UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the Quarterly Period Ended
or
For the transition period from ____________ to ____________
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) |
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(Address of principal executive offices) | (Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
The |
Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 2, 2024,
SOLIGENIX, INC.
Index
i
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
Assets |
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Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Unbilled revenue | — | | ||||
Research and development incentives receivable, current |
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Deferred issuance cost | | — | ||||
Prepaid expenses and other current assets |
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Total current assets |
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Security deposit |
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Office furniture and equipment, net |
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Right-of-use lease assets |
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Research and development incentives receivable, net of current portion |
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Total assets | $ | | $ | | ||
Liabilities and shareholders' equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses |
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Accrued compensation |
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Lease liabilities, current |
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Convertible debt | | | ||||
Total current liabilities |
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Non-current liabilities: |
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Convertible debt |
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Lease liabilities, net of current portion |
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Total liabilities |
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Commitments and contingencies (Note 6) |
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Shareholders’ equity: |
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Preferred stock, | | | ||||
Common stock, $ |
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Additional paid-in capital (1) |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity | $ | | $ | |
(1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenues: |
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Grant revenue |
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Total revenues |
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Cost of revenues |
| ( |
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Gross profit |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Foreign currency transaction gain |
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Interest income (expense), net |
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Research and development incentives | ( | | ( | | ||||||||
Other income | | | | | ||||||||
Loss on extinguishment of debt |
| — |
| ( |
| — |
| ( | ||||
Change in fair value of convertible debt | | | | | ||||||||
Total other income (expense) | | | | ( | ||||||||
Net loss before income taxes |
| ( |
| ( |
| ( |
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Income tax benefit |
| — |
| — |
| — |
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Net loss applicable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted net loss per share (1) | ( | ( | ( | ( | ||||||||
Basic and diluted weighted average common shares outstanding (1) |
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(1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
For the Three and Six Months Ended June 30, 2024 and 2023
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): |
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Foreign currency translation adjustments | | ( | | ( | ||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity/(Deficit)
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
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| Accumulated |
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Mezzanine Equity- | Additional | Other | |||||||||||||||||||||
Series D Preferred Stock | Common Stock | Paid–In | Comprehensive | Accumulated | |||||||||||||||||||
Shares | Par Value |
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| Shares | Par Value | Capital | Income (Loss) | Deficit | Total | ||||||||||||||
Balance, December 31, 2023 |
| | $ | | $ | | $ | $ | $ | ( | $ | | |||||||||||
Issuance of common stock and pre-funded warrants in connection with April 2024 public offering | | | | | | — | — | | |||||||||||||||
Issuance costs associated with April 2024 public offering | — | — | — | — | ( | — | — | ( | |||||||||||||||
Fractional shares issued in June 2024 reverse stock split | — | — | | | ( | — | — | — | |||||||||||||||
Issuance of common stock upon exercise of pre-funded warrants |
| — | — | |
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| — |
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Issuance of common stock associated with conversion of debt | — | — | | | | — | — | | |||||||||||||||
Share-based compensation expense |
| — | — | — |
| — |
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| — |
| — |
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Foreign currency translation adjustment |
| — | — | — |
| — |
| — |
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Net loss |
| — | — | — |
| — |
| — |
| — |
| ( | ( | ||||||||||
Balance, June 30, 2024 |
| | $ | | | $ | | $ | | $ | | $ | ( | $ | |
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| Accumulated |
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Mezzanine Equity- | Additional | Other | |||||||||||||||||||||
Series D Preferred Stock | Common Stock | Paid–In | Comprehensive | Accumulated | |||||||||||||||||||
Shares | Par Value | Shares | Par Value | Capital | Income (Loss) | Deficit | Total | ||||||||||||||||
Balance, December 31, 2022 |
| | $ | | $ | $ | $ | | $ | ( | $ | ( | |||||||||||
Sale of common stock pursuant to B. Riley At Market Issuance Sales Agreement |
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Issuance costs associated with B. Riley At Market Issuance Sales Agreement |
| — | — | — |
| — |
| ( |
| — | — |
| ( | ||||||||||
Redemption of Series D preferred stock | — | ( | — | — | — | — | — | — | |||||||||||||||
Issuance of common stock in May 2023 public offering |
| — | — | | | | — | — |
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Issuance costs associated with May 2023 public offering | — | — | — | — | ( | — | — | ( | |||||||||||||||
Issuance of common stock to vendors |
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Issuance of common stock for purchase option |
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Exercise of pre-funded warrants |
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Share-based compensation expense |
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Foreign currency translation adjustment |
| — | — | — |
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| ( |
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Net loss |
| — | — | — |
| — |
| — |
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| ( |
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Balance, June 30, 2023 |
| | $ | | | $ | | $ | | $ | | $ | ( | $ | |
Adjusted to reflect the reverse stock split of
-for-sixteen effective June 5, 2024The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity/(Deficit)
For the Three Months Ended June 30, 2024 and 2023
(Unaudited)
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| Accumulated |
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Additional | Other | ||||||||||||||||
Common Stock | Paid–In | Comprehensive | Accumulated | ||||||||||||||
Shares | Par Value | Capital | Income | Deficit | Total | ||||||||||||
Balance, March 31, 2024 |
| $ | | $ | $ | $ | ( | $ | | ||||||||
Issuance of common stock and pre-funded warrants in connection with April 2024 public offering | | | | — | — | | |||||||||||
Issuance costs associated with April 2024 public offering | — | — | ( | — | ( | ||||||||||||
Fractional shares issued in June 2024 reverse stock split | | | ( | — | — | ||||||||||||
Exercise of pre-funded warrants | |
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Issuance of common stock upon conversion of debt |
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Share-based compensation expense |
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Foreign currency translation adjustment |
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Net loss |
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| ( |
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Balance, June 30, 2024 |
| | $ | | $ | | $ | | $ | ( | $ | |
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Additional | Other | ||||||||||||||||
Common Stock | Paid–In | Comprehensive | Accumulated | ||||||||||||||
Shares | Par Value | Capital | Income | Deficit | Total | ||||||||||||
Balance, March 31, 2023 |
| $ | $ | $ | | $ | ( | $ | ( | ||||||||
Issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement |
| — | — |
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Issuance costs associated with B. Riley At Market Issuance Sales Agreement |
| — | — | ( | — | — |
| ( | |||||||||
Issuance of common stock and pre-funded warrants in connection with May 2023 public offering | | | | — | — | | |||||||||||
Issuance costs associated with May 2023 public offering | — | — | ( | — | — | ( | |||||||||||
Issuance of common stock to vendors |
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Issuance of common stock upon exercise of pre-funded warrants |
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Issuance of common stock for asset purchase option | | | | — | — | | |||||||||||
Share-based compensation expense |
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Foreign currency translation adjustment |
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| ( |
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Net loss |
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Balance, June 30, 2023 |
| | $ | | $ | | $ | | $ | ( | $ | |
Adjusted to reflect the reverse stock split of
-for-sixteen effective June 5, 2024The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2024 and 2023
(Unaudited)
| 2024 |
| 2023 | |||
Operating activities: |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization and depreciation |
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Non-cash lease expense |
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Share-based compensation |
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Issuance of common stock to vendors for services |
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Issuance of common stock for purchase option | — | | ||||
Loss on extinguishment of debt |
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Change in fair value of convertible debt | ( | ( | ||||
Amortization of deferred issuance costs associated with convertible debt |
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Change in operating assets and liabilities: |
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Contracts and grants receivable |
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Prepaid expenses and other current assets |
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Research and development incentives receivable |
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Operating lease liability |
| ( |
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Accounts payable and accrued expenses |
| ( |
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Accrued compensation |
| ( |
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Net cash flows from operating activities |
| ( |
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Financing activities: |
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Proceeds from issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement |
| — |
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Costs associated with B. Riley At Market Issuance Sales Agreement |
| — |
| ( | ||
Proceeds from issuance of common stock and pre-funded warrants pursuant to public offering | | | ||||
Stock issuance costs associated with public offering | ( | ( | ||||
Proceeds from the exercise of warrants | | | ||||
Convertible debt repayments |
| — |
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Net cash flows from financing activities |
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Effect of exchange rate on cash and cash equivalents |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | | $ | | ||
Supplemental information: |
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Cash paid for state income taxes | $ | | $ | | ||
Cash paid for interest | $ | | $ | | ||
Cash paid for lease liabilities: |
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Operating lease | $ | | $ | | ||
Non-cash investing and financing activities: |
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Pontifax conversion of portion of debt principal into common stock | $ | | — | |||
Deferred issuance cost reclassified to additional paid-in capital | $ | — | $ | | ||
Redemption liability for Series D preferred stock | $ | — | $ | | ||
Public offering costs included in accounts payable | $ | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Soligenix, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Nature of Business
Basis of Presentation
Soligenix, Inc. (the “Company”) is a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. The Company maintains
The Company’s Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”). With agreement from the European Medicines Agency (“EMA”) on the key design components of a confirmatory Phase 3 placebo-controlled study evaluating the safety and efficacy of HyBryte™ in the treatment of CTCL patients with early-stage disease, the Company is targeting to begin patient enrollment by the end of 2024 with top-line results anticipated in the second half of 2026. Upon successful completion of the second Phase 3 study, called “FLASH2” (Fluorescent Light Activated Synthetic Hypericin 2), regulatory approval will be sought to support potential commercialization worldwide.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, the Company’s first-in-class innate defense regulator technology, and dusquetide (SGX942 and SGX945) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
The Company’s Public Health Solutions business segment includes development programs for RiVax®, its ricin toxin vaccine candidate and SGX943, its therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, its vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs incorporates the use of the Company’s proprietary heat stabilization platform technology, known as ThermoVax®. To date, this business segment has been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research and Development Authority and the Defense Threat Reduction Agency.
The Company primarily generates revenues under government grants and contracts. The Company was awarded a subcontract that originally provided for approximately $
The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, development of new technological innovations, dependence on key personnel, protections of proprietary technology, compliance with the FDA regulations, and other regulatory authorities, litigation, and product liability.
Results for the three and six months ended June 30, 2024 are not necessarily indicative of results that may be expected for the full year.
Liquidity
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued. As of June 30, 2024, the Company had an
7
accumulated deficit of $
To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, the Company plans to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, and potentially amending the loan agreement with Pontifax Medison Finance (“Pontifax”) to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce the Company’s debt repayments; however, none of these alternatives are committed at this time. There can be no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to it to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that it will require or achieve the other strategies to alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, the Company will not have sufficient cash resources and liquidity to fund its business operations for at least the 12 months following the date the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed may require the Company to delay, limit, or eliminate the development of business opportunities and its ability to achieve its business objectives and its competitiveness, and its business, financial condition, and results of operations will be materially adversely affected. In addition, market instability, including as a result of geopolitical instability, may reduce the Company’s ability to access capital, which could negatively affect its liquidity and ability to continue as a going concern. In addition, the perception that the Company may not be able to continue as a going concern may cause others to choose not to deal with it due to concerns about its ability to meet its contractual obligations.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As of June 30, 2024, the Company had cash and cash equivalents of $
Management’s business strategy can be outlined as follows:
● | Following agreement from the EMA on the key design components for the second confirmatory Phase 3 placebo-controlled FLASH2 clinical trial of HyBryte™ in CTCL and positive primary endpoint results from the first Phase 3 FLASH study, initiate the FLASH2 study, while at the same time, continuing |
8
discussions with the FDA on potential modifications to the development path to adequately address their feedback. |
● | Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients. |
● | Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment in oral mucositis would be required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to continue this development program. |
● | Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease with the conduct of a Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in aphthous ulcers induced by chemotherapy and radiation. |
● | Continue development of the Company’s heat stabilization platform technology, ThermoVax®, in combination with its programs for RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent combinations), with United States (“U.S.”) government or non-governmental organization funding support. |
● | Continue to apply for and secure additional government funding for the Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements. |
● | Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives, including but not limited to merger/acquisition strategies. |
● | Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development. |
The Company’s plans with respect to its liquidity management include, but are not limited to, the following:
● | The Company has up to approximately $ |
● | The Company will continue to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expects to continue to do so for the foreseeable future. |
● | The Company will continue to pursue Net Operating Loss (“NOL”) sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if the program is available. |
● | The Company plans to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that the Company can consummate such transactions. |
● | The Company completed a public offering on April 22, 2024 of |
9
$ |
● | The Company entered into a warrant inducement agreement (the “Inducement Agreement”) on July 9, 2024 with certain holders (the “Holders”) of the Company’s existing Warrant to Purchase Shares of Common Stock (“Existing Warrants”) to purchase shares of common stock of the Company. Pursuant to the Inducement Agreement, the Holders agreed to exercise for cash their Existing Warrants to purchase up to |
● | The Company is currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing. |
Reverse Stock Split
On June 5, 2024, the Company completed a reverse stock split of its issued and outstanding shares of common stock at a ratio of
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include Soligenix, Inc., and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated as a result of consolidation.
Operating Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. The Company divides its operations into
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
10
Contracts and Grants Receivable
Contracts and grants receivable consist of amounts due from various grants from the NIH and contracts from NIAID, an institute of NIH, for costs incurred prior to the period end under reimbursement contracts. The amounts were billed to the respective governmental agencies in the month subsequent to period end and collected shortly thereafter. Accordingly, no allowance for credit losses has been established. If amounts become uncollectible, they are charged to operations.
Impairment of Long-Lived Assets
Office furniture and equipment and right of use assets with finite lives are evaluated and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to such assets. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and the carrying value of the related asset or group of assets. Such analyses necessarily involve significant judgment.
The Company did
Fair Value of Financial Instruments
Fair Value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on June 30, 2024. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
Fair Value valuation techniques include a three level hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the fair value hierarchy are as follows:
● | Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. |
● | Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. |
● | Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
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In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The carrying amounts reported in the condensed consolidated balance sheet for cash and cash equivalents, contracts and grants receivable, research and development incentives receivable, accounts payable, accrued expenses, and accrued compensation approximate their fair value based on the short-term maturity of these instruments.
The carrying amount reported in the condensed consolidated balance sheet as of June 30, 2024 for the convertible debt is its fair value which totals $
A roll forward of the fair value of convertible debt to June 30, 2024 is as follows:
Pontifax | ||||||||||||
Conversions | ||||||||||||
Balance | January 3, 2024 | Adjustment to | Balance | |||||||||
December 31, 2023 | and April 15, 2024 | fair value | June 30, 2024 | |||||||||
Convertible debt at fair value | $ | | $ | ( | $ | ( | $ | |
Deferred Issuance Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a result of the issuance.
Change in Accounting Estimates
The Company accrues clinical trial expenses per contracts with clinical sites over the course of the clinical trial period. Accrued trial expenses are assessed for accuracy on an ongoing basis during the trial period and beyond. The Company made an adjustment to estimated accrued clinical trial expenses of approximately $
Revenue Recognition
The Company’s revenues include revenues generated from government contracts and grants. The revenue from government contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These revenues are recognized when expenses have been incurred by subcontractors or when the Company incurs reimbursable internal expenses that are related to the government contracts and grants.
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The Company also records revenue from contracts with customers in accordance with applicable accounting guidance which requires an entity to recognize revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of this guidance, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of this guidance, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties are classified as licensing revenue. Sales-based royalties under the Company’s license agreements would be recognized as royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue.
Research and Development Costs
Research and development costs are charged to expense when incurred in accordance with applicable accounting guidance. Research and development includes costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, equipment depreciation and allocation of various corporate costs.
Share-Based Compensation
Stock options are issued with an exercise price equal to the market price on the date of grant. Stock options issued to directors upon re-election vest quarterly for a period of
From time to time, the Company issues restricted shares of common stock to vendors and consultants as compensation for services performed under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of stock options, restricted stock, deferred stock and unrestricted stock to the Company’s employees and non-employees (including consultants). The shares issued under the 2015 Plan are registered on Form S-8 (SEC File No. 333-208515). However, as shares of common stock are not covered by a reoffer prospectus, the certificates reflecting such shares reflect a Securities Act of 1933, as amended restrictive legend. Stock compensation expense for equity-classified awards to non-employees is measured on the date of grant and is recognized when the services are performed.
The fair value of options issued during the six months ended June 30, 2024 and 2023 was estimated using the Black-Scholes option-pricing model and the following assumptions:
● | a dividend yield of |
● | an expected life of |
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● | volatility of |
● | risk free interest rates of |
The fair value of each option grant made during the six months ended June 30, 2024 and 2023 was estimated on the date of each grant and recognized as share-based compensation expense ratably over the option vesting periods, which approximates the service period.
Foreign Currency Transactions and Translation
In accordance with FASB ASC 830 Foreign Currency Matters, the UK subsidiary expresses its U.S. dollar and Euro denominated transactions in its functional currency, the British Pound, with related transaction gains or losses included in net loss. On a quarterly basis, the financial statements of the UK subsidiary are translated into U.S. dollars and consolidated into the Company’s financials, with related translation adjustments reported as a cumulative translation adjustment (“CTA”), which is a component of accumulated other comprehensive income. During the three months ended June 30, 2024 and 2023, the Company recognized foreign currency transaction gains of $
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Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence is considered, including the Company’s current and past performance, the market environment in which the Company operates, the utilization of past tax credits, and the length of carryback and carryforward periods. Deferred tax assets and liabilities are measured utilizing tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company did not recognize an income tax benefit during the six months ended June 30, 2024. The Company recognized $
Loss Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing loss applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Included within the Company’s weighted average common shares outstanding for the three and six months ended June 30, 2024, are common shares issuable upon the exercise of the pre-funded warrants associated with the May 2023 and April 2024 public offerings, as these pre-funded warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. Since there is a significant number of options and warrants outstanding, fluctuations in the actual market price can have a variety of results for each period presented.
The following table summarizes potentially dilutive adjustments to the number of common shares which were excluded from the diluted calculation because their effect would be anti-dilutive due to the losses in each period:
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| 2023 |
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Common stock purchase warrants | |