Tonix Pharmaceuticals (TNXP) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Tonix Pharmaceuticals reported a net loss of $26.4 million for Q1 2022, with assets decreasing and going concern uncertainty due to limited cash Condensed Consolidated Balance Sheets The balance sheet highlights a decrease in total assets and cash, alongside a reduction in total liabilities and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $140,435 | $178,660 | | Total current assets | $152,989 | $189,049 | | Property and equipment, net | $69,588 | $50,558 | | Total assets | $223,716 | $240,900 | | Liabilities & Equity | | | | Total current liabilities | $15,354 | $21,716 | | Total liabilities | $15,759 | $22,183 | | Total stockholders' equity | $207,957 | $218,717 | | Total liabilities and stockholders' equity | $223,716 | $240,900 | Condensed Consolidated Statements of Operations The statement of operations shows an increased operating and net loss for Q1 2022 compared to the prior year, driven by higher expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Account | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $18,422 | $15,327 | | General and administrative | $8,014 | $5,409 | | Operating loss | ($26,436) | ($20,736) | | Net loss | ($26,417) | ($20,653) | | Net loss per common share, basic and diluted | ($0.05) | ($0.07) | Condensed Consolidated Statements of Cash Flows Cash flow statements indicate increased cash usage in operating and investing activities, with significantly reduced financing proceeds Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($31,046) | ($21,058) | | Net cash used in investing activities | ($20,217) | ($505) | | Net cash provided by financing activities | $13,063 | $108,710 | | Net (decrease) increase in cash | ($38,225) | $87,146 | Notes to Condensed Consolidated Financial Statements Notes detail the company's clinical-stage status, going concern uncertainty, facility investments, equity financing, and contractual commitments - The company is a clinical-stage biopharmaceutical firm with all drug candidates still in development and a history of recurring losses and negative cash flows[20][22] - There is substantial doubt about the company's ability to continue as a going concern, with cash resources expected to meet requirements only through the end of 2022[23][24] - Property and equipment, net, increased to $69.6 million from $50.6 million, largely due to ongoing construction and development of facilities[49][51][52] - In Q1 2022, the company sold 22.0 million shares to Lincoln Park for $4.5 million and 34.5 million shares via its ATM offering for $8.5 million[89][93] - As of March 31, 2022, the company had outstanding commitments of approximately $62.7 million for contract research organizations and $18.1 million for construction contracts[115] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's therapeutic development focus, increased Q1 2022 net loss to $26.4 million due to rising expenses, and critical liquidity issues raising going concern doubts Business Overview The company is a clinical-stage biopharmaceutical firm focused on CNS, rare disease, immunology, and infectious disease candidates, including key Phase 2/3 programs - Tonix is a clinical-stage biopharmaceutical company with a portfolio of candidates for central nervous system (CNS), rare disease, immunology, and infectious disease[122] - Key CNS programs include TNX-102 SL for fibromyalgia (Phase 3) and Long COVID (Phase 2), TNX-1300 for cocaine intoxication (Phase 2), and TNX-1900 for chronic migraine (Phase 2)[122] - The infectious disease pipeline includes vaccines for smallpox/monkeypox (TNX-801) and COVID-19 (TNX-1840/1850), while development of the TNX-2100 diagnostic skin test in the US has been terminated[122] Results of Operations Net loss increased by 28% to $26.4 million in Q1 2022, driven by significant rises in R&D and G&A expenses - Net loss increased by 28% to $26.4 million in Q1 2022, compared to $20.7 million in Q1 2021[129] - Research and Development (R&D) expenses increased by 20% to $18.4 million in Q1 2022 from $15.3 million in Q1 2021, mainly due to higher non-clinical and employee-related expenses[125] - General and Administrative (G&A) expenses rose 48% to $8.0 million in Q1 2022 from $5.4 million in Q1 2021, driven by increased employee-related, legal, and financial reporting costs[128] Direct R&D Expenses by Program (in thousands) | Program | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | TNX - 102 SL | $3,523 | $4,587 | ($1,064) | | TNX - 1300 | $1,343 | $3,060 | ($1,717) | | TNX - 1800 | $2,976 | $2,416 | $560 | | TNX - 1500 | $1,852 | $1,176 | $676 | | Other programs | $3,336 | $1,859 | $1,477 | | Internal staffing, overhead and other | $5,128 | $2,229 | $2,899 | | Total R&D | $18,422 | $15,327 | $3,095 | Liquidity and Capital Resources The company's liquidity is critical, with $140.4 million cash expected to last only through 2022, raising substantial doubt about its going concern ability - As of March 31, 2022, the company had working capital of $137.6 million, including $140.4 million in cash and cash equivalents[151] - The company believes its cash resources will only meet operating and capital expenditure requirements through the end of 2022, raising substantial doubt about its ability to continue as a going concern[153][154] - Net cash used in operating activities increased to $31.1 million in Q1 2022 from $21.1 million in Q1 2021, while net cash from financing activities decreased significantly to $13.1 million from $108.7 million[152] - The company will need to obtain additional capital to fund future R&D, and if financing is unavailable, it may be forced to delay, reduce, or eliminate research programs[157][158] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not applicable to the company - The company states that this item is not applicable[184] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, and reported in a timely manner[186] - No changes occurred during the quarter ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[187] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings or claims - As of the filing date, the company is not a party to any material legal proceedings[189] Item 1A. Risk Factors There have been no material changes from 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 were reported from the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2021[190] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[191]