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Document and Entity Information
3 Months Ended
Mar. 31, 2013
May 08, 2013
Document and Entity Information
Entity Registrant Name SYNERGY PHARMACEUTICALS, INC.
Entity Central Index Key 0001347613
Document Type 10-Q
Document Period End Date Mar 31, 2013
Amendment Flag false
Current Fiscal Year End Date --12-31
Entity Current Reporting Status Yes
Entity Filer Category Accelerated Filer
Entity Common Stock, Shares Outstanding 90,182,090
Document Fiscal Year Focus 2013
Document Fiscal Period Focus Q1
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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current Assets:
Cash and cash equivalents $ 9,067 $ 12,416
Available-for-sale securities 12,049 20,086
Prepaid expenses and other current assets 1,573 1,547
Total Current Assets 22,689 34,049
Property and equipment, net 108 30
Security deposits 93 20
Due from controlling shareholder 3,306
Total Assets 22,890 37,405
Current Liabilities:
Accounts payable 5,978 5,255
Accrued expenses 3,312 2,060
Total Current Liabilities 9,290 7,315
Derivative financial instruments, at estimated fair value-warrants 6,351 5,258
Total Liabilities 15,641 12,573
Stockholders' Equity:
Preferred stock, Authorized 20,000,000 shares, at March 31, 2013 and December 31, 2012, none outstanding      
Common stock, par value of $.0001 authorized 200,000,000 shares at March 31, 2013 and 100,000,000 shares at December 31, 2012. Issued and outstanding 73,779,680 and 66,621,832 shares at March 31, 2013 and December 31, 2012, respectively. 8 7
Additional paid-in capital 134,991 133,878
Deficit accumulated during development stage (127,750) (109,053)
Total Stockholders' Equity 7,249 24,832
Total Liabilities and Stockholders' Equity $ 22,890 $ 37,405
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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Mar. 31, 2013
Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, authorized shares 20,000,000 20,000,000
Preferred stock, outstanding shares 0 0
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized shares 200,000,000 100,000,000
Common stock, Issued shares 73,779,680 66,621,832
Common stock, outstanding shares 73,779,680 66,621,832
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 88 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Costs and Expenses:
Research and development $ 14,344 $ 5,338 $ 72,051
Purchased in-process research and development 29,157
General and administrative 3,278 1,732 30,863
Loss from Operations (17,622) (7,070) (132,071)
Interest and investment income 18 39 514
Interest expense (12)
Other income 1,363
Change in fair value of derivative instruments-warrants (1,093) 8 2,528
Total Other (Loss)/Income (1,075) 47 4,393
Loss from Continuing Operations (18,697) (7,023) (127,678)
Loss from Discontinued Operations (72)
Net Loss $ (18,697) $ (7,023) $ (127,750)
Weighted Average Common Shares Outstanding Basic and Diluted (in shares) 72,789,006 54,298,079
Net Loss per Common Share, Basic and Diluted
Net Loss per Common Share, Basic and Diluted (in dollars per share) $ (0.26) $ (0.13)
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (USD $)
Total
Common Stock, Par Value
Additional Paid in Capital
Deficit Accumulated during the Development Stage
Balance at Nov. 15, 2005
Increase (Decrease) in Stockholders' Equity
Sale of unregistered common stock to founder $ 2,000 $ 7,000 $ (5,000)
Sale of unregistered common stock to founder (in shares) 75,690,608
Common stock issued via registered direct offerings, private placements and other 18,000 1,000 17,000
Common stock issued via registered direct offerings, private placements and other (in shares) 6,850,000
Balance at Dec. 31, 2005 20,000 8,000 12,000
Balance (in shares) at Dec. 31, 2005 82,540,608
Increase (Decrease) in Stockholders' Equity
Net loss for the period (20,000) (20,000)
Balance at Dec. 31, 2006 8,000 12,000 (20,000)
Balance (in shares) at Dec. 31, 2006 82,540,608
Increase (Decrease) in Stockholders' Equity
Capital contribution by shareholders 9,000 9,000
Net loss for the period (20,000) (20,000)
Balance at Dec. 31, 2007 (11,000) 8,000 21,000 (40,000)
Balance (in shares) at Dec. 31, 2007 82,540,608
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings, private placements and other 3,025,000 3,025,000
Common stock issued via registered direct offerings, private placements and other (in shares) 2,520,833
Cancellation of unregistered shares (7,000) 7,000
Cancellation of unregistered shares (in shares) (74,990,604)
Common stock issued via exchange transactions to former Callisto Shareholders and other 27,280,000 3,000 27,277,000
Common stock issued via exchange transactions to former Callisto Shareholders and other (in shares) 22,732,380
Fees and expenses related to financing transactions - paid in cash (73,000) (73,000)
Stock based compensation expense 380,000 380,000
Net loss for the period (31,757,000) (31,757,000)
Balance at Dec. 31, 2008 (1,156,000) 4,000 30,637,000 (31,797,000)
Balance (in shares) at Dec. 31, 2008 32,803,217
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings, private placements and other 15,970,000 1,000 15,969,000
Common stock issued via registered direct offerings, private placements and other (in shares) 11,407,213
Fees and expenses related to financing transactions - paid in cash (260,000) (260,000)
Common stock Issued for services rendered 2,000 2,000
Common stock Issued for services rendered (in shares) 1,250
Stock based compensation expense 1,052,000 1,052,000
Net loss for the period (8,124,000) (8,124,000)
Balance at Dec. 31, 2009 7,484,000 5,000 47,400,000 (39,921,000)
Balance (in shares) at Dec. 31, 2009 44,211,680
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings and private placements 7,179,000 7,179,000
Common stock issued via registered direct offerings and private placements (in shares) 1,209,000
Fees and expenses related to financing transactions - paid in cash (468,000) (468,000)
Warrants classified to derivative liability - net (3,785,000) (3,785,000)
Common stock issued to extend lock-up agreements related to unregistered shares (in shares) 670,933
Common stock Issued for services rendered 18,000 18,000
Common stock Issued for services rendered (in shares) 2,469
Stock based compensation expense 694,000 694,000
Net loss for the period (15,221,000) (15,221,000)
Balance at Dec. 31, 2010 (4,099,000) 5,000 51,038,000 (55,142,000)
Balance (in shares) at Dec. 31, 2010 46,094,082
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings and private placements 34,369,000 1,000 34,368,000
Common stock issued via registered direct offerings and private placements (in shares) 7,733,093
Fees and expenses related to financing transactions - paid in cash (2,148,000) (2,148,000)
Fees and expenses related to financing transactions - paid in units of common stock and warrants (in shares) 77,750
Warrants classified to derivative liability - net (5,094,000) (5,094,000)
Common stock issued to make whole certain unregistered shares (in shares) 215,981
Exercise of warrant 415,000 415,000
Exercise of warrant (in shares) 80,000
Common stock Issued for services rendered 341,000 341,000
Common stock Issued for services rendered (in shares) 79,000
Stock based compensation expense 481,000 481,000
Net loss for the period (14,467,000) (14,467,000)
Balance at Dec. 31, 2011 9,798,000 6,000 79,401,000 (69,609,000)
Balance (in shares) at Dec. 31, 2011 54,279,906
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings, private placements and other 55,862,000 1,000 55,861,000
Common stock issued via registered direct offerings, private placements and other (in shares) 12,315,654
Fees and expenses related to financing transactions - paid in cash (3,774,000) (3,774,000)
Common stock Issued for services rendered 93,000 93,000
Common stock Issued for services rendered (in shares) 26,272
Stock based compensation expense 2,297,000 2,297,000
Net loss for the period (39,444,000) (39,444,000)
Balance at Dec. 31, 2012 24,832,000 7,000 133,878,000 (109,053,000)
Balance (in shares) at Dec. 31, 2012 66,621,832 66,621,832
Increase (Decrease) in Stockholders' Equity
Common stock issued via registered direct offerings, private placements and other 4,671,000 4,671,000
Common stock issued via registered direct offerings, private placements and other (in shares) 758,093
Cancellation of unregistered shares (2,000) 2,000
Cancellation of unregistered shares (in shares) (22,294,976)
Common stock issued via exchange transactions to former Callisto Shareholders and other 3,000 (3,000)
Common stock issued via exchange transactions to former Callisto Shareholders and other (in shares) 28,605,379
Fees and expenses related to financing transactions - paid in cash (140,000) (140,000)
Recapitalization of Synergy (4,904,000) (4,904,000)
Common stock Issued for services rendered 250,000 250,000
Common stock Issued for services rendered (in shares) 55,000
Exercise of stock options 105,000 105,000
Exercise of stock options (in shares) 34,352
Stock based compensation expense 1,132,000 1,132,000
Net loss for the period (18,697,000) (18,697,000)
Balance at Mar. 31, 2013 $ 7,249,000 $ 8,000 $ 134,991,000 $ (127,750,000)
Balance (in shares) at Mar. 31, 2013 73,779,680 73,779,680
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended 88 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Cash Flows From Operating Activities:
Net loss $ (18,697) $ (7,023) $ (127,750)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 10
Loss on disposal of property and equipment 2
Stock-based compensation expense 1,257 438 6,741
Accretion of discount/premium on investment securities 37 (49)
Purchased in-process research and development 28,157
Change in fair value of derivative instruments-warrants 1,093 (8) (2,528)
Changes in operating assets and liabilities:
Accounts payable and accrued expenses 700 303 7,167
Security deposit (20)
Prepaid expenses and other current assets (27) (554) (1,574)
Total Adjustments 3,060 179 37,906
Net Cash Used in Operating Activities (15,637) (6,844) (89,844)
Cash Flows From Investing Activities:
Loans to related parties (270) (278) (3,731)
Sale/(purchases) of available-for-sale securities 8,000 (12,000)
Additions to property and equipment (78) (120)
Net Cash Provided by/(Used in) Investing Activities 7,652 (278) (15,851)
Cash Flows From Financing Activities:
Proceeds from sale of common stock 4,671 121,105
Fees and expenses related to sale of common stock (140) (6,863)
Proceeds from exercise of stock warrants 415
Proceeds from exercise of stock options 105 105
Net Cash Provided by Financing Activities 4,636 114,762
Net (decrease) increase in cash and cash equivalents (3,349) (7,122) 9,067
Cash and cash equivalents at beginning of period 12,416 13,245
Cash and cash equivalents at end of period 9,067 6,123 9,067
Supplementary disclosure of cash flow information:
Cash paid for taxes 18 1 158
Supplementary disclosure of non-cash investing and financing activities:
Value of warrants classified as derivative liability-net 8,879
Value of common stock issued to induce stockholders to extend lock-up agreements 3,235
Recapitalization of Synergy $ 4,904 $ 4,904
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Business Overview
3 Months Ended
Mar. 31, 2013
Business Overview
Business Overview

 

 

1. Business Overview

 

Synergy is a biopharmaceutical company focused primarily on the development of drugs to treat gastrointestinal, or GI, disorders and diseases. Its lead product candidate is plecanatide (formerly called SP-304), a guanylate cyclase C, or GC-C, receptor agonist, to treat GI disorders, primarily chronic idiopathic constipation, or CIC, and constipation-predominant-irritable bowel syndrome, or IBS-C. CIC and IBS-C are functional gastrointestinal disorders that afflict millions of sufferers worldwide. CIC is primarily characterized by constipation symptoms but a majority of these patients report experiencing straining, bloating and abdominal discomfort as among their most bothersome symptoms. IBS-C is characterized by frequent and recurring abdominal pain and/or discomfort associated with chronic constipation. Synergy is also developing SP-333, a second generation GC-C receptor agonist for the treatment of inflammatory bowel diseases, such as ulcerative colitis, or UC.

 

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Basis of Presentation
3 Months Ended
Mar. 31, 2013
Basis of Presentation
Basis of Presentation

2. Basis of Presentation

 

These unaudited condensed consolidated financial statements include Synergy and its wholly-owned subsidiaries:  (1) Synergy Advanced Pharmaceuticals, Inc. and (2) IgX, Ltd (Ireland—inactive). These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and United States generally accepted accounting principles (“GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly Synergy’s interim financial information. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2012 contained in the Company’s Annual Report on Form 10-K filed with the Securities Exchange Commission (“SEC”) on March 18, 2013. All intercompany balances and transactions have been eliminated.

 

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Recent Accounting Pronouncements
3 Months Ended
Mar. 31, 2013
Recent Accounting Pronouncements
Recent Accounting Pronouncements

3. Recent Accounting Pronouncements

 

There are no recent accounting pronouncements affecting the Company.

 

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Cash, Cash Equivalents and Marketable Securities
3 Months Ended
Mar. 31, 2013
Cash, Cash Equivalents and Marketable Securities
Cash, Cash Equivalents and Marketable Securities

4. Cash, Cash Equivalents and Marketable Securities

 

All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. As of March 31, 2013, the amount of cash and cash equivalents was approximately $9.1 million and consists of checking accounts, short-term money market funds held at U.S. commercial banks. As of December 31, 2012, the amount of cash and cash equivalent was approximately $12.4 million and consisted of checking accounts and short-term money market funds with U.S. commercial banks. At any point in time, the Company’s balance of cash and cash equivalent may exceed federally insured limits.

 

The Company’s marketable securities as of March 31, 2013 consist of approximately $12.0 million in U.S. Treasury securities and have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the available-for-sale designations as of each balance sheet date. Cash equivalents and marketable securities are carried at amounts that approximate fair value due to their short-term maturities.  As of March 31, 2013, gross unrealized losses were not material. The Company recognized no net realized gains or losses for the three months ended March 31, 2013. The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. Fair values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, and the Company’s intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investment’s amortized cost basis. During the three months ended March 31, 2013, the Company did not recognize any impairment charges. As of March 31, 2013 and December 31, 2012, the Company did not consider any of its investments to be other-than-temporarily impaired. The Company’s marketable securities as of December 31, 2012 consisted of approximately $20.1 million in U.S. Treasury securities.

 

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Accounting for Shared-Based Payments
3 Months Ended
Mar. 31, 2013
Accounting for Shared-Based Payments
Accounting for Shared-Based Payments

 

 

5. Accounting for Shared-Based Payments

 

Stock Options

 

ASC Topic 718 “Compensation—Stock Compensation” requires companies to measure the cost of employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. ASC Topic 718 did not change the way Synergy accounts for non-employee stock-based compensation. Synergy continues to account for shares of common stock, stock options and warrants issued to non-employees based on the fair value of the stock, stock option or warrant, if that value is more reliably measurable than the fair value of the consideration or services received. The Company accounts for stock options issued and vesting to non-employees in accordance with ASC Topic 505-50 “Equity -Based Payment to Non-Employees” and accordingly the value of the stock compensation to non-employees is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Accordingly the fair value of these options is being “marked to market” quarterly until the measurement date is determined.

 

ASC Topic 718 requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for options exercised (excess tax benefits) be classified as cash inflows from financing activities and cash outflows from operating activities. Due to Synergy’s accumulated deficit position, no excess tax benefits have been recognized. Synergy accounts for common stock, stock options, and warrants granted to employees and non-employees based on the fair market value of the instrument, using the Black-Scholes option pricing model based on assumptions for expected stock price volatility, term of the option, risk-free interest rate and expected dividend yield, at the grant date.

 

Synergy adopted the 2008 Equity Compensation Incentive Plan (the “Plan”) during the quarter ended September 30, 2008. Stock options granted under the Plan typically vest after three years of continuous service from the grant date and have a contractual term of ten years. On January 17, 2013, Synergy amended its 2008 Equity Compensation Incentive Plan and increased the number of shares of its common stock reserved for issuance under the Plan from 7,500,000 to 15,000,000.

 

Stock-based compensation has been recognized in operating results as follow:

 

 

 

Three Months
Ended March 31,

 

November 15, 2005
(inception) to

 

($ in thousands)

 

2013

 

2012

 

March 31, 2012

 

Employees—included in research and development

 

$

276

 

$

116

 

$

1,877

 

Employees—included in general and administrative

 

450

 

94

 

1,859

 

Subtotal employee stock based compensation

 

726

 

210

 

3,736

 

Non-employees—included in research and development

 

135

 

0

 

432

 

Non-employees—included in general and administrative

 

396

 

228

 

2,573

 

Subtotal non-employee stock based compensation

 

531

 

228

 

3,005

 

 

 

 

 

 

 

 

 

Total stock-based compensation expense

 

$

1,257

 

$

438

 

$

6,741

 

 

The unrecognized compensation cost related to non-vested stock options outstanding at March 31, 2013, net of expected forfeitures, was approximately $8.3 million to be recognized over a weighted-average remaining vesting period of approximately 2.4 years. This unrecognized compensation cost does not include amounts related to 4,364,000 shares of stock options which vest upon a change of control.

 

The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions during the periods indicated.

 

 

 

Three Months
Ended
March 31, 2013

 

Three Months
Ended
March 31, 2012

 

Risk-free interest rate

 

0.04%-1.87%

 

1.05%-1.50%

 

Dividend yield

 

 

 

Expected volatility

 

60%

 

60%

 

Expected term (in years)

 

6 years

 

6 years

 

 

A summary of stock option activity and of changes in stock options outstanding under the Plan is presented below:

 

 

 

Number of
Options

 

Exercise Price
Per Share

 

Weighted Average
Exercise Price
Per Share

 

Intrinsic
Value

(in thousands)

 

Weighted Average
Remaining
Contractual Term

 

Balance outstanding, December 31, 2012

 

9,734,268

 

$

0.50 -5.20

 

$

2.75

 

$

24,482

 

6.45 years

 

Granted

 

1,249,316

(a)

$

0.44-20.01

 

$

8.29

 

 

 

 

 

Exercised

 

(34,352

)

$

0.50 — 4.28

 

$

3.04

 

 

 

 

 

Forfeited

 

(500,000

)

$

4.42

 

$

4.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance outstanding, March 31, 2013

 

10,449,232

(a)

$

0.44-20.01

 

$

3.33

 

$

32,466

 

7.1 years

 

Exercisable at March 31, 2013

 

3,917,662

(a)

$

0.44-20.01

 

$

3.09

 

$

14,136

 

5.3 years

 

 

(a)         Includes 1,221,316 stock options issued to former Callisto option holders under the terms of Callisto Synergy Merger Agreement dated January 17, 2013, of which 1,010,026 stock options are vested as of March 31, 2013. (Note 7)

 

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Income Taxes
3 Months Ended
Mar. 31, 2013
Income Taxes
Income Taxes

6. Income Taxes

 

During the year ended December 31, 2012 the Company recorded refundable tax credits in prepaid and other current assets for its (i) 2011 New York State QETC credit, totaling $250,000 and (ii) its New York City Biotechnology Tax Credit for the tax year of 2012 totaling $250,000. These credits have been recorded as other current assets at December 31, 2012 and March 31, 2013.

 

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Stockholder's Equity
3 Months Ended
Mar. 31, 2013
Stockholder's Equity
Stockholder's Equity

7. Stockholder’s Equity

 

From January 1, 2013 through March 31, 2013, Synergy sold 758,093 shares of common stock with gross proceeds of approximately $4.67 million, at an average selling price of $6.16 per share, pursuant to the June 2012 controlled equity sales agreement with a placement agent. Selling expenses totaled approximately $140,000.

 

On October 18, 2012 Synergy entered into a Stock Purchase Agreement with a clinical trial contract research organization (or CRO) whereby the CRO would be compensated for services performed by issuance of shares of Synergy common stock. The agreed fair value of the work performed was $250,000 and represented approximately 25% of the total contract. The agreed number of shares was 55,000 at a price of $4.55 per share. The closing stock price for Synergy common stock on October 17, 2012 was $4.57 per share. Approximately 50% of the services were completed as of December 31, 2012 and Synergy accrued share based compensation expense of $125,000 during the quarter ended December 31, 2012. The remaining balance of $125,000 was recorded as share based compensation expense upon completion of the contact in January 2013 and Synergy issued 55,000 shares to the CRO during the quarter ended March 31, 2013.

 

On January 15, 2013, the number of authorized shares of common stock increased from 100,000,000 to 200,000,000.

 

Synergy - Callisto Merger

 

On January 17, 2013, Synergy completed its acquisition of Callisto Pharmaceuticals, pursuant to the Merger Agreement.  As a result of the Merger, Synergy issued a total of 28,605,379 shares of its common stock to former Callisto stockholders in exchange for their shares of Callisto common stock, in which each outstanding share of Callisto common stock was converted into the right to receive 0.1799 of one share of Synergy common stock (the Exchange Ratio). The 22,294,976 shares of Synergy common stock held by Callisto were canceled.

 

In addition, each stock option exercisable for shares of Callisto common stock that was outstanding on January 17, 2013 was assumed by Synergy and converted into a stock option to purchase the number of shares of Synergy’s common stock that the holder would have received if such holder had exercised such stock option for shares of Callisto common stock prior to the Merger and exchanged such shares for shares of the Company’s common stock in accordance with the Exchange Ratio. Synergy issued 1,221,316 stock options in connection with this exchange. In addition, each outstanding warrant or obligation to issue a warrant to purchase shares of Callisto common stock, whether or not vested, was cancelled.

 

As Callisto does not meet the input, process and output definition of a business under ASC 805, the merger was not accounted for as a business combination. The merger was accounted for as a recapitalization of Synergy, effected through exchange of Callisto shares for Synergy shares, and the cancellation of its shares held by Callisto. The excess of Synergy shares issued to Callisto shareholders over Synergy shares held by Callisto is the result of a discount associated with the restricted nature of the new Synergy shares received by Callisto shareholders. Therefore, considering this discount, the share exchange has been determined to be equal from a fair value stand point. Upon the effective date of the Merger, Synergy accounted for the merger by assuming Callisto’s net liabilities, of approximately $1.3 million, with a corresponding decrease in additional paid in capital. Synergy’s financial statements will not be restated retroactively to reflect the historical financial position or results of operations of Callisto.

 

In addition, as of January 17, 2013, Synergy had advanced Callisto approximately $3.6 million, which was Callisto’s share of Synergy payments for common operating costs since July 2008. This balance was eliminated upon the recapitalization date, with a corresponding decrease in additional paid in capital .

 

Net liabilities of Callisto assumed and advances to Callisto eliminated in connection with this recapitalization were as follows:

 

 

 

Balance

 

($ in thousands)

 

January 17, 2013

 

Assets

 

 

 

Cash

 

$

 

Security deposits

 

74

 

Total assets acquired

 

74

 

Liabilities

 

 

 

Accounts payable and other liabilities

 

(1,400

)

Net assumed liabilities

 

(1,326

)

Elimination of amounts due from Callisto

 

(3,578

)

Recapitalization of Synergy

 

$

(4,904

)

 

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Research and Development Expense
3 Months Ended
Mar. 31, 2013
Research and Development Expense
Research and Development Expense

8. Research and Development Expense

 

Research and development costs include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, regulatory and scientific consulting fees, as well as contract research, patient costs, drug formulation and tableting, data collection, monitoring, and clinical insurance.

 

In accordance with FASB ASC Topic 730-10-55, Research and Development, Synergy recorded prepaid research and development costs of approximately $0.7 million and $0.9 million as of March 31, 2013 and December 31, 2012, respectively, for nonrefundable pre-payments for production of drug substance and analytical testing services for its drug candidates. In accordance with this guidance, Synergy expenses these costs when drug compound is delivered and services are performed.

 

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Derivative Financial Instruments
3 Months Ended
Mar. 31, 2013
Derivative Financial Instruments
Derivative Financial Instruments

9. Derivative Financial Instruments

 

Synergy Derivative Financial Instruments

 

Effective January 1, 2009, the Company adopted provisions of ASC Topic 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity” (“ASC Topic 815-40”). ASC Topic 815-40 clarifies the determination of whether an instrument issued by an entity (or an embedded feature in the instrument) is indexed to an entity’s own stock, which would qualify as a scope exception under ASC Topic 815-10.

 

Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, Synergy has determined that certain warrants issued in connection with sale of its common stock must be classified as derivative instruments. In accordance with ASC Topic 815-40, these warrants are also being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value is being recorded in the Company’s statement of operations. The Company estimates the fair value of certain warrants using the Black-Scholes option pricing model in order to determine the associated derivative instrument liability and change in fair value described above. The range of assumptions used to determine the fair value of the warrants at each period end were:

 

 

 

Three Months Ended
March 31, 2013

 

Three Months Ended
March 31, 2012

 

Fair value of Synergy common stock

 

$

6.07

 

$

4.05

 

Expected warrant term

 

5.0-7.0 years

 

5.0 - 7.0 years

 

Risk-free interest rate

 

0.31% - 0.77%

 

0.51% - 1.33%

 

Expected volatility

 

60%

 

60%

 

Dividend yield

 

 

 

 

Fair value of stock is the closing market price of the Company’s common stock on the date of warrant issuance and at the end of each reporting period when the derivative instruments are marked to market. Expected volatility is a management estimate of future volatility, over the expected warrant term, based on historical volatility of Synergy’s common stock. The warrants have a transferability provision and based on guidance provided in SAB 107 for instruments issued with such a provision, Synergy used the full contractual term as the expected term of the warrants. The risk free rate is based on the U.S. Treasury security rates for maturities consistent with the expected remaining term of the warrants at the date of grant or quarterly revaluation.

 

As of March 31, 2013, certain of Synergy’s outstanding warrants contained a price protection clause which variable exercise price requires the Company to use a binomial model to determine fair value. The range of assumptions used to determine the fair value of the warrants at the dates indicated were as follows:

 

 

 

Three months ended,
March 31, 2013

 

Three months ended,
March 31, 2012

 

Fair value of Synergy common stock

 

$

6.07

 

$

3.28

 

Expected warrant term

 

3.63 years

 

4.63 years

 

Risk-free interest rate

 

0.36

%

1.04

%

Expected volatility

 

60

%

60

%

Dividend yield

 

0

%

0

%

 

Fair value of stock is the closing market price of the Company’s common stock on the date of warrant issuance and end of each reporting period the derivative instruments are marked to market. Expected volatility is based on historical volatility of Synergy’s common stock. The warrants have a transferability provision and based on guidance provided in SAB 107 for instruments issued with such a provision, Synergy used the full contractual term as the expected term of the warrants. The risk free rate is based on the U.S. Treasury security rates for maturities consistent with the expected remaining term of the warrants at the date of grant or quarterly revaluation.

 

The following table sets forth the components of changes in the Synergy’s outstanding warrants which were deemed derivative financial instruments and the associated liability balance for the periods indicated:

 

Date

 

Description

 

Warrants

 

Derivative
Instrument
Liability

(in thousands)

 

12/31/2011

 

Balance

 

2,265,160

 

$

3,325

 

3/31/2012

 

Fair value of new warrants issued during the quarter

 

 

 

 

 

3/31/2012

 

Change in fair value of warrants during the quarter recognized as other income in the statement of operations

 

 

 

(8

)

3/31/2012

 

Balance

 

2,265,160

 

3,317

 

6/30/2012

 

Fair value of new warrants issued during the quarter

 

112,500

 

169

 

 

 

 

 

 

 

 

 

6/30/2012

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

1,317

 

6/30/2012

 

Balance

 

2,377,660

 

4,803

 

9/30/2012

 

Fair value of new warrants issued during the quarter

 

 

 

9/30/2012

 

Change in fair value of warrants during the quarter recognized as other income in the statement of operations

 

 

(140

)

9/30/2012

 

Balance

 

2,377,660

 

4,663

 

12/31/2012

 

Fair value of new warrants issued during the quarter

 

 

 

12/31/2012

 

Reclass of derivative liability to equity during the quarter

 

(112,500

)

(169

)

12/31/2012

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

764

 

12/31/2012

 

Balance

 

2,265,160

 

5,258

 

3/31/2013

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

1,093

 

 

 

 

 

 

 

 

 

3/31/2013

 

Balance

 

2,265,160

 

$

6,351

 

 

Synergy Fair Value Measurements

 

The following table presents the Company’s liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2012 and March 31, 2013:

 

($ in thousands)

 

Description

 

Quoted Prices
in
Active
Markets
for Identical
Assets and
Liabilities
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Balance as of
December 31,
2012

 

Quoted Prices
in
Active
Markets
for Identical
Assets and
Liabilities
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Balance as of
March 31,
2013

 

Derivative liabilities related to Warrants

 

$

 

$

 

$

5,258

 

$

5,258

 

$

 

$

 

$

6,351

 

$

6,351

 

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 liabilities for the three months ended March 31, 2013:

 

Description 

 

Balance at
December 31,
2012

 

Fair Value of
warrants upon
issuance

 

(Gain) or loss
recognized in
earning from
Change in Fair
Value

 

Balance as of
March 31,
2012

 

Derivative liabilities related to Warrants

 

$

5,258

 

$

 

$

1,093

 

$

6,351

 

 

The unrealized gains or losses on the derivative liabilities are recorded as a change in fair value of derivative liabilities in the Company’s statement of operations. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company reviews the assets and liabilities that are subject to ASC Topic 815-40. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

 

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Loss per Share
3 Months Ended
Mar. 31, 2013
Loss per Share
Loss per Share

 

 

10. Loss per Share

 

Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, (“ASC Topic 260”) for all periods presented. In accordance with ASC Topic 260, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Diluted weighted-average shares are the same as basic weighted-average shares because shares issuable pursuant to the exercise of stock options would be antidilutive. For the three months ended March 31, 2013 and March 31, 2012 the effect of 10,449,232 and 6,736,039, respectively outstanding stock options were excluded from the calculation of diluted loss per share because the effect was antidilutive. For the three months ended March 31, 2013 and March 31, 2012, the effect of 5,647,203 and 5,597,203 outstanding warrants were excluded from the calculation of diluted loss per share because the effect was antidilutive.

 

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Subsequent Event
3 Months Ended
Mar. 31, 2013
Subsequent Event
Subsequent Event

11. Subsequent Event

 

On April 16, 2013, Synergy closed a public offering of 16,375,000 shares of its common stock at a price of $5.50 per share, less underwriting discounts and commissions. The net proceeds to the Company from this sale was approximately $84.4 million, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The Company has also granted the underwriters a 30-day option to purchase up to an additional 2,456,250 shares of its common stock to cover over-allotments, if any. As of May 8, 2013 this option had not been exercised. The following table sets forth the pro-forma effect on the financial position of the Company had the transaction taken place on March 31, 2013:

 

($000’s except share amounts)

 

March 31, 2013
As Reported

 

Effect of
April 16, 2013
Public Offering

 

March 31, 2013
Pro-forma

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and available for sale securities

 

$

21,116

 

$

84,444

 

$

105,560

 

Total Assets

 

22,890

 

84,444

 

107,334

 

 

 

 

 

 

 

 

 

Common Stock

 

8

 

2

 

10

 

Additional paid-in-capital

 

134,991

 

84,442

 

219,433

 

Deficit accumulated during development stage

 

(127,750

)

 

(127,750

)

Total stockholder’s equity

 

7,249

 

84,444

 

91,693

 

Total liabilities and stockholder’s equity

 

$

22,890

 

$

84,444

 

$

107,334

 

 

 

 

 

 

 

 

 

Common Shares Outstanding

 

73,779,680

 

16,375,000

 

90,154,680

 

 

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Accounting for Shared-Based Payments (Tables)
3 Months Ended
Mar. 31, 2013
Accounting for Shared-Based Payments
Schedule of stock-based compensation expense

 

 

 

 

Three Months
Ended March 31,

 

November 15, 2005
(inception) to

 

($ in thousands)

 

2013

 

2012

 

March 31, 2012

 

Employees—included in research and development

 

$

276

 

$

116

 

$

1,877

 

Employees—included in general and administrative

 

450

 

94

 

1,859

 

Subtotal employee stock based compensation

 

726

 

210

 

3,736

 

Non-employees—included in research and development

 

135

 

0

 

432

 

Non-employees—included in general and administrative

 

396

 

228

 

2,573

 

Subtotal non-employee stock based compensation

 

531

 

228

 

3,005

 

 

 

 

 

 

 

 

 

Total stock-based compensation expense

 

$

1,257

 

$

438

 

$

6,741

 

 

Schedule of weighted-average assumptions used to estimate fair value of stock option awards using the Black-Scholes option valuation model

 

 

 

 

Three Months
Ended
March 31, 2013

 

Three Months
Ended
March 31, 2012

 

Risk-free interest rate

 

0.04%-1.87%

 

1.05%-1.50%

 

Dividend yield

 

 

 

Expected volatility

 

60%

 

60%

 

Expected term (in years)

 

6 years

 

6 years

 

 

Summary of stock option activity and of changes in stock options outstanding under the Plan

 

 

 

 

Number of
Options

 

Exercise Price
Per Share

 

Weighted Average
Exercise Price
Per Share

 

Intrinsic
Value

(in thousands)

 

Weighted Average
Remaining
Contractual Term

 

Balance outstanding, December 31, 2012

 

9,734,268

 

$

0.50 -5.20

 

$

2.75

 

$

24,482

 

6.45 years

 

Granted

 

1,249,316

(a)

$

0.44-20.01

 

$

8.29

 

 

 

 

 

Exercised

 

(34,352

)

$

0.50 — 4.28

 

$

3.04

 

 

 

 

 

Forfeited

 

(500,000

)

$

4.42

 

$

4.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance outstanding, March 31, 2013

 

10,449,232

(a)

$

0.44-20.01

 

$

3.33

 

$

32,466

 

7.1 years

 

Exercisable at March 31, 2013

 

3,917,662

(a)

$

0.44-20.01

 

$

3.09

 

$

14,136

 

5.3 years

 

 

(a)         Includes 1,221,316 stock options issued to former Callisto option holders under the terms of Callisto Synergy Merger Agreement dated January 17, 2013, of which 1,010,026 stock options are vested as of March 31, 2013. (Note 7)

 

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Stockholder's Equity (Tables)
3 Months Ended
Mar. 31, 2013
Stockholder's Equity
Schedule of net liabilities of Callisto assumed and advances to Callisto eliminated in connection with this recapitalization

 

 

 

 

Balance

 

($ in thousands)

 

January 17, 2013

 

Assets

 

 

 

Cash

 

$

 

Security deposits

 

74

 

Total assets acquired

 

74

 

Liabilities

 

 

 

Accounts payable and other liabilities

 

(1,400

)

Net assumed liabilities

 

(1,326

)

Elimination of amounts due from Callisto

 

(3,578

)

Recapitalization of Synergy

 

$

(4,904

)

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Derivative Financial Instruments (Tables)
3 Months Ended
Mar. 31, 2013
Derivative Financial Instruments
Schedule of changes in derivative financial instruments liability balance

 

 

Date

 

Description

 

Warrants

 

Derivative
Instrument
Liability

(in thousands)

 

12/31/2011

 

Balance

 

2,265,160

 

$

3,325

 

3/31/2012

 

Fair value of new warrants issued during the quarter

 

 

 

 

 

3/31/2012

 

Change in fair value of warrants during the quarter recognized as other income in the statement of operations

 

 

 

(8

)

3/31/2012

 

Balance

 

2,265,160

 

3,317

 

6/30/2012

 

Fair value of new warrants issued during the quarter

 

112,500

 

169

 

 

 

 

 

 

 

 

 

6/30/2012

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

1,317

 

6/30/2012

 

Balance

 

2,377,660

 

4,803

 

9/30/2012

 

Fair value of new warrants issued during the quarter

 

 

 

9/30/2012

 

Change in fair value of warrants during the quarter recognized as other income in the statement of operations

 

 

(140

)

9/30/2012

 

Balance

 

2,377,660

 

4,663

 

12/31/2012

 

Fair value of new warrants issued during the quarter

 

 

 

12/31/2012

 

Reclass of derivative liability to equity during the quarter

 

(112,500

)

(169

)

12/31/2012

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

764

 

12/31/2012

 

Balance

 

2,265,160

 

5,258

 

3/31/2013

 

Change in fair value of warrants during the quarter recognized as other expense in the statement of operations

 

 

1,093

 

 

 

 

 

 

 

 

 

3/31/2013

 

Balance

 

2,265,160

 

$

6,351

 

Schedule of liabilities that are measured and recognized at fair value on a recurring basis

 

 

($ in thousands)

 

Description

 

Quoted Prices
in
Active
Markets
for Identical
Assets and
Liabilities
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Balance as of
December 31,
2012

 

Quoted Prices
in
Active
Markets
for Identical
Assets and
Liabilities
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Balance as of
March 31,
2013

 

Derivative liabilities related to Warrants

 

$

 

$

 

$

5,258

 

$

5,258

 

$

 

$

 

$

6,351

 

$

6,351

 

Summary of changes in the fair value of Level 3 liabilities

 

 

Description 

 

Balance at
December 31,
2012

 

Fair Value of
warrants upon
issuance

 

(Gain) or loss
recognized in
earning from
Change in Fair
Value

 

Balance as of
March 31,
2012

 

Derivative liabilities related to Warrants

 

$

5,258

 

$

 

$

1,093

 

$

6,351

 

 

Derivative instrument liability | Warrants | Black-Scholes option pricing model
Derivative Financial Instruments
Schedule of range of assumptions used to determine the fair value of the warrants

 

 

 

 

Three Months Ended
March 31, 2013

 

Three Months Ended
March 31, 2012

 

Fair value of Synergy common stock

 

$

6.07

 

$

4.05

 

Expected warrant term

 

5.0-7.0 years

 

5.0 - 7.0 years

 

Risk-free interest rate

 

0.31% - 0.77%

 

0.51% - 1.33%

 

Expected volatility

 

60%

 

60%

 

Dividend yield

 

 

 

 

Derivative instrument liability | Warrants | Binomial model
Derivative Financial Instruments
Schedule of range of assumptions used to determine the fair value of the warrants

 

 

 

 

Three months ended,
March 31, 2013

 

Three months ended,
March 31, 2012

 

Fair value of Synergy common stock

 

$

6.07

 

$

3.28

 

Expected warrant term

 

3.63 years

 

4.63 years

 

Risk-free interest rate

 

0.36

%

1.04

%

Expected volatility

 

60

%

60

%

Dividend yield

 

0

%

0

%

 

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Subsequent Event (Tables)
3 Months Ended
Mar. 31, 2013
Subsequent Event
Schedule of pro-forma effect on the financial position

 

 

($000’s except share amounts)

 

March 31, 2013
As Reported

 

Effect of
April 16, 2013
Public Offering

 

March 31, 2013
Pro-forma

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and available for sale securities

 

$

21,116

 

$

84,444

 

$

105,560

 

Total Assets

 

22,890

 

84,444

 

107,334

 

 

 

 

 

 

 

 

 

Common Stock

 

8

 

2

 

10

 

Additional paid-in-capital

 

134,991

 

84,442

 

219,433

 

Deficit accumulated during development stage

 

(127,750

)

 

(127,750

)

Total stockholder’s equity

 

7,249

 

84,444

 

91,693

 

Total liabilities and stockholder’s equity

 

$

22,890

 

$

84,444

 

$

107,334

 

 

 

 

 

 

 

 

 

Common Shares Outstanding

 

73,779,680

 

16,375,000

 

90,154,680

 

 

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Cash, Cash Equivalents and Marketable Securities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Dec. 31, 2011
Cash, Cash Equivalents and Marketable Securities
Cash and cash equivalents $ 9,067 $ 12,416 $ 6,123 $ 13,245
Available-for-sale securities 12,049 20,086
Net realized gains or losses $ 0
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Accounting for Shared-Based Payments (Details) (USD $)
3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended 88 Months Ended 3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Mar. 31, 2013
Jan. 17, 2013
2008 Equity Compensation Incentive Plan
Dec. 31, 2012
2008 Equity Compensation Incentive Plan
Mar. 31, 2013
Employees
Mar. 31, 2012
Employees
Mar. 31, 2013
Employees
Mar. 31, 2013
Employees
Research and development
Mar. 31, 2012
Employees
Research and development
Mar. 31, 2013
Employees
Research and development
Mar. 31, 2013
Employees
General and administrative
Mar. 31, 2012
Employees
General and administrative
Mar. 31, 2013
Employees
General and administrative
Mar. 31, 2013
Non-employees
Mar. 31, 2012
Non-employees
Mar. 31, 2013
Non-employees
Mar. 31, 2013
Non-employees
Research and development
Mar. 31, 2012
Non-employees
Research and development
Mar. 31, 2013
Non-employees
Research and development
Mar. 31, 2013
Non-employees
General and administrative
Mar. 31, 2012
Non-employees
General and administrative
Mar. 31, 2013
Non-employees
General and administrative
Mar. 31, 2013
Stock options
Mar. 31, 2012
Stock options
Shared-based payments
Amount of excess tax benefits recognized $ 0
Vesting period 3 years
Contractual term 10 years
Number of shares reserved under the plan 15,000,000 7,500,000
Total stock-based compensation expense (in dollars) 1,257,000 438,000 6,741,000 726,000 210,000 3,736,000 276,000 116,000 1,877,000 450,000 94,000 1,859,000 531,000 228,000 3,005,000 135,000 0 432,000 396,000 228,000 2,573,000
Unrecognized compensation cost related to non-vested employee stock options (in dollars) $ 8,300,000
Weighted-average remaining vesting period over which unrecognized compensation cost is to be recognized 2 years 4 months 24 days
Number of stock options which vest upon a change of control 4,364,000
Weighted-average assumptions used to estimate fair value of stock option awards using the Black-Scholes option valuation model
Risk-free interest rate, minimum (as a percent) 0.04% 1.05%
Risk-free interest rate, maximum (as a percent) 1.87% 1.50%
Expected volatility (as a percent) 60.00% 60.00%
Expected term 6 years 6 years
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Accounting for Shared-Based Payments (Details 2) (Stock options, USD $)
In Thousands, except Share data, unless otherwise specified
0 Months Ended 12 Months Ended 3 Months Ended
Jan. 17, 2013
Callisto
Mar. 31, 2013
Callisto
Dec. 31, 2012
Exercise price per Share 0.50 - 5.20
Mar. 31, 2013
Exercise price per Share 0.44 - 20.01
Mar. 31, 2013
Exercise price per Share 0.44 - 20.01
Maximum
Mar. 31, 2013
Exercise price per Share 0.44 - 20.01
Minimum
Mar. 31, 2013
Exercise price per Share 0.50 - 4.28
Mar. 31, 2013
Exercise price per Share 4.42
Shared-based payments
Options outstanding (in shares) 9,734,268 10,449,232
Granted (in shares) 1,221,316 1,249,316
Exercised (in shares) (34,352)
Forfeited (in shares) (500,000)
Exercisable at the end of the period (in shares) 3,917,662
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share) $ 0.5 $ 0.44 $ 0.5
Exercise price, high end of the range (in dollars per share) $ 5.2 $ 20.01 $ 4.28
Granted (in dollars per share) $ 20.01 $ 0.44
Forfeited (in dollars per share) $ 4.42
Exercisable at the end of the period (in dollars per share) $ 20.01 $ 0.44
Weighted average exercise price per share of outstanding options (in dollars per share) $ 2.75 $ 3.33
Granted (in dollars per share) $ 8.29
Exercised (in dollars per share) $ 3.04
Forfeited (in dollars per share) $ 4.42
Exercisable at the end of the period (in dollars per share) $ 3.09
Intrinsic Value
Intrinsic value of options outstanding (in dollars) $ 24,482 $ 32,466
Intrinsic value of options exercisable (in dollars) $ 14,136
Weighted Average Remaining Contractual Term
Balance at the end of the period 6 years 5 months 12 days 7 years 4 days
Exercisable at the end of the period 5 years 3 months 18 days
Additional disclosures
Vested (in shares) 1,010,026
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Income Taxes (Details) (New York City Department of Finance, USD $)
Mar. 31, 2013
QETC credit
Income taxes
Refundable tax credits $ 250,000
Biotechnology Tax Credit
Income taxes
Refundable tax credits $ 250,000
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Stockholder's Equity (Details) (USD $)
3 Months Ended 12 Months Ended 88 Months Ended 3 Months Ended 0 Months Ended 1 Months Ended 3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Mar. 31, 2013
Jan. 15, 2013
Mar. 31, 2013
June 21, 2012 Equity sales agreement
Jan. 17, 2013
Callisto Merger Agreement
Oct. 18, 2012
CRO stock purchase agreement
Jan. 31, 2013
CRO stock purchase agreement
Dec. 31, 2012
CRO stock purchase agreement
Dec. 31, 2012
CRO stock purchase agreement
Oct. 17, 2012
CRO stock purchase agreement
Stockholder's Equity
Number of authorized shares of common stock 200,000,000 100,000,000 200,000,000 100,000,000
Stockholder's Equity
Fair value of common stock issued for services rendered $ 250,000 $ 93,000 $ 341,000 $ 18,000 $ 2,000 $ 250,000
Percentage of services completed of total contract 50.00%
Fair value of common stock issued for services rendered (in shares) 55,000
Closing stock price (in dollars per share) $ 4.57
Share based compensation expense 1,257,000 438,000 6,741,000 125,000 125,000
Common stock issued (in shares) 758,093
Gross proceeds from sale of common stock by the entity 4,671,000 121,105,000 4,670,000
Common stock price (in dollars per share) $ 6.16 $ 4.55
Selling agent fees 140,000 6,863,000 140,000
Percentage of the total contract 25.00%
Shares issued in connection with merger 28,605,379
Exchange Ratio of shares 0.1799
Cancellation of stock (in shares) 22,294,976
Shares granted in connection with merger 1,221,316
Assets
Security deposits 74,000
Total assets acquired 74,000
Liabilities
Accounts payable and other liabilities (1,400,000)
Net assumed liabilities (1,326,000)
Elimination of amounts due from Callisto (3,578,000)
Recapitalization of Synergy $ (4,904,000) $ (4,904,000) $ (4,904,000)
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Research and Development Expense (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Research and Development Expense
Prepaid research and development costs $ 0.7 $ 0.9
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Derivative Financial Instruments (Details) (Derivative instrument liability, Warrants, USD $)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Black-Scholes option pricing model
Range of assumptions used to determine the fair value of the warrants
Fair value of Synergy common stock (in dollars per share) $ 6.07 $ 4.05
Expected volatility (as a percent) 60.00% 60.00%
Black-Scholes option pricing model | Minimum
Range of assumptions used to determine the fair value of the warrants
Expected warrant term 5 years 5 years
Risk-free interest rate (as a percent) 0.31% 0.51%
Black-Scholes option pricing model | Maximum
Range of assumptions used to determine the fair value of the warrants
Expected warrant term 7 years 7 years
Risk-free interest rate (as a percent) 0.77% 1.33%
Binomial model
Range of assumptions used to determine the fair value of the warrants
Fair value of Synergy common stock (in dollars per share) $ 6.07 $ 3.28
Expected warrant term 3 years 7 months 17 days 4 years 7 months 17 days
Risk-free interest rate (as a percent) 0.36% 1.04%
Expected volatility (as a percent) 60.00% 60.00%
Dividend yield (as a percent) 0.00% 0.00%
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Derivative Financial Instruments (Details 2) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 88 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Mar. 31, 2013
Changes in warrants
Balance at the beginning of the period (in shares) 2,265,160 2,377,660 2,377,660 2,265,160 2,265,160
Fair value of new warrants issued during the quarter (in shares) 112,500
Reclassification of derivative liability to equity during the quarter (in shares) (112,500)
Balance at the end of the period (in shares) 2,265,160 2,265,160 2,377,660 2,377,660 2,265,160 2,265,160
Changes in derivative instrument liability
Balance at the beginning of the period $ 5,258 $ 4,663 $ 4,803 $ 3,317 $ 3,325
Fair value of new warrants issued during the quarter 169
Change in fair value of warrants during the quarter recognized as other expense (income) in the statement of operations 1,093 764 (140) 1,317 (8) (2,528)
Reclassification of derivative liability to equity during the quarter (169)
Balance at the end of the period $ 6,351 $ 5,258 $ 4,663 $ 4,803 $ 3,317 $ 6,351
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Derivative Financial Instruments (Details 3) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Derivative Financial Instruments
Derivative liabilities related to Warrants $ 6,351 $ 5,258 $ 4,663 $ 4,803 $ 3,317 $ 3,325
Fair value on a recurring basis | Significant Unobservable Inputs (Level 3) | Derivative instrument liability | Warrants
Derivative Financial Instruments
Derivative liabilities related to Warrants 6,351 5,258
Fair value on a recurring basis | Total Fair Value | Derivative instrument liability | Warrants
Derivative Financial Instruments
Derivative liabilities related to Warrants $ 6,351 $ 5,258
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Derivative Financial Instruments (Details 4) (Derivative instrument liability, Warrants, Level 3, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Derivative instrument liability | Warrants | Level 3
Changes in the fair value of Level 3 liabilities
Balance at the beginning of the period $ 5,258
(Gain) or loss recognized in earning from Change in Fair Value 1,093
Balance at the end of the period $ 6,351
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Loss per Share (Details)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Stock options
Loss per Share
Number of antidilutive securities excluded from the calculation of diluted loss per share 10,449,232 6,736,039
Warrants
Loss per Share
Number of antidilutive securities excluded from the calculation of diluted loss per share 5,647,203 5,597,203
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Subsequent Event (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 88 Months Ended 0 Months Ended
Mar. 31, 2013
Mar. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Dec. 31, 2007
Dec. 31, 2005
Mar. 31, 2013
Pro-forma
Apr. 16, 2013
Subsequent Event
Apr. 16, 2013
Subsequent Event
Public Offering
Subsequent Event
Number of shares of common stock issued 16,375,000
Common stock price (in dollars per share) $ 5.5
Net proceeds $ 4,671 $ 121,105 $ 84,400
Term of options granted to underwriters 30 days
Options granted to underwriters (in shares) 2,456,250
Cash, cash equivalents and available for sale securities 21,116 21,116 105,560 84,444
Total Assets 22,890 22,890 37,405 107,334 84,444
Common Stock 8 8 7 10 2
Additional paid-in capital 134,991 134,991 133,878 219,433 84,442
Deficit accumulated during development stage (127,750) (127,750) (109,053) (127,750)
Total Stockholders' Equity 7,249 7,249 24,832 9,798 (4,099) 7,484 (1,156) (11) 20 91,693 84,444
Total Liabilities and Stockholders' Equity $ 22,890 $ 22,890 $ 37,405 $ 107,334 $ 84,444
Common Shares Outstanding 73,779,680 73,779,680 66,621,832 90,154,680 16,375,000
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