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截至2024年11月1日，
第一部分 - 财务资讯
项目1 - 财务报表
Soligenix, Inc. 及其子公司
简明合并资产负债表
九月三十日， | 十二月三十一日， | |||||
| 2024 |
| 2023 | |||
资产 |
| （未经审核） |
|
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流动资产: |
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|
|
| ||
现金及现金等价物 | $ | | $ | | ||
未开票收入 | — | | ||||
研究与发展奖励应收款，当前 |
| — |
| | ||
递延发行成本 | | — | ||||
预付费用及其他流动资产 |
| |
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流动资产总额 |
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存入资金 |
| |
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Office furniture and equipment, net |
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使用权租赁资产 |
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研究和开发奖励应收款，扣除当前部分 |
| — |
| | ||
总资产 | $ | | $ | | ||
负债及股东权益 |
|
|
|
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流动负债： |
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|
|
| ||
应付账款 | $ | | $ | | ||
应计费用 |
| |
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应付补偿 |
| |
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租赁负债，流动 |
| |
| | ||
可转债 | | | ||||
流动负债总额 |
| |
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非流动负债: |
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|
|
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可转债 |
| — |
| | ||
租赁负债，扣除当期部分 |
| |
| | ||
总负债 |
| |
| | ||
资产承诺和事项（附注6） |
|
|
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股东权益： |
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|
|
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优先股，面额; 授权 | ||||||
普通股, $ |
| |
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额外认股资本金 (1) |
| |
| | ||
其他综合收益累积额 |
| |
| | ||
累积亏损 |
| ( |
| ( | ||
股东权益总额 |
| |
| | ||
负债总额及股东权益 | $ | | $ | | ||
| (1) |
随附附注是这些简明综合财务报表的重要组成部分。
1
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenues: |
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|
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| ||||
Grant revenue |
| — |
| | $ | | $ | | ||||
Total revenues |
| — |
| |
| |
| | ||||
Cost of revenues |
| — |
| ( |
| ( |
| ( | ||||
Gross profit |
| — |
| |
| — |
| | ||||
Operating expenses: |
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|
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|
|
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Research and development |
| |
| |
| |
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General and administrative |
| |
| |
| |
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Total operating expenses |
| |
| |
| |
| | ||||
Loss from operations |
| ( |
| ( |
| ( |
| ( | ||||
Other income (expense): |
|
|
|
|
|
|
|
| ||||
Foreign currency transaction gain (loss) |
| |
| ( |
| |
| | ||||
Interest income (expense), net |
| |
| |
| |
| ( | ||||
Research and development incentives | — | | ( | | ||||||||
CARES Act Employee Retention Credit | | | | | ||||||||
Other income | — | — | | | ||||||||
Loss on extinguishment of debt |
| — |
| — |
| — |
| ( | ||||
Change in fair value of convertible debt | — | ( | | | ||||||||
Total other income | | | | | ||||||||
Net loss before income taxes |
| ( |
| ( |
| ( |
| ( | ||||
Income tax benefit |
| — |
| — |
| — |
| | ||||
Net loss applicable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted net loss per share (1) | ( | ( | ( | ( | ||||||||
Basic and diluted weighted average common shares outstanding (1) |
| |
| |
| |
| | ||||
| (1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
For the Three and Nine Months Ended September 30, 2024 and 2023
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): |
|
|
|
| ||||||||
Foreign currency translation adjustments | | | | ( | ||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity/(Deficit)
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
|
|
|
| Accumulated |
|
| |||||||||||||||||
Mezzanine Equity- | Additional | Other | |||||||||||||||||||||
Series D Preferred Stock | Common Stock | Paid–In | Comprehensive | Accumulated | |||||||||||||||||||
Shares | Par Value |
|
| Shares | Par Value | Capital | Income (Loss) | Deficit | Total | ||||||||||||||
Balance, December 31, 2023 |
| | $ | | $ | | $ | $ | $ | ( | $ | | |||||||||||
Issuance of common stock pursuant to At Market Issuance Sales Agreement |
| |
| |
| |
| — |
| — |
| | |||||||||||
Issuance costs associated with sales of common stock pursuant to At Market Issuance Sales Agreement |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||||||||
Issuance of common stock and pre-funded warrants in connection with April 2024 public offering | | | | | | — | — | | |||||||||||||||
Issuance costs associated with April 2024 public offering | — | — | — | — | ( | — | — | ( | |||||||||||||||
Fractional shares issued in June 2024 reverse stock split | — | — | | | ( | — | — | — | |||||||||||||||
Issuance of common stock upon exercise of warrants |
| — | — | |
| |
| |
| — |
| — |
| | |||||||||
Issuance of common stock upon exercise of pre-funded warrants |
| — | — | |
| |
| |
| — |
| — |
| | |||||||||
Issuance of common stock from warrant inducement | — | — | | | | | |||||||||||||||||
Issuance costs associated with warrant inducement |
| — | — | — |
| — |
| ( |
| — |
| — |
| ( | |||||||||
Warrant modification - incremental fair value | — | — | — | — | | — | — | | |||||||||||||||
Issuance of common stock from conversion of debt | — | — | | | | | |||||||||||||||||
Share-based compensation expense |
| — | — | — |
| — |
| |
| — |
| — |
| | |||||||||
Foreign currency translation adjustment |
| — | — | — |
| — |
| — |
| |
| — |
| | |||||||||
Net loss |
| — | — | — |
| — |
| — |
| — |
| ( | ( | ||||||||||
Balance, September 30, 2024 |
| | $ | | | $ | | $ | | $ | | $ | ( | $ | | ||||||||
|
|
|
| Accumulated |
|
| |||||||||||||||||
Mezzanine Equity- | Additional | Other | |||||||||||||||||||||
Series D Preferred Stock | Common Stock | Paid–In | Comprehensive | Accumulated | |||||||||||||||||||
Shares | Par Value | Shares | Par Value | Capital | Income (Loss) | Deficit | Total | ||||||||||||||||
Balance, December 31, 2022 |
| — | $ | | $ | $ | $ | | $ | ( | $ | ( | |||||||||||
Sale of common stock pursuant to B. Riley At Market Issuance Sales Agreement |
| — | — |
|
|
| — | — |
| | |||||||||||||
Issuance costs associated with B. Riley At Market Issuance Sales Agreement |
| — | — | — |
| — |
| ( |
| — | — |
| ( | ||||||||||
Redemption of Series D preferred stock | — | ( | — | — | — | — | — | — | |||||||||||||||
Issuance of common stock in May 2023 public offering |
| — | — | | | | — | — |
| | |||||||||||||
Issuance costs associated with May 2023 public offering | — | — | — | — | ( | — | — | ( | |||||||||||||||
Issuance of common stock to vendors |
| — | — | | | | — | — |
| | |||||||||||||
Issuance of common stock for purchase option |
| — | — | |
| |
| |
| — |
| — |
| | |||||||||
Exercise of pre-funded warrants |
| | — | |
| |
| |
| — |
| — |
| | |||||||||
Share-based compensation expense |
| — | — | — |
| — |
| |
| — |
| — |
| | |||||||||
Foreign currency translation adjustment |
| — | — | — |
| — |
| — |
| ( |
| — |
| ( | |||||||||
Net loss |
| — | — | — |
| — |
| — |
| — |
| ( |
| ( | |||||||||
Balance, September 30, 2023 |
| | $ | | | $ | | $ | | $ | | $ | ( | $ | | ||||||||
Adjusted to reflect the reverse stock split of -for-sixteen effective June 5, 2024.
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity
For the Three Months Ended September 30, 2024 and 2023
(Unaudited)
|
|
|
| Accumulated |
|
| |||||||||||
Additional | Other | ||||||||||||||||
Common Stock | Paid–In | Comprehensive | Accumulated | ||||||||||||||
Shares | Par Value | Capital | Income | Deficit | Total | ||||||||||||
Balance, June 30, 2024 |
| $ | | $ | $ | $ | ( | $ | | ||||||||
Issuance of common stock pursuant to At Market Issuance Sales Agreement |
| |
| |
| |
| — |
| — |
| | |||||
Issuance costs associated with sales of common stock pursuant to At Market Issuance Sales Agreement |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||
Issuance of common stock upon exercise of warrants | | | | — | — | | |||||||||||
Issuance of common stock from warrant inducement | | | | | |||||||||||||
Issuance costs associated with warrant inducement | — | — | ( | — | — | ( | |||||||||||
Warrant modification - incremental fair value | — | — | | | |||||||||||||
Share-based compensation expense |
| — |
| — |
| |
| — |
| — |
| | |||||
Foreign currency translation adjustment |
| — |
| — |
| — |
| |
| — |
| | |||||
Net loss |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2024 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
|
|
|
| Accumulated |
|
| |||||||||||
Additional | Other | ||||||||||||||||
Common Stock | Paid–In | Comprehensive | Accumulated | ||||||||||||||
Shares | Par Value | Capital | Income | Deficit | Total | ||||||||||||
Balance, June 30, 2023 |
| $ | $ | $ | | $ | ( | $ | | ||||||||
Issuance of common stock upon exercise of pre-funded warrants |
| | | ( | — | — |
| — | |||||||||
Share-based compensation expense |
| — |
| — |
| |
| — |
| — |
| | |||||
Foreign currency translation adjustment |
| — |
| — |
| — |
| |
| — |
| | |||||
Net loss |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Balance, September 30, 2023 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Adjusted to reflect the reverse stock split of -for-sixteen effective June 5, 2024.
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Soligenix, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2024 and 2023
(Unaudited)
| 2024 |
| 2023 | |||
Operating activities: |
|
|
|
| ||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
| ||
Amortization and depreciation |
| |
| | ||
Non-cash lease expense |
| |
| | ||
Share-based compensation |
| |
| | ||
Issuance of common stock to vendors for services |
| — |
| | ||
Issuance of common stock for purchase option | — | | ||||
Loss on extinguishment of debt |
| — |
| | ||
Change in fair value of convertible debt | ( | ( | ||||
Amortization of deferred issuance costs associated with convertible debt |
| — |
| | ||
Change in operating assets and liabilities: |
|
| ||||
Contracts and grants receivable |
| |
| | ||
Prepaid expenses and other current assets |
| |
| ( | ||
Research and development incentives receivable |
| |
| | ||
Operating lease liability |
| ( |
| ( | ||
Accounts payable and accrued expenses |
| ( |
| ( | ||
Accrued compensation |
| ( |
| ( | ||
Net cash flows from operating activities |
| ( |
| ( | ||
Financing activities: |
|
|
|
| ||
Proceeds from issuance of common stock pursuant to At Market Issuance Sales Agreement |
| |
| | ||
Costs associated with an At Market Issuance Sales Agreement |
| ( |
| ( | ||
Proceeds from issuance of common stock and pre-funded warrants | | | ||||
Stock issuance costs associated with public offerings | ( | ( | ||||
Proceeds from the exercise of warrants | | | ||||
Issuance costs associated with warrant inducement | ( | — | ||||
Convertible debt repayments |
| ( |
| ( | ||
Net cash flows from financing activities |
| |
| | ||
Effect of exchange rate on cash and cash equivalents |
| |
| | ||
Net increase in cash and cash equivalents |
| |
| ( | ||
Cash and cash equivalents at beginning of period |
| |
| | ||
Cash and cash equivalents at end of period | $ | | $ | | ||
Supplemental information: |
|
|
|
| ||
Cash paid for state income taxes | $ | | $ | | ||
Cash paid for interest | $ | | $ | | ||
Cash paid for lease liabilities: |
|
|
| |||
Operating lease | $ | | $ | | ||
Non-cash investing and financing activities: |
|
|
|
| ||
Pontifax conversion of portion of debt principal into common stock | $ | | $ | — | ||
Deferred issuance cost reclassified to additional paid-in capital | $ | | $ | | ||
Redemption liability for Series D preferred stock | $ | — | $ | | ||
Offering costs included in accounts payable | $ | | $ | | ||
Warrant modification - incremental value | $ | | $ | — | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Soligenix, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Nature of Business
Basis of Presentation
Soligenix, Inc. (the “Company”) is a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. The Company maintains
The Company’s Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”). With agreement from the European Medicines Agency (“EMA”) on the key design components of a confirmatory Phase 3 placebo-controlled study evaluating the safety and efficacy of HyBryte™ in the treatment of CTCL patients with early-stage disease, the Company is targeting to begin patient enrollment by the end of 2024 with top-line results anticipated in the second half of 2026. Upon successful completion of the second Phase 3 study, called “FLASH2” (Fluorescent Light Activated Synthetic Hypericin 2), regulatory approval will be sought to support potential commercialization worldwide.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, the Company’s first-in-class innate defense regulator technology, and dusquetide (SGX942 and SGX945) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
The Company’s Public Health Solutions business segment includes development programs for RiVax®, its ricin toxin vaccine candidate and SGX943, its therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, its vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs incorporates the use of the Company’s proprietary heat stabilization platform technology, known as ThermoVax®. To date, this business segment has been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research and Development Authority and the Defense Threat Reduction Agency.
The Company primarily generates revenues under government grants and contracts. The Company was awarded a subcontract that originally provided for approximately $
The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, development of new technological innovations, dependence on key personnel, protections of proprietary technology, compliance with the FDA regulations, and other regulatory authorities, litigation, and product liability.
Results for the three and nine months ended September 30, 2024 are not necessarily indicative of results that may be expected for the full year.
Liquidity
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued. As of September 30, 2024, the Company had an
7
accumulated deficit of $
To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, the Company’s plans include:
| ● | Securing additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations. |
| ● | Securing additional proceeds from government contract and grant programs. |
| ● | Securing additional proceeds from the sale of shares of the Company’s common stock via the At Market Issuance Sales Agreement (“AGP Sales Agreement”) with A.G.P/Alliance Global Partners (“AGP”). |
| ● | Amending the loan agreement with Pontifax Medison Finance (“Pontifax”) (See Note 4) to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce the Company’s debt repayments. |
Other than the AGP Sales Agreement which was entered into on August 16, 2024 and the second amendment to the Pontifax loan agreement which was completed on October 8, 2024, none of these alternatives are committed at this time. There can be no assurance that the Company will be successful in obtaining sufficient funding on acceptable terms to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that it will require, or achieve the other strategies to alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, the Company will not have sufficient cash resources and liquidity to fund its business operations for at least the 12 months following the date the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed may require the Company to delay, limit, or eliminate the development of business opportunities and its ability to achieve its business objectives and its competitiveness, and its business, financial condition, and results of operations will be materially adversely affected. In addition, the perception that the Company may not be able to continue as a going concern may cause others to choose not to deal with it due to concerns about its ability to meet its contractual obligations.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As of September 30, 2024, the Company had cash and cash equivalents of $
8
The Company’s plans with respect to its liquidity management include, but are not limited to, the following:
| ● | The Company has up to approximately $ |
| ● | The Company will continue to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expects to continue to do so for the foreseeable future. |
| ● | The Company will continue to pursue Net Operating Loss (“NOL”) sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if the program is available. |
| ● | The Company plans to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that the Company can consummate such transactions. |
| ● | The Company completed a public offering on April 22, 2024 of |
| ● | The Company entered into a warrant inducement agreement (the “Inducement Agreement”) on July 9, 2024 with certain holders (the “Holders”) of the Company’s existing Warrant to Purchase Shares of Common Stock (“Existing Warrants”) to purchase shares of common stock of the Company. In consideration of the Holders’ agreement to exercise their Existing Warrants, the Company (i) decreased the exercise price of the Existing Warrants from $ |
| ● | The Company has up to approximately $ |
| ● | The Company is currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing. |
9
Management’s business strategy can be outlined as follows:
| ● | Following agreement from the EMA on the key design components for the second confirmatory Phase 3 placebo-controlled FLASH2 clinical trial of HyBryte™ in CTCL and positive primary endpoint results from the first Phase 3 FLASH study, initiate the FLASH2 study, while at the same time, continuing discussions with the FDA on potential modifications to the development path to adequately address their feedback. |
| ● | Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients. |
| ● | Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment in oral mucositis would be required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to continue this development program. |
| ● | Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease by conducting a Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in aphthous ulcers induced by chemotherapy and radiation. |
| ● | Continue development of the Company’s heat stabilization platform technology, ThermoVax®, in combination with its programs for RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent combinations), with United States (“U.S.”) government or non-governmental organization funding support. |
| ● | Continue to apply for and secure additional government funding for the Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements. |
| ● | Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives, including but not limited to merger/acquisition strategies. |
| ● | Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development. |
Reverse Stock Split
On June 5, 2024, the Company completed a reverse stock split of its issued and outstanding shares of common stock at a ratio of -for-sixteen, whereby every sixteen shares of the Company’s issued and outstanding common stock were automatically combined into issued and outstanding share of common stock without any change in the par value per share.
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Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include Soligenix, Inc., and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated as a result of consolidation.
Operating Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. The Company divides its operations into
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Contracts and Grants Receivable
Contracts and grants receivable consist of amounts due from various grants from the NIH and contracts from NIAID, an institute of NIH, for costs incurred prior to the period end under reimbursement contracts. The amounts were billed to the respective governmental agencies in the month subsequent to period end and collected shortly thereafter. Accordingly, no allowance for credit losses has been established. If amounts become uncollectible, they are charged to operations.
Impairment of Long-Lived Assets
Office furniture and equipment and right of use assets with finite lives are evaluated and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to such assets. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and the carrying value of the related asset or group of assets. Such analyses necessarily involve significant judgment.
The Company did
Fair Value of Financial Instruments
Fair Value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on September 30, 2024. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
Fair Value valuation techniques include a three level hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to
11
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the fair value hierarchy are as follows:
| ● | Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. |
| ● | Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. |
| ● | Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. |
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The carrying amounts reported in the condensed consolidated balance sheet for cash and cash equivalents, contracts and grants receivable, research and development incentives receivable, accounts payable, accrued expenses, and accrued compensation approximate their fair value based on the short-term maturity of these instruments.
The carrying amount reported in the condensed consolidated balance sheet as of September 30, 2024 for the convertible debt is its fair value which totals $
A roll forward of the fair value of convertible debt to September 30, 2024 is as follows:
Pontifax | |||||||||||||||
Conversions | |||||||||||||||
January 3, 2024 | |||||||||||||||
Debt Balance | and | Adjustment to | Principal | Debt Balance | |||||||||||
December 31, 2023 | April 15, 2024 | fair value | Repayments |
| September 30, 2024 | ||||||||||
Convertible debt at fair value | $ | | $ | ( | $ | ( | $ | ( | $ | | |||||
Deferred Issuance Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a result of the issuance.
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Change in Accounting Estimates
The Company accrues clinical trial expenses per contracts with clinical sites over the course of the clinical trial period. Accrued trial expenses are assessed for accuracy on an ongoing basis during the trial period and beyond. For the three and nine months ended September 30, 2024, the Company made adjustments to estimated accrued clinical trial expenses for completed trials of approximately $
Revenue Recognition
The Company’s revenues include revenues generated from government contracts and grants. The revenue from government contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These revenues are recognized when expenses have been incurred by subcontractors or when the Company incurs reimbursable internal expenses that are related to the government contracts and grants.
The Company also records revenue from contracts with customers in accordance with applicable accounting guidance which requires an entity to recognize revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of this guidance, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of this guidance, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties are classified as licensing revenue. Sales-based royalties under the Company’s license agreements would be recognized as royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue.
Research and Development Costs
Research and development costs are charged to expense when incurred in accordance with applicable accounting guidance. Research and development includes costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, equipment depreciation and allocation of various corporate costs.
Share-Based Compensation
Stock options are issued with an exercise price equal to the market price on the date of grant. Stock options issued to directors upon re-election vest quarterly for a period of
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individuals remain employees or directors. In general, when an employee or director terminates their position, the options will expire within
From time to time, the Company issues restricted shares of common stock to vendors and consultants as compensation for services performed under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of stock options, restricted stock, deferred stock and unrestricted stock to the Company’s employees and non-employees (including consultants). The shares issued under the 2015 Plan are registered on Form S-8 (SEC File No. 333-208515). However, as shares of common stock are not covered by a reoffer prospectus, the certificates reflecting such shares reflect a Securities Act of 1933, as amended restrictive legend. Stock compensation expense for equity-classified awards to non-employees is measured on the date of grant and is recognized when the services are performed.
There were
The fair value of each option grant made during the nine months ended September 30, 2024 and 2023 was estimated on the date of each grant and recognized as share-based compensation expense ratably over the option vesting periods, which approximates the service period.
Foreign Currency Transactions and Translation
In accordance with FASB ASC 830 Foreign Currency Matters, the UK subsidiary expresses its U.S. dollar and Euro denominated transactions in its functional currency, the British Pound, with related transaction gains or losses included in net loss. On a quarterly basis, the financial statements of the UK subsidiary are translated into U.S. dollars and consolidated into the Company’s financials, with related translation adjustments reported as a cumulative translation adjustment, which is a component of accumulated other comprehensive income. During the nine months ended September 30, 2024 and 2023, the Company recognized a foreign currency transaction gain of $
Loss Per Share
Basic earnings per share (“EPS”) is computed by dividing loss applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Included within the Company’s weighted average common shares outstanding (basic and diluted) for the three and nine months ended September 30, 2024, are common shares issuable upon the exercise of the pre-funded warrants as these pre-funded warrants are exercisable at any time for nominal consideration.
The following table summarizes outstanding instruments which were not included in the computation of diluted EPS as to do so would have been antidilutive:
As of September 30, | |||||
| 2024 |
| 2023 |
| |
Common stock purchase warrants | | | |||
Stock options |
| |
| |
|
Convertible debt |
| |
| |
|
Total |
| |
| |
|
Use of Estimates and Assumptions
The preparation of financial statements requires management to make estimates and assumptions such as the fair value of warrants and stock options and to accrue for clinical trials in process that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.
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Note 3. Accrued Expenses
The following is a summary of the Company’s accrued expenses:
September 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
Clinical trial expenses | $ | | $ | | |||
Other |
| |
| | |||
Total | $ | | $ | | |||
Note 4. Debt
In December 2020, the Company entered into a $
Upon the closing of this transaction, the Company borrowed the first tranche of $
In April 2023, the Company entered into an amendment to the Loan Agreement (the “2023 Amendment”). The 2023 Amendment called for the immediate payment of $
On January 3, 2024, Pontifax delivered a conversion notice to the Company electing to convert a portion of the remaining principal balance into shares of the Company’s common stock. Upon conversion, the Company issued
On April 15, 2024, Pontifax delivered a conversion notice to the Company electing to convert a portion of the remaining principal balance into shares of the Company’s common stock. Upon conversion, the Company issued
The 2023 Amendment resulted in the extinguishment of the original convertible debt for accounting purposes. The Company elected to account for the amended convertible debt using the fair value option. As of September 30, 2024, the Company determined the carrying amount of the convertible debt was approximately equivalent to the face value of the convertible debt. The Company recognized $
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from the change in the fair value of the convertible debt in its accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively.
In October 2024, the Company entered into an amendment (the “2024 Amendment”) to the Loan Agreement, as amended. The 2024 Amendment reduced the conversion price with respect to the remaining principal amount outstanding to (i) $
Note 5. Shareholders’ Equity
Common Stock
The Company completed a public offering on April 22, 2024 of
Common stock transactions for the nine months ended September 30, 2024 are as follows:
| ● | The Company issued Pontifax |
| ● | The Company issued Pontifax |
| ● | The Company sold |
| ● | The Company issued |
| ● | The Company issued |
| ● | The Company issued |
| ● | The Company issued |
| ● | The Company issued |
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| ● | The Company issued |
| ● | The Company issued |
| ● | The Company issued |
| ● | The Company issued |
| ● | The Company sold |
The issuance of the Company’s common stock in connection with the convertible debt financing agreement as described above was exempt under Section 3(a)(9) of the Securities Act of 1933, as amended.
The issuances of the Company’s common stock in connection with the April 2024 public offering and upon the exercise of warrants described above were registered on a Registration Statement on Form S-1.
The issuance of the Company’s common stock pursuant to the AGP Sales Agreement described above was registered on a Registration Statement on Form S-3.
AGP At Market Issuance Sales Agreement
In August 2024, the Company entered into the AGP Sales Agreement to sell shares of the Company’s common stock from time to time, through an “at-the-market” equity offering program (the “AGP ATM”). In connection with the sale of shares via the AGP ATM, the Company determines, among other things, the number of shares to be issued, the time period during which sales may be requested to be made, limitation on the number of shares that may be sold in any one trading day, and any minimum price below which sales may not be made. Pursuant to the terms, AGP is entitled to compensation for its services in an amount up to
The AGP Sales Agreement provides for the offer and sale of shares of common stock having an aggregate offering price of up to $
July 2024 Warrant Inducement
On July 9, 2024, the Company entered into the Inducement Agreement with the Holders of the Company’s Existing Warrants to purchase shares of common stock of the Company. Pursuant to the Inducement Agreement, the Holders agreed to exercise for cash their Existing Warrants to purchase up to
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applied modification accounting guidance related to the fair value of the modification associated with the warrants that were exercised under the Inducement Agreement. Accordingly, the Company recognized the incremental fair value of the modification of the Existing Warrants exercised along with the fair value of the New Warrants issued as compared to the original warrants, together totaling approximately $
The fair value of the New Warrants issued under the Inducement Agreement was estimated using the Black-Scholes warrant-pricing model and the following assumptions:
| ● | a dividend yield of |
| ● | an expected life of |
| ● | volatility of |
| ● | risk free interest rate of |
Note 6. Commitments and Contingencies
Contractual Obligations
The Company has commitments of approximately $
The Company currently leases office space pursuant to a lease which expires in October 2025 and requires monthly rent of $
In September 2014, the Company entered into an asset purchase agreement with Hy Biopharma Inc. (“Hy Biopharma”) pursuant to which the Company acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin product. As consideration for the assets acquired, the Company paid $
Provided the sole remaining future success-oriented milestone of FDA approval is attained, the Company will be required to make an additional payment of $
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As a result of the above agreements, the Company has the following contractual obligations:
| Research and |
|
|
| |||||
Year |
| Development |
| Leases |
| Total | |||
October 1 through December 31, 2024 | $ | | $ | | $ | | |||
2025 |
| |
| |
| | |||
2026 |
| |
| — |
| | |||
2027 | | — | | ||||||
2028 | | — | | ||||||
Total | $ | | $ | | $ | | |||
Note 7. Operating Segments
The Company maintains
| Three Months Ended | |||||
| September 30, | |||||
| 2024 |
| 2023 | |||
Revenues |
|
|
| |||
Specialized BioTherapeutics | $ | — | $ | — | ||
Public Health Solutions | — | | ||||
Total | $ | — | $ | | ||
Income (loss) from Operations |
|
|
|
| ||
Specialized BioTherapeutics | $ | ( | $ | ( | ||
Public Health Solutions | ( | ( | ||||
Corporate |
| ( |
| ( | ||
Total | $ | ( | $ | ( | ||
Amortization and Depreciation Expense |
|
|
|
| ||
Specialized BioTherapeutics | $ | | $ | | ||
Public Health Solutions | | | ||||
Corporate |
| |
| | ||
Total | $ | | $ | | ||
Other (Expense) Income, Net |
|
|
|
| ||
Specialized BioTherapeutics | $ | | $ | | ||
Corporate |
| |
| | ||
Total | $ | | $ | | ||
Share-Based Compensation |
|
|
|
| ||
Specialized BioTherapeutics | $ | | $ | | ||
Public Health Solutions | | | ||||
Corporate |
| |
| | ||
Total | $ | | $ | | ||
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| Nine Months Ended | ||||||
| September 30, | ||||||
| 2024 |
| 2023 | ||||
Revenues |
|
|
| ||||
Specialized BioTherapeutics | $ | | $ | | |||
Public Health Solutions | — | | |||||
Total | $ | | $ | | |||
Income (loss) from Operations |
|
|
|
| |||
Specialized BioTherapeutics | $ | ( | $ | ( | |||
Public Health Solutions | ( | ( | |||||
Corporate |
| ( |
| ( | |||
Total | $ | ( | $ | ( | |||
Amortization and Depreciation Expense |
|
|
|
| |||
Specialized BioTherapeutics | $ | | $ | | |||
Public Health Solutions | | | |||||
Corporate |
| |
| | |||
Total | $ | | $ | | |||
Other (Expense) Income, Net |
|
|
|
| |||
Specialized BioTherapeutics | $ | ( | $ | | |||
Corporate |
| |
| | |||
Total | $ | | $ | | |||
Share-Based Compensation |
|
|
|
| |||
Specialized BioTherapeutics | $ | | $ | | |||
Public Health Solutions | | | |||||
Corporate |
| |
| | |||
Total | $ | | $ | | |||
| As of | As of |
| ||||
September 30, | December 31, | ||||||
| 2024 |
| 2023 |
| |||
Identifiable Assets |
|
|
|
|
| ||
Specialized BioTherapeutics | $ | | $ | | |||
Public Health Solutions |
| |
| | |||
Corporate |
| |
| | |||
Total | $ | | $ | | |||
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Note 8. Subsequent Events
Amendment to the Pontifax Loan and Security Agreement
On October 8, 2024, the Company entered into the 2024 Amendment to the Loan Agreement. The 2024 Amendment reduced the conversion price with respect to the remaining principal amount outstanding to (i) $
Sales Pursuant to the AGP ATM
From October 1, 2024 through November 1, 2024, the Company sold
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information to explain our results of operations and financial condition. You should also read our unaudited condensed consolidated interim financial statements and their notes included in this Form 10-Q, and our audited consolidated financial statements and their notes, Risk Factors and other information included in our Annual Report on Form 10-K for the year ended December 31, 2023. We provide addresses to internet sites solely for the information to investors. We do not intend any addresses to be active links or to otherwise incorporate the contents of any website into this report.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects and opportunities. These forward-looking statements are not guarantees of future performance and are subject to significant risks, uncertainties, assumptions and other factors, which are difficult to predict and may cause actual results to differ materially from those expressed in, or implied by, any forward-looking statements. The forward-looking statements within this report may be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “may,” “would,” “will” and other similar expressions. However, these words are not the exclusive means of identifying these statements. Statements that are not historical facts are based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the industry and markets related to our business and are forward-looking statements.
Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Important factors which may affect these actual outcomes and results include, without limitation:
| ● | uncertainty as to whether our product candidates will be sufficiently safe and effective to support regulatory approvals; |
| ● | uncertainty inherent in developing therapeutics and vaccines, and manufacturing and conducting preclinical and clinical trials; |
| ● | our ability to obtain future financing or funds when needed, either through the raising of capital, the incurrence of convertible or other indebtedness or through strategic financing or commercialization partnerships; |
| ● | our ability to secure government grants or contracts to support our vaccine development; |
| ● | our ability to maintain our listing on The Nasdaq Capital Market and meet its listing requirements; |
| ● | that product development and commercialization efforts will be reduced or discontinued due to difficulties or delays in clinical trials or a lack of progress or positive results from research and development efforts; |
| ● | maintenance and progression of our business strategy; |
| ● | the possibility that our products under development may not gain market acceptance; |
| ● | our expectations about the potential market sizes and market participation potential for our product candidates may not be realized; |
| ● | our expected revenues (including sales, milestone payments and royalty revenues) from our product candidates and any related commercial agreements of ours may not be realized; |
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| ● | the ability of our manufacturing partners to supply us or our commercial partners with clinical or commercial supplies of our products in a safe, timely and regulatory compliant manner and the ability of such partners to timely address any regulatory issues that have arisen or may arise in the future; |
| ● | competition existing today or that may arise in the future, including the possibility that others may develop technologies or products superior to our products; |
| ● | the effect that global pathogens could have on financial markets, materials sourcing, service providers, patients, clinical study sites, governments and population (e.g. Covid-19); and |
| ● | other factors, including those “Risk Factors” set forth under Part II, Item 1A. “Risk Factors” in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances occurring subsequent to the filing of this Form 10-Q with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) or for any other reason. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
Note Regarding Reverse Stock Split
On June 5, 2024, we completed a reverse stock split of our issued and outstanding shares of common stock at a ratio of one-for-sixteen, whereby every sixteen shares of our issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock without any change in the par value per share. No fractional shares were issued as a result of the reverse stock split. Any fractional shares that would otherwise have resulted from the reverse stock split were rounded up to the next whole number. Our common stock began trading on The Nasdaq Capital Market on a reverse split basis at the market opening on June 6, 2024. All share and per share data have been restated to reflect this reverse stock split.
Our Business Overview
We are a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. We maintain two active business segments: Specialized BioTherapeutics and Public Health Solutions.
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”). With agreement from the European Medicines Agency (“EMA”) on the key design components of a confirmatory Phase 3 placebo-controlled study evaluating the safety and efficacy of HyBryte™ in the treatment of CTCL patients with early-stage disease, we are targeting to begin patient enrollment by the end of 2024 with top-line results anticipated in the second half of 2026. Upon successful completion of the second Phase 3 study, called “FLASH2” (Fluorescent Light Activated Synthetic Hypericin 2), regulatory approval will be sought to support potential commercialization worldwide.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our first-in-class innate defense regulator technology, and dusquetide (SGX942 and SGX945) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
Our Public Health Solutions business segment includes development programs for RiVax®, our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine programs, targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine
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candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs incorporates the use of our proprietary heat stabilization platform technology, known as ThermoVax®. To date, this business segment has been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research and Development Authority and the Defense Threat Reduction Agency.
An outline of our business strategy follows:
| ● | Following agreement from the EMA on the key design components for the second confirmatory Phase 3 placebo-controlled FLASH2 (Florescent Light Activated Synthetic Hypericin 2) clinical trial of HyBryte™ in CTCL and positive primary endpoint results from the first Phase 3 FLASH study, initiate the FLASH2 study, while at the same time, continuing discussions with the U.S. Food and Drug Administration (“FDA”) on potential modifications to the development path to adequately address their feedback. |
| ● | Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients. |
| ● | Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”) that a second Phase 3 clinical trial of SGX942 in the treatment of oral mucositis would be required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to continue this development program. |
| ● | Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease by conducting a Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in aphthous ulcers induced by chemotherapy and radiation. |
| ● | Continue development of our heat stabilization platform technology, ThermoVax®, in combination with programs for RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent combinations), with U.S. government and non-governmental organization funding support. |
| ● | Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements. |
| ● | Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives, including but not limited to merger/acquisition strategies. |
| ● | Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development. |
Corporate Information
We were incorporated in Delaware in 1987 under the name Biological Therapeutics, Inc. In 1987, we merged with Biological Therapeutics, Inc., a North Dakota corporation, pursuant to which we changed our name to “Immunotherapeutics, Inc.” We changed our name to “Endorex Corp.” in 1996, to “Endorex Corporation” in 1998, to “DOR BioPharma, Inc.” in 2001, and finally to “Soligenix, Inc.” in 2009. Our principal executive offices are located at 29 Emmons Drive, Suite B-10, Princeton, New Jersey 08540 and our telephone number is (609) 538-8200.
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Our Product Candidates in Development
The following tables summarize our product candidates under development:
Specialized BioTherapeutics Product Candidates
Soligenix Product Candidate |
| Therapeutic Indication |
| Stage of Development |
|---|---|---|---|---|
HyBryte™ | Cutaneous T-Cell Lymphoma | Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and October 2020 (Cycle 3); NDA submitted to FDA December 2022; FDA RTF letter received February 2023; second Phase 3 trial based upon EMA-accepted protocol targeted to begin patient enrollment by the end of 2024 with top-line results anticipated in the second half of 2026; discussions continue with FDA on modifying the development path to adequately address FDA’s preference for a longer duration comparative study over a placebo-controlled trial. | ||
SGX302 | Mild-to-Moderate Psoriasis | Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug (“IND”) clearance received from the FDA; Phase 2a study remains ongoing having demonstrated biological effect in Cohort 1 and clinically meaningful benefit in Cohort 2 | ||
SGX942† | Oral Mucositis in Head and Neck Cancer | Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: the primary endpoint of median duration of severe oral mucositis (“SOM”) did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyzed full dataset from Phase 3 study and designing a second Phase 3 clinical trial; continued development contingent upon identification of partnership | ||
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Soligenix Product Candidate |
| Therapeutic Indication |
| Stage of Development |
|---|---|---|---|---|
SGX945 | Aphthous Ulcers in Behçet’s Disease | Phase 2a protocol and IND clearance received from the FDA; Phase 2a study to be initiated in 4Q 2024 | ||
Public Health Solutions†
Soligenix Product Candidate |
| Indication |
| Stage of Development |
|---|---|---|---|---|
ThermoVax® | Thermostability of vaccines for Ricin toxin, Ebola, and Marburg viruses | Pre-clinical | ||
RiVax® | Vaccine against Ricin Toxin Poisoning | Phase 1a, 1b, and 1c trials completed, safety and neutralizing antibodies for protection demonstrated | ||
SGX943 | Therapeutic against Emerging Infectious Diseases | Pre-clinical | ||
† | Contingent upon continued government contract/grant funding or other funding source. |
Specialized BioTherapeutics Overview
Synthetic Hypericin
Synthetic Hypericin is a potent photosensitizer that is topically applied to skin lesions, taken up by cutaneous T-cells and then activated by safe visible light. Hypericin is also found in several species of Hypericum plants, although the active moiety used in HyBryte™ and SGX302 is chemically synthesized by a proprietary manufacturing process and not extracted from plants. Importantly, hypericin is optimally activated with visible light thereby avoiding the negative consequences of ultraviolet (“UV”) light. Other light therapies using UVA or UVB light can result in serious adverse effects including secondary skin cancers.
Combined with photoactivation, in clinical trials synthetic hypericin has demonstrated significant anti-proliferative effects on activated normal human lymphoid cells and inhibited growth of malignant T-cells isolated from CTCL patients. In both settings, it appears that the mode of action is an induction of cell death in a concentration as well as a light dose-dependent fashion. These effects appear to result, in part, from the generation of singlet oxygen during photoactivation of hypericin.
Synthetic hypericin is one of the most efficient known generators of singlet oxygen, the key component for phototherapy. The generation of singlet oxygen induces necrosis and apoptosis in cells. The use of topical synthetic hypericin coupled with directed visible light results in generation of singlet oxygen only at the treated site. We believe that the use of visible light (as opposed to cancer-causing UV light) is a major advance in photodynamic therapy. In a small published Phase 1/2 proof of concept pilot clinical study using synthetic hypericin twice weekly for six weeks, statistically significant efficacy was demonstrated in patients with CTCL (58.3% response, p=0.04) and psoriasis (80% response, p<0.02). Subsequently, a Phase 3 study in CTCL has further confirmed the biological efficacy of synthetic hypericin (termed HyBryte™ in the context of CTCL).
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HyBryte™ – for Treating Cutaneous T-Cell Lymphoma
HyBryte™ is a novel, first-in-class, PDT that utilizes safe visible light for activation. The active ingredient in HyBryte™ is synthetic hypericin, a photosensitizer which is topically applied to skin lesions and then activated by visible fluorescent light 16 to 24 hours later.
Based on the positive and previously published Phase 1/2 results, we initiated our Phase 3 clinical study of HyBryte™ for the treatment of CTCL during December 2015 and completed the trial in 2020. This trial, referred to as the “FLASH” (Fluorescent Light Activated Synthetic Hypericin) study, aimed to evaluate the response to HyBryte™ as a skin directed therapy to treat early stage CTCL. We completed the study with approximately 35 CTCL centers across the U.S. participating in this trial. The Phase 3 protocol was a highly powered, double-blind, randomized, placebo-controlled, multicenter trial that enrolled 169 subjects (166 evaluable). The trial consisted of three treatment cycles, each of eight weeks duration. Treatments were administered twice weekly for the first six weeks and treatment response was determined at the end of the eighth week. In the first treatment cycle, approximately 66% of subjects received HyBryte™ and 33% received placebo treatment of their index lesions. In the second cycle, all subjects received HyBryte™ treatment of their index lesions, and in the third cycle, all subjects received HyBryte™ treatment of all of their lesions. The majority of subjects enrolled elected to continue into the third optional, open-label cycle of the study. Subjects were followed for an additional six months after their last evaluation visit. The primary efficacy endpoint was assessed on the percentage of patients in each of the two treatment groups (i.e., HyBryte™ and placebo) achieving a partial or complete response of the treated lesions, defined as a ≥ 50% reduction in the total Composite Assessment of Index Lesion Disease Severity (“CAILS”) score for three index lesions at the Cycle 1 evaluation visit (Week 8) compared to the total CAILS score at baseline. Secondary endpoints for the trial included the duration of responses, the extent of the regression of the tumors, and the safety of the treatment. We continue to work closely with the Cutaneous Lymphoma Foundation, as well as the National Organization for Rare Disorders.
Positive primary endpoint analysis for the Phase 3 study for HyBryte™ was completed in March 2020. The study enrolled 169 patients (166 evaluable) randomized 2:1 to receive either HyBryte™ (116 patients) or placebo (50 patients) and demonstrated a statistically significant treatment response (p=0.04) in the CAILS primary endpoint assessment at 8 weeks for Cycle 1. A total of 16% of the patients receiving HyBryte™ achieved at least a 50% reduction in their index lesions compared to only 4% of patients in the placebo group at 8 weeks. HyBryte™ treatment in the first cycle was safe and well tolerated.
Analysis of the second open-label treatment cycle (Cycle 2) was completed in April 2020, showing that continued treatment with HyBryte™ twice weekly for an additional 6 weeks (12 weeks total) increased the positive response rate to 40% (p<0.0001 compared to placebo and p<0.0001 compared to 6-weeks treatment). After the subsequent additional 6-week treatment, the response rate in patients receiving a total of 12 weeks treatment increased two and a half-fold. Treatment responses were assessed at Week 8 (after 6 weeks of treatment) and at Week 16 (after 12 weeks of treatment). A positive response was defined as an improvement of at least 50% in the CAILS score for the three index lesions evaluated in both Cycles 1 and 2. The data continued to indicate that HyBryte™ was safe and well tolerated.
Analysis of the optional third open-label treatment cycle (Cycle 3) was completed in October 2020. Cycle 3 was focused on safety and all patients could elect to receive HyBryte™ treatment of all their lesions for an additional 6 weeks or up to 18 weeks in total. Of note, 66% of patients elected to continue with this optional safety cycle of the study. Of the subset of patients that received HyBryte™ throughout all three cycles of treatment (18 weeks), 49% of them demonstrated a treatment response (p=0.046 vs. patients completing 12 weeks of HyBryte™ treatment in Cycle 2; p<0.0001 vs. patients receiving placebo in Cycle 1). Moreover, in a subset of patients evaluated in this cycle, it was demonstrated that HyBryte™ is not systemically available, consistent with the general safety of this topical product observed to date. At the end of Cycle 3, HyBryte™ continued to be well tolerated despite extended and increased use of the product to treat multiple lesions.
In addition, continued analysis of results from the protocol mandated efficacy cycles (Cycles 1 and 2) of the study revealed that 12 weeks of treatment (Cycle 2) with HyBryte™ is equally effective on both patch (response
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37%, p=0.0009) and plaque (response 42%, p<0.0001) lesions when compared to Cycle 1 placebo lesion responses, further demonstrating the unique benefits of the more deeply penetrating visible light activation of hypericin.
Following the first Phase 3 study of HyBryte™ for the treatment of CTCL, the FDA and the EMA indicated that they would require a second successful Phase 3 trial to support marketing approval. With agreement from the EMA on the key design components, the confirmatory Phase 3 trial will be a randomized, double-blind, placebo-controlled, multicenter study treating approximately 80 subjects with early-stage CTCL. It will evaluate the efficacy and safety of HyBryte™ topically applied to CTCL lesions twice weekly for 18 weeks, with each application followed 21 (±3) hours later by the administration of safe, visible light at a wavelength of 500 to 650 nm. The light will be administered starting at 6 J/cm2 twice weekly. This will be increased upwards by 2 J/cm2 until: 1) the patient experiences a Grade 1 erythema, 2) the patient reaches the maximum dose of 30 J/cm2, or 3) the patient cannot tolerate the treatment time, whichever comes first. All of the patient’s lesions that are readily available for exposure to the visible light source will be treated and three to five index lesions of each patient will be prospectively identified and indexed for the modified composite assessment of index lesions severity (“mCAILS”) evaluation prior to randomization (baseline). The primary efficacy endpoint will be assessed on the percent of patients in each of the two treatment groups (i.e., HyBryte™ and placebo) achieving a Partial or Complete Response (yes/no) of the treated lesions defined as a ≥ 50% reduction in the total mCAILS score for the three to five index lesions following 18 weeks of treatment compared to the total mCAILS score at baseline. Other secondary measures will assess treatment response (including duration), degree of improvement, time to relapse and safety. Following treatment, all patients will be followed every four weeks for a total of 12 weeks (through Week 30). The Data Monitoring Committee will conduct one (1) interim analysis when approximately 60% of the total subjects have completed the primary endpoint evaluation. The primary efficacy endpoint and the key safety endpoints will be analyzed. A sample size recalculation may be performed after examining the assumptions or the trial halted for either futility, safety concerns, or overwhelming efficacy. The Company, participating clinical investigators, and any personnel involved in trial conduct will remain blinded to study treatment until completion of the trial.
HyBryte™ has received Orphan Drug designation as well as Fast Track designation from the FDA. The Orphan Drug Act is intended to assist and encourage companies to develop safe and effective therapies for the treatment of rare diseases and disorders. In addition to providing a seven-year term of market exclusivity for HyBryte™ upon final FDA approval, Orphan Drug designation also positions us to be able to leverage a wide range of financial and regulatory benefits, including government grants for conducting clinical trials, waiver of FDA user fees for the potential submission of a NDA for HyBryte™, and certain tax credits. In addition, Fast Track is a designation that the FDA reserves for a drug intended to treat a serious or life-threatening condition and one that demonstrates the potential to address an unmet medical need for the condition. Fast Track designation is designed to facilitate the development and expedite the review of new drugs. For instance, we were eligible to submit a NDA for HyBryte™ on a rolling basis, permitting the FDA to review sections of the NDA prior to receiving the complete submission. Additionally, NDAs for Fast Track development programs ordinarily will be eligible for priority review. HyBryte™ for the treatment of CTCL also was granted Orphan Drug designation from the EMA Committee for Orphan Medical Products and Promising Innovative Medicine (“PIM”) designation from the MHRA, as well as Innovation Passport under the Innovative Licensing and Access Pathway (“ILAP”) in the UK.
During January 2021, we signed an exclusive Supply, Distribution and Services Agreement with The Daavlin Distributing Co. (“Daavlin”), securing long-term supply and distribution of a commercially ready light device, which is an integral component of the regulatory and commercial strategy for HyBryte™ for the treatment of CTCL. Pursuant to the agreement, Daavlin will exclusively manufacture the proprietary light device for use with HyBryte™ for the treatment of CTCL. Upon approval of HyBryte™ by the FDA, we will promote HyBryte™ and the companion light device, and facilitate the direct purchase of the device from Daavlin. Daavlin will exclusively distribute and sell the HyBryte™ light device to us, physicians and patients.
In April 2021, the FDA conditionally accepted HyBryte™ as the proposed brand name for SGX301 or synthetic hypericin, in the treatment of early stage CTCL. The name HyBryte™ was developed in compliance with the
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FDA’s Guidance for Industry, Contents of a Complete Submission for the Evaluation of Proprietary Names. The FDA’s conditional approval validates HyBryte™ as a proprietary name that is consistent with the FDA’s goal of preventing medication errors and potential harm to the public by ensuring that only appropriate proprietary names are approved for use. Final approval of the HyBryte™ proprietary name is conditioned on FDA approval of the product candidate, SGX301.
In May 2021, HyBryte™ was awarded an "Innovation Passport" for the treatment of early stage CTCL in adults under the UK’s ILAP. The decision to award the Innovation Passport to the HyBryte™ program was made by the Innovative Licensing and Access Pathway Steering Group, which is comprised of representatives from MHRA, the National Institute for Health and Care Excellence (“NICE”), and the Scottish Medicines Consortium (“SMC”). ILAP was launched at the start of 2021 to accelerate the development and access to promising medicines, thereby facilitating patient access to new medicines. The pathway, part of the UK’s plan to attract life sciences development in the post-Brexit era, features enhanced input and interactions with the MHRA, NICE, and SMC. The innovation passport designation is the first step in the ILAP process and triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and development milestones with the goal of early patient access in the UK. Other benefits of ILAP include a 150-day accelerated assessment, rolling review and a continuous benefit risk assessment.
In June 2021, we received a Paediatric Investigation Plan (“PIP”) waiver from the EMA for HyBryte™. As part of the regulatory process for the registration of new medicines with the EMA, pharmaceutical companies are required to provide a PIP outlining their strategies for investigation of the new medicinal products in the pediatric population. In some instances, a waiver negating the need for a PIP for certain conditions may be granted by the EMA when development of a medicine for use in children is not feasible or appropriate, as is the case for HyBryte™ in CTCL which is extremely rare in children.
In September 2021, we were granted orphan drug designation for the active ingredient hypericin for the treatment of T-cell lymphoma, extending the target population beyond CTCL as previously granted by the FDA.
In July 2022, the results of our successful Phase 3 FLASH study evaluating HyBryte™ for the treatment of CTCL were published in the Journal of the American Medical Association (JAMA) Dermatology.
In July 2022, we received agreement from the FDA on an initial pediatric study plan (“iPSP”) for HyBryte™ for the treatment of CTCL. The agreed iPSP stipulates that we intend to request a full waiver of pediatric studies upon submission of the NDA. Agreement with FDA on an iPSP is one of the regulatory requirements that must be met prior to submitting a NDA.
In September 2022, the FDA awarded an Orphan Products Development grant to support the evaluation of HyBryte™ for expanded treatment in patients with early-stage CTCL. The grant, totaling $2.6 million over four years, was awarded to a prestigious academic institution that was a leading enroller in the published positive Phase 3 FLASH study in the treatment of early stage CTCL.
In December 2022, we submitted the HyBryte™ NDA for the treatment of CTCL with the FDA.
In February 2023, we received a RTF letter from the FDA for the HyBryte™ NDA. Upon preliminary review, the FDA determined that the NDA was not sufficiently complete to permit substantive review.
In April 2023, the United States Adopted Names (“USAN”) Council approved the use of the nonproprietary name of “hypericin sodium” for the novel active ingredient in both HyBryte™ (research name SGX301) for the treatment of CTCL and SGX302 for the treatment of mild-to-moderate psoriasis.
In April 2023, we had a Type A meeting with the FDA to clarify and respond to the issues identified in the RTF letter received from the FDA and to seek additional guidance concerning information that the FDA would require for a resubmitted NDA to be deemed acceptable to file, in order to advance HyBryte™ towards marketing approval and U.S. commercialization. In order to accept an NDA filing for HyBryte™, the FDA is requiring
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positive results from a second, Phase 3 pivotal study in addition to the Phase 3, randomized, double-blind, placebo-controlled FLASH study previously conducted in this orphan indication. Based on this feedback, we have decided to collaboratively engage in discussions with the FDA in order to define the protocol and evaluate the feasibility of conducting the additional clinical trial.
In May 2023, we were granted a follow-on Type A meeting with the FDA to initiate formal discussions regarding the protocol design of a second, Phase 3 pivotal study evaluating HyBryte™ in the treatment of CTCL in support of potential FDA marketing approval. While discussions have been collaborative, the FDA has expressed a preference for a longer duration comparative study over a placebo-controlled trial. Given the shorter time to potential commercial revenue and the similar trial design to the first FLASH study afforded by the EMA accepted protocol, we determined to initiate the FLASH2 study in support of worldwide potential approval. At the same time, we will continue discussions with the FDA on modifying the development path to adequately address their feedback.
In August 2023, patient enrollment was opened for the investigator-initiated study (“IIS”). IIS is supported by an Orphan Products Development grant of $2.6 million over four years awarded by the FDA to a prestigious academic institution that was a leading enroller in the published positive Phase 3 FLASH study in the treatment of early stage CTCL. The IIS will evaluate the expanded treatment, including up to 12 months of treatment, with HyBryte™ in patients with early-stage CTCL.
In March 2024, we received agreement from the EMA on the key design components of a confirmatory Phase 3 placebo-controlled study evaluating the safety and efficacy of HyBryte™ in the treatment of CTCL patients with early-stage disease. This confirmatory 18-week study is expected to enroll approximately 80 patients in the US and Europe and is targeted to begin patient enrollment by the end of 2024 with top-line results anticipated in the second half of 2026.
In June 2024, we announced positive clinical results from a comparability study evaluating HyBryte™ versus Valchlor® (mechlorethamine gel) in the treatment of early stage CTCL. The open-label study enrolled 10 patients (5 patients per group) with treatment success defined as a ≥50% improvement in a patient’s cumulative mCAILS score after 12 weeks of topical treatment compared to Baseline. The study demonstrated that HyBryte™ treatment resulted in 60% of patients achieving a 50% or better improvement in their mCAILS score versus 20% of Valchlor® patients. When comparing the tolerance of the topical therapies in this trial, it is notable that all patients tolerated HyBryte™ well and had no adverse events “Related” to the therapy. In contrast, 60% of the Valchlor® treated patients had at least one adverse event “Related” to the therapy. These adverse events in the Valchlor® group included rashes, application site sensitivity, allergic contact dermatitis, and dermatitis, with one patient requiring steroid treatment, one requiring temporary interruption of Valchlor® treatment, and one requiring permanent discontinuation of Valchlor®. No such instances were reported in the HyBryte™ group.
In July 2024, we announced an interim update on the open-label, investigator-initiated study (IIS) evaluating extended HyBryte™ treatment for up to 12 months in patients with early stage CTCL. To date, the trial sponsored by Dr. Ellen Kim, has enrolled and treated six patients with HyBryte™ over a time period ranging up to 44 weeks. Patients have responded positively to HyBryte™ therapy with 75% (3 of the 4 subjects who have completed at least 12 weeks of therapy) already achieving “Treatment Success”, as predefined in the study’s protocol as ≥50% improvement in their cumulative mCAILS score compared to Baseline. Of the three Treatment Successes, two were achieved within the first 12 weeks of treatment and the third within 18 weeks. Of the remaining three patients, two have only recently started HyBryte™ therapy and have not yet reached their first efficacy evaluation visit (i.e., at Week 6) and the other had a substantial improvement documented at the Week 18 visit, but has not yet achieved the success threshold. In addition, HyBryte™ appears to be safe and well tolerated in all patients, with no treatment-related adverse events reported to date.
In September 2024, the European Patent Office granted the patent entitled "Systems and Methods for Producing Synthetic Hypericin". The newly issued patent's claims are directed to a novel, highly purified form of synthetic hypericin manufactured through a unique proprietary process. Synthetic hypericin is the active pharmaceutical ingredient in HyBryte™, our photodynamic therapy for the treatment of CTCL, set to initiate a
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confirmatory Phase 3 clinical trial before the end of the year. This new European granted patent (EP3423428) is a related patent to US Pat. No. 10,053,413, previously issued in the U.S. Both patents are expected to expire in 2036, and form part of a larger patent family, including previously granted U.S. patents covering methods of use (US Pat. No. 7,122,518) and methods of synthesis (US Pat. No. 8,629,302), as well as other granted patents throughout the world.
In October 2024, we established a partnership agreement with Sterling Pharma Solutions Limited (“Sterling”) to optimize and implement a commercially viable, scalable production technology for synthetic hypericin. We are currently working to transfer and optimize the manufacturing processes and analytics to enable GMP manufacturing for clinical trials with the intent of establishing a long-term commercial manufacturing collaboration.
We estimate the potential worldwide market for HyBryte™ is in excess of $250 million for the treatment of CTCL. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
Cutaneous T-Cell Lymphoma
CTCL is a class of non-Hodgkin’s lymphoma (“NHL”), a type of cancer of the white blood cells that are an integral part of the immune system. Unlike most NHLs, which generally involve B-cell lymphocytes (involved in producing antibodies), CTCL is caused by an expansion of malignant T-cell lymphocytes (involved in cell-mediated immunity) normally programmed to migrate to the skin. These skin-trafficking malignant T-cells migrate to the skin, causing various lesions to appear that may change shape as the disease progresses, typically beginning as a rash and eventually forming plaques and tumors. Mycosis fungoides (“MF”) is the most common form of CTCL. It generally presents with skin involvement only, manifested as scaly, erythematous patches. Advanced disease with diffuse lymph node and visceral organ involvement is usually associated with a poorer response rate to standard therapies. A relatively uncommon sub-group of CTCL patients present with extensive skin involvement and circulating malignant cerebriform T-cells, referred to as Sézary syndrome. These patients have substantially graver prognoses (expected five-year survival rate of 24%), than those with MF (expected five-year survival rate of 88%).
CTCL mortality is related to stage of disease, with median survival generally ranging from about 12 years in the early stages to only 2.5 years when the disease has advanced. There is currently no FDA-approved drug for front-line treatment of early stage CTCL. Treatment of early-stage disease generally involves skin-directed therapies. One of the most common unapproved therapies used for early-stage disease is oral 5 or 8-methoxypsoralen (“Psoralen”) given with ultraviolet A (“UVA”) light, referred to as PUVA, which is approved for dermatological conditions such as disabling psoriasis not adequately responsive to other forms of therapy, idiopathic vitiligo and skin manifestations of CTCL in persons who have not been responsive to other forms of treatment. Psoralen is a mutagenic chemical that interferes with DNA causing mutations and other malignancies. Moreover, UVA is a carcinogenic light source that when combined with the Psoralen, results in serious adverse effects including secondary skin cancers; therefore, the FDA requires a Black Box warning for PUVA.
CTCL constitutes a rare group of NHLs, occurring in about 4% of the more than 1.7 million individuals living with the disease in the United States and Europe (European Union and United Kingdom). It is estimated, based upon review of historic published studies and reports and an interpolation of data on the incidence of CTCL that it affects approximately 31,000 individuals in the U.S. (based on SEER data, with approximately 3,200 new cases seen annually) and approximately 38,000 individuals in Europe (based on ECIS prevalence estimates, with approximately 3,800 new cases annually).
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SGX302 – for Treating Mild-to-Moderate Psoriasis
SGX302 (synthetic hypericin) is a potent photosensitizer that is topically applied to skin lesions and taken up by cutaneous T-cells. With subsequent activation by safe, visible light, T-cell apoptosis is induced, addressing the dysregulated T-cells found in psoriasis lesions. Other PDTs have shown efficacy in psoriasis with a similar apoptotic mechanism, albeit using UV light associated with more severe potential long-term toxicities. The use of visible light in the red-yellow spectrum has the advantage of deeper penetration into the skin (much more than UV light) potentially treating deeper skin disease and thicker plaques and lesions, similar to what was observed in the positive Phase 3 FLASH study in CTCL. Further, this treatment approach avoids the risk of secondary malignancies (including melanoma) inherent with both the frequently used DNA-damaging drugs and other phototherapies that are dependent on UVA or UVB exposure. The use of SGX302 coupled with safe, visible light also avoids the risk of serious infections and cancer associated with the systemic immunosuppressive treatments used in psoriasis.
In September 2021, following the validation of synthetic hypericin’s biologic activity in the positive Phase 3 FLASH study in CTCL, as well as positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients, we decided to expand this novel therapy into a Phase 2a clinical trial in mild-to-moderate psoriasis.
In June 2022, we received FDA IND clearance for our Phase 2a clinical trial (protocol number HPN-PSR-01) titled, "Phase 2 Study Evaluating SGX302 in the Treatment of Mild-to-Moderate Psoriasis." In December 2022, we initiated patient enrollment for the Phase 2a study (protocol number HPN-PSR-01) evaluating SGX302 in the treatment of mild-to-moderate psoriasis. The Phase 2a clinical trial (protocol number HPN-PSR-01) will target enrollment of up to 42 patients ages 18 years or older with mild to moderate, stable psoriasis covering 2 to 30% of the body. In both Parts A and B, all patients will apply the study drug twice per week and activate the drug with visible light 24 ± 6 hours later using the supplied visible light devices and according to the manufacturer's instructions. Patients will undergo treatments for a total of 18 weeks and, on completion, will be followed for a four-week follow-up period in which patients will not receive other psoriasis treatments. In Part A, five to ten patients will be assigned open-label SGX302 (0.25% hypericin) at the time of enrollment. Once the tolerability and response to SGX302 has been established, Part B of the protocol will commence. In Part B, patients will be randomized to double-blind treatment groups at a ratio 1:1 of active drug to placebo ointment. Active dermatologic assessment of treated lesions for adverse events will be performed immediately before and during light treatments. Patients will be assessed for overall disease status through four weeks of follow-up. Efficacy endpoints will include the extent of lesion clearance and patient reported quality of life indices. Routine safety data also will be collected.
In October 2022, we announced the formation of a Medical Advisory Board to provide medical/clinical strategic guidance to advance the Phase 2a clinical development of SGX302 for the treatment of mild-to-moderate psoriasis.
In July 2023, we expanded the Phase 2a trial of SGX302 after demonstration of biological effect in the initial five subjects (Cohort 1). The study is expected to enroll at least an additional ten subjects, exploring the use of SGX302 in the standard of care psoriasis setting, prior to undertaking the larger phase of the study.
In January 2024, positive preliminary results of clinical success were demonstrated in the Cohort 2 subjects enrolled in the ongoing Phase 2a study. In the four evaluable patients from Cohort 2 (one patient withdrew early in the treatment course for personal reasons unrelated to the study), two reached a disease status of “Almost Clear” represented by an Investigator Global Assessment score of 1, which is considered the standard clinical measure for treatment success in psoriasis. In addition, the Psoriasis Activity and Severity Index score, another well-characterized measure of treatment success, for patients in Cohort 2 had a mean drop of approximately 50% over the 18-week treatment. SGX302 therapy was well tolerated by all patients with no drug related adverse events identified.
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We estimate the potential worldwide market for SGX302 is in excess of $1 billion for the treatment of mild-to-moderate psoriasis. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
Psoriasis
Psoriasis is a chronic, non-communicable, itchy and often painful inflammatory skin condition for which there is no cure. Psoriasis has a significantly detrimental impact on patients' quality of life, and is associated with cardiovascular, arthritic, and metabolic diseases, as well as psychological conditions such as anxiety, depression and suicide. Many factors contribute to development of psoriasis including both genetic and environmental factors (e.g., skin trauma, infections, and medications). The lesions develop because of rapidly proliferating skin cells, driven by autoimmune T-cell mediated inflammation. Of the various types of psoriasis, plaque psoriasis is the most common and is characterized by dry, red raised plaques that are covered by silvery-white scales occurring most commonly on the elbows, knees, scalp, and lower back. Approximately 80% of patients have mild-to-moderate disease. Mild psoriasis is generally characterized by the involvement of less than 3% of the body surface area (“BSA”), while moderate psoriasis will typically involve 3-10% BSA and severe psoriasis greater than 10% BSA. Between 20% and 30% of individuals with psoriasis will go on to develop chronic, inflammatory arthritis (psoriatic arthritis) that can lead to joint deformations and disability. Studies have also associated psoriasis, and particularly severe psoriasis, with an increased relative risk of lymphoma, particularly CTCL. Although psoriasis can occur at any age, most patients present with the condition before age 35.
Treatment of psoriasis is based on its severity at the time of presentation with the goal of controlling symptoms. It varies from topical options including PDT to reduce pain and itching, and potentially reduce the inflammation driving plaque formation, to systemic treatments for more severe disease. Most common systemic treatments and even current topical photo/photodynamic therapy such as UV A and B, carry a risk of increased skin cancer.
Psoriasis is the most common immune-mediated inflammatory skin disease. According to the World Health Organization (“WHO”) Global Report on Psoriasis 2016, the prevalence of psoriasis is between 1.5% and 5% in most developed countries, with some suggestions of incidence increasing with time. It is estimated, based upon review of historic published studies and reports and an interpolation of data that psoriasis affects 3% of the U.S. population or more than 7.5 million people. Current estimates have as many as 60-125 million people worldwide living with the condition. The global psoriasis treatment market was valued at approximately $15 billion in 2020 and is projected to reach as much as $40 billion by 2027.
Dusquetide
Dusquetide (research name: SGX94) is an IDR that regulates the innate immune system to simultaneously reduce inflammation, eliminate infection and enhance tissue healing. Dusquetide is based on a new class of short, synthetic peptides known as IDRs. It has a novel mechanism of action in that it modulates the body’s reaction to both injury and infection and is both simultaneously anti-inflammatory and anti-infective. IDRs have no direct antibiotic activity but modulate host responses, increasing survival after infections with a broad range of bacterial Gram-negative and Gram-positive pathogens including both antibiotic sensitive and resistant strains, as well as accelerating resolution of tissue damage following exposure to a variety of agents including bacterial pathogens, trauma and chemo- or radiation-therapy. IDRs represent a novel approach to the control of infection and tissue damage via highly selective binding to an intracellular adaptor protein, sequestosome-1, also known as p62, which has a pivotal function in signal transduction during activation and control of the innate defense system. Preclinical data indicate that IDRs may be active in models of a wide range of therapeutic indications including life-threatening bacterial infections as well as the severe side-effects of chemo- and radiation-therapy. Additionally, due to selective binding to p62, dusquetide may have potential anti-tumor action.
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Dusquetide has demonstrated efficacy in numerous animal disease models including mucositis, oncology, colitis, skin infection and other bacterial infections and has been evaluated in a double-blind, placebo-controlled Phase 1 clinical trial in 84 healthy volunteers with both single ascending dose and multiple ascending dose components. Dusquetide was shown to have a good safety profile and be well-tolerated in all dose groups when administered by IV over 7 days and was consistent with safety results seen in pre-clinical studies. We believe that market opportunities for dusquetide include, but are not limited to, oral and gastrointestinal mucositis, oncology (e.g., breast cancer), acute Gram-positive bacterial infections (e.g., methicillin resistant Staphylococcus aureus (“MRSA”)), acute Gram-negative infections (e.g., acinetobacter, melioidosis), and acute radiation syndrome.
SGX942 – for Treating Oral Mucositis in Head and Neck Cancer
SGX942 is our product candidate containing our IDR technology, dusquetide, targeting the treatment of oral mucositis in head and neck cancer patients. Oral mucositis in this patient population is an area of unmet medical need where there are currently no approved drug therapies. Accordingly, we received Fast Track designation for the treatment of oral mucositis as a result of radiation and/or chemotherapy treatment in head and neck cancer patients from the FDA. In addition, dusquetide has been granted PIM designation in the UK by the MHRA for the treatment of SOM in head and neck cancer patients receiving chemoradiation therapy.
We initiated a Phase 2 clinical study of SGX942 for the treatment of oral mucositis in head and neck cancer patients in December of 2013. We completed enrollment in this trial and released positive results in December 2015. In this Phase 2 proof-of-concept clinical study that enrolled 111 patients, SGX942, at a dose of 1.5 mg/kg, successfully reduced the median duration of SOM by 50%, from 18 days to 9 days (p=0.099) in all patients and by 67%, from 30 days to 10 days (p=0.040) in patients receiving the most aggressive chemoradiation therapy for treatment of their head and neck cancer. The p-values met the prospectively defined statistical threshold of p<0.1 in the study protocol. A less severe occurrence of oral mucositis, ulcerative oral mucositis (defined as oral mucositis with a WHO score ≥2 corresponding to the occurrence of overt ulceration in the mouth), was also monitored during the study. In the patients receiving the most aggressive chemoradiation therapy, the median duration of oral mucositis was found to decrease from 65 days in the placebo treated patients to 51 days in the patients treated with SGX942 1.5 mg/kg (p=0.099).
In addition to identifying the best dose of 1.5 mg/kg, this study achieved all objectives, including increased incidence of “complete response” of tumor at the one month follow-up visit (47% in placebo vs. 63% in SGX942 at 1.5 mg/kg). Decreases in mortality and decreases in infection rate were also observed with SGX942 treatment, consistent with the preclinical results observed in animal models. Data from this Phase 2 trial are published in the Journal of Biotechnology.
SGX942 was found to be generally safe and well tolerated, consistent with the safety profile observed in the prior Phase 1 study conducted in 84 healthy volunteers. The long-term (12 month) follow-up data was consistent with the preliminary positive safety and efficacy findings. While the placebo population experienced the expected 12-month survival rate of approximately 80%, as defined in the Surveillance, Epidemiology, and End Results statistics 1975-2012 from the National Cancer Institute, the SGX942 1.5 mg/kg treatment group reported a 12-month survival rate of 93% (7% mortality in the SGX942 1.5 mg/kg group compared to 19% in the placebo group). Similarly, tumor resolution (complete response) at 12 months was better in the SGX942 1.5 mg/kg treatment group relative to the placebo population (80% in the 1.5 mg/kg group compared to 74% in the placebo group). The long-term follow-up results from the Phase 2 study are published in Biotechnology Reports.
In September 2016, we and SciClone Pharmaceuticals, Inc. (“SciClone”) entered into an exclusive license agreement, pursuant to which we granted rights to SciClone to develop, promote, market, distribute and sell SGX942 in defined territories. Under the terms of the license agreement, SciClone will be responsible for all aspects of development, product registration and commercialization in the territories, having access to data generated by us. In exchange for exclusive rights, SciClone will pay us royalties on net sales, and we will supply commercial drug product to SciClone on a cost-plus basis, while maintaining worldwide manufacturing rights.
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Based on the positive and previously published Phase 2 results (Study IDR-OM-01), in July 2017, we initiated a Phase 3 clinical trial referred to as the “DOM–INNATE” (Dusquetide treatment in Oral Mucositis – by modulating INNATE immunity) study. Approximately 50 U.S. and European oncology centers participated in this trial. The Phase 3 protocol (Study IDR-OM-02) was a highly powered, double-blind, randomized, placebo-controlled, multinational trial that sought to enroll approximately 260 subjects with squamous cell carcinoma of the oral cavity and oropharynx who were scheduled to receive a minimum total cumulative radiation dose of 55 Gy fractionated as 2.0-2.2 Gy per day with concomitant cisplatin chemotherapy given as a dose of 80-100 mg/m2 every third week. Subjects were randomized to receive either 1.5 mg/kg SGX942 or placebo given twice a week during and for two weeks following completion of chemoradiation therapy (“CRT”). The primary endpoint for the study was the median duration of SOM, which was assessed by oral examination at each treatment visit and then through six weeks following completion of CRT. Oral mucositis is evaluated using the WHO Grading system. SOM is defined as a WHO Grade of ≥3. Subjects are followed for an additional 12 months after the completion of treatment.
In April 2019, the Paediatric Committee of the EMA approved our PIP for SGX942, a prerequisite for filing a Marketing Authorization Application (“MAA”) for any new medicinal product in Europe. The EMA also agreed that we may defer conducting the PIP until successful completion of our pivotal Phase 3 clinical trial of SGX942, which allowed us to file the adult indication MAA prior to completion of the PIP.
In June 2020, the pivotal Phase 3 DOM–INNATE study (Study IDR-OM-02) completed enrollment of 268 subjects. In December 2020, the results of our Phase 3 clinical trial for SGX942 showed that the primary endpoint of median duration of SOM did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group. Despite this clinically meaningful improvement, the variability in the distribution of the data yielded a p-value that was not statistically significant. Other secondary endpoints supported the biological activity of dusquetide, including a statistically significant 50% reduction in the median duration of SOM in the per-protocol population, which decreased from 18 days in the placebo group to 9 days in the SGX942 treatment group (p=0.049), consistent with the findings in the Phase 2 trial (Study IDR-OM-01). Similarly, incidence of SOM also followed this biological trend as seen in the Phase 2 study, decreasing by 16% in the SGX942 treatment group relative to the placebo group in the per-protocol population. The per-protocol population was defined as the population receiving a minimum of 55 Gy radiation and at least 10 doses of study drug (placebo or SGX942) throughout the intended treatment period, with no major protocol deviations (e.g. breaks in study drug administration longer than 8 days between successive doses).
Following analysis of the full dataset, including the 12-month long-term follow-up safety data in late 2021, we held a meeting with the MHRA to review the study results and to obtain further clarity on the future of the oral mucositis development program. The meeting was informative with the outcome being that based on the SGX942 biologic activity observed and the consistency in response between the Phase 2 and Phase 3 trials, the Phase 3 DOM-INNATE study could serve as the first of two Phase 3 studies required to support potential marketing authorization, assuming the second Phase 3 clinical trial achieves the required level of statistical significance in its primary endpoint. With the benefit of a robust preclinical and clinical data package for SGX942, we now will analyze the data to design a second Phase 3 study and will look to identify a potential partner(s) to continue this development program.
In January 2022, dusquetide proved effective at reducing tumor size in nonclinical xenograft models. Recent studies, recapitulating results from previously published studies, have confirmed the efficacy of dusquetide as a stand-alone and combination anti-tumor therapy, with radiation, chemotherapy and targeted therapy, in the context of the MCF-7 breast cancer cell line. Of note, these results are consistent with a potential direct anti-tumor effect identified with SGX942 and is another important consideration in the oral mucositis treatment space.
In June 2022, an article was published describing the binding of our IDR, dusquetide, to the p62 protein. Dusquetide binds to p62 or SQSTM-1, a scaffold protein implicated in a number of intracellular signaling
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networks implicated in tumor cell survival, including autophagy. This publication elaborates on the direct interaction of dusquetide with p62, as well as some of the direct downstream consequences of that interaction, consistent with its observed anti-infective, anti-tumor and anti-inflammatory activities. This information advances the understanding of dusquetide's novel mechanism of action and supports the development of analogs related to dusquetide.
We estimate the potential worldwide market for SGX942 is in excess of $500 million for the treatment of oral mucositis. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
Oral Mucositis
Mucositis is the clinical term for damage done to the mucosa by anticancer therapies. It can occur in any mucosal region, but is most commonly associated with the mouth, followed by the small intestine. We estimate, based upon our review of historic studies and reports, and an interpolation of data on the incidence of mucositis, that mucositis affects approximately 500,000 people in the U.S. per year and occurs in 40% of patients receiving chemotherapy. Mucositis can be severely debilitating and can lead to infection, sepsis, the need for parenteral nutrition and narcotic analgesia. The gastrointestinal damage causes severe diarrhea. These symptoms can limit the doses and duration of cancer treatment, leading to sub-optimal treatment outcomes.
The mechanisms of mucositis have been extensively studied and have been linked to the interaction of chemotherapy and/or radiation therapy with the innate defense system. Bacterial infection of the ulcerative lesions is regarded as a secondary consequence of dysregulated local inflammation triggered by therapy-induced cell death, rather than as the primary cause of the lesions.
We estimate, based upon our review of historic studies and reports, and an interpolation of data on the incidence of oral mucositis, that oral mucositis is a subpopulation of approximately 90,000 patients in the U.S., with a comparable number in Europe. Oral mucositis almost always occurs in patients with head and neck cancer treated with radiation therapy (greater than 80% incidence of severe mucositis) and is common in patients undergoing high dose chemotherapy and hematopoietic cell transplantation, where the incidence and severity of oral mucositis depends greatly on the nature of the conditioning regimen used for myeloablation.
SGX945 – for Treating Aphthous Ulcers in Behçet’s Disease
SGX945 is our product candidate containing our IDR technology, dusquetide, targeting the treatment of aphthous Ulcers in Behçet’s Disease. Behçet’s Disease is an orphan disease and an area of unmet medical need.
In November 2023, the FDA cleared the IND application for a Phase 2a clinical trial entitled, “Pilot Study of SGX945 (Dusquetide) in the Treatment of Aphthous Ulcers in Behçet’s Disease.” The study is designed to evaluate the safety and potential efficacy of SGX945 (dusquetide) in the resolution of aphthous flares in Behçet’s Disease and is expected to begin patient enrollment in the second half of 2024.
In January 2024, SGX945 received Fast Track designation for the treatment of oral lesions of Behçet’s Disease from the FDA.
In February 2024, we announced the formation of a Medical Advisory Board to provide medical/clinical strategic guidance to advance the clinical development of SGX945 for the treatment of Behçet's Disease.
We estimate the potential worldwide market for SGX945 is in excess of $200 million for the treatment of aphthous ulcers in Behçet’s Disease. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential
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market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
Behçet’s Disease
Behçet’s Disease (“BD”) is commonly known as an inflammatory disorder of the blood vessels (vasculitis). Often first diagnosed in young adults, its effects and severity will wax and wane over time. Major signs and symptoms usually include mouth sores (approximately 95% of patients), skin rashes and lesions (approximately 50% of patients), genital sores (approximately 50% of patients), leg ulcers (approximately 40% of patients) and eye inflammation (approximately 15% of patients). It is a painful disease, directly impacting the patient’s quality of life and ability to productively engage in life activities, including work.
BD is thought to be an auto-immune disease with both genetic and environmental factors. It is most common along the “silk road” in the Middle East and East Asia, including Turkey, Iran, Japan and China. There are approximately 18,000 known cases of BD in the U.S. and over 50,000 in Europe. There are as many as 1,000,000 people worldwide living with BD.
There is no cure for BD, rather treatments are prescribed to manage symptoms. Treatments may include both maintenance therapies and those specifically addressing mucocutaneous flares (e.g., mouth ulcers, genital ulcers and leg ulcers). Corticosteroids are generally applied topically to sores and as eyedrops and may also be given systemically to reduce inflammation. Although used frequently, they have limited efficacy over the long-term and have significant side effects that become more concerning with more chronic use. Genital ulcers are often associated with significant genital scarring while leg ulcers can result in a post-thrombotic syndrome. Other treatments for BD flares involve suppressing the immune system with drugs (e.g., cyclosporine or cyclophosphamide). These drugs come with a higher risk of infection, liver and kidney problems, low blood counts and high blood pressure. Finally, anti-inflammatory drugs are also used, including anti-TNF medications. The only approved drug in BD is apremilast, which is used as a maintenance therapy to prevent formation of oral ulcers. Unfortunately, apremilast is associated with both high cost and side effects including diarrhea, nausea, upper respiratory tract infection and headache.
Public Health Solutions Overview
ThermoVax® – Thermostability Platform Technology
ThermoVax® is a novel method for thermostabilizing vaccines with a variety of adjuvants, resulting in a single vial which can be reconstituted with water for injection immediately prior to use. One of the adjuvants utilized in ThermoVax® is aluminum salts (known colloquially as “Alum”). Alum is the most widely employed adjuvant technology in the vaccine industry.
The value of ThermoVax® lies in its potential ability to eliminate the need for cold chain production, transportation, and storage for Alum-adjuvanted vaccines. This would relieve the high costs of producing and maintaining vaccines under refrigerated conditions. Based on historical reports from WHO and other scientific reports, we believe that a meaningful proportion of vaccine doses globally are wasted due to excursions from required cold chain temperature ranges. This is due to the fact that many vaccines need to be maintained either between 2 and 8 degrees Celsius (“C”), frozen below -20 degrees C, or frozen below -60 degrees C, and even brief excursions from these temperature ranges usually necessitate the destruction of the product or the initiation of costly stability programs specific for the vaccine lots in question. ThermoVax® has the potential to facilitate easier storage and distribution of strategic national stockpile vaccines for ricin exposure in emergency settings.
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ThermoVax® development, specifically in the context of an Alum adjuvant, was supported pursuant to our $9.4 million NIAID grant enabling development of thermo-stable ricin (RiVax®) and anthrax vaccines. Proof-of-concept preclinical studies with ThermoVax® indicate that it is able to produce stable vaccine formulations using adjuvants, protein immunogens, and other components that ordinarily would not withstand long temperature variations exceeding customary refrigerated storage conditions. These studies were conducted with our Alum-adjuvanted ricin toxin vaccine, RiVax® and our Alum-adjuvanted anthrax vaccine. Each vaccine was manufactured under precise lyophilization conditions using excipients that aid in maintaining native protein structure of the key antigen. When RiVax® was kept at 40 degrees C (104 degrees Fahrenheit (“F”)) for up to one year, all of the animals vaccinated with the lyophilized RiVax® vaccine developed potent and high titer neutralizing antibodies. In contrast, animals that were vaccinated with the liquid RiVax® vaccine kept at 40 degrees C did not develop neutralizing antibodies and were not protected against ricin exposure. The ricin A chain is extremely sensitive to temperature and rapidly loses the ability to induce neutralizing antibodies when exposed to temperatures higher than 8 degrees C. When the anthrax vaccine was kept for up to 16 weeks at 70 degrees C, it was able to develop a potent antibody response, unlike the liquid formulation kept at the same temperature. Moreover, we also have demonstrated the compatibility of our thermostabilization technology with other secondary adjuvants such as TLR-4 agonists.
We also entered into a collaboration agreement with Axel Lehrer, PhD of the Department of Tropical Medicine, Medical Microbiology and Pharmacology, John A. Burns School of Medicine (“JABSOM”), University of Hawai’i at Manoa (“UH Manoa”) and Hawaii Biotech, Inc. (“HBI”) to develop a heat stable subunit Ebola vaccine. Dr. Lehrer, a co-inventor of the Ebola vaccine with HBI, has shown proof of concept efficacy with subunit Ebola vaccines in non-human primates (“NHP”). The most advanced Ebola vaccines involve the use of vesicular stomatitis virus and adenovirus vectors – live, viral vectors which complicate the manufacturing, stability and storage requirements. Dr. Lehrer’s vaccine candidate is based on highly purified recombinant protein antigens, circumventing many of these manufacturing difficulties. Dr. Lehrer and HBI have developed a robust manufacturing process for the required proteins. Application of ThermoVax® may allow for a product that can avoid the need for cold chain distribution and storage, yielding a vaccine ideal for use in both the developed and developing world. This agreement has expired in accordance with its terms.
In December 2010, we executed a worldwide exclusive license agreement with the University of Colorado (“UC”) for certain patents relating to ThermoVax® in all fields of use. In April 2018, the UC delivered a notice of termination of our license agreement based upon our failure to achieve one of the development milestones: initiation of the Phase 1 clinical trial of the heat stabilization technology by March 31, 2018. After negotiating with the UC, we and the UC agreed to extend the termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat stabilization technology in our field of use.
During September 2017, we were awarded funding of approximately $700,000 over five years under a NIAID Research Project (R01) grant awarded to UH Manoa for the development of a trivalent thermostabilized filovirus vaccine (including protection against Zaire ebolavirus, Sudan ebolavirus and Marburg Marburgvirus). Previous collaborations demonstrated the feasibility of developing a heat stable subunit Ebola vaccine. Under the terms of the subaward, we will continue to support vaccine formulation development with our proprietary vaccine thermostabilization technology, ThermoVax®. Ultimately, the objective is to produce a thermostable trivalent filovirus vaccine for protection against Ebola and related diseases, allowing worldwide distribution without the need for cold storage. Based on current U.S. government needs, efforts have been expanded to focus on a monovalent or bivalent vaccine to specifically address Marburg marburgvirus.
In October 2018, in a series of related transactions, (a) we and the UC agreed to terminate the original license agreement, (b) the UC and VitriVax, Inc. (“VitriVax”) executed a worldwide exclusive license agreement for the heat stabilization technology for all fields of use, and (c) we and VitriVax executed a worldwide exclusive sublicense agreement, which was amended and restated in October 2020, for the heat stabilization technology for use in the fields of ricin and Ebola vaccines. We paid a $100,000 sublicense fee on the effective date of the sublicense agreement. Under the amended sublicense agreement to maintain the sublicense we are obliged
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to pay a minimum annual royalty of $20,000 until first commercial sale of a sublicensed product, upon which point, we shall pay an earned royalty of 2% of net sales subject to a minimum royalty of $50,000 each year. We are also required to pay royalty on any sub-sublicense income based on a declining percentage of all sub-sublicense income calculated within the contractual period until reaching a minimum of 15% after two years. In addition, we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical trial of the sublicensed product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000 upon regulatory approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a sublicensed product in the U.S. or equivalent. To date none of these milestones have been met.
In March 2020, we entered into a research collaboration with Axel Lehrer, PhD of the Department of Tropical Medicine, Medical Microbiology and Pharmacology, JABSOM, UH Manoa to further expand the filovirus collaboration to investigation of potential coronavirus vaccines, including for SARS-CoV-2 (causing COVID-19). This research collaboration will utilize the technology platform developed in the search for filovirus vaccines and will use well-defined surface glycoprotein(s) from one or more coronaviruses, which are expected to be protective for COVID-19.
During April 2020, we obtained an exclusive worldwide license for CoVaccine HT™, a novel vaccine adjuvant, from SERB Pharmaceuticals (formerly BTG Specialty Pharmaceuticals, a division of Boston Scientific Corporation) (“SERB”), for the fields of coronavirus infection (including SARS-CoV-2, the cause of COVID-19), and pandemic flu. CoVaccine HT™ is a novel adjuvant, which has been shown to enhance both cell-mediated and antibody-mediated immunity. We and our collaborators, including UH Manoa and Dr. Axel Lehrer, have successfully demonstrated the utility of CoVaccine HT™ in the development of our heat stable filovirus vaccine program, with vaccine candidates against Ebola and Marburg virus disease. Given this previous success, CoVaccine HT™ will potentially be an important component of our vaccine technology platform currently being assessed for use against coronaviruses including SARS-CoV-2, the cause of COVID-19. The license agreement was executed between us and SERB, which owns the CoVaccine HT™ intellectual property.
In September 2020, the Journal of Pharmaceutical Sciences published a scientific article detailing the thermostabilization of the filovirus GP proteins and key assays describing their stability.
During October 2020, Frontiers in Immunology published a scientific article describing CiVax™, a prototype COVID-19 vaccine, using the novel CoVaccine HT™ adjuvant and demonstrating significant immunogenicity, including strong total and neutralizing antibody responses, with a balanced Th1 response, as well as enhancement of cell mediated immunity. These are all considered to be critical attributes of a potential COVID-19 vaccine.
In December 2020, NIAID awarded us a Direct to Phase II Small Business Innovation Research (“SBIR”) grant of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and Ebola Virus Disease (“EVD”) vaccine candidates in conjunction with the CoVaccine HT™ adjuvant. This award also is supporting immune characterization of this novel, emulsified adjuvant that has unique potency and compatibility with lyophilization strategies to enable thermostabilization of subunit vaccines.
During August 2021, positive data demonstrated the efficacy of multiple filovirus vaccine candidates in NHP, including thermostabilized multivalent vaccines in a single vial platform presentation. Collaborators at UH Manoa describe the potent efficacy of vaccine candidates protecting against three life-threatening filoviruses, Zaire ebolavirus, Sudan ebolavirus and Marburg Marburgvirus in an article titled "Recombinant Protein Filovirus Vaccines Protect Cynomolgus Macaques from Ebola, Sudan, and Marburg Viruses", published in Frontiers in Immunology. These vaccine candidates contain highly purified protein antigens combined with the novel CoVaccine HT™ adjuvant, in both monovalent (single antigen) and bivalent (two antigen) formulations. Most recently, efforts to formulate all three antigens and adjuvant into a thermostable single-vial vaccine platform has also been shown to protect 75% of vaccinated NHPs against subsequent Sudan ebolavirus challenge, with further development to test efficacy against other filovirus infections ongoing.
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During August 2021, Vaccine published a scientific article describing the formulation of single-vial platform presentations of monovalent (single antigen), bivalent (two antigens) and trivalent (three antigens) combinations of filovirus vaccine candidates.
During September 2021, an accelerated preprint was posted on bioRxiv of pre-clinical immunogenicity studies for CiVax™ (heat stable COVID-19 vaccine program) demonstrating durable broad-spectrum neutralizing antibody responses, including against the Beta, Gamma and Delta variants of concern. The scientific article was subsequently published on March 9, 2022 in ACS Infectious Diseases. The work is part of an ongoing collaboration with Axel Lehrer, PhD, Associate Professor at the Department of Tropical Medicine, Medical Microbiology and Pharmacology, JABSOM, UH Manoa. Development continues under a non-dilutive $1.5M grant from the NIAID awarded to us in December 2020.
In December 2021, 100% protection of NHPs against lethal Sudan ebolavirus challenge was achieved using a bivalent, thermostabilized vaccine formulated in a single vial, reconstituted only with water immediately prior to use. This milestone is part of an ongoing collaboration with UH Manoa and further demonstrates the broad applicability of the vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness.
In May 2022, the U.S. Patent and Trademark Office issued a Notice of Allowance for the patent application titled “Composition and Methods of Manufacturing Trivalent Filovirus Vaccines.” The allowed claims are directed to unique, proprietary composition and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization. The described vaccine platform has previously been successfully applied to filovirus vaccines (as mono-, bi- and tri-valent candidates for Zaire ebolavirus, Sudan ebolavirus and Marburg marburgvirus) as well as SARS-CoV-2 vaccine. No currently licensed lyophilized vaccine that contains an adjuvant is presented in a single vial format and there are few reports of successfully using nano-emulsions in lyophilized formulations. Previous work has demonstrated the use of a single vial platform to co-lyophilize antigen(s) and a nano-emulsion adjuvant, CoVaccine HT™, maintaining key adjuvant stability characteristics including particle size and colloidal stability, as well as maintaining immunogenicity. This most recent milestone confirms that, in the context of lethal challenge with Sudan ebolavirus, complete protection is maintained with the thermostabilized formulation.
In June 2022, 100% protection of NHPs against lethal Marburg marburgvirus challenge was achieved using a bivalent, thermostabilized vaccine formulated in a single vial, reconstituted only with sterile water immediately prior to use. This important milestone is part of an ongoing collaboration with UH Manoa, demonstrating the successful presentation of one or more antigen(s) within the same formulation while maintaining full potency and thermostability. It further demonstrates the broad applicability of the heat stable vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness.
In September 2023, positive data demonstrated two-year stability of thermostabilized bivalent and trivalent filovirus vaccine candidates at temperatures of 40 degrees C (104 degrees F) when formulated in a single vial, needing reconstitution only with sterile water immediately prior to use. This important milestone is part of an ongoing collaboration with UH Manoa, demonstrating the successful presentation of one or more antigen(s) within the same formulation while maintaining full potency and thermostability. It further demonstrates the broad applicability of the heat stable vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness.
In January 2024, Vaccine published the preclinical efficacy results of our novel, single-vial, thermostabilized bivalent filovirus vaccine providing 100% protection against both Sudan ebolavirus (SUDV) and Marburg marburgvirus (MARV) infections. The manuscript was entitled “Thermostable bivalent filovirus vaccine protects against severe and lethal Sudan ebolavirus and marburgvirus infection”.
In April 2024, we received orphan drug designation for the active ingredient in SuVax™, the subunit protein vaccine of recombinantly expressed SUDV glycoprotein, for the prevention and post-exposure prophylaxis against SUDV infection.
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In April 2024, we received orphan drug designation for the active ingredient in MarVax™, the subunit protein vaccine of recombinantly expressed MARV glycoprotein, for the prevention and post-exposure prophylaxis against MARV infection.
In April 2024, we received notice of intent to grant additional patents based on our patent application titled “Compositions and Methods of Manufacturing Trivalent Filovirus Vaccines” in the United Kingdom and South Africa, with other international jurisdictions pending.
RiVax® – for Protection Against Ricin Toxin Exposure
RiVax® is our proprietary vaccine candidate being developed to protect against exposure to ricin toxin and if approved, would be the first ricin vaccine. The immunogen in RiVax® induces a protective immune response in animal models of ricin exposure and functionally active antibodies in humans. The immunogen consists of a genetically inactivated ricin A chain subunit that is enzymatically inactive and lacks residual toxicity of the holotoxin. RiVax® has demonstrated statistically significant (p < 0.0001) preclinical survival results, providing 100% protection against acute lethality in an aerosol exposure non-human primate model (Roy et al, 2015, Thermostable ricin vaccine protects rhesus macaques against aerosolized ricin: Epitope-specific neutralizing antibodies correlate with protection, PNAS USA 112:3782-3787), and has also been shown to be well tolerated and immunogenic in two Phase 1 clinical trials in healthy volunteers. Results of the first Phase 1 human trial of RiVax® established that the immunogen was safe and induced antibodies that we believe may protect humans from ricin exposure. The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans. The outcome of this study was published in the Proceedings of the National Academy of Sciences (Vitetta et al., 2006, A Pilot Clinical Trial of a Recombinant Ricin Vaccine in Normal Humans, PNAS, 103:2268-2273). The second trial that was completed in September 2012 and was sponsored by University of Texas Southwestern Medical Center (“UTSW”) evaluated a more potent formulation of RiVax® that contained an Alum adjuvant. The results of the Phase 1b study indicated that Alum-adjuvanted RiVax® was safe and well tolerated, and induced greater ricin neutralizing antibody levels in humans than adjuvant-free RiVax®. The outcomes of this second study were published in the Clinical and Vaccine Immunology.
We have adapted the original manufacturing process for the immunogen contained in RiVax® for thermostability and large scale manufacturing and recent studies have confirmed that the thermostabilized RiVax® formulation enhances the stability of the RiVax® antigen, enabling storage for at least 1 year at temperatures up to 40 degrees C (104 degrees F). The program will pursue approval via the FDA “Animal Rule” since it is not possible to test the efficacy of the vaccine in a clinical study which would expose humans to ricin. Uniform, easily measured and species-neutral immune correlates of protection that can be measured in humans and animals, and are indicative of animal survival to subsequent ricin challenge, are central to the application of the “Animal Rule.” Recent work has identified such potential correlates of immune protection in animals and work to qualify and validate these approaches is continuing, with the goal of utilizing these assays in a planned Phase 1/2 clinical trial with the thermostable RiVax® formulation. During September 2018, we published an extended stability study of RiVax®, showing up to 100% protection in mice after 12 months storage at 40 degrees C (104 degrees F) as well as identification of a potential in vitro stability indicating assay, critical to adequately confirming the long-term shelf life of the vaccine. We have entered into a collaboration with IDT Biologika GmbH (“IDT”) to scale-up the formulation/filling process and continue development and validation of analytical methods established at IDT to advance the program. We also initiated a development agreement with Emergent BioSolutions, Inc. (“EBS”) to implement a commercially viable, scalable production technology for the RiVax® drug substance protein antigen.
The development of RiVax® has been sponsored through a series of overlapping challenge grants, UC1, and cooperative grants, U01, from the NIH, granted to us and to UTSW where the vaccine originated. The second clinical trial was supported by a grant from the FDA’s Office of Orphan Products to UTSW. To date, we and UTSW have collectively received approximately $25 million in grant funding from the NIH for the development of RiVax®. In September 2014, we entered into a contract with the NIH for the development of RiVax® pursuant
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to which we were awarded an additional $21.2 million of funding in the aggregate. The development agreements with EBS and IDT were specifically funded under this NIH contract.
In 2017, NIAID exercised options to fund additional animal efficacy studies and good manufacturing practices compliant RiVax® bulk drug substance and finished drug product manufacturing, which is required for the conduct of future preclinical and clinical safety and efficacy studies. The exercised options provide us with approximately $4.5 million in additional non-dilutive funding, bringing the total amount awarded to date under this contract to $21.2 million, which expired in February 2021. The total award of up to $21.2 million supported the preclinical, manufacturing and clinical development activities necessary to advance heat stable RiVax® with the FDA. In addition to this funding for the development of RiVax®, biomarkers for RiVax® testing have been successfully identified, facilitating potential approval under the FDA Animal Rule.
During December 2019, we initiated a third Phase 1 double-blind, placebo-controlled, randomized study in eight healthy adult volunteer subjects designed to evaluate the safety and immunogenicity of RiVax® utilizing ThermoVax®. During January 2020, we suspended the study after Emergent Manufacturing Operations Baltimore LLC (“EMOB”), the manufacturer of the drug substance, notified us that, after releasing the final drug product to us, EMOB identified that the active drug substance tested outside the established specification parameters. Two subjects had received doses as part of the study before the manufacturer provided this notice. Those two subjects were monitored with no safety issues noted and data was captured in accordance with the study protocol. They did not receive further doses of study drug.
During April 2020, we received notification from NIAID that they would not be exercising the final contract option to support the conduct of a Phase 1/2 clinical study in healthy volunteers. As a result, the total contract award will not exceed $21.2 million. This contract expired in February 2021.
In November 2021, an article was published on pre-clinical immunogenicity studies for RiVax® demonstrating enduring protection for at least 12 months post-vaccination. These results, coupled with the previous demonstration of efficacy in mice and NHPs as well as long-term thermostability (at least 1 year at 40 degrees C or 104 degrees F), reinforce the practicality of stockpiling and potentially utilizing the RiVax® vaccine in warfighters and civilian first responders without the complexities that arise for vaccines that require stringent cold chain handling.
RiVax® has been granted Orphan Drug designation as well as Fast Track designation by the FDA for the prevention of ricin intoxication. In addition, RiVax® has also been granted Orphan Drug designation in the European Union (“EU”) from the EMA Committee for Orphan Medical Products.
Assuming development efforts are successful for RiVax®, we believe potential government procurement contract(s) could reach as much as $200 million. This potential procurement contract information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential procurement contract value based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
As a new chemical entity, an FDA approved RiVax® vaccine has the potential to qualify for a biodefense Priority Review Voucher (“PRV”). Approved under the 21st Century Cures Act in late 2016, the biodefense PRV is awarded upon approval as a medical countermeasure when the active ingredient(s) have not been otherwise approved for use in any context. PRVs are transferable and can be sold, with sales in recent years of approximately $100 million. When redeemed, PRVs entitle the user to an accelerated review period of nine months, saving a median of seven months review time as calculated in 2009. However, FDA must be advised 90 days in advance of the use of the PRV and the use of a PRV is associated with an additional user fee ($1.33 million for fiscal year 2024).
In July 2022, we signed a worldwide exclusive agreement to license and supply our ricin antigen, used in our RiVax® vaccine, to SERB, for development of a novel therapeutic treatment against ricin toxin poisoning. In pursuit of a ricin antidote, SERB will leverage its unique broad-spectrum polyclonal antibody platform, gained
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in its acquisition of BTG Specialty Pharmaceuticals. This specialized manufacturing process generates binding fragments from antibodies that are specific to a given antigen, helping to ensure potency and purity. This platform is currently used to manufacture two of SERB’s currently marketed products, CroFab® and DigiFab®.
In December 2022, we published a paper demonstrating statistically significant correlates of protection predicting survival after lethal aerosolized ricin challenge in non-human primates. The article titled “Serum antibody profiling identifies vaccine-induced correlates of protection against aerosolized ricin toxin in rhesus macaques” was published in the journal npj Vaccines.
Ricin Toxin
Ricin toxin can be cheaply and easily produced, is stable over long periods of time, is toxic by several routes of exposure and thus has the potential to be used as a biological weapon against military and/or civilian targets. As a bioterrorism agent, ricin could be disseminated as an aerosol, by injection, or as a food supply contaminant. The potential use of ricin toxin as a biological weapon of mass destruction has been highlighted in a Federal Bureau of Investigation Bioterror report released in November 2007 titled Terrorism 2002-2005, which states that “Ricin and the bacterial agent anthrax are emerging as the most prevalent agents involved in WMD investigations.” Al Qaeda in the Arabian Peninsula had threatened the use of ricin toxin to poison food and water supplies and in connection with explosive devices. Domestically, the threat from ricin remains a concern for security agencies. In April 2013, letters addressed to the U.S. President, a Senator and a judge tested positive for ricin. As recently as September 2020, ricin-laced letters addressed to the White House and others addressed to Texas law enforcement agencies were intercepted before delivery raising fresh concerns about the deadly toxin.
The Centers for Disease Control and Prevention has classified ricin toxin as a Category B biological agent. Ricin works by first binding to glycoproteins found on the exterior of a cell, and then entering the cell and inhibiting protein synthesis leading to cell death. Once exposed to ricin toxin, there is no effective therapy available to reverse the course of the toxin. The recent ricin threat to government officials has heightened the awareness of this toxic threat. Currently, there is no FDA approved vaccine to protect against the possibility of ricin toxin being used in a terrorist attack, or its use as a weapon on the battlefield nor is there a known antidote for ricin toxin exposure.
SGX943 – for Treating Emerging and/or Antibiotic-Resistant Infectious Diseases
SGX943 is an IDR, containing the same active ingredient as SGX942. Dusquetide is a fully synthetic, 5-amino acid peptide with high aqueous solubility and stability. Extensive in vivo preclinical studies have demonstrated enhanced clearance of bacterial infection with SGX943 administration. SGX943 has shown efficacy against both Gram-negative and Gram-positive bacterial infections in preclinical models, independent of whether the bacteria is antibiotic-resistant or antibiotic-sensitive.
The innate immune system is responsible for rapid and non-specific responses to combat bacterial infection. Augmenting these responses represents an alternative approach to treating bacterial infections. In animal models, IDRs are efficacious against both antibiotic-sensitive and antibiotic-resistant infections, both Gram-positive and Gram-negative bacteria, and are active irrespective of whether the bacteria occupy a primarily extracellular or intracellular niche. IDRs are also effective as stand-alone agents or in conjunction with antibiotics. An IDR for the treatment of serious bacterial infections encompasses a number of clinical advantages including:
| ● | Treatment when antibiotics are contraindicated, such as: |
| o | before the infectious organism and/or its antibiotic susceptibility is known; or |
| o | in at-risk populations prior to infection. |
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| ● | An ability to be used as an additive, complementary treatment with antibiotics, thereby: |
| o | enhancing efficacy of sub-optimal antibiotic regimens (e.g., partially antibiotic-resistant infections); |
| o | enhancing clearance of infection, thereby minimizing the generation of antibiotic resistance (e.g., in treating melioidosis); and |
| o | reducing the required antibiotic dose, again potentially minimizing the generation of antibiotic resistance. |
| ● | An ability to modulate the deleterious consequences of inflammation in response to the infection, including the inflammation caused by antibiotic-driven bacterial lysis. |
| ● | Being unlikely to generate bacterial resistance since the IDR acts on the host, and not the pathogen. |
Importantly, systemic inflammation and multi-organ failure is the ultimate common outcome of not only emerging and/or antibiotic-resistant infectious diseases, but also of most biothreat agents (e.g., Burkholderia pseudomallei), indicating that dusquetide would be applicable not only to antibiotic-resistant infection, but also to biothreat agents, especially where the pathogen is not known and/or has been engineered for enhanced antibiotic resistance.
Intellectual Property
In addition to orphan drug exclusivity, we maintain patent and other intellectual property protection in the U.S. and other countries with respect to our technology and product candidates. We seek to protect our proprietary position in reliance upon trade secret, patent, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations are based upon the accompanying condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
Significant accounting policies are described in more detail in the notes to our financial statements appearing at the beginning of this Quarterly Report on Form 10-Q.
Material Changes in Results of Operations
Three and Nine Months Ended September 30, 2024 Compared to September 30, 2023
For the three months ended September 30, 2024, we had a net loss of $1,719,381 as compared to a net loss of $1,662,702 for the same prior year period, representing increased net loss of $56,679 or 3%. This increase in net loss was primarily due to decreases in gross profit and tax credits as well as an increase in operating expenses, offset by increases in interest income and the change in the fair value of debt during the three months ended September 30, 2024. For the nine months ended September 30, 2024, we had a net loss of $5,279,210 as compared to a net loss of $4,320,835 for the same prior year period, representing increased net loss of $958,375 or 22%. This increase in net loss was primarily due to decreases in gross profit and tax credits and an increase in operating expenses, offset by increases in interest income, the change in the fair value of debt
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and the recognition of an income tax benefit during the nine months ended September 30, 2023 with no corresponding income tax benefit recognized during the nine months ended September 30, 2024.
Our revenues and associated costs incurred relate to government contracts, grants and subawards received to support the development of SGX943 for treatment of emerging and/or antibiotic-resistant infectious diseases; development of CiVax™, our vaccine candidate for the prevention of COVID-19, and evaluation of HyBryte™ for expanded treatment in patients with early-stage CTCL. For the three months ended September 30, 2024 and 2023 we had no revenue as compared to revenue of $130,440 for the same prior year period, representing a decrease of $130,440 or 100%. We also incurred costs related to those revenues for the three months ended September 30, 2023 of $110,441. Our gross profit for the three months ended September 30, 2024 was $0 or 0% of total revenues, as compared to a gross profit of $19,999 or 15% of total revenues for the same period in 2023, representing a decrease of $19,999 or 100%. The decrease in revenue and gross profit during the three months ended September 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study. For the nine months ended September 30, 2024, we had revenues of $119,371 as compared to $594,547 for the same prior year period, representing a decrease of $475,176 or 80%. We also incurred costs related to those revenues for the nine months ended September 30, 2024 and 2023 of $119,371 and $520,502, respectively, representing a decrease of $401,131 or 77%. Our gross profit for the nine months ended September 30, 2024 was $0 or 0% of total revenues, as compared to a gross profit of $74,045 or 12% of total revenues for the same period in 2023, representing a decrease of $74,045 or 100%. The decrease in revenue and gross profit during the nine months ended September 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study.
Research and development expenses were $968,689 for the three months ended September 30, 2024 as compared to $826,015 for the same period in 2023, representing an increase of $142,674 or 17%. The increase was primarily due to preliminary costs associated with the initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial offset by an adjustment of estimated accruals for completed clinical trials. Research and development expenses were $2,564,887 for the nine months ended September 30, 2024 as compared to $2,535,165 for the same period in 2023, representing an increase of $29,722 or 1%. The increase was primarily due to preliminary costs associated with the initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial offset by an adjustment of estimated accruals for completed clinical trials.
General and administrative expenses were $896,547 for the three months ended September 30, 2024, as compared to $973,040 for the same period in 2023, representing a decrease of $76,493 or 8%. The decrease in general and administrative expenses for the three months ended September 30, 2024 was primarily attributable to decreases in legal and professional fees. General and administrative expenses were $3,162,115 for the nine months ended September 30, 2024, as compared to $3,098,949 for the same period in 2023, representing an increase of $63,166 or 2%. The increase in general and administrative expenses for the nine months ended September 30, 2024 was primarily attributable to an increase in legal and professional fees associated with the 2024 annual meeting of stockholders, the April 2024 public offering and the June 2024 reverse stock split of our issued and outstanding shares of common stock.
We recognized $0 and $260,933 of other income from the change in the fair value of the convertible debt on our accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, we determined the carrying amount of the convertible debt was approximately equivalent to the face value of the convertible debt. For the same prior year period, we recognized other loss of $72,463 and other income of $387,537, respectively from the change in fair value of the convertible debt on our accompanying condensed consolidated statements of operations.
Interest income, net for the three months ended September 30, 2024 was $78,836 as compared to $66,363 for the same period in 2023, representing an increase of $12,473 or 19%. The increase is primarily associated with
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a reduction in interest expense based on the repayment of $6 million of the convertible debt principal balance. Interest income, net for the nine months ended September 30, 2024 was $143,603 as compared to ($97,399) for the same period in 2023, representing an increase of $241,002 or 247%. The increase is primarily associated with a reduction in interest expense based on the repayment of $6 million of the convertible debt principal balance.
Financial Condition
Cash and Working Capital
As of September 30, 2024, we had cash and cash equivalents of $9,840,177 as compared to $8,446,158 as of December 31, 2023, representing an increase of $1,394,019 or 17%. As of September 30, 2024, we had working capital of $5,776,645 as compared to working capital of $3,355,212 as of December 31, 2023, representing an increase of $2,421,433 or 72%. The increase in cash and cash equivalents was primarily related to cash received from financing activities offset by cash used in operating activities during the nine months ended September 30, 2024. The increase in working capital is primarily the result of an increase in cash and cash equivalents from financing activities of approximately $9.2 million before deducting commissions and other estimated offering expenses offset by convertible debt principal repayments of approximately $686,000, and cash used in operating activities during the nine months ended September 30, 2024.
Based on our operating budget, current rate of cash outflows, cash on hand, and proceeds from government contract and grant programs, we believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they become due through the second quarter of 2025. We do not have sufficient cash and cash equivalents as of the date of filing this Quarterly Report on Form 10-Q to support our operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date that the financial statements are issued.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, our plans include:
| ● | Securing additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations. |
| ● | Securing additional proceeds from government contract and grant programs. |
| ● | Securing additional proceeds from the sale of shares of our common stock via the At Market Issuance Sales Agreement (“AGP Sales Agreement”) with A.G.P/Alliance Global Partners (“AGP”). |
| ● | Amending the loan agreement with Pontifax Medison Finance (“Pontifax”) (See Note 4) to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce the Company’s debt repayments. |
Other than the AGP Sales Agreement which was entered into on August 16, 2024 and the second amendment to the Pontifax loan agreement which was completed on October 8, 2024, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding on acceptable terms to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that we will require, or achieve the other strategies to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, we will not have sufficient cash resources and liquidity to fund our business operations for at least the 12 months following the date the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed may require us to delay, limit, or eliminate the development of business opportunities and our ability to achieve our business objectives and our competitiveness, and our business, financial condition, and results of operations will be materially
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adversely affected. In addition, the perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Our plans with respect to our liquidity management include, but are not limited to, the following:
| ● | We have up to approximately $554,000 in active government grant funding still available as of September 30, 2024 to support our associated research programs through May 2026, provided the federal agencies do not elect to terminate the grants for convenience. We plan to submit additional contract and grant applications for further support of our programs with various funding agencies. However, there can be no assurance that we will obtain additional governmental grant funding; |
| ● | We have continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expect to continue to do so for the foreseeable future; |
| ● | We will continue to pursue NOL sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if the program is available; |
| ● | We plan to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that we can consummate such transactions; |
| ● | We completed a public offering on April 22, 2024 of 204,694 shares of our common stock, pre-funded warrants to purchase 537,500 shares of our common stock and common warrants to purchase up to 742,194 shares of our common stock at a combined public offering price of $6.40. The pre-funded warrants have an exercise price of $0.02. The common warrants have an exercise price of $6.40 per share, are exercisable immediately and expire five years from the issuance date. The total gross proceeds to us from this offering were approximately $4.75 million before deducting commissions and other estimated offering expenses of approximately $0.45 million. We plan to use the proceeds for further support of our programs, as well as for working capital; |
| ● | We entered into a warrant inducement agreement (the “Inducement Agreement”) on July 9, 2024 with certain holders (the “Holders”) of our existing Warrant to Purchase Shares of Common Stock (“Existing Warrants”) to purchase shares of our common stock. In consideration of the Holders’ agreement to exercise their Existing Warrants, we (i) decreased the exercise price of the Existing Warrants from $6.40 per share to $6.00 per share and (ii) issued new warrants (“New Warrants”) to the Holders to purchase a number of shares of common stock equal to 150% of the number of shares of common stock issued upon exercise of the Holders’ Existing Warrants. Pursuant to the Inducement Agreement, the Holders agreed to exercise for cash their Existing Warrants to purchase up to 703,125 shares of our common stock at a reduced exercise price of $6.00 per share on July 9, 2024, the date of the Inducement Agreement, until 1:30 p.m., Eastern Time. The total gross proceeds to us was approximately $4.2 million from the exercise of the Existing Warrants before deducting financial advisory fees and other expenses. We plan to use the proceeds for further support of our programs, as well as for working capital; |
| ● | We have up to approximately $4.7 million remaining from the AGP Sales Agreement as of November 1, 2024 under the prospectus supplement updated August 16, 2024. From October 1, 2024 through November 1, 2024, we sold 229,078 shares of common stock pursuant to the AGP Sales Agreement at a weighted average price of $4.72 per share for total gross proceeds of approximately $1.1 million; and |
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| ● | We are currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that we can consummate such a transaction, or consummate a transaction at favorable pricing. |
July 2024 Warrant Inducement
On July 9, 2024, we entered into the Inducement Agreement with the Holders of the Company’s Existing Warrants to purchase shares of our common stock. Pursuant to the Inducement Agreement, the Holders agreed to exercise for cash their Existing Warrants to purchase up to 703,125 shares of common stock at a reduced exercise price of $6.00 per share on July 9, 2024, the date of the Inducement Agreement, until 1:30 p.m. Eastern Time. The aggregate gross proceeds received by us was approximately $4.2 million from the exercise of the Existing Warrants offset by total issuance costs of approximately $7.5 million. Issuance costs include financial advisory, banker, and legal fees of approximately $0.4 million and the fair value of the warrant modification and the fair value of the New Warrants issued totaling approximately $7.2 million. Because the modification represented a short-term inducement, we applied modification accounting guidance related to the fair value of the modification associated with the warrants that were exercised under the Inducement Agreement. Accordingly, we recognized the incremental fair value of the modification of the Existing Warrants exercised along with the fair value of the New Warrants issued as compared to the original warrants, together totaling approximately $7.2 million, as an issuance cost of the warrant exercise. Per the terms of the Inducement Agreement, we issued an aggregate of 1,054,688 New Warrants.
The fair value of New Warrants issued under the Inducement Agreement was estimated using the Black-Scholes warrant-pricing model and the following assumptions:
| ● | a dividend yield of 0%; |
| ● | an expected life of 5 years; |
| ● | volatility of 127.25%; and |
| ● | risk free interest rate of 4.24%. |
Expenditures
Under our budget and based upon our existing product development agreements and license agreements, we expect our total research and development expenditures for the next 12 months to be approximately $7 million before any contract or grant reimbursements, all of which relates to the Specialized BioTherapeutics business segment. We anticipate contract and grant reimbursements revenue in the next 12 months of approximately $0.3 million to offset research and development expenses in the Specialized BioTherapeutics business segment.
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The table below details our costs for research and development by program and amounts reimbursed for the nine months ended September 30, 2024 and 2023:
| 2024 |
| 2023 | |||
Research & Development Expenses |
|
|
|
| ||
RiVax® and ThermoVax® Vaccines | $ | 165,183 | $ | 100,613 | ||
SGX942 (Dusquetide) |
| (435,562) |
| (47,088) | ||
HyBryte™ (SGX301 or synthetic hypericin) |
| 2,411,168 |
| 2,147,245 | ||
Other |
| 424,098 |
| 334,395 | ||
Total | $ | 2,564,887 | $ | 2,535,165 | ||
Reimbursed under Government Contracts and Grants |
|
|
|
| ||
RiVax® and ThermoVax® Vaccines | $ | — | $ | — | ||
CiVax™ | — | 260,778 | ||||
SGX943 |
| — |
| 35,429 | ||
HyBryte™ (investigator-initiated study) | 119,371 | 224,295 | ||||
Total | 119,371 | 520,502 | ||||
Grand Total | $ | 2,684,258 | $ | 3,055,667 | ||
Contractual Obligations
We have commitments of approximately $205,000 as of September 30, 2024 over the next five years for several licensing agreements with partners and universities. Additionally, we are party to other agreements which include cash milestone payments, royalties and other fees payable, which are all contingent upon clinical or commercialization success. There can be no assurance that clinical or commercialization success will occur.
We currently lease office space pursuant to a lease which expires in October 2025 and requires monthly rent of $11,367 through October 2024 and $11,625 per month thereafter.
In September 2014, we entered into an asset purchase agreement with Hy Biopharma pursuant to which we acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin product. As consideration for the assets acquired, we initially paid $275,000 in cash and issued 771 shares of common stock with a fair value based upon our stock price on the date of grant of $3.75 million. These amounts were charged to research and development expense during the third quarter of 2014 as the assets will be used in our research and development activities and do not have alternative future use.
In January 2020, our Board of Directors authorized an amendment to Dr. Schaber’s employment agreement to increase the number of shares of common stock from 21 to 2,084, issuable to Dr. Schaber immediately prior to the completion of a transaction, or series or a combination of related transactions, negotiated by our Board of Directors whereby, directly or indirectly, a majority of our capital stock or a majority of our assets are transferred from us and/or our stockholders to a third party.
In March 2020, we filed a prospectus supplement covering the offer and sale of up to 8,151 shares of our common stock which were issued to Hy Biopharma. We were required to issue the shares to Hy Biopharma as payment following the achievement of a milestone under the asset purchase agreement, specifically, the Phase 3 clinical trial of HyBryte™ being successful in the treatment of CTCL. The number of shares of our common stock issued to Hy Biopharma was calculated using an effective price of $614.40 per share, based upon a formula set forth in the asset purchase agreement.
Provided the final success-oriented milestone of FDA approval is attained, we will be required to make a payment of up to $5 million, if and when achieved. The potential future payment will be payable in our common stock, not to exceed 19.9% of our outstanding stock. As of September 30, 2024, no other milestone or royalty payments have been paid or accrued.
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In December 2020, we entered into a $20 million convertible debt financing agreement with Pontifax (the “Loan Agreement”). Under the terms of the Loan Agreement, we had access to up to $20 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and had an interest-only period for the first two years with a fixed interest rate of 8.47% on borrowed amounts and an interest rate of 1% on amounts available but not borrowed as an unused line of credit fee. After the interest-only period, the outstanding principal was to be repaid in quarterly payments of $1 million each commencing in the first quarter of 2023. The agreement is secured by a lien on substantially all of our assets, other than intellectual property.
Upon the closing of this transaction, we borrowed the first tranche of $10 million. We did not utilize our option to draw the second or third tranche of $5 million each, which expired on December 15, 2021 and March 15, 2022, respectively.
In April 2023, we entered into an amendment to the Loan Agreement (the “2023 Amendment”). The 2023 Amendment called for the immediate payment of $5 million of the outstanding principal balance and any accrued interest, waived any prepayment charge in connection with the repayment of this amount and resulted in an outstanding principal balance of $3 million. The 2023 Amendment also provided for interest only through June 30, 2024, reduced quarterly principal repayments to $750,000, and eliminated the minimum cash covenant. Further, the 2023 Amendment reduced the conversion price with respect to the remaining principal amount to (i) 90% of the closing price of our common stock on the day before the delivery of a conversion notice with respect to the first 36,790 shares of our common stock issuable upon conversion and to (ii) $27.20 with respect to all shares of our common stock issuable upon conversion thereafter. The remaining terms of the agreement remained unmodified.
On January 3, 2024, Pontifax delivered a conversion notice to us electing to convert a portion of the remaining principal balance into shares of our common stock. Upon conversion, we issued 9,139 shares of our common stock at $10.88 per share, reducing the remaining principal balance by $99,416.
On April 15, 2024, Pontifax delivered a conversion notice to us electing to convert a portion of the remaining principal balance into shares of our common stock. Upon conversion, we issued 27,651 shares of our common stock at $5.60 per share, reducing the remaining principal balance by $154,840.
The 2023 Amendment resulted in the extinguishment of the original convertible debt for accounting purposes. We elected to account for the amended convertible debt using the fair value option. As of September 30, 2024, we determined the carrying amount of the convertible debt was approximately equivalent to the face value of the convertible debt. We recognized $0 and $260,933 of other income from the change in the fair value of the convertible debt in our accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively.
In October 2024, we entered into an amendment (the “2024 Amendment”) to the Loan Agreement, as amended. The 2024 Amendment reduced the conversion price with respect to the remaining principal amount outstanding to (i) $3.81 for the first 501,648 shares of our common stock issuable upon conversion and (ii) $4.23 with respect to all shares of our common stock issuable upon conversion thereafter. The remaining terms of the agreement remain in effect without modification.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because the majority of our investments are in short-term marketable securities, in addition to the foreign exchange rate fluctuations related to our foreign currency transactions. We do not have any derivative financial instruments. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure.
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ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of September 30, 2024, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) using the criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013 Framework). Our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded, based upon the evaluation described above, that as of September 30, 2024, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such material information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting identified in connection with the evaluation of such internal controls that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION.
ITEM 1 – LEGAL PROCEEDINGS
From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and allocates additional monies for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable.
ITEM 1A – RISK FACTORS
Our business faces significant risks. These risks include those disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. If any of the events or circumstances described in the referenced risks actually occur, our business, financial condition or results of operations could be materially adversely affected and such events or circumstances could cause our actual results to differ materially from the results contemplated by the “forward-looking” statements contained in this report. Further, additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business, financial condition and results of operations. We do not undertake to update any of the “forward-looking” statements or to announce the results of any revisions to these “forward-looking” statements, except as required by law.
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The following risks should be read in conjunction with the other information set forth in this Quarterly Report as well as in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our periodic reports on Form 10-Q and Form 8-K.
Shareholders may suffer substantial dilution related to issued pre-funded warrants, common stock warrants, options and convertible notes.
As of November 1, 2024, we had a number of agreements or obligations that may result in dilution to investors. These include:
| ● | common stock warrants to purchase a total of 1,467,581 shares of our common stock at a current weighted average exercise price of $11.01; |
| ● | options to purchase approximately 56,427 shares of our common stock at a current weighted average exercise price of $84.96; and |
| ● | convertible promissory notes issued to Pontifax Medison Finance, of which there was $1,372,873 of principal and $10,195 of accrued interest outstanding, which notes are convertible at $3.81 per share for the first 501,648 shares and $4.23 with respect to all shares thereafter; and |
| ● | 5,943,706 shares of common stock available for future issuance under our 2015 Equity Incentive Plan. |
We have granted, and expect to grant in the future, options to purchase shares of our common stock to our directors, employees and consultants under our incentive compensation plan. To the extent that pre-funded warrants, common stock warrants, options or convertible promissory notes are exercised or converted, our stockholders will experience dilution and our stock price may decrease.
Additionally, the sale, or even the possibility of the sale, of the shares of common stock underlying these pre-funded warrants, common stock warrants, options and convertible promissory notes could have an adverse effect on the market price for our securities or on our ability to obtain future financing.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 5 – OTHER INFORMATION
During the quarter ended September 30, 2024,
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ITEM 6 – EXHIBITS
EXHIBIT NO. |
| DESCRIPTION |
31.1 | ||
31.2 | ||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Schema | |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase | |
101.DEF | Inline XBRL Taxonomy Definition Linkbase | |
101.LAB | Inline XBRL Taxonomy Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SOLIGENIX, INC. | ||
November 8, 2024 | By | /s/ Christopher J. Schaber |
Christopher J. Schaber, PhD | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
November 8, 2024 | By | /s/ Jonathan Guarino |
Jonathan Guarino | ||
Chief Financial Officer, Senior Vice President, | ||
and Corporate Secretary | ||
(Principal Financial and Accounting Officer) |
54