Soligenix(SNGX) - 2023 Q2 - Quarterly Report

Part I - Financial Information Item 1. Consolidated Financial Statements The consolidated financial statements for the period ended June 30, 2023, detail the company's financial position, operational results, and cash flows, reporting a $2.66 million net loss and improved liquidity Consolidated Balance Sheets As of June 30, 2023, total assets were $13.83 million, total liabilities significantly reduced to $8.03 million, and shareholders' equity turned positive to $5.80 million Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Items | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,161 | $13,360 | | Total current assets | $13,471 | $13,853 | | Total assets | $13,826 | $14,280 | | Liabilities & Equity | | | | Total current liabilities | $5,758 | $16,517 | | Total liabilities | $8,026 | $16,751 | | Total shareholders' equity/(deficit) | $5,800 | $(2,471) | - The company's working capital improved significantly from a deficit of ($2.66 million) at year-end 2022 to a positive $7.71 million as of June 30, 2023, driven by financing activities and debt reclassification[24] Consolidated Statements of Operations For the six months ended June 30, 2023, the company reported a net loss of $2.66 million, a significant improvement from $6.74 million in 2022, primarily due to reduced operating expenses Consolidated Statements of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $207 | $229 | $464 | $417 | | Loss from operations | $(1,630) | $(3,395) | $(3,781) | $(7,588) | | Net loss | $(1,612) | $(2,387) | $(2,658) | $(6,736) | | Basic and diluted net loss per share | $(0.22) | $(0.83) | $(0.52) | $(2.35) | - Research and development expenses decreased to $1.71 million for the six months ended June 30, 2023, from $3.79 million in the prior-year period[8] - General and administrative expenses also decreased to $2.13 million from $3.92 million[8] Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operations was $4.09 million, offset by $3.88 million from financing activities, resulting in an ending cash balance of $13.16 million Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,090) | $(5,767) | | Net cash used in investing activities | $0 | $(13) | | Net cash provided by financing activities | $3,885 | $0 | | Net decrease in cash and cash equivalents | $(199) | $(5,886) | | Cash and cash equivalents at end of period | $13,161 | $20,158 | Notes to Consolidated Financial Statements The notes detail the company's business segments, liquidity, going concern assessment, a reverse stock split, and an amendment to its convertible debt agreement - The company operates in two segments: Specialized BioTherapeutics, focused on rare diseases like CTCL, and Public Health Solutions, developing vaccines and therapeutics for public health threats with government funding[17][18][20] - Management believes its current cash of $13.16 million will be sufficient to meet anticipated cash needs for at least the next twelve months[23] - On February 9, 2023, the company completed a one-for-fifteen reverse stock split of its common stock, with all share and per-share data restated to reflect this split[29] - In April 2023, the company amended its convertible debt agreement, repaying $5 million of principal, extending the interest-only period, and reducing the conversion price, resulting in a $394,000 loss on debt extinguishment[73][75] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, operational results, and product candidate progress, highlighting a reduced net loss, improved liquidity, and the need for a second Phase 3 study for HyBryte™ Business Overview and Product Candidates Soligenix, a late-stage biopharmaceutical company, is advancing HyBryte™ for CTCL and SGX302 for psoriasis, while its Public Health Solutions segment develops vaccines with government funding - For HyBryte™ (CTCL treatment), the FDA issued a Refusal to File letter, requiring a second positive Phase 3 pivotal study for NDA submission[127][163] - The company initiated a Phase 2a study for SGX302 in mild-to-moderate psoriasis in December 2022 and expanded the trial in July 2023 after observing a biological effect[173][174] - The Public Health Solutions segment develops its ThermoVax® platform for heat-stable vaccines, including RiVax® and CiVax™, supported by funding from NIAID and DTRA[129][209][215] Results of Operations Net loss for the six months ended June 30, 2023, decreased by 61% to $2.66 million, primarily due to 55% lower R&D and 46% lower G&A expenses Comparison of Operating Results (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $464 | $417 | +11% | | Research & Development | $1,709 | $3,795 | -55% | | General & Administrative | $2,126 | $3,924 | -46% | | Net Loss | $(2,658) | $(6,736) | -61% | - The decrease in R&D expenses was mainly due to reduced manufacturing and regulatory costs associated with the HyBryte™ NDA filing[255] - The decrease in G&A expenses was primarily attributable to a reduction in legal and consulting fees related to the arbitration against Emergent BioSolutions[256] Financial Condition, Liquidity and Capital Resources As of June 30, 2023, the company held $13.16 million in cash and $7.71 million in working capital, significantly improved by $7.7 million from a public offering and $3.0 million from at-the-market sales - Cash and cash equivalents stood at $13.16 million as of June 30, 2023[260] - Working capital increased by $10.38 million to $7.71 million, primarily due to financing activities and the reclassification of $2.09 million of convertible debt to non-current[260] - Key financing activities in H1 2023 included raising approximately $3.0 million from at-the-market sales and net proceeds of approximately $7.7 million from a public offering in May 2023[260][265] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate sensitivity on short-term investments and foreign exchange rate fluctuations, though management deems the overall exposure immaterial - The company's main market risks are interest rate changes affecting its short-term investments and foreign exchange rate fluctuations[292] - The company does not use derivative financial instruments and believes its market risk exposure is not material[293] Item 4. Controls and Procedures As of June 30, 2023, disclosure controls were deemed ineffective due to a material weakness in accounting for complex financial instruments, for which a remediation plan is in place - Management identified a material weakness in internal control over financial reporting related to the accounting for complex financial instruments[295] - This weakness led to a delay in finalizing financial statements, resulting in the conclusion that disclosure controls were not effective as of June 30, 2023[295] - A remediation plan is in place, including enhancing policies and procedures for accounting for complex transactions[296][297] Part II - Other Information Item 1. Legal Proceedings The company's arbitration against Emergent BioSolutions for breach of contract concluded with no monetary damages awarded to Soligenix, a decision confirmed by the Delaware Court of Chancery - Soligenix filed for arbitration against Emergent BioSolutions in July 2020, seeking over $19 million in damages for alleged breach of contract and fraud related to RiVax® manufacture[302][306] - In July 2022, the arbitration panel found Emergent had breached contracts but did not award any monetary damages to Soligenix[306] - On July 17, 2023, the Delaware Court of Chancery confirmed the arbitration panel's decision in favor of Emergent, concluding the legal matter[306] Item 1A. Risk Factors This section refers to risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2022, with no new material changes in this quarterly report - The company's significant business risks are detailed in its Annual Report on Form 10-K for the year ended December 31, 2022[307] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On May 2, 2023, the company issued 31,646 common shares to Silk Road Therapeutics at $1.58 per share, exempt from registration under Section 4(a)(2) - On May 2, 2023, Soligenix issued 31,646 shares of common stock to Silk Road Therapeutics in a transaction exempt from registration[308] Item 6. Exhibits This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL documents