Tonix Pharmaceuticals Holding Corp. — Q1 2022 10-Q
Reporting period: Three months ended March 31, 2022. Tonix is a clinical-stage biopharmaceutical company with no approved products and no product revenue. All candidates remain investigational.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $18.4 million | $15.3 million |
| General and administrative expense | $8.0 million | $5.4 million |
| Operating loss | $26.4 million | $20.7 million |
| Net loss | $26.4 million | $20.7 million |
| Basic and diluted loss per share | $0.05 | $0.07 |
| Net cash used in operating activities | $31.0 million | $21.1 million |
| Net cash used in investing activities | $20.2 million | $0.5 million |
| Net cash provided by financing activities | $13.1 million | $108.7 million |
At March 31, cash and cash equivalents were $140.4 million, down from $178.7 million at December 31, 2021; working capital was $137.6 million. Total assets were $223.7 million and total liabilities were $15.8 million. The balance sheet shows no borrowings; lease liabilities totaled approximately $0.8 million. The company reported $69.6 million of property and equipment, including substantial construction in progress.
Changes and notable items
- R&D expense rose 20% year over year, mainly from higher nonclinical and employee-related costs. Management expects R&D spending to increase in 2022 as programs advance.
- G&A expense rose 48%, primarily from employee-related expenses, with smaller increases in legal and financial-reporting costs. Net loss increased 28%.
- Operating cash use increased to $31.0 million. Investing cash use increased to $20.2 million, largely reflecting facility and equipment spending.
- Q1 common-stock sales generated approximately $13.0 million net: $8.5 million through the ATM program and $4.5 million under the Lincoln Park purchase agreement. Common shares outstanding rose from 496.2 million at year-end to 552.8 million at quarter-end. The company increased authorized common shares to 1.6 billion in February 2022.
- After quarter-end, Tonix reported selling 33.9 million ATM shares for about $6.8 million and 13.0 million Lincoln Park shares for about $2.0 million. Shares outstanding were 599.7 million as of May 9, 2022.
- Options outstanding increased to 66.4 million, and 0.6 million warrants were outstanding at quarter-end, representing potential future dilution.
Outlook, risks and contingencies
- Liquidity and going concern: Management said cash at March 31 plus subsequent equity proceeds was expected to fund operating and capital requirements through the end of 2022, but not beyond. The filing states substantial doubt about the company’s ability to continue as a going concern and says it would not have sufficient resources for the one-year period from filing without additional funding. Additional financing may not be available on acceptable terms; absent funding, programs or operations may be delayed, reduced or eliminated.
- Pipeline plans: Management expected a new Phase 3 fibromyalgia study of TNX-102 SL to launch in Q2 2022, with interim data expected in Q1 2023; a Long COVID Phase 2 study and a Kenya PTSD study to begin or start enrolling in Q2 2022; TNX-1300 Phase 2 to start in Q2 2022; TNX-1900 Phase 2 in the second half of 2022; and TNX-1500 Phase 1 in the second half of 2022. TNX-601 CR Phase 2 was expected in Q1 2023. These are forward-looking plans, not reported outcomes.
- Tonix stopped enrollment and was terminating U.S. development of the TNX-2100 COVID-19 skin-test study, citing the changed U.S. COVID-19 landscape and reduced control measures.
- Outstanding commitments included approximately $62.7 million for future contract research organization work and $18.1 million for construction. The company also expected a second-quarter 2022 closing of a contingent, nonbinding $2.9 million Massachusetts property purchase.
- Key risks include continued losses and cash burn, need for further financing and shareholder dilution, clinical and regulatory uncertainty, reliance on third parties, competition, intellectual-property risks, and potential COVID-19 effects. Nasdaq had granted an additional compliance period to address the minimum bid-price requirement; the filing noted possible delisting if the deficiency was not cured.
- The company reported no material legal proceedings and no material changes to the risk factors in its 2021 Form 10-K. Management concluded disclosure controls were effective at a reasonable assurance level.
Important facts for investors to verify
- Actual cash runway, subsequent financing proceeds, and capital needs relative to the going-concern warning.
- Whether planned clinical trial starts and data milestones occurred, and any changes to timing, enrollment, or development strategy.
- Construction spending, facility readiness, and the timing and terms of the contemplated property purchase.
- Share-count changes and potential dilution from ATM and Lincoln Park sales, options, warrants, and equity plans.
- Nasdaq bid-price compliance status and any further listing actions.