Soligenix, Inc. — Form 10-Q Summary
Reporting period: Quarter ended March 31, 2020. Soligenix is a clinical-stage biopharmaceutical company with Specialized BioTherapeutics and Public Health Solutions segments. Its pipeline includes SGX301, SGX942, oral BDP candidates, RiVax and SGX943; revenue is primarily from government contracts and grants.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $924,552 | $1,144,788; down 19% |
| Gross profit and margin | $95,046; about 10% | $216,864; about 19% |
| Research and development expense | $2,700,171 | $1,642,718; up 64% |
| Milestone R&D expense | $5,000,000 | None |
| Operating loss | $8,473,792 | $2,300,063 |
| Net loss / loss per share | $7,581,334 / $0.32 | $1,639,627 / $0.09 |
| Net cash used in operating activities | $2,695,073 | $2,293,303 |
Cash and cash equivalents were $7.20 million at March 31, up from $5.42 million at December 31, 2019. Working capital was approximately $3.24 million, versus $1.18 million at year-end. Cash rose chiefly from at-the-market stock sales and warrant exercises. Financing activities provided $4.52 million; investing activities used $7,147.
Total liabilities were $6.33 million, primarily current accounts payable and accrued expenses. There was no material conventional borrowing reported at quarter-end; lease liabilities totaled about $92,000. Management expects available cash, government funding and remaining ATM capacity to cover anticipated working-capital and capital-expenditure needs for at least 12 months after issuance of the statements. The company nevertheless expects continued losses and relies on funding, partnerships and spending controls.
Changes and notable items
- Net loss increased by $5.94 million year over year, primarily because of the $5 million SGX301 milestone payment to Hy Biopharma, settled in 1,956,182 shares, and higher clinical trial costs.
- Revenue and gross profit declined as two higher-margin grants active in Q1 2019 had expired. Public Health Solutions generated $908,807 of Q1 2020 revenue; Specialized BioTherapeutics generated $15,745.
- SGX301’s Phase 3 trial met its primary endpoint in March 2020: 16% of treated patients versus 4% on placebo achieved the specified lesion response at eight weeks (p=0.04). April analysis reported a 40% response after 12 weeks of treatment. These are reported trial results, not regulatory approval.
- Common shares outstanding rose from 21.75 million at December 31 to 25.78 million at March 31, including ATM sales, warrant exercises and the milestone shares. From April 1 to May 8, another 798,245 shares were sold through the ATM for $1.31 million. The filing reports 26,576,676 shares outstanding as of May 8.
Outlook, risks and contingencies
- Management estimates approximately $7.3 million of R&D spending over the next 12 months before reimbursements, with approximately $1.9 million expected in contract and grant reimbursements. It reported up to $1.96 million of active government funding available at March 31, subject to agency options and continuation.
- Management planned to pursue SGX301 partnership/commercialization and an NDA filing; complete SGX942 Phase 3 enrollment and report final results, then expected in Q4 2020; and continue government-funded vaccine and infectious-disease programs. No revenue or earnings guidance is provided.
- RiVax’s Phase 1 study was suspended in January after the manufacturer identified drug substance outside established specifications; two subjects had already received doses. In April, NIAID said it would not exercise the final contract option for a Phase 1/2 study. The filing reports $1.1 million still available under the RiVax contract before that option decision.
- COVID-19 could disrupt materials, manufacturing, patient availability, trial-site activity and regulatory submissions; the company said the impact was uncertain. In April, it received a $417,830 PPP loan at 1% interest, with potential forgiveness subject to program requirements.
- Licensing commitments were approximately $475,000. Agreements may also require up to $7.9 million in success-based milestones and royalties of up to 6% of covered-product net sales. A further Hy Biopharma milestone of up to $5 million may be payable if achieved.
- The company cited risks from clinical and regulatory uncertainty, financing needs, government funding dependence, product development and commercialization, and COVID-19. Management reported disclosure controls effective and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Follow-up, regulatory and commercial developments for SGX301, and whether the Phase 3 results support an NDA filing.
- SGX942 Phase 3 final results and timing; the filing’s Q4 2020 expectation was forward-looking.
- RiVax drug-substance quality issue, study status and funding after NIAID declined the final option.
- Cash burn, government contract/grant receipts, access to remaining ATM capacity and any additional financing or partnership terms; management’s 12-month liquidity assessment depends on these sources.
- Share-count dilution and the terms of any future equity issuance. The filing also gives inconsistent working-capital increase figures: the balance-sheet amounts imply an increase of about $2.06 million, while another note states $2.04 million.