Tonix Pharmaceuticals Holding Corp. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Tonix is a clinical-stage biopharmaceutical company; it reported no approved or marketed products and no product revenue.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior period |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $26.5 million | $18.4 million |
| General and administrative expense | $7.4 million | $8.0 million |
| Operating loss | $33.9 million | $26.4 million |
| Net loss | $33.0 million | $26.4 million |
| Net loss per share, basic and diluted | $0.52 | $1.61 |
| Cash used in operating activities | $32.9 million | $31.0 million |
| Cash used in investing activities | $3.8 million | $20.2 million |
At March 31, cash and cash equivalents were $72.0 million, versus $120.2 million at December 31, 2022. Working capital was $70.7 million; total assets were $179.1 million and total liabilities were $13.7 million. The filing reports no debt; lease liabilities totaled approximately $1.0 million. No gross margin is reported because the company had no product revenue.
Changes versus prior comparable period
- Net loss increased $6.6 million, or 25%, as R&D expense rose $8.1 million, or 44%; lower G&A expense and higher interest income partly offset the increase.
- R&D increases included clinical costs, lab supplies, employee-related costs and building costs; lower manufacturing expense partly offset them. Management expects R&D expense to increase during 2023.
- Operating cash use increased by approximately $1.9 million. Investing cash use declined as major research and development facility projects were placed in service during 2022.
- Q1 financing activities used $11.5 million, primarily reflecting $14.0 million of common-stock repurchases, partly offset by equity proceeds. Cash and cash equivalents declined by $48.3 million during the quarter.
Outlook, risks and notable items
- Going concern and funding: Management says cash at March 31 and proceeds from subsequent-quarter equity offerings are expected to fund operations and capital expenditures into Q4 2023, but not beyond. The filing states that substantial doubt exists about the company’s ability to continue as a going concern and that it lacks sufficient resources for the one-year period from filing. Further financing may be unavailable or unacceptable; without it, programs or operations may need to be delayed, reduced or eliminated.
- Development outlook: Management expected topline results in Q3 2023 from the TNX-102 SL Long COVID Phase 2 study. Q4 2023 milestones included topline data for TNX-102 SL in fibromyalgia, TNX-1900 chronic migraine, and interim TNX-601 ER data. The company expected to initiate Phase 2 TNX-1300 and Phase 1 TNX-1500 studies in Q3, and a Phase 1 TNX-801 study in the second half of 2023. These are forward-looking expectations, not reported outcomes.
- Commitments and spending: Outstanding commitments to contract research organizations were approximately $54.4 million for future work. The company also continued investment in research and development and manufacturing facilities.
- Equity and listing: Tonix repurchased 16.7 million shares during Q1. Nasdaq notified the company that it did not meet the $1 minimum bid-price requirement; the initial compliance period ran through September 27, 2023, with potential further compliance steps or delisting risk.
- Pipeline changes: Tonix acquired Healion’s preclinical infectious-disease assets for $1.2 million, expensed as R&D, and exercised an option for Columbia monoclonal-antibody licenses. All candidates remain investigational.
- The company reported no material legal proceedings and no material changes to the risk factors in its 2022 Form 10-K. Management concluded disclosure controls were effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether subsequent equity financing and other available funding extend the cash runway beyond management’s stated Q4 2023 horizon, and on what dilution or other terms.
- Actual progress and results for the clinical and regulatory milestones listed above, along with the associated R&D cash requirements.
- The economics and remaining capacity of equity purchase and ATM arrangements, and the rationale and cash impact of share repurchases given the going-concern disclosure.
- Nasdaq bid-price compliance status and any effect on continued listing.
- The filing gives inconsistent accumulated-deficit figures: $516.992 million on the balance sheet and $516.922 million in the stockholders’ equity statement. Verify the correct amount against the filed financial statements.