Soligenix, Inc. — Q1 2021 Form 10-Q
Business context and reporting period. This unaudited report covers the three months ended March 31, 2021. Soligenix is a development-stage biopharmaceutical company with Specialized BioTherapeutics and Public Health Solutions segments. It reported no product sales; revenue primarily came from government grants and contracts.
Key financial metrics
| Metric | Q1 2021 | Q1 2020 / prior balance-sheet date |
|---|---|---|
| Revenue | $147,593 | $924,552 |
| Gross profit (margin) | $25,233 (17%) | $95,046 (10%) |
| Operating expenses | $2.26 million | $8.57 million |
| Net loss | $2.36 million | $7.58 million |
| Loss per share, basic and diluted | $0.06 | $0.32 |
| Net cash used in operating activities | $3.99 million | $2.70 million |
| Cash and cash equivalents | $30.54 million | $18.68 million at Dec. 31, 2020 |
| Working capital | $26.98 million | $13.39 million at Dec. 31, 2020 |
| Total liabilities | $14.23 million | $16.15 million at Dec. 31, 2020 |
The company had $9.82 million in convertible debt, net of discount, and $417,830 outstanding under its PPP loan. The Pontifax debt carries 8.47% interest on drawn amounts; the first $10 million tranche had been borrowed. Q1 financing cash flow was $15.86 million, primarily from at-the-market (ATM) stock sales.
Material changes versus the prior comparable period
- Revenue fell 84%, and gross profit declined 73%, mainly following completion of the CTCL and oral mucositis trials.
- Research and development expense decreased 49% to $1.37 million, also reflecting completed trials. General and administrative expense rose 3% to $891,440.
- Net loss narrowed by 69%, chiefly because Q1 2020 included a $5.0 million Hy Biopharma milestone paid in shares. Q1 2021 interest expense was $213,505, compared with $21,947 of interest income in Q1 2020, reflecting the Pontifax financing.
- Cash increased 64% from year-end, largely due to ATM equity proceeds. The company issued 9.38 million shares through the ATM in Q1 at a weighted-average price of $1.75; shares outstanding rose from 30.64 million to 40.02 million.
Outlook, commentary, risks and unusual items
- Management said cash, anticipated government funding, available Pontifax borrowing and remaining ATM capacity should fund working capital and capital expenditures for at least 12 months from issuance of the financial statements. It expects continued losses and may need additional financing, partnerships, grants or equity sales.
- For the next 12 months, the company estimated R&D expenditures of approximately $11.2 million before reimbursements, with approximately $1.3 million of expected contract and grant reimbursements. It reported up to $2.0 million of active government funding available as of March 31, 2021, subject to agency termination rights.
- HyBryte completed Phase 3 with a statistically significant primary endpoint result; longer treatment showed additional response improvement. The company is pursuing an NDA and U.S. commercialization, but manufacturing delays led it not to pursue a rolling NDA submission at this time. The filing does not give a clear target filing date.
- SGX942’s Phase 3 trial did not meet its prespecified primary endpoint for statistical significance, although the company reported biological activity and is analyzing results for potentially responsive patient subsets.
- COVID-19 had not materially affected Q1 financial results, but manufacturer disruptions delayed HyBryte activities; further operational and regulatory effects remain uncertain.
- The company is seeking more than $19 million in arbitration damages from Emergent BioSolutions over alleged manufacturing and contractual failures related to RiVax. Emergent denies the allegations. Recovery is uncertain; no damages asset was recorded. The company also did not accrue approximately $331,000 in disputed Emergent invoices, judging payment not probable.
- PPP loan forgiveness was not assured; the company planned to apply in Q2 2021. Other risks include clinical and regulatory outcomes, product manufacturing and supply, dependence on government funding, and the need for future capital. Management reported disclosure controls were effective.
Important facts for investors to verify
- HyBryte NDA timing, manufacturing readiness and any additional supporting data required by regulators.
- Updated analysis and regulatory discussions concerning SGX942 following its missed Phase 3 primary endpoint.
- Cash burn and funding availability, including grant reimbursements, Pontifax draw conditions and remaining ATM capacity; assess dilution from further equity issuance.
- Outcome and timing of the Emergent arbitration, including the disputed invoices and any potential recovery.
- PPP forgiveness status and the progress and funding needs of other clinical and vaccine programs.