Tonix Pharmaceuticals (TNXP) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, reporting a $6.2 million net loss and highlighting a 'going concern' issue due to limited cash Condensed Consolidated Balance Sheets Total assets decreased to $20.0 million, driven by a reduction in cash to $16.4 million, while stockholders' equity declined to $17.8 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $16,448 | $25,034 | | Total current assets | $19,182 | $26,056 | | Total assets | $20,022 | $26,319 | | Liabilities & Equity | | | | Total current liabilities | $2,011 | $2,655 | | Total liabilities | $2,211 | $2,655 | | Total stockholders' equity | $17,811 | $23,664 | | Total liabilities and stockholders' equity | $20,022 | $26,319 | Condensed Consolidated Statements of Operations Net loss decreased to $6.2 million, or $1.29 per share, primarily due to lower research and development expenses Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Research and development | $3,896 | $5,170 | | General and administrative | $2,401 | $1,818 | | Operating loss | $(6,297) | $(6,988) | | Net loss | $(6,233) | $(6,935) | | Net loss per common share, basic and diluted | $(1.29) | $(8.80) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $8.6 million, resulting in a $8.6 million decrease in cash and equivalents, ending at $16.5 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,639) | $(6,771) | | Net cash used by investing activities | $(7) | $(2) | | Net cash provided by financing activities | $70 | $532 | | Net decrease in cash, cash equivalents and restricted cash | $(8,586) | $(6,243) | | Cash, cash equivalents and restricted cash end of period | $16,548 | $19,342 | Notes to Condensed Consolidated Financial Statements Details the company's biopharmaceutical business, discloses a 'going concern' uncertainty, and outlines key accounting policies and contractual commitments - The company is a clinical-stage biopharmaceutical firm focused on psychiatric, pain, and biodefense products, with all candidates currently in development[19] - Substantial doubt exists about the company's ability to continue as a going concern, with $16.4 million cash sufficient only through the end of 2019[21] - The company adopted the new lease accounting standard, ASC Topic 842, on January 1, 2019, recognizing right-of-use assets and lease liabilities[28][30] - As of March 31, 2019, the company had outstanding commitments of approximately $8.7 million for future work with contract research organizations[103] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the development of Tonmya, analyzes Q1 2019 results showing decreased R&D and increased G&A, and reiterates the 'going concern' issue requiring additional financing - The company's lead product candidate, Tonmya (TNX-102 SL), is in Phase 3 development for PTSD, with other programs targeting fibromyalgia and Alzheimer's agitation[111][113] - The company lacks sufficient resources to meet operating requirements for the next year and requires additional capital for future research and development[145][147] Comparison of Expenses (in millions) | Expense Category | Q1 2019 | Q1 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Research & Development | $3.9 | $5.2 | -25% | | General & Administrative | $2.4 | $1.8 | +33% | | Net Loss | $6.2 | $6.9 | -10% | Results of Operations Research and development expenses decreased by $1.3 million (25%) to $3.9 million, while general and administrative expenses increased by $0.6 million (33%) to $2.4 million, leading to a 10% lower net loss - R&D expenses decreased by 25% year-over-year, primarily due to the non-recurrence of a pharmacokinetic bridging study conducted in Q1 2018[120] - G&A expenses increased by 33% year-over-year, driven by higher investor relations and insurance premiums[121] Liquidity and Capital Resources Working capital was $17.2 million with $16.4 million in cash, but resources are insufficient for the next year, necessitating additional funding and detailing past financing efforts - The company had working capital of $17.2 million and cash and cash equivalents of $16.4 million as of March 31, 2019[123] - Cash used in operating activities increased to $8.6 million in Q1 2019 from $6.8 million in Q1 2018, primarily due to non-recurring clinical study costs and higher insurance premiums[123] - The December 2018 financing provided net proceeds of approximately $13.6 million through the sale of Class A and Class B units[127] - No shares were sold under the 2018 Purchase Agreement with Lincoln Park or the At-the-Market (ATM) offering with Cowen during the quarter ended March 31, 2019[130][138] Quantitative and Qualitative Disclosures about Market Risk Disclosure is not required as the company qualifies as a 'smaller reporting company' - Disclosure is not required as the company qualifies as a 'smaller reporting company'[175] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2019, the company's disclosure controls and procedures were effective[176] - No material changes were made to the internal control over financial reporting during the quarter ended March 31, 2019[177] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings or claims - The company is not currently a party to any material legal proceedings[180] Risk Factors Disclosure is not required as the company qualifies as a 'smaller reporting company' - Disclosure is not required as the company qualifies as a 'smaller reporting company'[181] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None reported for the period[181] Exhibits Lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906[187]