Tonix Pharmaceuticals (TNXP) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the reported period ITEM 1. Financial Statements This section presents Tonix Pharmaceuticals' unaudited condensed consolidated financial statements and related notes, covering financial position, performance, and cash flows Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :--------------------------- | :----------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $145,478 | $178,660 | $(33,182) | -18.57% | | Restricted cash | $31,500 | — | $31,500 | N/A | | Total current assets | $191,747 | $189,049 | $2,698 | 1.43% | | Property and equipment, net | $83,099 | $50,558 | $32,541 | 64.36% | | Total assets | $276,165 | $240,900 | $35,265 | 14.64% | | Total current liabilities | $15,909 | $21,716 | $(5,807) | -26.74% | | Total liabilities | $16,383 | $22,183 | $(5,800) | -26.15% | | Redeemable Convertible Preferred Stock | $31,500 | — | $31,500 | N/A | | Total stockholders' equity | $228,282 | $218,717 | $9,565 | 4.37% | Condensed Consolidated Statements of Operations This statement details the company's revenues, expenses, and net loss over specific reporting periods Statements of Operations – Three Months Ended June 30 (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change (in thousands) | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Research and development | $16,579 | $18,133 | $(1,554) | -8.57% | | General and administrative | $6,757 | $5,429 | $1,328 | 24.46% | | Operating loss | $(23,336) | $(23,562) | $226 | -0.96% | | Net loss | $(23,140) | $(23,553) | $413 | -1.75% | | Net loss per common share, basic and diluted | $(1.22) | $(2.25) | $1.03 | -45.78% | | Weighted average common shares outstanding | 22,404,371 | 10,483,112 | 11,921,259 | 113.72% | Statements of Operations – Six Months Ended June 30 (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Research and development | $35,001 | $33,460 | $1,541 | 4.61% | | General and administrative | $14,771 | $10,838 | $3,933 | 36.29% | | Operating loss | $(49,772) | $(44,298) | $(5,474) | 12.36% | | Net loss | $(49,557) | $(44,206) | $(5,351) | 12.10% | | Net loss per common share, basic and diluted | $(2.76) | $(4.49) | $1.73 | -38.53% | | Weighted average common shares outstanding | 19,462,280 | 9,843,309 | 9,618,971 | 97.72% | Condensed Consolidated Statements of Comprehensive Loss This statement presents the net loss and other comprehensive income or loss components for the reporting periods Statements of Comprehensive Loss – Three Months Ended June 30 (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change (in thousands) | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Net loss | $(23,140) | $(23,553) | $413 | -1.75% | | Foreign currency translation loss | $(25) | $(8) | $(17) | 212.50% | | Comprehensive loss | $(23,165) | $(23,561) | $396 | -1.68% | Statements of Comprehensive Loss – Six Months Ended June 30 (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net loss | $(49,557) | $(44,206) | $(5,351) | 12.10% | | Foreign currency translation loss | $(51) | $(9) | $(42) | 466.67% | | Comprehensive loss | $(49,608) | $(44,215) | $(5,393) | 12.20% | Condensed Consolidated Statements of Stockholders' Equity This statement tracks changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity (in thousands) | Metric (in thousands) | December 31, 2021 | March 31, 2022 | June 30, 2022 | Change (Dec 2021 to Jun 2022) | | :-------------------- | :---------------- | :------------- | :------------ | :---------------------------- | | Common stock shares | 15,638,274 | 17,406,468 | 31,692,024 | 16,053,750 | | Common stock amount | $16 | $18 | $32 | $16 | | Additional Paid in Capital | $578,613 | $594,294 | $637,770 | $59,157 | | Accumulated Deficit | $(359,820) | $(386,237) | $(409,377) | $(49,557) |\ | Total Stockholders' Equity | $218,717 | $207,957 | $228,282 | $9,565 | - Issuance of common stock from At-the-market offering and 2021 Purchase Agreement significantly increased common stock shares and additional paid-in capital during the six months ended June 30, 2022[16] - A preferred stock deemed dividend of $4.255 million was recorded in the second quarter of 2022[16] Condensed Consolidated Statements of Cash Flows This statement summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (in thousands) | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Net cash used in operating activities | $(52,217) | $(40,166) | $(12,051) | 30.00% | | Net cash used in investing activities | $(34,656) | $(1,934) | $(32,722) | 1691.93% |\ | Net cash provided by financing activities | $85,240 | $130,759 | $(45,519) | -34.81% | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(1,682) | $88,651 | $(90,333) | -101.90% |\ | Cash, cash equivalents and restricted cash end of period | $177,218 | $165,959 | $11,259 | 6.78% | - The significant increase in cash used in investing activities is primarily due to a substantial increase in the purchase of property and equipment in 2022[20] - Financing activities in 2022 included proceeds from the sale of convertible redeemable preferred stock ($27.2 million) and common stock ($57.9 million), while 2021 saw higher proceeds from common stock sales[20] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements NOTE 1 – BUSINESS This note describes the company's operations, its clinical-stage focus, and the going concern assessment - Tonix Pharmaceuticals Holding Corp. is a clinical-stage biopharmaceutical company focused on discovering, licensing, acquiring, and developing therapeutics for human diseases, with all product candidates currently in development and none approved or marketed[22] - The Company's financial statements are prepared under a going concern assumption, but recurring losses and negative cash flows raise substantial doubt about its ability to continue as a going concern beyond Q2 2023 without additional funding[24][25][26] Key Financial Metrics (approximate) | Metric | June 30, 2022 (approx.) | | :---------------- | :---------------------- | | Working Capital | $144.3 million | | Restricted Cash | $31.5 million | | Accumulated Deficit | $409.4 million | | Cash and Cash Equivalents | $145.5 million | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES This note outlines the key accounting principles and methods used in preparing the financial statements - A 1-for-32 reverse stock split was effected on May 17, 2022, and all share and per share data in the financial statements have been retrospectively adjusted[27] - The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue, with no commercial products or revenues generated to date[32] Cash and Restricted Cash (in thousands) | Cash Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $145,478 | $178,660 | | Restricted cash – short term | $31,500 | — | | Restricted cash – long term | $240 | $240 | | Total | $177,218 | $178,900 | NOTE 3 – PROPERTY AND EQUIPMENT, NET This note details the composition and changes in the company's property and equipment assets Property and Equipment, Net (in thousands) | Category (in thousands) | June 30, 2022 | December 31, 2021 | | :---------------------- | :------------ | :---------------- | | Land | $8,011 | $7,911 | | Construction in progress | $69,094 | $41,921 | | Office furniture and equipment | $908 | $756 | | Laboratory Equipment | $5,628 | $347 | | Leasehold improvements | $23 | $23 | | Total | $83,664 | $50,958 | | Less: Accumulated depreciation and amortization | $(565) | $(400) | | Property and equipment, net | $83,099 | $50,558 | - The Company acquired a 45,000 sq ft R&D facility in Frederick, MD, and a 45,000 sq ft facility in Dartmouth, MA, for vaccine development and manufacturing, both expected to be ready for intended use by Q3 2022[55][56] - An additional 44-acre site in Hamilton, Montana, was purchased for a vaccine development and commercial scale manufacturing facility, which was not ready for its intended use as of June 30, 2022[57] NOTE 4 – FAIR VALUE MEASUREMENTS This note describes the fair value hierarchy and measurements for financial assets and liabilities Fair Value Measurements (in thousands) | Asset Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------- | :--------------------------- | :----------------------------- | | Cash equivalents (Level 1) | $120,600 | $120,400 | - The Company did not have any Level 2 or Level 3 assets or liabilities as of June 30, 2022, and December 31, 2021[58] NOTE 5 – STOCKHOLDERS' EQUITY This note provides details on changes in common stock, including reverse stock splits and authorized share adjustments - A 1-for-32 reverse stock split was effective May 17, 2022, reducing outstanding common stock from 599,679,596 to 18,740,141 shares and authorized shares from 800 million to 50 million[60] - The reverse stock split helped the Company regain compliance with NASDAQ's minimum bid price requirement[60] - Subsequent to June 30, 2022, on August 5, 2022, the authorized common stock was further increased from 50,000,000 to 150,000,000 shares[60] NOTE 6 – TEMPORARY EQUITY This note explains the accounting for convertible redeemable preferred stock classified as temporary equity - On June 24, 2022, the Company closed a private placement offering of 2,500,000 Series A and 500,000 Series B Convertible Redeemable Preferred Stock at $9.50 per share (5% OID to $10.00 stated value), raising gross proceeds of $28.5 million[61] - The Preferred Stock is convertible into common stock at $4.00 per share and includes a holder's right to redeem for cash at 105% of stated value through September 22, 2022[63] - Gross proceeds of $28.5 million plus an additional $3.0 million from the Company are held in an escrow account to cover OID and the 105% redemption price[64] Redeemable Convertible Preferred Stock (in thousands) | Preferred Stock Type (in thousands) | Gross Proceeds | Issuance Costs | Accretion to Redemption Value | Redemption Value (June 30, 2022) | | :---------------------------------- | :------------- | :------------- | :---------------------------- | :------------------------------- | | Series A | $23,750 | $(1,046) | $3,546 | $26,250 | | Series B | $4,750 | $(209) | $709 | $5,250 | NOTE 7 – ASSET PURCHASE AGREEMENT WITH KATANA This note details the acquisition of Katana assets for insulin resistance and related licensing obligations - On December 22, 2020, Tonix acquired Katana assets related to insulin resistance and obesity for $0.7 million, expensed as R&D costs due to no alternative future use prior to FDA approval[68] - The acquisition included an exclusive license from the University of Geneva for related patents, with obligations for diligent development and annual maintenance fees[69] - As of June 30, 2022, no milestone payments have been accrued or paid under this agreement[70] NOTE 8 – ASSET PURCHASE AGREEMENT WITH TRIGEMINA This note describes the acquisition of Trigemina assets for migraine and pain treatment technologies - On June 11, 2020, Tonix acquired Trigemina assets for migraine and pain treatment technologies, paying $824,759 cash and issuing 62,500 common shares (valued at $21.76/share), plus $250,241 to Stanford[71] - Total consideration of $2.4 million was expensed as R&D costs because the intellectual property was acquired prior to FDA approval and had no alternative future use[72] - The agreement includes an exclusive license from Stanford University for related patents, requiring diligent development and annual maintenance fees, with no milestone payments accrued or paid as of June 30, 2022[74][75] NOTE 9 – ASSET PURCHASE AGREEMENT WITH TRIMARAN This note outlines the acquisition of TRImaran's pyran-based compound assets and associated milestone payments - On August 19, 2019, Tonix acquired TRImaran's pyran-based compound assets for $100,000 cash and assumed $68,500 in liabilities, expensed as R&D costs[76] - The agreement includes potential future payments of approximately $3.4 million in restricted stock or cash upon achievement of specified development, regulatory, and sales milestones[76] - An exclusive license from Wayne State University (WSU) for related technology requires diligent efforts for regulatory approval and marketing, annual maintenance fees, and potential milestone payments totaling $3.4 million, plus single-digit royalties on net sales[77][78] NOTE 10 – LICENSE AGREEMENT WITH UNIVERSITY OF ALBERTA This note describes the exclusive license for broad-spectrum antiviral drugs from the University of Alberta - On May 18, 2022, Tonix entered an exclusive License Agreement with the University of Alberta for broad-spectrum antiviral drugs against SARS-CoV-2 variants and other emerging viruses[80] - The agreement involved a low-five digit upfront license fee and provides for single-digit royalties and contingent milestone payments, none of which have been accrued or paid as of June 30, 2022, beyond the upfront fee[80][81] NOTE 11 – LICENSE AGREEMENT WITH OYAGEN This note details the license agreement with OyaGen for an antiviral inhibitor and its subsequent termination - On April 14, 2021, Tonix licensed technology from OyaGen for an antiviral inhibitor of SARS-CoV-2 (sangivamycin), paying a low-seven digit license fee and issuing 86,010 common shares valued at $3.0 million, expensed as R&D[82][83] - The OyaGen License also included single-digit royalties and contingent milestone payments, with no milestones accrued or paid as of June 30, 2022[83][84] - In July 2022, Tonix notified OyaGen of its intent to terminate the License Agreement, effective September 20, 2022[84] NOTE 12 – LICENSE AGREEMENT WITH INSERM This note outlines the license agreement with Inserm for oxytocin-based therapeutics and associated fees - On February 11, 2021, Tonix licensed oxytocin-based therapeutics technology from Inserm for Prader-Willi syndrome and non-organic failure to thrive disease[85] - The agreement provides for annual fees, milestone payments totaling approximately $0.4 million upon specified sales milestones, and royalties on net sales[85] - As of June 30, 2022, no milestone payments have been accrued or paid under this agreement[86] NOTE 13 – LICENSE AGREEMENTS WITH COLUMBIA UNIVERSITY This note details multiple license agreements with Columbia University for TFF2 Technology and cocaine esterase - On September 16, 2019, Tonix entered an exclusive license with Columbia University for TFF2 Technology, paying a five-digit license fee expensed as R&D[86][87] - This TFF2 license includes single-digit royalties on net sales and contingent milestone payments to Columbia totaling $4.1 million upon achievement of development, approval, and sales milestones[88][91] - On May 20, 2019, Tonix also licensed double-mutant cocaine esterase technology from Columbia, paying a six-digit license fee, with potential milestone payments totaling $3 million and single-digit royalties on net sales[93][94][95][96] - As of June 30, 2022, no milestone payments have been accrued or paid under either Columbia agreement[92][97] NOTE 14 – SALE OF COMMON STOCK This note describes various common stock sales agreements, including At-the-Market offerings and Lincoln Park agreements - The Company has two purchase agreements with Lincoln Park Capital Fund, LLC (2021 and 2021 Purchase Agreements) for up to $80 million of common stock each[98][102] Common Stock Sales and Proceeds (approximate) | Financing Activity | Period | Shares Sold (approx.) | Net Proceeds (approx.) | | :----------------- | :----- | :-------------------- | :--------------------- | | Lincoln Park (Dec 2021) | 6 months ended Jun 30, 2022 | 1.1 million | $6.5 million | | Lincoln Park (Dec 2021) | Subsequent to Jun 30, 2022 | 1.8 million | $2.2 million | | Lincoln Park (May 2021) | 6 months ended Jun 30, 2021 | 86,000 | $3.3 million | | February 2021 Financing | Feb 2021 | 1.8 million | $65.0 million | | January 2021 Financing | Jan 2021 | 1.6 million | $36.9 million | | At-the-Market (ATM) Offerings | 6 months ended Jun 30, 2022 | 15.0 million | $51.5 million | | At-the-Market (ATM) Offerings | 6 months ended Jun 30, 2021 | 0.8 million | $25.5 million | | At-the-Market (ATM) Offerings | Subsequent to Jun 30, 2022 | 9.6 million | $16.2 million | - Under the December 2021 Lincoln Park agreement, the Company cannot sell additional shares without shareholder approval, having issued approximately 3 million shares at less than the NASDAQ threshold[192] NOTE 15 – STOCK-BASED COMPENSATION This note outlines the company's stock incentive plan and the accounting for stock-based compensation expenses - The Company operates under the Amended and Restated 2020 Stock Incentive Plan, which allows for various stock-based awards and includes an 'evergreen provision' for annual share increases[111][112] Stock Option Activity | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :------------ | :---------------- | | Shares Outstanding | 2,474,549 | 805,762 | | Weighted Average Exercise Price | $29.54 | $78.02 | | Weighted Average Remaining Contractual Term | 9.23 years | 8.83 years | | Shares Exercisable | 469,600 | N/A | | Weighted Average Exercise Price (Exercisable) | $83.90 | N/A | Weighted Average Fair Value of Options Granted | Period | Weighted Average Fair Value of Options Granted | | :----- | :------------------------------------------- | | 3 months ended June 30, 2022 | $3.78 per share | | 6 months ended June 30, 2022 | $5.25 per share | | 3 months ended June 30, 2021 | $30.62 per share | | 6 months ended June 30, 2021 | $34.45 per share | Stock-Based Compensation Expense (in thousands) | Period | Total Stock-Based Compensation Expense (in thousands) | | :----- | :-------------------------------------------------- | | 3 months ended June 30, 2022 | $2,800 | | 6 months ended June 30, 2022 | $5,400 | | 3 months ended June 30, 2021 | $2,100 | | 6 months ended June 30, 2021 | $3,300 | - As of June 30, 2022, the Company had approximately $17.3 million of unrecognized compensation cost related to non-vested awards, expected to be recognized over a weighted average period of 2.09 years[122] NOTE 16 – STOCK WARRANTS This note provides information on outstanding stock warrants, their exercise prices, and expiration dates Outstanding Stock Warrants (June 30, 2022) | Exercise Price | Number Outstanding (June 30, 2022) | Expiration Date | | :------------- | :--------------------------------- | :-------------- | | $16.00 | 779 | November 2024 | | $18.24 | 3,860 | February 2025 | | $1,120.00 | 15,331 | December 2023 | | Total | 19,970 | | - No warrants were exercised during the six months ended June 30, 2022[126] - During the six months ended June 30, 2021, 107 warrants with an exercise price of $18.24 were exercised, generating approximately $2,000 in proceeds[127] NOTE 17 – LEASES This note details the company's lease liabilities, right-of-use assets, and future lease payment obligations Lease Metrics (in thousands) | Metric (in thousands) | June 30, 2022 | | :-------------------- | :------------ | | Right-of-use assets | $0.9 million | | Total lease liability | $1.0 million | | Current lease liability | $0.5 million | | Long-term lease liability | $0.5 million | Future Minimum Lease Payments (in thousands) | Year Ending December 31, (in thousands) | Future Minimum Lease Payments | | :------------------------------------ | :---------------------------- | | 2022 | $275 | | 2023 | $409 | | 2024 | $154 | | 2025 | $159 | | 2026 and beyond | $11 | | Total | $1,008 | | Included interest | $(23) | | Present Value of Lease Payments | $985 | Lease Cash Flow and Terms | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Operating cash flow from operating leases (in thousands) | $309 | $314 | | Weighted Average Remaining Lease Term | 2.49 years | 3.13 years | | Weighted Average Discount Rate | 2.31% | 1.36% | NOTE 18 – COMMITMENTS This note discloses the company's outstanding commitments for contract research and construction activities - As of June 30, 2022, the Company had outstanding commitments of approximately $62.5 million for future work with contract research organizations[135] - A construction contract had outstanding commitments of approximately $8.4 million at June 30, 2022[135] 401(k) Company Contributions (in thousands) | 401(k) Contributions (in thousands) | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :---------------------------------- | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Company Contributions | $115 | $306 | $41 | $111 | NOTE 19 – SUBSEQUENT EVENTS This note reports significant events that occurred after the balance sheet date but before the financial statements were issued - Subsequent to June 30, 2022, the Company sold 9.6 million shares of common stock under the ATM Sales Agreement for net proceeds of approximately $16.2 million[139] - Additionally, 1.8 million shares of common stock were sold under the Purchase Agreement with Lincoln Park for net proceeds of approximately $2.2 million after June 30, 2022[139] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, liquidity, and capital resources, emphasizing its clinical-stage pipeline and funding needs Business Overview This section provides an overview of Tonix Pharmaceuticals' clinical-stage biopharmaceutical focus and key product candidates - Tonix Pharmaceuticals is a clinical-stage biopharmaceutical company developing therapeutics across infectious disease, central nervous system (CNS), rare disease, and immunology[143] - Key infectious disease candidates include TNX-801 (smallpox/monkeypox vaccine, Phase 1 in H1 2023) and TNX-1850 (COVID-19 vaccine, Phase 1 in H2 2023)[143] - Lead CNS candidate TNX-102 SL is in mid-Phase 3 for fibromyalgia (interim data Q1 2023) and entering Phase 2 for Long COVID (Q3 2022) and PTSD (Q3 2022); TNX-1300 (cocaine intoxication) is in mid-Phase 2 with FDA Breakthrough Therapy Designation[143] - The Company operates infectious disease R&D facilities in Frederick, MD, and Dartmouth, MA, expected to be fully functional in Q3 2022[143] Results of Operations This section analyzes the company's research and development, general and administrative expenses, and net loss Operating Expenses and Net Loss – Three Months Ended June 30 (in thousands) | Expense Category (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change (in thousands) | % Change | | :------------------------------ | :------------------------------- | :------------------------------- | :-------------------- | :------- | | Research and Development | $16,579 | $18,133 | $(1,554) | -8.57% | | General and Administrative | $6,757 | $5,429 | $1,328 | 24.46% | | Net Loss | $(23,140) | $(23,553) | $413 | -1.75% | Operating Expenses and Net Loss – Six Months Ended June 30 (in thousands) | Expense Category (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change (in thousands) | % Change | | :------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Research and Development | $35,001 | $33,460 | $1,541 | 4.61% | | General and Administrative | $14,771 | $10,838 | $3,933 | 36.29% | | Net Loss | $(49,557) | $(44,206) | $(5,351) | 12.10% | - The decrease in Q2 2022 R&D expenses was primarily due to decreased clinical ($0.4M), non-clinical ($4.3M), and manufacturing ($0.9M) expenses, partially offset by increased employee-related ($2.2M) and lab supplies ($0.8M)[146] - The increase in YTD 2022 R&D expenses was mainly driven by increased employee-related ($4.1M), regulatory/legal ($0.3M), and lab supplies ($1.0M), partially offset by decreases in non-clinical ($3.3M), clinical ($1.4M), and manufacturing ($0.7M)[151] License Agreements This section discusses various exclusive license agreements for drug candidates and associated financial terms - Tonix entered an exclusive license with the University of Alberta in May 2022 for broad-spectrum antiviral drugs, involving a low-five digit upfront fee and future royalties/milestones[157] - The exclusive license with OyaGen for a SARS-CoV-2 antiviral, initiated in April 2021 with a low-seven digit fee and $3.0 million in common stock, was terminated by Tonix in July 2022, effective September 20, 2022[158][159] - Agreements with Inserm (February 2021) for oxytocin-based therapeutics and Columbia University (September 2019 for TFF2 Technology, May 2019 for cocaine esterase) involve annual fees, single-digit royalties, and contingent milestone payments totaling $0.4 million, $4.1 million, and $3 million respectively[160][161][164][165][169] Asset Purchase Agreements This section details asset acquisitions for various therapeutic technologies and their accounting treatment - Tonix acquired Katana assets for insulin resistance in December 2020 for $0.7 million, expensed as R&D, including an exclusive license from the University of Geneva[170][171] - Trigemina assets for migraine and pain were acquired in June 2020 for $824,759 cash, 62,500 common shares, and $250,241 to Stanford, totaling $2.4 million expensed as R&D, with an exclusive Stanford license[172][173] - TRImaran's pyran-based compound assets were acquired in August 2019 for $100,000 cash and $68,500 in assumed liabilities, expensed as R&D, with potential future milestone payments of $3.4 million and an exclusive WSU license[174][175][176] Liquidity and Capital Resources This section assesses the company's ability to meet short-term obligations and its need for future funding Liquidity Metrics (in thousands) | Metric (in thousands) | June 30, 2022 | December 31, 2021 | | :-------------------- | :------------ | :---------------- | | Working Capital | $144,300 | N/A | | Cash and Cash Equivalents | $145,500 | N/A | | Restricted Cash | $31,500 | N/A | Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(52,217) | $(40,166) | | Net cash used in investing activities | $(34,656) | $(1,934) | | Net cash provided by financing activities | $85,240 | $130,759 | - The Company anticipates its cash resources at June 30, 2022, plus subsequent equity offerings, will meet operating and capital expenditure requirements into Q2 2023, but not beyond, raising substantial doubt about its going concern ability[180][181] - Financing activities included a June 2022 private placement of $28.5 million in convertible redeemable preferred stock (escrowed for redemption) and ongoing sales of common stock through Lincoln Park agreements and At-the-Market (ATM) offerings[187][191][199] Critical Accounting Policies and Estimates This section highlights key accounting policies and estimates that significantly impact the financial statements - Research and Development costs are expensed as incurred, including manufacturing for testing, licensing fees, and clinical trial costs, with acquired intellectual property expensed if no alternative future use[217] - Stock-Based Compensation for employees and nonemployee directors is measured at fair value on the grant date and recognized as compensation expense over the vesting period[219] - Redeemable Convertible Preferred Stock is classified as temporary equity and measured at redemption value due to holder-controlled redemption features[220] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the Company for the reported period - Not applicable[223] ITEM 4. Controls and Procedures This section details management's evaluation of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the reporting date - As of June 30, 2022, management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures are designed at a reasonable assurance level and are effective[225] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter - There were no changes in internal control over financial reporting during the quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[226] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings and equity sales ITEM 1. Legal Proceedings The Company is not currently a party to any material legal proceedings or claims - The Company is not a party to any material legal proceedings or claims as of the reporting date[228] ITEM 1A. Risk Factors This section states that there were no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - No material changes from the risk factors set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021[229] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sale of Series A and Series B Preferred Stock in June 2022 and the intended use of the proceeds - On June 24, 2022, the Company issued 2,500,000 shares of Series A Preferred Stock and 500,000 shares of Series B Preferred Stock in a private placement to institutional investors[231] - The Preferred Stock has an aggregate stated value of $30,000,000, with a purchase price of $9.50 per share[231] - The $28.5 million in gross proceeds from the sale is held in escrow and is expected to be used to fund the redemption of the Preferred Stock in 2022[231] ITEM 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - None[232] ITEM 4. Mine Safety Disclosures The Company reported no mine safety disclosures - None[233] ITEM 5. Other Information The Company reported no other information - None[234] ITEM 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, certifications, and XBRL data files - Exhibits include Securities Purchase Agreement, Registration Rights Agreement, Side Letter, Articles of Incorporation, Bylaws, Certificates of Change/Amendment, Specimen Common Stock Certificates, Description of Securities, CEO/CFO Certifications (Sections 302 and 906), and XBRL Interactive Data Files[235][237] SIGNATURES This section contains the official signatures of the company's principal executive and financial officers - The report is signed by Seth Lederman, Chief Executive Officer, and Bradley Saenger, Chief Financial Officer, on August 8, 2022[241]