known as Cognitive Research Enterprises, Inc. since October 2016), and its affiliate NRV II, LLC, which we collectively refer to herein as “CRE,” pursuant to which we now have an exclusive non-transferable license to certain patents and technologies required to develop our proposed products. We were formed for the primary purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive dysfunctions. These technologies have been under development by BRNI since 1999 and, until March 2013, had been financed through funding from a variety of non-investor sources (which include not-for-profit foundations, the NIH, which is part of the U.S. Department of Health and Human Services, and individual philanthropists). From March 2013 forward, development of the licensed technology has been funded principally through us in collaboration with CRE.
September 2024 Private Placement
On September 10, 2024, we entered into the Series C Purchase Agreement with the Series C Investors, pursuant to which we agreed to sell to the Series C Investors (i) in a registered direct offering, an aggregate of 1,793 shares of Series C Preferred Stock, initially convertible into up to 448,250 Registered Conversion Shares and (ii) in a concurrent private placement, an aggregate of 3,207 shares of Series C Preferred Stock, initially convertible into up to 801,750 Unregistered Conversion Shares as well as Series C Warrants to acquire up to an aggregate of 1,250,000 Series B Warrant Shares.
GP Nurmenkari Inc. acted as the Series C Placement Agent. In connection with the Series C Offering, pursuant to an Engagement Letter between the Company and the Series C Placement Agent, we agreed to pay the Series C Placement Agent (i) a cash fee equal to 7.0% of the gross proceeds from any sale of securities in the Series C Offering and (ii) warrants to purchase shares of Common Stock equal to 3.0% of the number of shares of Common Stock that the Series C Preferred Stock are initially convertible into, with an exercise price of $4.00 per share and a five-year term.
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The terms of the Series C Preferred Stock are as set forth in the Series C Certificate of Designations, which was filed with the Secretary of State for the State of Delaware on September 12, 2024. The Series C Preferred Stock is convertible into Series C Conversion Shares at the election of the holder at any time at the Series C Conversion Price. The Series C Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series C Conversion Price (subject to certain exceptions). We are required to redeem the Series C Preferred Shares in equal quarterly installments, commencing on October 31, 2024. The amortization payments due upon such redemption are payable in cash at 107% of the applicable Installment Amount (as defined in the Series C Certificate of Designations).
The holders of the Series C Preferred Shares are entitled to dividends of 5% per annum, compounded quarterly, which will be payable in cash. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Series C Certificate of Designations), the Series C Preferred Shares will accrue dividends at the rate of 15% per annum. The holders of Series C Preferred Shares are entitled to vote with holders of the Common Stock as a single class on all matters that holders of Common Stock are entitled to vote upon, with the number of votes per Series C Preferred Share equal to the stated value of such Series C Preferred Share divided by the “Minimum Price” (as defined in Rule 5635 of the Rule of the Nasdaq Stock Market) immediately prior to the date of the Series C Purchase Agreement.
Following the first anniversary of the initial issuance of the Series C Preferred Shares through the date that is ten calendar days thereafter, holders of Series C Preferred Shares may require the Company to redeem all or any portion of their Series C Preferred Shares in cash, pursuant to the terms set forth in the Series C Certificate of Designation.
The Company received Nasdaq Stockholder Approval at the Company’s special meeting of stockholders held on December 6, 2024.
The Series C Certificate of Designations includes certain Triggering Events (as defined in the Series C Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Series C Registration Rights Agreement (defined below) and our failure to pay any amounts due to the holders of the Series C Preferred Shares when due. In connection with a Triggering Event, each holder of Series C Preferred Shares will be able to require us to redeem in cash any or all of the holder’s Series C Preferred Shares at a premium set forth in the Series C Certificate of Designations.
We are subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series C Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters.
The Series C Warrants are exercisable immediately at the Series C Exercise Price and expire five years from the date of issuance. The Series C Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series C Exercise Price (subject to certain exceptions). There is no established public trading market for the Series C Warrants and we do not intend to list the Series C Warrants on any national securities exchange or nationally recognized trading system.
In connection with the Series C Purchase Agreement, on September 10, 2024, we and the Series C Investors entered into a Registration Rights Agreement, pursuant to which we were required to file a resale registration statement with the SEC to register for resale 200% of the Unregistered Conversion Shares and 200% of the Series C Warrant Shares. We filed a registration statement for the resale of such securities on October 10, 2024, which was declared effective by the SEC on October 21, 2024. We also agreed to other customary obligations regarding registration, including indemnification and maintenance of the effectiveness of the registration statement.
During the three months ended March 31, 2025, we redeemed $715,000 of the Series C Preferred Stock and $53,563 of accrued dividends in cash through installment redemptions and relieved $1,086,984 of discount related to the redeemed Series C Preferred Stock. During the three months ended March 31, 2025, we recognized a deemed dividend of $53,799 related to cash premiums.
As of March 31, 2025, we have accrued a liability for installment payments owed to investors in either cash or shares of $0.
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During the year ended December 31, 2024, we redeemed $715,000 of the Series C Preferred Stock and $86,694 of accrued dividends in cash through installment redemptions and proportionately relieved $1,592,341 of discount related to the redeemed Series C Preferred Stock. During the year ended December 31, 2024, we recognized a deemed dividend of $52,447 related to cash premiums.
Recent Developments
Exploring Strategic Alternatives
In December 2024, we announced via press release that the board of directors of the Company (the “Board “) had formed an independent special committee (the “Special Committee “) to explore strategic opportunities to create and enhance value for investors, including promising drug development platforms and/or compelling new technologies and services. Management has reviewed the Company’s financial position and has concluded that the Company’s continuing financial strength offset by anticipated future cash burn rate and publicly traded stock as currency allows the Special Committee to evaluate potential strategic opportunities.
Other Development Projects
To the extent resources permit, we may pursue development of selected technology platforms with indications related to the treatment of various disorders, including neurodegenerative disorders such as AD, based on our currently licensed technology and/or technologies available from third party licensors or collaborators.
Nemours Agreement
On September 5, 2018, we announced a collaboration with Nemours, a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X. In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior. On August 5, 2021, we announced our memorandum of understanding with Nemours A.I. DuPont Hospital (“Nemours”) to initiate a clinical trial using Bryostatin-1, under Orphan Drug Status, to treat Fragile X. We intend to provide the Bryostatin-1 drug product candidate and obtain the IND and Nemours intends to provide the clinical site and attendant support for the trial. We and Nemours, jointly, will develop the trial protocol. We currently estimate our total trial and IND cost to be approximately $2 million. As of the end of the period covered by this quarterly report, we have incurred cumulative expenses associated with this agreement of approximately $100,000.
We have filed for an IND with the FDA. The FDA has placed the development of the IND on clinical hold pending completion of further analytics relating to drug pharmacokinetics and pharmacodynamics. We are currently evaluating our plans to advance Fragile X development.
Cleveland Clinic
On February 23, 2022, we announced our collaboration with Cleveland Clinic to pursue possible treatments for MS, and on July 19, 2023, we announced that we had entered into an agreement with Cleveland Clinic to conduct a Phase 1 trial of Bryostatin-1 in MS. Cleveland Clinic will manage the clinical trial’s implementation, including an IND submission to the FDA and patient enrollment. Cleveland Clinic has enrolled three subjects and has dosed two to - date, with the total planned enrollment in the MS Trial of 20 subjects. The total estimated costs associated with this collaboration are approximately $2.0 million. As of March 31, 2025, we have incurred expenses due to Cleveland Clinic approximately $743,000 of which $215,459 was expensed during the three months ended March 31, 2025.
In December 2024, the Company announced via press release the termination of its agreement with the Cleveland Clinic due to the slow pace of enrollment in the Phase 1 clinical trial. The termination of the agreement was one of various actions authorized by the Board, designed to reduce the Company’s cash burn rate.
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Results of Operations
Comparison of the three months ended March 31, 2025 and 2024
The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:
Three Months ended |
| |||||||||||
March 31, | Dollar |
| ||||||||||
| 2025 |
| 2024 |
| Change |
| % Change |
| ||||
Operating Expenses: |
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|
|
|
|
|
|
| ||||
Research and development expenses | $ | 60,816 | $ | 609,249 | $ | (548,433) |
| (90.0) | % | |||
General and administrative expenses | $ | 1,008,349 | $ | 1,082,245 | $ | (73,896) |
| (6.8) | % | |||
Other income, net | $ | (1,454,334) | $ | (1,484,795) | $ | 30,461 |
| (2.1) | % | |||
Net income (loss) | $ | 385,169 | $ | (206,699) | $ | 591,868 | 283.6 | % | ||||
Net comprehensive income (loss) attributable to common stockholders | $ | 167,836 | $ | (425,858) | $ | 593,694 |
| 139.4 | % | |||
Revenues
We did not generate any operating revenues for the three months ended March 31, 2025 and 2024.
Operating Expenses
Overview
Total operating expenses for the three months ended March 31, 2025 were $1,069,165 as compared to $1,691,494 for the three months ended March 31, 2024, a decrease of approximately 36.8%. The decrease in total operating expenses is due to the decrease in both research and development and general and administrative expenses.
Research and Development Expenses
For the three months ended March 31, 2025, we incurred $60,816 in research and development expenses as compared to $609,249 for the three months ended March 31, 2024, a decrease of approximately 90.0%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product and the MS trial with Cleveland Clinic during the three months ended March 31, 2024. Of these expenses, for the year ended three months ended March 31, 2025, $19,839 was incurred principally relating to our storage of drug product, $19,177 for clinical consulting services, $7,425 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, and $14,375 for development of alternative drug supply with Stanford University; comparatively, for the three months ended March 31, 2024, $421,823 was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $170,444 for clinical consulting services, $7,104 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai Agreement, and $9,878 for development of alternative drug supply with Stanford University.
Our research and development expenses have decreased as our Phase 2 clinical trial for AD was concluded by the end of 2023 and our Phase 2 dose ranging study and our MS clinical trial were discontinued. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.
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General and Administrative Expenses
We incurred $1,008,349 and $1,082,245 of general and administrative expenses for the three months ended March 31, 2025 and 2024, respectively, a decrease of approximately 6.8%. During the three months ended March 31, 2025, $237,242 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $342,659 for the three months ended March 31, 2024, the decrease resulted primarily from compensation reductions for our President and our Chief Executive Officer; $78,447 was incurred for legal expenses versus $113,656 for the 2024 comparable period. The higher legal fees for 2024 is based upon the prior year’s increased fees for special stockholder meeting requirements and for regulatory compliance; $194,358 was incurred for outside operations consulting services during the three months ended March 31, 2025, versus $262,002 for the comparable period in 2024, as the lower amount for the 2025 period reflects the decrease in regulatory and compliance work; $15,959 was incurred for travel expenses during the three months ended March 31, 2025, versus $34,881 for the comparable period in 2024 as Company officers and directors conducted overseas due diligence for strategic investments in 2024; $149,961 was incurred for investor relations services during the three months ended March 31, 2025, versus $164,732 for the comparable period in 2024; $89,746 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the three months ended March 31, 2025, versus $20,713 for the comparable period in 2024, the increase was attributable to year end 2024 audit services paid during the current 2025 quarter; $130,204 was incurred for insurance during the three months ended March 31, 2025, versus $154,965 for the comparable period in 2024. The decrease is attributable to lower premiums; $108,724 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the three months ended March 31, 2025, versus $(25,771) for the comparable period in 2024. The increase is attributable to credits for lower franchise taxes paid during the 2024 period credited to 2024; and $3,709 was recorded as non-cash stock options compensation expense during the three months ended March 31, 2025, versus $14,407 for the comparable period in 2024.
Other Income
We recognized total other income of $1,454,334 for the three months ended March 31, 2025 as compared to total other income of $1,484,795 for the three months ended March 31, 2025, which consisted, for 2025 and 2024, of interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills and changes in fair value of warrant and derivative liabilities and offering costs. The decrease in interest income and unrealized gains on treasury bills totaling $281,061 for the three months ended March 31, 2025 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decrease in other income is primarily attributable to the decrease in interest income as noted above, in and the decrease in change in fair value of derivative liability of $1,051,000, partially offset by the change in fair value of derivative liability of $1,293,000 and the decrease in net loss in equity investment of $8,600.
Net income (loss)
We recognized income of $385,169 versus a loss of ($206,699) for the three months ended March 31, 2025 and 2024, respectively. The increased income was primarily attributable to the decrease in research and development and general and administrative expenses partially offset by the decrease in other income.
Financial Condition, Liquidity and Capital Resources
Cash and Working Capital
Since inception, we have incurred negative cash flows from operations. As of March 31, 2025, we had working capital of $15,106,751 as compared to working capital of $16,706,587 as of December 31, 2024. The $1,599,836 decrease in working capital was primarily attributable to approximately $1.0 million of operating expenses, redemption of Series C Preferred Stock of approximately $800,000 partially offset by and interest income of approximately $0.2 million.
We expect that our current cash and cash equivalents of approximately $13.8 million will be sufficient to support our projected operating requirements for at least the next 12 months from the date of this Quarterly Report on Form 10-Q, which may include the continuing development of Bryostatin-1 for neurodegenerative diseases.
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We expect to require additional capital in order to initiate, pursue and complete all potential clinical trials and obtain regulatory approval of one or more therapeutic candidates. However, additional future funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, would likely materially harm our business and financial condition.
Sources and Uses of Liquidity
We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we continue to develop AD and other therapeutic products. We anticipate that this development may include clinical trials in addition to our current ongoing clinical trial and additional research and development expenditures.
Three Months Ended March 31, | ||||||
| 2025 |
| 2024 | |||
Cash used in operating activities | $ | 2,000,596 | $ | 1,831,541 | ||
Cash used in investing activities | $ | — | $ | 500,000 | ||
Cash used in financing activities | $ | 822,362 | $ | — | ||
Net Cash Used in Operating Activities
Cash used in operating activities was $2,000,596 for the three months ended March 31, 2025, compared to $1,831,541 for the three months ended March 31, 2024. The $169,055 increase primarily resulted from the increase in non-cash expenses and change in fair value of liabilities of approximately $0.3 million, the decrease in prepaid expenses of approximately $0.3 million and the decrease in accounts payable and accrued expenses of totaling approximately $0.2 million partially offset by the increase in net income of approximately $0.6 million.
Net Cash Used in Investing Activities
Net cash used in investing activities was $0 for the three months ended March 31, 2025 compared to $500,000 for the three months ended March 31, 2024. The cash used in investing activities for the three months ended March 31, 2024 was for the purchase of available for sale debt securities.
Net Cash Used in Financing Activities
Net cash used in financing activities was $822,362 for the three months ended March 31, 2025 compared to $0 for the three months ended March 31, 2024. The cash used in financing activities for the three months ended March 31, 2025 consisted of redemptions and dividends of amounts due to preferred stock investors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable to a smaller reporting company.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and our principal financial and accounting officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on their evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures are not effective due to: inadequate segregation of duties consistent with control objectives in the areas over certain payroll and banking systems and user access controls; ineffective processes over period end financial disclosure and reporting including documentation of GAAP disclosure and reporting reviews supporting the financial reporting process and changes to chart of accounts; and ineffective information technology (IT) general computing controls including lack of risk and design assessments supporting IT security policies and procedures, user access, and IT controls within third party contracts. These weaknesses may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
We previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, that our management, including our Chairman of the Board, principal executive officer and principal financial and accounting officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in the 2013 Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, such internal controls and procedures were not effective to detect the inappropriate application of US generally accepted accounting principles.
Based on management’s review, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of March 31, 2025. Notwithstanding the material weaknesses described above, our management, including the Chief Executive Officer and Chief Financial Officer, has concluded that financial statements, and other financial information included in this Quarterly Report on Form 10-Q, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this Quarterly Report on Form 10-Q.
Changes in Internal Controls over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes from the risk factors disclosed in such Form 10-K. We may disclose changes to risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On January 9, 2025, we issued 30,995 shares of Common Stock to IRTH Communications and, on March 14, 2025, we issued 1,655 shares of Common Stock to Neil Cataldi, in exchange for investor relations services.
The foregoing transaction did not involve any underwriters or any public offering. The sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering. The recipient of the securities in the transaction represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the securities issued in these transactions. The recipient received or had, through his relationships with us, adequate access to information about us.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
During the fiscal quarter ended March 31, 2025, none of our directors or executive officers
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Item 6. Exhibits.
Exhibit |
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31.1 |
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31.2 |
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32* |
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101 |
| The following financial information from this Quarterly Report on Form 10-Q for the period ended March 31, 2025, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Statements of Operations; (ii) the Condensed Balance Sheets; (iii) the Condensed Statements of Cash Flows; and (iv) the Notes to Financial Statements, tagged as blocks of text. |
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit) |
* The certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Synaptogenix, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.
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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.
| Synaptogenix, Inc. | |
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| |
Date: May 15, 2025 | By: | /s/ Alan J. Tuchman, M.D. |
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| Alan J. Tuchman, M.D. |
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| Chief Executive Officer |
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| (principal executive officer) |
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| |
Date: May 15, 2025 | By: | /s/ Robert Weinstein |
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| Robert Weinstein |
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| Chief Financial Officer, Executive Vice President, Secretary and Treasurer |
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