Tonix Pharmaceuticals Holding Corp. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022; filed March 13, 2023. Tonix is a clinical-stage biopharmaceutical company developing CNS, rare-disease, immunology and infectious-disease therapies. It had no approved products and generated no product revenue.
Financial performance and position
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $81.9 million | $68.8 million |
| General and administrative expense | $30.2 million | $23.5 million |
| Total operating expenses / operating loss | $112.1 million | $92.3 million |
| Net loss | $110.2 million | $92.3 million |
| Net loss per common share | $3.27 | $8.10 |
| Cash used in operating activities | $98.1 million | $75.6 million |
| Cash used in investing activities | $48.1 million | $35.3 million |
At December 31, 2022, cash and cash equivalents were $120.2 million and working capital was $112.6 million. Total assets were $225.7 million, total liabilities $18.5 million, and stockholders’ equity $207.2 million. Reported liabilities were primarily accounts payable, accrued expenses and lease obligations; the filing does not report material conventional debt. Profit margins are not meaningful because the company had no product revenue.
Material changes versus FY2021
- Net loss increased by $17.9 million, while operating cash use rose by $22.5 million. R&D spending increased 19%, mainly from staffing and facility-related costs; G&A increased 29%.
- Investing cash use rose as Tonix built out research and development and clinical-scale manufacturing facilities. Property and equipment increased to $93.8 million from $50.6 million.
- Financing provided $87.8 million, down from $212.5 million in 2021, predominantly through common-stock sales. The company issued 56.4 million shares through its at-the-market program during 2022. Year-end common shares outstanding were 76.5 million, compared with 15.6 million at year-end 2021; the filing’s share data reflect a 1-for-32 reverse split in May 2022.
- Tonix raised and then redeemed convertible preferred stock offerings in 2022; aggregate redemptions were $47.3 million. The related deemed dividend was $6.7 million.
Pipeline, outlook and key risks
- Lead program — TNX-102 SL for fibromyalgia: The Phase 3 RELIEF study met its primary endpoint in 2020, but the separate Phase 3 RALLY study failed its primary endpoint and had elevated adverse-event discontinuations in both treatment and placebo groups. The new Phase 3 RESILIENT trial was about 50% enrolled at year-end 2022. Interim analysis was expected in Q2 2023 and topline results in Q4 2023; Tonix said a positive result could support an NDA filing. These are forward-looking expectations, not reported outcomes.
- Other programs: TNX-102 SL’s Phase 2 PREVAIL study for FM-type Long COVID began enrolling in August 2022. Its Phase 3 PTSD RECOVERY study failed the primary endpoint in 2020; future PTSD studies were expected to use a different CAPS-5 look-back period. TNX-1900 began a Phase 2 chronic-migraine study in Q1 2023; Phase 2 studies of TNX-601 ER for depression and TNX-1300 for cocaine intoxication were planned for 2023. Phase 1 studies of TNX-1500 and TNX-801 were also planned for 2023. All candidates remain investigational.
- Management expects R&D expense to increase as programs advance and facilities are developed. The Massachusetts Advanced Development Center became operational in Q4 2022; work on the planned Montana commercial manufacturing center was not complete.
- Going concern and liquidity: The auditor’s report includes an explanatory paragraph stating that recurring losses and negative operating cash flows raise substantial doubt about Tonix’s ability to continue as a going concern. Management said year-end cash, together with first-quarter 2023 equity proceeds net of repurchases, was expected to fund operations into Q4 2023, but not beyond. Additional financing is required and may be unavailable or dilutive. The filing also says the company would not have sufficient resources for the full one-year period from filing without further funding.
- Capital allocation and commitments: After year-end, Tonix repurchased 15.7 million shares for approximately $12.5 million and authorized a further $12.5 million repurchase program; it also reported repurchasing another 1.0 million shares for approximately $1.1 million under that program. Outstanding CRO commitments were approximately $58.6 million, plus $2.0 million under a construction contract.
- Other principal risks include clinical-trial failure or delay, FDA approval uncertainty, reliance on contract manufacturers and research organizations, competition, patent challenges, reimbursement and pricing uncertainty, and potential additional equity dilution. The company reported no legal proceedings it believed would have a material adverse effect.
Important facts for investors to verify
- Current cash, actual post-year-end financing and the resulting runway; reconcile the stated Q4 2023 runway with the going-concern warning.
- RESILIENT interim and topline results, enrollment progress, safety and whether the study supports an NDA submission.
- Share count and dilution from ATM/Lincoln Park sales, stock awards and subsequent repurchases; assess the cost and rationale of buybacks given the funding shortfall.
- Timing and funding of the $58.6 million CRO commitments and planned Montana facility, including future capital needs.
- Whether other pipeline trial milestones occurred as planned and whether regulatory, manufacturing or competitive developments changed their prospects.