Soligenix, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2017. Soligenix is a development-stage biopharmaceutical company with BioTherapeutics and Vaccines/BioDefense segments. Revenue is principally reimbursement under government contracts and grants; the company reports no product-sales revenue.
Financial performance and condition
| Metric | Q3 2017 | Q3 2016 | Nine months 2017 | Nine months 2016 |
|---|---|---|---|---|
| Revenue | $1.82 million | $2.96 million | $4.14 million | $8.75 million |
| Gross profit (margin) | $348,000 (19%) | $329,000 (11%) | $905,000 (22%) | $1.55 million (18%) |
| Operating expenses | $1.32 million | $1.83 million | $5.93 million | $5.96 million |
| Net loss | $963,000 | $1.67 million | $5.01 million | $2.92 million |
| Basic and diluted loss per share | $(0.17) | $(0.49) | $(0.89) | Basic $(0.90); diluted $(1.20) |
- At September 30, cash and cash equivalents were $5.00 million, down $3.77 million (43%) from December 31, 2016. Working capital was $3.05 million, down $4.20 million (58%). Total assets were $5.85 million; shareholders’ equity was $3.14 million.
- For the first nine months, operating cash use was $4.19 million, investing cash use was $2,000, and financing provided $421,000. Cash declined by $3.77 million.
- The balance sheet reports $2.71 million of current liabilities, including accounts payable, accrued expenses and compensation. It lists no notes payable or other debt at September 30, 2017.
Changes versus prior comparable periods
- Q3 revenue fell 38%; nine-month revenue fell 53%, primarily because the NIAID contract and BARDA base period for OrbeShield ended and BARDA did not extend its contract. New grants partly offset this decline.
- Q3 net loss improved 42%, while the nine-month net loss increased 72%. The year-to-date comparison is affected by $1.11 million of noncash warrant fair-value income in 2016; the warrants were reclassified to equity in 2016.
- Nine-month R&D expense rose 5% to $3.61 million, reflecting preparation and initiation of SGX942 Phase 3 and continued SGX301 Phase 3 work. G&A expense declined 8% to $2.32 million.
- Gross margin increased year over year for both reported periods, although nine-month gross profit declined in dollars as contract revenue decreased.
Outlook, programs and risks
- Management said available resources were expected to cover anticipated working-capital and capital-expenditure needs through at least December 31, 2018. This depends on spending controls, government funding and contract options, equity facilities, the ATM program, New Jersey NOL-sale proceeds and potential partnerships or financing. The company expects continued losses and used $4.19 million in operating cash in the first nine months.
- Management estimated R&D spending of approximately $10.5 million over the next 12 months before reimbursements, including $7.0 million for BioTherapeutics and $3.5 million for Vaccines/BioDefense; it anticipated approximately $5.5 million in contract and grant revenue to offset Vaccines/BioDefense R&D.
- Key clinical plans: complete enrollment and report preliminary Phase 3 results for SGX301, expected in the second half of 2018; continue the SGX942 Phase 3 trial, initiated in July 2017, with data expected in the first half of 2019; and pursue SGX203 Phase 3, subject to additional funding. RiVax development is supported by NIAID contract options. Further OrbeShield development depends on additional government funding.
- The filing stated up to $20.6 million in active government contract and grant funding remained available, contingent on agencies exercising options and not terminating agreements. It also cited $10.2 million available under the Lincoln Park equity facility and $4.3 million remaining under the FBR ATM agreement. Funding availability and timing are not assured.
- After quarter-end, the company amended its office lease through October 2020. On November 3, 2017, it closed a registered direct offering and concurrent private placement of common stock for $5.1 million gross proceeds; estimated net proceeds were approximately $4.6 million. As of November 3, 8,730,640 common shares were outstanding.
- Other risks include reliance on grants and government contracts, clinical and regulatory uncertainty, the need for additional capital, potential dilution, and possible limitations on tax-loss carryforwards. Management noted that contract/grant funding and prospective partnerships or financings are not guaranteed.
Most important facts for investors to verify
- Actual cash runway and burn rate, including whether management’s funding assumptions through December 2018 remain achievable.
- Whether government agencies exercise remaining contract options, and the effect of the BARDA non-extension on future revenue and OrbeShield development.
- Enrollment, costs and timing for SGX301 and SGX942 Phase 3 trials, and whether the stated data timelines are maintained.
- Net proceeds and resulting dilution from the November 2017 offerings, alongside remaining capacity under the equity line and ATM program.
- Whether forecast R&D spending and contract/grant reimbursements align with actual results; the filing’s revenue and margin figures reflect funded development work, not commercial product sales.