Tonix Pharmaceuticals (US:TNXP)2023-05-08 20:29Financial Performance - The net loss for Q1 2023 was $33.0 million, compared to a net loss of $26.4 million in Q1 2022, an increase of $6.6 million or 25%[163] - For the three months ended March 31, 2023, the company used approximately $32.9 million in operating activities, compared to $31.1 million for the same period in 2022, reflecting increased research and development and administrative expenses[191] - The company incurred net cash used in investing activities of $3.8 million for the three months ended March 31, 2023, a decrease from $20.2 million in the same period of 2022, primarily due to fewer property and equipment purchases[191] Research and Development - Research and development expenses for Q1 2023 were $26.5 million, an increase of $8.1 million or 44% from $18.4 million in Q1 2022[159] - The company expects research and development expenses to increase throughout 2023 as clinical development programs progress[159] - Direct research and development expenses for TNX-601 ER increased by $2.3 million to $2.6 million in Q1 2023 compared to $0.3 million in Q1 2022[161] - The lead CNS candidate, TNX-102 SL, is in mid-Phase 3 development for fibromyalgia, with topline data expected in Q4 2023[155] - TNX-1300, designed to treat cocaine intoxication, has been granted Breakthrough Therapy designation by the FDA, with a Phase 2 study expected to start in Q3 2023[155] - TNX-801, a vaccine in development to prevent smallpox and mpox, is expected to initiate a Phase 1 study in the second half of 2023[155] - The company has incurred research and development costs totaling $1.2 million for the acquisition of Healion's pre-clinical infectious disease assets, which was expensed as there is no alternative future use[181] - The company expects to incur increasing research and development expenses, including costs related to additional clinical trials and the buildout of operations, indicating a need for future capital[194] - The company has outstanding commitments of approximately $54.4 million for future work to be performed under research and development contracts as of March 31, 2023[223] - The company outsources certain research and development efforts, expensing related costs as incurred, including manufacturing costs for testing and clinical trial expenses[228] - Clinical trial accruals are based on negotiations with vendors and the progress of trials, with adjustments made if actual results differ from estimates[229] Administrative Expenses - General and administrative expenses for Q1 2023 were $7.4 million, a decrease of $0.6 million or 8% from $8.0 million in Q1 2022[162] Capital Resources and Funding - The company faces significant challenges regarding its capital resources, which may be consumed more rapidly than expected, raising doubts about its ability to continue as a going concern for the next year[193] - The company has the ability to obtain additional funding through public or private financing or collaborative arrangements, but may not be able to raise capital on acceptable terms[193] - The company entered into a purchase agreement with Lincoln Park Capital Fund, LLC, to purchase up to $50,000,000 of common stock, with a registration rights agreement filed with the SEC[205] - During the quarter ended March 31, 2023, the company sold 0.6 million shares of common stock under the Lincoln Park Purchase Agreement, generating net proceeds of approximately $0.4 million[207] - The company sold approximately 3.2 million shares of common stock under the ATM Sales Agreement during the quarter ended March 31, 2023, for net proceeds of approximately $2.0 million[211] Stock and Equity Transactions - The company issued 1,400,000 shares of Series A Preferred Stock and 100,000 shares of Series B Preferred Stock on October 26, 2022, with an aggregate stated value of $15,000,000 and a purchase price of $9.50 per share, representing a 5% OID[200] - All outstanding shares of Series A and Series B Convertible Redeemable Preferred Stock were redeemed in December 2022 at 105% of the stated value, totaling $15.8 million[201] - The company issued 2,500,000 shares of Series A Preferred Stock and 500,000 shares of Series B Preferred Stock on June 24, 2022, with an aggregate stated value of $30,000,000 and a purchase price of $9.50 per share, also representing a 5% OID[202] - All outstanding shares of Series A and Series B Convertible Redeemable Preferred Stock were redeemed in August 2022 at 105% of the stated value, totaling $31.5 million[203] Contingent Payments and Obligations - The company has a total of $4.1 million in contingent milestone payments related to the TFF2 Product under the Columbia License Agreement[175] - The company is obligated to make contingent milestone payments to Columbia totaling $3 million upon achieving specific development, approval, and sales milestones related to a product[179] - Future minimum lease payments as of March 31, 2023, total $1,026,000, including interest[225] Stock-Based Compensation - As of March 31, 2023, the company had approximately $12.6 million of total unrecognized compensation cost related to non-vested awards granted under the stock incentive plans, expected to be recognized over a weighted average period of 2.00 years[219] - Stock-based compensation consists of grants of restricted stock and stock options, measured at fair value on the grant date and recognized as compensation expense over the vesting period[230] Accounting and Financial Reporting - Redeemable convertible preferred stock is classified as liability instruments and measured at fair value, with conditionally redeemable shares classified as temporary equity until conditions are met[231] - The company has no off-balance sheet financing arrangements or liabilities beyond normal contractual obligations[232] - The adoption of ASU 2020-06 on January 1, 2023, simplified accounting for convertible instruments without impacting the company's financial position or cash flows[233]