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What changed in SOLIGENIX, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SOLIGENIX, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+341 added−332 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-31)

Top changes in SOLIGENIX, INC.'s 2023 10-K

341 paragraphs added · 332 removed · 243 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

115 edited+46 added−46 removed241 unchanged
Biggest changeOur principal executive offices are located at 29 Emmons Drive, Suite B-10, Princeton, New Jersey 08540 and our telephone number is (609) 538-8200. 2 Table of Contents Our Product Candidates in Development The following tables summarize our product candidates under development: Specialized BioTherapeutics Product Candidates* Soligenix Product Candidate Therapeutic Indication Stage of Development HyBryte™ ​ Cutaneous T-Cell Lymphoma ​ Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and October 2020 (Cycle 3); NDA submitted December 2022; FDA RTF letter received February 2023; Prepare for Type A meeting with the FDA ​ ​ ​ ​ ​ SGX302 ​ Mild-to-Moderate Psoriasis ​ Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug (“IND”) clearance received from the FDA; Phase 2a study initiated December 2022 ​ ​ ​ ​ ​ SGX942 ​ Oral Mucositis in Head and Neck Cancer ​ Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: the primary endpoint of median duration of severe oral mucositis (“SOM”) did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyze full dataset from Phase 3 study and design a second Phase 3 clinical trial; continued development contingent upon identification of partnership ​ ​ ​ ​ ​ SGX203 † ​ Pediatric Crohn’s disease ​ Phase 1/2 clinical trial completed; efficacy data, pharmacokinetic(PK)/ pharmacodynamic (PD) profile and safety profile demonstrated; Phase 3 clinical trial initiation contingent upon additional funding, such as through partnership ​ ​ ​ ​ ​ ​ ​ 3 Table of Contents Public Health Solutions*† ​ ​ ​ ​ ​ ThermoVax ® Thermostability of vaccines for Ricin toxin, Ebola, Marburg and SARS- CoV-2 (COVID-19) viruses Pre-clinical ​ ​ ​ ​ ​ RiVa x ® ​ Vaccine against Ricin Toxin Poisoning ​ Phase 1a and 1b trials completed, safety and neutralizing antibodies for protection demonstrated; Phase 1c trial initiated December 2019, closed January 2020 ​ ​ ​ ​ ​ SGX943 ​ Therapeutic against Emerging Infectious Diseases ​ Pre-clinical ​ ​ ​ ​ ​ CiVax ™ ​ Vaccine against COVID-19 ​ Pre-clinical * Timelines subject to potential disruption due to COVID-19 outbreak. † Contingent upon continued government contract/grant funding or other funding source.
Biggest changeOur Product Candidates in Development The following tables summarize our product candidates under development: Specialized BioTherapeutics Product Candidates ​ Soligenix Product Candidate Therapeutic Indication Stage of Development HyBryte™ ​ Cutaneous T-Cell Lymphoma ​ Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and October 2020 (Cycle 3); NDA submitted December 2022; FDA RTF letter received February 2023; Type A meeting with the FDA convened April 2023, in which the FDA determined that a second positive Phase 3 study would be required to support a NDA submission; actively engaged in formal protocol discussions with both the FDA and the EMA to define the protocol for, and evaluate feasibility of conducting, an additional Phase 3 clinical trial (as requested 2 Table of Contents Soligenix Product Candidate Therapeutic Indication Stage of Development by the FDA); final outcome of discussions anticipated in the first half of 2024 ​ ​ ​ ​ ​ SGX302 ​ Mild-to-Moderate Psoriasis ​ Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug (“IND”) clearance received from the FDA; Phase 2a study remains ongoing having demonstrated biological effect in Cohort 1 and clinically meaningful benefit in Cohort 2 ​ ​ ​ ​ ​ SGX942 † ​ Oral Mucositis in Head and Neck Cancer ​ Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: the primary endpoint of median duration of severe oral mucositis (“SOM”) did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyzed full dataset from Phase 3 study and designing a second Phase 3 clinical trial; continued development contingent upon identification of partnership ​ ​ ​ ​ ​ SGX945 ​ Aphthous Ulcers in Behçet’s Disease ​ Phase 2a protocol and IND clearance received from the FDA; Phase 2a study to be initiated in the second half of 2024 ​ Public Health Solutions† Soligenix Product Candidate ​ Indication ​ Stage of Development ThermoVax ® Thermostability of vaccines for Ricin toxin, Ebola, and Marburg viruses Pre-clinical ​ ​ ​ ​ ​ RiVa x ® ​ Vaccine against Ricin Toxin Poisoning ​ Phase 1a, 1b, and 1c trials completed, safety and neutralizing antibodies for protection demonstrated ​ ​ ​ ​ ​ SGX943 ​ Therapeutic against Emerging Infectious Diseases ​ Pre-clinical ​ ​ ​ ​ ​ † Contingent upon continued government contract/grant funding or other funding source.
The Innovation Passport designation is the first step in the ILAP process and triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and development milestones with the goal of early patient access in the UK.
The Innovation Passport designation is the first step in the ILAP process and triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and development milestones with the goal of early patient access in the UK.
In exchange for exclusive rights, SciClone will pay us royalties on net sales, and we will supply commercial drug product to SciClone on a cost-plus basis, while maintaining worldwide manufacturing rights.
In exchange for exclusive rights, SciClone will pay us royalties on net sales, and we will supply commercial drug product to SciClone on a cost-plus basis, while maintaining worldwide manufacturing rights.
After negotiating with the UC, we and the UC agreed to extend the termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat stabilization technology in our field of use.
After negotiating with the UC, we and the UC agreed to extend the termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat stabilization technology in our field of use.
We paid a $100,000 sublicense fee on the effective date of the sublicense agreement.
We paid a $100,000 sublicense fee on the effective date of the sublicense agreement.
In addition, we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical trial of the sublicensed product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000 upon regulatory approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a sublicensed product in the U.S. or equivalent.
In addition, we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical trial of the sublicensed product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000 upon regulatory approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a sublicensed product in the U.S. or equivalent.
Based on the positive and previously published Phase 2 results (Study IDR-OM-01), in July 2017, we initiated a pivotal Phase 3 clinical trial referred to as the “DOM–INNATE” ( D usquetide treatment in O ral M ucositis – by modulating INNATE immunity) study. Approximately 50 U.S. and European oncology centers participated in this trial.
Based on the positive and previously published Phase 2 results (Study IDR-OM-01), in July 2017, we initiated a Phase 3 clinical trial referred to as the “DOM–INNATE” ( D usquetide treatment in O ral M ucositis – by modulating INNATE immunity) study. Approximately 50 U.S. and European oncology centers participated in this trial.
Dusquetide binds to p62 or SQSTM-1, a scaffold protein implicated in a number of intracellular signaling networks implicated in tumor cell survival, including autophagy. This recent publication elaborates on the direct interaction of dusquetide with p62, as well as some of the direct downstream consequences of that interaction, consistent with its observed anti-infective, anti-tumor and anti-inflammatory activities.
Dusquetide binds to p62 or SQSTM-1, a scaffold protein implicated in a number of intracellular signaling networks implicated in tumor cell survival, including autophagy. This publication elaborates on the direct interaction of dusquetide with p62, as well as some of the direct downstream consequences of that interaction, consistent with its observed anti-infective, anti-tumor and anti-inflammatory activities.
In September 2021, following the validation of synthetic hypericin’s biologic activity in the positive pivotal Phase 3 FLASH study in CTCL, as well as positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients, we decided to expand this novel therapy into a Phase 2a clinical trial in mild-to-moderate psoriasis.
In September 2021, following the validation of synthetic hypericin’s biologic activity in the positive Phase 3 FLASH study in CTCL, as well as positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients, we decided to expand this novel therapy into a Phase 2a clinical trial in mild-to-moderate psoriasis.
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin), a novel photodynamic therapy (“PDT”), utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy (“PDT”), utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
Our Public Health Solutions business segment includes active development programs for RiVax ® , our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2).
Our Public Health Solutions business segment includes development programs for RiVax ® , our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2).
This trial, referred to as the “FLASH” ( F luorescent L ight A ctivated S ynthetic H ypericin) study, aimed to evaluate the response to HyBryte™ as a skin directed therapy to treat early stage CTCL. We completed the study with approximately 35 CTCL centers across the U.S. participating in this pivotal trial.
This trial, referred to as the “FLASH” ( F luorescent L ight A ctivated S ynthetic H ypericin) study, aimed to evaluate the response to HyBryte™ as a skin directed therapy to treat early stage CTCL. We completed the study with approximately 35 CTCL centers across the U.S. participating in this trial.
We estimate the potential worldwide market for SGX302 to be in excess of $1 billion for the treatment of mild-to-moderate psoriasis. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement.
We estimate the potential worldwide market for SGX302 is in excess of $1 billion for the treatment of mild-to-moderate psoriasis. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement.
For instance, we were eligible to submit an NDA for HyBryte™ on a rolling basis, permitting the FDA to review sections of the NDA prior to receiving the complete submission. Additionally, NDAs for Fast Track development programs ordinarily will be eligible for priority review.
For instance, we were eligible to submit a NDA for HyBryte™ on a rolling basis, permitting the FDA to review sections of the NDA prior to receiving the complete submission. Additionally, NDAs for Fast Track development programs ordinarily will be eligible for priority review.
Based on the positive and previously published Phase 1/2 results, we initiated our pivotal Phase 3 clinical study of HyBryte™ for the treatment of CTCL during December 2015 and completed the trial in 2020.
Based on the positive and previously published Phase 1/2 results, we initiated our Phase 3 clinical study of HyBryte™ for the treatment of CTCL during December 2015 and completed the trial in 2020.
The criteria product candidates must meet to obtain PIM designation are: ● Criterion 1 – The condition should be life-threatening or seriously debilitating with a high unmet medical need (i.e., there is no method of treatment, diagnosis or prevention available or existing methods have serious limitations). ● Criterion 2 – The medicinal product is likely to offer major advantage over methods currently used in the UK. ● Criterion 3 – The potential adverse effects of the medicinal product are likely to be outweighed by the benefits, allowing for the reasonable expectation of a positive benefit risk balance.
The criteria product candidates must meet to obtain PIM designation are: ● Criterion 1 – The condition should be life-threatening or seriously debilitating with a high unmet medical need (i.e., there is no method of treatment, diagnosis or prevention available or existing methods have serious limitations). ● Criterion 2 – The medicinal product is likely to offer major advantage over methods currently used in the UK. 20 Table of Contents ● Criterion 3 – The potential adverse effects of the medicinal product are likely to be outweighed by the benefits, allowing for the reasonable expectation of a positive benefit risk balance.
The amounts we spent on research and development per product during the years ended December 31, 2022 and 2021 are set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Human Capital We are committed to a work environment that is welcoming, inclusive and encouraging.
The amounts we spent on research and development per product during the years ended December 31, 2023 and 2022 are set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Human Capital We are committed to a work environment that is welcoming, inclusive and encouraging.
The Phase 3 protocol (Study IDR-OM-02) was a highly powered, double-blind, randomized, placebo-controlled, multinational trial that sought to enroll approximately 260 subjects with squamous cell carcinoma of the oral cavity and oropharynx who were scheduled to receive a minimum total cumulative radiation dose of 55 Gy fractionated as 2.0-2.2 Gy per day with concomitant cisplatin 9 Table of Contents chemotherapy given as a dose of 80-100 mg/m 2 every third week.
The Phase 3 protocol (Study IDR-OM-02) was a highly powered, double-blind, randomized, placebo-controlled, multinational trial that sought to enroll approximately 260 subjects with squamous cell carcinoma of the oral cavity and oropharynx who were scheduled to receive a minimum total cumulative radiation dose of 55 Gy fractionated as 2.0-2.2 Gy per day with concomitant cisplatin chemotherapy given as a dose of 80-100 mg/m 2 every third week.
In addition to competitive base salaries, we offer every full-time employee a cash target bonus, a comprehensive benefits package and equity compensation. As of December 31, 2022, we employed a total of 15 persons, including 2 part-time employees and 13 full-time employees, five of whom are MDs/PhDs.
In addition to competitive base salaries, we offer every full-time employee a cash target bonus, a comprehensive benefits package and equity compensation. As of December 31, 2023, we employed a total of 15 persons, including 2 part-time employees and 13 full-time employees, five of whom are MDs/PhDs.
In July 2022, the results of our successful Phase 3 FLASH study evaluating HyBryte ™ for the treatment of CTCL were published in the Journal of the American Medical Association (JAMA) Dermatology . In July 2022, we received agreement from the FDA on an initial pediatric study plan (iPSP) for HyBryte™ for the treatment of CTCL.
In July 2022, the results of our successful Phase 3 FLASH study evaluating HyBryte ™ for the treatment of CTCL were published in the Journal of the American Medical Association (JAMA) Dermatology. In July 2022, we received agreement from the FDA on an initial pediatric study plan (“iPSP”) for HyBryte™ for the treatment of CTCL.
A patent for unique, proprietary compositions and methods directed to combinations of glycoprotein antigens with nanoemulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization was filed in 2020, granted in 2022 and expiring in 2040 (No. 11,433,129 titled “Compositions and Methods of Manufacturing Trivalent Filovirus Vaccines.”) Patent protection is also pursued worldwide with similar patents and expiry dates.
A patent for unique, proprietary compositions and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization was filed in 2020, granted in 2022 and expiring in 2040 (No. 11,433,129 titled “Compositions and Methods of Manufacturing Trivalent Filovirus Vaccines.”) Patent protection is also pursued worldwide with similar patents and expiry dates.
These results, coupled with the previous demonstration of efficacy in 15 Table of Contents mice and NHPs as well as long-term thermostability (at least 1 year at 40 degrees C or 104 degrees F), reinforce the practicality of stockpiling and potentially utilizing the RiVax ® vaccine in warfighters and civilian first responders without the complexities that arise for vaccines that require stringent cold chain handling.
These results, coupled with the previous demonstration of efficacy in mice and NHPs as well as long-term thermostability (at least 1 year at 40 degrees C or 104 degrees F), reinforce the practicality of stockpiling and potentially utilizing the RiVax ® vaccine in warfighters and civilian first responders without the complexities that arise for vaccines that require stringent cold chain handling.
Anti-Kickback Laws The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in 20 Table of Contents return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
Anti-Kickback Laws The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs.
As a result of discussions with the FDA regarding the HyBryte™ NDA submission and due to disruptions caused by the global COVID-19 pandemic resulting in delays by the commercial active pharmaceutical ingredient (“API”) contract manufacturer affecting the timing of availability of the pre-requisite amount of accrued stability data required to file the NDA, we filed the NDA with the FDA in December of 2022.
As a result of discussions with the FDA regarding the HyBryte™ NDA submission and due to disruptions caused by the global COVID-19 pandemic resulting in delays by the commercial active pharmaceutical ingredient (“API”) contract manufacturer affecting the timing of availability of the pre-requisite amount of accrued stability data required to file the NDA, 5 Table of Contents we filed the NDA with the FDA in December of 2022.
This license may be terminated by either party upon notice of a material breach by the other party that is not cured within the applicable cure period. The exclusive license includes rights to several issued U.S. patents, including U.S. patent numbers 6,867,235 and 7,122,518, among other domestic and foreign patent applications. U.S.
This license may be terminated by either party upon notice of a material breach by the other party that is not cured within the applicable cure period. The exclusive license includes rights to several issued U.S. patents, including U.S. patent numbers 6,867,235 and 7,122,518, 25 Table of Contents among other domestic and foreign patent applications. U.S.
We make available through our website, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or 27 Table of Contents furnish them to the SEC. Our website is located at www.soligenix.com. You can also request copies of such documents by contacting the company at (609) 538-8200 or sending an email to info@soligenix.com. ​
We make available through our website, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC. Our website is located at www.soligenix.com. You can also request copies of such documents by contacting the company at (609) 538-8200 or sending an email to info@soligenix.com. ​
Once the tolerability and response to SGX302 has been established, Part B of the protocol will commence. In Part B, patients will be randomized to double-blind treatment groups at a ratio 1:1 of active drug to placebo ointment. Active dermatologic assessment of treated lesions for adverse events will be performed immediately before and during light treatments.
Once the tolerability and response to SGX302 has been established, Part B of the protocol will commence. In Part B, patients will be randomized to double-blind treatment groups at a ratio 1:1 of active drug to placebo ointment. Active dermatologic 7 Table of Contents assessment of treated lesions for adverse events will be performed immediately before and during light treatments.
This milestone is part of an ongoing collaboration with UH Manoa and further demonstrates the broad applicability of the vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness.
This milestone is part of an ongoing collaboration with UH Manoa and further demonstrates the broad applicability of the vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness. In May 2022, the U.S.
(“SciClone”) entered into an exclusive license agreement, pursuant to which we granted rights to SciClone to develop, promote, market, distribute and sell SGX942 in defined territories. Under the terms of the license agreement, SciClone will be responsible for all aspects of development, product registration and commercialization in the territories, having access to data generated by us.
(“SciClone”) entered into an exclusive license agreement, pursuant to which we granted rights to SciClone to develop, promote, market, distribute and sell SGX942 in defined territories. Under the terms of the license agreement, SciClone will be responsible for all aspects of development, product 9 Table of Contents registration and commercialization in the territories, having access to data generated by us.
The EMA also agreed that we may defer conducting the PIP until successful completion of our ongoing pivotal Phase 3 clinical trial of SGX942, which allows us to file the adult indication MAA prior to completion of the PIP. In June 2020, the pivotal Phase 3 DOM–INNATE study (Study IDR-OM-02) completed enrollment of 268 subjects.
The EMA also agreed that we may defer conducting the PIP until successful completion of our pivotal Phase 3 clinical trial of SGX942, which allowed us to file the adult indication MAA prior to completion of the PIP. In June 2020, the pivotal Phase 3 DOM–INNATE study (Study IDR-OM-02) completed enrollment of 268 subjects.
Formulation and distribution of our finished product candidates also currently are conducted by single suppliers but we believe that alternative sources for these services are readily available on commercially reasonable terms, subject to the efficient transfer of technology and know-how from current suppliers to the new supplier.
Formulation and distribution of our finished 21 Table of Contents product candidates also currently are conducted by single suppliers but we believe that alternative sources for these services are readily available on commercially reasonable terms, subject to the efficient transfer of technology and know-how from current suppliers to the new supplier.
Noncompliance with applicable requirements can result in, among other things, fines, recall or seizure of products, refusal to permit products to be imported into the U.S., refusal of the government to approve product approval applications or to allow us to enter into government supply contracts, withdrawal of previously approved applications and criminal prosecution.
Noncompliance with applicable 18 Table of Contents requirements can result in, among other things, fines, recall or seizure of products, refusal to permit products to be imported into the U.S., refusal of the government to approve product approval applications or to allow us to enter into government supply contracts, withdrawal of previously approved applications and criminal prosecution.
These include narrow-band ultraviolet B (NB-UVB) light therapy and psoralen combined with ultraviolet A UVA light therapy (“PUVA”); however, PUVA treatments are usually limited to three times per week and 200 times in total due to the potentially carcinogenic side effect, while NB UVB is known to be effective against patches but less so against plaque lesions, common in early stage CTCL.
These include narrow-band ultraviolet B (NB-UVB) light therapy and psoralen combined 22 Table of Contents with ultraviolet A UVA light therapy (“PUVA”); however, PUVA treatments are usually limited to three times per week and 200 times in total due to the potentially carcinogenic side effect, while NB UVB is known to be effective against patches but less so against plaque lesions, common in early stage CTCL.
Analysis of the second open-label treatment cycle (Cycle 2) was completed in April 2020, showing that continued treatment with HyBryte™ twice weekly for an additional 6 weeks (12 weeks total) increased the positive response rate to 40% (p Analysis of the optional third open-label treatment cycle (Cycle 3) was completed in October 2020.
Analysis of the second open-label treatment cycle (Cycle 2) was completed in April 2020, showing that continued treatment with HyBryte™ twice weekly for an additional 6 weeks (12 weeks total) increased the positive response rate to 40% (p 4 Table of Contents Analysis of the optional third open-label treatment cycle (Cycle 3) was completed in October 2020.
Under the amended sublicense agreement to maintain the sublicense we are obliged to pay a minimum annual royalty of $20,000 until first commercial sale of a sublicensed product, upon which point, we will be required to pay an earned royalty of 2% of net sales subject to a minimum 26 Table of Contents royalty of $50,000 each year.
Under the amended sublicense agreement to maintain the sublicense we are obliged to pay a minimum annual royalty of $20,000 until first commercial sale of a sublicensed product, upon which point, we will be required to pay an earned royalty of 2% of net sales subject to a minimum royalty of $50,000 each year.
To date none of these milestones have been met. RiVax ® License Agreement In June 2003, we executed a worldwide exclusive option to license patent applications with UTSW for the nasal, pulmonary and oral uses of a non-toxic ricin vaccine.
To date none of these milestones have been met. 26 Table of Contents RiVax ® License Agreement In June 2003, we executed a worldwide exclusive option to license patent applications with UTSW for the nasal, pulmonary and oral uses of a non-toxic ricin vaccine.
In June 2022, we received FDA IND clearance for our Phase 2a clinical trial (protocol number HPN-PSR-01) titled, " Phase 2 Study Evaluating SGX302 in the Treatment of Mild-to-Moderate Psoriasis ." In December 2022, we initiated patient 7 Table of Contents enrollment for the Phase 2a study (protocol number HPN-PSR-01) evaluating SGX302 in the treatment of mild-to-moderate psoriasis.
In June 2022, we received FDA IND clearance for our Phase 2a clinical trial (protocol number HPN-PSR-01) titled, "Phase 2 Study Evaluating SGX302 in the Treatment of Mild-to-Moderate Psoriasis." In December 2022, we initiated patient enrollment for the Phase 2a study (protocol number HPN-PSR-01) evaluating SGX302 in the treatment of mild-to-moderate psoriasis.
Application of ThermoVax ® may allow for a product that can avoid the need for cold chain distribution and storage, yielding a vaccine ideal for use in both the developed and developing world. This agreement has expired in accordance with its terms.
Application of ThermoVax ® may allow for a product 12 Table of Contents that can avoid the need for cold chain distribution and storage, yielding a vaccine ideal for use in both the developed and developing world. This agreement has expired in accordance with its terms.
There are few historical precedents, or recent precedents, for the development of new countermeasure for bioterrorism agents. Despite the animal rule, the FDA may require large clinical trials to establish safety and immunogenicity before licensure and it may require 18 Table of Contents safety and immunogenicity trials in additional populations.
There are few historical precedents, or recent precedents, for the development of new countermeasure for bioterrorism agents. Despite the animal rule, the FDA may require large clinical trials to establish safety and immunogenicity before licensure and it may require safety and immunogenicity trials in additional populations.
Dusquetide is based on a new class of short, synthetic peptides known as IDRs. It has a novel mechanism of action in that it modulates the body’s reaction to both injury and infection and is both simultaneously anti-inflammatory and anti-infective.
Dusquetide is based on a new class of short, synthetic peptides known as IDRs. It has a novel mechanism of action in that it modulates the body’s reaction to both injury and 8 Table of Contents infection and is both simultaneously anti-inflammatory and anti-infective.
When redeemed, PRVs entitle the user to an accelerated review period of nine months, saving a median of seven months review time as calculated in 2009. However, FDA must be advised 90 days in advance of the use of the PRV and the use of a PRV is associated with an additional user fee ($1.3 million for fiscal year 2022).
When redeemed, PRVs entitle the user to an accelerated review period of nine months, saving a median of seven months review time as calculated in 2009. However, FDA must be advised 90 days in advance of the use of the PRV and the use of a PRV is associated with an additional user fee ($1.5 million for fiscal year 2023).
We also assumed a license agreement with UBC to advance the research and 25 Table of Contents development of the SGX94 technology. The license agreement with UBC provides us with exclusive worldwide rights to manufacture, distribute, market sell and/or license or sublicense products derived or developed from this technology.
We also assumed a license agreement with UBC to advance the research and development of the SGX94 technology. The license agreement with UBC provides us with exclusive worldwide rights to manufacture, distribute, market sell and/or license or sublicense products derived or developed from this technology.
From time to time, we have had and are having strategic discussions with potential collaboration partners for our biodefense vaccine product 21 Table of Contents candidates, although no assurance can be given that we will be able to enter into one or more collaboration agreements for our product candidate on acceptable terms, if at all.
From time to time, we have had and are having strategic discussions with potential collaboration partners for our biodefense vaccine product candidates, although no assurance can be given that we will be able to enter into one or more collaboration agreements for our product candidate on acceptable terms, if at all.
Pursuant to the agreement, Daavlin will exclusively manufacture the proprietary light device for use with HyBryte™ for the treatment of CTCL. Upon 5 Table of Contents approval of HyBryte™ by the FDA, we will promote HyBryte™ and the companion light device, and facilitate the direct purchase of the device from Daavlin.
Pursuant to the agreement, Daavlin will exclusively manufacture the proprietary light device for use with HyBryte™ for the treatment of CTCL. Upon approval of HyBryte™ by the FDA, we will promote HyBryte™ and the companion light device, and facilitate the direct purchase of the device from Daavlin.
The scientific article is part of the ongoing collaboration with Axel Lehrer, PhD, Associate Professor at the Department of Tropical Medicine, Medical Microbiology and Pharmacology, JABSOM, UH Manoa. Development continues under a non-dilutive $1.5M grant from the NIAID awarded to us in December 2020.
The work is part of an ongoing collaboration with Axel Lehrer, PhD, Associate Professor at the Department of Tropical Medicine, Medical Microbiology and Pharmacology, JABSOM, UH Manoa. Development continues under a non-dilutive $1.5M grant from the NIAID awarded to us in December 2020.
The program 14 Table of Contents will pursue approval via the FDA “Animal Rule” since it is not possible to test the efficacy of the vaccine in a clinical study which would expose humans to ricin.
The program will pursue approval via the FDA “Animal Rule” since it is not possible to test the efficacy of the vaccine in a clinical study which would expose humans to ricin.
In August 2018, we were granted a U.S. patent (No. 10,053,513) titled “Systems and Methods for Producing Synthetic Hypericin.” This newly issued patent, expected to expire in 2036, broadens the production around synthetic hypericin.
In August 2018, we were granted a U.S. patent (No. 10,053,513) titled “Systems and Methods for Producing Synthetic 24 Table of Contents Hypericin.” This newly issued patent, expected to expire in 2036, broadens the production around synthetic hypericin.
In May 2022, the United States Patent and Trademark Office issued a Notice of Allowance for the patent application titled “Composition and Methods of Manufacturing Trivalent Filovirus Vaccines.” The allowed claims are directed to unique, proprietary composition and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization.
Patent and Trademark Office issued a Notice of Allowance for the patent application titled “Composition and Methods of Manufacturing Trivalent Filovirus Vaccines.” The allowed claims are directed to unique, proprietary composition and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization.
The agreement was executed with Protherics Medicines Development, one of the companies that make up the BTG specialty pharmaceuticals business, which owns the CoVaccine HT™ intellectual property. Research and Development Expenditures We spent approximately $7.9 million and $8.2 million in the years ended December 31, 2022 and 2021, respectively, on research and development.
The agreement was executed with Protherics Medicines Development, one of the companies that make up the BTG specialty pharmaceuticals business, which owns the CoVaccine HT™ intellectual property. Research and Development Expenditures We spent approximately $3.3 million and $7.9 million in the years ended December 31, 2023 and 2022, respectively, on research and development.
There are currently no approved drugs for treatment of oral mucositis in cancers with solid tumors (e.g., head and neck cancer). There are several drugs in clinical development for oral mucositis – two in Phase 3 (brilacidin by Innovation Pharmaceuticals, Inc., and a mucobuccal tablet by Monopar Therapeutics LLC) and one submitted for a NDA (GC4419 by Galera Therapeutics, Inc.).
There are currently no approved drugs for treatment of oral mucositis in cancers with solid tumors (e.g., head and neck cancer). There are several drugs in clinical development for oral mucositis – three in Phase 3 (brilacidin by Innovation Pharmaceuticals, Inc., a mucobuccal tablet by Monopar Therapeutics LLC and GC4419 by Galera Therapeutics, Inc.).
Of note, these results are consistent with a potential direct anti-tumor effect identified with SGX942 and is another important consideration in the oral mucositis treatment space. ​ In June 2022, an article was published describing the binding of our Innate Defense Regulator (“IDR”), dusquetide, to the p62 protein.
Of note, these results are consistent with a potential direct anti-tumor effect identified with SGX942 and is another important consideration in the oral mucositis treatment space. ​ In June 2022, an article was published describing the binding of our IDR, dusquetide, to the p62 protein.
In the first treatment cycle, approximately 66% of subjects received HyBryte™ and 33% received placebo 4 Table of Contents treatment of their index lesions. In the second cycle, all subjects received HyBryte™ treatment of their index lesions, and in the third cycle, all subjects received HyBryte™ treatment of all of their lesions.
In the first treatment cycle, approximately 66% of subjects received HyBryte™ and 33% received placebo treatment of their index lesions. In the second cycle, all subjects received HyBryte™ treatment of their index lesions, and in the third cycle, all subjects received HyBryte™ treatment of all of their lesions.
HyBryte™ for the treatment of CTCL also was granted Orphan Drug designation from the European Medicines Agency (“EMA”) Committee for Orphan Medical Products and Promising Innovative Medicine (“PIM”) designation from the MHRA, as well as Innovation Passport under the Innovative Licensing and Access Pathway (“ILAP”) in the UK.
HyBryte™ for the treatment of CTCL also was granted Orphan Drug designation from the EMA Committee for Orphan Medical Products and Promising Innovative Medicine (“PIM”) designation from the MHRA, as well as Innovation Passport under the Innovative Licensing and Access Pathway (“ILAP”) in the UK.
SGX302 – for Treating Mild-to-Moderate Psoriasis SGX302 (synthetic hypericin) is a potent photosensitizer that is topically applied to skin lesions and taken up by cutaneous T-cells. With subsequent activation by safe, visible light, T-cell apoptosis is induced, addressing the root cause of psoriasis lesions.
SGX302 – for Treating Mild-to-Moderate Psoriasis SGX302 (synthetic hypericin) is a potent photosensitizer that is topically applied to skin lesions and taken up by cutaneous T-cells. With subsequent activation by safe, visible light, T-cell apoptosis is induced, addressing the dysregulated T-cells found in psoriasis lesions.
These vaccine candidates contain highly purified protein antigens combined with the novel CoVaccine HT™ adjuvant, in both monovalent (single antigen) and 13 Table of Contents bivalent (two antigen) formulations.
These vaccine candidates contain highly purified protein antigens combined with the novel CoVaccine HT™ adjuvant, in both monovalent (single antigen) and bivalent (two antigen) formulations.
Phase 3 trials are expanded clinical trials intended to gather additional information on safety and effectiveness needed to clarify the product’s benefit-risk relationship and generate information for proper labeling of the drug, among other things.
These trials typically explore various doses and regimens. Phase 3 trials are expanded clinical trials intended to gather additional information on safety and effectiveness needed to clarify the product’s benefit-risk relationship and generate information for proper labeling of the drug, among other things.
During October 2020, Frontiers in Immunology published a scientific article describing CiVax™, a prototype COVID-19 vaccine, using the novel CoVaccine HT™ adjuvant and demonstrating significant immunogenicity, including strong total and neutralizing antibody responses, with a balanced Th1 response, as well as enhancement of cell mediated immunity. These are all considered to be critical attributes of a potential COVID-19 vaccine.
During October 2020, Frontiers in Immunology published a scientific article describing CiVax™, a prototype COVID-19 vaccine, using the novel CoVaccine HT™ adjuvant and demonstrating significant immunogenicity, including strong total and neutralizing antibody responses, with a balanced Th1 response, as well as enhancement of cell mediated immunity.
In December 2020, NIAID awarded us a Direct to Phase II Small Business Innovation Research (“SBIR”) grant of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and Ebola Virus Disease (“EVD”) vaccine candidates in conjunction with the CoVaccine HT™ adjuvant.
These are all considered to be critical attributes of a potential COVID-19 vaccine. 13 Table of Contents In December 2020, NIAID awarded us a Direct to Phase II Small Business Innovation Research (“SBIR”) grant of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and Ebola Virus Disease (“EVD”) vaccine candidates in conjunction with the CoVaccine HT™ adjuvant.
In February 2023 we received a RTF letter from the FDA for the HyBryte™ NDA. Upon preliminary review, the FDA determined that the NDA was not sufficiently complete to permit substantive review.
In December 2022, we submitted the HyBryte™ NDA for the treatment of CTCL with the FDA. In February 2023, we received a RTF letter from the FDA for the HyBryte™ NDA. Upon preliminary review, the FDA determined that the NDA was not sufficiently complete to permit substantive review.
During September 2021, an accelerated preprint was posted on bioRxiv of pre-clinical immunogenicity studies for CiVax™ (heat stable COVID-19 vaccine program) demonstrating durable broad-spectrum neutralizing antibody responses, including against the Beta, Gamma and Delta variants of concern.
During September 2021, an accelerated preprint was posted on bioRxiv of pre-clinical immunogenicity studies for CiVax™ (heat stable COVID-19 vaccine program) demonstrating durable broad-spectrum neutralizing antibody responses, including against the Beta, Gamma and Delta variants of concern. The scientific article was subsequently published on March 9, 2022 in ACS Infectious Diseases.
During September 2017, we were awarded funding of approximately $700,000 over five years under a NIAID Research Project (R01) grant awarded to UH Manoa for the development of a trivalent thermostabilized filovirus vaccine (including 12 Table of Contents protection against Zaire ebolavirus , Sudan ebolavirus and Marburg Marburgvirus) .
During September 2017, we were awarded funding of approximately $700,000 over five years under a NIAID Research Project (R01) grant awarded to UH Manoa for the development of a trivalent thermostabilized filovirus vaccine (including protection against Zaire ebolavirus , Sudan ebolavirus and Marburg Marburgvirus) . Previous collaborations demonstrated the feasibility of developing a heat stable subunit Ebola vaccine.
Preclinical data indicate that IDRs may be active in models of a wide range of therapeutic indications including life-threatening bacterial infections as well as the severe side-effects of chemo- and radiation-therapy.
Preclinical data indicate that IDRs may be active in models of a wide range of therapeutic indications including life-threatening bacterial infections as well as the severe side-effects of chemo- and radiation-therapy. Additionally, due to selective binding to p62, dusquetide may have potential anti-tumor action.
All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA. 19 Table of Contents Pediatric Information Under the Pediatric Research Equity Act (“PREA”), NDAs or BLAs or supplements to NDAs or BLAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective.
Pediatric Information Under the Pediatric Research Equity Act (“PREA”), NDAs or BLAs or supplements to NDAs or BLAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective.
Additionally, due to selective binding to p62, dusquetide may have potential anti-tumor action. 8 Table of Contents Dusquetide has demonstrated efficacy in numerous animal disease models including mucositis, oncology, colitis, skin infection and other bacterial infections and has been evaluated in a double-blind, placebo-controlled Phase 1 clinical trial in 84 healthy volunteers with both single ascending dose and multiple ascending dose components.
Dusquetide has demonstrated efficacy in numerous animal disease models including mucositis, oncology, colitis, skin infection and other bacterial infections and has been evaluated in a double-blind, placebo-controlled Phase 1 clinical trial in 84 healthy volunteers with both single ascending dose and multiple ascending dose components.
While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.
While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized. ​ Oral Mucositis Mucositis is the clinical term for damage done to the mucosa by anticancer therapies.
In May 2019, we were awarded a DTRA subcontract of approximately $600,000 over three years to participate in a biodefense contract for the development of medical countermeasures against bacterial threat agents. As of December 31, 2022, there was negligible revenue earned or expense incurred related to the DTRA subcontract.
In May 2019, we were awarded a DTRA subcontract of approximately $600,000 over three years to participate in a biodefense contract for the development of medical countermeasures against bacterial threat agents.
Phase 1 trials are smaller trials concerned primarily with metabolism and pharmacologic actions of the drug and with the safety of the product. Phase 2 trials are designed primarily to demonstrate effectiveness and safety in treating the disease or condition for which the product is indicated. These trials typically explore various doses and regimens.
Clinical trials are normally done in three phases, although the phases may overlap. Phase 1 trials are smaller trials concerned primarily with metabolism and pharmacologic actions of the drug and with the safety of the product. Phase 2 trials are designed primarily to demonstrate effectiveness and safety in treating the disease or condition for which the product is indicated.
The grant, totaling $2.6 million over 4 years, was awarded to a prestigious academic institution that was a leading enroller in the recently published positive Phase 3 FLASH study in the treatment of early stage CTCL. In December 2022, we submitted the HyBryte™ NDA for the treatment of CTCL with the FDA.
In September 2022, the FDA awarded an Orphan Products Development grant to support the evaluation of HyBryte™ for expanded treatment in patients with early-stage CTCL. The grant, totaling $2.6 million over four years, was awarded to a prestigious academic institution that was a leading enroller in the published positive Phase 3 FLASH study in the treatment of early stage CTCL.
Patients will be assessed for overall disease status through four weeks of follow-up. Efficacy endpoints will include the extent of lesion clearance and patient reported quality of life indices. Routine safety data also will be collected. Psoriasis Psoriasis is a chronic, non-communicable, itchy and often painful inflammatory skin condition for which there is no cure.
Patients will be assessed for overall disease status through four weeks of follow-up. Efficacy endpoints will include the extent of lesion clearance and patient reported quality of life indices. Routine safety data also will be collected.
Before human clinical testing in the U.S. of a new drug compound or biological product can commence, an Investigational New Drug (“IND”), application is required to be submitted to the FDA.
Before human clinical testing in the U.S. of a new drug compound or biological product can commence, an Investigational New Drug (“IND”), application is required to be submitted to the FDA. The IND application includes results of pre-clinical animal studies evaluating the safety and efficacy of the drug and a detailed description of the clinical investigations to be undertaken.
A monoclonal antibody is also being developed by Mapp Biopharmaceutical Inc. as a ricin therapeutic, with administration 4 hours after exposure demonstrating efficacy while administration 12 hours after ricin exposure was not protective in animal models.
A monoclonal antibody is also being developed by Mapp Biopharmaceutical Inc. as a ricin therapeutic, with administration 4 hours after exposure demonstrating efficacy while administration 12 hours after ricin exposure was not protective in animal models. There are no approved vaccines to prevent infection and/or mitigate exposure to Sudan ebolavirus or Marburg marburgvirus.
Throughout the COVID 19 pandemic, many of our employees have worked remotely. In September 2021 our employees returned to the Company’s facilities in-person and have maintained a hybrid work schedule with both in-office and remote hours. We implemented a number of significant safety measures based on current guidelines recommended by the Centers for Disease Control.
Throughout the COVID 19 pandemic, many of our employees have worked remotely. In September 2021 our employees returned to the Company’s facilities in-person and have maintained a hybrid work schedule with both in-office and remote hours.
Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis.
Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.
Further studies, in both rabbits and nonhuman primates, were conducted to evaluate RVEc™’s safety as well as its immunogenicity, with positive results observed. No further data 23 Table of Contents has been released in recent years.
RVEc™ has been shown to be fully protective in mice exposed to lethal doses of ricin toxin by the aerosol route. Further studies, in both rabbits and nonhuman primates, were conducted to evaluate RVEc™’s safety as well as its immunogenicity, with positive results observed. No further data has been released in recent years.
SGX943 has shown efficacy against both Gram-negative and Gram-positive bacterial infections in preclinical models, independent of whether the bacteria is antibiotic-resistant or antibiotic-sensitive. 16 Table of Contents The innate immune system is responsible for rapid and non-specific responses to combat bacterial infection. Augmenting these responses represents an alternative approach to treating bacterial infections.
The innate immune system is responsible for rapid and non-specific responses to combat bacterial infection. Augmenting these responses represents an alternative approach to treating bacterial infections. In animal models, IDRs are efficacious against both antibiotic-sensitive and antibiotic-resistant infections, both Gram-positive and Gram-negative bacteria, and are active irrespective of whether the bacteria occupy a primarily extracellular or intracellular niche.
Universities and other research institutions, including the U.S. Army Medical Research Institute of Infectious Diseases, also compete in the development of treatment technologies, and we face competition from other companies to acquire rights to those technologies. HyBryte™ Competition The FDA has approved several treatments for later stages (IIB-IV) of CTCL and/or in conditions that are unresponsive to prior treatment.
Universities and other research institutions, including the U.S. Army Medical Research Institute of Infectious Diseases, also compete in the development of treatment technologies, and we face competition from other companies to acquire rights to those technologies. HyBryte™ Competition There is currently no approved cure for CTCL and treatments are prescribed to manage symptoms.
Our Orphan Drug designations provide for seven years of post-approval marketing exclusivity in the U.S. and ten years exclusivity in Europe. We have pending patent applications for this indication that, if granted, may extend our anticipated marketing exclusivity beyond the U.S. seven year or EU ten year post-approval exclusivity provided by Orphan Drug legislation.
We have pending patent applications for this indication that, if granted, may extend our anticipated marketing exclusivity beyond the U.S. seven year or EU ten year post-approval exclusivity provided by Orphan Drug legislation. In 2013, we expanded our patent portfolio to include innate defense regulation through the acquisition of the novel drug technology, known as SGX94.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our 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).
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our first-in-class Innate Defense Regulator (“IDR”) technology, and dusquetide (SGX942 and SGX945) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans.
RiVax ® has demonstrated statistically significant (p ® established that the immunogen was safe and induced antibodies that we believe may protect humans from ricin exposure. The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans.
Dusquetide is a fully synthetic, 5-amino acid peptide with high aqueous solubility and stability. Extensive in vivo preclinical studies have demonstrated enhanced clearance of bacterial infection with SGX943 administration.
Dusquetide is a fully synthetic, 5-amino acid peptide with high aqueous solubility and stability. Extensive in vivo preclinical studies have demonstrated enhanced clearance of bacterial infection with SGX943 administration. SGX943 has shown efficacy against both Gram-negative and Gram-positive bacterial infections in preclinical models, independent of whether the bacteria is antibiotic-resistant or antibiotic-sensitive.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to our Securities ● The price of our common stock may be highly volatile. ● If we fail to remain current with our listing requirements, we could be removed from The Nasdaq Capital Market, which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market. ● Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes. ● Our shares of common stock are thinly traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares. ● We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock. ● Upon our dissolution, our stockholders may not recoup all or any portion of their investment. ● The issuance of our common stock pursuant to the terms of the asset purchase agreement with Hy Biopharma may cause dilution and the issuance of such shares of common stock, or the perception that such issuances may occur, could cause the price of our common stock to fall.
Biggest changeRisks Related to our Securities ● The price of our common stock may be highly volatile. ● If we fail to meet Nasdaq’s listing requirements, we could be removed from The Nasdaq Capital Market, which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market and negatively impact our ability to raise capital. ● Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes. ● Our shares of common stock are thinly traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares. ● Our common stock is deemed to be a “ penny stock, ” which may make it more difficult for investors to sell their shares due to suitability requirements. ● We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock. ● Upon our dissolution, our stockholders may not recoup all or any portion of their investment. ● The issuance of our common stock pursuant to the terms of the asset purchase agreement with Hy Biopharma may cause dilution and the issuance of such shares of common stock, or the perception that such issuances may occur, could cause the price of our common stock to fall. ● Repayment of certain convertible notes, if they are not otherwise converted, will require a significant amount of cash, and we may not have sufficient cash flow from our business to make payments on our indebtedness. ● The issuance of shares of common stock upon conversion of certain convertible notes could substantially dilute shareholders ’ investments and could impede our ability to obtain additional financing. ● Our Board of Directors can, without stockholder approval, cause preferred stock to be issued on terms that adversely affect holders of our common stock.
Furthermore, for reasons including those set forth below, we may be unable to commercialize or receive royalties from the sale of any other technology we develop, even if it is shown to be effective, if: ● it is not economical or the market for the product does not develop or diminishes; ● we are not able to enter into arrangements or collaborations to manufacture and/or market the product; ● the product is not eligible for third-party reimbursement from government or private insurers; ● others hold proprietary rights that preclude us from commercializing the product; ● we are not able to manufacture the product reliably; ● others have brought to market similar or superior products; or 32 Table of Contents ● the product has undesirable or unintended side effects that prevent or limit its commercial use.
Furthermore, for reasons including those set forth below, we may be unable to commercialize or receive royalties from the sale of any other technology we develop, even if it is shown to be effective, if: ● it is not economical or the market for the product does not develop or diminishes; ● we are not able to enter into arrangements or collaborations to manufacture and/or market the product; 32 Table of Contents ● the product is not eligible for third-party reimbursement from government or private insurers; ● others hold proprietary rights that preclude us from commercializing the product; ● we are not able to manufacture the product reliably; ● others have brought to market similar or superior products; or ● the product has undesirable or unintended side effects that prevent or limit its commercial use.
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ● our ability to obtain additional funding to develop our product candidates; ● our ability to repay existing debt in accordance with its terms; ● delays in the commencement, enrollment and timing of clinical trials; ● the success of our product candidates through all phases of clinical development; ● any delays in regulatory review and approval of product candidates in clinical development; ● our ability to obtain and maintain regulatory approval for our product candidates in the U.S. and foreign jurisdictions; ● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ● our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ● our dependence on contract research organizations to conduct our clinical trials; ● our ability to establish or maintain collaborations, licensing or other arrangements; ● market acceptance of our product candidates; ● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ● competition from existing products or new products that may emerge; ● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ● our ability to discover and develop additional product candidates; ● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ● our ability to attract and retain key personnel to manage our business effectively; ● our ability to build our finance infrastructure and improve our accounting systems and controls; ● potential product liability claims; 33 Table of Contents ● potential liabilities associated with hazardous materials; and ● our ability to obtain and maintain adequate insurance policies.
Factors relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual Report and also include: ● our ability to obtain additional funding to develop our product candidates; ● our ability to repay existing debt in accordance with its terms; ● delays in the commencement, enrollment and timing of clinical trials; ● the success of our product candidates through all phases of clinical development; ● any delays in regulatory review and approval of product candidates in clinical development; ● our ability to obtain and maintain regulatory approval for our product candidates in the U.S. and foreign jurisdictions; ● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug to be taken off the market; ● our dependence on third-party contract manufacturing organizations to supply or manufacture our products; ● our dependence on contract research organizations to conduct our clinical trials; ● our ability to establish or maintain collaborations, licensing or other arrangements; ● market acceptance of our product candidates; ● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a commercial infrastructure or through strategic collaborations; ● competition from existing products or new products that may emerge; ● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products; ● our ability to discover and develop additional product candidates; 33 Table of Contents ● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; ● our ability to attract and retain key personnel to manage our business effectively; ● our ability to build our finance infrastructure and improve our accounting systems and controls; ● potential product liability claims; ● potential liabilities associated with hazardous materials; and ● our ability to obtain and maintain adequate insurance policies.
The degree of market acceptance of any product that we develop will depend on a number of factors, including: ● cost-effectiveness; ● the safety and effectiveness of our products, including any significant potential side effects, as compared to alternative products or treatment methods; ● the timing of market entry as compared to competitive products; ● the rate of adoption of our products by doctors and nurses; ● product labeling or product insert required by the FDA for each of our products; ● reimbursement policies of government and third-party payors; 37 Table of Contents ● effectiveness of our sales, marketing and distribution capabilities and the effectiveness of such capabilities of our collaborative partners, if any; and ● unfavorable publicity concerning our products or any similar products.
The degree of market acceptance of any product that we develop will depend on a number of factors, including: ● cost-effectiveness; ● the safety and effectiveness of our products, including any significant potential side effects, as compared to alternative products or treatment methods; ● the timing of market entry as compared to competitive products; ● the rate of adoption of our products by doctors and nurses; 37 Table of Contents ● product labeling or product insert required by the FDA for each of our products; ● reimbursement policies of government and third-party payors; ● effectiveness of our sales, marketing and distribution capabilities and the effectiveness of such capabilities of our collaborative partners, if any; and ● unfavorable publicity concerning our products or any similar products.
Disputes may arise regarding intellectual property subject to a licensing agreement, including but not limited to: ● the scope of rights granted under the license agreement and other interpretation-related issues; ● the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; ● the sublicensing of patent and other rights; ● our diligence obligations under the license agreement and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and 40 Table of Contents ● the priority of invention of patented technology.
Disputes may arise regarding intellectual property subject to a licensing agreement, including but not limited to: ● the scope of rights granted under the license agreement and other interpretation-related issues; ● the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement; ● the sublicensing of patent and other rights; 40 Table of Contents ● our diligence obligations under the license agreement and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our collaborators; and ● the priority of invention of patented technology.
Additionally, the issuance of a substantial number of shares of our common stock pursuant to the purchase agreement, or the anticipation of such issuances, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
Additionally, the issuance of a substantial number of shares of our common stock pursuant to the Asset Purchase Agreement, or the anticipation of such issuances, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
We may ultimately issue all, some or none of the additional shares of our common stock that may be issued pursuant to the purchase agreement. We are required to register any shares issued pursuant to the purchase agreement for resale under the Securities Act of 1933, as amended (the “Securities Act”).
We may ultimately issue all, some or none of the additional shares of our common stock that may be issued pursuant to the Asset Purchase Agreement. We are required to register any shares issued pursuant to the purchase agreement for resale under the Securities Act of 1933, as amended (the “Securities Act”).
Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming and costly. ● We may not be able to compete with our larger and better-financed competitors in the biotechnology industry. ● Competition and technological change may make our product candidates and technologies less attractive or obsolete. ● Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our business. ● Instability and volatility in the financial markets could have a negative impact on our business, financial condition, results of operations, and cash flows. ● Adverse developments affecting financial institutions such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. ● We may not be able to utilize all of our net operating loss carryforwards. 29 Table of Contents ● Global pathogens could have an impact on financial markets, materials sourcing, patients, governments and population (e.g.
Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming and costly. ● We may not be able to compete with our larger and better-financed competitors in the biotechnology industry. ● Competition and technological change may make our product candidates and technologies less attractive or obsolete. ● Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our business. ● Instability and volatility in the financial markets could have a negative impact on our business, financial condition, results of operations, and cash flows. ● Adverse developments affecting financial institutions such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. ● We may not be able to utilize all of our net operating loss carryforwards. ● Global pathogens could have an impact on financial markets, materials sourcing, patients, governments and population (e.g.
Companies trading on The Nasdaq Stock Market, such as our Company, must be reporting issuers under Section 12 of the Exchange Act, as amended, and must meet the listing requirements in order to maintain the listing of common stock on The Nasdaq Capital Market.
Companies trading on Nasdaq, such as our Company, must be reporting issuers under Section 12 of the Exchange Act, and must meet the listing requirements in order to maintain the listing of common stock on The Nasdaq Capital Market.
The number of shares that we may issue under the purchase agreement will fluctuate based on the market price of our common stock. Depending on market liquidity at the time, the issuance of such shares may cause the trading price of our common stock to fall.
The number of shares that we may issue under the Asset Purchase Agreement will fluctuate based on the market price of our common stock. Depending on market liquidity at the time, the issuance of such shares may cause the trading price of our common stock to fall.
Pursuant to the purchase agreement, we initially paid $275,000 in cash and issued 12,328 shares of common stock in the aggregate to Hy Biopharma and its assignees, and the licensors of the license agreement acquired from Hy Biopharma.
Pursuant to the Asset Purchase Agreement, we initially paid $275,000 in cash and issued 12,328 shares of common stock in the aggregate to Hy Biopharma and its assignees, and the licensors of the license agreement acquired from Hy Biopharma.
If there is an unfavorable change in the State of New Jersey’s Technology Business Tax Certificate Program (whether as a result of a change in law, policy or otherwise) that terminates the program or eliminates or reduces our ability to use or sell our 43 Table of Contents NOL carryforwards or if we are unable to find a suitable buyer to utilize our New Jersey NOL carryforwards to the extent the NOLs expire before we are able to utilize them against our taxable income, our cash taxes may increase which may have an adverse effect on our financial condition.
If there is an unfavorable change in the State of New Jersey’s Technology Business Tax Certificate Program (whether as a result of a change in law, policy or otherwise) that terminates the program or eliminates or reduces our ability to use or sell our NOL carryforwards or if we are unable to find a suitable buyer to utilize our New Jersey NOL carryforwards to the extent the NOLs expire before we are able to utilize them against our taxable income, our cash taxes may increase which may have an adverse effect on our financial condition.
In exchange for the option, we paid $50,000 in cash and issued 288 shares of common stock in the aggregate to Hy Biopharma and its assignees. We subsequently exercised the option, and on September 3, 2014, we entered into an asset purchase agreement with Hy Biopharma, pursuant to which we purchased the Hypericin Assets.
In exchange for the option, we paid $50,000 in cash and issued 288 shares of common stock in the aggregate to Hy Biopharma and its assignees. We subsequently exercised the option, and on September 3, 2014, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Hy Biopharma, pursuant to which we purchased the Hypericin Assets.
We will be required to issue up to $5.0 million worth of our common stock (subject to a cap equal 48 Table of Contents to 19.9% of our issued and outstanding common stock) in the aggregate, if HyBryte™ is approved for the treatment of CTCL by either the FDA or the EMA.
We will be required to issue up to $5.0 49 Table of Contents million worth of our common stock (subject to a cap equal to 19.9% of our issued and outstanding common stock) in the aggregate, if HyBryte™ is approved for the treatment of CTCL by either the FDA or the EMA.
The auditor’s opinion on our audited financial statements for the year ended December 31, 2022 includes an explanatory paragraph stating that we have incurred recurring losses from operations that raise substantial doubt about our ability to continue as a going concern.
The auditor’s opinion on our audited financial statements for the year ended December 31, 2023 includes an explanatory paragraph stating that we have incurred recurring losses from operations that raise substantial doubt about our ability to continue as a going concern.
Risks Related to our Intellectual Property ● We may be unable to commercialize our products if we are unable to protect our proprietary rights, and we may be liable for significant costs and damages if we face a claim of intellectual property infringement by a third party. ● We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming. ● If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and defend against litigation.
Risks Related to our Intellectual Property ● We may be unable to commercialize our products if we are unable to protect our proprietary rights, and we may be liable for significant costs and damages if we face a claim of intellectual property infringement by a third party. ● We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming. 29 Table of Contents ● If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and defend against litigation.
In December 2020, we were awarded Direct to Phase II SBIR grant from NIAID of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and EVD vaccine candidates in conjunction with the CoVaccine HT™ adjuvant. Our biodefense grants have an overhead component 30 Table of Contents that allows us an agency-approved percentage over our incurred costs.
In December 2020, we were awarded Direct to Phase II SBIR grant from NIAID of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and EVD vaccine candidates in conjunction with the CoVaccine HT™ adjuvant. Our biodefense grants have an overhead component that allows us an agency-approved percentage over our incurred costs.
Negative covenants include, among others, covenants restricting us from transferring any material portion of our assets, incurring additional indebtedness, engaging in mergers or acquisitions, changing foreign subsidiary voting rights, repurchasing shares, paying dividends or making other distributions, making certain investments, and creating other liens on our assets, including our intellectual property, in each case subject to customary exceptions.
Negative covenants include, among others, covenants restricting us from transferring any material portion of our assets, incurring additional indebtedness, engaging in mergers or acquisitions, changing foreign subsidiary voting rights, repurchasing shares, paying dividends or making other distributions, making certain investments, and creating other liens 35 Table of Contents on our assets, including our intellectual property, in each case subject to customary exceptions.
Further, if we are liquidated, the lender’s right to repayment would be senior to the rights of the holders of our common stock. The lender could declare a default upon the occurrence of any event that it interprets as a material adverse effect as defined under the Loan and Security Agreement or based upon 35 Table of Contents our insolvency.
Further, if we are liquidated, the lender’s right to repayment would be senior to the rights of the holders of our common stock. The lender could declare a default upon the occurrence of any event that it interprets as a material adverse effect as defined under the Loan and Security Agreement or based upon our insolvency.
Furthermore, if any claims are brought against us, even if we are fully covered by insurance, we may suffer harm such as adverse publicity. We may use hazardous chemicals in our business. Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming and costly.
Furthermore, if any claims are brought against us, even if we are fully covered by insurance, we may suffer harm such as adverse publicity. 41 Table of Contents We may use hazardous chemicals in our business. Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming and costly.
Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes. As of December 31, 2022, we had a number of agreements or obligations that may result in dilution to investors.
Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes. As of December 31, 2023, we had a number of agreements or obligations that may result in dilution to investors.
We, or our materials suppliers, may face manufacturing or quality control problems causing product production and shipment delays or a situation where we or the supplier may not be able to maintain compliance with the FDA’s cGMP requirements, or those of foreign regulators, necessary to continue manufacturing our drug substance.
We, or our materials suppliers, may face manufacturing or quality control problems causing product production and shipment delays or a situation where we or the supplier may not be able 36 Table of Contents to maintain compliance with the FDA’s cGMP requirements, or those of foreign regulators, necessary to continue manufacturing our drug substance.
Any of the risks we describe below could adversely affect our business, financial condition, operating results or prospects. The market prices for our securities could decline if one or more of these risks and uncertainties develop into actual events and you could lose all or part of your investment.
Any of the risks we describe below could adversely affect our business, financial condition, operating results or prospects. The market prices for our 27 Table of Contents securities could decline if one or more of these risks and uncertainties develop into actual events and you could lose all or part of your investment.
The failure to obtain sufficient capital on acceptable terms 31 Table of Contents when needed may require us to delay, limit, or eliminate the development of business opportunities and our ability to achieve our business objectives and our competitiveness, and our business, financial condition, and results of operations will be materially adversely affected.
The failure to obtain sufficient capital on acceptable terms when needed may require us to delay, limit, or eliminate the development of business opportunities and our ability to achieve our business objectives and our competitiveness, and our business, financial condition, and results of operations will be materially adversely affected.
These risks include, but are not limited to, the following: Risks Related to our Business ● We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce or discontinue our product development and commercialization efforts or not be able to repay the Convertible Notes. ● Our losses from operations, negative cash flows, and shareholders' deficit as of December 31, 2022 as well as a projected potential breach of our cash debt covenant with our debt holder during the 12 month look-forward period from the issuance of the financial statements without taking additional measures, such as raising capital, raises substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings. ● The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2022 contains an explanatory paragraph relating to our ability to continue as a going concern. ● If we are unable to develop our product candidates, our ability to generate revenues and viability as a company will be significantly impaired. ● We have no approved products on the market and therefore do not expect to generate any revenues from product sales in the foreseeable future, if at all. ● Our business is subject to extensive governmental regulation, which can be costly, time consuming and subjects us to unanticipated delays. ● There may be unforeseen challenges in developing our biodefense products. ● We are dependent on government funding, which is inherently uncertain, for the success of our public health business segment operations. ● The terms of our loan and security agreement with Pontifax Medison Finance require, and any future debt financing may require, us to meet certain operating covenants and place restrictions on our operating and financial flexibility. ● If the parties we depend on for supplying our drug substance raw materials and certain manufacturing-related services do not timely supply these products and services, it may delay or impair our ability to develop, manufacture and market our products. ● If we are not able to maintain or secure agreements with third parties for pre-clinical and clinical trials of our product candidates on acceptable terms, if these third parties do not perform their services as required, or if these third 28 Table of Contents parties fail to timely transfer any regulatory information held by them to us, we may not be able to obtain regulatory approval for, or commercialize, our product candidates. ● The manufacturing of our products is a highly exacting process, and if we or one of our materials suppliers encounter problems manufacturing our products, our business could suffer. ● We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success. ● Even if approved, our products will be subject to extensive post-approval regulation. ● Even if we obtain regulatory approval to market our product candidates, our product candidates may not be accepted by the market. ● We do not have extensive sales and marketing experience and our lack of experience may restrict our success in commercializing some of our product candidates. ● Our products, if approved, may not be commercially viable due to change in health care practice and third party reimbursement limitations. ● Our product candidates may cause serious adverse events or undesirable side effects which may delay or prevent marketing approval, or, if approval is received, require them to be taken off the market, require them to include safety warnings or otherwise limit their sales. ● If we fail to obtain or maintain orphan drug exclusivity for our product candidates, our competitors may sell products to treat the same conditions and our revenue will be reduced. ● Federal and/or state health care reform initiatives could negatively affect our business. ● We may not be able to retain rights licensed to us by third parties to commercialize key products or to develop the third party relationships we need to develop, manufacture and market our products. ● We may suffer product and other liability claims; we maintain only limited product liability insurance, which may not be sufficient. ● We may use hazardous chemicals in our business.
These risks include, but are not limited to, the following: Risks Related to our Business ● We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce or discontinue our product development and commercialization efforts or not be able to repay certain convertible notes. ● Our losses from operations, negative cash flows, and shareholders’ deficit as of December 31, 2023 raise substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings. ● The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2023 contains an explanatory paragraph relating to our ability to continue as a going concern. ● If we are unable to develop our product candidates, our ability to generate revenues and viability as a company will be significantly impaired. ● We have no approved products on the market and therefore do not expect to generate any revenues from product sales in the foreseeable future, if at all. ● Our business is subject to extensive governmental regulation, which can be costly, time consuming and subjects us to unanticipated delays. ● There may be unforeseen challenges in developing our biodefense products. ● We are dependent on government funding, which is inherently uncertain, for the success of our public health business segment operations. ● The terms of our loan and security agreement with Pontifax Medison Finance require, and any future debt financing may require, us to meet certain operating covenants and place restrictions on our operating and financial flexibility. ● If the parties we depend on for supplying our drug substance raw materials and certain manufacturing-related services do not timely supply these products and services, it may delay or impair our ability to develop, manufacture and market our products. ● If we are not able to maintain or secure agreements with third parties for pre-clinical and clinical trials of our product candidates on acceptable terms, if these third parties do not perform their services as required, or if these third parties fail to timely transfer any regulatory information held by them to us, we may not be able to obtain regulatory approval for, or commercialize, our product candidates. ● The manufacturing of our products is a highly exacting process, and if we or one of our materials suppliers encounter problems manufacturing our products, our business could suffer. ● We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success. 28 Table of Contents ● Even if approved, our products will be subject to extensive post-approval regulation. ● Even if we obtain regulatory approval to market our product candidates, our product candidates may not be accepted by the market. ● We do not have extensive sales and marketing experience and our lack of experience may restrict our success in commercializing some of our product candidates. ● Our products, if approved, may not be commercially viable due to change in health care practice and third party reimbursement limitations. ● Our product candidates may cause serious adverse events or undesirable side effects which may delay or prevent marketing approval, or, if approval is received, require them to be taken off the market, require them to include safety warnings or otherwise limit their sales. ● If we fail to obtain or maintain orphan drug exclusivity for our product candidates, our competitors may sell products to treat the same conditions and our revenue will be reduced. ● Federal and/or state health care reform initiatives could negatively affect our business. ● We may not be able to retain rights licensed to us by third parties to commercialize key products or to develop the third party relationships we need to develop, manufacture and market our products. ● We may suffer product and other liability claims; we maintain only limited product liability insurance, which may not be sufficient. ● We may use hazardous chemicals in our business.
The market price of our securities, like that of many other research and development public pharmaceutical and biotechnology companies, has been highly volatile and the price of our common stock may be volatile in the future due to a wide variety of factors, including: ● announcements by us or others of results of pre-clinical testing and clinical trials; ● announcements of technological innovations, more important bio-threats or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors; ● failure of our common stock to continue to be listed or quoted on a national exchange or market system, such as The Nasdaq Stock Market (“Nasdaq”) or NYSE Amex LLC; ● our quarterly operating results and performance; ● developments or disputes concerning patents or other proprietary rights; ● mergers or acquisitions; ● litigation and government proceedings; ● adverse legislation; ● changes in government regulations; ● our available working capital; ● economic and other external factors; and ● general market conditions.
The market price of our securities, like that of many other research and development public pharmaceutical and biotechnology companies, has been highly volatile and the price of our common stock may be volatile in the future due to a wide variety of factors, including: ● announcements by us or others of results of pre-clinical testing and clinical trials; ● announcements of technological innovations, more important bio-threats or new commercial therapeutic products by us, our collaborative partners or our present or potential competitors; ● failure of our common stock to continue to be listed or quoted on a national exchange or market system, such as Nasdaq or the New York Stock Exchange; ● our quarterly operating results and performance; ● developments or disputes concerning patents or other proprietary rights; ● mergers or acquisitions; ● litigation and government proceedings; 46 Table of Contents ● adverse legislation; ● changes in government regulations; ● our available working capital; ● economic and other external factors; and ● general market conditions.
These restrictions may include product recalls and suspension or withdrawal of the marketing approval for the product. Furthermore, the advertising, promotion and export, among other things, of a product are subject to extensive regulation by governmental authorities in the U.S. and other countries.
These restrictions may include product recalls and suspension or withdrawal of the marketing approval for the product. Furthermore, the advertising, promotion and export, among other things, of a product are subject to extensive regulation by 34 Table of Contents governmental authorities in the U.S. and other countries.
While we attempt to comply with all environmental laws and regulations, including those relating to the outsourcing of the disposal of all hazardous chemicals and waste 41 Table of Contents products, we cannot eliminate the risk of contamination from or discharge of hazardous materials and any resultant injury.
While we attempt to comply with all environmental laws and regulations, including those relating to the outsourcing of the disposal of all hazardous chemicals and waste products, we cannot eliminate the risk of contamination from or discharge of hazardous materials and any resultant injury.
Absent patent or other intellectual property protection, even after an orphan drug is approved, the FDA or European Medicines Agency may subsequently approve the same drug with the same active moiety 39 Table of Contents for the same condition if the FDA or European Medicines Agency concludes that the later drug is safer, more effective, or makes a major contribution to patient care.
Absent patent or other intellectual property protection, even after an orphan drug is approved, the FDA or European Medicines Agency may subsequently approve the same drug with the same active moiety for the same condition if the FDA or European Medicines Agency concludes that the later drug is safer, more effective, or makes a major contribution to patient care.
Additionally, the sale, or even the possibility of the sale, of the shares of common stock underlying these warrants and options could have an adverse effect on the market price for our securities or on our ability to obtain future financing.
Additionally, the sale, or even the possibility of the sale, of the shares of common stock underlying these warrants, options and convertible promissory notes could have an adverse effect on the market price for our securities or on our ability to obtain future financing.
In addition, potential dilutive effects of future sales of shares of common stock and warrants by us, as well as potential sale of common stock by the holders of warrants and options, could have an adverse effect on the market price of our shares.
In addition, potential dilutive effects of future sales of shares of common stock and warrants by us, as well as potential sale of common stock by the holders of warrants, options and convertible promissory notes, could have an adverse effect on the market price of our shares.
Our product candidates are positioned for or are currently in clinical trials, and we have not yet generated any significant revenues from sales or licensing of these product candidates. From inception through December 31, 2022, we have expended approximately $116 million developing our current product candidates for pre-clinical research and development and clinical trials.
Our product candidates are positioned for or are currently in clinical trials, and we have not yet generated any significant revenues from sales or licensing of these product candidates. From inception through December 31, 2023, we have expended approximately $119 million developing our current product candidates for pre-clinical research and development and clinical trials.
As of the issuance date of these financial statements, we believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they come due into the third quarter of 2023.
As of the issuance date of these financial statements, we believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they come due into the fourth quarter of 2024.
Preferred shares issued by our Board of Directors could include voting rights or super voting rights, which could shift the ability to control the Company to the holders of the preferred stock.
Preferred shares issued by our Board of Directors could include voting 50 Table of Contents rights or super voting rights, which could shift the ability to control the Company to the holders of the preferred stock.
We currently expect to spend approximately $3.7 million for the year ending December 31, 2023 in connection with the development of our therapeutic and vaccine products, licenses, employment agreements, and consulting agreements, of which approximately $0.7 million is expected to be reimbursed through our existing government contracts and grants.
We currently expect to spend approximately $5.5 million for the year ending December 31, 2024 in connection with the development of our therapeutic and vaccine products, licenses, employment agreements, and consulting agreements, of which approximately $0.3 million is expected to be reimbursed through our existing government grants.
Risks Related to our Business We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce or discontinue our product development and commercialization efforts. We have experienced significant losses since inception and, at December 31, 2022, had an accumulated deficit of approximately $219.6 million.
Risks Related to our Business We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce or discontinue our product development and commercialization efforts. We have experienced significant losses since inception and, at December 31, 2023, had an accumulated deficit of approximately $225.7 million.
Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual property and comply with all applicable laws, deliver certain financial reports, maintain a minimum cash balance and maintain insurance coverage.
Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual property and comply with all applicable laws, deliver certain financial reports, and maintain insurance coverage.
We cannot give stockholders any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
We cannot give stockholders any assurance that a 48 Table of Contents broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.
If any of our product candidates cause serious adverse events or undesirable side effects: ● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; 38 Table of Contents ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ● we may be required to limit the patients who can receive the product; ● we may be subject to limitations on how we promote the product; ● sales of the product may decrease significantly; ● regulatory authorities may require us to take our approved product off the market; ● we may be subject to litigation or product liability claims; and ● our reputation may suffer.
The results of future clinical trials may show that our product candidates cause serious adverse events or undesirable side effects, which could interrupt, delay or halt clinical trials, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities. 38 Table of Contents If any of our product candidates cause serious adverse events or undesirable side effects: ● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product; ● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians and pharmacies; ● we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; ● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; ● we may be required to limit the patients who can receive the product; ● we may be subject to limitations on how we promote the product; ● sales of the product may decrease significantly; ● regulatory authorities may require us to take our approved product off the market; ● we may be subject to litigation or product liability claims; and ● our reputation may suffer.
In addition, preferred stock would have 49 Table of Contents preference in the event of liquidation of the corporation, which means that the holders of preferred stock would be entitled to receive the net assets of the corporation distributed in liquidation before the holders of our common stock receive any distribution of the liquidated assets. ​
In addition, preferred stock would have preference in the event of liquidation of the Company, which means that the holders of preferred stock would be entitled to receive the net assets of the Company distributed in liquidation before the holders of our common stock receive any distribution of the liquidated assets. ​
However, we will still have to establish that the vaccines we are 34 Table of Contents developing are safe in humans at doses that are correlated with the beneficial effect in animals.
However, we will still have to establish that the vaccines we are developing are safe in humans at doses that are correlated with the beneficial effect in animals.
We estimate that the overhead component associated with our existing contracts and grants will fund some fixed costs for direct employees working on these contracts and grants as well as other administrative costs. As of December 31, 2022, we had approximately $1.7 million in awarded grant funding available.
We estimate that the overhead component associated with our existing contracts and grants will fund some fixed costs for direct employees working on these contracts and grants as well as other administrative costs. As of December 31, 2023, we had approximately $844,000 in awarded grant funding available.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product candidate; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. 45 Table of Contents Risks Related to our Securities The price of our common stock may be highly volatile.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product candidate; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our financial and management resources. 45 Table of Contents Risks Related to Technology and Intellectual Property ​ Our strategy includes an increasing dependence on technology in our operations.
We have concluded that substantial doubt exists about our ability to continue as a going concern for the 12 months following the issuance of the financial statements included in this Annual Report on Form 10-K. As of December 31, 2022, we had cash and cash equivalents of $13.6 million and current liabilities of $16.5 million.
We have concluded that substantial doubt exists about our ability to continue as a going concern for the 12 months following the issuance of the financial statements included in this Annual Report on Form 10-K. As of December 31, 2023, we had cash and cash equivalents of approximately $8.4 million and current liabilities of approximately $6.2 million.
We have no control over the resources and funding NIH, BARDA and NIAID may devote to our programs, which may be subject to periodic renewal and which generally may be terminated by the government at any time for convenience.
We have no control over the resources and funding U.S. government agencies may devote to our programs, which may be subject to periodic renewal and which generally may be terminated by the government at any time for convenience.
We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.
These requirements may adversely affect the market liquidity of our common stock. We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock.
If NIH, BARDA or NIAID do not exercise future funding options under the contracts or grants, terminate the funding or fail to perform their responsibilities under the agreements or grants, it could materially impact our biodefense program and our financial results.
If U.S. government agencies do not exercise future funding options under the contracts or grants, terminate the funding or fail to perform their responsibilities under the agreements or grants, it could materially impact our biodefense program and our financial results.
Based on the current outbreak of the Coronavirus SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions to our operating business, including but not limited to, the sourcing of materials for our product candidates, manufacture of supplies for our preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for our trials due to such things as quarantines, our conduct of patient monitoring and clinical trial data retrieval at investigational study sites.
Global pathogens (e.g., SARS-CoV-2, the pathogen responsible for COVID-19) could cause an impact on financial markets and therefore repercussions to our operating business, including but not limited to, the sourcing of materials for our product candidates, manufacture of supplies for our preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for our trials due to such things as quarantines, our conduct of patient monitoring and clinical trial data retrieval at investigational study sites.
If we fail to remain current with our listing requirements, we could be removed from The Nasdaq Capital Market, which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.
If we fail to meet Nasdaq’s listing requirements, we could be removed from The Nasdaq Capital Market, which would limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market and negatively impact our ability to raise capital.
We may also choose to reduce the conversion price of the Convertible Notes in order to reduce our accounts payable, which would likely cause the Convertible Notes to be convertible into a significant amount of our common stock.
We also may choose to reduce the conversion price of the Convertible Notes, which would likely cause the Convertible Notes to be converted into a significant amount of our common stock and reduce our liabilities.
We expect to incur additional operating losses in the future and expect our cumulative losses to increase. As of December 31, 2022, we had approximately $13.4 million in cash and cash equivalents available, and as of March 24, 2023 we had approximately $10.4 million in cash and cash equivalents available.
We expect to incur additional operating losses in the future and expect our cumulative losses to increase. As of December 31, 2023, we had approximately $8.4 million in cash and cash equivalents available, and as of March 8, 2024 we had approximately $7.5 million in cash and cash equivalents available.
Furthermore, to the extent that consultants, key employees or other third parties apply technological information developed by them or by others to any of our proposed projects, disputes may arise as to the proprietary rights to this information, which may not be resolved in our favor. 44 Table of Contents We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming.
Furthermore, to the extent that consultants, key employees or other third parties apply technological information developed by them or by others to any of our proposed projects, disputes may arise as to the proprietary rights to this information, which may not be resolved in our favor.
As these companies develop their technologies, they may develop competitive positions that may prevent, make futile, or limit our product commercialization efforts, which would result in a decrease in the revenue we would be able to derive from the sale of any products.
As these companies develop their technologies, they may develop competitive positions that may prevent, make futile, or limit our product commercialization efforts, which would result in a decrease in the revenue we would be able to derive from the sale of any products. 42 Table of Contents There can be no assurance that any of our product candidates will be accepted by the marketplace as readily as these or other competing treatments.
There can be no assurance that we will be able to regain compliance with the Shareholders’ Equity Requirement prior to any extended deadline established by Nasdaq or at all, that Nasdaq will grant us an extension of time to achieve such compliance or that our common stock will remain listed on The Nasdaq Capital Market.
There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Rule prior to the hearing date or at all, that Nasdaq will grant us an extension of time to achieve compliance with the Minimum Bid Price Rule or that our common stock will remain listed on The Nasdaq Capital Market.
The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.
The impacts of outbreaks are highly uncertain and cannot be predicted, and we cannot provide any assurance that any outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the pathogen.
In addition to the products for which we have patents or have filed patent applications, we rely upon unpatented proprietary technology and may not be able to meaningfully protect our rights with regard to that unpatented proprietary technology.
We may have to alter our products or processes, pay licensing fees or cease activities altogether because of patent rights of third parties. 44 Table of Contents In addition to the products for which we have patents or have filed patent applications, we rely upon unpatented proprietary technology and may not be able to meaningfully protect our rights with regard to that unpatented proprietary technology.
We currently have 15 employees and we depend upon these employees, in particular Dr. Christopher Schaber, our President and Chief Executive Officer, to manage the day-to-day activities of our business.
Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our business. We currently have 15 employees and we depend upon these employees, in particular Dr. Christopher Schaber, our President and Chief Executive Officer, to manage the day-to-day activities of our business.
We sold 2020 and 2019 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 years ended December 31, 2022 and 2021, respectively.
We 43 Table of Contents sold 2022, 2021 and 2020 New Jersey NOL carryforwards, resulting in the recognition of $1,767,803 and $1,154,935 of income tax benefit, net of transaction costs during the years ended December 31, 2023 and 2022, respectively. We have not yet sold our 2023 New Jersey NOL carryforwards but may do so in the future.
Since January 1, 2022, the closing stock price of our common stock has fluctuated between a high of $15.00 per share to a low of $5.70 per share. On March 24, 2023, the last reported sales prices of our common stock on The Nasdaq Capital Market was $1.84 per share.
Since January 1, 2023, the closing stock price of our common stock has fluctuated between a high of $7.65 per share to a low of $0.40 per share. On March 8, 2024, the last reported sale price of our common stock on The Nasdaq Capital Market was $0.77 per share.
The pharmaceutical industry has been characterized by extensive litigation regarding patents and other intellectual property rights, and companies have employed intellectual property litigation to gain a competitive advantage.
We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming. The pharmaceutical industry has been characterized by extensive litigation regarding patents and other intellectual property rights, and companies have employed intellectual property litigation to gain a competitive advantage.
Any failure to comply with cGMP requirements or other FDA or foreign regulatory requirements could adversely affect our clinical research activities and our ability to market and develop our products. 36 Table of Contents We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.
Even if our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance that physicians and patients will accept our product(s) as a treatment of choice. 42 Table of Contents Furthermore, the pharmaceutical research industry is diverse, complex, and rapidly changing.
Furthermore, if our competitors’ products are approved before ours, it could be more difficult for us to obtain approval from the FDA. Even if our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance that physicians and patients will accept our product(s) as a treatment of choice.
By its nature, the business risks associated therewith are numerous and significant. The effects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us from forecasting revenues or income with certainty or even confidence. Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our business.
Furthermore, the pharmaceutical research industry is diverse, complex, and rapidly changing. By its nature, the business risks associated therewith are numerous and significant. The effects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us from forecasting revenues or income with certainty or even confidence.
In addition, the perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.
In addition, the perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations. ​ The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2023 contains an explanatory paragraph relating to our ability to continue as a going concern .
We timely requested a hearing, which stayed any trading suspension of our common stock until completion of the Nasdaq hearing process and expiration of any additional extension period granted by the panel following the hearing. In advance of the hearing, we provided the Nasdaq Hearings Panel (the “Panel”) with our plan to regain compliance.
Nasdaq has scheduled a hearing for March 26, 2024, which stayed any trading suspension of our common stock until completion of the Nasdaq hearing process and expiration of any additional extension period granted by the panel following the hearing.
Even though we have orphan drug designation for HyBryte™ in the U.S. and Europe, and SGX203, RiVax ® in the U.S., we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing drugs or biologic products.
This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. 39 Table of Contents Even though we have orphan drug designation for HyBryte™ in the U.S. and Europe, and RiVax ® in the U.S., we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing drugs or biologic products.
On December 20, 2021, we received a written notice (the “Bid Price Notice”) from the Listing Qualifications department of Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Requirement”).
On June 23, 2023, we received a letter from the Listing Qualifications Department of Nasdaq stating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market (the “Minimum Bid Price Rule”) because our common stock failed to maintain a minimum closing bid price of $1.00 for 30 consecutive trading days.
Based on our projected budgetary needs, funding from existing contracts and grants over the next year and sales pursuant to our At Market Issuance Sales Agreement (“B. Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”), we expect to be able to maintain the current level of our operations into the third quarter of 2023.
Without additional funding, 30 Table of Contents based on our projected budgetary needs and funding from existing contracts and grants over the next year, we expect to be able to maintain the current level of our operations into the fourth quarter of 2024.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, securing additional proceeds available from the sale of shares of our common stock via the B.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, and potentially amending the loan agreement with Pontifax Medison Finance to reduce the conversion price in 31 Table of Contents order to allow for conversion of a portion of the debt which will reduce our liabilities; however, none of these alternatives are committed at this time.
We have granted, and expect to grant in the future, options to purchase shares of our common stock to our directors, employees and consultants. To the extent that warrants or options are exercised, our stockholders will experience dilution and our stock price may decrease.
To the extent that warrants, options or convertible promissory notes are exercised or converted, our stockholders will experience dilution and our stock price may decrease.
The Notice indicated that our common stock would be suspended from trading on Nasdaq unless we requested a hearing before a hearings panel by December 27, 2022.
In that regard, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 reported stockholders’ equity of $4,221,155. As a result, the notice indicated that our common stock would be suspended from trading on Nasdaq unless we requested a hearing before a hearings panel by December 28, 2023.
We have no control over whether the holders will exercise their right to convert their Convertible Notes.
As of March 8, 2024, there was $2,900,858 of principal and $45,840 of accrued interest outstanding under the Convertible Notes. We have no control over whether the holders will exercise their right to convert their Convertible Notes.
Our losses from operations, negative cash flows, and shareholders' deficit as of December 31, 2022 as well as a projected potential breach of our cash debt covenant with our debt holder during the 12 month look-forward period from the issuance of the financial statements without taking additional measures, such as raising capital, raises substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.
If we cannot raise such additional funds, we may have to delay or stop some or all of our drug development programs. Our losses from operations, negative cash flows, and shareholders' deficit as of December 31, 2023 raise substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.
We were unable to regain compliance with the Minimum Bid Price Requirement prior to the expiration of the second 180 calendar day period. On December 20, 2022, we received written notice (the “Notice”) from Nasdaq stating that we had not complied with the Minimum Bid Price Requirement or the Shareholders’ Equity Requirement.
On December 21, 2023, we received written notice from Nasdaq stating that we had not complied with the Minimum Bid Price Rule and were not eligible for a second 180-day period because we did not comply with the $5,000,000 minimum stockholders’ equity initial listing requirement for The Nasdaq Capital Market.
While the Convertible Notes are convertible at a minimum price of $61.50 per share which is higher than our current market price, we cannot predict the market price of our common stock at any future date, and therefore, cannot predict whether the Convertible Notes will be converted.
While the Convertible Notes are convertible at (i) 90% of the closing price of our common stock on the day before the delivery of the conversion notice with respect to the first 442,400 shares issuable upon conversion as of March 8, 2024 and (ii) $1.70 with respect to all shares issuable upon conversion in excess of the first 442,400 shares issued upon conversion as of March 8, 2024, we cannot predict the market price of our common stock at any future date, and therefore, cannot predict whether the Convertible Notes will be converted.
These include: ● warrants to purchase a total of approximately 667 shares of our common stock at a current weighted average exercise price of $29.25; ● options to purchase approximately 192,273 shares of our common stock at a current weighted average exercise price of $27.56; ● the B.
These include: ● warrants to purchase a total of approximately 6,538,073 shares of our common stock at a current weighted average exercise price of $1.50; ● options to purchase approximately 906,892 shares of our common stock at a current weighted average exercise price of $5.73; and ● convertible promissory notes issued to Pontifax Medison Finance, of which there was $3,000,000 of principal and $63,351 of accrued interest outstanding.
Removed
If we cannot raise such additional funds, we may have to delay or stop some or all of our drug development programs.
Added
Risks Related to Technology and Intellectual Property ● Our strategy includes an increasing dependence on technology in our operations. If any of our key technology fails, our business could be adversely affected. ● A cybersecurity incident could negatively impact our business and our relationships with our employees, service providers, patients, clinical study sites and government agencies.
Removed
Riley Sales Agreement with B. Riley and potentially amending the loan agreement with Pontifax to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce our accounts payable ; however, none of these alternatives are committed at this time.
Added
Any failure to comply with cGMP requirements or other FDA or foreign regulatory requirements could adversely affect our clinical research activities and our ability to market and develop our products.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025. The current rent is approximately $11,108 per month and will remain so through October 2023. The rent for lease periods starting November 2023 and November 2024 is approximately $11,367 per month and $11,625 per month, respectively.
Biggest changePursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025. The current rent is approximately $11,367 per month and will remain so through October 2024. The rent for the lease period starting November 2024 is approximately $11,625 per month. Our office space is sufficient for our current needs.
Our office space is sufficient for our current needs. We may add new space or expand existing space as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. ​
We may add new space or expand existing space as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on The Nasdaq Capital Market under the symbol “SNGX.” The following table sets forth the high and low sales prices per share of our common stock for the periods indicated, as reported by The Nasdaq Capital Market. ​ ​ ​ ​ ​ ​ ​ ​ ​ Price Range Period High Low Year Ended December 31, 2021: ​ ​ First Quarter ​ $ 37.20 ​ $ 18.90 Second Quarter ​ $ 24.30 ​ $ 12.90 Third Quarter ​ $ 19.80 ​ $ 12.75 Fourth Quarter ​ $ 16.80 ​ $ 10.20 Year Ended December 31, 2022: ​ ​ First Quarter ​ $ 13.65 ​ $ 8.70 Second Quarter ​ $ 12.00 ​ $ 5.70 Third Quarter ​ $ 15.00 ​ $ 6.45 Fourth Quarter ​ $ 10.95 ​ $ 5.85 ​ On March 24, 2023, the last reported price of our common stock quoted on The Nasdaq Capital Market was $1.84 per share.
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on The Nasdaq Capital Market under the symbol “SNGX.” The following table sets forth the high and low sales prices per share of our common stock for the periods indicated, as reported by The Nasdaq Capital Market. ​ ​ ​ ​ ​ ​ ​ ​ ​ Price Range Period High Low Year Ended December 31, 2022: ​ ​ First Quarter ​ $ 13.65 ​ $ 8.70 Second Quarter ​ $ 12.00 ​ $ 5.70 Third Quarter ​ $ 15.00 ​ $ 6.45 Fourth Quarter ​ $ 10.95 ​ $ 5.85 Year Ended December 31, 2023: ​ ​ First Quarter ​ $ 8.10 ​ $ 1.75 Second Quarter ​ $ 4.20 ​ $ 0.64 Third Quarter ​ $ 0.74 ​ $ 0.42 Fourth Quarter ​ $ 2.00 ​ $ 0.38 ​ Our stock is listed on The Nasdaq Capital Market under the symbol “SNGX.” The Nasdaq Capital Market prices set forth above represent inter-dealer quotations, without adjustment for retail mark-up, mark-down or commission, and may not represent the prices of actual transactions.
Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our 53 Table of Contents consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
As of such date, 2,924,491 shares of our common stock were issued and outstanding. Dividends We have never declared nor paid any cash dividends, and currently intend to retain all our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future.
As of such date, 10,524,437 shares of our common stock were issued and outstanding. Dividends We have never declared nor paid any cash dividends, and currently intend to retain all our cash and any earnings for use in our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future.
Transfer Agent The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC. The address is 6201 15 th Avenue, Brooklyn, NY 11219 and the telephone number is (718) 921-8200. Holders of Common Stock As of March 24, 2023, there were 108 holders of record of our common stock.
Transfer Agent Shares of our common stock are issued in registered form. Equiniti Trust Company, LLC, 6201 15 th Avenue, Brooklyn, NY 11219 (Telephone: (718) 921-8200; Facsimile: (718) 765-8719) is the registrar and transfer agent for shares of our common stock. Holders of Common Stock As of March 8, 2024, there were 112 holders of record of our common stock.
The vendors are knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about us or had adequate access to information about us. The vendors represented to us that the vendors are not “consultants” for purposes of Nasdaq Listing Rule 5635(c).
The issuance of common stock as described above was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. The recipients are knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about us or had adequate access to information about us.
Removed
The Nasdaq Capital Market prices set forth above represent inter-dealer quotations, without adjustment for retail mark-up, mark-down or commission, and may not represent the prices of actual transactions.
Added
On March 8, 2024, the last reported price of our common stock quoted on The Nasdaq Capital Market was $0.77 per share. Unregistered Sales of Equity Securities Other than as previously reported, we did not issue any unregistered shares during the year ended December 31, 2023.
Removed
Our stock is listed on The Nasdaq Capital Market under the under the symbol “SNGX.” On December 13, 2016, certain of our common stock warrants began trading on The Nasdaq Capital Market under the symbol “SNGXW.” These tradable warrants expired on December 15, 2021.
Added
We issued a total of 146,199 shares of common stock to two lenders upon conversion of approximately $100,000 of principal under promissory notes at a conversion price of $0.68 on January 3, 2024.
Removed
For the period from January 1, 2021 through December 15, 2021, the high and low sales price per warrant as reported by Nasdaq were $9.75 and $0.15 respectively. Unregistered Sales of Equity Securities We issued a vendor 1,667 shares of fully vested common stock with a fair value of $7.20 per share on October 4, 2022.
Added
Such promissory notes may be converted at (i) 90% of the closing price of our common stock on the day before the delivery of the conversion notice with respect to the first 442,400 shares issuable upon conversion as of March 8, 2024 and (ii) $1.70 with respect to all shares issuable upon conversion in excess of the first 442,400 shares issued upon conversion as of March 8, 2024.
Removed
We also issued a vendor 5,129 shares of fully vested common stock with a fair value of $9.75 per share on November 7, 2022. ​ 51 Table of Contents The issuances of common stock to the vendors as described above were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur Product Candidates in Development The following tables summarize our product candidates under development: Specialized BioTherapeutics Product Candidates* ​ ​ ​ ​ ​ ​ Soligenix Product Candidate Therapeutic Indication Stage of Development HyBryte™ ​ Cutaneous T-Cell Lymphoma ​ Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and 53 Table of Contents October 2020 (Cycle 3); NDA filed December 2022; FDA RTF letter received February 2023; Prepare for Type A meeting with the FDA ​ ​ ​ ​ ​ SGX302 ​ Mild-to-Moderate Psoriasis ​ Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug (“IND”) clearance received from the FDA; Phase 2a study initiated December 2022 ​ ​ ​ ​ ​ SGX942 ​ Oral Mucositis in Head and Neck Cancer ​ Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: The primary endpoint of median duration of severe oral mucositis (“SOM”) did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyze full dataset from Phase 3 study and design a second Phase 3 clinical trial; continued development contingent upon identification of partnership ​ ​ ​ ​ ​ ​ SGX203 † ​ Pediatric Crohn’s disease ​ Phase 1/2 clinical trial completed; efficacy data, pharmacokinetic (PK)/pharmacodynamic(PD) profile and safety profile demonstrated; Phase 3 clinical trial initiation contingent upon additional funding, such as through partnership ​ Public Health Solutions*† ​ ​ ​ ​ ​ ​ ​ Soligenix Product Candidate Indication Stage of Development ThermoVax ® ​ Thermostability of vaccines for Ricin toxin, Ebola, Sudan, Marburg and SARS- CoV-2 (COVID-19) viruses ​ Pre-clinical ​ ​ ​ ​ ​ ​ RiVax ® ​ Vaccine against Ricin Toxin Poisoning Phase 1a and 1b trials completed, safety and neutralizing antibodies for protection demonstrated; Phase 1c trial initiated December 2019, closed January 2020 ​ ​ ​ ​ ​ SGX943 ​ Therapeutic against Emerging Infectious Diseases ​ Pre-clinical ​ ​ ​ ​ ​ ​ CiVax™ ​ Vaccine against COVID-19 ​ Pre-clinical * Timelines subject to potential disruption due to COVID-19 outbreak. † Contingent upon continued government contract/grant funding or other funding source. 54 Table of Contents Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Biggest changeOur Product Candidates in Development The following tables summarize our product candidates under development: Specialized BioTherapeutics Product Candidates ​ ​ ​ ​ ​ ​ Soligenix Product Candidate Therapeutic Indication Stage of Development HyBryte™ ​ Cutaneous T-Cell Lymphoma ​ Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and October 2020 (Cycle 3); NDA submitted December 2022; FDA RTF letter received February 2023; Type A meeting with the FDA convened April 2023, in which the FDA determined that a second positive Phase 3 study would be required to support a NDA submission; actively engaged in formal protocol discussions with both the FDA and the EMA to define the protocol for, and evaluate feasibility of conducting, an additional Phase 3 clinical trial (as requested by the FDA); final outcome of 55 Table of Contents ​ ​ ​ ​ ​ Soligenix Product Candidate Therapeutic Indication Stage of Development these discussions anticipated in the first half of 2024 ​ ​ ​ ​ ​ SGX302 ​ Mild-to-Moderate Psoriasis ​ Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug (“IND”) clearance received from the FDA; Phase 2a study remains ongoing having demonstrated biological effect in Cohort 1 and clinically meaningful benefit in Cohort 2 ​ ​ ​ ​ ​ SGX942 † ​ Oral Mucositis in Head and Neck Cancer ​ Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: The primary endpoint of median duration of severe oral mucositis (“SOM”) did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyzed full dataset from Phase 3 study and designing a second Phase 3 clinical trial; continued development contingent upon identification of partnership ​ ​ ​ ​ ​ SGX945 ​ Aphthous Ulcers in Behçet’s Disease ​ Phase 2a protocol and IND clearance received from the FDA; Phase 2a study to be initiated in the second half of 2024 ​ Public Health Solutions† ​ ​ ​ ​ ​ ​ ​ Soligenix Product Candidate Indication Stage of Development ThermoVax ® ​ Thermostability of vaccines for Ricin toxin, Ebola, and Marburg viruses Pre-clinical ​ ​ ​ ​ ​ RiVax ® ​ Vaccine against Ricin Toxin Poisoning ​ Phase 1a, 1b and 1c trials completed, safety and neutralizing antibodies for protection demonstrated ​ ​ ​ ​ ​ ​ SGX943 ​ Therapeutic against Emerging Infectious Diseases ​ Pre-clinical † Contingent upon continued government contract/grant funding or other funding source.
The number of shares of our common stock issued to Hy Biopharma was calculated using an effective price of $38.40 per share, based upon a formula set forth in the asset purchase agreement. Provided the final success-oriented milestone is attained, we will be required to make a payment of up to $5.0 million, if and when achieved.
The number of shares of our common stock issued to Hy Biopharma was calculated using an effective price of $38.40 per share, based upon a formula set forth in the asset purchase agreement. Provided the final success-oriented milestone is attained, we will be required to make a payment of up to $5 million, if and when achieved.
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin), a novel photodynamic therapy (“PDT”), utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy (“PDT”), utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
Our Public Health Solutions business segment includes active development programs for RiVax ® , our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2).
Our Public Health Solutions business segment includes development programs for RiVax ® , our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2).
The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses 55 Table of Contents as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.
The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.
COVID-19 affected our operations but did not have a material impact on our business, operating results, financial condition or cash flows as of and for the year ended December 31, 2022.
COVID-19 affected our operations but did not have a material impact on our business, operating results, financial condition or cash flows as of and for the year ended December 31, 2023.
The potential future payment will be payable in our common stock, not to exceed 19.9% of our outstanding stock. In December 2020, we entered into a $20 million convertible debt financing agreement with Pontifax Medison Finance (“Pontifax”), the healthcare-dedicated venture and debt fund of the Pontifax life science funds.
The potential future payment will be payable in our common stock, not to exceed 19.9% of our outstanding stock. In December 2020, we entered into a $20 million convertible debt financing agreement with Pontifax, the healthcare-dedicated venture and debt fund of the Pontifax life science funds.
Our office space is sufficient for our current needs. In September 2014, we entered into an asset purchase agreement with Hy Biopharma pursuant to which we acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin product.
Our office space is sufficient for our current needs. 61 Table of Contents In September 2014, we entered into an asset purchase agreement with Hy Biopharma pursuant to which we acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin product.
We do not have sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to support our operations for at least the 12 months following the date the financial statements are issued.
We do not have sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to support our operations for at least the 12 months 59 Table of Contents following the date the financial statements are issued.
We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis.
We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Under the terms of the agreement with Pontifax, we had access to up to $20 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and had an interest only period through December 2022 with a rate of 8.47% on borrowed amounts and a 1% rate on amounts available but not borrowed.
Under the terms of the agreement with Pontifax, we had access to up to $20 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and had an interest only period through December 2022 with a rate of 8.47% on borrowed amounts and a 1% rate on amounts available but not borrowed as an unused line of credit fee.
The increase was due to the addition of reimbursable development activity in 2022 under the grant to support the investigator initiated study of HyBryte™ for expanded treatment in patients with early-stage CTCL.
The increase was due to increased reimbursable development activity under the grant to support the investigator-initiated study of HyBryte™ for expanded treatment in patients with early-stage CTCL.
Our plans with respect to our liquidity management include, but are not limited to, the following: ● We have up to $1.7 million in active government grant funding still available as of December 31, 2022 to support our associated research programs through May 2026, provided the federal agencies do not elect to terminate the grants for convenience.
Our plans with respect to our liquidity management include, but are not limited to, the following: ● We have up to $844,000 in active government grant funding still available as of December 31, 2023 to support our associated research programs through May 2026, provided the federal agencies do not elect to terminate the grants for convenience.
Expenditures Under our budget and based upon our existing product development agreements and license agreements pursuant to letters of intent and option agreements, we expect our total research and development expenditures for the year ending December 31, 2023 to be approximately $3.7 million before any contract or grant reimbursements, of which $3.2 million relates to the Specialized BioTherapeutics business and $0.5 million relates to the Public Health Solutions business.
Expenditures Under our budget and based upon our existing product development agreements and license agreements pursuant to letters of intent and option agreements, we expect our total research and development expenditures for the year ending December 31, 2024 to be approximately $5.5 million before any contract or grant reimbursements, of which approximately all relates to the Specialized BioTherapeutics business segment.
The income for the year ended December 31, 2022 is attributable to the recognition of licensing revenue offset by the additional expenses incurred due to the expiration of grants and contracts.
The loss for the year ended December 31, 2023 is attributable to the recognition of licensing revenue in 2022 and additional expenses incurred due to the expiration of grants and contracts.
We anticipate contract and grant reimbursements for the same period of approximately $0.7 million to offset research and development expenses in the Specialized BioTherapeutics and Public Health Solutions business segments.
We anticipate grant reimbursements for the same period of approximately $0.3 million to offset research and development expenses in the Specialized BioTherapeutics business segment.
Reverse Stock Split On February 9, 2023, we completed a reverse stock split of our issued and outstanding shares of common stock at a ratio of one-for-fifteen, whereby, every fifteen shares of our issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock without any change in the par value per share.
However, there can be no assurances that we can consummate such a transaction, or consummate a transaction at favorable pricing. 60 Table of Contents Reverse Stock Split On February 9, 2023, we completed a reverse stock split of our issued and outstanding shares of common stock at a ratio of one-for-fifteen, whereby, every fifteen shares of our issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock without any change in the par value per share.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, securing additional proceeds available from the sale of shares of our common stock via the At Market Issuance Sales Agreement (“B.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, securing additional proceeds available from the sale of shares of our common stock via an At Market Issuance Sales Agreement and potentially amending the loan agreement with Pontifax to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce our debt repayments; however, none of these alternatives are committed at this time.
Examples of estimated accrued research and development expenses include fees paid to: ● contract research organizations (“CROs”) in connection with performing research activities on our behalf and conducting preclinical studies and clinical trials on our behalf; ​ ● investigative sites or other service providers in connection with clinical trials; ​ ● vendors in connection with preclinical and clinical development activities; and ​ ● vendors related to product manufacturing and distribution of preclinical and clinical supplies.
Examples of estimated accrued research and development expenses include fees paid to: ● contract research organizations (“CROs”) in connection with performing research activities on our behalf and conducting preclinical studies and clinical trials on our behalf; ​ ● investigative sites or other service providers in connection with clinical trials; ​ ● vendors in connection with preclinical and clinical development activities; and ​ ● vendors related to product manufacturing and distribution of preclinical and clinical supplies. 57 Table of Contents We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials on our behalf.
The table below details our costs for research and development by program and amounts reimbursed for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Research & Development Expenses ​ ​ RiVax ® and ThermoVax ® Vaccines ​ $ 346,894 ​ $ 616,598 SGX942 (Dusquetide) ​ 295,376 ​ 2,284,731 CiVax™ ​ 22,901 ​ 20,000 HyBryte™ (SGX301 or synthetic hypericin) ​ 6,831,827 ​ 4,720,377 Other ​ 447,091 ​ 544,144 Total ​ $ 7,944,089 ​ $ 8,185,850 ​ ​ ​ ​ ​ ​ ​ Reimbursed under Government Contracts and Grants ​ ​ RiVax ® and ThermoVax ® Vaccines ​ $ 22,161 ​ $ 146,913 CiVax™ ​ ​ 398,001 ​ ​ 514,436 SGX943 ​ 98,731 ​ 67,291 HyBryte™ (investigator initiated study) ​ ​ 31,929 ​ ​ — Total ​ ​ 550,822 ​ ​ 728,640 Grand Total ​ $ 8,494,911 ​ $ 8,914,490 ​ Contractual Obligations We have licensing fee commitments of approximately $230,000 as of December 31, 2022 over the next five years for several licensing agreements with partners and universities.
The table below details our costs for research and development by program and amounts reimbursed for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Research & Development Expenses ​ ​ RiVax ® and ThermoVax ® Vaccines ​ $ 133,186 ​ $ 346,894 SGX942 (Dusquetide) ​ (28,570) ​ 295,376 CiVax™ ​ — ​ 22,901 HyBryte™ (SGX301 or synthetic hypericin) ​ 2,698,609 ​ 6,831,827 Other ​ 509,474 ​ 447,091 Total ​ $ 3,312,699 ​ $ 7,944,089 ​ ​ ​ ​ ​ ​ ​ Reimbursed under Government Contracts and Grants ​ ​ RiVax ® and ThermoVax ® Vaccines ​ $ — ​ $ 22,161 CiVax™ ​ ​ 311,495 ​ ​ 398,001 SGX943 ​ 35,429 ​ 98,731 HyBryte™ (investigator-initiated study) ​ ​ 395,124 ​ ​ 31,929 Total ​ ​ 742,048 ​ ​ 550,822 Grand Total ​ $ 4,054,747 ​ $ 8,494,911 ​ Contractual Obligations We have licensing fee commitments of approximately $230,000 as of December 31, 2023 over the next five years for several licensing agreements with partners and universities.
We sold 2020 and 2019 New Jersey NOL carryforwards resulting in the recognition of income tax benefits of $1,154,935 and $864,742 during the years ended December 31, 2022 and 2021, respectively. We sold our 2021 New Jersey NOL carryforwards and received $1,161,197, net of transaction costs, in January 2023, which will be recognized in the first quarter of 2023.
We sold 2022, 2021 and 2020 New Jersey NOL carryforwards resulting in the recognition of income tax benefits, net of transaction costs of $1,767,803 and $1,154,935 during the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, we had a working capital deficit of $2,663,721, representing a decrease of $22,942,066 as compared to working capital of $20,278,345 for the prior year. The decrease in cash and cash equivalents and working capital was primarily related to cash used in operating activities.
As of December 31, 2023, we had working capital of $3,355,212, representing an increase of $6,018,933 as compared to a working capital deficit of ($2,663,721) for the prior year. The decrease in cash and cash equivalents was primarily related to cash used in operating activities.
Actual results could differ from those estimates. Material Changes in Results of Operations Year Ended December 31, 2022 Compared to 2021 For the year ended December 31, 2022, we had a net loss of $13,798,339 as compared to a net loss of $12,550,973 for the prior year, representing an increased loss of $1,247,366 or 10%.
Actual results could differ from those estimates. Material Changes in Results of Operations Year Ended December 31, 2023 Compared to 2022 For the year ended December 31, 2023, we had a net loss of $6,140,730 as compared to a net loss of $13,798,339 for the prior year, representing decreased net loss of $7,657,609 or 55%.
Income from operations for the Public Health Solutions business segment for the year ended December 31, 2022 was $26,612 as compared to a loss of $542,270 for the year ended December 31, 2021, representing an increase $568,882 or 105%.
Loss from operations for the Public Health Solutions business segment for the year ended December 31, 2023 was $36,531 as compared to income from operations of $26,612 for the year ended December 31, 2022, representing a decrease of $63,143 or 237%.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our 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).
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our first-in-class Innate Defense Regulator (“IDR”) technology, and dusquetide (SGX942 and SGX945) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
Financial Condition and Liquidity Cash and Working Capital As of December 31, 2022, we had cash and cash equivalents of $13,359,615 as compared to $26,043,897 as of December 31, 2021, representing a decrease of $12,684,282 or 49%.
Financial Condition and Liquidity Cash and Working Capital As of December 31, 2023, we had cash and cash equivalents of $8,446,158 as compared to $13,359,615 as of December 31, 2022, representing a decrease of $4,913,457 or 37%.
The increase was primarily due to the recognition of gain on forgiveness of the PPP loan in 2021, which reduced the total other expenses in the prior year. The State of New Jersey’s Technology Business Tax Certificate Program allows certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers.
The State of New Jersey’s Technology Business Tax Certificate Program allows certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers.
We have not yet sold our 2022 New Jersey NOL carryforwards but may do so in the future. We will continue to explore opportunities to sell unused NOL carryforwards for the year ended December 31, 2022. However, there can be no assurance as to the continuation or magnitude of this program in future years.
We will continue to explore opportunities to sell unused NOL carryforwards for the year ended December 31, 2023. However, there can be no assurance as to the continuation or magnitude of this program in future years. Business Segments We maintain two active business segments for the years ended December 31, 2023 and 2022: Specialized BioTherapeutics and Public Health Solutions.
Loss from operations for the Specialized BioTherapeutics business segment for the year ended December 31, 2022 was $7,614,988 as compared to $7,216,450 for the year ended December 31, 2021, representing an increased loss of $398,538 or 6%. This increased loss is primarily attributed to increased expenses associated with preparation for the HyBryte™ NDA filing in 2022.
Loss from operations for the Specialized BioTherapeutics business segment for the year ended December 31, 2023 was $2,812,303 as compared to $7,614,988 for the year ended December 31, 2022, representing a decreased loss of $4,802,685 or 63%. This decreased loss is primarily attributed to the decrease in manufacturing and regulatory costs associated with the HyBryte™ NDA filing.
Business Segments We maintain two active business segments for the years ended December 31, 2022 and 2021: Specialized BioTherapeutics and Public Health Solutions. The Specialized BioTherapeutics business segment had revenue of $31,929 for the year ended December 31, 2022 as compared to no revenue for the year ended December 31, 2021, representing an increase of $31,929 or 100%.
The Specialized BioTherapeutics business segment had revenue of $395,124 for the year ended December 31, 2023 as compared to $31,929 for the year ended December 31, 2022, representing an increase of $363,195 or 100%.
We are preparing for a meeting, categorized as Type A, with the FDA to clarify and respond to the issues identified in the RTF letter and to seek additional guidance concerning information that the FDA would require for a resubmitted NDA to be deemed acceptable to file, in order to advance HyBryte™ towards marketing approval and U.S. commercialization 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 Phase 3 DOM-INNATE (Dusquetide treatment in Oral Mucositis – by modulating INNATE Immunity) 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 our therapeutic SGX943 and our heat stabilization platform technology, ThermoVax ® , in combination with our programs for RiVax ® (ricin toxin vaccine), CiVax™ (COVID-19 vaccine) and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses), with U.S. government funding support. ● Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements. ● Pursue business development opportunities for our pipeline programs, as well as explore merger/acquisition strategies. ● Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development.
An outline of our business strategy 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), collaboratively engage in discussions with both the FDA and EMA in order to define the protocol and evaluate the feasibility of conducting a second clinical study in order to advance HyBryte ™ towards U.S. marketing approval and commercialization while continuing to explore potential marketing approval and partnership in Europe. ● 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. 54 Table of Contents ● Following feedback from the United Kingdom ( “ UK ” ) Medicines and Healthcare products Regulatory Agency ( “ MHRA ” ) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment of 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. ● Expanding development of dusquetide under the research name SGX945 into Beh ç et ’ s Disease with the conduct of a Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in aphthous ulcers induced by chemotherapy and radiation. ● Continue development of our heat stabilization platform technology, ThermoVax ® , in combination with programs for RiVax ® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent combinations), with U.S. government and non-governmental organization funding support. ● Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements. ● Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives, including but not limited to merger/acquisition strategies. ● Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development.
Our actual results may differ from these estimates under different assumptions or conditions.
We evaluate our estimates and 56 Table of Contents assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Pursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025. The current rent is approximately $11,108 per month and 59 Table of Contents will remain so through October 2023. The rent for lease periods starting November 2023 and November 2024 is approximately $11,367 per month and $11,625 per month, respectively.
Pursuant to an amendment on June 21, 2022, the lease has been extended to October 2025. The current rent of $11,367 per month will be maintained until November 2024 when it will be increased to $11,625 where it will remain until expiration.
Our gross profit for the year ended December 31, 2022 was $398,089 or 42% of total revenues as compared to $95,628 or 12% of total revenues for the prior year, representing an increase of $302,461 or 316%.
The increase in costs was primarily the result of an increase in costs relating to the HyBryte™ investigator-initiated study. Our gross profit for the year ended December 31, 2023 was $97,311 or 12% of total revenues as compared to $398,089 or 42% of total revenues for the prior year, representing a decrease of $300,778 or 76%.
We incurred costs related to contract and grant revenues in the year ended December 31, 2022 and 2021 of $550,822 and $728,640, respectively, representing a decrease of $177,818 or 24%. The decrease in costs was primarily the result of grants being fully utilized.
The decrease in revenues was primarily a result of the recognition of licensing revenue in 2022 partially offset by an increase in grant revenue during 2023. We incurred costs related to contract and grant revenues in the year ended December 31, 2023 and 2022 of $742,048 and $550,822, respectively, representing an increase of $191,226 or 35%.
Revenues for the Public Health Solutions business segment for the year ended December 31, 2022 were $916,982 as compared to $824,268 for the year ended December 31, 2021, representing an increase of $92,714 or 11%. The increase in revenues was primarily the result of the recognition of licensing revenue in 2022.
Revenues for the Public Health Solutions business segment for the year ended December 31, 2023 were $444,235 as compared to $916,982 for the year ended December 31, 2022, representing a decrease of $472,747 or 52%.
The increase in gross profit was primarily the result of the recognition of licensing revenue in 2022 as well as a greater percentage of trial work conducted for CiVax™ and SGX943 in 2022 and the higher contract reimbursements associated with those grants. 56 Table of Contents Research and development expenses decreased by $241,761 or 3% to $7,944,089 for year ended December 31, 2022 as compared to $8,185,850 for the prior year.
The decrease in gross profit was primarily the result of the recognition of higher margin licensing revenue in 2022 and the lower margin grant revenue associated with the HyBryte™ investigator-initiated study during 2023. Research and development expenses decreased by $4,631,390 or 58% to $3,312,699 for year ended December 31, 2023 as compared to $7,944,089 for the prior year.
Upon the closing of this transaction, we borrowed the first tranche of $10 million. We did not utilize our option to draw the second or third tranche of $5 million each, which expired on December 15, 2021 and March 15, 2022, respectively. Interest expense incurred and paid in 2022 totaled $847,000 and $857,411, respectively.
We did not utilize our option to draw the second or third tranche of $5 million each, which expired on December 15, 2021 and March 15, 2022, respectively. On April 19, 2023, we entered into an amendment to the convertible debt financing agreement with Pontifax.
Pontifax may elect to convert the outstanding loan drawn under the first tranche into shares of our common stock at any time prior to repayment at a conversion price of $61.50 per share. We also have the ability to force the conversion of the loan into shares of our common stock, subject to certain conditions.
The fair value of the convertible debt was estimated using the Monte Carlo valuation method. 62 Table of Contents Pontifax may elect to convert the outstanding loan drawn under the first tranche into shares of our common stock at any time prior to repayment.
For the year ended December 31, 2022, we had revenues of $948,911 as compared to $824,268 for the prior year, representing an increase of $124,643 or 15%. The increase in revenues was primarily a result of the recognition of licensing revenue in 2022 offset by a decrease in grant revenue.
The decrease in net loss is primarily attributed to decreases in operating expenses and interest expense as well as an increase in other income. For the year ended December 31, 2023, we had revenues of $839,359 as compared to $948,911 for the prior year, representing a decrease of $109,552 or 12%.
The decrease in research and development spending for the year ended December 31, 2022 was related to the conclusion of the CTCL and oral mucositis Phase 3 studies in 2021. General and administrative expenses increased by $1,684,166 or 34%, to $6,692,904 for the year ended December 31, 2022, as compared to $5,008,738 for the prior year.
The decrease in research and development spending for the year ended December 31, 2023 was primarily related to the decrease in manufacturing and regulatory costs associated with the HyBryte™ NDA filing. General and administrative expenses decreased by $2,210,352 or 33%, to $4,482,552 for the year ended December 31, 2023, as compared to $6,692,904 for the prior year.
The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the coronavirus. Emergent BioSolutions Legal Proceedings In July 2020, we filed a demand for arbitration against Emergent BioSolutions, Inc. and certain of its subsidiaries (collectively, “Emergent”) with the American Arbitration Association in Mercer County, New Jersey.
The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the coronavirus. ​
We are currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there 58 Table of Contents can be no assurances that we can consummate such a transaction, or consummate a transaction at favorable pricing.
We plan to use the proceeds for further support of our programs, as well as for working capital; and ● We are currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate.
The decrease in working capital is also due to the impact of the entire convertible debt balance being classified as a current liability as of December 31, 2022 due to a subjective acceleration clause included in the debt agreement and a potential breach of a cash debt covenant during the twelve month look-forward period from the filing of our financial statements. 57 Table of Contents We believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they become due into the third quarter of 2023.
We believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they become due into the fourth quarter of 2024.
The development of our vaccine programs incorporates the use of our proprietary heat stabilization platform technology, known as ThermoVax ® .
The development of our vaccine programs incorporates the use of our proprietary heat stabilization platform technology, known as ThermoVax ® . To date, this business segment has been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases, the Biomedical Advanced Research and Development Authority and the Defense Threat Reduction Agency.
Removed
With a successful Phase 3 study completed, regulatory approval is being sought and commercialization activities for this product candidate are being advanced initially in the U.S.
Added
With successful completion of the Phase 3 FLASH (Fluorescent Light And Synthetic Hypericin) study, regulatory approval is being pursued in the U.S. and Europe. Following submission of a new drug application (“NDA”) for HyBryte™ in the treatment of CTCL, we received a refusal to file (“RTF”) letter from the U.S. Food and Drug Administration (“FDA”).
Removed
To date, this business segment has been supported with government 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”). 52 Table of Contents An outline of our business strategy follows: ● Following positive primary endpoint results for the Phase 3 FLASH ( F lorescent L ight A ctivated S ynthetic H ypericin) 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), meet with the United States (“U.S.”) Food and Drug Administration (“FDA”) to discuss the contents of a refusal to file (“RTF”) letter recently issued by the FDA in response to the HyBryte™ new drug application (“NDA”) for the treatment of CTCL .
Added
We had a Type A meeting with the FDA to clarify and respond to the issues identified in the RTF letter and to seek additional guidance concerning information that the FDA would require for a resubmitted NDA to be deemed acceptable to file, in order to advance HyBryte™ towards U.S. marketing approval and commercialization.
Removed
We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials on our behalf.
Added
In order to accept an NDA filing for HyBryte™, the FDA is requiring positive results from a second, Phase 3 pivotal study in addition to the Phase 3, randomized, double-blind, placebo-controlled FLASH study previously conducted in this orphan indication.
Removed
The increase in net loss is primarily attributed to an increase in legal and consulting expenses associated with the arbitration against Emergent as well as no gain on forgiveness of the loan under the Paycheck Protection Program (“PPP”) in 2022.
Added
Based on this feedback, we are collaboratively engaging in active discussions with both the FDA and the European Medicines Agency (“EMA”) in order to define the protocol and evaluate the feasibility of conducting the additional Phase 3 clinical trial evaluating HyBryte™ in the treatment of CTCL in support of potential marketing approval.
Removed
This increase is primarily related to an increase in legal and consulting expenses associated with the arbitration against Emergent. Other expense for the year ended December 31, 2022 was $714,370 as compared to $316,755 for the prior year, reflecting an increase of $397,615 or 126%.
Added
Critical Accounting Policies Our management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
Removed
Riley Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”) and potentially amending the loan agreement with Pontifax to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce our debt repayments; however, none of these alternatives are committed at this time.
Added
This decrease is primarily related to a reduction in legal and consulting expenses. The amendment to the convertible debt financing agreement with Pontifax Medison Finance (“Pontifax”) – see Note 5 –, resulted in the extinguishment of the original convertible debt for accounting purposes.
Removed
However, there can be no assurances that we can consummate such transactions; ● We have up to $26.6 million remaining from the B.
Added
We elected to account for the amended convertible debt using the fair value option, which requires us to record changes in fair value as a component of other income or expense.
Removed
Riley Sales Agreement as of March 24, 2023 under the prospectus supplement updated August 13, 2021, subject to the limitations imposed by General Instruction I.B.6 to Form S-3; and ● We may seek additional capital in the private and/or public equity markets, pursue government contracts and grants as well as business development activities, to continue our operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships.
Added
The fair value of the convertible debt on the date of the amendment was approximately $3,304,000, which resulted in the recognition of a loss on extinguishment of approximately $394,000 on our accompanying consolidated statements of operations during the year ended December 31, 2023.
Removed
CARES Act Loan On April 13, 2020, we were advised that one of our principal banks, JPMorgan Chase Bank, N.A., had approved a $417,830 loan (the “Loan”) under the PPP pursuant to the Coronavirus Aid, Relief and Economic Security Act that was signed into law on March 27, 2020.
Added
The fair value of the convertible debt as of December 31, 2023 was approximately $3,260,934, which resulted in the recognition of $43,066 of other income from 58 Table of Contents the change in the fair value of the convertible debt on our accompanying consolidated statements of operations during the year ended December 31, 2023.
Removed
As a U.S. small business, we qualified for the PPP, which allows businesses and nonprofits with fewer than 500 employees to obtain loans of up to $10 million to incentivize companies to maintain their workers as they manage the business disruptions caused by the COVID-19 pandemic.
Added
The fair value of the convertible debt was estimated using the Monte Carlo valuation method. Total other expense for the year ended December 31, 2023 was $210,593 as compared to $714,370 of total other expense for the prior year, reflecting a decrease of $503,777 or 71%.
Removed
The PPP provides for loans for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The PPP loan proceeds may be used for eligible purposes, including payroll, benefits, rent and utilities. The Loan had a term of two years, was unsecured, and was guaranteed by the Small Business Administration (“SBA”).
Added
The decrease in total other expense was primarily associated with the reduction in interest resulting from the repayment of a portion of the convertible debt principal balance and higher interest income earned on cash balances.
Removed
The Loan bore interest at a fixed rate of 0.98% per annum, with interest and principal deferred during the eight-week or twenty-four-week period following the Loan origination date (“the loan forgiveness period”) and subsequent 10 months.
Added
We sold our 2022 New Jersey NOLs and have recorded a receivable of $606,606 which is included in prepaid expenses and other current assets on the accompanying consolidated balance sheet for the year ended December 31, 2023. We have not yet sold our 2023 New Jersey NOL carryforwards but may do so in the future.
Removed
Some or all of the Loan was eligible for forgiveness if at least 60% of the Loan proceeds were used by us to cover payroll costs, including benefits and if we maintained our employment and compensation within certain parameters during the loan 60 Table of Contents forgiveness period and complied with other relevant conditions.
Added
The decrease in revenues was primarily the result of the recognition of licensing revenue in 2022 and the conclusion of the grant associated with the development of SGX943.
Removed
We used the proceeds for purposes consistent with the PPP and met the conditions for forgiveness of the Loan. On June 29, 2021, the SBA and JPMorgan notified us that the entire balance of this note has been forgiven.
Added
The increase in working capital is primarily the result of the net proceeds received from financing activities partially offset by the immediate paydown of $5 million of outstanding debt principal balance and any accrued interest resulting from the amendment to the convertible debt financing agreement with Pontifax during the year ended December 31, 2023.
Removed
We recorded the forgiveness of the principal and accrued interest of $421,584 as a gain on forgiveness in other income on the consolidated statement of operations for the year ended December 31, 2021. Contingencies We follow subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.
Added
However, there can be no assurances that we can consummate such transactions; ● We completed a public offering of 2,301,500 shares of our common stock, pre-funded warrants to purchase 4,237,000 shares of our common stock and common warrants to purchase up to 6,538,500 shares of our common stock at a combined public offering price of $1.30.
Removed
In particular, due to delays by our third party commercial active pharmaceutical ingredient contract manufacturer of HyBryte™ we were unable to provide the pre-requisite amount of accrued stability data required to file the HyBryte™ NDA with the FDA by the first half of 2022. Therefore, we filed the NDA with the FDA in December of 2022.
Added
The pre-funded warrants had an exercise price of $0.001. The common warrants have an exercise price of $1.50 per share, are exercisable immediately and expire five years from the issuance date. The total gross proceeds to us from this offering were approximately $8.5 million before deducting commissions and other estimated offering expenses.
Removed
We allege in the arbitration various breaches of contracts and warranties as well as acts of fraud. Emergent has answered that demand for arbitration denying the allegations and asserting affirmative defenses. We presented our case at an arbitration hearing over 12 days in January 2022. Following submission of post-hearing briefs, the arbitration panel heard closing oral arguments in April 2022.
Added
After the interest-only period, the outstanding principal was 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 our assets, other than intellectual property. Upon the closing of this transaction, we borrowed the first tranche of $10 million.
Removed
We sought to recover damages in excess of $19 million from Emergent. On July 6, 2022, the American Arbitration Association entered a final decision in connection with this arbitration. Despite the arbitration panel ruling that Emergent had committed a number of breaches of the parties’ contracts, the panel did not award monetary damages to us.

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