SOLIGENIX, INC. [SNGX] Filings

10-Q 1 tmb-20220930x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 001-14778

SOLIGENIX, INC.

(Exact name of registrant as specified in its charter)


DELAWARE		41-1505029
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)



29 EMMONS DRIVE, SUITE B-10 PRINCETON, NJ		08540
(Address of principal executive offices)		(Zip Code)

(609) 538-8200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	SNGX	The Nasdaq Capital Market

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2022, 43,227,288 shares of the registrant’s common stock (par value, $.001 per share) were outstanding.

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SOLIGENIX, INC.

Index

	Description	Page

Part I	FINANCIAL INFORMATION

Item 1	Consolidated Financial Statements
	Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	2
	Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended September 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4	Controls and Procedures	49

Part II	OTHER INFORMATION

Item 1	Legal Proceedings	49
Item 1A	Risk Factors	50
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 6	Exhibits	52

SIGNATURES		53

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PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Soligenix, Inc. and Subsidiaries

Consolidated Balance Sheets


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	16,865,642	$	26,043,897
Licensing, contracts and grants receivable		130,742		138,889
Research and development incentives receivable		100,372		103,832
Prepaid expenses and other current assets		396,355		282,903
Total current assets		17,493,111		26,569,521
Security deposit		22,777		22,777
Office furniture and equipment, net of accumulated depreciation of $111,742 and $167,848		21,505		22,220
Deferred issuance cost		20,266		20,266
Right-of-use lease assets		367,375		106,155
Research and development incentives receivable		22,339		121,238
Other assets		—		7,750
Total assets	$	17,947,373	$	26,869,927

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	4,164,627	$	2,925,544
Accrued expenses		2,235,451		2,956,545
Accrued compensation		59,790		302,936
Lease liabilities, current		106,165		106,151
Convertible debt, current		3,000,000		—
Deferred revenue, current		100,000		—
Total current liabilities		9,666,033		6,291,176
Non-current liabilities:
Convertible debt, net of current portion and debt discount of $112,779 and $143,847		6,887,221		9,856,153
Lease liabilities, net of current portion		262,117		—
Deferred revenue, net of current portion		100,000		—
Total liabilities		16,915,371		16,147,329
Commitments and contingencies
Shareholders’ equity:
Preferred stock, 350,000 shares authorized; none issued or outstanding		—		—
Common stock, $.001 par value; 75,000,000 shares authorized; 43,105,191 shares and 42,873,445 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		43,105		42,873
Additional paid-in capital		216,773,316		216,402,890
Accumulated other comprehensive income		25,472		41,942
Accumulated deficit		(215,809,891)		(205,765,107)
Total shareholders’ equity		1,032,002		10,722,598
Total liabilities and shareholders’ equity	$	17,947,373	$	26,869,927

The accompanying notes are an integral part of these consolidated financial statements.

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Soligenix, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited)


		Three Months Ended			Nine Months Ended
		September 30,			September 30,
	2022		2021		2022		2021
Revenues:
Licensing revenue	$	—	$	—	$	50,000	$	—
Contract revenue		—		—		—		33,351
Grant revenue		166,140		186,198		532,843		515,264
Total revenues		166,140		186,198		582,843		548,615
Cost of revenues		(129,440)		(166,265)		(414,957)		(492,942)
Gross profit		36,700		19,933		167,886		55,673
Operating expenses:
Research and development		1,791,695		2,237,565		5,586,302		5,483,695
General and administrative		1,326,249		1,147,279		5,250,510		3,159,155
Total operating expenses		3,117,944		3,384,844		10,836,812		8,642,850
Loss from operations		(3,081,244)		(3,364,911)		(10,668,926)		(8,587,177)
Other income (expense):
Gain on forgiveness of PPP loan		—		—		—		421,584
Foreign currency transaction loss		(12,613)		(66,967)		(26,006)		(22,384)
Interest expense, net		(215,146)		(227,271)		(641,768)		(676,512)
Research and development incentives		—		40,844		136,981		121,896
Other income (expense)		—		30,754		—		30,754
Total other income (expense)		(227,759)		(222,640)		(530,793)		(124,662)
Net loss before income taxes		(3,309,003)		(3,587,551)		(11,199,719)		(8,711,839)
Income tax benefit		—		—		1,154,935		864,742
Net loss applicable to common stockholders	$	(3,309,003)	$	(3,587,551)	$	(10,044,784)	$	(7,847,097)
Basic and diluted net loss per share	$	(0.08)	$	(0.09)	$	(0.23)	$	(0.20)
Basic and diluted weighted average common shares outstanding		43,083,690		40,697,888		43,005,912		39,210,984

The accompanying notes are an integral part of these consolidated financial statements.

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Soligenix, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net loss	$	(3,309,003)	$	(3,587,551)	$	(10,044,784)	$	(7,847,097)
Other comprehensive loss:
Foreign currency translation adjustments		14,403		81,616		(16,470)		73,895
Comprehensive loss	$	(3,294,600)	$	(3,505,935)	$	(10,061,254)	$	(7,773,202)

The accompanying notes are an integral part of these consolidated financial statements.

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Soligenix, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the Nine Months Ended September 30, 2022 and 2021


						Accumulated
				Additional		Other
	Common Stock			Paid–In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income (Loss)		Deficit		Total
Balance, December 31, 2021	42,873,445	$	42,873	$	216,402,890	$	41,942	$	(205,765,107)	$	10,722,598
Issuance of common stock to vendors	231,746		232		149,770		—		—		150,002
Share-based compensation expense	—		—		220,656		—		—		220,656
Foreign currency translation adjustment	—		—		—		(16,470)		—		(16,470)
Net loss	—		—		—		—		(10,044,784)		(10,044,784)
Balance, September 30, 2022	43,105,191	$	43,105	$	216,773,316	$	25,472	$	(215,809,891)	$	1,032,002


						Accumulated
				Additional		Other
	Common Stock			Paid–In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income (Loss)		Deficit		Total
Balance, December 31, 2020	30,643,656	$	30,644	$	196,949,655	$	(24,337)	$	(193,214,134)	$	3,741,828
Issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement	11,931,513		11,931		19,405,359		—		—		19,417,290
Issuance costs associated with B. Riley At Market Issuance Sales Agreement	—		—		(639,906)		—		—		(639,906)
Issuance of common stock to vendors	25,000		25		27,475		—		—		27,500
Exercise of stock options	30,254		30		25,805		—		—		25,835
Exercise of warrants	13		—		51		—		—		51
Share-based compensation expense	—		—		255,147		—		—		255,147
Foreign currency translation adjustment	—		—		—		73,895		—		73,895
Net loss	—		—		—		—		(7,847,097)		(7,847,097)
Balance, September 30, 2021	42,630,436	$	42,630	$	216,023,586	$	49,558	$	(201,061,231)	$	15,054,543

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Soligenix, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended September 30, 2022 and 2021


						Accumulated
				Additional		Other
	Common Stock			Paid–In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income		Deficit		Total
Balance, June 30, 2022	43,050,245	$	43,050	$	216,652,655	$	11,069	$	(212,500,888)	$	4,205,886
Issuance of common stock to vendors	54,946		55		49,946		—		—		50,001
Share-based compensation expense	—		—		70,715		—		—		70,715
Foreign currency translation adjustment	—		—		—		14,403		—		14,403
Net loss	—		—		—		—		(3,309,003)		(3,309,003)
Balance, September 30, 2022	43,105,191	$	43,105	$	216,773,316	$	25,472	$	(215,809,891)	$	1,032,002


						Accumulated
				Additional		Other
	Common Stock			Paid–In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income (Loss)		Deficit		Total
Balance, June 30, 2021	40,078,760	$	40,079	$	213,061,849	$	(32,058)	$	(197,473,680)	$	15,596,190
Issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement	2,496,422		2,496		2,924,465		—		—		2,926,961
Issuance costs associated with B. Riley At Market Issuance Sales Agreement	—		—		(95,729)		—		—		(95,729)
Issuance of common stock to vendor	25,000		25		27,475		—		—		27,500
Exercise of common stock options	30,254		30		25,805		—		—		25,835
Share-based compensation expense	—		—		79,721		—		—		79,721
Foreign currency translation adjustment	—		—		—		81,616		—		81,616
Net loss	—		—		—		—		(3,587,551)		(3,587,551)
Balance, September 30, 2021	42,630,436	$	42,630	$	216,023,586	$	49,558	$	(201,061,231)	$	15,054,543

The accompanying notes are an integral part of these consolidated financial statements.

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Soligenix, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2022 and 2021

(Unaudited)


	2022		2021
Operating activities:
Net loss	$	(10,044,784)	$	(7,847,097)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		21,538		26,614
Non-cash lease expense		86,326		86,124
Share-based compensation		220,656		255,147
Issuance of common stock to vendors for services		150,002		27,500
Amortization of deferred issuance costs associated with convertible debt		31,068		31,456
Gain on forgiveness of PPP loan		—		(421,584)
Change in operating assets and liabilities:
Licensing, contracts and grants receivable		8,147		159,590
Prepaid expenses and other current assets		(113,452)		(203,619)
Research and development incentives receivable		67,912		258,509
Operating lease liability		(85,415)		(86,124)
Deferred revenue		200,000		—
Accounts payable and accrued expenses		679,268		(154,415)
Accrued compensation		(243,146)		(816,367)
Net cash used in operating activities		(9,021,880)		(8,684,266)

Investing activities:
Purchases of office furniture and equipment		(13,073)		—
Net cash used in investing activities		(13,073)		—

Financing activities:
Proceeds from issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement		—		19,417,290
Costs associated with B. Riley At Market Issuance Sales Agreement		—		(584,334)
Proceeds from the exercise of warrants		—		51
Proceeds from the exercises of stock options		—		25,835
Costs associated with issuance of convertible debt		—		(45,512)
Principal repayment – financing lease		—		(6,149)
Net cash provided by financing activities		—		18,807,181
Effect of exchange rate on cash and cash equivalents		(143,302)		67,909
Net (decrease)/increase in cash and cash equivalents		(9,178,255)		10,190,824
Cash and cash equivalents at beginning of period		26,043,897		18,676,663
Cash and cash equivalents at end of period	$	16,865,642	$	28,867,487
Supplemental information:
Cash paid for state income taxes	$	13,243	$	7,382
Cash paid for interest	$	643,921	$	444,814
Cash paid for lease liabilities:
Operating lease	$	99,975	$	99,975
Financing lease	$	—	$	6,408
Non-cash activities:
Right-of-use assets and lease liabilities recorded	$	347,546	$	—
Deferred issuance cost in accounts payable	$	—	$	22,700
Deferred issuance cost reclassified to additional paid-in capital	$	—	$	55,572

The accompanying notes are an integral part of these consolidated financial statements.

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Soligenix, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Nature of Business

Basis of Presentation

Soligenix, Inc. (the “Company”) is a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. The Company maintains two active business segments: Specialized BioTherapeutics and Public Health Solutions.

The Company’s Specialized BioTherapeutics business segment is developing and moving toward commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic (hypericin), a novel photodynamic therapy (“PDT”) utilizing safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”). With a successful Phase 3 study complete, regulatory approval is being sought and commercialization activities for this product candidate are being advanced initially in the United States (“U.S.”). Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, the Company’s first-in-class innate defense regulator (“IDR”) technology, dusquetide (SGX942) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer, and proprietary formulations of oral beclomethasone 17,21-dipropionate (“BDP”) for the prevention/treatment of gastrointestinal (“GI”) disorders characterized by severe inflammation, including pediatric Crohn’s disease (SGX203).

The Company’s Public Health Solutions business segment includes active development programs for RiVax^®, its ricin toxin vaccine candidate and SGX943, its therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine programs, including a program targeting filoviruses (such as Marburg and Ebola) and a program developing CiVax™, its vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs is currently supported by the heat stabilization platform technology, known as ThermoVax^®. To date, this business segment has been supported with grant and contract funding from the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research and Development Authority (“BARDA”) and the Defense Threat Reduction Agency (“DTRA”).

The Company primarily generates revenues under government grants and contracts principally from the National Institutes of Health (“NIH”). The Company has a subcontract of approximately $700,000 from a NIAID grant over five years for its thermostabilization technology, a DTRA subcontract of approximately $600,000 over three years for SGX943 and a subcontract of approximately $1.5 million from a NIAID grant over two years for development of CiVax™. The Company will continue to apply for additional government funding.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, development of new technological innovations, dependence on key personnel, protections of proprietary technology, compliance with the FDA regulations, and other regulatory authorities, litigation, and product liability.

Results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may be expected for the full year.

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Liquidity

In accordance with Accounting Standards Codification 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. As of September 30, 2022, the Company had an accumulated deficit of $215,809,891. During the nine months ended September 30, 2022, the Company incurred a net loss of $10,044,784 and used $9,021,880 of cash in operating activities. The Company expects to continue to generate losses in the foreseeable future. The Company’s liquidity needs will be determined largely by the budgeted operational expenditures incurred in regards to the progression of its product candidates. The Company’s plans to meet its liquidity needs primarily include its ability to control the timing and spending on its research and development programs and raising additional funds through potential partnerships and/or financings. Based on the Company’s approved operating budget, current rate of cash outflows, cash on hand, proceeds from government contract and grant programs, and proceeds available from the sale of shares of the Company’s common stock via the At Market Issuance Sales Agreement (“B. Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”), management believes that its current cash will be sufficient to meet the anticipated cash needs for working capital and capital expenditures for at least the next twelve months from issuance of these financial statements.

As of September 30, 2022, the Company had cash and cash equivalents of $16,865,642 as compared to $26,043,897 as of December 31, 2021, representing a decrease of $9,178,255 or 35%. As of September 30, 2022, the Company had working capital of $7,827,078 as compared to working capital of $20,278,345 as of December 31, 2021, representing a decrease of $12,451,267 or 61%. The decrease in cash and cash equivalents and working capital was primarily related to cash used in operating activities.

Management’s business strategy can be outlined as follows:

●

Following positive primary endpoint results for the Phase 3 FLASH (Florescent Light Activated Synthetic Hypericin) clinical trial of HyBryte™ in CTCL as well as further statistically significant improvement in response rates with longer treatment (18 weeks compared to 12 and 6 weeks of treatment), pursue a New Drug Application (“NDA”) filing and commercialization in the U.S. while continuing to explore ex-U.S. partnership.

●

Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.

●

Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency (“MHRA”) that a second Phase 3 clinical trial of SGX942 in the treatment in oral mucositis would be required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to continue this development program.

●

Continue development of the Company’s heat stabilization platform technology, ThermoVax^®, in combination with its programs for RiVax^® (ricin toxin vaccine), CiVax™ (COVID-19 vaccine) and filovirus vaccines for Ebola, Sudan, and Marburg Viruses, with U.S. government funding support.

●

Continue to apply for and secure additional government funding for each of the Company’s Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements.

●

Pursue business development opportunities for the Company’s pipeline programs, as well as explore merger/acquisition strategies.

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●

Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development.

The Company’s plans with respect to its liquidity management include, but are not limited to, the following:

●

The Company has up to $0.8 million in active government grant funding still available as of September 30, 2022 to support its associated research programs through March 2023, provided the federal agencies do not elect to terminate the grants for convenience. The Company plans to submit additional contract and grant applications for further support of its programs with various funding agencies. However, there can be no assurance that the Company will obtain additional governmental grant funding.

●

The Company has continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expects to continue to do so for the foreseeable future.

●

The Company will continue to pursue Net Operating Loss (“NOL”) sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if available.

●

The Company plans to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that the Company can consummate such transactions.

●

The Company has up to $26.7 million remaining from the B. Riley Sales Agreement as of November 3, 2022 under the prospectus supplement updated August 13, 2021.

●

The Company may seek additional capital in the private and/or public equity markets, to continue its operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. The Company is evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include Soligenix, Inc., and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated as a result of consolidation.

Reclassifications

Certain amounts in the statement of operations for the three and nine months ended September 30, 2021 have been reclassified to conform to the current year presentation.

Operating Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. The Company divides its operations into two operating segments: Specialized BioTherapeutics and Public Health Solutions.

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Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Licensing, Contracts and Grants Receivable

Contracts and grants receivable consist of amounts due from various grants from the NIH and contracts from NIAID, an institute of NIH, for costs incurred prior to the period end under reimbursement contracts. The amounts were billed to the respective governmental agencies in the month subsequent to period end and collected shortly thereafter. Accordingly, no allowance for doubtful accounts has been established. If amounts become uncollectible, they are charged to operations.

Licensing receivables consist of amounts billed to customers pursuant to contracts with those customers. No allowance for doubtful accounts has been established for licensing receivables as all amounts billed were collected shortly thereafter.

Impairment of Long-Lived Assets

Office furniture and equipment, right of use assets and website development costs with finite lives are evaluated and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to such assets. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and the carrying value of the related asset or group of assets. Such analyses necessarily involve significant judgment.

The Company did not record any impairment of long-lived assets for the three and nine months ended September 30, 2022 and 2021.

Fair Value of Financial Instruments

FASB ASC 820 — Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on September 30, 2022. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

●

Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

●

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models

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or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

●

Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, licensing, contracts and/or grants receivable, research and development incentives receivable, accounts payable, accrued expenses, and accrued compensation approximate their fair value based on the short-term maturity of these instruments.

The carrying amount reported in the consolidated balance sheets for convertible debt approximates its fair value based on its interest rate and maturity date.

Revenue Recognition

The Company’s revenues include revenues generated from government contracts and grants. The revenue from government contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These revenues are recognized when expenses have been incurred by subcontractors or when the Company incurs reimbursable internal expenses that are related to the government contracts and grants.

The Company also records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606 (“ASC 606”), Revenue From Contracts with Customers. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties are classified as license revenues. Sales-based royalties under the Company’s license agreements would be recognized as royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue.

Research and Development Costs

Research and development costs are charged to expense when incurred in accordance with FASB ASC 730, Research and Development. Research and development includes costs such as clinical trial expenses,

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contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, equipment depreciation and allocation of various corporate costs.

Share-Based Compensation

Stock options are issued with an exercise price equal to the market price on the date of grant. Stock options issued to directors upon re-election vest quarterly for a period of one year (new director issuances are fully vested upon issuance). Stock options issued to employees generally vest 25% on the grant date, then 25% each subsequent year for a period of three years. These options have a ten year life for as long as the individuals remain employees or directors. In general, when an employee or director terminates their position, the options will expire within three months, unless otherwise extended by the Board.

From time to time, the Company issues restricted shares of common stock to vendors and consultants as compensation for services performed under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of stock options, restricted stock, deferred stock and unrestricted stock to the Company’s employees and non-employees (including consultants). The shares issued under the 2015 Plan are registered on Form S-8 (SEC File No. 333-208515). However, as shares of common stock are not covered by a reoffer prospectus, the certificates reflecting such shares reflect a Securities Act of 1933, as amended restrictive legend. Stock compensation expense for equity-classified awards to non-employees is measured on the date of grant and is recognized when the services are performed.

The fair value of options issued during the nine months ended September 30, 2022 and 2021 was estimated using the Black-Scholes option-pricing model and the following assumptions:

●

a dividend yield of 0%;

●

an expected life of 4 years;

●

volatility of 87% for 2022 and 85% - 87% for 2021; and

●

risk free interest rates ranging from 1.12% - 3.23% for 2022 and 0.27% - 0.67% for 2021.

The fair value of each option grant made during the nine months ended September 30, 2022 and 2021 was estimated on the date of each grant and recognized as share-based compensation expense ratably over the option vesting periods, which approximates the service period.

Foreign Currency Transactions and Translation

In 2018, the Company changed the status of a wholly-owned subsidiary in the UK from inactive to active and incurred expenditures in multiple currencies including the U.S. dollar, the British Pound and the Euro to fund its clinical trial operations in the UK and select countries in Europe. In accordance with FASB ASC 830 Foreign Currency Matters, the UK subsidiary expresses its U.S. dollar and Euro denominated transactions in its functional currency, the British Pound, with related transaction gains or losses included in net loss. On a quarterly basis, the financial statements of the UK subsidiary are translated into U.S. dollars and consolidated into the Company’s financials, with related translation adjustments reported as a cumulative translation adjustment (“CTA”), which is a component of accumulated other comprehensive loss. During the three months ended September 30, 2022 and 2021, the Company recognized a foreign currency transaction loss of ($12,613) and ($66,967), respectively, in the accompanying consolidated statements of operations. During the nine months ended September 30, 2022 and 2021, the Company recognized a foreign currency transaction loss of ($26,006) and ($22,384), respectively, in the accompanying consolidated statements of operations.

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Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence is considered, including the Company’s current and past performance, the market environment in which the Company operates, the utilization of past tax credits, and the length of carryback and carryforward periods. Deferred tax assets and liabilities are measured utilizing tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognized an income tax benefit of $1,154,935 and $864,742 from the sale of New Jersey NOL carryforwards during the nine months ended September 30, 2022 and 2021, respectively. The Company recognizes accrued interest and penalties associated with uncertain tax positions, if any, as part of income tax expense. There were no tax related interest and penalties recorded for the nine months ended September 30, 2022 and 2021. Additionally, the Company has not recorded an asset for unrecognized tax benefits or a liability for uncertain tax positions at September 30, 2022 or December 31, 2021.

Research and Development Incentive Income and Receivable

The Company recognizes other income from UK research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The small or medium sized enterprise (“SME”) research and development tax relief program supports companies that seek to research and develop an advance in their field and is governed through legislative law by HM Revenue & Customs as long as specific eligibility criteria are met.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the SME research and development tax relief program described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time. As the tax incentives may be received without regard to an entity’s actual tax liability, they are not subject to accounting for income taxes. As a result, amounts realized under the SME research and development tax relief program are recorded as a component of other income.

The research and development incentive receivable represents an amount due in connection with the above-described tax relief program. The Company has recorded a research and development incentive receivable of approximately $123,000 and $225,000 as of September 30, 2022 and December 31, 2021, respectively, in the consolidated balance sheets.

The following table shows the change in the UK research and development incentives receivable from December 31, 2021 to September 30, 2022:


	Current		Long-Term		Total
Balance at December 31, 2021	$	103,832	$	121,238	$	225,070
UK research and development incentives, transfer		121,238		(121,238)		—
UK research and development incentives		—		29,075		29,075
Additional 2020 incentive earned		107,906		—		107,906
UK research and development incentives cash receipt		(209,166)		—		(209,166)
Foreign currency translation		(23,438)		(6,736)		(30,174)
Balance at September 30, 2022	$	100,372	$	22,339	$	122,711

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Loss Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing loss applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. Since there is a significant number of options and warrants outstanding, fluctuations in the actual market price can have a variety of results for each period presented.

The following table summarizes potentially dilutive adjustments to the number of common shares which were excluded from the diluted calculation because their effect would be anti-dilutive due to the losses in each period:


	As of September 30,
	2022	2021
Common stock purchase warrants	59,872	5,731,464
Stock options	2,183,406	1,996,890
Convertible debt	2,439,024	4,878,048
Total	4,682,302	12,606,402

The weighted average exercise price of the Company’s warrants and stock options outstanding at September 30, 2022 were $2.41 and $2.30 per share, respectively, and at September 30, 2021 were $2.96 and $2.70 per share, respectively. 2,403,385 of the Company’s common stock warrants associated with the December 2016 public offering expired on December 15, 2021 and 3,268,200 of the Company’s common stock warrants associated with the July 2018 public offering expired on January 2, 2022.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions such as the fair value of warrants and stock options and to accrue for clinical trials in process that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

Note 3. Leases

The Company classifies a lease for its office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey as an operating lease, and recorded a related right-of-use lease asset and lease liability accordingly. Pursuant to an amendment executed on June 21, 2022, the lease has been extended to October 2025. The current rent of $11,108 per month will be maintained until November 2023 when it will be increased to $11,367 and then will increase to $11,625 in November 2024 where it will remain until expiration. As of September 30, 2022 and December 31, 2021, the Company’s consolidated balance sheets included a right-of-use lease asset of $367,375 and $106,155 for the office space, respectively. The Company’s consolidated balance sheets as of September 30, 2022 and December 31, 2021 included corresponding lease liabilities of $368,282 and $106,151 for the office space, respectively.

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The following represents a reconciliation of contractual lease cash flows to the right-of-use lease asset and liability recognized in the financial statements:


	Operating
	Lease
Right-of-use lease asset:
Right-of-use lease asset, January 1, 2022	$	106,155
New lease extension June 21, 2022		347,546
Reduction/amortization		(86,326)
Right of use lease asset, September 30, 2022	$	367,375

Lease liability:
Lease liability, January 1, 2022	$	106,151
New lease extension June 21, 2022		347,546
Repayments		(85,415)
Lease liability, September 30, 2022	$	368,282

Lease expense for the nine months ended September 30, 2022:
Lease expense	$	100,887
Total	$	100,887

Lease expense for the nine months ended September 30, 2021:
Lease expense	$	99,975
Total	$	99,975

Contractual cash payments for the remaining lease term as of September 30, 2022:
2022	$	33,325
2023		133,817
2024		136,917
2025		116,250
Total	$	420,309
Remaining lease term (months) as of September 30, 2022		37

Note 4. Accrued Expenses

The following is a summary of the Company’s accrued expenses:


	September 30,		December 31,
	2022		2021
Clinical trial expenses	$	1,913,221	$	2,625,779
Other		322,230		330,766
Total	$	2,235,451	$	2,956,545

Note 5. Debt

In December 2020, the Company entered into a $20 million convertible debt financing agreement with Pontifax Medison Debt Financing (“Pontifax”), the healthcare-dedicated venture and debt fund of the Pontifax life science funds. Under the terms of the agreement with Pontifax, the Company had access to up to $20 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and have an interest-only period for the first two years with an interest rate of 8.47% on borrowed amounts and an interest rate of 1% on amounts available but not borrowed as an unused line of credit fee. After the interest-only period, the outstanding principal is to be repaid in quarterly payments of $1 million each commencing in the first quarter of 2023. The agreement is secured by a lien covering substantially all of the Company’s assets, other than intellectual property. The agreement contains customary representations, warranties and covenants, including

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covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. Affirmative covenants include, among others, covenants requiring the Company to protect and maintain its intellectual property and comply with all applicable laws, deliver certain financial reports, maintain a minimum cash balance and maintain its insurance coverage.

Upon the closing of this transaction, the Company accessed the first tranche of $10 million, had the option to draw the second tranche of $5 million at any time during the initial 12 months of the loan and the third tranche of $5 million upon filing of the HyBryte™ NDA, subject to certain conditions. The Company elected to let the options to borrow both the second and third tranches expire as of December 15, 2021 and March 15, 2022, respectively.

Interest expense incurred during the three months ended September 30, 2022 and 2021 was $213,490 and $226,093, respectively. Interest expense incurred during the nine months ended September 30, 2022 and 2021 was $633,510 and $670,907, respectively.

Pontifax may elect to convert the outstanding loan drawn into shares of the Company’s common stock at any time prior to repayment at a conversion price of $4.10 per share. The Company also has the ability to force the conversion of the loan into shares of the Company’s common stock at the same conversion price, subject to certain conditions.

Annual principal and interest payments due, assuming no conversion is as follows:


Year	Principal		Interest		Total
2022	$	—	$	213,490	$	213,490
2023		4,000,000		719,138		4,719,138
2024		4,000,000		380,338		4,380,338
2025		2,000,000		60,566		2,060,566
Total	$	10,000,000	$	1,373,532	$	11,373,532

Note 6. Income Taxes

The Company had gross NOLs at December 31, 2021 of approximately $123.8 million for federal tax purposes, approximately $25.2 million for state tax purposes and approximately $1.4 million for foreign tax purposes. Federal losses generated in 2018 or later will carry forward indefinitely. In addition, the Company has approximately $8.6 million of various tax credits, which the Company may be able to utilize to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carryforwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is likely that the utilization of the NOLs may be substantially limited.

The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. During 2021 and 2020, in accordance with the State of New Jersey’s Technology Business Tax Certificate Program, which allowed certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers, the Company sold New Jersey NOL carryforwards, resulting in the recognition of $1,154,935 and $864,742 of income tax benefit, net of transaction costs, during the nine months ended September 30, 2022 and 2021, respectively. The Company has not yet sold its 2021 New Jersey NOLs but may be able to do so in the future. There can be no assurance as to the continuation or magnitude of this program in the future.

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Note 7. Shareholders’ Equity

Preferred Stock

The Company has 350,000 shares of preferred stock authorized, none of which are issued or outstanding.

Common Stock

The following items represent transactions in the Company’s common stock for the nine months ended September 30, 2022:

●

The Company issued a vendor 80,646 shares of fully vested common stock with a fair value of $0.62 per share on February 7, 2022.

●

The Company issued a vendor 96,154 shares of fully vested common stock with a fair value of $0.52 per share on May 6, 2022.

●

The Company issued a vendor 54,946 shares of fully vested common stock with a fair value of $0.91 per share on August 5, 2022.

The issuance of the Company’s common stock to the vendor as described above was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. The vendor is knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about the Company or had adequate access to information about the Company. The vendor represented to the Company that the vendor is not a “consultant” for purposes of Nasdaq Listing Rule 5635(c).

B. Riley At Market Issuance Sales Agreement

In August 2017, the Company entered into the B. Riley Sales Agreement to sell shares of the Company’s common stock from time to time, through an “at-the-market” equity offering program under which B. Riley acts as sales agent. Under the B. Riley Sales Agreement, the Company sets the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales may be requested to be made, limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. The B. Riley Sales Agreement provides that B. Riley is entitled to compensation for its services in an amount equal to 3% of the gross proceeds from the sale of shares sold under the B. Riley Sale Agreement. The Company has no obligation to sell any shares under the B. Riley Sales Agreement, and may suspend solicitation and offers under the B. Riley Sales Agreement at any time. The B. Riley Sales Agreement expires on December 31, 2023.

On August 13, 2021, the Company filed a prospectus supplement relating to the B. Riley Sales Agreement to offer and sell shares of Company common stock having an aggregate offering price of up to $30 million under the July 2020 Registration Statement. As of November 3, 2022, there was $26.7 million available for future sale of common stock under the B. Riley Sales Agreement.

Note 8. Concentrations

At September 30, 2022 and 2021, the Company had deposits in major financial institutions that exceeded the amount under protection by the Federal Deposit Insurance Corporation (“FDIC”). Currently, the Company is covered up to $250,000 by the FDIC and at times maintains cash balances in excess of the FDIC coverage.

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Note 9. Commitments and Contingencies

Contractual Obligations

The Company has commitments of approximately $255,000 as of September 30, 2022 over the next five years for several licensing agreements with partners and universities. Additionally, the Company has collaboration and license agreements, which upon clinical or commercialization success, may require the payment of milestones of up to approximately $13.2 million, royalties on net sales of covered products ranging from 2% to 3%, sub-license Investigational New Drug (“IND”) milestones on covered products of up to approximately $200,000, sub-license income royalties on covered products up to 15% and sub-license global net sales royalties on covered products ranging from 1.5% to 2.5%, if and when achieved. However, there can be no assurance that clinical or commercialization success will occur.

The Company currently leases approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey. This office space currently serves as the Company’s corporate headquarters, and both of the Company’s business segments (Specialized BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025.

In September 2014, the Company entered into an asset purchase agreement with Hy Biopharma Inc. (“Hy Biopharma”) pursuant to which the Company acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin product. As consideration for the assets acquired, the Company paid $275,000 in cash and issued 184,912 shares of common stock with a fair value based on the Company’s stock price on the date of grant of $3.75 million. These amounts were charged to research and development expense during the third quarter of 2014 as the assets will be used in the Company’s research and development activities and do not have alternative future use pursuant to generally accepted accounting principles in the U.S. In March 2020, the Company issued 1,956,182 shares of common stock to Hy Biopharma as payment for achieving a milestone: the Company determining the Phase 3 clinical trial of HyBryte™ to be successful in the treatment of CTCL. The number of shares of common stock issued to Hy Biopharma was calculated using an effective price of $2.56 per share, based upon a formula set forth in the purchase agreement.

Provided the sole remaining future success-oriented milestone is attained, the Company will be required to make an additional payment of $5.0 million, if and when achieved. Such payment will be payable in restricted securities of the Company provided such number of shares does not exceed 19.9% ownership of the Company’s outstanding stock. As of September 30, 2022, no other milestone or royalty payments have been paid or accrued.

As a result of the above agreements, the Company has the following contractual obligations:


	Research and		Property and
Year	Development		Other Leases		Total
October 1 through December 31, 2022	$	21,000	$	33,325	$	54,325
2023		96,000

SOLIGENIX, INC. [SNGX] Filings
10-Q	[2022-11-10]
10-Q	[2022-08-12]
10-Q	[2022-05-13]
10-K	[2022-03-29]
10-Q	[2021-11-12]
10-Q	[2021-08-13]
10-Q	[2021-05-18]
10-K	[2021-03-30]
10-Q	[2020-11-12]
10-Q	[2020-08-14]
10-Q	[2020-05-15]
10-K	[2020-03-30]
10-Q	[2019-11-12]
10-Q	[2019-08-13]
10-Q	[2019-05-14]
10-K	[2019-03-26]
10-Q	[2018-11-09]
10-Q	[2018-08-08]
S-1	[2018-05-25]
10-Q	[2018-05-11]
10-K	[2018-03-15]
S-1	[2017-11-20]
10-Q	[2017-11-06]
10-Q	[2017-08-11]
10-Q	[2017-05-11]
10-K	[2017-03-27]
10-Q	[2016-11-10]
S-1	[2016-10-07]
10-Q	[2016-08-11]
10-Q	[2016-05-12]
S-1	[2016-04-08]
10-K	[2016-03-24]
10-Q	[2015-11-12]
10-Q	[2015-08-12]
S-1	[2015-08-03]
10-Q	[2015-05-14]
10-K	[2015-03-25]
10-Q	[2014-11-10]
S-1	[2014-10-31]
S-1	[2014-09-30]
10-Q	[2014-08-11]
10-Q	[2014-05-12]
10-K	[2014-03-26]
S-1	[2013-12-17]
10-Q	[2013-11-12]
10-Q	[2013-08-12]
10-Q	[2013-05-03]
10-K	[2013-02-26]
10-Q	[2012-11-14]
S-1	[2012-11-05]
10-Q	[2012-08-10]
10-Q	[2012-05-14]
10-K	[2012-03-27]