SOLIGENIX INC

Previous wording

In April 2023, we had a Type A meeting with the FDA to clarify and respond to the issues identified in the RTF letter received from the FDA 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. 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. Based on this feedback, we have decided to collaboratively engage in discussions with the FDA in order to define the protocol and evaluate the feasibility of conducting the additional clinical trial.

Current wording

In April 2023, we had a Type A meeting with the FDA to clarify and respond to the issues identified in the RTF letter received from the FDA 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. In order to accept an NDA filing for HyBryte™, the FDA is requiring

Previous wording

In July 2024, we announced an interim update on the open-label, investigator-initiated study (IIS) evaluating extended HyBryte™ treatment for up to 12 months in patients with early stage CTCL. To date, the trial sponsored by Dr. Ellen Kim, has enrolled and treated six patients with HyBryte™ over a time period ranging up to 44 weeks. Patients have responded positively to HyBryte™ therapy with 75% (3 of the 4 subjects who have completed at least 12 weeks of therapy) already achieving “Treatment Success”, as predefined in the study’s protocol as ≥50% improvement in their cumulative mCAILS score compared to Baseline. Of the three Treatment Successes, two were achieved within the first 12 weeks of treatment and the third within 18 weeks. Of the remaining three patients, two have only recently started HyBryte™ therapy and have not yet reached their first

Current wording

In July 2024, we announced an interim update on the open-label, investigator-initiated study (IIS) evaluating extended HyBryte™ treatment for up to 12 months in patients with early stage CTCL. To date, the trial sponsored by Dr. Ellen Kim, has enrolled and treated six patients with HyBryte™ over a time period ranging up to 44 weeks. Patients have responded positively to HyBryte™ therapy with 75% (3 of the 4 subjects who have completed at least 12 weeks of therapy) already achieving “Treatment Success”, as predefined in the study’s protocol as ≥50% improvement in their cumulative mCAILS score compared to Baseline. Of the three Treatment Successes, two were achieved within the first 12 weeks of treatment and the third within 18 weeks. Of the remaining three patients, two have only recently started HyBryte™ therapy and have not yet reached their first efficacy evaluation visit (i.e., at Week 6) and the other had a substantial improvement documented at the Week 18 visit, but has not yet achieved the success threshold. In addition, HyBryte™ appears to be safe and well tolerated in all patients, with no treatment-related adverse events reported to date.

Previous wording

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. Other PDTs have shown efficacy in psoriasis with a similar apoptotic mechanism, albeit using UV light associated with more severe potential long-term toxicities. The use of visible light in the red-yellow spectrum has the advantage of deeper penetration into the skin (much more than UV light) potentially treating deeper skin disease and thicker plaques and lesions, similar to what was observed in the positive Phase 3 FLASH study in CTCL. Further, this treatment approach avoids the risk of secondary malignancies (including melanoma) inherent with both the frequently used DNA-damaging drugs

Current wording

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. Other PDTs have shown efficacy in psoriasis with a similar apoptotic mechanism, albeit using UV light associated with more severe potential long-term toxicities. The use of visible light in the red-yellow spectrum has the advantage of deeper penetration into the skin (much more than UV light) potentially treating deeper skin disease and thicker plaques and lesions, similar to what was observed in the positive Phase 3 FLASH study in CTCL. Further, this treatment approach avoids the risk of secondary malignancies (including melanoma) inherent with both the frequently used DNA-damaging drugs and other phototherapies that are dependent on UVA or UVB exposure. The use of SGX302 coupled with safe, visible light also avoids the risk of serious infections and cancer associated with the systemic immunosuppressive treatments used in psoriasis.

Previous wording

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 was shown to have a good safety profile and be well-tolerated in all dose groups when administered by IV over 7 days and was consistent with safety results seen in pre-clinical studies. We believe that market opportunities for dusquetide include, but are not limited to, oral and gastrointestinal mucositis, oncology (e.g., breast cancer), acute Gram-positive bacterial infections (e.g., methicillin resistant

Current wording

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 was shown to have a good safety profile and be well-tolerated in all dose groups when administered by IV over 7 days and was consistent with safety results seen in pre-clinical studies. We believe that market opportunities for dusquetide include, but are not limited to, oral and gastrointestinal mucositis, oncology (e.g., breast cancer), acute Gram-positive bacterial infections (e.g., methicillin resistant Staphylococcus aureus (“MRSA”)), acute Gram-negative infections (e.g., acinetobacter, melioidosis), and acute radiation syndrome.

Previous wording

Gy fractionated as 2.0-2.2 Gy per day with concomitant cisplatin chemotherapy given as a dose of 80-100 mg/m2 every third week. Subjects were randomized to receive either 1.5 mg/kg SGX942 or placebo given twice a week during and for two weeks following completion of chemoradiation therapy (“CRT”). The primary endpoint for the study was the median duration of SOM, which was assessed by oral examination at each treatment visit and then through six weeks following completion of CRT. Oral mucositis is evaluated using the WHO Grading system. SOM is defined as a WHO Grade of ≥3. Subjects are followed for an additional 12 months after the completion of treatment.

Current wording

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” (Dusquetide treatment in Oral Mucositis – by modulating INNATE immunity) study. Approximately 50 U.S. and European oncology centers participated in this trial. 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/m2 every third week. Subjects were randomized to receive either 1.5 mg/kg SGX942 or placebo given twice a week during and for two weeks following completion of chemoradiation therapy (“CRT”). The primary endpoint for the study was the median duration of SOM, which was assessed by oral examination at each treatment visit and then through six weeks following completion of CRT. Oral mucositis is evaluated using the WHO Grading system. SOM is defined as a WHO Grade of ≥3. Subjects are followed for an additional 12 months after the completion of treatment.

Previous wording

In June 2022, an article was published describing the binding of our IDR, dusquetide, to the p62 protein. 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. This information advances the understanding of dusquetide's novel mechanism of action and supports the development of analogs related to dusquetide.

Current wording

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. This information advances the understanding of dusquetide's novel mechanism of action and supports the development of analogs related to dusquetide.

Previous wording

We estimate the potential worldwide market for SGX945 is in excess of $200 million for the treatment of aphthous ulcers in Behçet’s Disease. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. 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.

Current wording

We estimate the potential worldwide market for SGX945 is in excess of $200 million for the treatment of aphthous ulcers in Behçet’s Disease. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential

Previous wording

BD is thought to be an auto-immune disease with both genetic and environmental factors. It is most common along the “silk road” in the Middle East and East Asia, including Turkey, Iran, Japan and China. There are approximately 18,000 known cases of BD in the U.S. and 80,000 in Europe. There are as many as 1,000,000 people worldwide living with BD.

Current wording

BD is thought to be an auto-immune disease with both genetic and environmental factors. It is most common along the “silk road” in the Middle East and East Asia, including Turkey, Iran, Japan and China. There are approximately 18,000 known cases of BD in the U.S. and over 50,000 in Europe. There are as many as 1,000,000 people worldwide living with BD.

Previous wording

As a new chemical entity, an FDA approved RiVax® vaccine has the potential to qualify for a biodefense Priority Review Voucher (“PRV”). Approved under the 21st Century Cures Act in late 2016, the biodefense PRV is awarded upon approval as a medical countermeasure when the active ingredient(s) have not been otherwise approved for use in any context. PRVs are transferable and can be sold, with sales in recent years of approximately $100 million. 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 2024).

Current wording

As a new chemical entity, an FDA approved RiVax® vaccine has the potential to qualify for a biodefense Priority Review Voucher (“PRV”). Approved under the 21st Century Cures Act in late 2016, the biodefense PRV is awarded upon approval as a medical countermeasure when the active ingredient(s) have not been otherwise approved for use in any context. PRVs are transferable and can be sold, with sales in recent years of approximately $100 million. 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 ($1.33 million for fiscal year 2024).

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities. 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. Our actual results may differ from these estimates under different assumptions or conditions.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based upon the accompanying condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

While our significant accounting policies are described in more detail in the notes to our financial statements appearing at the beginning of this Quarterly Report on Form 10-Q, we believe that the following accounting policies are those most critical to the assumptions and estimates used in the preparation of our financial statements.

Current wording

Significant accounting policies are described in more detail in the notes to our financial statements appearing at the beginning of this Quarterly Report on Form 10-Q.

Previous wording

Three and Six Months Ended June 30, 2024 Compared to June 30, 2023

Current wording

Three and Nine Months Ended September 30, 2024 Compared to September 30, 2023

Previous wording

For the three months ended June 30, 2024, we had a net loss of $1,644,502 as compared to a net loss of $1,612,024 for the same prior year period, representing increased net loss of $32,478 or 2%. This increase in net loss was primarily due to decreases in gross profit and tax credits as well as an increase in operating expenses, offset by increases in interest income and changes in the fair value of debt during the three months ended June 30, 2024. For the six months ended June 30, 2024, we had a net loss of $3,559,829 as compared to a net loss of $2,658,133 for the same prior year period, representing increased net loss of $901,696 or 34%. This increase in net loss was primarily due to decreases in gross profit and tax credits and an increase in operating expenses, offset by increases in interest income and changes in the fair value of debt and the recognition of an income tax benefit during the six months ended June 30, 2023 with no corresponding income tax benefit recognized during the six months ended June 30, 2024.

Current wording

For the three months ended September 30, 2024, we had a net loss of $1,719,381 as compared to a net loss of $1,662,702 for the same prior year period, representing increased net loss of $56,679 or 3%. This increase in net loss was primarily due to decreases in gross profit and tax credits as well as an increase in operating expenses, offset by increases in interest income and the change in the fair value of debt during the three months ended September 30, 2024. For the nine months ended September 30, 2024, we had a net loss of $5,279,210 as compared to a net loss of $4,320,835 for the same prior year period, representing increased net loss of $958,375 or 22%. This increase in net loss was primarily due to decreases in gross profit and tax credits and an increase in operating expenses, offset by increases in interest income, the change in the fair value of debt

Previous wording

Our revenues and associated costs incurred relate to government contracts, grants and subawards received to support the development of SGX943 for treatment of emerging and/or antibiotic-resistant infectious diseases; development of CiVax™, our vaccine candidate for the prevention of COVID-19, and evaluation of HyBryte™ for expanded treatment in patients with early-stage CTCL. For the three months ended June 30, 2024, we had revenues of $2,342 as compared to $206,929 for the same prior year period, representing a decrease of $204,587 or 99%. We also incurred costs related to those revenues for the three months ended June 30, 2024 and 2023 of $2,342 and $184,021, respectively, representing a decrease of $181,679 or 99%. Our gross profit for the three months ended June 30, 2024 was zero or 0% of total revenues, as compared to a gross profit of $22,908 or 11% of total revenues for the same period in 2023, representing a decrease of $22,908 or 100%. The decrease in revenue and gross profit during the three months ended June 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study. For the six months ended June 30, 2024, we had revenues of $119,371 as compared to $464,107 for the same prior year period, representing a decrease of $344,736 or 74%. We also incurred costs related to those revenues for the six months ended June 30, 2024 and 2023 of $119,371 and $410,061, respectively, representing a decrease of $290,690 or 71%. Our gross profit for the six months ended June 30, 2024 was zero or 0% of total revenues, as compared to a gross profit of $54,046 or 12% of total revenues for the same period in 2023, representing a decrease of $54,046 or 100%. The decrease in revenue and gross profit during the six months ended June 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study.

Current wording

Our revenues and associated costs incurred relate to government contracts, grants and subawards received to support the development of SGX943 for treatment of emerging and/or antibiotic-resistant infectious diseases; development of CiVax™, our vaccine candidate for the prevention of COVID-19, and evaluation of HyBryte™ for expanded treatment in patients with early-stage CTCL. For the three months ended September 30, 2024 and 2023 we had no revenue as compared to revenue of $130,440 for the same prior year period, representing a decrease of $130,440 or 100%. We also incurred costs related to those revenues for the three months ended September 30, 2023 of $110,441. Our gross profit for the three months ended September 30, 2024 was $0 or 0% of total revenues, as compared to a gross profit of $19,999 or 15% of total revenues for the same period in 2023, representing a decrease of $19,999 or 100%. The decrease in revenue and gross profit during the three months ended September 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study. For the nine months ended September 30, 2024, we had revenues of $119,371 as compared to $594,547 for the same prior year period, representing a decrease of $475,176 or 80%. We also incurred costs related to those revenues for the nine months ended September 30, 2024 and 2023 of $119,371 and $520,502, respectively, representing a decrease of $401,131 or 77%. Our gross profit for the nine months ended September 30, 2024 was $0 or 0% of total revenues, as compared to a gross profit of $74,045 or 12% of total revenues for the same period in 2023, representing a decrease of $74,045 or 100%. The decrease in revenue and gross profit during the nine months ended September 30, 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study.

Previous wording

associated with the anticipated initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial. Research and development expenses were $1,596,198 for the six months ended June 30, 2024 as compared to $1,709,150 for the same period in 2023, representing a decrease of $112,952 or 7%. The decrease was primarily due to adjustment of estimated accruals for completed clinical trials offset by preliminary costs associated with the anticipated initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial.

Current wording

Research and development expenses were $968,689 for the three months ended September 30, 2024 as compared to $826,015 for the same period in 2023, representing an increase of $142,674 or 17%. The increase was primarily due to preliminary costs associated with the initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial offset by an adjustment of estimated accruals for completed clinical trials. Research and development expenses were $2,564,887 for the nine months ended September 30, 2024 as compared to $2,535,165 for the same period in 2023, representing an increase of $29,722 or 1%. The increase was primarily due to preliminary costs associated with the initiation of our Phase 2 study in Behçet’s Disease and the second confirmatory Phase 3 CTCL trial offset by an adjustment of estimated accruals for completed clinical trials.

Previous wording

General and administrative expenses were $1,243,517 for the three months ended June 30, 2024, as compared to $890,533 for the same period in 2023, representing an increase of $352,984 or 40%. The increase in general and administrative expenses for the three months ended June 30, 2024 was primarily attributable to an increase in legal and professional fees associated with the 2024 annual meeting of stockholders, the April 2024 public offering and the June 2024 reverse stock split of our issued and outstanding shares of common stock. General and administrative expenses were $2,265,568 for the six months ended June 30, 2024, as compared to $2,125,909 for the same period in 2023, representing an increase of $139,659 or 7%. The increase in general and administrative expenses for the six months ended June 30, 2024 was primarily attributable to an increase in legal and professional fees associated with the 2024 annual meeting of stockholders, the April 2024 public offering and the June 2024 reverse stock split of our issued and outstanding shares of common stock partially offset by decreases in expenses associated with business development and investor relations.

Current wording

General and administrative expenses were $896,547 for the three months ended September 30, 2024, as compared to $973,040 for the same period in 2023, representing a decrease of $76,493 or 8%. The decrease in general and administrative expenses for the three months ended September 30, 2024 was primarily attributable to decreases in legal and professional fees. General and administrative expenses were $3,162,115 for the nine months ended September 30, 2024, as compared to $3,098,949 for the same period in 2023, representing an increase of $63,166 or 2%. The increase in general and administrative expenses for the nine months ended September 30, 2024 was primarily attributable to an increase in legal and professional fees associated with the 2024 annual meeting of stockholders, the April 2024 public offering and the June 2024 reverse stock split of our issued and outstanding shares of common stock.

Previous wording

The amendment to the convertible debt financing agreement with Pontifax Medison Finance (“Pontifax”) – see Note 4, resulted in the extinguishment of the original convertible debt for accounting purposes. 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. We determined the carrying amount reported in the condensed consolidated balance sheet as of June 30, 2024 for the convertible debt is its fair value which totals $2,745,745 and was approximately equivalent to the face value of the convertible debt at June 30, 2024. We recognized $95,551 and $260,933 of other income from the change in the fair value of the convertible debt on our accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2024, respectively.

Current wording

We recognized $0 and $260,933 of other income from the change in the fair value of the convertible debt on our accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, we determined the carrying amount of the convertible debt was approximately equivalent to the face value of the convertible debt. For the same prior year period, we recognized other loss of $72,463 and other income of $387,537, respectively from the change in fair value of the convertible debt on our accompanying condensed consolidated statements of operations.

Previous wording

Interest expense, net for the three months ended June 30, 2024 was ($35,925) as compared to $60,194 for the same period in 2023, representing a decrease of $96,119 or 160%. The decrease is primarily associated with the reduction in interest resulting from the repayment of $6 million of the convertible debt principal balance. Interest expense, net for the six months ended June 30, 2024 was ($64,767) as compared to $163,762 for the same period in 2023, representing a decrease of $228,529 or 140%. The decrease is primarily associated with the reduction in interest resulting from the repayment of $6 million of the convertible debt principal balance.

Current wording

a reduction in interest expense based on the repayment of $6 million of the convertible debt principal balance. Interest income, net for the nine months ended September 30, 2024 was $143,603 as compared to ($97,399) for the same period in 2023, representing an increase of $241,002 or 247%. The increase is primarily associated with a reduction in interest expense based on the repayment of $6 million of the convertible debt principal balance.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $9,412,539 as compared to $8,446,158 as of December 31, 2023, representing an increase of $966,381 or 11%. As of June 30, 2024, we had working capital of $3,308,260 as compared to working capital of $3,355,212 as of December 31, 2023, representing a decrease of $46,952 or 1%. The increase in cash and cash equivalents was primarily related to cash received from the April 2024 public offering offset by cash used in operating activities during the six months ended June 30, 2024. The decrease in working capital is primarily the result of the reclassification of approximately $1 million of the convertible debt balance from a non-current liability as of December 31, 2023 to a current liability as of June 30, 2024 (resulting from the amendment to the loan and security agreement with Pontifax – see Note 4), and cash used in operating activities during the six months ended June 30, 2024 offset by cash received from the April 2024 public offering.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $9,840,177 as compared to $8,446,158 as of December 31, 2023, representing an increase of $1,394,019 or 17%. As of September 30, 2024, we had working capital of $5,776,645 as compared to working capital of $3,355,212 as of December 31, 2023, representing an increase of $2,421,433 or 72%. The increase in cash and cash equivalents was primarily related to cash received from financing activities offset by cash used in operating activities during the nine months ended September 30, 2024. The increase in working capital is primarily the result of an increase in cash and cash equivalents from financing activities of approximately $9.2 million before deducting commissions and other estimated offering expenses offset by convertible debt principal repayments of approximately $686,000, and cash used in operating activities during the nine months ended September 30, 2024.

Previous wording

quarter of 2025. We do not have sufficient cash and cash equivalents as of the date of filing this Quarterly Report on Form 10-Q to support our operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date that the financial statements are issued.

Current wording

Based on our operating budget, current rate of cash outflows, cash on hand, and proceeds from government contract and grant programs, 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 through the second quarter of 2025. We do not have sufficient cash and cash equivalents as of the date of filing this Quarterly Report on Form 10-Q to support our operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern through 12 months after the date that the financial statements are issued.

Previous wording

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 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. There can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that we will require or achieve the other strategies to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, we will not have sufficient cash resources and liquidity to fund our business operations for at least the 12 months following the date the financial statements are issued. 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. In addition, market instability, including as a result of geopolitical instability, may reduce our ability to access capital, which could negatively affect our liquidity and ability to continue as a going concern. 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.

Current wording

Other than the AGP Sales Agreement which was entered into on August 16, 2024 and the second amendment to the Pontifax loan agreement which was completed on October 8, 2024, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding on acceptable terms to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that we will require, or achieve the other strategies to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, we will not have sufficient cash resources and liquidity to fund our business operations for at least the 12 months following the date the financial statements are issued. 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

Previous wording

Under our budget and based upon our existing product development agreements and license agreements, we expect our total research and development expenditures for the next 12 months to be approximately $6.4 million before any contract or grant reimbursements, all of which relates to the Specialized BioTherapeutics business segment. We anticipate contract and grant reimbursements revenue in the next 12 months of approximately $0.2 million to offset research and development expenses in the Specialized BioTherapeutics business segment.

Current wording

Under our budget and based upon our existing product development agreements and license agreements, we expect our total research and development expenditures for the next 12 months to be approximately $7 million before any contract or grant reimbursements, all of which relates to the Specialized BioTherapeutics business segment. We anticipate contract and grant reimbursements revenue in the next 12 months of approximately $0.3 million to offset research and development expenses in the Specialized BioTherapeutics business segment.

Previous wording

The table below details our costs for research and development by program and amounts reimbursed for the six months ended June 30, 2024 and 2023:

Current wording

The table below details our costs for research and development by program and amounts reimbursed for the nine months ended September 30, 2024 and 2023:

Previous wording

We have licensing fee commitments of approximately $230,000 as of June 30, 2024 over the next five years for several licensing agreements with partners and universities. Additionally, we have collaboration and license agreements, which upon clinical or commercialization success may require the payment of milestones of up to approximately $13.2 million, royalties on net sales of covered products ranging from 2% to 3%, sub-license IND milestones on covered products of up to approximately $200,000, sub-license income royalties on covered products up to 15% and sub-license global net sales royalties on covered products ranging from 1.5% to 2.5%, if and when achieved. However, there can be no assurance that clinical or commercialization success will occur.

Current wording

We have commitments of approximately $205,000 as of September 30, 2024 over the next five years for several licensing agreements with partners and universities. Additionally, we are party to other agreements which include cash milestone payments, royalties and other fees payable, which are all contingent upon clinical or commercialization success. There can be no assurance that clinical or commercialization success will occur.

Previous wording

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. 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. 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.

Current wording

In December 2020, we entered into a $20 million convertible debt financing agreement with Pontifax (the “Loan Agreement”). Under the terms of the Loan Agreement, 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 for the first two years with a fixed interest rate of 8.47% on borrowed amounts and an interest rate of 1% on amounts available but not borrowed as an unused line of credit fee. After the interest-only period, the outstanding principal 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 on substantially all of our assets, other than intellectual property.

Previous wording

In April 2023, we entered into an amendment to the convertible debt financing agreement with Pontifax. The amendment required the immediate payment of $5 million of the outstanding principal balance and any accrued interest, waived any prepayment charge in connection with the repayment of this amount and resulted in an outstanding principal balance of $3 million. The amendment also provided for a new interest only period from the date of the amendment through June 30, 2024, reduced quarterly principal repayments from $1 million to $750,000 and eliminated the minimum cash covenant. Further, the Amendment reduced the conversion price with respect to the remaining principal amount under the agreement to (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 36,790 shares of our common stock issuable upon conversion and to (ii) $27.20 with respect to all shares of our common stock

Current wording

In April 2023, we entered into an amendment to the Loan Agreement (the “2023 Amendment”). The 2023 Amendment called for the immediate payment of $5 million of the outstanding principal balance and any accrued interest, waived any prepayment charge in connection with the repayment of this amount and resulted in an outstanding principal balance of $3 million. The 2023 Amendment also provided for interest only through June 30, 2024, reduced quarterly principal repayments to $750,000, and eliminated the minimum cash covenant. Further, the 2023 Amendment reduced the conversion price with respect to the remaining principal amount to (i) 90% of the closing price of our common stock on the day before the delivery of a conversion notice with respect to the first 36,790 shares of our common stock issuable upon conversion and to (ii) $27.20 with respect to all shares of our common stock issuable upon conversion thereafter. The remaining terms of the agreement remained unmodified.

Previous wording

On January 3, 2024, Pontifax delivered a conversion notice to the Company electing to convert a portion of the remaining principal balance into shares of the Company’s common stock. Upon conversion, the Company issued 9,139 shares of the Company’s common stock at $10.88 per share, reducing the remaining principal balance by $99,416. Pontifax may elect to convert the remaining outstanding loan drawn under the first tranche into additional shares of the Company’s common stock at any time prior to repayment. The Company also has the ability to force the conversion of the loan into shares of its common stock, subject to certain conditions.

Current wording

On January 3, 2024, Pontifax delivered a conversion notice to us electing to convert a portion of the remaining principal balance into shares of our common stock. Upon conversion, we issued 9,139 shares of our common stock at $10.88 per share, reducing the remaining principal balance by $99,416.

Previous wording

On April 15, 2024, Pontifax delivered a conversion notice to the Company electing to convert a portion of the remaining principal balance into shares of the Company’s common stock. Upon conversion, the Company issued 27,651 shares of the Company’s common stock at $5.60 per share, reducing the remaining principal balance by $154,840. Pontifax may elect to convert the remaining outstanding loan drawn under the first tranche into additional shares of the Company’s common stock at any time prior to repayment. The Company also has the ability to force the conversion of the loan into shares of its common stock, subject to certain conditions.

Current wording

On April 15, 2024, Pontifax delivered a conversion notice to us electing to convert a portion of the remaining principal balance into shares of our common stock. Upon conversion, we issued 27,651 shares of our common stock at $5.60 per share, reducing the remaining principal balance by $154,840.

Previous wording

The amendment to the convertible debt financing agreement with Pontifax resulted in the extinguishment of the original convertible debt for accounting purposes. 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. We determined the carrying amount reported in the condensed consolidated balance sheet as of June 30, 2024 for the convertible debt is its fair value which totals $2,745,745 and was approximately equivalent to the face value of the convertible debt at June 30, 2024. We recognized $95,551 and $260,933 of other income from the change in the fair value of the convertible debt on our accompanying condensed consolidated statements of operations during the three and six months ended June 30, 2024, respectively.

Current wording

The 2023 Amendment resulted in the extinguishment of the original convertible debt for accounting purposes. We elected to account for the amended convertible debt using the fair value option. As of September 30, 2024, we determined the carrying amount of the convertible debt was approximately equivalent to the face value of the convertible debt. We recognized $0 and $260,933 of other income from the change in the fair value of the convertible debt in our accompanying condensed consolidated statements of operations during the three and nine months ended September 30, 2024, respectively.

Previous wording

issuable upon conversion in excess of the first 36,790 shares so issued. The remaining terms of the agreement remain in effect without modification.

Current wording

In October 2024, we entered into an amendment (the “2024 Amendment”) to the Loan Agreement, as amended. The 2024 Amendment reduced the conversion price with respect to the remaining principal amount outstanding to (i) $3.81 for the first 501,648 shares of our common stock issuable upon conversion and (ii) $4.23 with respect to all shares of our common stock issuable upon conversion thereafter. The remaining terms of the agreement remain in effect without modification.