Soligenix, Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2020. Soligenix is a late-stage biopharmaceutical company developing treatments for rare diseases and government-supported public-health programs. Its two segments are Specialized BioTherapeutics and Public Health Solutions.
Financial performance and position
| Metric | Q3 2020 | Nine months 2020 |
|---|---|---|
| Revenue | $608,811 | $2,038,653 |
| Gross profit (margin) | $222,170 (36%) | $459,168 (23%) |
| Operating expenses | $2,034,947 | $13,559,606 |
| Net loss | $1,790,160 | $12,148,257 |
| Net loss per share, basic and diluted | $0.06 | $0.45 |
- Cash and liquidity: Cash and cash equivalents were $11.34 million at September 30, 2020, up from $5.42 million at December 31, 2019. Working capital was $7.19 million, compared with $1.18 million at year-end 2019.
- Cash flow: Operating activities used $7.33 million in the first nine months, versus $4.87 million in the comparable 2019 period. Financing activities provided $13.24 million, primarily from at-the-market (ATM) share sales, warrant exercises and a PPP loan.
- Debt and obligations: The $417,830 Paycheck Protection Program loan is unsecured, bears 0.98% interest and is due over two years. The company expects it to qualify for forgiveness; forgiveness was not reported as completed. Lease liabilities totaled approximately $260,000.
- Equity financing: Soligenix sold 5.80 million shares through its ATM program for $12.69 million gross proceeds during the nine months. Shares outstanding increased to 29.85 million from 21.75 million at December 31, 2019.
Changes versus prior comparable periods
- Q3 revenue declined 51% from $1.25 million in 2019; nine-month revenue declined 48% from $3.94 million. The company attributed lower revenue and gross profit primarily to the closing of the CTCL study and reduced related government-funded activity.
- Q3 net loss narrowed 35% from $2.72 million, primarily because R&D spending fell following completion of the CTCL trial.
- Nine-month net loss increased 87% from $6.48 million. The period included a $5.0 million non-cash stock-based milestone charge to Hy Biopharma after SGX301 achieved a Phase 3 milestone, as well as higher R&D spending.
- Nine-month R&D expense rose 6% to $6.14 million; Q3 R&D expense fell 44% to $1.27 million. Nine-month gross margin was 23%, compared with 24% in 2019; Q3 gross margin improved to 36% from 23%.
Outlook, developments and risks
- Management said available cash, expected government-contract and grant proceeds, and ATM capacity were expected to fund working capital and capital expenditures for at least 12 months from issuance of the financial statements. The company expects continuing losses and anticipates approximately $14.1 million in R&D expenditures over the next 12 months before reimbursements, with approximately $1 million of expected contract and grant reimbursements.
- Management reported up to $0.9 million of active government funding available at September 30, 2020, and $20.0 million remaining under the ATM prospectus supplement as of November 9, 2020. Further financing, grants and partnerships may be needed; there is no assurance they will be obtained on favorable terms.
- SGX301: The Phase 3 trial met its primary endpoint, and subsequent analyses reported improving responses with longer treatment. The company planned to pursue an NDA while exploring partnership and commercialization options. Further clinical and regulatory success is not assured.
- SGX942: Enrollment in the pivotal Phase 3 oral-mucositis trial was completed in June 2020; final topline results were expected in Q4 2020.
- RiVax: A Phase 1 study was suspended after the manufacturer identified that drug substance tested outside established specifications. Soligenix is arbitrating against Emergent BioSolutions and affiliates, seeking damages exceeding $19 million. Emergent denies the allegations; recovery is uncertain. Soligenix recorded no accrual for approximately $331,000 in related Emergent invoices.
- Other risks and contingencies: COVID-19 could disrupt supplies, manufacturing, patient availability and clinical operations. Product candidates remain subject to clinical, regulatory, manufacturing and funding risks. Licensing and collaboration agreements may require up to $7.9 million in milestones and royalties of up to 6% of covered-product net sales if specified conditions are achieved.
- Soligenix reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether SGX942’s expected Q4 2020 topline results were delivered and what the results showed.
- SGX301’s complete clinical and regulatory path, including NDA timing, and the basis for response rates reported in later treatment cycles.
- Updates on the RiVax manufacturing issue, replacement manufacturing plans and the Emergent arbitration, including potential costs and any recovery.
- Actual cash burn, grant reimbursements and runway relative to the company’s projected R&D spending and management’s 12-month liquidity assessment.
- Whether the PPP loan was forgiven and the extent of further ATM or other financing, including resulting dilution.