Tonix Pharmaceuticals Holding Corp
For the period ended Jun 30, 2024. Filed Aug 16, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 16, 2024
TNXP$4.74+3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001999371-24-005989
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-16.
0001999371-24-010281
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 132 current paragraphs.
55 unchanged; 39 reworded; 31 added; 9 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 5 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
Tonix Medicines has contracted to acquire the Zembrace SymTouch and Tosymra registered trademarks. Intravail is a registered trademark of Aegis Therapeutics, LLC, a wholly owned subsidiary of Neurelis, Inc.
Current report
General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2024 were $7.5 million, an increase of $0.5 million, or 7%, from $7.0 million incurred in the three months ended June 30, 2023. The increase in primarily an increase in financial reporting expenses of $0.4 million, related to the shareholder meetings, an increase in sales and marketing of $0.5 million, offset by a decrease in employee-related expenses of $0.5 million.
Current report
Asset impairment charges*.* We recognized a non-cash impairment charge of $48.8 million related to property and equipment, a non-cash impairment of $1.0 million related to goodwill, and a non-cash impairment charge of $9.2 million related to intangible assets, which is reflected in asset impairment charges in the consolidated statements of operations for the three months ended June 30, 2024.
Current report
The impairment of the Tosymra and Zembrace inventory, intangibles and goodwill was driven by our delayed investment in the sales personnel required to drive growth in the business as we are focusing our cash resources to further our efforts to bring TNX-102 SL through the approval process and to market. However, we believe that the benefits and long-term value proposition of the 2023 acquisition of Tosymra and Zembrace remain, in that we now have the infrastructure to be ready to manufacture and sell TNX-102 SL under an expedited timeline pending FDA approval for which we expect an FDA decision in 2025.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Cost of Sales*.* We recognized cost of sales beginning in July 2023 as a result of the acquisition of Zembrace and Tosymra from Upsher Smith. Cost of sales recognized for the six months ended June 30, 2024, was $5.0 million, including write-downs related to Tosymra and Zembrace finished goods inventory of approximately $1.7 million based on an assessment of inventory on hand and projected sales prior to the respective expiration dates.
Current report
Asset impairment charges*.* We recognized a non-cash impairment charge of $48.8 million related to property and equipment, a non-cash impairment of $1.0 million related to goodwill, and a non-cash impairment charge of $9.2 million related to intangible assets, which is reflected in asset impairment charges in the consolidated statements of operations for the six months ended June 30, 2024.
Current report
The impairment of the Tosymra and Zembrace inventory, intangibles and goodwill was driven by our delayed investment in the sales personnel required to drive growth in the business as we are focusing our cash resources to further our efforts to bring TNX-102 SL through the approval process and to market. However, we believe that the benefits and long-term value proposition of the 2023 acquisition of Tosymra and Zembrace remain, in that we now have the infrastructure to be ready to manufacture and sell TNX-102 SL under an expedited timeline pending FDA approval for which we expect an FDA decision in 2025.
Current report
Net Loss. As a result of the foregoing, the net loss for the six months ended June 30, 2024 was $93.7 million, an increase of $32.3 million, or 53%, compared to a net loss of $61.4 million for the six months ended June 30, 2023.
Current report
2024 At-the-Market Offering
Current report
On July 9, 2024, we entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which we sold 3,393,600 shares of common stock and pre-funded warrants to purchase up to 3,703,140 shares of common stock. The offering price per share of common stock was $0.57, and the offering price per share of pre-funded warrant was $0.5699.
Current report
The offering closed on July 10, 2024. We incurred offering expenses of approximately $0.5 million, including placement agent fees of approximately $0.3 million. We received net proceeds of approximately $3.5 million, after deducting the underwriting discount and other offering expenses.
Current report
June 2024 Financings
Current report
On June 12, 2024, we entered into a securities purchase agreement with certain investors, pursuant to which we sold 1,199,448 shares of common stock and pre-funded warrants to purchase up to 2,568,110 shares of common stock. The offering price per share of common stock was $1.065, and the offering price per share of pre-funded warrant was $1.064.
Current report
The offering closed on June 13, 2024. We incurred offering expenses of approximately $0.5 million, including placement agent fees of approximately $0.3 million. We received net proceeds of approximately $3.5 million, after deducting the underwriting discount and other offering expenses.
Current report
On June 27, 2024, we entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which we sold 2,833,900 shares of common stock and pre-funded warrants to purchase up to 4,228,158 shares of common stock. The offering price per share of common stock was $0.57, and the offering price per share of pre-funded warrant was $0.5699.
Current report
The offering closed on June 28, 2024. We incurred offering expenses of approximately $0.5 million, including placement agent fees of approximately $0.3 million. We received net proceeds of approximately $3.5 million, after deducting the underwriting discount and other offering expenses.
Current report
Upon the closing of the offering, we determined that certain of the Common Warrants did not meet the criteria for equity classification due to the lack of sufficient authorized and unissued shares to settle the instruments. We have adopted a sequencing approach under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity to determine the classification of its contracts at issuance and at each subsequent reporting date, whereby shares are allocated based on the earliest issuance date of potentially dilutive instruments, with the earliest issuance date receiving the first allocation of shares. In the event of identical issuance dates, shares are then allocated beginning with instruments with the latest maturity date first. Pursuant to this sequencing approach, our authorized and unissued shares were applied to the Pre-Funded Warrants and the Common Warrants in the following order: (i) the Pre-Funded Warrants, (ii) the Series D Warrants, and (iii) the Series C Warrants. Based on this analysis, we determined that the authorized shares are sufficient to settle the remaining Pre-Funded Warrants and 1,591,665 Series D Warrants and were therefore classified in equity. The remaining 942,120 Series D Warrants and the Series C Warrants associated with the deficit shares were classified as liabilities and are accounted for at fair value.
Current report
The $30.0 million in gross proceeds received by us was first allocated to the Series C Warrants and the liability-classified Series D Warrants at their respective fair values of approximately $14.4 million and $8.1 million, respectively. The residual proceeds of approximately $7.5 million were allocated to the shares of common stock, the Pre-Funded Warrants, and the equity-classified Series D Warrants on a relative fair value basis. The issuance costs totaling $2.3 million were allocated between the equity and liability-classified instruments on a relative fair value basis. Issuance costs of $1.4 million allocated to the shares, the Pre-Funded Warrants, and the equity-classified Series D Warrants were recognized as a discount to the proceeds allocated to the equity-classified instruments. Issuance costs of $0.9 million were allocated to the liability-classified Series D Warrants and the Series C Warrants and expensed within Selling, general and administrative expense on the consolidated statements of operations.
Current report
On January 25, 2024, our stockholders approved the proposal to file an amendment to our Articles of Incorporation to increase the number of authorized shares of common stock from 160,000,000 to 1,000,000,000.
Current report
The liability-classified Series D Warrants and all of the Series C Warrants were presented within non-current liabilities on the consolidated balance sheets as of December 31, 2023, and were adjusted to fair value through January 25, 2024, when the warrants were reclassified to equity. Changes in the fair value of the liability-classified warrants were recognized as a separate component in the consolidated statement of operations.
Current report
July 2023 Financing
Current report
During the three and six months ended June 30, 2023, we sold 0 and 3,000 shares, respectively, of common stock under the 2022 Purchase Agreement, for net proceeds of approximately $0 and $0.4 million, respectively. No shares were sold during 2024 under the 2022 Purchase Agreement.
Current report
At-the-Market Offerings
Current report
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than our closing stock price at the respective dates.
Current report
The weighted average fair value of options granted during the three and six months ended June 2024 was $5.06 per share and $10.16 per share, respectively. The weighted average fair value of options granted during the three and six months ended June 2023 was $87.36 per share and $128.32 per share, respectively.
Current report
Employee Stock Purchase Plans
Current report
Asset impairment charges. We test certain assets for impairment, including goodwill, indefinite-lived intangibles, long-lived assets and amortizing intangibles. Goodwill is reviewed for impairment by comparing the carrying value of a reporting unit to its fair value on an annual basis as of June 30, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired. We evaluate long-lived assets for impairment, including property and equipment and finite-lived intangibles assets whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.
Current report
We completed the required annual impairment test for goodwill as of June 30, 2024, primarily using an income approach or discounted cash flow analysis. Additionally, due to a sustained decline in revenues and continued delays in building out the sales team for its commercialized products, we also tested the commercialized products asset group for recoverability as of June 30, 2024, and determined that the carrying value was not recoverable and therefore estimated the fair value of the asset group using a discounted cash flow analysis. The significant assumptions used in the discounted cash flow model included revenue growth, long-term growth rate, and discounts rate. The impairment assessments resulted in full non-cash impairment of $965,000 of goodwill and $9.2 million, consisting of $6.2 million and $3.0 million for the Zembrace and Tosymra developed technology, intangible assets, which are reflected in asset impairment charges in the consolidated statements of operations for the three and six months ended June 30, 2024.
Current report
During the three months ended June 30, 2024, we identified certain triggering events related to the ADC and the decommissioning of the ADC. The Company determined that the carrying value of the ADC was not recoverable and that the carrying value exceeded its fair value. We engaged independent appraisers to value the building and land, using sales comparison and income capitalization approaches, and the related fixed assets using a indirect cost approach and market approach. The assessments resulted in a non-cash impairment charge of $48.8 million, which is reflected in asset impairment charges in the consolidated statements of operations for the three and six months ended June 30, 2024.
Current report
The classification of derivative instruments is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Removed paragraphs (9)
Previous report
Tonmya has been conditionally accepted by the U.S. Food and Drug Administration (FDA) as the tradename for TNX-102 SL for the management of fibromyalgia. Tonmya has not been approved for any indication.
Previous report
Zembrace SymTouch and Tosymra are registered trademarks of Tonix Medicines. All other marks are the property of their respective owners.
Previous report
The Company’s net product revenues are summarized below:
Previous report
No sales under the 2022 Purchase Agreement occurred during the quarter ended March 31, 2024. During the quarter ended March 31, 2023, we sold 0.1 million shares of common stock under the 2022 Purchase Agreement, for net proceeds of approximately $0.4 million.
Previous report
At-the-Market Offering
Previous report
Stock Incentive Plans
Previous report
The weighted average fair value of options granted for the three-month periods ended March 31, 2024 and 2023 was $0.33 and $4.13 per share, respectively.
Previous report
Employee Stock Purchase Plan
Previous report
Operating leases
Reworded paragraphs (39)
Previous wording
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to: our need for additional financing; risks related to the failure to obtain FDA clearances or approvals and noncompliance with FDA regulations; risks related to the failure to successfully market any of our products; risks related to the timing and progress of clinical development of our product candidates; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and substantial competition.
Current wording
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors known to us could cause actual results to differ materially from those in forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that its assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from its assumptions. Factors that could cause differences include, but are not limited to: the COVID-19 pandemic, including its impact on the Company, substantial competition; our possible need for additional financing; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and risks related to failure to obtain clearances or approvals from the United States Food and Drug Administration, or FDA, and noncompliance with FDA regulations.
Previous wording
We are a fully-integrated biopharmaceutical company focused on developing, licensing and commercializing therapeutics to treat and prevent human disease and alleviate suffering. Tonix’s development portfolio is focused on central nervous system (CNS) disorders. Tonix’s priority is to submit a New Drug Application (NDA) to the FDA in the second half of 2024 for Tonmya™, a product candidate for which two pivotal Phase 3 studies have been completed for the management of fibromyalgia. Tonix has a pre-NDA meeting scheduled with the FDA in the second quarter of 2024. TNX-102 SL is also being developed to treat acute stress reaction as well as fibromyalgia-type Long COVID. Tonix’s CNS portfolio includes TNX-1300 (cocaine esterase), a biologic designed to treat cocaine intoxication that has Breakthrough Therapy designation. Tonix’s immunology development portfolio consists of biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. Tonix also has product candidates in development in the areas of rare disease and infectious disease. Tonix Medicines, our commercial subsidiary, markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg for the treatment of acute migraine with or without aura in adults.
Current wording
Tonix is a fully-integrated biopharmaceutical company focused on developing, licensing and commercializing therapeutics to treat and prevent human disease and alleviate suffering. Tonix’s development portfolio is focused on central nervous system (CNS) disorders. Tonix’s priority is to submit a New Drug Application (NDA) to the FDA in the second half of 2024 for TNX-102 SL, a product candidate for which two statistically significant Phase 3 studies have been completed for the management of fibromyalgia. TNX-102 SL for fibromyalgia was granted Fast Track designation by the FDA. Tonix expects a decision on marketing approval from the FDA in 2025. TNX-102 SL is also expected to be tested by the University of North Carolina under a physician IND for Acute Stress Reaction in a trial funded by the U.S. Department of Defense (DoD), Congressionally Directed Medical Research Program, or CDMRP for approximately $3 million. Tonix’s CNS portfolio includes TNX-1300 (cocaine esterase), a biologic designed to treat cocaine intoxication that has FDA Breakthrough Therapy designation. Tonix’s immunology development portfolio consists of biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500, which is a humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of allograft rejection and for the treatment of autoimmune diseases. Tonix also has product candidates in development in the areas of rare disease and infectious disease. Tonix’s infectious disease portfolio includes TNX-4200, an oral CD45 antagonist in development as a broad-spectrum antiviral. The program was awarded a contract for up to $34 million of funding by the U.S. Department of Defense (DoD), Defense Threat Reduction Agency (DTRA), to establish physicochemical properties, pharmacokinetics, and safety attributes to support an Investigational New Drug (IND) submission and to fund a first-in-human Phase 1 clinical study. Tonix is developing TNX-801 (recombinant horsepox virus), for preventing mpox (formerly known as monkeypox). On August 14, 2024, the World Health Organization determined that the upsurge of mpox in a growing number of countries in Africa constitutes a public health emergency of international concern. Tonix owns and operates a state-of-the art infectious disease research facility in Frederick, MD. Tonix Medicines, our commercial subsidiary, markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg for the treatment of acute migraine with or without aura in adults.
Previous wording
All of our product candidates are investigational new drugs or biologics and have not been approved for any indication.
Current wording
Tonix’s product development candidates are investigational new drugs or biologics and have not been approved for any indication.
Previous wording
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the sale of our commercialized assets, progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make. Since the acquisition of Zembrace and Tosymra on June 30, 2023, we are now reporting product revenue and related costs.
Current wording
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the sales of Zembrace® and Tosymra®, the progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.
Previous wording
Revenues. The Company recognized revenue beginning in July 2023, as a result of the acquisition of two marketed products. Revenue recognized for the quarter ended March 31, 2024, was $2.5 million.
Current wording
Revenues. We recognized revenue beginning in July 2023, as a result of the acquisition of two marketed products. Revenue recognized for the quarter ended June 30, 2024, was $2.2 million.
Previous wording
Cost of Sales. The Company recognized cost of sales beginning in July 2023 as a result of the acquisition of Zembrace and Tosymra from Upsher Smith. Cost of sales recognized for the quarter ended March 31, 2024, was $1.7 million.
Current wording
Cost of Sales*.* We recognized cost of sales beginning in July 2023 as a result of the acquisition of Zembrace and Tosymra from Upsher Smith. Cost of sales recognized for the quarter ended June 30, 2024, was $3.4 million, including write-downs related to Tosymra and Zembrace finished goods inventory of approximately $1.7 million based on an assessment of inventory on hand and projected sales prior to the respective expiration dates.
Previous wording
Research and Development Expenses. Research and development expenses for the three months ended March 31, 2024, were $12.9 million, a decrease of $13.6 million, or 51%, from $26.5 million for the three months ended March 31, 2023. The decrease is predominately due to decreased clinical expenses of $5.0 million, non-clinical expenses of $4.2 million, and manufacturing expenses of $0.9 million as a result of fewer trials in the clinic and pipeline prioritization period over period, employee-related expenses of $0.8 million and lab supplies of $1.8 million, due to a reduction in expenditures.
Current wording
Research and Development Expenses. Research and development expenses for the three months ended June 30, 2024 were $9.7 million, a decrease of $12.3 million, or 56%, from $22.0 million for the three months ended June 30, 2023. This decrease is predominately due to decreased clinical expenses of $3.8 million, non-clinal expenses of $3.9 million, manufacturing expenses of $1.5 million as a result of fewer trials in the clinic and pipeline prioritization period over period, employee-related expenses of $1.6 and lab supplies of $1.4 million due to a reduction in expenditures.
Previous wording
The table below summarizes our direct research and development expenses for our product candidates and development platform for the quarters ended March 31, 2024, and 2023.
Current wording
The table below summarizes our direct research and development expenses for our product candidates and development platform for the three months ended June 30, 2023, and 2022.
Previous wording
Net Loss. As a result of the forgoing, the net loss for the three months ended March 31, 2024, was $14.9 million, compared to a net loss of $33.0 million for the three months ended March 31, 2023, a decrease of $18.1 million or 55%.
Current wording
Net Loss*.* As a result of the foregoing, the net loss for the three months ended June 30, 2024 was $78.8 million, an increase of $50.4 million, or 177%, compared to a net loss of $28.4 million for the three months ended June 30, 2023.
Previous wording
General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2024, were $9.3 million, an increase of $1.9 million, or 26%, from $7.4 million incurred in the three months ended March 31, 2023. The increase is primarily due to an increase in financial reporting expenses of $0.6 million, related to the special shareholder meetings in Q1 2024, an increase in sales and marketing of $0.4 million, and transition services agreement fees payable to Upsher Smith of $0.7 million.
Current wording
General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2024 were $16.8 million, an increase of $2.4 million, or 17%, from $14.4 million incurred in the six months ended June 30, 2023. The increase is primarily due to an increase in financial reporting expenses of $1.0 million, related to the special shareholder meetings in 2024, an increase in sales and marketing of $0.8 million, and transition services agreement fees payable to Upsher Smith of $0.7 million.
Previous wording
As of March 31, 2024, we had working capital of $9.6 million, comprised primarily of cash and cash equivalents of $7.0 million, inventory of $12.4 million, and prepaid expenses and other of $10.7 million, offset by $6.6 million of accounts payable, $10.7 million of accrued expenses and other current liabilities, $2.8 million of term loan payable, short term and $0.3 million of lease liabilities, short term. A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our clinical programs, and the acquisition of Zembrace and Tosymra. During the fourth quarter of 2023, we engaged CBRE, an international real estate brokerage firm, to potentially find a strategic partner for, or buyer of, our Advanced Development Center in North Dartmouth, Massachusetts (“ADC”), to align with our current business objectives and priorities. Currently, we do not have a commitment in place to sell the building.
Current wording
As of June 30, 2024, we had working capital of $3.2 million, comprised primarily of cash and cash equivalents of $4.2 million, Accounts receivable, net of $3.3 million, Inventory of $9.4 million and prepaid expenses and other of $8.3 million, offset by $10.4 million of accounts payable, $8.5 million of accrued expenses, short-term loan payable of $2.8 million, and current lease liabilities of $0.3 million. A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our clinical programs, and the operations related to Zembrace and Tosymra. During the fourth quarter of 2023, we engaged CBRE, an international real estate brokerage firm, to potentially find a strategic partner for, or buyer of, our Advanced Development Center in North Dartmouth, Massachusetts (“ADC”), to align with our current business objectives and priorities. Currently, we do not have a commitment in place to sell the ADC.
Previous wording
The following table provides a summary of operating, investing and financing cash flows for the quarters ended March 31, 2024, and 2023, respectively (in thousands):
Current wording
The following table provides a summary of operating, investing and financing cash flows for the six months ended June 30, 2024, and 2023, respectively (in thousands):
Previous wording
For the three months ended March 31, 2024, and 2023, we used approximately $17.6 million and $32.9 million of cash in operating activities, respectively, which represents cash outlays for research and development and general and administrative expenses in such periods. The decrease in cash outlays principally resulted from a decrease in research and development activities. For the three months ended March 31, 2024, net cash used by financing activities were $0.2 million, predominately from the repayment of the term loan. For the three months ended March 31, 2023, net cash used by financing activities were $11.5 million, predominately from the repurchase of our common stock. Cash used by investing activities for the three months ended March 31, 2024, and 2023, was $0.1 million and $3.8 million respectively, related to the purchase of property and equipment. The decrease is predominately due to less property and equipment purchases as the ADC and RDC were placed in service during 2022.
Current wording
For the six months ended June, 2024 and 2023, we used approximately $27.5 million and $56.3 million of cash in operating activities, respectively, which represents cash outlays for research and development and general and administrative expenses in such periods. The decrease in cash outlays principally resulted from a decrease in research and development activities. For the six months ended June 30, 2024, net cash provided from financing activities was $6.8 million predominately from the issuance of common stock offset by the deferred payment to USL. For the six months ended June 30, 2023, net cash used from financing activities was $10.5 million, predominately from the repurchase of our common stock. Cash used in investing activities for the six months ended June 30, 2024 was $0.1 million related to the purchase of property and equipment, and $27.8 million for the six months ended June 30, 2023 related to the purchase of the USL assets and property and equipment.
Previous wording
We believe that our cash resources at March 31, 2024, and the proceeds that we raised from equity offerings subsequent to the end of the first quarter of 2024, will not meet our operating and capital expenditure requirements through the second quarter of 2024.
Current wording
We believe that our cash resources at June 30, 2024, and the proceeds that we raised from equity offerings subsequent to the end of the second quarter of 2024 will meet our operating and capital expenditure requirements into the third quarter of 2024, but not beyond.
Previous wording
We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to changes we may make in our research and development spending plans. These factors raise substantial doubt about our ability to continue as a going concern for the one-year period from the date of filing of this Form 10-Q. We must obtain additional funding through public or private financing or collaborative arrangements with strategic partners to increase the funds available to fund operations. Without additional funds, we may be forced to delay, scale back or eliminate some of our research and development activities, or other operations and potentially delay product development to provide sufficient funds to continue our operations. If any of these events occurs, our ability to achieve our development and commercialization goals would be adversely affected and we may be forced to cease operations.
Current wording
We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to changes we may make in our research and development spending plans. These factors raise substantial doubt about our ability to continue as a going concern for the one year period from the date of filing of this Form 10-Q. We have the ability to obtain additional funding through public or private financing or collaborative arrangements with strategic partners to increase the funds available to fund operations. Without additional funds, we may be forced to delay, scale back or eliminate some or all of our research and development activities or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events occurs, our ability to achieve our development and commercialization goals will be adversely affected.
Previous wording
We expect to incur losses from operations for the near future. We expect to incur increasing research and development expenses, including expenses related to additional clinical trials and the build out of our research and development operations and manufacturing. We will not have enough resources to meet our operating requirements for the one-year period from filing date of this report.
Current wording
We expect to incur losses from operations for the near future. We expect to decrease our operating costs to align the Company’s capital and human resources with its previously announced strategic prioritization of TNX-102 SL product candidate for the management of fibromyalgia. We will not have enough resources to meet our operating requirements for the one-year period from filing date of this report.
Previous wording
Our future capital requirements will depend on a number of factors, including the availability of financing, the timing and outcome of regulatory approvals, the progress of our research and development of product candidates, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, and our success in developing markets for our product candidates.
Current wording
Our future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates, the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing and our success in developing markets for our product candidates.
Previous wording
We will need to obtain additional capital in order to fund future research and development activities. Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.
Current wording
We will need to obtain additional capital in order to fund future research and development activities and future capital expenditures. Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.
Previous wording
On March 28, 2024, we entered into an agreement to sell 10,766,666 shares of common stock, pre-funded warrants to purchase up to 3,900,000 shares of common stock, and accompanying Series E warrants to purchase up to 14,666,666 shares of common stock with an exercise price of $0.33 per share and expiring five and a half years from date of issuance in a public offering, which closed on April 1, 2024. The offering price per share of common stock was $0.30, accompanying warrants was $0.33, and the offering price per share of pre-funded warrants was $0.2999.
Current wording
On March 28, 2024, we entered into an agreement to sell 336,459 shares of common stock, pre-funded warrants to purchase up to 121,875 shares of common stock, and accompanying Series E warrants to purchase up to 458,334 shares of common stock with an exercise price of $10,56 per share and expiring five and a half years from date of issuance in a public offering, which closed on April 1, 2024. The offering price per share of common stock was $9.60 and the offering price per share of pre-funded warrants was $9.5968.
Previous wording
Additionally, with the closing of the financing on April 1, 2024, we entered into warrant amendments with certain holders of our Common Warrants. The exercise price of each Existing Warrant will be amended to $0.33 upon approval by the Company’s stockholders of a proposal to allow the Existing Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635, or as otherwise provided in the Amendment if stockholder approval is not obtained by October 1, 2024. Stockholders will vote on this proposal on May 22, 2024. Upon stockholder approval, the termination date for Common Warrants to purchase up to an aggregate of 6,950,000 shares will be amended to April 1, 2029; the termination date for Series A Warrants to purchase up to an aggregate of approximately 8,900,000 shares will be April 1, 2029; the termination date for Series B Warrants to purchase up to an aggregate of approximately 8,900,000 shares will be April 1, 2029; the termination date for Series C Warrants to purchase up to an aggregate of approximately 34,823,928 shares will be the earlier of (i) April 1, 2026 and (ii) 10 trading days following notice by the Company to the Series C Warrant holder of the Company’s public announcement of the FDA’s acknowledgement and acceptance of our NDA relating to TNX-102 SL in patients with Fibromyalgia; the termination date for Series D Warrants to purchase up to an aggregate of approximately 34,823,928 shares will be April 1, 2029. The other terms of the Existing Warrants will remain unchanged. If stockholder approval is not obtained on or by October 1, 2024, then the Company has agreed to automatically amend the exercise price of the Existing Warrants to the Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) of the Common Stock on October 1, 2024 if and only if the Minimum Price is below the then current exercise price.
Current wording
Additionally, with the closing of the financing on April 1, 2024, we entered into warrant amendments (collectively, the “Warrant Amendments”) with certain holders of our common warrants (referred to herein as the “Existing Warrants”). We agreed to amend the exercise price of each Existing Warrant to $10.56 upon approval by our stockholders of a proposal to allow the Existing Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 or, if stockholder approval is not obtained by October 1, 2024, we agreed to automatically amend the exercise price of the Existing Warrants to the Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) of our common stock on October 1, 2024 if and only if the Minimum Price is below the then current exercise price. Upon stockholder approval on May 22, 2024, the termination date for the warrants issued August 2023 (the “August Warrants”) to purchase up to an aggregate of 217,188 shares was amended to April 1, 2029; the termination date for Series A Warrants to purchase up to an aggregate of approximately 278,125 shares is April 1, 2029; the termination date for Series B Warrants to purchase up to an aggregate of approximately 278,125 shares is April 1, 2025; the termination date for Series C Warrants to purchase up to an aggregate of approximately 1,088,248 shares is the earlier of (i) April 1, 2026 and (ii) 10 trading days following notice by we to the Series C Warrant holder of our public announcement of the FDA’s acknowledgement and acceptance of our NDA relating to TNX-102 SL in patients with Fibromyalgia; the termination date for Series D Warrants to purchase up to an aggregate of approximately 1,088,248 shares is April 1, 2029. The other terms of the Existing Warrants will remain unchanged. On May 22, 2024, at the annual meeting of stockholders, our stockholders approved the proposal to amend the exercise prices of the Existing Warrants to $10.56 per share and extend the expiration dates.
Previous wording
On December 20, 2023, we issued (i) 25,343,242 shares of our common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 28,710,812 shares of common stock and (iii) Series C warrants to purchase up to 81,081,081 shares of common stock (the “Series C Warrants”), and (iv) Series D warrants to purchase up to 81,081,081 shares of common stock (the “Series D Warrants” and, together with the Series C Warrants, the “Common Warrants”) in a registered direct offering. The securities were sold in fixed combinations as units. The offering price per share of common stock and accompanying Common Warrants was $0.555, and the offering price per Pre-Funded Warrant and accompanying Common Warrants was $0.5549. The offering closed on December 22, 2023, generating gross proceeds of approximately $30.0 million, before deducting offering expenses of $2.3 million payable by us.
Current wording
On December 20, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which we sold and issued (i) 791,977 shares of our common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 897,213 shares of common stock and (iii) Series C warrants to purchase up to 2,533,784 shares of common stock (the “Series C Warrants”), and (iv) Series D warrants to purchase up to 2,533,784 shares of common stock (the “Series D Warrants” and, together with the Series C Warrants, the “Common Warrants”). The securities sold in the offering were sold in fixed combinations as units. The offering price per share of common stock and accompanying Common Warrants was $17.76, and the offering price per Pre-Funded Warrant and accompanying Common Warrants was $17.7568. The offering closed on December 22, 2023, generating gross proceeds of approximately $30.0 million, before deducting offering expenses of $2.3 million payable by us. At the closing of the offering, 203,407 Pre-Funded Warrants were immediately exercised into shares of common stock for nominal proceeds.
Previous wording
The Pre-Funded Warrants have an exercise price of $0.0001 per share, are immediately exercisable subject to certain ownership limitations, and can be exercised at any time until exercised in full. The Series C Warrants have an exercise price of $0.555 per share, and are exercisable on the later of approval by the Company’s stockholders of (i) a proposal to approve the filing of an amendment to the Company’s Articles of Incorporation, increasing the number of authorized shares of common stock from 160,000,000 to 1,000,000,000 and (ii) a proposal to allow the Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 (the later of such events, the “Approval Date”) and will expire on the later of (a) 10 trading days following the Approval Date and (b) the earlier of (x) the two year anniversary of the Approval Date and (y) 10 trading days following the public announcement of the FDA’s acknowledgement and acceptance of the NDA relating to TNX-102 SL in patients with fibromyalgia. The Series D Warrants have an exercise price of $0.85 per share and are exercisable beginning on the Approval Date through the five-year anniversary of the Approval Date.
Current wording
The Pre-Funded Warrants have an exercise price of $0.0001 per share, are immediately exercisable subject to certain ownership limitations, and can be exercised at any time until exercised in full. The Series C Warrants have an exercise price of $17.76 per share, and are exercisable on the later of approval by our stockholders of (i) a proposal to approve the filing of an amendment to our Articles of Incorporation, increasing the number of authorized shares of common stock from 160,000,000 to 1,000,000,000 and (ii) a proposal to allow the Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 (the later of such events, the “Approval Date”) and will expire on the later of (a) 10 trading days following the Approval Date and (b) the earlier of (x) the two year anniversary of the Approval Date and (y) 10 trading days following the public announcement of the U.S. Food and Drug Administration’s (“FDA”) acknowledgement and acceptance of the New Drug Application (“NDA”) relating to our TNX-102 SL product candidate in patients with fibromyalgia. The Series D Warrants have an exercise price of $27.20 per share and are exercisable beginning on the Approval Date through the five-year anniversary of the Approval Date.
Previous wording
On September 28, 2023, we sold 4,050,000 shares of common stock; pre-funded warrants to purchase up to 4,950,000 shares of common stock, and accompanying common warrants to purchase up to 9,000,000 shares of common stock with an exercise price of $0.50 per share and expiring one year from date of issuance, and common warrants to purchase up to 9,000,000 shares of common stock with an exercise price of $0.50 per share and expiring five years from date of issuance in a public offering which closed on October 3, 2023. The offering price per share of common stock and accompanying common warrant was $0.50, and the offering price per share of pre-funded warrant and accompanying common warrant was $0.4999.
Current wording
On September 28, 2023, we sold 126,563 shares of common stock; pre-funded warrants to purchase up to 154,687 shares of common stock, and accompanying Series A warrants to purchase up to 281,250 shares of common stock with an exercise price of $16.00 per share and expiring five years from date of issuance, and Series B warrants to purchase up to 281,250 shares of common stock with an exercise price of $16.00 per share and expiring one year from date of issuance in a public offering, which closed on October 3, 2023. The offering price per share of common stock and accompanying warrants was $16.00, and the offering price per share of pre-funded warrant and accompanying warrants was $15.99.
Previous wording
We incurred other offering expenses of approximately $0.5 million, including a placement agent discount. We received net proceeds of approximately $4.0 million, after deducting the underwriting discount and other offering expenses.
Current wording
We incurred offering expenses of approximately $0.5 million, including placement agent fees of approximately $0.3 million. We received net proceeds of approximately $4.0 million, after deducting the underwriting discount and other offering expenses.
Previous wording
On July 27, 2023, we sold securities consisting of 2,530,000 shares of common stock; pre-funded warrants to purchase up to 4,470,000 shares of common stock and common warrants to purchase up to 7,000,000 shares of common stock in a public offering that closed on August 1, 2023. The offering price per share of common stock and accompanying common warrant was $1.00, and the offering price per pre-funded warrant and accompanying common warrant was $0.9999.
Current wording
On July 27, 2023, we sold 79,062 shares of common stock; pre-funded warrants to purchase up to 139,688 shares of common stock and accompanying common warrants to purchase up to 218,750 shares of common stock with an exercise price of $32.00 per share in a public offering that closed on August 1, 2023. The offering price per share of common stock and accompanying common warrant was $32.00, and the offering price per share of pre-funded warrant and accompanying common warrant was $31.99.
Previous wording
Pursuant to the terms of the 2022 Purchase Agreement, at the time we signed the 2022 Purchase Agreement and the 2022 Registration Rights Agreement, we issued 100,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2022 Purchase Agreement. The commitment shares were valued at $1,000,000 and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to be raised under the 2022 Purchase Agreement.
Current wording
Pursuant to the terms of the 2022 Purchase Agreement, at the time we signed the 2022 Purchase Agreement and the 2022 Registration Rights Agreement, we issued 3,125 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2022 Purchase Agreement. The commitment shares were valued at $1,000,000 and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital to be raised under the 2022 Purchase Agreement.
Previous wording
On April 8, 2020, we entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which we may issue and sell, from time to time, shares of our Common stock having an aggregate offering price of up to $320.0 million in at-the-market offerings (“ATM”) sales. AGP will act as sales agent and will be paid a 3% commission on each sale under the Sales Agreement. Our common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. No shares of common stock under the Sales Agreement were sold during the quarter ended March 31, 2024. During the quarter ended March 31, 2023, we sold approximately 0.5 million shares of common stock under the Sales Agreement, for net proceeds of approximately $2.0 million. During the quarter ended March 31, 2024, no shares of common stock under the Sales Agreement were sold.
Current wording
On April 8, 2020, we entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $320.0 million in at-the-market offerings (“ATM”) sales. AGP will act as sales agent and will be paid a 3% commission on each sale under the Sales Agreement. Our common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. There were no sales under the Sales Agreement during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, we sold approximately 13,766 and 29,855 shares, respectively, of common stock under the Sales Agreement, for net proceeds of approximately $1.0 million and $3.0 million, respectively. There will be no more sales under the 2020 ATM.
Previous wording
During the quarter ended March 31, 2023, we repurchased 2,512,044 of our shares of common stock outstanding under a $12.5 million share purchase program at prices ranging from$2.75 to $8.61 per share for a gross aggregate cost of approximately $12.5 million. In addition, we incurred expenses of $0.3 million.
Current wording
During the first quarter of 2023, we repurchased 78,502 of our shares of common stock outstanding under the 2022 share repurchase program for $12.5 million at prices ranging from $88.00 to $275.52 per share for a gross aggregate cost of approximately $12.5 million. In addition, we incurred expenses of $0.3 million.
Previous wording
In January 2023, the Board of Directors approveda new share repurchase program pursuant to which the Company may repurchase up to an additional $12.5 million in value of its outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors. During the quarter ended March 31, 2023, we repurchased 160,000 of our shares of common stock outstanding under the new share repurchase program at $7.12 per share for a gross aggregate cost of $1.1 million.
Current wording
In January 2023, the Board of Directors approveda new 2023 share repurchase program pursuant to which we may repurchase up to an additional $12.5 million in value of our outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors. During the first quarter of 2023, we repurchased 5,000 of our shares of common stock outstanding under the new 2023 share repurchase program at $227.84 per share for a gross aggregate cost of $1.1 million.
Previous wording
Under the terms of the Amended and Restated 2020 Plan, we may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation rights (“SARs”), (4) restricted stock units, (5) other stock-based awards, and (6) cash-based awards. The Amended and Restated 2020 Plan initially provided for the issuance of up to 50,000 shares of common stock, which amount will be increased to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except as otherwise provided in the Amended and Restated 2020 Plan). In addition, the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our common stock available for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent (20%) of the total number of shares of common stock outstanding on December 31 st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended and Restated 2020 Plan on December 31 stof such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards or available for future awards). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan. However, the exercise price of an incentive stock option may not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100% of fair value for a grantee who is not a 10% shareholder. The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years. As of March 31, 2024, 1,973,136 options were available for future grants under the Amended and Restated 2020 Plan.
Current wording
Under the terms of the Amended and Restated 2020 Plan, we may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation rights (“SARs”), (4) RSUs, (5) other stock-based awards, and (6) cash-based awards. The Amended and Restated 2020 Plan initially provided for the issuance of up to 1,563 shares of common stock, which amount will be increased to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except as otherwise provided in the Amended and Restated 2020 Plan). In addition, the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our common stock available for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent (20%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended and Restated 2020 Plan on December 31 st of such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards or available for future awards). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan. However, the exercise price of an incentive stock option may not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100% of fair value for a grantee who is not a 10% shareholder. The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years. As of June 30, 2024, 55,544 options were available for future grants under the Amended and Restated 2020 Plan.
Previous wording
We measure the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions discussed below, and the closing market price of the Company’s common stock on the date of the grant. The fair value of the award is measured on the grant date. One-third of most stock options granted pursuant to the Plans vest 12 months from the date of grant and 1/36 th each month thereafter for 24 months and expire ten years from the date of grant. In addition, the Company issues options to directors which vest over a one-year period. The Company also issues premium options to executive officers which have an exercise price greater than the grant date fair value and has issued performance-based options which vest when target parameters are met or probable of being met, subject in each case to a one year minimum service period prior to vesting. Stock-based compensation expense related to awards is amortized over the applicable service period using the straight-line method.
Current wording
We measure the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions discussed below, and the closing market price of our common stock on the date of the grant. The fair value of the award is measured on the grant date. One-third of most stock options granted pursuant to the Plans vest 12 months from the date of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant. In addition, we issue options to directors which vest over a one-year period. We also issue premium options to executive officers which have an exercise price greater than the grant date fair value and has issued performance-based options which vest when target parameters are met or probable of being met, subject in each case to a one year minimum service period prior to vesting. Stock-based compensation expense related to awards is amortized over the applicable service period using the straight-line method.
Previous wording
The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected term of the options as of the grant date. The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting Bulletin, and the expected stock price volatility is based on the Company’ historical stock price volatility.
Current wording
The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected term of the options as of the grant date. The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting Bulletin, and the expected stock price volatility is based on our historical stock price volatility.
Previous wording
Stock-based compensation expense relating to options granted of $2.8 million, of which $2.0 million and $0.8 million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended March 31, 2023.
Current wording
Stock-based compensation expense relating to options granted of $1.1 million, of which $0.8 million and $0.3 million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended June 30, 2024. Stock-based compensation expense relating to options granted of $2.4 million, of which $1.6 million and $0.8 million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended June 30, 2023.
Previous wording
As of March 31, 2024, we had approximately $6.9 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which the Company expects to recognize over a weighted average period of 2.05 years.
Current wording
As of June 30, 2024, we had approximately $5.5 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which we expect to recognize over a weighted average period of 1.87 years.
Previous wording
On May 6, 2022, our stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which was replaced by the Tonix Pharmaceuticals Holdings Corp. 2023 Employee Stock Purchase Plan (the “2023 ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by the Company’s stockholders on May 5, 2023.
Current wording
On May 6, 2022, our stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2022 Employee Stock Purchase Plan. (the “2022 ESPP”), which was replaced by the Tonix Pharmaceuticals Holdings Corp. 2023 Employee Stock Purchase Plan (the “2023 ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by our stockholders on May 5, 2023.
Previous wording
The 2023 ESPP allows eligible employees to purchase up to an aggregate of 800,000 shares of the Company’s common stock. Under the 2023 ESPP, on the first day of each offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of the Company’s common stock at the end of the offering period. Each offering period under the 2023 ESPP is for six months, which can be modified from time-to-time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2023 ESPP, subject to the statutory limit under the Code. As of March 31, 2024, 733,641 shares were available for future sales under the 2023 ESPP.
Current wording
The 2023 ESPP allows eligible employees to purchase up to an aggregate of 25,000 shares of our common stock. Under the 2023 ESPP, on the first day of each offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of our common stock at the end of the offering period. Each offering period under the 2023 ESPP is for six months, which can be modified from time-to-time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2023 ESPP, subject to the statutory limit under the Code. As of June 30, 2024, 22,926 shares were available for future sales under the 2023 ESPP.
Previous wording
The ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the quarter ended March 31, 2024, and 2023, $27,000 and $0, respectively, was expensed. In January 2023, 14,999 shares that were purchased as of December 31, 2022, under the 2022 ESPP, were issued. Accordingly, during the first quarter of 2023, approximately $29,000 of employee payroll deductions accumulated at December 31, 2022, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $14,000 was returned to the employees. As of December 31, 2023, approximately $44,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In January 2024, 66,359 shares that were purchased as of December 31, 2023, under the 2022 ESPP, were issued. Accordingly, during the first quarter of 2024, approximately $24,000 of employee payroll deductions accumulated at December 31, 2023, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $20,000 was returned to the employees.
Current wording
The ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the six months ended June 30, 2024 and 2023, $27,000 and $0, respectively, was expensed. In January 2023, 469 shares that were purchased as of December 31, 2022, under the 2022 ESPP, were issued. Accordingly, during the first quarter of 2023, approximately $29,000 of employee payroll deductions accumulated at December 31, 2022, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $14,000 was returned to the employees. As of December 31, 2023, approximately $44,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In January 2024, 2,074 shares that were purchased as of December 31, 2023, under the 2022 ESPP, were issued. Accordingly, during the first quarter of 2024, approximately $24,000 of employee payroll deductions accumulated at December 31, 2023, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $20,000 was returned to the employees. As of June 30, 2024, approximately $33,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In July 2024, 6,927 shares that were purchased as of June 30, 2024, under the 2022 ESPP, were issued. Accordingly, during the third quarter of 2024, approximately $5,000 of employee payroll deductions accumulated at June 30, 2024, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $28,000 was returned to the employees.
Previous wording
We have entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $20.8 million at March 31, 2024 for future work to be performed.
Current wording
We have entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $16.9 million at June 30, 2024 for future work to be performed.
Previous wording
As of March 31, 2024, future minimum lease payments are as follows (in thousands):
Current wording
At June 30, 2024, future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in thousands):
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such as fees paid to contractors, consultants and CROs in connection with our development work. Included in “Internal Staffing, Overhead and Other” is overhead, supplies, research and development employee costs (including stock option expenses), travel, regulatory and legal.
Current report — wording carried from elsewhere
The following table sets forth our operating expenses for the six months ended June 30, 2024 and 2023 (in thousands):
Current report — wording carried from elsewhere
Revenues. We recognized revenue beginning in July 2023, as a result of the acquisition of two marketed products. Revenue recognized for the six months ended June 30, 2024, was $4.7 million.
Current report — wording carried from elsewhere
Research and Development Expenses. Research and development expenses for the six months ended June 30, 2024 were $22.6 million, a decrease of $25.9 million, or 53%, from $48.5 million for the six months ended June 30, 2023. This decrease is predominately due to decreased clinical expenses of $8.8 million, non-clinal expenses of $8.1 million, manufacturing expenses of $2.4 million as a result of fewer trials in the clinic and pipeline prioritization period over period, employee-related expenses of $2.4 and lab supplies of $3.2 million due to a reduction in expenditures.
Current report — wording carried from elsewhere
The table below summarizes our direct research and development expenses for our product candidates and development platform for the six months ended June 30, 2024, and 2023.
Current report — wording carried from elsewhere
On July 30, 2024, we entered into a Sales Agreement with AGP pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50.0 million in the ATM. AGP will act as sales agent and will be paid a 3% commission on each sale under the Sales Agreement. Our common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. Subsequent to June 30, 2024, the Company has sold 0.8 million shares of common stock under the Sales Agreement, for net proceeds of approximately $0.4 million.
Current report — wording carried from elsewhere
Stock-based compensation expense relating to options granted of $2.8 million, of which $2.0 million and $0.8 million, related to General and Administration and Research and Development, respectively was recognized for the six-month period ended June 30, 2024. Stock-based compensation expense relating to options granted of $5.2 million, of which $3.6 million and $1.6 million, related to General and Administration and Research and Development, respectively was recognized for the six-month period ended June 30, 2023.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Stock-based compensation expense relating to options granted of $1.7 million, of which $1.2 million and $0.5 million, related to General and Administration and Research and Development, respectively was recognized for the quarter ended March 31, 2024.