Soligenix, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparative period is Q1 2021. Soligenix is a development-stage biopharmaceutical company with Specialized BioTherapeutics and Public Health Solutions segments. Revenue came from government contracts and grants, not product sales.
Financial results and position
| Metric | Q1 2022 | Q1 2021 / prior date | Change |
|---|---|---|---|
| Revenue | $188,063 | $147,593 | Up 27% |
| Gross profit | $95,850 | $25,233 | Gross margin 51%, versus 17% |
| Operating expenses | $4.30 million | $2.26 million | Up 90% |
| Operating loss | $4.20 million | $2.23 million | Loss increased |
| Net loss | $4.35 million | $2.36 million | Up 84%; loss per share $0.10 versus $0.06 |
| Cash used in operations | $3.24 million | $3.99 million | Use decreased |
| Cash and cash equivalents | $22.88 million | $26.04 million at Dec. 31, 2021 | Down $3.17 million |
| Working capital | $16.25 million | $20.28 million at Dec. 31, 2021 | Down $4.03 million |
| Convertible debt, net | $9.87 million | $9.86 million at Dec. 31, 2021 | $10 million principal outstanding |
General and administrative expense rose 169% to $2.55 million, mainly due to legal and consulting costs for the Emergent arbitration. Research and development expense increased 33% to $1.75 million, primarily for HyBryte NDA preparation. Revenue and gross profit increased mainly from licensing revenue and a higher proportion of grant work with better contract margins. No financing cash was raised in Q1 2022; Q1 2021 included net financing proceeds of approximately $15.86 million, primarily from an at-the-market stock sale.
Business developments, outlook, and risks
- HyBryte for CTCL: The company reported positive Phase 3 results and plans to file an NDA in the second half of 2022; it estimated potential FDA approval in the second half of 2023. Timing had been affected by commercial API manufacturer delays and required stability data. These are forward-looking targets, not assured outcomes.
- Other pipeline: Soligenix anticipated a Phase 2a psoriasis study of SGX302 in the latter part of 2022. SGX942’s Phase 3 trial missed its primary endpoint; the company says the UK regulator indicated a second Phase 3 study would be needed for potential marketing authorization. Soligenix plans to design another study and seek a partner. SGX203 Phase 3 work depends on additional funding or a partnership.
- Public Health Solutions: Vaccine and infectious-disease programs rely substantially on government grants and contracts. Up to $1.2 million of active grant funding remained available through March 2023, subject to agency terms. Further funding is not assured.
- Liquidity outlook: Management said available cash, expected government program proceeds, budget controls, and potential ATM proceeds should fund working capital and capital expenditures for at least 12 months from issuance of the statements. The company expected about $11.5 million of R&D spending over the next 12 months before reimbursements, including approximately $10.4 million for Specialized BioTherapeutics and $1.2 million for Public Health Solutions, with about $1.2 million of anticipated contract and grant reimbursements.
- Financing and dilution: Up to $26.8 million remained available under the B. Riley ATM agreement as of May 6, 2022; sales are optional and may dilute shareholders. The $10 million Pontifax loan bears 8.47% interest, is secured by substantially all assets other than intellectual property, and matures June 15, 2025. The additional $10 million in undrawn tranches expired unexercised.
- Legal contingency: Soligenix seeks more than $19 million in arbitration against Emergent over alleged contract breaches, warranties, and fraud tied to RiVax manufacturing. Closing arguments were heard in April 2022; recovery is uncertain. The company did not accrue approximately $331,000 of Emergent invoices, which management considers invalid and not probable of payment.
- Other risks: Clinical and regulatory failure, manufacturing and trial delays, dependence on government funding and external financing, foreign-exchange exposure, and possible COVID-19 effects could affect operations. The company said COVID-19 had not materially affected Q1 financial results, but future impact was uncertain. Management reported disclosure controls were effective and no material change in internal control over financial reporting.
Important facts for investors to verify
- Progress and timing of the HyBryte NDA, including whether manufacturing and stability-data requirements are met.
- Cash burn, available ATM capacity, and whether management’s stated 12-month liquidity assessment remains supportable.
- Results of the Emergent arbitration and any related costs, settlement, or recovery; no damages recovery is assured.
- Funding and partner availability for the planned SGX942 second Phase 3 study and other pipeline programs.
- Potential dilution and debt obligations, including ATM share sales and the Pontifax loan’s interest, security, conversion terms, and maturity.