Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Information
The Risk Factors in Part I, Item 1A of this Annual Report on Form 10-K, the audited financial statements and accompanying notes, included elsewhere in this Annual Report on Form 10-K, and this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read together. In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period.
Overview
We are a biopharmaceutical company that previously advanced novel therapeutics to transform the care of serious diseases. We focused on rare metabolic disorders, with our lead program, labafenogene marselecobac (SYNB1934), studied in Synpheny-3, a global, pivotal Phase 3 study for patients with phenylketonuria (PKU), and SYNB1353, a potential treatment for homocystinuria (HCU). Both PKU and HCU are caused by inborn errors of metabolism, and present significant need for innovation due to limitations of both efficacy and safety in the currently available medical treatment options. In February 2024, we made the decision to discontinue Synpheny-3, our pivotal study of our lead product candidate, labafenogene marselecobac (SYNB1934), as a potential treatment for PKU. The decision to end Synpheny-3 is based on results of an internal review in advance of an upcoming independent Data Monitoring Committee (DMC) assessment, which indicated the trial was unlikely to meet its primary endpoint. The decision was not based on concerns regarding safety or tolerability. As a result, our current corporate strategy is focused on pursuing strategic initiatives to enhance stockholder value, including but not limited to, a merger or the sale of the Company. Our strategic process is both active and ongoing and includes a range of interactions with transaction counterparties. Thus, we believe it is in our stockholders’ best interest to allow sufficient opportunity to pursue and consummate one or more such transactions and to consider additional alternatives that may materialize in the future. However, there can be no assurance that such activities will result in any agreements or transactions that will enhance shareholder value. Further, any strategic transaction that is completed ultimately may not deliver the anticipated benefits or enhance shareholder value.
Nasdaq Delisting
On November 21, 2025, we received the Notice from the Staff of Nasdaq that stated the Staff’s belief that we were a “public shell” and that, therefore, the continued listing of its securities was no longer warranted in the view of the Staff. In the Notice, the Staff explained that it based this belief on its review of our public disclosures and materials submitted to the Staff by us. In addition, the Staff noted its belief was supported by our lack of revenue generating assets and the substantial reduction in employees and operations since February 2024. The Staff also considered our quarterly reports on Forms 10-Q filed on May 8, 2025, August 7, 2025, and November 13, 2025, respectively, which indicated that we had not generated any revenue for the nine months ended 2025, that we had no ongoing research and development activities or active clinical trial and that we had research and development expenses of only $16,000. The Notice further advised that, unless we timely request a hearing before a Panel, we would be subject to suspension/delisting.
On November 28, 2025, we timely requested a hearing before the Panel, which temporarily stayed the suspension of trading and delisting of our common stock from Nasdaq. The hearing was scheduled for January 20, 2026. After additional consideration, we determined that it was no longer in our best interest to pursue continued listing of our common stock on The Nasdaq Capital Market and withdrew our request for a hearing on January 16, 2026. As a result, on January 16, 2026, we received notice from Nasdaq that our shares would be suspended at the open of business on January 21, 2026.
Following the suspension of trading of our shares of common stock on Nasdaq and delisting of our shares of common stock from Nasdaq, we believe that we are a “public shell” under the Nasdaq rules. Our shares of common stock have been quoted on the OTC since January 21, 2026. As a shell company, our operating expenses have consisted primarily of, and we expect them to continue to consist primarily of, customary public company expenses, including personnel, accounting, financial reporting, legal, audit and other related public company costs.
Effects of Inflation
We do not believe that inflation has had a material impact on our business or operating results during the periods presented. However, inflationary costs could adversely affect our business, financial condition and results of operations. Increased inflation has had, and may continue to have, an effect on interest rates. Increased interest rates may adversely affect our borrowing rate and our ability to obtain, or the terms under which we can obtain, any potential additional funding.
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Financial Overview
Research and Development Expense
Research and development expense consist of expenses incurred in connection with the discovery and development of our product candidates, which are expensed as they are incurred.
General and Administrative Expense
General and administrative expenses consist primarily of compensation, benefits and other employee-related expenses for personnel in our administrative, finance, legal, information technology, investor relations, business development and human resource functions. Other general and administrative costs include the legal costs of pursuing patent protection of our intellectual property, facility and information technology infrastructure costs, directors’ and officers’ insurance, and professional fees for accounting, tax, legal and consulting services. We anticipate that our general and administrative expenses may increase in the future as we explore strategic alternatives, including potential legal, accounting and advisory expenses and other related charges. We also anticipate that we will continue to incur accounting, legal, regulatory, compliance and directors’ and officers’ insurance costs.
Restructuring and Other Charges
In February 2024, we made the decision to discontinue Synpheny-3, our pivotal study of our lead product candidate, labafenogene marselecobac (SYNB1934), as a potential treatment for PKU. As a result, we started to undertake certain operational and organizational steps in connection with a strategic reorganization plan and related cost-saving measures. We initiated a plan to review strategic alternatives in which we substantially reduced our operations and reduced the workforce, leaving one remaining full-time employee. In addition, the Company has engaged consultants, to, among other things, support the strategic review process and current business operations.
Other Income (Expense)
Interest and investment income consists of income earned on investments. Other income (expense) consists primarily of gains and losses on foreign currency invoices and gains and losses on remeasurement of the purchase warrant liability.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. (GAAP). The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reported periods and related disclosures. These estimates and assumptions, including those related to warrants are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. The judgment regarding the inputs used to value liability-classified warrants using the Black-Scholes option pricing model and estimates and assumptions involved in our research and development expenses, involve a greater degree of judgment, and therefore we consider warrants and research and development expenses to be our critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from our estimates under different assumptions or conditions. We believe that these identified policies are critical to fully understanding and evaluating our financial condition and results of operations.
We believe that the application of the following accounting policies, each of which require significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results. Our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. During the year ended December 31, 2025, we determined that research and development expense was no longer a critical accounting policy due to the corporate restructuring and current focus on the strategic review process and business operations.
23
Results of Operations
The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial results.
Years Ended December 31,
(in thousands)
Revenue $ — $ 8
Operating expenses:
Research and development 43 9,154
Restructuring and other charges 476 25,173
Other income (expense):
Interest and investment income 695 1,425
Change in fair value of purchase warrant liability 2,308 16,173
Other expense — (2 )
Income tax expense — (5 )
Net loss per share - basic and diluted $ (0.08 ) $ (1.92 )
Comprehensive loss:
Net unrealized loss on marketable securities — (6 )
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenue
Years Ended
December 31, Change
(in thousands)
Revenue $ — $ 8 $ (8 ) (100 )%
There was no revenue for the year ended December 31, 2025 compared to $0.01 million for the year ended December 31, 2024. Revenue for the year ended December 31, 2024 was related to a material transfer and consulting agreement, under which work was completed in March 2024.
Operating Expenses
Years Ended
December 31, Change
(in thousands)
Operating expenses:
24
Research and Development Expense
Research and development expense was $0.04 million for the year ended December 31, 2025 compared to $9.2 million for the year ended December 31, 2024. The following table below summarizes our research and development expenses by categories of costs for the periods presented (in thousands):
Years Ended December 31, Change
External pre-development candidate costs and unallocated costs 47 102 (55 )
Internal costs:
Total research and development expense $ 43 $ 9,154 $ (9,111 )
The decrease of $9.1 million in research and development expense was primarily due to the following:
•
A decrease in external research and development costs of $4.0 million, which primarily consisted of:
o
$4.4 million decrease in clinical, manufacturing and professional costs associated with Labafenogene marselecobac (SYNB1934). The decision to discontinue Synpheny-3, our pivotal study of our lead product candidate, labafenogene marselecobac (SYNB1934), as a potential treatment for PKU, was made in February 2024; and
o
$0.4 million benefit in clinical, manufacturing and professional costs associated with SYNB1618 (earlier generation for Labafenogene marselecobac) for the Phase 2 Synpheny-1 study. We completed the final reconciliation of the study with the contract research organization (CRO) and received a refund during the year ended December 31, 2024.
•
A $5.1 million decrease in internal research and development costs, which was primarily driven by the corporate restructuring and reduction in its workforce by more than 90%.
General and Administrative Expense
General and administrative expense was $3.5 million for the year ended December 31, 2025 compared to $6.6 million for the year ended December 31, 2024. The decrease of $3.1 million was primarily due to lower compensation, benefits and other employee-related expenses due to reduced headcount and decreased professional service costs.
Restructuring and Other Charges
In February 2024, the Company and its board of directors decided to discontinue the Synpheny-3 trial and to conduct a comprehensive review of strategic alternatives. We also announced a corporate restructuring that resulted in a reduction in our workforce, leaving one remaining full-time employee. In addition, we have engaged consultants, to, among other things, support the strategic review process and current business operations. We recorded restructuring and other charges of $0.5 million for the year ended December 31, 2025, compared to $25.2 million for the year ended December 31, 2024. As part of the corporate restructuring, we recorded impairment charges related to our leases, property and equipment, and prepaid research and development. Additionally, we had other restructuring costs related to severance payments due to the reduction in workforce, accelerated stock compensation expense, legal fees, and contract termination costs.
Other Income (Expense)
Other income for the year ended December 31, 2025 was $3.0 million, compared to $17.6 million for the corresponding period in 2024. The decrease in other income of $14.6 million was primarily related to the change in fair value of the purchase warrants classified as liabilities on the consolidated balance sheet.
25
Liquidity and Capital Resources
We have incurred losses since our inception on March 14, 2014 and as of December 31, 2025, we had an accumulated deficit of $442.7 million. We have financed our operations to date primarily through the sale of preferred stock, common stock, preferred units and warrants, payments received under prior collaboration agreements, interest earned on investments, and cash received in the Merger. At December 31, 2025, we had $14.7 million in cash and cash equivalents. Our cash and cash equivalents include amounts held in money market funds, stated at cost plus unrealized gain and loss, which approximates fair market value. We invest cash in excess of immediate requirements in accordance with our investment policy, which limits the amounts we may invest in any one type of investment and requires all investments held by us to maintain minimum ratings from Nationally Recognized Statistical Rating Organizations so as to primarily achieve liquidity and capital preservation.
During the year ended December 31, 2025, our cash, cash equivalents and marketable securities balance decreased by $4.2 million. This decrease was primarily due to the cash used to operate our business. In February 2024, we implemented a strategic reduction of our workforce, leaving one remaining full-time employee. In addition, we have engaged consultants, to, among other things, support the strategic review process and current business operations. In the years ended December 31, 2025 and December 31, 2024, we recorded restructuring and impairment charges in connection with the restructuring.
The following table sets forth the major sources and uses of cash, cash equivalents and restricted cash for each of the periods below:
Years Ended December 31,
(in thousands)
Net cash, cash equivalents and restricted cash (used in) provided by
Financing activities — 172
Net decrease in cash, cash equivalents and restricted cash $ (4,192 ) $ (6,147 )
Cash Flows from Operating Activities
Net cash, cash equivalents and restricted cash used in operating activities was $4.4 million for the year ended December 31, 2025. The primary use of cash was our net loss of $1.0 million, changes in our assets and liabilities of $1.1 million, $2.4 million of non-cash items primarily including the change in fair value of purchase warrants, and gain on disposal of property and equipment, partially offset by $0.1 million of non-cash items related to equity based-compensation. The changes in our assets and liabilities include decreases in prepaid expenses and other current assets and accounts payable and accrued expenses.
Net cash, cash equivalents and restricted cash used in operating activities was $31.7 million for the year ended December 31, 2024. The primary use of cash was our net loss of $23.4 million, changes in our assets and liabilities of $11.7 million, partially offset by $3.4 million of non-cash items primarily including the change in fair value of purchase warrants, impairment of fixed assets and the right of use asset, gain on lease termination, impairment of prepaid research and development balances related to work with Ginkgo, equity-based compensation, and gain on disposal of property and equipment. The changes in our assets and liabilities include decreases in prepaid expenses and other current assets, prepaid research and development expenses, the operating lease liability, and accounts payable and accrued expenses.
Cash Flows from Investing Activities
Net cash provided by investing activities for the year ended December 31, 2025 was $0.2 million and resulted from the proceeds from sales of property and equipment.
Net cash provided by investing activities for the year ended December 31, 2024 was $25.3 million and resulted primarily from the proceeds from maturity of marketable securities of $25.5 million and $1.3 million from sales of property and equipment. This was offset by the purchases of marketable securities of $1.5 million and the purchases of property and equipment of $0.01 million.
Cash Flows from Financing Activities
There was no cash used in or provided by financing activities for the year ended December 31, 2025.
Net cash provided by financing activities for the twelve months ended December 31, 2024 totaled $0.2 million, primarily related to proceeds from exercise of stock options and net proceeds from the sale of our common stock in an at-the-market offering program.
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Funding Requirements
We currently expect our expenses to remain roughly the same in the near term following our decision to discontinue our Synpheny-3 clinical trial while we explore strategic alternatives. Pending the outcome of our review of strategic alternatives, we expect to incur additional costs in connection with such activities.
We have generated revenue from our prior collaborations, but have not generated any product revenue since our inception and do not expect to generate any product revenue. We believe that our current cash and cash equivalents as of December 31, 2025 will be sufficient to fund our operations at the current levels for at least the next 12 months from the date of this filing.
Our funding requirements will depend on many factors, including, but not limited to, the following:
•
the outcome, success, timing and cost of any strategic transactions, business combinations or divestiture;
•
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
•
the acquisition of businesses, products and technologies;
•
our need to implement additional infrastructure and internal systems; and
•
other risks and uncertainties, including those listed under Part I, Item 1A “Risk Factors.”
Contractual Commitments and Obligations
As an early-stage company, we are subject to a number of risks common to other life science companies, including, but not limited to, the ability to raise additional capital and protection of proprietary technology. We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital or obtain financing from other sources, such as strategic collaborations or alliances. If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our performance and the performance of our subsidiaries.
Recent Accounting Pronouncements
Please read Note 2, Summary of Significant Accounting Policies to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide this information required under this item.
Item 8. Consolidated Financial Statements and Supplementary Data.
Our consolidated financial statements, together with the independent registered public accounting firm report thereon, appear at pages F-1 through F-21 respectively, of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
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Item 9A. Controls and Procedures.
Definition and limitations of disclosure controls
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluates these controls and procedures on an ongoing basis.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. These limitations include the possibility of human error, the circumvention or overriding of the controls and procedures and reasonable resource constraints. In addition, because we have designed our system of controls based on certain assumptions, which we believe are reasonable, about the likelihood of future events, our system of controls may not achieve its desired purpose under all possible future conditions. Accordingly, our disclosure controls and procedures provide reasonable assurance, but not absolute assurance, of achieving their objectives.
Evaluation of Disclosure Controls and Procedures
Our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2025. Based upon the evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective at a reasonable assurance level as a result of the material weakness that existed in our internal control over financial reporting, as described below.
However, our Principal Executive Officer and Principal Financial Officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the consolidated financial statements in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as amended. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management concluded that, as a result of the material weakness that existed as of December 31, 2025, our internal control over financial reporting was not effective as of December 31, 2025.
Material Weakness
While preparing our condensed consolidated financial statements for the year ended December 31, 2024, management identified a material weakness in internal control over financial reporting. Specifically, we did not design an effective internal information and communication process relating to significant and non-routine transactions to ensure that relevant and reliable information was communicated on a timely basis across the organization, to enable financial personnel to effectively carry out their financial reporting and internal control roles and responsibilities. The failure, relating to significant and non-routine transactions, resulted in a misstatement of our warrant liabilities, transaction costs, change in fair value of warrant liabilities, additional paid-in-capital, accumulated deficit and certain related financial disclosures. This material weakness resulted in the correction of our consolidated financial statements as of and for the year ended December 31, 2023, and for the quarterly periods ended March 31, 2024 and June 30, 2024.
As described in our annual report on Form 10-K for the fiscal year ended December 31, 2024, management has designed a plan and is prepared to execute remediation actions to address the material weakness, however we have not had an instance of a significant and non-routine transaction in order to test the effectiveness of the remediation actions taken to date. As a result, the material
28
weakness continues to be present as of December 31, 2025. The material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Changes in Internal Control
There have not been any changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Inherent Limitations on the Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues or misstatements, if any, within a company have been detected. Accordingly, our controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our control system are met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Item 9B. Other Information.
Rule 10b5-1 Trading Plans
During the fiscal year ended December 31, 2025, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1 (c) or any "non-Rule 10b5-1 trading arrangement."
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.
Not Applicable.
29
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Management and Corporate Governance Matters,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Code of Conduct and Ethics” in the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 11. Executive Compensation.
The response to this item is incorporated by reference from the discussion responsive thereto under the caption “Executive Officer and Director Compensation” in the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The response to this item is incorporated by reference from the discussion responsive thereto under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The response to this item is incorporated by reference from the discussion responsive thereto under the captions “Certain Relationships and Related Person Transactions” and “Management and Corporate Governance” in the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
Item 14. Principal Accounting Fees and Services.
The response to this item is incorporated by reference from the discussion responsive thereto under the caption “Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2026 Annual Meeting of Stockholders.
30
PART IV
Item 15. Exhibits, Financial Statement Schedules.
Item 15(a). The following documents are filed as part of this Annual Report on Form 10-K:
Item 15(a)(1) and (2) See “Consolidated Financial Statements and Supplementary Data” at Item 8 to this Annual Report on Form 10-K. Other financial statement schedules have not been included because they are not applicable, or the information is included in the financial statements or notes thereto.
Item 15(a)(3) The following exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K.
Exhibit Index
31
19.1 Synlogic's Insider Trading Policy X
32
21.1 Subsidiaries of the registrant X
23.1 Consent of Independent Registered Public Accounting Firm X
24.1 Power of Attorney (included in the signature page hereto) X
97.1 Synlogic's Incentive Compensation Recovery Policy X
101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents X
^ The schedules and exhibits to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
# Management contract or compensatory plans or arrangements.
† Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the SEC.
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Synlogic, Inc.
Date: March 12, 2026 By: /s/ MARY BETH DOOLEY
Mary Beth Dooley
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mary Beth Dooley their true and lawful attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite his name.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant in the capacities indicated below and on the dates indicated.
Name Title Date
/s/ MARY BETH DOOLEY Principal Executive Officer and Principal Financial Officer
/s/ PETER BARRETT
Peter Barrett Chairman of the Board March 12, 2026
/s/ JAMES FLYNN
James Flynn Director March 12, 2026
/s/ EDWARD MATHERS
Edward Mathers Director March 12, 2026
/s/ RICHARD P. SHEA
Richard P. Shea Director March 12, 2026
34
Index to Consolidated Financial Statements of Synlogic, Inc.
Consolidated Balance Sheets F-3
Consolidated Statements of Operations and Comprehensive Loss F-4
Consolidated Statements of Stockholders’ Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Synlogic, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Synlogic, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the years then ended and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ KPMG LLP
We have served as the Company’s auditor since 2015.
Boston, Massachusetts
March 12, 2026
F-2
SYNLOGIC, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31, December 31,
Assets
Current assets:
Prepaid expenses and other current assets 729 830
Assets held for sale — 86
Restricted cash 50 50
Liabilities and Stockholders' Equity
Current liabilities:
Commitments and contingencies (Note 12)
Stockholders' equity
Common stock, $0.001 par value
Accumulated other comprehensive income — —
Total liabilities and stockholders' equity $ 15,447 $ 19,826
See accompanying notes to the consolidated financial statements.
F-3
Synlogic, INC. aND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
Years Ended December 31,
Revenue $ — $ 8
Operating expenses:
Research and development 43 9,154
Restructuring and other charges 476 25,173
Other income (expense):
Interest and investment income 695 1,425
Change in fair value of purchase warrant liability 2,308 16,173
Other expense — (2 )
Income tax expense — (5 )
Net loss per share - basic and diluted $ (0.08 ) $ (1.92 )
Comprehensive loss:
Net unrealized loss on marketable securities — (6 )
See accompanying notes to the consolidated financial statements.
F-4
Synlogic, INC. aND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
Shares Amount capital income (loss) deficit Shares Amount Stockholders' Equity
Exercise of pre-funded warrants 2,251,000 2 — — — — — 2
Issuance of restricted stock 362,700 — — — — — — —
Cancellation of restricted stock (193,880 ) — — — — — — —
Equity-based compensation expense — — 3,169 — — — — 3,169
Unrealized loss on securities — — — (6 ) — — — (6 )
Issuance of restricted stock 30,000 — — — — — — —
Cancellation of restricted stock (27,190 ) — — — — — — —
Equity-based compensation expense — — 117 — — — — 117
See accompanying notes to the consolidated financial statements.
F-5
Synlogic, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Years Ended December 31,
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation — 347
Gain on disposal of property and equipment (81 ) (1,160 )
Impairment loss on fixed assets — 5,011
Impairment loss on ROU assets — 9,571
Gain on lease termination — (3,271 )
Impairment of prepaid research and development — 5,219
Equity-based compensation expense 117 3,169
Change in fair value of warrant liability (2,308 ) (16,173 )
Accretion/amortization of investment securities — (242 )
Reduction in carrying amount of operating lease right of use asset — 948
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 101 1,033
Prepaid research and development, net of current portion — 1,906
Accounts payable and accrued expenses (1,183 ) (2,256 )
Operating lease liabilities — (12,417 )
Other assets — 16
Net cash used in operating activities (4,359 ) (31,658 )
Cash flows from investing activities:
Purchases of marketable securities — (1,477 )
Proceeds from maturity of marketable securities — 25,499
Purchases of property and equipment — (14 )
Proceeds from the sale of property and equipment 167 1,331
Net cash provided by investing activities 167 25,339
Cash flows from financing activities:
Payments on finance lease obligations — (4 )
Proceeds from employee stock purchases and exercise of stock options — 152
Proceeds from exercise of pre-funded warrants — 2
Net cash provided by financing activities — 172
Net decrease in cash, cash equivalents and restricted cash (4,192 ) (6,147 )
Cash, cash equivalents and restricted cash at beginning of period 18,910 25,057
Cash, cash equivalents and restricted cash at end of period $ 14,718 $ 18,910
Supplemental disclosure of non-cash investing activities:
Property and equipment sales included in other current assets $ — $ 2
Supplemental disclosure of non-cash financing activities:
Cash paid for income taxes $ — $ 5
See accompanying notes to the consolidated financial statements.
F-6
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1)
Nature of Business
Organization
Synlogic, Inc., together with its wholly owned and consolidated subsidiaries (Synlogic or the Company) is a biopharmaceutical company that previously advanced novel therapeutics to transform the care of serious diseases. The Company focused on rare metabolic disorders, with its lead program, labafenogene marselecobac (SYNB1934), studied in Synpheny-3, a global, pivotal Phase 3 study for patients with phenylketonuria (PKU), and SYNB1353, a potential treatment for homocystinuria (HCU). Both PKU and HCU are caused by inborn errors of metabolism, and present significant need for innovation due to limitations of both efficacy and safety in the currently available medical treatment options. Since incorporation, the Company has devoted substantially all of its efforts to the research and development of its product candidates.
In February 2024, the Company and its board of directors decided to discontinue the Synpheny-3 trial and to conduct a comprehensive review of strategic alternatives. The Company also announced a corporate restructuring that resulted in a reduction in its workforce, leaving one remaining full-time employee. In addition, the Company has engaged consultants, to, among other things, support the strategic review process and current business operations. (see Note 7, Restructuring and Other Charges).
Going Concern and Liquidity
The Company’s consolidated financial statements have been prepared assuming it will continue as a going concern. The going concern assumption contemplates the continuity of operations, and the realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has historically generated negative cash flows from operations and has an accumulated deficit of $442.7 million at December 31, 2025. At December 31, 2025, the Company had $14.7 million in unrestricted cash and cash equivalents. The Company has determined its current cash and cash equivalents as of December 31, 2025 will be sufficient to fund its operations at the current levels for at least the next 12 months from the date of this filing. As the Company continues to review strategic alternatives, the Company will continue to incur costs and expenditures in connection with the process of evaluating strategic alternatives.
Risks and Uncertainties
As an early-stage company, the Company is subject to a number of risks common to other life science companies, including, but not limited to, raising additional capital and protection of proprietary technology. The Company may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital or obtain financing from other sources.
(2)
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) (U.S. GAAP or GAAP).
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Synlogic and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. On an on-going basis, the Company’s management evaluates its estimates, including those related to accrued expenses and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which
F-7
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.
Cash Equivalents
The Company considers all highly liquid investment instruments with a remaining maturity when purchased of three months or less to be cash equivalents. Investments qualifying as cash equivalents consist of money market funds, including money market funds held in a sweep account. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $14.7 million and $18.9 million at December 31, 2025 and 2024, respectively.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk include amounts held as cash, cash equivalents and restricted cash. The Company uses high quality, accredited financial institutions to maintain its balances, and accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no financial instruments with off-balance sheet risk of loss.
Fair Value
The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
•
Level 1 – Utilize observable inputs such as quoted prices in active markets for identical assets or liabilities;
•
Level 2 – Utilize data points that are either directly or indirectly observable, such as quoted prices, interest rates and yield curves;
•
Level 3 – Utilize unobservable data points in which there is little or no market data, which require the Company to develop its own assumptions for the asset or liability.
The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of assets or liabilities between Level 1, Level 2 or Level 3 during the years ended December 31, 2025 and 2024.
Impairment of Long‐Lived Assets
Long‐lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there is impairment, the amount of impairment is calculated as the difference between the carrying value and fair value of the asset. As a result of the corporate restructuring, further discussed in Note 7, Restructuring and Other Charges, there were various impairment charges recorded during the year ended December 31, 2024.
Warrants
The Company accounts for issued warrants either as a liability or equity in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”) or ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the company’s own stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
F-8
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Warrants that are equity-classified instruments and recorded in additional paid-in capital at issuance are not subject to remeasurement. The purchase warrants issued in October 2023 are liability classified and recorded at fair value using the Black-Scholes option-pricing model at issuance, with any subsequent changes in fair value recognized in the consolidated statements of operations. The Company periodically evaluates changes in facts and circumstances that could impact the classification of warrants.
Equity‐Based Compensation
The Company measures equity-based compensation to employees, non-employees and directors based on the grant date fair value of the awards and recognizes the associated expense in the financial statements over the requisite service period of the award, which is generally the vesting period. The fair value of each option and purchase rights under the employee stock purchase plan (ESPP) is estimated on the date of grant using the Black‐Scholes option‐pricing model. Expected volatility for the Company’s common stock is determined based on an average of the historical volatility of the Company and the historical volatility of a peer‐group of similar public companies. The expected term of options granted to employees is calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The expected term of purchase rights for the ESPP is based on the duration of an offering period. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk‐free interest rate is based upon the U.S. Treasury yield curve commensurate with the expected term at the time of grant or remeasurement. Forfeitures are recognized as they occur.
The Company classifies equity-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified.
Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.
Uncertain tax positions represent tax positions for which reserves have been established. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to be recognized in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
Net Loss Per Share
Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the sum of the weighted-average number of shares of common stock outstanding during the period and if dilutive, the weighted-average number of potential shares of common stock, including unvested restricted common stock, outstanding stock options and potential shares issuable under the ESPP.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company operates in one operating segment: discovery and development of Synthetic Biotics. The Company’s principal executive officer, as chief operating decision maker, manages and allocates resources to the operations of the Company on a total company basis. Prior to the corporate restructuring, all of the Company’s equipment, leasehold improvements and other fixed
F-9
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
assets were physically located within the United States, and all agreements with its partners were denominated in U.S. dollars, except where noted.
Treasury Stock
Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.
Recently Issued and Adopted Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other accounting standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, recently issued pronouncements that are or will be applicable to the Company did not have, or are not expected to have, a material impact on its present or future consolidated financial statements or disclosures.
In December 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures, to enhance the disclosure requirements for income taxes. Upon adoption, companies will be required to disclose additional specified categories in the rate reconciliation. Companies will also be required to disclose the amount of income taxes paid disaggregated by jurisdiction, among other disclosure requirements. The standard is effective for public business entities for annual periods beginning after December 15, 2024. The Company adopted the standard during our 2025 annual period and included the required disclosures prospectively in Note 11, Income Taxes.
(3)
Fair Value of Financial Instruments
The tables below present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025 and 2024 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, as described under Note 2, Summary of Significant Accounting Policies.
The Company’s investment portfolio includes many fixed income securities that do not always trade on a daily basis. As a result, the pricing services used by the Company applied other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations. In addition, model processes were used to assess interest rate impact and develop prepayment scenarios. These models take into consideration relevant credit information, perceived market movements, sector news and economic events. The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data.
The Company accounts for issued warrants either as derivative liabilities or as equity instruments depending on the specific terms of the agreement. Warrants that are equity-classified instruments and recorded in additional paid-in capital at issuance are not subject to remeasurement. The purchase warrants issued in October 2023 are liability classified and recorded at fair value using the Black-Scholes option-pricing model at issuance, with any subsequent changes in fair value recognized in the consolidated statements of operations and comprehensive loss. We periodically evaluate changes in facts and circumstances that could impact the classification of warrants. None of the purchase warrants have been exercised since their issuance.
F-10
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
At December 31, 2025 and 2024, the Company has classified assets and liabilities measured at fair value on a recurring basis as follows (in thousands):
Fair Value Measurements at Reporting Date Using
Description 2025 (Level 1) (Level 2) (Level 3)
Assets:
Liabilities:
Purchase warrant liability $ 2,566 $ — $ — $ 2,566
Fair Value Measurements at Reporting Date Using
Description 2024 (Level 1) (Level 2) (Level 3)
Assets:
Liabilities:
Purchase warrant liability $ 4,874 $ — $ — $ 4,874
Cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses at December 31, 2025 and December 31, 2024 are carried at amounts that approximate fair value due to their short-term maturities.
Assumptions Used in Determining Fair Value of Warrants
The assumptions used in the Black-Scholes option-pricing model for the purchase warrants on the consolidated balance sheets at December 31, 2025 and December 31, 2024 are included below:
Weighted-average, risk free interest rate 3.5 % 4.3 %
Expected volatility 89.4 % 90.0 %
Dividend yield — —
(4)
Assets Held for Sale, Property and Equipment
Assets held for sale are summarized as follows (in thousands):
December 31, December 31,
Laboratory equipment $ — $ 86
Assets held for sale $ — $ 86
F-11
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
In February 2024, the Company committed to a plan to sell its remaining lab equipment and engaged a third party to assist with the auction, which was completed during the second quarter of 2025, and resulted in proceeds of $0.2 million and a $0.08 million gain on disposal of assets held for sale during the year ended December 31, 2025. The assets held for sale were reported at the lower of the carrying amount or fair value, less costs to sell. During the year ended December 31, 2024, there were impairment charges of $0.8 million incurred related to the lab equipment classified as assets held for sale, which was included in restructuring and other charges. The auction resulted in proceeds of $1.3 million and a $1.2 million gain on disposal of lab equipment during the year ended December 31, 2024.
Depreciation expense on property and equipment was $0.0 million and $0.3 million in 2025 and 2024, respectively.
(5)
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
December 31, December 31,
Prepaid research and development — 128
Other current assets 48 75
Total prepaid expenses and other current assets $ 729 $ 830
(6)
Accrued Expenses
Accrued expenses consist of the following (in thousands):
December 31, December 31,
Payroll related $ 11 $ 126
Total accrued expenses $ 915 $ 2,037
(7)
Restructuring and Other Charges
In February 2024, the Company and its board of directors decided to discontinue the Synpheny-3 trial and as a result are currently evaluating strategic options for the Company with a goal to enhance stockholder value, including the possibility of a merger or sale of the Company.
The Company also announced a corporate restructuring that included a reduction in its workforce, leaving one remaining full-time employee. In addition, the Company has engaged consultants, to, among other things, support the strategic review process and current business operations. In connection with the corporate restructuring, the Company recorded restructuring charges for severance and related costs of $0.24 million and $6.2 million during the years ended December 31, 2025 and December 31, 2024, respectively. The Company also executed consulting agreements during the year ended December 31, 2024, with a select number of former employees in which their equity continues to vest under the terms of the original award. The consulting services were determined to be non-substantive and as a result, the Company has accelerated the related stock compensation expense. There was no acceleration of stock compensation expense for the year ended December 31, 2025 and there was $2.4million of stock compensation included in restructuring charges for the year ended December 31, 2024.
Restructuring and other charges also included gains on equipment sales of $0.08 million and $1.2 million during the years ended December 31, 2025 and December 31, 2024, respectively. For the year ended December 31, 2024, restructuring and other charges also
F-12
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
included impairment of the right-of-use assets associated with the Company's leased spaces of $9.6 million and impairment of property and equipment of $5.0 million.
In connection with the corporate restructuring, on June 26, 2024 (the “Termination Date”), the Company entered into a Lease Termination Agreement (the “Termination Agreement”) for its corporate headquarters in Cambridge, Massachusetts, with the landlord which, effective immediately, terminated the lease. In exchange for the early termination of the lease pursuant to the Termination Agreement, the Company made a total termination payment of $10.6 million, of which $1.0 million was from a letter of credit associated with the lease. The Company also recorded a gain on lease termination, associated with its former headquarters, of $3.2 million, for the year ended December 31, 2024.
Other charges relating to the restructuring include a $5.2 million charge to impairment for prepaid research and development in relation to the Ginkgo collaboration (See Note 11, Collaboration Agreements, in the audited financial statements included in the 2024 Annual Report) for the year ended December 31, 2024. Additionally, there were charges of $0.32 million and $1.2 million recorded during the years ended December 31, 2025 and December 31, 2024, respectively, related to the restructuring including legal fees, banking fees and lab decommissioning fees.
As of December 31, 2025, approximately $0.75 million of the total restructuring charges remain unpaid and were included in accrued restructuring charges. These charges primarily consist of personnel costs related to severance expense and retention bonuses.
(8)
Stockholders' Equity
Rights Plan
On February 20, 2024, the Board of Directors of the Company declared a dividend of one preferred share purchase right (a “Right”), payable on March 1, 2024, for each share of common stock of the Company outstanding on March 1, 2024 to the stockholders of record on that date and for certain warrants to purchase Common Stock outstanding on March 1, 2024. In connection with the distribution of the Rights, the Company entered into a Rights Agreement, dated as of February 20, 2024, between the Company and Equiniti Trust Company LLC, as rights agent (the "Rights Agreement").
Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company (the “Series A Preferred Stock”) at a price of $12.00 per one one-thousandth of a share of Series A Preferred Stock represented by a Right (the “Purchase Price”), subject to adjustment.
The Rights were determined to have no value upon issuance and expired on February 20, 2025.
October 2023 Financing
On October 3, 2023, the Company issued and sold, through an underwritten public offering:
•
3,921,928 shares of its common stock at a price of $2.84 per share less underwriting discounts and commissions;
•
pre-funded warrants to purchase up to 3,472,435 shares of its common stock at a price of $2.839 immediately following the consummation of the offering, and;
•
accompanying common stock warrants to purchase up to 7,394,363 shares of its common stock at a price of $3.408 per share exercisable immediately after issuance and expires five years from the date of issuance.
Each share of its common stock and each pre-funded warrant was sold together with a common warrant to purchase one share of its common stock. A holder of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99% (or, upon election by a holder prior to the issuance of any warrants, 9.99%) of the number of shares of common stock outstanding immediately after giving effect to such exercise. The net proceeds to the Company from the sale of common stock and pre-funded warrants through the offering, after deducting the underwriting discounts and commissions and offering expenses payable by the Company, were approximately $19.6 million.
The common stock and pre-funded warrants met the criteria for equity classification. The purchase warrants met the definition of a derivative instrument. Accordingly, upon issuance, the purchase warrants were recorded as a liability at fair value using the Black-Scholes option-pricing model in the amount of $13.4 million. Any subsequent changes in fair value of the purchase warrants is recognized in the consolidated statements of operations. The residual proceeds were allocated between the common stock and pre-funded warrants based on their relative fair values at the time of issuance. The amount allocated to the pre-funded warrants was recorded as a component of stockholders’ equity within additional paid-in capital.
F-13
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
At December 31, 2025, the fair value of the purchase warrants was $2.6 million. Accordingly, a gain on remeasurement of the purchase warrant liability of $2.3 million was recorded in the year ended December 31, 2025. Subsequent to their issuance and as of December 31, 2025, 2,920,126 pre-funded warrants have been exercised. None of the purchase warrants have been exercised since their issuance.
Ginkgo Warrants
In June 2019, the Company issued to Ginkgo Bioworks, Inc. (Ginkgo) 422,718 shares of common stock and accompanying Pre-Funded Warrants (the Pre-Funded Warrants) to purchase up to an aggregate of 169,874 shares of common stock, at a combined purchase price per share and Pre-Funded Warrant of $135. The Pre-Funded Warrants have an exercise price of $135 per share, with $134.85 of such exercise price paid at the closing of the offering. The proceeds, net of issuance costs, were approximately $79.9 million, $57.0 million related to the proceeds from sale of the common stock and $22.9 million related to the proceeds from sale of the Pre-Funded Warrants. The Pre-Funded Warrants may be exercised at any time until all of the Pre-Funded Warrants are exercised in full to the extent that, after giving effect to such issuance after exercise, Ginkgo would not beneficially own in excess of 19.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance. The Pre-Funded Warrants were classified as a component of permanent equity and were recorded at the issuance date using a relative fair value allocation method. The Pre-Funded Warrants are equity classified because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of common shares upon exercise. In addition, such warrants do not provide any guarantee of value or return. In connection with the issuance to Ginkgo of common stock and Pre-Funded Warrants, the Company expanded its collaboration and entered into an agreement with Ginkgo for the research and development of engineered microbial therapeutic products. As a result of the Company's and its board of directors decision to discontinue the Synpheny-3 trial, the Company would no longer be purchasing services from Ginkgo. None of the Pre-Funded Warrants have been exercised as of December 31, 2025. (See Note 11, Collaboration Agreements, in the audited financial statements included in the 2024 Annual Report).
The Company has reserved for future issuance the following shares of common stock related to the potential exercise of warrants, exercise of stock options, and the employee stock purchase plan:
Common stock issuable under pre-funded warrants 552,309
Common stock issuable under purchase warrants 7,394,363
Common stock issuable under Ginkgo pre-funded warrants 169,874
Options exercisable to purchase common stock 203,277
(9)
Equity‐based Compensation and Equity Incentive Plans
Equity Plans
The Company currently has two active equity plans.
The 2025 Equity Incentive Award Plan (2025 Plan) functions as the primary equity plan for the Company. The 2025 Plan replaced the 2015 Equity Incentive Award Plan (2015 Plan), which terminated on November 10, 2025. The 2025 Plan includes an “evergreen provision” that allows for an annual increase in the number of shares of common stock available for issuance under the 2025 Plan, which annual increase will be added on the first day of each fiscal year of the Company during the period beginning in fiscal year 2026, and ending on the second day of fiscal year 2035, and will be equal to the lesser of (i) four percent of the number of outstanding shares of common stock on such date and an amount determined by the administrator of the 2025 Plan. The 2025 Plan provides for the granting of a variety of stock‐based compensation awards, including stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, deferred stock awards, dividend equivalent awards, stock payment awards, performance awards and other stock‐based awards.
The 2017 Stock Incentive Plan (the 2017 Plan) provides for the grant of incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and other stock-based awards.
F-14
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The Company was formerly utilizing the 2015 Employee Stock Purchase Plan (ESPP), which allowed eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. Due to the corporate restructuring, the purchases for the ESPP offering periods were cancelled during the years ended December 31, 2024 and December 31, 2025.
As of December 31, 2025, there were an aggregate of 1,038,721 shares available for future grant under the 2025 Plan and the 2017 Plan.
Stock Options
There were no stock options issued to employees during the year ended December 31, 2025. The weighted average assumptions used in the Black-Scholes option-pricing model for stock options issued to employees and non-employees under the 2015 Plan and the 2017 Plan, during the year ended December 31, 2024 were:
Year Ended December 31,
Expected term 5.6 years
Weighted-average, risk-free interest rate 3.9%
Expected volatility 92.0%
Dividend yield —
The following table summarizes stock option activity under the 2015 (replaced by the 2025 Plan) and 2017 Plans.
Stock options outstanding
Weighted
average
Weighted remaining Aggregate
average contractual intrinsic
Number of exercise term value (a)
options price (in years) (in thousands)
Granted — — —
Exercised — — —
(a) The aggregate intrinsic value is calculated as the difference between the exercise price of the options and the fair market value of the underlying common stock for the options that were in the money at December 31, 2025 and 2024. There were no options in the money at December 31, 2025 and December 31, 2024.
The weighted average grant date fair value per share of options granted during the years ended December 31, 2024 was approximately $3.15. There were no options granted during the year ended December 31, 2025. The total fair value of awards that vested during the years ended December 31, 2025 and 2024 was $0.6 million and $1.3 million, respectively.
As of December 31, 2025, there was approximately $0.02 million of unrecognized share-based compensation for unvested stock option grants which is expected to be recognized over a weighted average period of 0.94 years. The total unrecognized share-based compensation cost will be adjusted for actual forfeitures as they occur.
Restricted Common Stock
During the years ended December 31, 2025 and 2024, 30,000 and 362,700 shares of restricted common stock were granted, respectively.
F-15
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The following table shows restricted common stock activity:
Restricted stock awards
Weightedaveragegrant date
Number of fair value
shares (per share)
The total fair value of shares that vested during the years ended December 31, 2025 and 2024 was $0.7 million and $0.3 million, respectively.
As of December 31, 2025, there was approximately $0.01 million of unrecognized share-based compensation related to restricted stock awards granted, which is expected to be recognized over a weighted average period of 0.6 years. The total unrecognized share-based compensation cost will be adjusted for actual forfeitures as they occur.
Employee Stock Purchase Plan
The ESPP is considered a compensatory plan with the related compensation expense recognized over the six-month offering periods. There was no compensation expense for the year ended December 31, 2025. The compensation expense for the year ended December 31, 2024 was $(0.02) million due to the reversal of the expense as a result of the corporate restructuring and subsequent cancellation of the ESPP purchase in the first quarter of 2024.
Equity Compensation
The Company has recorded total equity‐based compensation expense of approximately $0.1 million and $3.2 million, during the years ended December 31, 2025 and 2024, respectively. Equity compensation during the years ended December 31, 2025 and 2024 is derived from stock options, restricted stock awards, and the ESPP.
The following table summarizes equity‐based compensation expense within the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024 (in thousands):
Years Ended December 31,
Research and development $ — $ 232
General and administrative 117 570
Restructuring charges: expense acceleration — 2,367
The following table summarizes equity‐based compensation expense by type of award for the years ended December 31, 2025 and 2024 (in thousands):
Years Ended December 31,
Restricted stock awards 76 1,127
ESPP — (22 )
F-16
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(10)
Net Loss per Share
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except for share and per share amounts):
Years Ended December 31,
Numerator:
Denominator:
Net loss per share - basic and diluted $ (0.08 ) $ (1.92 )
The Company’s potentially dilutive shares, which include purchase warrants, outstanding stock options, unvested restricted common stock and potential shares issuable under the ESPP, are considered to be common share equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.
The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of the diluted net loss per share attributable to common stockholders for the period indicated because including them would have had an anti-dilutive effect.
As of December 31,
Potential shares issuable under the ESPP — —
(11)
Income Taxes
During the years ended December 31, 2025 and 2024, the Company recorded no income tax benefits for the net operating losses incurred due to its uncertainty of reclaiming a benefit for those losses.
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets consist of the following (in thousands):
December 31,
Deferred tax assets:
Property and equipment — 28
Lease liabilities — —
Amortizable intangibles 867 984
Deferred tax liabilities:
Right of use assets — —
Gross deferred tax liabilities — —
Net deferred tax assets $ — $ —
F-17
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(1)Under the Tax Cuts and Jobs Act (TCJA), research and experimental (R&D) expenditures are capitalized and amortized under section 174 for tax years beginning after December 31, 2021. These costs are amortized for tax purposes over 5 years since the R&D was performed in the U.S. The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025. OBBBA includes modifications to several provisions of TCJA, including reinstating full expensing for domestic R&D expenditures. The Company is considering the OBBBA amendments and transition rules for domestic R&D expenditures that were previously capitalized under TCJA. The unamortized balance of these costs is presented as a deferred tax asset in the table above.
Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of the Company’s deferred tax assets, which are comprised principally of net operating loss carryforwards, and determined that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets. As a result, a full valuation allowance of approximately $134.3 million and $134.4 million was established at December 31, 2025 and 2024, respectively.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA includes significant changes to U.S. tax law, including making permanent certain provisions originally enacted under the Tax Cuts and Jobs Act, such as 100% bonus depreciation, the immediate expensing of domestic research and development costs, and the limitation on the deductibility of business interest expense. The provisions of the OBBBA did not have a material impact on the effective income tax rate.
As further described in Note 2, Summary of Significant Accounting Policies, we have elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of our effective income tax rate to the statutory federal income tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09:
(In thousands, except percentages)
Rate Tax
U.S. federal statutory rate 21.00 % (209 )
State income taxes, net of federal effect — —
Tax credits — —
Changes in valuation allowances 14.32 % (142 )
Nontaxable or nondeductible items
Fair market value change of warrant liability 48.74 % (485 )
Other adjustments
Cancelled stock awards (72.99 )% 726
Effective income tax rate — —
The following table is a reconciliation of our effective income tax rate to the statutory federal income tax rate for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09:
F-18
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Tax Rate
U.S. federal statutory rate 21 %
State income taxes, net of federal benefit 9 %
Other permanent differences 9 %
Tax credits 2 %
Other items (1 )%
Net change in valuation allowance (40 )%
Effective income tax rate —
The Company's cash paid for income taxes, net of refunds received, consisted of the following for the year ended December 31, 2025 (in thousands):
Federal $ —
Massachusetts 11
A roll-forward of the valuation allowance for the years ended December 31, 2025 and 2024 is as follows (in thousands):
Years ended December 31,
Increase in valuation allowance 153 (9,378 )
As of December 31, 2025, the Company had federal net operating loss carryforwards that may be available to reduce future taxable income of $401.8 million. Of the $401.8 million of federal net operating loss carryforwards, $62.4 million will expire on various dates from 2034 to 2037. The remaining $339.4 million of federal net operating loss carryforwards do not expire. The Company also had state net operating loss carryforwards that may be available to reduce future taxable income of $387.9 million for the period ended December 31, 2025. The state net operating loss carryforwards begin to expire in 2029. In addition, as of December 31, 2025, the Company had federal and state research and development tax credit carryforwards available to reduce future tax liabilities of $7.5 million and $4.4 million, respectively.
Pursuant to Section 382 of the Internal Revenue Code of 1986 (IRC), certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating loss (NOL) carryforwards and research and development credit (R&D credit) carryforwards that may be used in future years. Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation under Section 382 of the IRC due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax. The Company has not completed a study to assess whether an ownership change has occurred, or whether there have been multiple ownership changes since its formation, due to the significant complexity and related costs associated with such a study. There could be additional ownership changes in the future that may result in additional limitations on the utilization of NOL carryforwards and credits.
The Company is required to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, basedon the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon the ultimate settlement with the relevant taxing authority. The Company has not recognized any liability for unrecognized tax benefits as of December 31, 2025. The Company’s policy is to record interest and penalties related to unrecognized tax benefits on the income tax expense line in the consolidated statement of operations. There are no interest or penalties accrued at December 31, 2025 and 2024.
The Company files tax returns, on an entity-level basis, as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. Tax years from 2021 to the present are open to examination under the statute. The Company’s
F-19
SYNLOGIC, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
net operating losses and other attributes generated in a closed tax year may still be adjusted to determine the amount of carryforward deduction available in an open year under examination.
(12) Commitments and Contingencies
In the ordinary course of business, the Company may be subject to legal proceedings, claims and litigation as the Company operates in an industry susceptible to patent legal claims. The Company accounts for estimated losses with respect to legal proceedings and claims when such losses are probable and estimable. Legal costs associated with these matters are expensed when incurred. The Company is not currently a party to any material legal proceedings.
(13) Employee Benefits
The Company has a defined contribution 401(k) plan for eligible employees. Employees are eligible to participate in the plan beginning on their date of hire. Under the terms of the plan, employees may make voluntary contributions as a percentage of compensation. The Company started to match employee contributions effective January 1, 2019. The Company matched 50% of the employee contributions to the 401(k) plan up to a maximum of 4% of the participating employee’s eligible earnings, resulting in a maximum company match of 2% of the participating employee’s eligible earnings, and subject to certain additional statutory dollar limitations. In 2021, the Company increased the match to 50% of the employee contributions up to a maximum of 6% of the participating employee’s eligible earnings, resulting in a maximum company match of 3% of the participating employee’s eligible earnings, and subject to certain additional statutory dollar limitations. For the years ended December 31, 2025 and 2024, the Company made $0.02 million and $0.09 million contributions to the plan, respectively.
(14) Segment Information
Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (CODM) or decision-making group, in making decisions on how to allocate resources and assess performance. The principal executive officer (PEO) is the CODM. The Company operates in one operating segment; discovery and development of Synthetic Biotics.
The CODM manages and allocates resources to the operations of the Company on a total company basis by assessing the overall level of resources available and how to best deploy these resources across functions and research and development projects that are in line with long-term company-wide strategic goals. In making these decisions, the PEO uses consolidated financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets. The CODM performs this assessment based on the Company's consolidated net income (loss) that is reported on the consolidated statements of operations and comprehensive loss. Through this analysis, the CODM assesses performance by comparing actual consolidated net income (loss) versus the budget, and then decides how to allocate resources to invest in the Company's research and development programs. The measure of segment assets is reported on the consolidated balance sheets as total assets. In addition, research and development, general and administrative expenses, and restructuring charges are significant segment expenses regularly provided to the PEO with the following categories: