Tonix Pharmaceuticals Holding Corp. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Unaudited results; amounts below are in U.S. dollars. Tonix is a clinical-stage biopharmaceutical company with no commercial products or product revenue.
Financial performance
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $18.1 million | $10.6 million | $33.5 million | $15.2 million |
| General and administrative expense | $5.4 million | $3.6 million | $10.8 million | $6.2 million |
| Net loss | $23.6 million | $14.2 million | $44.2 million | $21.5 million |
| Basic and diluted loss per share | $0.07 | $0.23 | $0.14 | $0.54 |
| Cash used in operating activities | Not stated for quarter | Not stated for quarter | $40.2 million | $19.4 million |
Margins are not meaningful because the company had no revenue. Q2 R&D expense rose 71% year over year, while six-month R&D expense rose 119%; management attributed the increases principally to nonclinical and manufacturing spending, partly offset by lower clinical expense. Six-month G&A expense rose 74%, reflecting higher employee-related, financial reporting, legal, investor relations and insurance costs.
Balance sheet, cash flow and financing
- At June 30, cash and cash equivalents were $165.7 million, versus $77.1 million at December 31, 2020; restricted cash was $0.2 million.
- Working capital was approximately $169.2 million. Total assets were $189.2 million; total liabilities were $8.7 million, including $1.1 million of lease liabilities. The filing reports no debt borrowings.
- Six-month investing cash outflow was $1.9 million, primarily property and equipment purchases. Financing provided $130.8 million, mainly from equity sales. Cash, cash equivalents and restricted cash increased $88.7 million to $166.0 million.
- Equity financings included net proceeds of approximately $36.9 million in January and $65.0 million in February, plus approximately $26.3 million of gross ATM proceeds and $3.3 million under the Lincoln Park purchase agreement during the first half. The company issued substantial additional common shares; 346.4 million were outstanding at quarter-end and 357.5 million as of August 9, 2021.
Material developments, outlook and risks
- Liquidity and going concern: Management reported recurring losses and negative operating cash flow and stated that substantial doubt exists about the company’s ability to continue as a going concern. The filing is inconsistent about runway: the notes say June 30 cash plus approximately $8.4 million of post-quarter ATM proceeds should fund requirements through June 30, 2022, but not beyond; MD&A says resources will not meet operating requirements for the one-year period from filing. Additional financing may be needed, and acceptable financing may not be available.
- Management expects operating losses and higher R&D spending, including clinical development and facility build-out. It warns that without further funding, programs may be delayed, scaled back or discontinued. Outstanding CRO commitments were approximately $39.1 million at June 30.
- Clinical update after quarter-end: In July, an interim analysis indicated the Phase 3 RALLY fibromyalgia study was unlikely to meet its primary endpoint. Tonix stopped enrollment of new participants, continued follow-up for enrolled participants and expected full-study topline data in Q4 2021. The prior Phase 3 RECOVERY PTSD study did not meet its primary endpoint.
- Other disclosed development expectations included a Phase 1 study of the TNX-1800 COVID-19 vaccine in the first half of 2022; planned IND submission for TNX-2100 and TNX-1900 in Q3 2021; and planned TNX-1300 Phase 2 study initiation in Q3 2021. These are forward-looking plans, not assured outcomes.
- The company licensed OyaGen’s sangivamycin technology in April 2021, issuing 2.75 million shares valued at $3.0 million and agreeing to a low-seven-figure license fee, royalties and contingent milestones. It also entered an Inserm license for oxytocin-based treatment technology. The filing reports no accrued or paid milestones on these agreements as of June 30.
- Tonix was developing vaccine and research/manufacturing facilities. A proposed Maryland facility purchase for $17.5 million was contingent and non-binding, with a planned Q4 2021 closing; a $2.9 million Massachusetts property purchase was also described as contingent and non-binding. Facility costs and execution remain relevant risks.
- Risks include clinical and regulatory failure, reliance on third-party research and manufacturing, patent uncertainty, competition, COVID-19-related disruption and the need for additional capital and potential shareholder dilution. No material legal proceedings were reported; management reported no material change to previously disclosed risk factors.
Important facts for investors to verify
- Reconcile the filing’s conflicting statements on whether available capital covers operations for one year from filing; assess cash burn, trial commitments and subsequent financing.
- Review the full RALLY results and any subsequent regulatory or development decisions for TNX-102 SL, particularly after the unfavorable interim assessment.
- Track share issuance, ATM and Lincoln Park sales, remaining financing capacity, and dilution from outstanding options and other equity awards.
- Verify progress, costs and closing status for planned facility projects, and whether projected development timelines and financing assumptions remain achievable.