Soligenix, Inc. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020; financial statements are unaudited. Soligenix is a late-stage biopharmaceutical company developing rare-disease therapies and vaccine programs in its Specialized BioTherapeutics and Public Health Solutions segments. Revenue is primarily from government contracts and grants.
Financial results and liquidity
| Metric | Q2 2020 | First six months 2020 | Comparable 2019 period |
|---|---|---|---|
| Total revenue | $505,288 | $1,429,842 | $1,544,964; $2,689,752 |
| Gross profit (margin) | $141,949 (28%) | $236,998 (17%) | $458,150 (30%); $675,014 (25%) |
| Research and development expense | $2,170,045 | $4,870,216 | $1,853,950; $3,496,668 |
| Net loss | $2,776,763 | $10,358,097 | $2,123,521; $3,763,148 |
| Net loss per share | $0.10 | $0.41 | $0.12; $0.21 |
Revenue fell 67% in Q2 and 47% for the six-month period year over year, primarily because two higher-margin grants expired. Six-month net loss increased 175%, driven principally by a $5.0 million stock-based milestone payment to Hy Biopharma for SGX301’s Phase 3 success and increased clinical-trial costs. The six-month income tax benefit was $836,893, from sales of New Jersey net operating loss carryforwards.
Cash and equivalents were $11.17 million at June 30, up from $5.42 million at year-end 2019; working capital was $5.99 million, versus $1.18 million. Operating cash use was $4.34 million for the first half, compared with $2.81 million in 2019. Financing provided $10.13 million, including $9.46 million gross ATM proceeds, $685,384 from warrant exercises, and a $417,830 PPP loan. Total liabilities were $6.23 million; the PPP loan accounted for $417,830, and lease liabilities were approximately $56,556. No conventional long-term debt balance is reported.
Common shares outstanding increased from 21.75 million at December 31, 2019 to 28.59 million at June 30, 2020, reflecting ATM sales, warrant exercises, and the milestone issuance. The company reported an accumulated deficit of $185.88 million. Management stated cash should cover anticipated working-capital and capital-expenditure needs for at least 12 months from issuance of the statements, based partly on government funding and available ATM capacity.
Material developments and outlook
- SGX301: The Phase 3 CTCL trial met its primary endpoint in March 2020 (p=0.04); 16% of treated patients versus 4% on placebo achieved the defined response at eight weeks. An open-label analysis reported a 40% response after 12 weeks of treatment. The company intends to pursue an NDA and explore partnership and commercialization options.
- 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 1c study was suspended in January after the manufacturer reported an out-of-specification drug-substance test result. NIAID declined to exercise the final contract option. Soligenix filed arbitration against Emergent entities seeking more than $19 million; Emergent denied the allegations. Recovery is uncertain.
- Other programs: SGX203 and SGX201 further clinical development depends on additional funding. Public Health Solutions programs include RiVax/ThermoVax, SGX943, and vaccine work on filoviruses and coronaviruses. A July 2020 preprint described a prototype COVID-19 vaccine using licensed CoVaccine HT; this is early-stage research, not an approved product.
- Spending and funding: Management estimated approximately $6.5 million of R&D spending over the next 12 months before reimbursements, with about $1.4 million anticipated in contract and grant reimbursements. Up to $1.54 million of active government funding remained available at June 30, subject to agency options and continuation. About $1.5 million remained under the ATM agreement as of August 10.
- PPP and contingencies: The $417,830 PPP loan bears 0.98% interest and may be forgiven if program conditions are met; management expected to meet them. COVID-19 could disrupt supplies, manufacturing, trial operations, patient availability, and regulatory timelines. The filing does not quantify the potential financial impact.
- Commitments: Approximately $450,000 of licensing commitments remained, excluding potential success-based milestone payments of up to $7.9 million and royalties up to 6% of covered-product net sales. A further Hy Biopharma milestone of up to $5 million may be payable if achieved.
Investor facts to verify
- Whether SGX942 delivered the expected Q4 2020 Phase 3 results, and what subsequent regulatory or development plans followed.
- SGX301’s full clinical data, NDA status, partnership prospects, and expected commercialization funding needs.
- The status and potential recovery from the Emergent arbitration, including effects of the RiVax manufacturing issue on development timelines and funding.
- Cash runway against actual operating cash burn, grant reimbursements, ATM availability, and further financing needs; assess the dilution from equity issuance and outstanding warrants/options.
- Whether the PPP loan was forgiven and whether government contracts/grants and New Jersey NOL sales remain available on the assumed terms.
- Any realized effects of COVID-19 on clinical trials, manufacturing, supply availability, and program schedules.