Soligenix, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2022; filed November 10, 2022. Soligenix is a development-stage biopharmaceutical company with Specialized BioTherapeutics and Public Health Solutions segments. It reported no product sales; revenue primarily reflects government grants and contracts.
Financial performance
| Metric | Three months ended September 30, 2022 | Nine months ended September 30, 2022 |
|---|---|---|
| Revenue | $166,140 | $582,843 |
| Gross profit (margin) | $36,700 (22%) | $167,886 (29%) |
| Research and development expense | $1,791,695 | $5,586,302 |
| General and administrative expense | $1,326,249 | $5,250,510 |
| Operating loss | $(3,081,244) | $(10,668,926) |
| Net loss | $(3,309,003) | $(10,044,784) |
| Basic and diluted loss per share | $(0.08) | $(0.23) |
For the nine months, operating cash use was $9.0 million, compared with $8.7 million in 2021. Cash and equivalents were $16.9 million at September 30, down $9.2 million (35%) from year-end 2021. Working capital fell to $7.8 million from $20.3 million.
Total assets were $17.9 million and total liabilities $16.9 million. Convertible debt had $10.0 million principal outstanding; it bears 8.47% interest, is secured by substantially all assets other than intellectual property, and matures June 2025. Quarterly $1 million principal repayments are scheduled to begin in Q1 2023. Cash interest paid in the first nine months was $643,921.
Changes versus prior comparable periods
- Q3 revenue declined 11% year over year, while gross profit rose 84% to $36,700, principally due to less lower-margin grant work.
- Nine-month revenue increased 6% and gross profit rose 202%, reflecting licensing revenue, a greater share of CiVax and SGX943 work, and higher contract margins.
- Q3 net loss narrowed 8%, mainly because R&D expense declined after completion of the oral mucositis Phase 3 trial; higher legal and consulting costs partly offset the improvement.
- Nine-month net loss widened 28%. Management attributed the increase mainly to Emergent-related legal and consulting expense and HyBryte NDA preparation. G&A expense increased 66%; R&D expense increased 2%.
- Cash used in operations increased to $9.0 million from $8.7 million. The prior-year period included $18.8 million of net financing cash inflow, primarily from ATM share sales; there were no financing cash flows in the 2022 period.
Outlook, risks and notable items
- Management said available cash, expected grant and contract proceeds, and potential ATM proceeds should fund anticipated working capital and capital expenditure needs for at least 12 months from issuance of the statements. The company expects continued losses and may need additional financing or partnerships; access and pricing are not assured.
- Management forecast approximately $8.5 million of R&D spending over the next 12 months before reimbursements ($7.7 million Specialized BioTherapeutics; $0.8 million Public Health Solutions), with approximately $0.9 million of expected contract, grant and licensing reimbursements. Up to $0.8 million of active grant funding remained available through March 2023, subject to agency termination rights.
- HyBryte had completed a positive Phase 3 study for CTCL. The company planned to file its NDA in Q4 2022 and stated potential FDA approval could be in the second half of 2023. The filing cites manufacturing-related stability-data delays. These are forward-looking plans, not assurances.
- Management anticipated starting a Phase 2a SGX302 psoriasis trial in December 2022. Further SGX942 development requires a second Phase 3 trial after UK regulatory feedback and depends on identifying a partner. SGX203 Phase 3 development also depends on additional funding.
- The $26.7 million remaining capacity under the B. Riley ATM agreement as of November 3, 2022 is a potential financing source, not committed cash; future sales could dilute shareholders. The company also issued 231,746 shares to vendors during the first nine months of 2022.
- In the Emergent dispute, the arbitration panel found contract breaches but awarded no monetary damages despite the company seeking more than $19 million. Soligenix petitioned the Delaware Court of Chancery to vacate the decision and seek rehearing; recovery is uncertain.
- Other exposures include clinical and regulatory execution, manufacturing and supply, future grant availability, financing, competition, and possible COVID-19-related operational disruption. The company said COVID-19 had not materially affected results or financial condition through the period. Contractual commitments include $255,000 in licensing fees over five years and potential success-based milestones and royalties.
- Disclosure controls were reported effective as of September 30, 2022, with no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether HyBryte’s NDA was filed, and the actual regulatory timetable and any FDA requirements.
- Cash burn, remaining runway, grant reimbursements, and whether additional financing or partnership funding is secured.
- Debt repayment and minimum-cash covenant requirements, including the $1 million quarterly principal payments scheduled from Q1 2023.
- Progress and funding for SGX302, SGX942, and other pipeline programs; verify that expected trial starts and partner plans materialized.
- Developments in the Emergent court petition and whether any damages are ultimately recovered.
- Potential dilution from ATM sales, vendor share issuances, and conversion rights on the Pontifax debt.