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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Fiscal Year Ended December 31, 2023
For the transition period from ____________ to ____________
Commission File No. 001-14778
SOLIGENIX, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
29 EMMONS DRIVE, SUITE B-10
PRINCETON, NJ
(Address of principal executive offices)
41-1505029
(I.R.S. Employer
Identification Number)
08540
(Zip Code)
(609) 538-8200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class
Common Stock, par value $0.01 per share
Trading Symbol (s)
SNGX
Name of each exchange on which registered
The Nasdaq Capital Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Non-accelerated filer
☐
⌧
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the common stock held by non-affiliates of the registrant was $6,846,887 (assuming, for this purpose, that executive
officers, directors and holders of 10% or more of the common stock are affiliates), based on the closing price of the registrant’s common stock as reported on
The Nasdaq Capital Market on June 30, 2023.
On March 8, 2024, there were 10,524,437 shares of the registrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: None.
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SOLIGENIX, INC.
ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2023
Table of Contents
Item
Cautionary Note Regarding Forward-Looking Statements
Description
Part I
1.
1A.
1B.
1C
2.
3.
5.
6.
7.
8.
9.
9A.
9B.
9C.
10.
11.
12.
13.
14.
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Part II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
15.
Signatures
Consolidated Financial Statements
Part IV
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Page
ii
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27
51
51
52
52
53
54
54
63
63
64
65
65
66
71
75
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements, within the meaning of the Private Securities Litigation
Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects and opportunities.
These forward-looking statements are not guarantees of future performance and are subject to significant risks, uncertainties,
assumptions and other factors, which are difficult to predict and may cause actual results to differ materially from those
expressed in, or implied by, any forward-looking statements. The forward-looking statements within this report may be
identified by words such as “believes,” “anticipates,” “expects,” “intends,” “may,” “would,” “will” and other similar expressions.
However, these words are not the exclusive means of identifying these statements. Statements that are not historical facts are
based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the
industry and markets related to our business and are forward-looking statements.
Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Important
factors which may affect these actual outcomes and results include, without limitation:
● uncertainty as to whether our product candidates will be sufficiently safe and effective to support regulatory approvals;
● uncertainty inherent in developing therapeutics and vaccines, and manufacturing and conducting preclinical and
clinical trials;
● our ability to obtain future financing or funds when needed, either through the raising of capital, the incurrence of
convertible or other indebtedness or through strategic financing or commercialization partnerships;
● our ability to secure government grants or contracts to support our vaccine development;
● our ability to maintain our listing on Nasdaq and meet Nasdaq’s listing requirements;
● that product development and commercialization efforts will be reduced or discontinued due to difficulties or delays in
clinical trials or a lack of progress or positive results from research and development efforts;
● maintenance and progression of our business strategy;
● the possibility that our products under development may not gain market acceptance;
● our expectations about the potential market sizes and market participation potential for our product candidates may
not be realized;
● our expected revenues (including sales, milestone payments and royalty revenues) from our product candidates and
any related commercial agreements of ours may not be realized;
● the ability of our manufacturing partners to supply us or our commercial partners with clinical or commercial supplies
of our products in a safe, timely and regulatory compliant manner and the ability of such partners to timely address
any regulatory issues that have arisen or may arise in the future;
● competition existing today or that may arise in the future, including the possibility that others may develop
technologies or products superior to our products;
● the effect that global pathogens could have on financial markets, materials sourcing, service providers, patients,
clinical study sites, governments and population (e.g. Coronavirus Disease 2019 (“COVID-19”)); and
● other factors, including those “Risk Factors” set forth under Part I, Item 1A. “Risk Factors” in this Annual Report.
Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances occurring subsequent to the filing of this Form 10-K with the
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United States (“U.S.”) Securities and Exchange Commission (“the SEC”) or for any other reason. You should carefully review
and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise
interested parties of the risks, uncertainties and other factors that may affect our business.
Note Regarding Reverse Stock Split
On February 9, 2023, we completed a reverse stock split of our issued and outstanding shares of common stock at a ratio of
one-for-fifteen, whereby, every fifteen shares of our issued and outstanding common stock was converted automatically into
one issued and outstanding share of common stock without any change in the par value per share. No fractional shares were
issued as a result of the reverse stock split. Any fractional shares that would otherwise have resulted from the reverse stock
split were rounded up to the next whole number. Our common stock began trading on The NASDAQ Capital Market on a
reverse split basis at the market opening on February 10, 2023. All share and per share data have been restated to reflect
this reverse stock split.
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Item 1. Business
PART I
This Annual Report on Form 10-K contains statements of a forward-looking nature relating to future events or our future
financial performance. These statements are only predictions and actual events or results may differ materially. In evaluating
such statements, you should carefully consider the various factors identified in this report that could cause actual results to
differ materially from those indicated in any forward-looking statements, including those set forth in “Risk Factors” in this
Annual Report on Form 10-K. See “Cautionary Note Regarding Forward Looking Statements.”
Our Business Overview
We are a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases
where there is an unmet medical need. We maintain two active business segments: Specialized BioTherapeutics and Public
Health Solutions.
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of
HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy (“PDT”),
utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
With successful completion of the Phase 3 FLASH (Fluorescent Light Activated Synthetic Hypericin) study, regulatory
approval is being pursued in the U.S. and Europe. Following submission of a new drug application (“NDA”) for HyBryte™ in
the treatment of CTCL, we received a refusal to file (“RTF”) letter from the U.S. Food and Drug Administration (“FDA”). We
had a Type A meeting with the FDA to clarify and respond to the issues identified in the RTF letter and to seek additional
guidance concerning information that the FDA would require for a resubmitted NDA to be deemed acceptable to file, in order
to advance HyBryte™ towards U.S. marketing approval and commercialization. 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 are
collaboratively engaging in active discussions with both the FDA and the European Medicines Agency (“EMA”) in order to
define the protocol and evaluate the feasibility of conducting the additional Phase 3 clinical trial evaluating HyBryte™ in the
treatment of CTCL in support of potential marketing approval.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our
first-in-class Innate Defense Regulator (“IDR”) technology, and dusquetide (SGX942 and SGX945) for the treatment of
inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
Our Public Health Solutions business segment includes development programs for RiVax®, our ricin toxin vaccine candidate
and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs
targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19
(caused by SARS-CoV-2). The development of our vaccine programs incorporates the use of our proprietary heat stabilization
platform technology, known as ThermoVax®. To date, this business segment has been supported with government grant and
contract funding from the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research
and Development Authority and the Defense Threat Reduction Agency (“DTRA”).
An outline of our business strategy follows:
● Following positive primary endpoint results for the Phase 3 FLASH (Fluorescent Light Activated Synthetic Hypericin)
clinical trial of HyBryte™ in CTCL as well as further statistically significant improvement in response rates with longer
treatment (18 weeks compared to 12 and 6 weeks of treatment), collaboratively engage in discussions with both the
FDA and EMA in order to define the protocol and evaluate the feasibility of conducting a second clinical study in order
to advance HyBryte™ towards U.S. marketing approval and commercialization while continuing to explore potential
marketing approval and partnership in Europe.
● Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a
Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a
small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.
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● Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency
(“MHRA”) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment of oral mucositis would be
required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to
continue this development program.
● Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease with the conduct of a
Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in
aphthous ulcers induced by chemotherapy and radiation.
● Continue development of our heat stabilization platform technology, ThermoVax®, in combination with programs for
RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent
combinations), with U.S. government and non-governmental organization funding support.
● Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and
Public Health Solutions programs through grants, contracts and/or procurements.
● Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives,
including but not limited to merger/acquisition strategies.
● Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing
pipeline compounds for development.
Corporate Information
We were incorporated in Delaware in 1987 under the name Biological Therapeutics, Inc. In 1987, we merged with Biological
Therapeutics, Inc., a North Dakota corporation, pursuant to which we changed our name to “Immunotherapeutics, Inc.” We
changed our name to “Endorex Corp.” in 1996, to “Endorex Corporation” in 1998, to “DOR BioPharma, Inc.” in 2001, and
finally to “Soligenix, Inc.” in 2009. Our principal executive offices are located at 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540 and our telephone number is (609) 538-8200.
Our Product Candidates in Development
The following tables summarize our product candidates under development:
Specialized BioTherapeutics Product Candidates
Soligenix Product Candidate
HyBryte™
Therapeutic Indication
Cutaneous T-Cell Lymphoma
2
Stage of Development
trial
Phase
continued
in March 2020
Phase 2
trial completed; demonstrated
significantly higher response rate compared to
placebo;
completed;
3
demonstrated statistical significance in primary
(Cycle 1) and
endpoint
demonstrated
in
improvement
treatment response with extended treatment in
April 2020 (Cycle 2) and October 2020 (Cycle
3); NDA submitted December 2022; FDA RTF
letter received February 2023; Type A meeting
with the FDA convened April 2023, in which the
FDA determined that a second positive Phase
3 study would be required to support a NDA
formal
submission; actively engaged
protocol discussions with both the FDA and the
EMA to define the protocol for, and evaluate
feasibility of conducting, an additional Phase 3
clinical trial (as requested
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Soligenix Product Candidate
Therapeutic Indication
SGX302
Mild-to-Moderate Psoriasis
SGX942†
Oral Mucositis in Head and Neck
Cancer
SGX945
Aphthous Ulcers in Behçet’s Disease
Stage of Development
by the FDA); final outcome of discussions
anticipated in the first half of 2024
Positive proof-of-concept demonstrated in a
small Phase 1/2 pilot study; Phase 2a protocol
and Investigation New Drug (“IND”) clearance
the FDA; Phase 2a study
received
remains
demonstrated
biological effect in Cohort 1 and clinically
meaningful benefit in Cohort 2
ongoing
having
from
trial completed; demonstrated
Phase 2
significant response compared to placebo with
long-term (12 month) safety also
positive
trial
reported; Phase 3 clinical
results
announced December 2020:
the primary
endpoint of median duration of severe oral
mucositis (“SOM”) did not achieve the pre-
specified criterion for statistical significance
(p≤0.05); although biological activity was
observed with a 56% reduction in the median
duration of SOM from 18 days in the placebo
group to 8 days in the SGX942 treatment
group; analyzed full dataset from Phase 3
study and designing a second Phase 3 clinical
trial; continued development contingent upon
identification of partnership
Phase 2a protocol and IND clearance received
from the FDA; Phase 2a study to be initiated in
the second half of 2024
Soligenix Product Candidate
ThermoVax®
Indication
Stage of Development
Thermostability of vaccines for Ricin toxin,
Pre-clinical
Ebola, and Marburg viruses
Public Health Solutions†
RiVax®
SGX943
Vaccine against Ricin Toxin Poisoning
Phase 1a, 1b, and 1c trials completed, safety and
neutralizing
protection
demonstrated
antibodies
for
Therapeutic against Emerging
Infectious Diseases
Pre-clinical
† Contingent upon continued government contract/grant funding or other funding source.
Specialized BioTherapeutics Overview
Synthetic Hypericin
Synthetic Hypericin is a potent photosensitizer that is topically applied to skin lesions, taken up by cutaneous T-cells and then
activated by safe visible light. Hypericin is also found in several species of Hypericum plants, although the active moiety used
in HyBryte™ and SGX302 is chemically synthesized by a proprietary manufacturing process and not extracted from plants.
Importantly, hypericin is optimally activated with visible light thereby avoiding the negative consequences of
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ultraviolet (“UV”) light. Other light therapies using UVA or UVB light can result in serious adverse effects including secondary
skin cancers.
Combined with photoactivation, in clinical trials synthetic hypericin has demonstrated significant anti-proliferative effects on
activated normal human lymphoid cells and inhibited growth of malignant T-cells isolated from CTCL patients. In both settings,
it appears that the mode of action is an induction of cell death in a concentration as well as a light dose-dependent fashion.
These effects appear to result, in part, from the generation of singlet oxygen during photoactivation of hypericin.
Synthetic hypericin is one of the most efficient known generators of singlet oxygen, the key component for phototherapy. The
generation of singlet oxygen induces necrosis and apoptosis in cells. The use of topical synthetic hypericin coupled with
directed visible light results in generation of singlet oxygen only at the treated site. We believe that the use of visible light (as
opposed to cancer-causing UV light) is a major advance in photodynamic therapy. In a small published Phase 1/2 proof of
concept pilot clinical study using synthetic hypericin twice weekly for six weeks, statistically significant efficacy was
demonstrated in patients with CTCL (58.3% response, p=0.04) and psoriasis (80% response, p<0.02). Subsequently, a
published Phase 3 study in CTCL has further confirmed the biological efficacy of synthetic hypericin (termed HyBryte™ in the
context of CTCL).
HyBryte™ – for Treating Cutaneous T-Cell Lymphoma
HyBryte™ is a novel, first-in-class, PDT, that utilizes safe visible light for activation. The active ingredient in HyBryte™ is
synthetic hypericin, a photosensitizer which is topically applied to skin lesions and then activated by visible fluorescent light 16
to 24 hours later.
Based on the positive and previously published Phase 1/2 results, we initiated our Phase 3 clinical study of HyBryte™ for the
treatment of CTCL during December 2015 and completed the trial in 2020. This trial, referred to as the “FLASH” (Fluorescent
Light Activated Synthetic Hypericin) study, aimed to evaluate the response to HyBryte™ as a skin directed therapy to treat
early stage CTCL. We completed the study with approximately 35 CTCL centers across the U.S. participating in this trial. The
Phase 3 protocol was a highly powered, double-blind, randomized, placebo-controlled, multicenter trial that enrolled 169
subjects (166 evaluable). The trial consisted of three treatment cycles, each of eight weeks duration. Treatments were
administered twice weekly for the first six weeks and treatment response was determined at the end of the eighth week. In the
first treatment cycle, approximately 66% of subjects received HyBryte™ and 33% received placebo treatment of their index
lesions. In the second cycle, all subjects received HyBryte™ treatment of their index lesions, and in the third cycle, all
subjects received HyBryte™ treatment of all of their lesions. The majority of subjects enrolled elected to continue into the third
optional, open-label cycle of the study. Subjects were followed for an additional six months after their last evaluation visit. The
primary efficacy endpoint was assessed on the percentage of patients in each of the two treatment groups (i.e., HyBryte™
and placebo) achieving a partial or complete response of the treated lesions, defined as a ≥ 50% reduction in the total
Composite Assessment of Index Lesion Disease Severity (“CAILS”) score for three index lesions at the Cycle 1 evaluation
visit (Week 8) compared to the total CAILS score at baseline. Secondary endpoints for the trial included the duration of
responses, the extent of the regression of the tumors, and the safety of the treatment. We continue to work closely with the
Cutaneous Lymphoma Foundation, as well as the National Organization for Rare Disorders.
Positive primary endpoint analysis for the Phase 3 study for HyBryte™ was completed in March 2020. The study enrolled 169
patients (166 evaluable) randomized 2:1 to receive either HyBryte™ (116 patients) or placebo (50 patients) and demonstrated
a statistically significant treatment response (p=0.04) in the CAILS primary endpoint assessment at 8 weeks for Cycle 1. A
total of 16% of the patients receiving HyBryte™ achieved at least a 50% reduction in their index lesions compared to only 4%
of patients in the placebo group at 8 weeks. HyBryte™ treatment in the first cycle was safe and well tolerated.
Analysis of the second open-label treatment cycle (Cycle 2) was completed in April 2020, showing that continued treatment
with HyBryte™ twice weekly for an additional 6 weeks (12 weeks total) increased the positive response rate to 40%
(p<0.0001 compared to placebo and p<0.0001 compared to 6-weeks treatment). After the subsequent additional 6-week
treatment, the response rate in patients receiving a total of 12 weeks treatment increased two and a half-fold. Treatment
responses were assessed at Week 8 (after 6 weeks of treatment) and at Week 16 (after 12 weeks of treatment). A positive
response was defined as an improvement of at least 50% in the CAILS score for the three index lesions evaluated in both
Cycles 1 and 2. The data continued to indicate that HyBryte™ was safe and well tolerated.
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Analysis of the optional third open-label treatment cycle (Cycle 3) was completed in October 2020. Cycle 3 was focused on
safety and all patients could elect to receive HyBryte™ treatment of all their lesions for an additional 6 weeks or up to 18
weeks in total. Of note, 66% of patients elected to continue with this optional safety cycle of the study. Of the subset of
patients that received HyBryte™ throughout all three cycles of treatment (18 weeks), 49% of them demonstrated a treatment
response (p=0.046 vs. patients completing 12 weeks of HyBryte™ treatment in Cycle 2; p<0.0001 vs. patients receiving
placebo in Cycle 1). Moreover, in a subset of patients evaluated in this cycle, it was demonstrated that HyBryte™ is not
systemically available, consistent with the general safety of this topical product observed to date. At the end of Cycle 3,
HyBryte™ continued to be well tolerated despite extended and increased use of the product to treat multiple lesions.
In addition, continued analysis of results from the protocol mandated efficacy cycles (Cycles 1 and 2) of the study revealed
that 12 weeks of treatment (Cycle 2) with HyBryte™ is equally effective on both patch (response 37%, p=0.0009) and plaque
(response 42%, p<0.0001) lesions when compared to Cycle 1 placebo lesion responses, further demonstrating the unique
benefits of the more deeply penetrating visible light activation of hypericin.
HyBryte™ has received Orphan Drug designation as well as Fast Track designation from the FDA. The Orphan Drug Act is
intended to assist and encourage companies to develop safe and effective therapies for the treatment of rare diseases and
disorders. In addition to providing a seven-year term of market exclusivity for HyBryte™ upon final FDA approval, Orphan
Drug designation also positions us to be able to leverage a wide range of financial and regulatory benefits, including
government grants for conducting clinical trials, waiver of FDA user fees for the potential submission of a NDA for HyBryte™,
and certain tax credits. In addition, Fast Track is a designation that the FDA reserves for a drug intended to treat a serious or
life-threatening condition and one that demonstrates the potential to address an unmet medical need for the condition. Fast
Track designation is designed to facilitate the development and expedite the review of new drugs. For instance, we were
eligible to submit a NDA for HyBryte™ on a rolling basis, permitting the FDA to review sections of the NDA prior to receiving
the complete submission. Additionally, NDAs for Fast Track development programs ordinarily will be eligible for priority review.
HyBryte™ for the treatment of CTCL also was granted Orphan Drug designation from the EMA Committee for Orphan
Medical Products and Promising Innovative Medicine (“PIM”) designation from the MHRA, as well as Innovation Passport
under the Innovative Licensing and Access Pathway (“ILAP”) in the UK.
During January 2021, we signed an exclusive Supply, Distribution and Services Agreement with The Daavlin Distributing Co.
(“Daavlin”), securing long-term supply and distribution of a commercially ready light device, which is an integral component of
the regulatory and commercial strategy for HyBryte™ for the treatment of CTCL. Pursuant to the agreement, Daavlin will
exclusively manufacture the proprietary light device for use with HyBryte™ for the treatment of CTCL. Upon approval of
HyBryte™ by the FDA, we will promote HyBryte™ and the companion light device, and facilitate the direct purchase of the
device from Daavlin. Daavlin will exclusively distribute and sell the HyBryte™ light device to us, physicians and patients.
In April 2021, the FDA conditionally accepted HyBryte™ as the proposed brand name for SGX301 or synthetic hypericin, in
the treatment of early stage CTCL. The name HyBryte™ was developed in compliance with the FDA’s Guidance for Industry,
Contents of a Complete Submission for the Evaluation of Proprietary Names. The FDA’s conditional approval validates
HyBryte™ as a proprietary name that is consistent with the FDA’s goal of preventing medication errors and potential harm to
the public by ensuring that only appropriate proprietary names are approved for use. Final approval of the HyBryte™
proprietary name is conditioned on FDA approval of the product candidate, SGX301.
In May 2021, HyBryte™ was awarded an "Innovation Passport" for the treatment of early stage CTCL in adults under the UK’s
ILAP. The decision to award the Innovation Passport to the HyBryte™ program was made by the Innovative Licensing and
Access Pathway Steering Group, which is comprised of representatives from MHRA, the National Institute for Health and
Care Excellence (“NICE”), and the Scottish Medicines Consortium (“SMC”). ILAP was launched at the start of 2021 to
accelerate the development and access to promising medicines, thereby facilitating patient access to new medicines. The
pathway, part of the UK’s plan to attract life sciences development in the post-Brexit era, features enhanced input and
interactions with the MHRA, NICE, and SMC. The innovation passport designation is the first step in the ILAP process and
triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and
development milestones with the goal of early patient access in the UK. Other benefits of ILAP include a 150-day accelerated
assessment, rolling review and a continuous benefit risk assessment.
As a result of discussions with the FDA regarding the HyBryte™ NDA submission and due to disruptions caused by the global
COVID-19 pandemic resulting in delays by the commercial active pharmaceutical ingredient (“API”) contract manufacturer
affecting the timing of availability of the pre-requisite amount of accrued stability data required to file the NDA,
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we filed the NDA with the FDA in December of 2022. We did not pursue a rolling NDA submission, so that we could provide
additional supportive data in the NDA filing.
In June 2021, we received a Paediatric Investigation Plan (“PIP”) waiver from the EMA for HyBryte™. As part of the
regulatory process for the registration of new medicines with the EMA, pharmaceutical companies are required to provide a
PIP outlining their strategies for investigation of the new medicinal products in the pediatric population. In some instances, a
waiver negating the need for a PIP for certain conditions may be granted by the EMA when development of a medicine for
use in children is not feasible or appropriate, as is the case for HyBryte™ in CTCL which is extremely rare in children.
In September 2021, we were granted orphan drug designation for the active ingredient hypericin for the treatment of T-cell
lymphoma, extending the target population beyond CTCL as previously granted by the FDA.
In July 2022, the results of our successful Phase 3 FLASH study evaluating HyBryte™ for the treatment of CTCL were
published in the Journal of the American Medical Association (JAMA) Dermatology.
In July 2022, we received agreement from the FDA on an initial pediatric study plan (“iPSP”) for HyBryte™ for the treatment of
CTCL. The agreed iPSP stipulates that we intend to request a full waiver of pediatric studies upon submission of the NDA.
Agreement with FDA on an iPSP is one of the regulatory requirements that must be met prior to submitting a NDA.
In September 2022, the FDA awarded an Orphan Products Development grant to support the evaluation of HyBryte™ for
expanded treatment in patients with early-stage CTCL. The grant, totaling $2.6 million over four years, was awarded to a
prestigious academic institution that was a leading enroller in the published positive Phase 3 FLASH study in the treatment of
early stage CTCL.
In December 2022, we submitted the HyBryte™ NDA for the treatment of CTCL with the FDA.
In February 2023, we received a RTF letter from the FDA for the HyBryte™ NDA. Upon preliminary review, the FDA
determined that the NDA was not sufficiently complete to permit substantive review.
In April 2023, the United States Adopted Names (“USAN”) Council approved the use of the nonproprietary name of “hypericin
sodium” for the novel active ingredient in both HyBryte™ (research name SGX301) for the treatment of CTCL and SGX302
for the treatment of mild-to-moderate psoriasis.
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.
In May 2023, we were granted a follow-on Type A meeting with the FDA to initiate formal discussions regarding the protocol
design of a second, Phase 3 pivotal study evaluating HyBryte™ in the treatment of CTCL in support of potential FDA
marketing approval. These protocol discussions with the FDA remain ongoing. We will provide further update once final FDA
clarity is obtained. Additionally, we are currently also evaluating the potential for HyBryte™ marketing approval in Europe.
In August 2023, patient enrollment was opened for the investigator-initiated study (“IIS”). IIS is supported by an Orphan
Products Development grant of $2.6 million over four years awarded by the FDA to a prestigious academic institution that was
a leading enroller in the published positive Phase 3 FLASH study in the treatment of early stage CTCL. The IIS will evaluate
the expanded treatment, including up to 12 months of treatment, with HyBryte™ in patients with early-stage CTCL.
We estimate the potential worldwide market for HyBryte™ is in excess of $250 million for the treatment of CTCL. 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.
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Cutaneous T-Cell Lymphoma
CTCL is a class of non-Hodgkin’s lymphoma (“NHL”), a type of cancer of the white blood cells that are an integral part of the
immune system. Unlike most NHLs, which generally involve B-cell lymphocytes (involved in producing antibodies), CTCL is
caused by an expansion of malignant T-cell lymphocytes (involved in cell-mediated immunity) normally programmed to
migrate to the skin. These skin-trafficking malignant T-cells migrate to the skin, causing various lesions to appear that may
change shape as the disease progresses, typically beginning as a rash and eventually forming plaques and tumors. Mycosis
fungoides (“MF”) is the most common form of CTCL. It generally presents with skin involvement only, manifested as scaly,
erythematous patches. Advanced disease with diffuse lymph node and visceral organ involvement is usually associated with a
poorer response rate to standard therapies. A relatively uncommon sub-group of CTCL patients present with extensive skin
involvement and circulating malignant cerebriform T-cells, referred to as Sézary syndrome. These patients have substantially
graver prognoses (expected five-year survival rate of 24%), than those with MF (expected five-year survival rate of 88%).
CTCL mortality is related to stage of disease, with median survival generally ranging from about 12 years in the early stages
to only 2.5 years when the disease has advanced. There is currently no FDA-approved drug for front-line treatment of early
stage CTCL. Treatment of early-stage disease generally involves skin-directed therapies. One of the most common
unapproved therapies used for early-stage disease is oral 5 or 8-methoxypsoralen (“Psoralen”) given with ultraviolet A (“UVA”)
light, referred to as PUVA, which is approved for dermatological conditions such as disabling psoriasis not adequately
responsive to other forms of therapy, idiopathic vitiligo and skin manifestations of CTCL in persons who have not been
responsive to other forms of treatment. Psoralen is a mutagenic chemical that interferes with DNA causing mutations and
other malignancies. Moreover, UVA is a carcinogenic light source that when combined with the Psoralen, results in serious
adverse effects including secondary skin cancers; therefore, the FDA requires a Black Box warning for PUVA.
CTCL constitutes a rare group of NHLs, occurring in about 4% of the approximate 500,000 individuals living with NHL. We
estimate, based upon review of historic published studies and reports and an interpolation of data on the incidence of CTCL,
that it affects over 20,000 individuals in the U.S., with approximately 2,800 new cases seen annually.
SGX302 – for Treating Mild-to-Moderate Psoriasis
SGX302 (synthetic hypericin) is a potent photosensitizer that is topically applied to skin lesions and taken up by cutaneous T-
cells. With subsequent activation by safe, visible light, T-cell apoptosis is induced, addressing the dysregulated T-cells found
in psoriasis lesions. 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.
In September 2021, following the validation of synthetic hypericin’s biologic activity in the positive Phase 3 FLASH study in
CTCL, as well as positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis
patients, we decided to expand this novel therapy into a Phase 2a clinical trial in mild-to-moderate psoriasis.
In June 2022, we received FDA IND clearance for our Phase 2a clinical trial (protocol number HPN-PSR-01) titled, "Phase 2
Study Evaluating SGX302 in the Treatment of Mild-to-Moderate Psoriasis." In December 2022, we initiated patient enrollment
for the Phase 2a study (protocol number HPN-PSR-01) evaluating SGX302 in the treatment of mild-to-moderate psoriasis.
The Phase 2a clinical trial (protocol number HPN-PSR-01) will target enrollment of up to 42 patients ages 18 years or older
with mild to moderate, stable psoriasis covering 2 to 30% of the body. In both Parts A and B, all patients will apply the study
drug twice per week and activate the drug with visible light 24 ± 6 hours later using the supplied visible light devices and
according to the manufacturer's instructions. Patients will undergo treatments for a total of 18 weeks and, on completion, will
be followed for a four-week follow-up period in which patients will not receive other psoriasis treatments. In Part A, five to ten
patients will be assigned open-label SGX302 (0.25% hypericin) at the time of enrollment. Once the tolerability and response
to SGX302 has been established, Part B of the protocol will commence. In Part B, patients will be randomized to double-blind
treatment groups at a ratio 1:1 of active drug to placebo ointment. Active dermatologic
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assessment of treated lesions for adverse events will be performed immediately before and during light treatments. Patients
will be assessed for overall disease status through four weeks of follow-up. Efficacy endpoints will include the extent of lesion
clearance and patient reported quality of life indices. Routine safety data also will be collected.
In October 2022, we announced the formation of a Medical Advisory Board to provide medical/clinical strategic guidance to
advance the Phase 2a clinical development of SGX302 for the treatment of mild-to-moderate psoriasis.
In July 2023, we expanded the Phase 2a trial of SGX302 after demonstration of biological effect in the initial five subjects
(Cohort 1). The study is expected to enroll at least an additional ten subjects, exploring the use of SGX302 in the standard of
care psoriasis setting, prior to undertaking the larger phase of the study.
In January 2024, positive preliminary results of clinical success were demonstrated in the Cohort 2 subjects enrolled in the
ongoing Phase 2a study. In the four evaluable patients from Cohort 2 (one patient withdrew early in the treatment course for
personal reasons unrelated to the study), two reached a disease status of “Almost Clear” represented by an Investigator
Global Assessment score of 1, which is considered the standard clinical measure for treatment success in psoriasis. In
addition, the Psoriasis Activity and Severity Index score, another well-characterized measure of treatment success, for
patients in Cohort 2 had a mean drop of approximately 50% over the 18-week treatment. SGX302 therapy was well tolerated
by all patients with no drug related adverse events identified.
We estimate the potential worldwide market for SGX302 is in excess of $1 billion for the treatment of mild-to-moderate
psoriasis. This potential market information is a forward-looking statement, and investors are urged not to place undue
reliance on this statement. 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.
Psoriasis
Psoriasis is a chronic, non-communicable, itchy and often painful inflammatory skin condition for which there is no
cure. Psoriasis has a significantly detrimental impact on patients' quality of life, and is associated with cardiovascular, arthritic,
and metabolic diseases, as well as psychological conditions such as anxiety, depression and suicide. Many factors contribute
to development of psoriasis including both genetic and environmental factors (e.g., skin trauma, infections, and
medications). The lesions develop because of rapidly proliferating skin cells, driven by autoimmune T-cell mediated
inflammation. Of the various types of psoriasis, plaque psoriasis is the most common and is characterized by dry, red raised
plaques that are covered by silvery-white scales occurring most commonly on the elbows, knees, scalp, and lower back.
Approximately 80% of patients have mild-to-moderate disease. Mild psoriasis is generally characterized by the involvement of
less than 3% of the body surface area (“BSA”), while moderate psoriasis will typically involve 3-10% BSA and severe
psoriasis greater than 10% BSA. Between 20% and 30% of individuals with psoriasis will go on to develop chronic,
inflammatory arthritis (psoriatic arthritis) that can lead to joint deformations and disability. Studies have also associated
psoriasis, and particularly severe psoriasis, with an increased relative risk of lymphoma, particularly CTCL. Although psoriasis
can occur at any age, most patients present with the condition before age 35.
Treatment of psoriasis is based on its severity at the time of presentation with the goal of controlling symptoms. It varies from
topical options including PDT to reduce pain and itching, and potentially reduce the inflammation driving plaque formation, to
topical
systemic
photo/photodynamic therapy such as UV A and B, carry a risk of increased skin cancer.
for more severe disease. Most common systemic
treatments and even current
treatments
Psoriasis is the most common immune-mediated inflammatory skin disease. According to the World Health Organization
(“WHO”) Global Report on Psoriasis 2016, the prevalence of psoriasis is between 1.5% and 5% in most developed countries,
with some suggestions of incidence increasing with time. It is estimated, based upon review of historic published studies and
reports and an interpolation of data that psoriasis affects 3% of the U.S. population or more than 7.5 million people. Current
estimates have as many as 60-125 million people worldwide living with the condition. The global psoriasis treatment market
was valued at approximately $15 billion in 2020 and is projected to reach as much as $40 billion by 2027.
Dusquetide
Dusquetide (research name: SGX94) is an IDR that regulates the innate immune system to simultaneously reduce
inflammation, eliminate infection and enhance tissue healing. Dusquetide is based on a new class of short, synthetic peptides
known as IDRs. It has a novel mechanism of action in that it modulates the body’s reaction to both injury and
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infection and is both simultaneously anti-inflammatory and anti-infective. IDRs have no direct antibiotic activity but modulate
host responses, increasing survival after infections with a broad range of bacterial Gram-negative and Gram-positive
pathogens including both antibiotic sensitive and resistant strains, as well as accelerating resolution of tissue damage
following exposure to a variety of agents including bacterial pathogens, trauma and chemo- or radiation-therapy. IDRs
represent a novel approach to the control of infection and tissue damage via highly selective binding to an intracellular
adaptor protein, sequestosome-1, also known as p62, which has a pivotal function in signal transduction during activation and
control of the innate defense system. Preclinical data indicate that IDRs may be active in models of a wide range of
therapeutic indications including life-threatening bacterial infections as well as the severe side-effects of chemo- and
radiation-therapy. Additionally, due to selective binding to p62, dusquetide may have potential anti-tumor action.
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.
SGX942 – for Treating Oral Mucositis in Head and Neck Cancer
SGX942 is our product candidate containing our IDR technology, dusquetide, targeting the treatment of oral mucositis in head
and neck cancer patients. Oral mucositis in this patient population is an area of unmet medical need where there are currently
no approved drug therapies. Accordingly, we received Fast Track designation for the treatment of oral mucositis as a result of
radiation and/or chemotherapy treatment in head and neck cancer patients from the FDA. In addition, dusquetide has been
granted PIM designation in the UK by the MHRA for the treatment of SOM in head and neck cancer patients receiving
chemoradiation therapy.
We initiated a Phase 2 clinical study of SGX942 for the treatment of oral mucositis in head and neck cancer patients in
December of 2013. We completed enrollment in this trial and released positive results in December 2015. In this Phase 2
proof-of-concept clinical study that enrolled 111 patients, SGX942, at a dose of 1.5 mg/kg, successfully reduced the median
duration of SOM by 50%, from 18 days to 9 days (p=0.099) in all patients and by 67%, from 30 days to 10 days (p=0.040) in
patients receiving the most aggressive chemoradiation therapy for treatment of their head and neck cancer. The p-values met
the prospectively defined statistical threshold of p<0.1 in the study protocol. A less severe occurrence of oral mucositis,
ulcerative oral mucositis (defined as oral mucositis with a WHO score ≥2 corresponding to the occurrence of overt ulceration
in the mouth), was also monitored during the study. In the patients receiving the most aggressive chemoradiation therapy, the
median duration of oral mucositis was found to decrease from 65 days in the placebo treated patients to 51 days in the
patients treated with SGX942 1.5 mg/kg (p=0.099).
In addition to identifying the best dose of 1.5 mg/kg, this study achieved all objectives, including increased incidence of
“complete response” of tumor at the one month follow-up visit (47% in placebo vs. 63% in SGX942 at 1.5 mg/kg). Decreases
in mortality and decreases in infection rate were also observed with SGX942 treatment, consistent with the preclinical results
observed in animal models. Data from this Phase 2 trial are published in the Journal of Biotechnology.
SGX942 was found to be generally safe and well tolerated, consistent with the safety profile observed in the prior Phase 1
study conducted in 84 healthy volunteers. The long-term (12 month) follow-up data was consistent with the preliminary
positive safety and efficacy findings. While the placebo population experienced the expected 12-month survival rate of
approximately 80%, as defined in the Surveillance, Epidemiology, and End Results statistics 1975-2012 from the National
Cancer Institute, the SGX942 1.5 mg/kg treatment group reported a 12-month survival rate of 93% (7% mortality in the
SGX942 1.5 mg/kg group compared to 19% in the placebo group). Similarly, tumor resolution (complete response) at
12 months was better in the SGX942 1.5 mg/kg treatment group relative to the placebo population (80% in the 1.5 mg/kg
group compared to 74% in the placebo group). The long-term follow-up results from the Phase 2 study are published in
Biotechnology Reports.
In September 2016, we and SciClone Pharmaceuticals, Inc. (“SciClone”) entered into an exclusive license agreement,
pursuant to which we granted rights to SciClone to develop, promote, market, distribute and sell SGX942 in defined territories.
Under the terms of the license agreement, SciClone will be responsible for all aspects of development, product
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registration and commercialization in the territories, having access to data generated by us. In exchange for exclusive rights,
SciClone will pay us royalties on net sales, and we will supply commercial drug product to SciClone on a cost-plus basis,
while maintaining worldwide manufacturing rights.
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.
In April 2019, the Paediatric Committee of the EMA approved our PIP for SGX942, a prerequisite for filing a Marketing
Authorization Application (“MAA”) for any new medicinal product in Europe. The EMA also agreed that we may defer
conducting the PIP until successful completion of our pivotal Phase 3 clinical trial of SGX942, which allowed us to file the
adult indication MAA prior to completion of the PIP.
In June 2020, the pivotal Phase 3 DOM–INNATE study (Study IDR-OM-02) completed enrollment of 268 subjects. In
December 2020, the results of our Phase 3 clinical trial for SGX942 showed that the primary endpoint of median duration of
SOM did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed
with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment
group. Despite this clinically meaningful improvement, the variability in the distribution of the data yielded a p-value that was
not statistically significant. Other secondary endpoints supported the biological activity of dusquetide, including a statistically
significant 50% reduction in the median duration of SOM in the per-protocol population, which decreased from 18 days in the
placebo group to 9 days in the SGX942 treatment group (p=0.049), consistent with the findings in the Phase 2 trial (Study
IDR-OM-01). Similarly, incidence of SOM also followed this biological trend as seen in the Phase 2 study, decreasing by 16%
in the SGX942 treatment group relative to the placebo group in the per-protocol population. The per-protocol population was
defined as the population receiving a minimum of 55 Gy radiation and at least 10 doses of study drug (placebo or SGX942)
throughout the intended treatment period, with no major protocol deviations (e.g. breaks in study drug administration longer
than 8 days between successive doses).
Following analysis of the full dataset, including the 12-month long-term follow-up safety data in late 2021, we held a meeting
with the MHRA to review the study results and to obtain further clarity on the future of the oral mucositis development
program. The meeting was informative with the outcome being that based on the SGX942 biologic activity observed and the
consistency in response between the Phase 2 and Phase 3 trials, the Phase 3 DOM-INNATE study could serve as the first of
two Phase 3 studies required to support potential marketing authorization, assuming the second Phase 3 clinical trial
achieves the required level of statistical significance in its primary endpoint. With the benefit of a robust preclinical and clinical
data package for SGX942, we now will analyze the data to design a second Phase 3 study and will look to identify a potential
partner(s) to continue this development program.
In January 2022, dusquetide proved effective at reducing tumor size in nonclinical xenograft models. Recent studies,
recapitulating results from previously published studies, have confirmed the efficacy of dusquetide as a stand-alone and
combination anti-tumor therapy, with radiation, chemotherapy and targeted therapy, in the context of the MCF-7 breast cancer
cell line. Of note, these results are consistent with a potential direct anti-tumor effect identified with SGX942 and is another
important consideration in the oral mucositis treatment space.
In June 2022, an article was published describing the binding of our IDR, dusquetide, to the p62 protein. 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.
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We estimate the potential worldwide market for SGX942 is in excess of $500 million for the treatment of oral mucositis. 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.
Oral Mucositis
Mucositis is the clinical term for damage done to the mucosa by anticancer therapies. It can occur in any mucosal region, but
is most commonly associated with the mouth, followed by the small intestine. We estimate, based upon our review of historic
studies and reports, and an interpolation of data on the incidence of mucositis, that mucositis affects approximately 500,000
people in the U.S. per year and occurs in 40% of patients receiving chemotherapy. Mucositis can be severely debilitating and
can lead to infection, sepsis, the need for parenteral nutrition and narcotic analgesia. The GI damage causes severe diarrhea.
These symptoms can limit the doses and duration of cancer treatment, leading to sub-optimal treatment outcomes.
The mechanisms of mucositis have been extensively studied and have been linked to the interaction of chemotherapy and/or
radiation therapy with the innate defense system. Bacterial infection of the ulcerative lesions is regarded as a secondary
consequence of dysregulated local inflammation triggered by therapy-induced cell death, rather than as the primary cause of
the lesions.
We estimate, based upon our review of historic studies and reports, and an interpolation of data on the incidence of oral
mucositis, that oral mucositis is a subpopulation of approximately 90,000 patients in the U.S., with a comparable number in
Europe. Oral mucositis almost always occurs in patients with head and neck cancer treated with radiation therapy (greater
than 80% incidence of severe mucositis) and is common in patients undergoing high dose chemotherapy and hematopoietic
cell transplantation, where the incidence and severity of oral mucositis depends greatly on the nature of the conditioning
regimen used for myeloablation.
SGX945 – for Treating Aphthous Ulcers in Behçet’s Disease
SGX945 is our product candidate containing our IDR technology, dusquetide, targeting the treatment of aphthous Ulcers in
Behçet’s Disease. Behçet’s Disease is an orphan disease and an area of unmet medical need.
In November 2023, the FDA cleared the IND application for a Phase 2a clinical trial entitled, “Pilot Study of SGX945
(Dusquetide) in the Treatment of Aphthous Ulcers in Behçet’s Disease.” The study is designed to evaluate the safety and
potential efficacy of SGX945 (dusquetide) in the resolution of aphthous flares in Behçet’s Disease and is expected to begin
patient enrollment in the second half of 2024.
In January 2024, SGX945 received Fast Track designation for the treatment of oral lesions of Behçet’s Disease from the FDA.
In February 2024, we announced the formation of a Medical Advisory Board to provide medical/clinical strategic guidance to
advance the clinical development of SGX945 for the treatment of Behçet's Disease.
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.
Behçet’s Disease
Behçet’s Disease (“BD”) is commonly known as an inflammatory disorder of the blood vessels (vasculitis). Often first
diagnosed in young adults, its effects and severity will wax and wane over time. Major signs and symptoms usually include
mouth sores (approximately 95% of patients), skin rashes and lesions (approximately 50% of patients), genital sores
(approximately 50% of patients), leg ulcers (approximately 40% of patients) and eye inflammation (approximately 15% of
patients). It is a painful disease, directly impacting the patient’s quality of life and ability to productively engage in life activities,
including work.
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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.
There is no cure for BD, rather treatments are prescribed to manage symptoms. Treatments may include both maintenance
therapies and those specifically addressing mucocutaneous flares (e.g., mouth ulcers, genital ulcers and leg ulcers).
Corticosteroids are generally applied topically to sores and as eyedrops and may also be given systemically to reduce
inflammation. Although used frequently, they have limited efficacy over the long-term and have significant side effects that
become more concerning with more chronic use. Genital ulcers are often associated with significant genital scarring while leg
ulcers can result in a post-thrombotic syndrome. Other treatments for BD flares involve suppressing the immune system with
drugs (e.g., cyclosporine or cyclophosphamide). These drugs come with a higher risk of infection, liver and kidney problems,
low blood counts and high blood pressure. Finally, anti-inflammatory drugs are also used, including anti-TNF medications. The
only approved drug in BD is apremilast, which is used as a maintenance therapy to prevent formation of oral ulcers.
Unfortunately, apremilast is associated with both high cost and side effects including diarrhea, nausea, upper respiratory tract
infection and headache.
Public Health Solutions Overview
ThermoVax® – Thermostability Platform Technology
ThermoVax® is a novel method for thermostabilizing vaccines with a variety of adjuvants, resulting in a single vial which can
be reconstituted with water for injection immediately prior to use. One of the adjuvants utilized in ThermoVax® is aluminum
salts (known colloquially as “Alum”). Alum is the most widely employed adjuvant technology in the vaccine industry.
The value of ThermoVax® lies in its potential ability to eliminate the need for cold chain production, transportation, and storage
for Alum-adjuvanted vaccines. This would relieve the high costs of producing and maintaining vaccines under refrigerated
conditions. Based on historical reports from WHO and other scientific reports, we believe that a meaningful proportion of
vaccine doses globally are wasted due to excursions from required cold chain temperature ranges. This is due to the fact that
many vaccines need to be maintained either between 2 and 8 degrees Celsius (“C”), frozen below -20 degrees C, or frozen
below -60 degrees C, and even brief excursions from these temperature ranges usually necessitate the destruction of the
product or the initiation of costly stability programs specific for the vaccine lots in question. ThermoVax® has the potential to
facilitate easier storage and distribution of strategic national stockpile vaccines for ricin exposure in emergency settings.
ThermoVax® development, specifically in the context of an Alum adjuvant, was supported pursuant to our $9.4 million NIAID
grant enabling development of thermo-stable ricin (RiVax®) and anthrax vaccines. Proof-of-concept preclinical studies with
ThermoVax® indicate that it is able to produce stable vaccine formulations using adjuvants, protein immunogens, and other
components that ordinarily would not withstand long temperature variations exceeding customary refrigerated storage
conditions. These studies were conducted with our Alum-adjuvanted ricin toxin vaccine, RiVax® and our Alum-adjuvanted
anthrax vaccine. Each vaccine was manufactured under precise lyophilization conditions using excipients that aid in
maintaining native protein structure of the key antigen. When RiVax® was kept at 40 degrees C (104 degrees Fahrenheit
(“F”)) for up to one year, all of the animals vaccinated with the lyophilized RiVax® vaccine developed potent and high titer
neutralizing antibodies. In contrast, animals that were vaccinated with the liquid RiVax® vaccine kept at 40 degrees C did not
develop neutralizing antibodies and were not protected against ricin exposure. The ricin A chain is extremely sensitive to
temperature and rapidly loses the ability to induce neutralizing antibodies when exposed to temperatures higher than 8
degrees C. When the anthrax vaccine was kept for up to 16 weeks at 70 degrees C, it was able to develop a potent antibody
response, unlike the liquid formulation kept at the same temperature. Moreover, we also have demonstrated the compatibility
of our thermostabilization technology with other secondary adjuvants such as TLR-4 agonists.
We also entered into a collaboration agreement with Axel Lehrer, PhD of the Department of Tropical Medicine, Medical
Microbiology and Pharmacology, John A. Burns School of Medicine (“JABSOM”), University of Hawai’i at Manoa (“UH
Manoa”) and Hawaii Biotech, Inc. (“HBI”) to develop a heat stable subunit Ebola vaccine. Dr. Lehrer, a co-inventor of the
Ebola vaccine with HBI, has shown proof of concept efficacy with subunit Ebola vaccines in non-human primates (“NHP”).
The most advanced Ebola vaccines involve the use of vesicular stomatitis virus and adenovirus vectors – live, viral vectors
which complicate the manufacturing, stability and storage requirements. Dr. Lehrer’s vaccine candidate is based on highly
purified recombinant protein antigens, circumventing many of these manufacturing difficulties. Dr. Lehrer and HBI have
developed a robust manufacturing process for the required proteins. Application of ThermoVax® may allow for a product
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that can avoid the need for cold chain distribution and storage, yielding a vaccine ideal for use in both the developed and
developing world. This agreement has expired in accordance with its terms.
In December 2010, we executed a worldwide exclusive license agreement with the University of Colorado (“UC”) for certain
patents relating to ThermoVax® in all fields of use. In April 2018, the UC delivered a notice of termination of our license
agreement based upon our failure to achieve one of the development milestones: initiation of the Phase 1 clinical trial of the
heat stabilization technology by March 31, 2018. After negotiating with the UC, we and the UC agreed to extend the
termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to
keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat
stabilization technology in our field of use.
During September 2017, we were awarded funding of approximately $700,000 over five years under a NIAID Research
Project (R01) grant awarded to UH Manoa for the development of a trivalent thermostabilized filovirus vaccine (including
protection against Zaire ebolavirus, Sudan ebolavirus and Marburg Marburgvirus). Previous collaborations demonstrated the
feasibility of developing a heat stable subunit Ebola vaccine. Under the terms of the subaward, we will continue to support
vaccine formulation development with our proprietary vaccine thermostabilization technology, ThermoVax®. Ultimately, the
objective is to produce a thermostable trivalent filovirus vaccine for protection against Ebola and related diseases, allowing
worldwide distribution without the need for cold storage. Based on current U.S. government needs, efforts have been
expanded to focus on a monovalent or bivalent vaccine to specifically address Marburg marburgvirus.
In October 2018, in a series of related transactions, (a) we and the UC agreed to terminate the original license agreement,
(b) the UC and VitriVax, Inc. (“VitriVax”) executed a worldwide exclusive license agreement for the heat stabilization
technology for all fields of use, and (c) we and VitriVax executed a worldwide exclusive sublicense agreement, which was
amended and restated in October 2020, for the heat stabilization technology for use in the fields of ricin and Ebola vaccines.
We paid a $100,000 sublicense fee on the effective date of the sublicense agreement. Under the amended sublicense
agreement to maintain the sublicense we are obliged to pay a minimum annual royalty of $20,000 until first commercial sale
of a sublicensed product, upon which point, we shall pay an earned royalty of 2% of net sales subject to a minimum royalty of
$50,000 each year. We are also required to pay royalty on any sub-sublicense income based on a declining percentage of all
sub-sublicense income calculated within the contractual period until reaching a minimum of 15% after two years. In addition,
we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical trial of the sublicensed
product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000 upon regulatory
approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a sublicensed
product in the U.S. or equivalent. To date none of these milestones have been met.
In March 2020, we entered into a research collaboration with Axel Lehrer, PhD of the Department of Tropical Medicine,
Medical Microbiology and Pharmacology, JABSOM, UH Manoa to further expand the filovirus collaboration to investigation of
potential coronavirus vaccines, including for SARS-CoV-2 (causing COVID-19). This research collaboration will utilize the
technology platform developed in the search for filovirus vaccines and will use well-defined surface glycoprotein(s) from one
or more coronaviruses, which are expected to be protective for COVID-19.
During April 2020, we obtained an exclusive worldwide license for CoVaccine HT™, a novel vaccine adjuvant, from SERB
Pharmaceuticals (formerly BTG Specialty Pharmaceuticals, a division of Boston Scientific Corporation) (“SERB”), for the fields
of coronavirus infection (including SARS-CoV-2, the cause of COVID-19), and pandemic flu. CoVaccine HT™ is a novel
adjuvant, which has been shown to enhance both cell-mediated and antibody-mediated immunity. We and our collaborators,
including UH Manoa and Dr. Axel Lehrer, have successfully demonstrated the utility of CoVaccine HT™ in the development of
our heat stable filovirus vaccine program, with vaccine candidates against Ebola and Marburg virus disease. Given this
previous success, CoVaccine HT™ will potentially be an important component of our vaccine technology platform currently
being assessed for use against coronaviruses including SARS-CoV-2, the cause of COVID-19. The license agreement was
executed between us and SERB, which owns the CoVaccine HT™ intellectual property.
In September 2020, the Journal of Pharmaceutical Sciences published a scientific article detailing the thermostabilization of
the filovirus GP proteins and key assays describing their stability.
During October 2020, Frontiers in Immunology published a scientific article describing CiVax™, a prototype COVID-19
vaccine, using the novel CoVaccine HT™ adjuvant and demonstrating significant immunogenicity, including strong total and
neutralizing antibody responses, with a balanced Th1 response, as well as enhancement of cell mediated immunity. These
are all considered to be critical attributes of a potential COVID-19 vaccine.
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In December 2020, NIAID awarded us a Direct to Phase II Small Business Innovation Research (“SBIR”) grant of
approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-
19 and Ebola Virus Disease (“EVD”) vaccine candidates in conjunction with the CoVaccine HT™ adjuvant. This award also is
supporting immune characterization of this novel, emulsified adjuvant that has unique potency and compatibility with
lyophilization strategies to enable thermostabilization of subunit vaccines.
During August 2021, positive data demonstrated the efficacy of multiple filovirus vaccine candidates in NHP, including
thermostabilized multivalent vaccines in a single vial platform presentation. Collaborators at UH Manoa describe the potent
efficacy of vaccine candidates protecting against three life-threatening filoviruses, Zaire ebolavirus, Sudan ebolavirus and
Marburg Marburgvirus in an article titled "Recombinant Protein Filovirus Vaccines Protect Cynomolgus Macaques from Ebola,
Sudan, and Marburg Viruses", published in Frontiers in Immunology. These vaccine candidates contain highly purified protein
antigens combined with the novel CoVaccine HT™ adjuvant, in both monovalent (single antigen) and bivalent (two antigen)
formulations. Most recently, efforts to formulate all three antigens and adjuvant into a thermostable single-vial vaccine
platform has also been shown to protect 75% of vaccinated NHPs against subsequent Sudan ebolavirus challenge, with
further development to test efficacy against other filovirus infections ongoing.
During August 2021, Vaccine published a scientific article describing the formulation of single-vial platform presentations of
monovalent (single antigen), bivalent (two antigens) and trivalent (three antigens) combinations of filovirus vaccine
candidates.
During September 2021, an accelerated preprint was posted on bioRxiv of pre-clinical immunogenicity studies for CiVax™
(heat stable COVID-19 vaccine program) demonstrating durable broad-spectrum neutralizing antibody responses, including
against the Beta, Gamma and Delta variants of concern. The scientific article was subsequently published on March 9, 2022
in ACS Infectious Diseases. The work is part of an ongoing collaboration with Axel Lehrer, PhD, Associate Professor at the
Department of Tropical Medicine, Medical Microbiology and Pharmacology, JABSOM, UH Manoa. Development continues
under a non-dilutive $1.5M grant from the NIAID awarded to us in December 2020.
In December 2021, 100% protection of NHPs against lethal Sudan ebolavirus challenge was achieved using a bivalent,
thermostabilized vaccine formulated in a single vial, reconstituted only with water immediately prior to use. This milestone is
part of an ongoing collaboration with UH Manoa and further demonstrates the broad applicability of the vaccine platform, and
its potential role in the U.S. government's initiative for pandemic preparedness.
In May 2022, the U.S. Patent and Trademark Office issued a Notice of Allowance for the patent application titled “Composition
and Methods of Manufacturing Trivalent Filovirus Vaccines.” The allowed claims are directed to unique, proprietary
composition and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising
sucrose fatty acid esters prior to lyophilization. The described vaccine platform has previously been successfully applied to
filovirus vaccines (as mono-, bi- and tri-valent candidates for Zaire ebolavirus, Sudan ebolavirus and Marburg marburgvirus)
as well as SARS-CoV-2 vaccine. No currently licensed lyophilized vaccine that contains an adjuvant is presented in a single
vial format and there are few reports of successfully using nano-emulsions in lyophilized formulations. Previous work has
demonstrated the use of a single vial platform to co-lyophilize antigen(s) and a nano-emulsion adjuvant, CoVaccine HT™,
maintaining key adjuvant stability characteristics including particle size and colloidal stability, as well as maintaining
immunogenicity. This most recent milestone confirms that, in the context of lethal challenge with Sudan ebolavirus, complete
protection is maintained with the thermostabilized formulation.
In June 2022, 100% protection of NHPs against lethal Marburg marburgvirus challenge was achieved using a bivalent,
thermostabilized vaccine formulated in a single vial, reconstituted only with sterile water immediately prior to use. This
important milestone is part of an ongoing collaboration with UH Manoa, demonstrating the successful presentation of one or
more antigen(s) within the same formulation while maintaining full potency and thermostability. It further demonstrates the
broad applicability of the heat stable vaccine platform, and its potential role in the U.S. government's initiative for pandemic
preparedness.
In September 2023, positive data demonstrated two-year stability of thermostabilized bivalent and trivalent filovirus vaccine
candidates at temperatures of 40 degrees C (104 degrees F) when formulated in a single vial, needing reconstitution only with
sterile water immediately prior to use. This important milestone is part of an ongoing collaboration with UH Manoa,
demonstrating the successful presentation of one or more antigen(s) within the same formulation while maintaining full
potency and thermostability. It further demonstrates the broad applicability of the heat stable vaccine platform, and its
potential role in the U.S. government’s initiative for pandemic preparedness.
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In January 2024, Vaccine published the preclinical efficacy results of our novel, single-vial, thermostabilized bivalent filovirus
vaccine providing 100% protection against both Sudan ebolavirus (SUDV) and Marburg marburgvirus (MARV) infections. The
manuscript was entitled “Thermostable bivalent filovirus vaccine protects against severe and lethal Sudan ebolavirus and
marburgvirus infection”.
RiVax® – for Protection Against Ricin Toxin Exposure
RiVax® is our proprietary vaccine candidate being developed to protect against exposure to ricin toxin and if approved, would
be the first ricin vaccine. The immunogen in RiVax® induces a protective immune response in animal models of ricin exposure
and functionally active antibodies in humans. The immunogen consists of a genetically inactivated ricin A chain subunit that is
enzymatically inactive and lacks residual toxicity of the holotoxin. RiVax® has demonstrated statistically significant (p <
0.0001) preclinical survival results, providing 100% protection against acute lethality in an aerosol exposure non-human
primate model (Roy et al, 2015, Thermostable ricin vaccine protects rhesus macaques against aerosolized ricin: Epitope-
specific neutralizing antibodies correlate with protection, PNAS USA 112:3782-3787), and has also been shown to be well
tolerated and immunogenic in two Phase 1 clinical trials in healthy volunteers. Results of the first Phase 1 human trial of
RiVax® established that the immunogen was safe and induced antibodies that we believe may protect humans from ricin
exposure. The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity
passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans.
The outcome of this study was published in the Proceedings of the National Academy of Sciences (Vitetta et al., 2006, A Pilot
Clinical Trial of a Recombinant Ricin Vaccine in Normal Humans, PNAS, 103:2268-2273). The second trial that was
completed in September 2012 and was sponsored by University of Texas Southwestern Medical Center (“UTSW”) evaluated
a more potent formulation of RiVax® that contained an Alum adjuvant. The results of the Phase 1b study indicated that Alum-
adjuvanted RiVax® was safe and well tolerated, and induced greater ricin neutralizing antibody levels in humans than
adjuvant-free RiVax®. The outcomes of this second study were published in the Clinical and Vaccine Immunology.
We have adapted the original manufacturing process for the immunogen contained in RiVax® for thermostability and large
scale manufacturing and recent studies have confirmed that the thermostabilized RiVax® formulation enhances the stability of
the RiVax® antigen, enabling storage for at least 1 year at temperatures up to 40 degrees C (104 degrees F). The program
will pursue approval via the FDA “Animal Rule” since it is not possible to test the efficacy of the vaccine in a clinical study
which would expose humans to ricin. Uniform, easily measured and species-neutral immune correlates of protection that can
be measured in humans and animals, and are indicative of animal survival to subsequent ricin challenge, are central to the
application of the “Animal Rule.” Recent work has identified such potential correlates of immune protection in animals and
work to qualify and validate these approaches is continuing, with the goal of utilizing these assays in a planned Phase 1/2
clinical trial with the thermostable RiVax® formulation. During September 2018, we published an extended stability study of
RiVax®, showing up to 100% protection in mice after 12 months storage at 40 degrees C (104 degrees F) as well as
identification of a potential in vitro stability indicating assay, critical to adequately confirming the long-term shelf life of the
vaccine. We have entered into a collaboration with IDT Biologika GmbH (“IDT”) to scale-up the formulation/filling process and
continue development and validation of analytical methods established at IDT to advance the program. We also initiated a
development agreement with Emergent BioSolutions, Inc. (“EBS”) to implement a commercially viable, scalable production
technology for the RiVax® drug substance protein antigen.
The development of RiVax® has been sponsored through a series of overlapping challenge grants, UC1, and cooperative
grants, U01, from the NIH, granted to us and to UTSW where the vaccine originated. The second clinical trial was supported
by a grant from the FDA’s Office of Orphan Products to UTSW. To date, we and UTSW have collectively received
approximately $25 million in grant funding from the NIH for the development of RiVax®. In September 2014, we entered into a
contract with the NIH for the development of RiVax® pursuant to which we were awarded an additional $21.2 million of funding
in the aggregate. The development agreements with EBS and IDT were specifically funded under this NIH contract.
In 2017, NIAID exercised options to fund additional animal efficacy studies and good manufacturing practices compliant
RiVax® bulk drug substance and finished drug product manufacturing, which is required for the conduct of future preclinical
and clinical safety and efficacy studies. The exercised options provide us with approximately $4.5 million in additional non-
dilutive funding, bringing the total amount awarded to date under this contract to $21.2 million, which expired in
February 2021. The total award of up to $21.2 million supported the preclinical, manufacturing and clinical development
activities necessary to advance heat stable RiVax® with the FDA. In addition to this funding for the development of RiVax®,
biomarkers for RiVax® testing have been successfully identified, facilitating potential approval under the FDA Animal Rule.
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During December 2019, we initiated a third Phase 1 double-blind, placebo-controlled, randomized study in eight healthy adult
volunteer subjects designed to evaluate the safety and immunogenicity of RiVax® utilizing ThermoVax®. During January 2020,
we suspended the study after Emergent Manufacturing Operations Baltimore LLC (“EMOB”), the manufacturer of the drug
substance, notified us that, after releasing the final drug product to us, EMOB identified that the active drug substance tested
outside the established specification parameters. Two subjects had received doses as part of the study before the
manufacturer provided this notice. Those two subjects were monitored with no safety issues noted and data was captured in
accordance with the study protocol. They did not receive further doses of study drug.
During April 2020, we received notification from NIAID that they would not be exercising the final contract option to support
the conduct of a Phase 1/2 clinical study in healthy volunteers. As a result, the total contract award will not exceed $21.2
million. This contract expired in February 2021.
In November 2021, an article was published on pre-clinical immunogenicity studies for RiVax® demonstrating enduring
protection for at least 12 months post-vaccination. These results, coupled with the previous demonstration of efficacy in mice
and NHPs as well as long-term thermostability (at least 1 year at 40 degrees C or 104 degrees F), reinforce the practicality of
stockpiling and potentially utilizing the RiVax® vaccine in warfighters and civilian first responders without the complexities that
arise for vaccines that require stringent cold chain handling.
RiVax® has been granted Orphan Drug designation as well as Fast Track designation by the FDA for the prevention of ricin
intoxication. In addition, RiVax® has also been granted Orphan Drug designation in the European Union (“EU”) from the EMA
Committee for Orphan Medical Products.
Assuming development efforts are successful for RiVax®, we believe potential government procurement contract(s) could
reach as much as $200 million. This potential procurement contract information is a forward-looking statement, and investors
are urged not to place undue reliance on this statement. While we have determined this potential procurement contract value
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.
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 ($1.5 million for fiscal year 2023).
In July 2022, we signed a worldwide exclusive agreement to license and supply our ricin antigen, used in our RiVax® vaccine,
to SERB, for development of a novel therapeutic treatment against ricin toxin poisoning. In pursuit of a ricin antidote, SERB
will leverage its unique broad-spectrum polyclonal antibody platform, gained in its acquisition of BTG Specialty
Pharmaceuticals. This specialized manufacturing process generates binding fragments from antibodies that are specific to a
given antigen, helping to ensure potency and purity. This platform is currently used to manufacture two of SERB’s currently
marketed products, CroFab® and DigiFab®.
In December 2022, we published a paper demonstrating statistically significant correlates of protection predicting survival
after lethal aerosolized ricin challenge in non-human primates. The article titled “Serum antibody profiling identifies vaccine-
induced correlates of protection against aerosolized ricin toxin in rhesus macaques” was published in the journal npj Vaccines.
Ricin Toxin
Ricin toxin can be cheaply and easily produced, is stable over long periods of time, is toxic by several routes of exposure and
thus has the potential to be used as a biological weapon against military and/or civilian targets. As a bioterrorism agent, ricin
could be disseminated as an aerosol, by injection, or as a food supply contaminant. The potential use of ricin toxin as a
biological weapon of mass destruction has been highlighted in a Federal Bureau of Investigation Bioterror report released in
November 2007 titled Terrorism 2002-2005, which states that “Ricin and the bacterial agent anthrax are emerging as the most
prevalent agents involved in WMD investigations.” Al Qaeda in the Arabian Peninsula had threatened the use of ricin toxin to
poison food and water supplies and in connection with explosive devices. Domestically, the threat from ricin remains
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a concern for security agencies. In April 2013, letters addressed to the U.S. President, a Senator and a judge tested positive
for ricin. As recently as September 2020, ricin-laced letters addressed to the White House and others addressed to Texas law
enforcement agencies were intercepted before delivery raising fresh concerns about the deadly toxin.
The Centers for Disease Control and Prevention has classified ricin toxin as a Category B biological agent. Ricin works by
first binding to glycoproteins found on the exterior of a cell, and then entering the cell and inhibiting protein synthesis leading
to cell death. Once exposed to ricin toxin, there is no effective therapy available to reverse the course of the toxin. The recent
ricin threat to government officials has heightened the awareness of this toxic threat. Currently, there is no FDA approved
vaccine to protect against the possibility of ricin toxin being used in a terrorist attack, or its use as a weapon on the battlefield
nor is there a known antidote for ricin toxin exposure.
SGX943 – for Treating Emerging and/or Antibiotic-Resistant Infectious Diseases
SGX943 is an IDR, containing the same active ingredient as SGX942. Dusquetide is a fully synthetic, 5-amino acid peptide
with high aqueous solubility and stability. Extensive in vivo preclinical studies have demonstrated enhanced clearance of
bacterial infection with SGX943 administration. SGX943 has shown efficacy against both Gram-negative and Gram-positive
bacterial infections in preclinical models, independent of whether the bacteria is antibiotic-resistant or antibiotic-sensitive.
The innate immune system is responsible for rapid and non-specific responses to combat bacterial infection. Augmenting
these responses represents an alternative approach to treating bacterial infections. In animal models, IDRs are efficacious
against both antibiotic-sensitive and antibiotic-resistant infections, both Gram-positive and Gram-negative bacteria, and are
active irrespective of whether the bacteria occupy a primarily extracellular or intracellular niche. IDRs are also effective as
stand-alone agents or in conjunction with antibiotics. An IDR for the treatment of serious bacterial infections encompasses a
number of clinical advantages including:
● Treatment when antibiotics are contraindicated, such as:
o before the infectious organism and/or its antibiotic susceptibility is known; or
o in at-risk populations prior to infection.
● An ability to be used as an additive, complementary treatment with antibiotics, thereby:
o enhancing efficacy of sub-optimal antibiotic regimens (e.g., partially antibiotic-resistant infections);
o enhancing clearance of infection, thereby minimizing the generation of antibiotic resistance (e.g., in treating
melioidosis); and
o reducing the required antibiotic dose, again potentially minimizing the generation of antibiotic resistance.
● An ability to modulate the deleterious consequences of inflammation in response to the infection, including the
inflammation caused by antibiotic-driven bacterial lysis.
● Being unlikely to generate bacterial resistance since the IDR acts on the host, and not the pathogen.
Importantly, systemic inflammation and multi-organ failure is the ultimate common outcome of not only emerging and/or
antibiotic-resistant infectious diseases, but also of most biothreat agents (e.g., Burkholderia pseudomallei), indicating that
dusquetide would be applicable not only to antibiotic-resistant infection, but also to biothreat agents, especially where the
pathogen is not known and/or has been engineered for enhanced antibiotic resistance.
In May 2019, we were awarded a DTRA subcontract of approximately $600,000 over three years to participate in a
threat agents. As of
biodefense contract
December 31, 2023, there was negligible revenue earned or expense incurred related to the DTRA subcontract; the funding
for this subcontract has concluded.
the development of medical countermeasures against bacterial
for
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The Drug Approval Process
The FDA and comparable regulatory agencies in state, local and foreign jurisdictions impose substantial requirements on the
clinical development, manufacture and marketing of new drug and biologic products. The FDA, through regulations that
implement the Federal Food, Drug, and Cosmetic Act, as amended (“FDCA”), and other laws and comparable regulations for
other agencies, regulate research and development activities and the testing, manufacture, labeling, storage, shipping,
approval, recordkeeping, advertising, promotion, sale, export, import and distribution of such products. The regulatory
approval process is generally lengthy, expensive and uncertain. Failure to comply with applicable FDA and other regulatory
requirements can result in sanctions being imposed on us or the manufacturers of our products, including holds on clinical
research, civil or criminal fines or other penalties, product recalls, or seizures, or total or partial suspension of production or
injunctions, refusals to permit products to be imported into or exported out of the U.S., refusals of the FDA to grant approval of
drugs or to allow us to enter into government supply contracts, withdrawals of previously approved marketing applications and
criminal prosecutions.
Before human clinical testing in the U.S. of a new drug compound or biological product can commence, an Investigational
New Drug (“IND”), application is required to be submitted to the FDA. The IND application includes results of pre-clinical
animal studies evaluating the safety and efficacy of the drug and a detailed description of the clinical investigations to be
undertaken.
Clinical trials are normally done in three phases, although the phases may overlap. Phase 1 trials are smaller trials concerned
primarily with metabolism and pharmacologic actions of the drug and with the safety of the product. Phase 2 trials are
designed primarily to demonstrate effectiveness and safety in treating the disease or condition for which the product is
indicated. These trials typically explore various doses and regimens. Phase 3 trials are expanded clinical trials intended to
gather additional information on safety and effectiveness needed to clarify the product’s benefit-risk relationship and generate
information for proper labeling of the drug, among other things. The FDA receives reports on the progress of each phase of
clinical testing and may require the modification, suspension or termination of clinical trials if an unwarranted risk is presented
to patients. When data is required from long-term use of a drug following its approval and initial marketing, the FDA can
require Phase 4, or post-marketing, studies to be conducted.
With certain exceptions, once successful clinical testing is completed, the sponsor can submit a NDA, for approval of a drug,
or a Biologic License Application (“BLA”), for biologics such as vaccines, which will be reviewed, and if successful, approved
by the FDA, allowing the product to be marketed. The process of completing clinical trials for a new drug is likely to take a
number of years and require the expenditure of substantial resources. Furthermore, the FDA or any foreign health authority
may not grant an approval on a timely basis, if at all. The FDA may deny the approval of a NDA or BLA, in its sole discretion,
if it determines that its regulatory criteria have not been satisfied or may require additional testing or information. Among the
conditions for marketing approval is the requirement that the prospective manufacturer’s quality control and manufacturing
procedures conform to good manufacturing practice regulations. In complying with standards contained in these regulations,
manufacturers must continue to expend time, money and effort in the area of production, quality control and quality assurance
to ensure full technical compliance. Manufacturing facilities, both foreign and domestic, also are subject to inspections by, or
under the authority of, the FDA and by other federal, state, local or foreign agencies.
Even after initial FDA or foreign health authority approval has been obtained, further studies, including Phase 4 post-
marketing studies, may be required to provide additional data on safety and will be required to gain approval for the marketing
of a product as a treatment for clinical indications other than those for which the product was initially tested. For certain drugs
intended to treat serious, life-threatening conditions that show great promise in earlier testing, the FDA can also grant
conditional approval. However, drug developers are required to study the drug further and verify clinical benefit as part of the
conditional approval provision, and the FDA can revoke approval if later testing does not reproduce previous findings. The
FDA may also condition approval of a product on the sponsor agreeing to certain mitigation strategies that can limit the
unfettered marketing of a drug. Also, the FDA or foreign regulatory authority will require post-marketing reporting to monitor
the side effects of the drug. Results of post-marketing programs may limit or expand the further marketing of the product.
Further, if there are any modifications to the drug, including any change in indication, manufacturing process, labeling or
manufacturing facility, an application seeking approval of such changes will likely be required to be submitted to the FDA or
foreign regulatory authority.
In the U.S., the FDCA, the Public Health Service Act, the Federal Trade Commission Act, and other federal and state statutes
and regulations govern, or influence the research, testing, manufacture, safety, labeling, storage, record keeping, approval,
advertising and promotion of drug, biological, medical device and food products. Noncompliance with applicable
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requirements can result in, among other things, fines, recall or seizure of products, refusal to permit products to be imported
into the U.S., refusal of the government to approve product approval applications or to allow us to enter into government
supply contracts, withdrawal of previously approved applications and criminal prosecution. The FDA may also assess civil
penalties for violations of the FDCA involving medical devices.
For biodefense development, such as with RiVax®, the FDA has instituted policies that are expected to result in shorter
pathways to market. This potentially includes approval for commercial use utilizing the results of animal efficacy trials, rather
than efficacy trials in humans. However, we will still have to establish that the vaccine and countermeasures it is developing
are safe in humans at doses that are correlated with the beneficial effect in animals. Such clinical trials will also have to be
completed in distinct populations that are subject to the countermeasures; for instance, the very young and the very old, and
in pregnant women, if the countermeasure is to be licensed for civilian use. Other agencies will have an influence over the
benefit-risk scenarios for deploying the countermeasures and in establishing the number of doses utilized in the Strategic
National Stockpile. We may not be able to sufficiently demonstrate the animal correlation to the satisfaction of the FDA, as
these correlates are difficult to establish and are often unclear. Invocation of the animal rule may raise issues of confidence in
the model systems even if the models have been validated. For many of the biological threats, the animal models are not
available and we may have to develop the animal models, a time-consuming research effort. There are few historical
precedents, or recent precedents, for the development of new countermeasure for bioterrorism agents. Despite the animal
rule, the FDA may require large clinical trials to establish safety and immunogenicity before licensure and it may require
safety and immunogenicity trials in additional populations. Approval of biodefense products may be subject to post-marketing
studies, and could be restricted in use in only certain populations.
Vaccines are approved under the BLA process that exists under the Public Health Service Act. In addition to the greater
technical challenges associated with developing biologics, the potential for generic competition is lower for a BLA product
than a small molecule product subject to a NDA under the Federal Food, Drug and Cosmetic Act. Under the Patient
Protection and Affordable Care Act enacted in 2010, a “generic” version of a biologic is known as a biosimilar and the barriers
to entry – whether legal, scientific, or logistical – for a biosimilar version of a biologic approved under a BLA are higher.
Orphan Drug Designation
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs or biologics intended to treat a rare disease
or condition – generally a disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation
must be requested before submitting a NDA or BLA. After the FDA grants orphan drug designation, the generic identity of the
drug or biologic and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any
advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA or BLA applicant to
receive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation is
entitled to a seven-year exclusive marketing period in the U.S. for that product, for that indication. During the seven-year
exclusivity period, the FDA may not approve any other applications to market the same drug or biologic for the same disease,
except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan
drug exclusivity does not prevent the FDA from approving a different drug or biologic for the same disease or condition, or the
same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits
for certain research and a waiver of the NDA or BLA application user fee.
Fast Track Designation and Accelerated Approval
The FDA is required to facilitate the development, and expedite the review, of drugs or biologics that are intended for the
treatment of a serious or life-threatening disease or condition for which there is no effective treatment and which demonstrate
the potential to address unmet medical needs for the condition. Under the fast track program, the sponsor of a new drug or
biologic candidate may request that the FDA designate the candidate for a specific indication as a fast track drug or biologic
concurrent with, or after, the filing of the IND for the candidate. The FDA must determine if the drug or biologic candidate
qualifies for fast track designation within 60 days of receipt of the sponsor’s request. Unique to a fast track product, the FDA
may initiate review of sections of a fast track product’s NDA or BLA before the application is complete. This rolling review is
available if the applicant provides, and the FDA approves, a schedule for the submission of the remaining information and the
applicant pays applicable user fees. However, the FDA’s time period goal for reviewing an application does not begin until the
last section of the NDA or BLA is submitted. Additionally, the fast track designation may be withdrawn by the FDA if the FDA
believes that the designation is no longer supported by data emerging in the clinical trial process.
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Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA
programs intended to expedite development and review, such as accelerated approval. Drug or biological products studied for
their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit
over existing treatments may receive accelerated approval, which means the FDA may approve the product based upon a
surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier
than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or
other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of
alternative treatments.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes
for a direct measurement of how a patient feels, functions, or survives. Surrogate endpoints can often be measured more
easily or more rapidly than clinical endpoints. A drug or biologic candidate approved on this basis is subject to rigorous post-
marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect
on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing
studies, will allow the FDA to withdraw the drug or biologic from the market on an expedited basis. All promotional materials
for drug candidates approved under accelerated regulations are subject to prior review by the FDA.
Pediatric Information
Under the Pediatric Research Equity Act (“PREA”), NDAs or BLAs or supplements to NDAs or BLAs must contain data to
assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to
support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may
grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not
apply to any drug for an indication for which orphan designation has been granted.
Paediatric Investigation Plan
As part of the regulatory process for the registration of new medicines with the EMA and the MHRA, pharmaceutical
companies are required to provide a PIP outlining the Company’s strategy for investigation of the new medicinal products in
the paediatric population. In some instances, a waiver negating the need for a PIP for certain conditions may be granted by
the EMA or MHRA when development of a medicine for use in children is not feasible or appropriate.
Innovative Licensing and Access Pathway
The ILAP was launched in the UK at the start of 2021 to accelerate the development and access to promising medicines,
thereby facilitating patient access to new medicines. The pathway, part of the UK’s plan to attract life sciences development in
the post-Brexit era, features enhanced input and interactions with the MHRA and other stakeholders including the NICE, and
the SMC. The decision to award the Innovation Passport is made by an ILAP Steering Group, which is comprised of
representatives from MHRA, NICE, and SMC. The Innovation Passport designation is the first step in the ILAP process and
triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and
development milestones with the goal of early patient access in the UK. Other benefits of ILAP include a 150-day accelerated
assessment, rolling review and a continuous benefit risk assessment.
Early Access to Medicines Scheme
Launched in April 2014 in the United Kingdom by the MHRA, the Early Access to Medicines Scheme (“EAMS”) offers severely
ill patients with life-threatening and seriously debilitating conditions the lifeline of trying ground-breaking new medicines earlier
than they would normally be accessible. PIM designation is the first phase of EAMS and is awarded following an assessment
of early nonclinical and clinical data by the MHRA. The criteria product candidates must meet to obtain PIM designation are:
● Criterion 1 – The condition should be life-threatening or seriously debilitating with a high unmet medical need (i.e.,
there is no method of treatment, diagnosis or prevention available or existing methods have serious limitations).
● Criterion 2 – The medicinal product is likely to offer major advantage over methods currently used in the UK.
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● Criterion 3 – The potential adverse effects of the medicinal product are likely to be outweighed by the benefits,
allowing for the reasonable expectation of a positive benefit risk balance. A positive benefit risk balance should be
based on preliminary scientific evidence that the safety profile of the medicinal product is likely to be manageable and
acceptable in relation to the estimated benefits.
False Claims Laws
The federal False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be
presented, a false claim for payment to, or approval by, the federal government or knowingly making, using, or causing to be
made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a
modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money
or property presented to the U.S. government.
Anti-Kickback Laws
The federal Anti-Kickback Statute prohibits, among other things, any person or entity, from knowingly and willfully offering,
paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in
return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any item or service reimbursable
under Medicare, Medicaid or other federal healthcare programs. The term remuneration has been interpreted broadly to
include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical
manufacturers on one hand and prescribers, purchasers, and formulary managers on the other.
United States Healthcare Reform
Federal Physician Payments Sunshine Act and its implementing regulations require that certain manufacturers of drugs,
devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made
or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of,
the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians
and their immediate family members.
In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which
we conduct our business. The Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Health
Information Technology for Economic and Clinical Health Act (“HITECH”), and its implementing regulations, imposes certain
requirements relating to the privacy, security and transmission of individually identifiable health information. Among other
things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates” – independent
contractors or agents of covered entities that receive or obtain protected health information in connection with providing a
service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to
make civil and criminal penalties directly applicable to business associates and possibly other persons, and gave state
attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA
laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, state laws govern the
privacy and security of health information in certain circumstances, many of which differ from each other in significant ways
and may not have the same effect, thus complicating compliance efforts.
Third-Party Suppliers and Manufacturers
Drug substance and drug product manufacturing is outsourced to qualified suppliers. We do not have manufacturing
capabilities/infrastructure and do not intend to develop the capacity to manufacture drug products substances. We have
agreements with third-party manufacturers to supply bulk drug substances for our product candidates and with third parties to
formulate, package and distribute our product candidates. Our employees include professionals with expertise in
pharmaceutical manufacturing development, quality assurance and third-party supplier management who oversee work
conducted by third-party companies. We believe that we have on hand or can easily obtain sufficient amounts of product
candidates to complete our currently contemplated clinical trials. All of the drug substances used in our product candidates
currently are manufactured by single suppliers. While we have not experienced any supply disruptions, the number of
manufacturers of the drug substances is limited. In the event it is necessary or advisable to acquire supplies from alternative
suppliers, assuming commercially reasonable terms could be reached, the challenge would be the efficient transfer of
technology and know-how from current manufactures to the new supplier. Formulation and distribution of our finished
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product candidates also currently are conducted by single suppliers but we believe that alternative sources for these services
are readily available on commercially reasonable terms, subject to the efficient transfer of technology and know-how from
current suppliers to the new supplier.
All of the current agreements for the supply of bulk drug substances for our product candidates and for the formulation or
distribution of our product candidates relate solely to the development (including preclinical and clinical) of our product
candidates. Under these contracts, our product candidates are manufactured upon our order of a specific quantity. In the
event that we obtain marketing approval for a product candidate, we will qualify secondary suppliers for all key manufacturing
activities supporting the marketing application.
Marketing and Collaboration
We do not currently have any sales and marketing capability, other than to potentially market our biodefense vaccine products
directly to government agencies. With respect to other commercialization efforts, we currently intend to seek distribution and
other collaboration arrangements for the sales and marketing of any product candidate that is approved, while also evaluating
the potential to commercialize on our own in orphan disease indications. From time to time, we have had and are having
strategic discussions with potential collaboration partners for our biodefense vaccine product candidates, although no
assurance can be given that we will be able to enter into one or more collaboration agreements for our product candidate on
acceptable terms, if at all. We believe that both military and civilian health authorities of the U.S. and other countries will
increase their stockpiling of therapeutics and vaccines to treat and prevent diseases and conditions that could ensue following
a bioterrorism attack.
On August 25, 2013, we entered into an agreement with SciClone, pursuant to which SciClone provided us with access to its
oral mucositis clinical and regulatory data library in exchange for exclusive commercialization rights for SGX942 in the
People’s Republic of China, including Hong Kong and Macau, subject to the negotiation of economic terms. SciClone’s data
library was generated from two sequential Phase 2 clinical studies conducted in 2010 and 2012 evaluating SciClone’s
compound, SCV-07, for the treatment of oral mucositis caused by chemoradiation therapy in head and neck cancer patients,
before SciClone terminated its program. By analyzing data available from the placebo subjects in the SciClone trials, we
acquired valuable insight into disease progression, along with quantitative understanding of its incidence and severity in the
head and neck cancer patient population. This information assisted us with the design of the SGX942 Phase 2 clinical trial, in
which positive preliminary results were announced in December 2015.
On September 9, 2016, we and SciClone entered into an exclusive license agreement, pursuant to which we granted rights to
SciClone to develop, promote, market, distribute and sell SGX942 in the People’s Republic of China, including Hong Kong
and Macau, as well as Taiwan, South Korea and Vietnam. Under the terms of the license agreement, SciClone will be
responsible for all aspects of development, product registration and commercialization in the territories, having access to data
generated by us. In exchange for exclusive rights, SciClone will pay us royalties on net sales, and we will supply commercial
drug product to SciClone on a cost-plus basis, while maintaining worldwide manufacturing rights. We also entered into a
common stock purchase agreement with SciClone pursuant to which we sold 23,530 shares of our common stock to SciClone
for approximately $127.50 per share, for an aggregate price of $3 million.
Competition
Our competitors are pharmaceutical and biotechnology companies, most of whom have considerably greater financial,
technical, and marketing resources than we do. Universities and other research institutions, including the U.S. Army Medical
Research Institute of Infectious Diseases, also compete in the development of treatment technologies, and we face
competition from other companies to acquire rights to those technologies.
HyBryte™ Competition
There is currently no approved cure for CTCL and treatments are prescribed to manage symptoms. The FDA has approved
several treatments for later stages (IIB-IV) of CTCL and/or in conditions that are unresponsive to prior treatment. Three are
targeted therapies (Targretin®-caps, Ontak® and Adcetris®), two are histone deacetylases inhibitors (Zolina® and Istodax®)
and the remaining two are topical therapies (Valchor® and Targretin®-gel). There are currently no FDA approved therapies for
the treatment of front-line, early stage (I-IIA) CTCL; however certain topical chemotherapies and topical, radiation,
photodynamic and other therapies which are approved for indications other than CTCL are prescribed off-label for the
treatment of early stage CTCL. These include narrow-band ultraviolet B (NB-UVB) light therapy and psoralen combined
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with ultraviolet A UVA light therapy (“PUVA”); however, PUVA treatments are usually limited to three times per week and 200
times in total due to the potentially carcinogenic side effect, while NB UVB is known to be effective against patches but less so
against plaque lesions, common in early stage CTCL. There are other drugs currently in development that may have the
potential to be used in early stage (I-IIA) CTCL, primarily in early Phase 1 and 2 clinical studies. Other treatments for later
stage disease are not considered direct competitors.
SGX302 Competition
There is currently no approved cure for psoriasis and treatments are prescribed to manage symptoms. The FDA has
approved several topical and systemic treatments for psoriasis. Systemic therapies dominate the treatment of severe and
increasingly the more severe moderate patients, and include biologics aimed at reducing systemic inflammation. Skin directed
therapy remains the primary treatment for mild-to-moderate disease. Current therapies for mild-to-moderate disease include
psoralen activated by ultraviolet A (“PUVA”, a photodynamic therapy), emollients, topical steroids, vitamin D preparations
including retinoids (e.g., Sorilux®, Dovonex®, Cacitrene®), coal tar, salicylic acid, calcineurin inhibitors (e.g., Prograf®, Elidel®,
Zorac®, Tazorac®) and dithranols (e.g., Drithocreme®). Other phototherapy approaches include the use of both broad-band
and narrow-band ultraviolet B light. There are also a number of ongoing Phase 2 and 3 clinical trials in mild to moderate
psoriasis.
Compared to PUVA, photoactivated hypericin uses non-carcinogenic and more penetrative visible light (unlike ultraviolet light
used with PUVA) and a non-mutagenic compound hypericin (unlike psoralen used with PUVA), and is more highly targeted
and more commensurate with long-term treatment. Compared to other skin-directed therapies, photoactivated hypericin has
demonstrated a comparatively low local irritancy/adverse event rate with minimal long-term skin effects. Compared to
in more severe patients only, photoactivated hypericin does not cause
systemic
immunosuppression.
therapies, commonly used
SGX94/942/945 Competition
Because SGX94 (dusquetide) uses a novel mechanism of action in combating bacterial infections, there are no direct
competitors at this time. Bacterial infections are routinely treated with antibiotics and SGX94 treatment is anticipated to be
utilized primarily where antibiotics are insufficient (e.g., due to antibiotic resistance) or contra-indicated (e.g., in situations
where the development of antibiotic resistance is a significant concern). Many groups are working on the antibiotic resistance
problem and research into the innate immune system is intensifying, making emerging competition likely (from companies
such as Celtaxsys Inc., Innaxon Therapeutics and Innate Pharma SA).
There is currently one drug approved for the treatment of oral mucositis in hematological cancer (palifermin). There are
currently no approved drugs for treatment of oral mucositis in cancers with solid tumors (e.g., head and neck cancer). There
are several drugs in clinical development for oral mucositis – three in Phase 3 (brilacidin by Innovation Pharmaceuticals, Inc.,
a mucobuccal tablet by Monopar Therapeutics LLC and GC4419 by Galera Therapeutics, Inc.). There are various natural
products in small and/or open label studies (including sage, turmeric, honey and olive oil). In addition, there are medical
devices approved for the treatment of oral mucositis including MuGard®, GelClair®, Episil®, and Caphosol®. These devices
attempt to create a protective barrier around the oral ulceration with no biologic activity in treating the underlying disease.
There is currently no approved cure for BD and treatments are prescribed to manage symptoms. Treatments may include
both maintenance therapies and those specifically addressing mucocutaneous flares (e.g., mouth ulcers, genital ulcers and
leg ulcers). Corticosteroids are generally applied topically to sores and as eyedrops and may also be given systemically to
reduce inflammation. Although used frequently, they have limited efficacy over the long-term and have significant side effects
that become more concerning with more chronic use. Other treatments for BD flares involve suppressing the immune system
with drugs (e.g., cyclosporine or cyclophosphamide). These drugs come with a higher risk of infection, liver and kidney
problems, low blood counts and high blood pressure. For skin and mucosal manifestations of BD, anti-inflammatory drugs are
also used, including colchicine, azathioprine, anti-TNF, anti-interferon alpha, anti-IL-17 and anti-IL-23 medications. The only
approved drug in BD is apremilast, which is used as a maintenance therapy to prevent formation of oral ulcers. Apremilast is
associated with both high cost and side effects including diarrhea, nausea, upper respiratory tract infection and headache.
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ThermoVax® Competition
Multiple groups and companies are working to address the unmet need of vaccine thermostability using a variety of
technologies. In addition, other organizations, such as the Bill and Melinda Gates Foundation and PATH, have programs
designed to advance technologies to address this need.
Several stabilization technologies currently being developed involve mixing vaccine antigen +/- adjuvant with various
proprietary excipients or co-factors that either serve to stabilize the vaccine or biological product in a liquid or dried
(lyophilized) form. Examples of these approaches include the use of various plant-derived sugars and macromolecules being
developed by companies such as iosBio. Variation Biotechnologies, Inc. (“VBI”) is developing a lipid system (resembling
liposomes) to stabilize viral antigens, including virus-like particles (“VLPs”), and for potential application to a conventional
influenza vaccine among others.
Additionally, companies like Altimmune, Inc., and Panacea Biotec Ltd., and Compass Biotech Inc. are developing proprietary
vaccines with the application of some form of stabilization technology.
Public Health Solutions Competition
We face competition in the area of biodefense product development from various public and private companies, universities
and governmental agencies, such as the U.S. Army, some of whom may have their own proprietary technologies which may
directly compete with our technologies.
The U.S. Army Medical Research Institute of Infectious Diseases, the DoD’s lead laboratory for medical research to counter
biological threats is also developing a ricin vaccine candidate, RVEc™. RVEc™ has been shown to be fully protective in mice
exposed to lethal doses of ricin toxin by the aerosol route. Further studies, in both rabbits and nonhuman primates, were
conducted to evaluate RVEc™’s safety as well as its immunogenicity, with positive results observed. No further data has been
released in recent years. A monoclonal antibody is also being developed by Mapp Biopharmaceutical Inc. as a ricin
therapeutic, with administration 4 hours after exposure demonstrating efficacy while administration 12 hours after ricin
exposure was not protective in animal models.
There are no approved vaccines to prevent infection and/or mitigate exposure to Sudan ebolavirus or Marburg marburgvirus.
There are other vaccine candidates in development, primarily using viral-vectored vaccine platforms. These platforms may be
contra-indicated in the immune-compromised, pregnant individuals or children. They may also have limited efficacy on repeat
administration.
Patents and Other Proprietary Rights
Our goal is to obtain, maintain and enforce patent protection for our products, formulations, processes, methods and other
proprietary technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties,
both in the U.S. and in other countries. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual
property protection possible for our product candidates, proprietary information and proprietary technology through a
combination of contractual arrangements and patents, both in the U.S. and elsewhere in the world.
We also depend upon the skills, knowledge and experience of our scientific and technical personnel, as well as that of our
advisors, consultants and other contractors, none of which is patentable. To help protect our proprietary knowledge and
experience that is not patentable, and for inventions for which patents may be difficult to enforce, we rely on trade secret
protection and confidentiality agreements to protect our interests. To this end, we require all employees, consultants, advisors
and other contractors to enter into confidentiality agreements, which prohibit the disclosure of confidential information and,
where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important
to our business.
In 2014, we acquired a novel PDT that utilizes safe visible light for activation, which we refer to as HyBryte™. The active
ingredient in HyBryte™ is synthetic hypericin, a photosensitizer which is topically applied to skin lesions and then activated by
fluorescent light 16 to 24 hours later. As part of the acquisition, we acquired a license agreement relating to the use of photo-
activated hypericin, composition of matter patent for HyBryte™ (U.S. patent 8,629,302) and additional issued and pending
applications, both in the U.S. and abroad. U.S. patent 8,629,302 is expected to expire in September 2030. In August 2018, we
were granted a U.S. patent (No. 10,053,513) titled “Systems and Methods for Producing Synthetic
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Hypericin.” This newly issued patent, expected to expire in 2036, broadens the production around synthetic hypericin. Our
proprietary formulation of synthetic hypericin also has been granted a European patent for the treatment of psoriasis, EP
2571507, and complements the method of treatment claims covered by the previously issued U.S. patent 6001882,
Photoactivated hypericin and the use thereof. Further, on January 7, 2020, we also were granted a U.S. patent
(No. 10,526,268) titled “Systems and Methods for Producing Synthetic Hypericin”, which further expanded protection for the
composition of purified synthetic hypericin. This patent is also expected to expire in 2036. Patent protection is also pursued
worldwide with similar patents and expiry dates.
In addition to issued and pending patents, we also have “Orphan Drug” designations for HyBryte™ in the U.S. and the EU for
CTCL, as well as for RiVax® in the U.S. and EU. Our Orphan Drug designations provide for seven years of post-approval
marketing exclusivity in the U.S. and ten years exclusivity in Europe. We have pending patent applications for this indication
that, if granted, may extend our anticipated marketing exclusivity beyond the U.S. seven year or EU ten year post-approval
exclusivity provided by Orphan Drug legislation.
In 2013, we expanded our patent portfolio to include innate defense regulation through the acquisition of the novel drug
technology, known as SGX94. By binding to the pivotal regulatory protein p62, also known as sequestosome-1, SGX94
regulates the innate immune system to reduce inflammation, eliminate infection and enhance healing. As part of the
acquisition, we acquired all rights, including composition of matter patents for SGX94 as well as other analogs and crystal
structures of SGX94 with its protein target p62, including U.S. patent 8,124,721 (expiring 2028), 9,416,157 (expiring 2028)
and 8,791,061 (expiring 2029), both in the U.S. and abroad. SGX94 was developed pursuant to discoveries made by
Professors B. Brett Finlay and Robert Hancock of University of British Columbia (“UBC”). We also have rights to the
background technology patents (U.S. patent numbers 7,507,787 [expiring 2024], 7,687,454 [expiring 2026] and 11,311,598
[expiring 2034]). The U.S. Patent Office has also granted patents titled “Novel Peptides and Analogs for Use in the Treatment
of Oral Mucositis.” The issued patents (U.S. patent numbers 9,850.279 and 10,253,068, both expiring in 2034) claim
therapeutic use of dusquetide and related IDR analogs, and adds to composition of matter claims for dusquetide and related
analogs that have been granted in the U.S. and worldwide.
ThermoVax® is the subject of U.S. patents 8,444,991 (expiring February 2030) and 8,808,710 (expiring March 2028) both
issued on May 21, 2013 titled “Method of Preparing an Immunologically-Active Adjuvant-Bound Dried Vaccine Composition”
and licensed to us by VitriVax, Inc. ThermoVax® is also U.S. patent application number 15/694.023 filed September 17, 2017
titled “Thermostable Vaccine Compositions and Methods of Preparing Same” and jointly invented by the UC and the
Company. The patent application and the corresponding foreign filings are pending or granted and they address the use of
adjuvants in conjunction with vaccines that are formulated to resist thermal inactivation. The license agreement covers
thermostable alum-adjuvanted vaccines for ricin toxin and Ebola virus. An additional patent, covering vaccine combinations
such as ricin toxin and anthrax, was filed in 2015 and granted on May 21, 2019 in the U.S. (No. 10,293,041, titled “Multivalent
Stable Vaccine Composition and Methods of Making Same”) and is expected to expire in 2035. A patent for unique,
proprietary compositions and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants
comprising sucrose fatty acid esters prior to lyophilization was filed in 2020, granted in 2022 and expiring in 2040 (No.
11,433,129 titled “Compositions and Methods of Manufacturing Trivalent Filovirus Vaccines.”) Patent protection is also
pursued worldwide with similar patents and expiry dates.
Additional vaccine thermostabilization patents specific for anti-viral vaccines, including filovirus and coronavirus have been
filed but are not yet granted. If granted, expiry dates would range from 2040 to 2041. Patent protection is also pursued
worldwide with similar patents and expiry dates.
HyBryte™ License Agreement
In September 2014, we acquired a worldwide exclusive license agreement with New York University and Yeda Research and
Development Company Ltd. for the rights to a novel PDT that utilizes safe visible light for activation, which we refer to as
HyBryte™. To maintain this license, we are obligated to pay $25,000 in annual license fees. In addition, we will pay the
licensors: (a) a royalty amount equal to 3% of all net sales of HyBryte™ made directly by us and/or any affiliates; (b) a royalty
amount equal to 2.5% of all net sales of HyBryte™ made by our sublicensees, subject to stated maximums and (c) 20% of all
payments, not based on net sales, received by us from our sublicensees. This license may be terminated by either party upon
notice of a material breach by the other party that is not cured within the applicable cure period. The exclusive license
includes rights to several issued U.S. patents, including U.S. patent numbers 6,867,235 and 7,122,518,
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among other domestic and foreign patent applications. U.S. Patent numbers 6,867,235 and 7,122,518 expired in
January 2020 and is expected to expire in November 2023, respectively.
We acquired the license agreement for HyBryte™ and related intangible assets, including U.S. patent 8,629,302, properties
and rights pursuant to an asset purchase agreement with Hy Biopharma Inc. (“Hy Biopharma”). As consideration for the
assets acquired, we initially paid $275,000 in cash and issued 12,328 shares of common stock with a market value of
$3,750,000, and in March 2020 we issued 130,413 shares of common stock at a value of $5,000,000 (based upon an
effective per share price of $38.40) as a result of HyBryte™ demonstrating statistical significant treatment response in the
Phase 3 clinical trial. Provided the final success-orientated milestone is attained, we will be required to make a payment of up
to $5 million, if and when achieved, payable in our common stock.
SGX94 License Agreements
On December 18, 2012, we acquired a first in class drug technology, known as SGX94 (dusquetide), representing a novel
approach to modulation of the innate immune system. SGX94 is an IDR that regulates the innate immune system to reduce
inflammation, eliminate infection and enhance tissue healing by binding to the pivotal regulatory protein p62, also known as
sequestosome-1. As part of the acquisition, we acquired all rights, including composition of matter patents, preclinical and
Phase 1 clinical study datasets for SGX94. We also assumed a license agreement with UBC to advance the research and
development of the SGX94 technology. The license agreement with UBC provides us with exclusive worldwide rights to
manufacture, distribute, market sell and/or license or sublicense products derived or developed from this technology. Under
the license agreement we are obligated to pay UBC (i) an annual license maintenance fee of CAD $1,000, and (ii) milestone
payments which could reach up to CAD $1.2 million. This license agreement (a) will automatically terminate if we file, or
become subject to an involuntary filing, for bankruptcy, and (b) may be terminated by UBC in the event of, among other
things, our insolvency, dissolution, grant of a security interest in the technology licensed to us pursuant to the license
agreement, or material breach of or failure to perform material obligations under the license agreement or other research
agreements between us and UBC.
ThermoVax® License Agreement
On December 21, 2010, we executed a worldwide exclusive license agreement with the UC for ThermoVax®, which is the
subject of U.S. patent number 8,444,991 issued on May 21, 2013 titled “Method of Preparing an Immunologically-Active
Adjuvant-Bound Dried Vaccine Composition.” This patent and its corresponding foreign filings are licensed to us by the UC
and they address the use of adjuvants in conjunction with vaccines that are formulated to resist thermal inactivation. U.S.
Patent 8,444,991 is expected to expire in December 2031. The license agreement also covers thermostable vaccines for
biodefense as well as other potential vaccine indications. In addition, we, in conjunction with UC, filed domestic and foreign
patent applications claiming priority back to a provisional application filed on May 17, 2011 titled: “Thermostable Vaccine
Compositions and Methods of Preparing Same.” In April 2018, the UC delivered a notice of termination of our license
agreement based upon our failure to achieve one of the development milestones: initiation of the Phase 1 clinical trial of the
heat stabilization technology by March 31, 2018. After negotiating with the UC, we and the UC agreed to extend the
termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to
keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat
stabilization technology in our field of use.
On October 31, 2018, in a series of related transactions, (a) we and the UC agreed to terminate the original license
agreement, (b) the UC and VitriVax executed a worldwide exclusive license agreement for the heat stabilization technology for
all fields of use, and (c) we and VitriVax executed a worldwide exclusive sublicense agreement, which was amended and
restated in October 2020, for the heat stabilization technology for use in the fields of ricin and Ebola vaccines. We paid a
$100,000 sublicense fee on the effective date of the sublicense agreement. Under the amended sublicense agreement to
maintain the sublicense we are obliged to pay a minimum annual royalty of $20,000 until first commercial sale of a
sublicensed product, upon which point, we will be required to pay an earned royalty of 2% of net sales subject to a minimum
royalty of $50,000 each year. We are also required to pay royalties on any sub-sublicense income based on a
declining percentage of all sub-sublicense income calculated within the contractual period until reaching a minimum of 15%
after two years. In addition, we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical
trial of the sublicensed product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000
upon regulatory approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a
sublicensed product in the U.S. or equivalent. To date none of these milestones have been met.
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RiVax® License Agreement
In June 2003, we executed a worldwide exclusive option to license patent applications with UTSW for the nasal, pulmonary
and oral uses of a non-toxic ricin vaccine. In June 2004, we entered into a license agreement with UTSW for the injectable
rights to the ricin vaccine and, in October 2004, we negotiated the remaining oral rights to the ricin vaccine. To maintain this
license, we are obligated to pay $50,000 in annual license fees. Through this license, we have rights to the issued patent
number 7,175,848 titled “Ricin A chain mutants lacking enzymatic activity as vaccines to protect against aerosolized ricin.”
This patent includes methods of use and composition claims for RiVax®.
CoVaccine HT™ License Agreement
In April 2020, we executed an agreement for the exclusive worldwide license of CoVaccine HT™, a novel vaccine adjuvant,
from BTG, a division of Boston Scientific Corporation (NYSE: BSX), for the fields of SARS-CoV-2, the cause of COVID-19 and
pandemic flu. The agreement was executed with Protherics Medicines Development, one of the companies that make up the
BTG specialty pharmaceuticals business, which owns the CoVaccine HT™ intellectual property.
Research and Development Expenditures
We spent approximately $3.3 million and $7.9 million in the years ended December 31, 2023 and 2022, respectively, on
research and development. The amounts we spent on research and development per product during the years ended
December 31, 2023 and 2022 are set forth in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in this Annual Report on Form 10-K.
Human Capital
We are committed to a work environment that is welcoming, inclusive and encouraging. To achieve our plans and goals, it is
imperative that we attract and retain top talent. In order to do so, we aim to have a safe and encouraging workplace, with
opportunities for our employees to grow and develop professionally, supported by strong compensation, benefits, and other
incentives. In addition to competitive base salaries, we offer every full-time employee a cash target bonus, a comprehensive
benefits package and equity compensation.
As of December 31, 2023, we employed a total of 15 persons, including 2 part-time employees and 13 full-time employees,
five of whom are MDs/PhDs. In addition to our employees, we contract with third-parties for the conduct of certain clinical
development, manufacturing, accounting and administrative activities. We anticipate increasing the number of our employees.
We have no collective bargaining agreements with our employees, and none are represented by labor unions. We consider
our relationships with our employees to be good.
Throughout the COVID 19 pandemic, many of our employees have worked remotely. In September 2021 our employees
returned to the Company’s facilities in-person and have maintained a hybrid work schedule with both in-office and remote
hours.
Available Investor Information
We file electronically with the Securities and Exchange Commission (“SEC”) our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) of 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We make available through
our website, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or furnish
them to the SEC. Our website is located at www.soligenix.com. You can also request copies of such documents by contacting
the company at (609) 538-8200 or sending an email to info@soligenix.com.
Item 1A. Risk factors
An investment in our securities involves a high degree of risk. You should carefully consider the following information about
these risks, together with the other information about these risks contained in this Annual Report, as well as the other
information contained in this Annual Report generally, before deciding to buy our securities. Any of the risks we describe
below could adversely affect our business, financial condition, operating results or prospects. The market prices for our
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securities could decline if one or more of these risks and uncertainties develop into actual events and you could lose all or
part of your investment. Additional risks and uncertainties that we do not yet know of, or that we currently think are immaterial,
may also impair our business operations. You should also refer to the other information contained in this Annual Report,
including our financial statements and the related notes.
Summary of Risk Factors
Our business is subject to a number of risks and uncertainties that you should understand before making an investment
decision. These risks include, but are not limited to, the following:
Risks Related to our Business
● We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce
or discontinue our product development and commercialization efforts or not be able to repay certain convertible
notes.
● Our losses from operations, negative cash flows, and shareholders’ deficit as of December 31, 2023 raise substantial
doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.
● The report of our independent registered accounting firm on our audited financial statements for the fiscal year
ended December 31, 2023 contains an explanatory paragraph relating to our ability to continue as a going concern.
● If we are unable to develop our product candidates, our ability to generate revenues and viability as a company will
be significantly impaired.
● We have no approved products on the market and therefore do not expect to generate any revenues from product
sales in the foreseeable future, if at all.
● Our business is subject to extensive governmental regulation, which can be costly, time consuming and subjects us to
unanticipated delays.
● There may be unforeseen challenges in developing our biodefense products.
● We are dependent on government funding, which is inherently uncertain, for the success of our public health business
segment operations.
● The terms of our loan and security agreement with Pontifax Medison Finance require, and any future debt financing
may require, us to meet certain operating covenants and place restrictions on our operating and financial flexibility.
● If the parties we depend on for supplying our drug substance raw materials and certain manufacturing-related
services do not timely supply these products and services, it may delay or impair our ability to develop, manufacture
and market our products.
● If we are not able to maintain or secure agreements with third parties for pre-clinical and clinical trials of our product
candidates on acceptable terms, if these third parties do not perform their services as required, or if these third
parties fail to timely transfer any regulatory information held by them to us, we may not be able to obtain regulatory
approval for, or commercialize, our product candidates.
● The manufacturing of our products is a highly exacting process, and if we or one of our materials suppliers encounter
problems manufacturing our products, our business could suffer.
● We may use our financial and human resources to pursue a particular research program or product candidate and fail
to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood
of success.
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● Even if approved, our products will be subject to extensive post-approval regulation.
● Even if we obtain regulatory approval to market our product candidates, our product candidates may not be accepted
by the market.
● We do not have extensive sales and marketing experience and our lack of experience may restrict our success in
commercializing some of our product candidates.
● Our products, if approved, may not be commercially viable due to change in health care practice and third party
reimbursement limitations.
● Our product candidates may cause serious adverse events or undesirable side effects which may delay or prevent
marketing approval, or, if approval is received, require them to be taken off the market, require them to include safety
warnings or otherwise limit their sales.
● If we fail to obtain or maintain orphan drug exclusivity for our product candidates, our competitors may sell products to
treat the same conditions and our revenue will be reduced.
● Federal and/or state health care reform initiatives could negatively affect our business.
● We may not be able to retain rights licensed to us by third parties to commercialize key products or to develop the
third party relationships we need to develop, manufacture and market our products.
● We may suffer product and other liability claims; we maintain only limited product liability insurance, which may not be
sufficient.
● We may use hazardous chemicals in our business. Potential claims relating to improper handling, storage or disposal
of these chemicals could affect us and be time consuming and costly.
● We may not be able to compete with our larger and better-financed competitors in the biotechnology industry.
● Competition and technological change may make our product candidates and technologies less attractive or obsolete.
● Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our
business.
● Instability and volatility in the financial markets could have a negative impact on our business, financial condition,
results of operations, and cash flows.
● Adverse developments affecting financial institutions such as actual events or concerns involving liquidity, defaults or
non-performance, could adversely affect our operations and liquidity.
● We may not be able to utilize all of our net operating loss carryforwards.
● Global pathogens could have an impact on financial markets, materials sourcing, patients, governments and
population (e.g. COVID-19).
Risks Related to our Intellectual Property
● We may be unable to commercialize our products if we are unable to protect our proprietary rights, and we may be
liable for significant costs and damages if we face a claim of intellectual property infringement by a third party.
● We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming.
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● If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and
defend against litigation.
Risks Related to Technology and Intellectual Property
● Our strategy includes an increasing dependence on technology in our operations. If any of our key technology fails,
our business could be adversely affected.
● A cybersecurity incident could negatively impact our business and our relationships with our employees, service
providers, patients, clinical study sites and government agencies.
Risks Related to our Securities
● The price of our common stock may be highly volatile.
● If we fail to meet Nasdaq’s listing requirements, we could be removed from The Nasdaq Capital Market, which would
limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the
secondary market and negatively impact our ability to raise capital.
● Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes.
● Our shares of common stock are thinly traded, so stockholders may be unable to sell at or near ask prices or at all if
they need to sell shares to raise money or otherwise desire to liquidate their shares.
● Our common stock is deemed to be a “penny stock,” which may make it more difficult for investors to sell their shares
due to suitability requirements.
● We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our
stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common
stock.
● Upon our dissolution, our stockholders may not recoup all or any portion of their investment.
● The issuance of our common stock pursuant to the terms of the asset purchase agreement with Hy Biopharma may
cause dilution and the issuance of such shares of common stock, or the perception that such issuances may occur,
could cause the price of our common stock to fall.
● Repayment of certain convertible notes, if they are not otherwise converted, will require a significant amount of cash,
and we may not have sufficient cash flow from our business to make payments on our indebtedness.
● The issuance of shares of common stock upon conversion of certain convertible notes could substantially dilute
shareholders’ investments and could impede our ability to obtain additional financing.
● Our Board of Directors can, without stockholder approval, cause preferred stock to be issued on terms that adversely
affect holders of our common stock.
Risks Related to our Business
We have had significant losses and anticipate future losses; if additional funding cannot be obtained, we may reduce
or discontinue our product development and commercialization efforts.
We have experienced significant losses since inception and, at December 31, 2023, had an accumulated deficit of
approximately $225.7 million. We expect to incur additional operating losses in the future and expect our cumulative losses to
increase. As of December 31, 2023, we had approximately $8.4 million in cash and cash equivalents available, and as of
March 8, 2024 we had approximately $7.5 million in cash and cash equivalents available. Without additional funding,
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based on our projected budgetary needs and funding from existing contracts and grants over the next year, we expect to be
able to maintain the current level of our operations into the fourth quarter of 2024.
In September 2014, we entered into a contract with the NIH for the development of RiVax® to protect against exposure to ricin
toxin that would provide up to $24.7 million of funding in the aggregate over six years if options to extend the contract are
exercised by the NIH. In 2017, we were awarded two separate grants from the NIH of approximately $1.5 million each to
support our pivotal Phase 3 trials of HyBryte™ for the treatment of CTCL and SGX942 for the treatment of oral mucositis in
head and neck cancer. In December 2020, we were awarded Direct to Phase II SBIR grant from NIAID of approximately $1.5
million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and EVD vaccine
candidates in conjunction with the CoVaccine HT™ adjuvant. Our biodefense grants have an overhead component that allows
us an agency-approved percentage over our incurred costs. We estimate that the overhead component associated with our
existing contracts and grants will fund some fixed costs for direct employees working on these contracts and grants as well as
other administrative costs. As of December 31, 2023, we had approximately $844,000 in awarded grant funding available.
Our product candidates are positioned for or are currently in clinical trials, and we have not yet generated any significant
revenues from sales or licensing of these product candidates. From inception through December 31, 2023, we have
expended approximately $119 million developing our current product candidates for pre-clinical research and development
and clinical trials. We currently expect to spend approximately $5.5 million for the year ending December 31, 2024 in
connection with the development of our therapeutic and vaccine products, licenses, employment agreements, and consulting
agreements, of which approximately $0.3 million is expected to be reimbursed through our existing government grants.
We have no control over the resources and funding U.S. government agencies may devote to our programs, which may be
subject to periodic renewal and which generally may be terminated by the government at any time for convenience. Any
significant reductions in the funding of U.S. government agencies or in the funding areas targeted by our business could
materially and adversely affect our biodefense program and our results of operations and financial condition. If we fail to
satisfy our obligations under the government contracts, the applicable Federal Acquisition Regulations allow the government
to terminate the agreement in whole or in part, and we may be required to perform corrective actions, including but not limited
to delivering to the government any incomplete work. If U.S. government agencies do not exercise future funding options
under the contracts or grants, terminate the funding or fail to perform their responsibilities under the agreements or grants, it
could materially impact our biodefense program and our financial results.
Unless and until we are able to generate sales or licensing revenue from one of our product candidates, we will require
additional funding to meet these commitments, sustain our research and development efforts, provide for future clinical trials,
and continue our operations. There can be no assurance we can raise such funds. If additional funds are raised through the
issuance of equity securities, stockholders may experience dilution of their ownership interests, and the newly issued
securities may have rights superior to those of the common stock. If additional funds are raised by the issuance of debt, we
may be subject to limitations on our operations. If we cannot raise such additional funds, we may have to delay or stop some
or all of our drug development programs.
Our losses from operations, negative cash flows, and shareholders' deficit as of December 31, 2023 raise substantial
doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.
We have concluded that substantial doubt exists about our ability to continue as a going concern for the 12 months following
the issuance of the financial statements included in this Annual Report on Form 10-K. As of December 31, 2023, we had cash
and cash equivalents of approximately $8.4 million and current liabilities of approximately $6.2 million. As of the issuance date
of these financial statements, we believe that we have sufficient resources available to support our development activities and
business operations and timely satisfy our obligations as they come due into the fourth quarter of 2024. We do not have
sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to support our operations for at
least the 12 months following the issuance of the financial statements.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure
additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including
potential alliances and drug product collaborations, securing additional proceeds from government contract and grant
programs, and potentially amending the loan agreement with Pontifax Medison Finance to reduce the conversion price in
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order to allow for conversion of a portion of the debt which will reduce our liabilities; however, none of these alternatives are
committed at this time. 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.
The report of our independent registered accounting firm on our audited financial statements for the fiscal year
ended December 31, 2023 contains an explanatory paragraph relating to our ability to continue as a going concern.
The auditor’s opinion on our audited financial statements for the year ended December 31, 2023 includes an explanatory
paragraph stating that we have incurred recurring losses from operations that raise substantial doubt about our ability to
continue as a going concern. While we believe that we will be able to obtain the capital we need to continue our operations,
there can be no assurances that we will be successful in these efforts or will be able to resolve our liquidity issues or eliminate
our operating losses. If we are unable to obtain sufficient funding, we would need to significantly reduce our operating plans
and curtail some or all of our development efforts. Accordingly, our business, prospects, financial condition, and results of
operations will be materially and adversely affected, and we may be unable to continue as a going concern. If we seek
additional financing to fund our business activities in the future and there remains substantial doubt about our ability to
continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on
commercially reasonable terms or at all.
If we are unable to develop our product candidates, our ability to generate revenues and viability as a company will
be significantly impaired.
In order to generate revenues and profits, our organization must, along with corporate partners and collaborators, positively
research, develop and commercialize our technologies or product candidates. Our current product candidates are in various
stages of clinical and pre-clinical development and will require significant further funding, research, development, pre-clinical
and/or clinical testing, regulatory approval and commercialization, and are subject to the risks of failure inherent in the
development of products based on innovative or novel technologies. Specifically, each of the following is possible with respect
to any of our product candidates:
● we may not be able to maintain our current research and development schedules;
● we may be unable to secure procurement contracts on beneficial economic terms or at all from the U.S. government
or others for our biodefense products;
● we may encounter problems in clinical trials; or
● the technology or product may be found to be ineffective or unsafe, or may fail to obtain marketing approval.
If any of the risks set forth above occur, or if we are unable to obtain the necessary regulatory approvals as discussed below,
we may be unable to develop our technologies and product candidates and our business will be seriously harmed.
Furthermore, for reasons including those set forth below, we may be unable to commercialize or receive royalties from the
sale of any other technology we develop, even if it is shown to be effective, if:
● it is not economical or the market for the product does not develop or diminishes;
● we are not able to enter into arrangements or collaborations to manufacture and/or market the product;
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● the product is not eligible for third-party reimbursement from government or private insurers;
● others hold proprietary rights that preclude us from commercializing the product;
● we are not able to manufacture the product reliably;
● others have brought to market similar or superior products; or
● the product has undesirable or unintended side effects that prevent or limit its commercial use.
We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which
may make it difficult to predict our future performance.
We are a late-stage biopharmaceutical company. Our operations to date have been primarily limited to developing our
technology and undertaking pre-clinical studies and clinical trials of our product candidates in our two active business
segments, Specialized BioTherapeutics and Public Health Solutions. We have not yet obtained regulatory approvals for any of
our product candidates. Consequently, any predictions made about our future success or viability may not be as accurate as
they could be if we had commercialized products. Our financial condition has varied significantly in the past and will continue
to fluctuate from quarter-to-quarter or year-to-year due to a variety of factors, many of which are beyond our control. Factors
relating to our business that may contribute to these fluctuations include other factors described elsewhere in this Annual
Report and also include:
● our ability to obtain additional funding to develop our product candidates;
● our ability to repay existing debt in accordance with its terms;
● delays in the commencement, enrollment and timing of clinical trials;
● the success of our product candidates through all phases of clinical development;
● any delays in regulatory review and approval of product candidates in clinical development;
● our ability to obtain and maintain regulatory approval for our product candidates in the U.S. and foreign jurisdictions;
● potential side effects of our product candidates that could delay or prevent commercialization, limit the indications for
any approved drug, require the establishment of risk evaluation and mitigation strategies, or cause an approved drug
to be taken off the market;
● our dependence on third-party contract manufacturing organizations to supply or manufacture our products;
● our dependence on contract research organizations to conduct our clinical trials;
● our ability to establish or maintain collaborations, licensing or other arrangements;
● market acceptance of our product candidates;
● our ability to establish and maintain an effective sales and marketing infrastructure, either through the creation of a
commercial infrastructure or through strategic collaborations;
● competition from existing products or new products that may emerge;
● the ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement for our products;
● our ability to discover and develop additional product candidates;
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● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights
important to our business;
● our ability to attract and retain key personnel to manage our business effectively;
● our ability to build our finance infrastructure and improve our accounting systems and controls;
● potential product liability claims;
● potential liabilities associated with hazardous materials; and
● our ability to obtain and maintain adequate insurance policies.
Accordingly, the results of any quarterly or annual periods should not be relied upon as indications of future operating
performance.
We have no approved products on the market and therefore do not expect to generate any revenues from product
sales in the foreseeable future, if at all.
To date, we have no approved product on the market and have not generated any significant product revenues. We have
funded our operations primarily from sales of our securities and from government contracts and grants. We have not received,
and do not expect to receive for at least the next several years, if at all, any revenues from the commercialization of our
product candidates. To obtain revenues from sales of our product candidates, we must succeed, either alone or with third
parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial potential or
successfully obtain government procurement or stockpiling agreements. We may never succeed in these activities, and we
may not generate sufficient revenues to continue our business operations or achieve profitability.
Our business is subject to extensive governmental regulation, which can be costly, time consuming and subjects us
to unanticipated delays.
Our business is subject to very stringent federal, foreign, state and local government laws and regulations, including the
Federal Food, Drug and Cosmetic Act, the Environmental Protection Act, the Occupational Safety and Health Act, and state
and local counterparts to these acts. These laws and regulations may be amended, additional laws and regulations may be
enacted, and the policies of the FDA and other regulatory agencies may change.
The regulatory process applicable to our products requires pre-clinical and clinical testing of any product to establish its safety
and efficacy. This testing can take many years, is uncertain as to outcome, and requires the expenditure of substantial capital
and other resources. We estimate that the clinical trials of our product candidates that we have planned will take at least
several years to complete. Furthermore, failure can occur at any stage of the trials, and we could encounter problems that
cause us to abandon or repeat clinical trials. Favorable results in early studies or trials, if any, may not be repeated in later
studies or trials. Even if our clinical trials are initiated and completed as planned, we cannot be certain that the results will
support our product candidate claims. Success in preclinical testing, Phase 1 and Phase 2 clinical trials does not ensure that
later Phase 2 or Phase 3 clinical trials will be successful. In addition, we, the FDA or other regulatory authorities may suspend
clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or the FDA or other
regulatory authorities find deficiencies in our submissions or conduct of our trials.
We may not be able to obtain, or we may experience difficulties and delays in obtaining, necessary domestic and foreign
governmental clearances and approvals to market a product (for example, the FDA may not recognize fast track designation
upon an NDA submission, resulting in no priority review and subjecting us to longer potential review times than originally
anticipated). Also, even if regulatory approval of a product is granted, that approval may entail limitations on the indicated
uses for which the product may be marketed.
Following any regulatory approval, a marketed product and its manufacturer are subject to continual regulatory review. Later
discovery of problems with a product or manufacturer may result in restrictions on such product or manufacturer. These
restrictions may include product recalls and suspension or withdrawal of the marketing approval for the product. Furthermore,
the advertising, promotion and export, among other things, of a product are subject to extensive regulation by
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governmental authorities in the U.S. and other countries. If we fail to comply with applicable regulatory requirements, we may
be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating
restrictions and/or criminal prosecution.
There may be unforeseen challenges in developing our biodefense products.
For development of biodefense vaccines and therapeutics, the FDA has instituted policies that are expected to result in
accelerated approval. This includes approval for commercial use using the results of animal efficacy trials, rather than efficacy
trials in humans, referred to as the Animal Rule. However, we will still have to establish that the vaccines we are developing
are safe in humans at doses that are correlated with the beneficial effect in animals. Such clinical trials will also have to be
completed in distinct populations that are subject to the countermeasures; for instance, the very young and the very old, and
in pregnant women, if the countermeasure is to be licensed for civilian use. Other agencies will have an influence over the risk
benefit scenarios for deploying the countermeasures and in establishing the number of doses utilized in the Strategic National
Stockpile. We may not be able to sufficiently demonstrate the animal correlation to the satisfaction of the FDA, as these
correlates are difficult to establish and are often unclear. Invocation of the Animal Rule may raise issues of confidence in the
model systems even if the models have been validated. For many of the biological threats, the animal models are not
available and we may have to develop the animal models, a time-consuming research effort. There are few historical
precedents, or recent precedents, for the development of new countermeasures for bioterrorism agents. Despite the Animal
Rule, the FDA may require large clinical trials to establish safety and immunogenicity before licensure and it may require
safety and immunogenicity trials in additional populations. Approval of biodefense products may be subject to post-marketing
studies, and could be restricted in use in only certain populations. The government’s biodefense priorities can change, which
could adversely affect the commercial opportunity for the products we are developing. Further, other countries have not, at
this time, established criteria for review and approval of these types of products outside their normal review process, i.e.,
there is no Animal Rule equivalent, and consequently there can be no assurance that we will be able to make a submission
for marketing approval in foreign countries based on such animal data.
Additionally, few facilities in the U.S. and internationally have the capability to test animals with ricin, or otherwise assist us in
qualifying the requisite animal models. We have to compete with other biodefense companies for access to this limited pool of
highly specialized resources. We therefore may not be able to secure contracts to conduct the testing in a predictable
timeframe or at all.
We are dependent on government funding, which is inherently uncertain, for the success of our biodefense
operations.
We are subject to risks specifically associated with operating in the biodefense industry, which is a new and unproven
business area. We do not anticipate that a significant commercial market will develop for our biodefense products. Because
we anticipate that the principal potential purchasers of these products, as well as potential sources of research and
development funds, will be the U.S. government and governmental agencies, the success of our biodefense division will be
dependent in large part upon government spending decisions. The funding of government programs is dependent on
budgetary limitations, congressional appropriations and administrative allotment of funds, all of which are inherently uncertain
and may be affected by changes in U.S. government policies resulting from various political and military developments. Our
receipt of government funding is also dependent on our ability to adhere to the terms and provisions of the original grant and
contract documents and other regulations. We can provide no assurance that we will receive or continue to receive funding for
grants and contracts we have been awarded. The loss of government funds could have a material adverse effect on our ability
to progress our biodefense business.
The terms of our loan and security agreement with Pontifax Medison Finance require, and any future debt financing
may require, us to meet certain operating covenants and place restrictions on our operating and financial flexibility.
In December 2020, we entered into a loan and security agreement with Pontifax Medison Finance (the “Loan and Security
Agreement”), that is secured by a lien covering substantially all of our assets, other than our intellectual property and licenses
for intellectual property. The Loan and Security Agreement contains customary affirmative and negative covenants and events
of default. Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual
property and comply with all applicable laws, deliver certain financial reports, and maintain insurance coverage. Negative
covenants include, among others, covenants restricting us from transferring any material portion of our assets, incurring
additional indebtedness, engaging in mergers or acquisitions, changing foreign subsidiary voting rights, repurchasing shares,
paying dividends or making other distributions, making certain investments, and creating other liens
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on our assets, including our intellectual property, in each case subject to customary exceptions. If we raise any additional debt
financing, the terms of such additional debt could further restrict our operating and financial flexibility. These restrictions may
include, among other things, limitations on borrowing and specific restrictions on the use of our assets, as well as prohibitions
on our ability to create liens, pay dividends, redeem capital stock or make investments. If we default under the terms of the
Loan and Security Agreement or any future debt facility, the lender may accelerate all of our repayment obligations and take
control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to
immediately cease operations. Further, if we are liquidated, the lender’s right to repayment would be senior to the rights of the
holders of our common stock. The lender could declare a default upon the occurrence of any event that it interprets as a
material adverse effect as defined under the Loan and Security Agreement or based upon our insolvency. Any declaration by
the lender of an event of default could significantly harm our business and prospects and could cause the price of our
common stock to decline.
If the parties we depend on for supplying our drug substance raw materials and certain manufacturing-related
services do not timely supply these products and services, it may delay or impair our ability to develop, manufacture
and market our products. We do not have or anticipate having internal manufacturing capabilities.
We rely on suppliers for our drug substance raw materials and third parties for certain manufacturing-related services to
produce material that meets appropriate content, quality and stability standards, which material will be used in clinical trials of
our products and, after approval, for commercial distribution. To succeed, clinical trials require adequate supplies of drug
substance and drug product, which may be difficult or uneconomical to procure or manufacture. We and our suppliers and
vendors may not be able to (i) produce our drug substance or drug product to appropriate standards for use in clinical studies,
(ii) perform under any definitive manufacturing, supply or service agreements with us or (iii) remain in business for a sufficient
time to be able to develop, produce, secure regulatory approval of and market our product candidates. If we do not maintain
important manufacturing and service relationships, we may fail to find a replacement supplier or required vendor or develop
our own manufacturing capabilities which could delay or impair our ability to obtain regulatory approval for our products and
substantially increase our costs or deplete profit margins, if any. If we do find replacement manufacturers and vendors, we
may not be able to enter into agreements with them on terms and conditions favorable to us and, there could be a substantial
delay before a new facility could be qualified and registered with the FDA and foreign regulatory authorities.
We rely on third parties for pre-clinical and clinical trials of our product candidates and, in some cases, to maintain
regulatory files for our product candidates. If we are not able to maintain or secure agreements with such third
parties on acceptable terms, if these third parties do not perform their services as required, or if these third parties
fail to timely transfer any regulatory information held by them to us, we may not be able to obtain regulatory
approval for, or commercialize, our product candidates.
We rely on academic institutions, hospitals, clinics and other third-party collaborators for preclinical and clinical trials of our
product candidates. Although we monitor, support, and/or oversee our pre-clinical and clinical trials, because we do not
conduct these trials ourselves, we have less control over the timing and cost of these studies and the ability to recruit trial
subjects than if we conducted these trials wholly by ourselves. If we are unable to maintain or enter into agreements with
these third parties on acceptable terms, or if any such engagement is terminated, we may be unable to enroll patients on a
timely basis or otherwise conduct our trials in the manner we anticipate. In addition, there is no guarantee that these third
parties will devote adequate time and resources to our studies or perform as required by a contract or in accordance with
regulatory requirements, including maintenance of clinical trial information regarding our product candidates. If these third
parties fail to meet expected deadlines, fail to timely transfer to us any regulatory information, fail to adhere to protocols or fail
to act in accordance with regulatory requirements or our agreements with them, or if they otherwise perform in a substandard
manner or in a way that compromises the quality or accuracy of their activities or the data they obtain, then preclinical and/or
clinical trials of our product candidates may be extended, delayed or terminated, or our data may be rejected by the FDA or
regulatory agencies.
The manufacturing of our products is a highly exacting process, and if we or one of our materials suppliers
encounter problems manufacturing our products, our business could suffer.
The FDA and foreign regulators require manufacturers to register manufacturing facilities. The FDA and foreign regulators
also inspect these facilities to confirm compliance with current Good Manufacturing Practice (“cGMP”) or similar requirements
that the FDA or foreign regulators establish. We, or our materials suppliers, may face manufacturing or quality control
problems causing product production and shipment delays or a situation where we or the supplier may not be able
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to maintain compliance with the FDA’s cGMP requirements, or those of foreign regulators, necessary to continue
manufacturing our drug substance. Any failure to comply with cGMP requirements or other FDA or foreign regulatory
requirements could adversely affect our clinical research activities and our ability to market and develop our products.
We may use our financial and human resources to pursue a particular research program or product candidate and
fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater
likelihood of success.
Because we have limited financial and human resources, we are currently focusing on the regulatory approval of certain
product candidates. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other
indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market opportunities. Our spending on existing and future product
candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the
commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product
candidate through strategic alliance, licensing or other royalty arrangements in cases in which it would have been more
advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate
internal resources to a product candidate in an area in which it would have been more advantageous to enter into a partnering
arrangement.
Even if approved, our products will be subject to extensive post-approval regulation.
Once a product is approved, numerous post-approval requirements apply. Among other things, the holder of an approved
NDA is subject to periodic and other FDA monitoring and reporting obligations, including obligations to monitor and report
adverse events and instances of the failure of a product to meet the specifications in the NDA. Application holders must
submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product
labeling, or manufacturing process. Application holders must also submit advertising and other promotional material to the
FDA and report on ongoing clinical trials.
Depending on the circumstances, failure to meet these post-approval requirements can result in criminal prosecution, fines,
injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing
product approvals, or refusal to allow us to enter into supply contracts, including government contracts. In addition, even if we
comply with FDA and other requirements, new information regarding the safety or effectiveness of a product could lead the
FDA to modify or withdraw product approval.
Even if we obtain regulatory approval to market our product candidates, our product candidates may not be
accepted by the market.
Even if the FDA approves one or more of our product candidates, physicians and patients may not accept it or use it. Even if
physicians and patients would like to use our products, our products may not gain market acceptance among healthcare
payors such as managed care formularies, insurance companies or government programs such as Medicare or Medicaid.
Acceptance and use of our products will depend upon a number of factors including: perceptions by members of the health
care community, including physicians, about the safety and effectiveness of our drug product; cost-effectiveness of our
product relative to competing products; availability of reimbursement for our product from government or other healthcare
payers; and effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
The degree of market acceptance of any product that we develop will depend on a number of factors, including:
● cost-effectiveness;
● the safety and effectiveness of our products, including any significant potential side effects, as compared to
alternative products or treatment methods;
● the timing of market entry as compared to competitive products;
● the rate of adoption of our products by doctors and nurses;
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● product labeling or product insert required by the FDA for each of our products;
● reimbursement policies of government and third-party payors;
● effectiveness of our sales, marketing and distribution capabilities and the effectiveness of such capabilities of our
collaborative partners, if any; and
● unfavorable publicity concerning our products or any similar products.
Our product candidates, if successfully developed, will compete with a number of products manufactured and marketed by
major pharmaceutical companies, biotechnology companies and manufacturers of generic drugs. Our products may also
compete with new products currently under development by others. Physicians, patients, third-party payors and the medical
community may not accept and utilize any of our product candidates. If our products do not achieve market acceptance, we
will not be able to generate significant revenues or become profitable.
Because we expect sales of our current product candidates, if approved, to generate substantially all of our product revenues
for the foreseeable future, the failure of these products to find market acceptance would harm our business and could require
us to seek additional financing.
We do not have extensive sales and marketing experience and our lack of experience may restrict our success in
commercializing some of our product candidates.
We do not have extensive experience in marketing or selling pharmaceutical products whether in the U.S. or internationally.
To obtain the expertise necessary to successfully market and sell any of our products, the development of our own
commercial infrastructure and/or collaborative commercial arrangements and partnerships will be required. Our ability to
make that investment and also execute our current operating plan is dependent on numerous factors, including, the
performance of third party collaborators with whom we may contract.
Our products, if approved, may not be commercially viable due to change in health care practice and third party
reimbursement limitations.
Initiatives to reduce the federal deficit and to change health care delivery are increasing cost-containment efforts. We
anticipate that Congress, state legislatures and the private sector will continue to review and assess alternative benefits,
controls on health care spending through limitations on the growth of private health insurance premiums and Medicare and
Medicaid spending, price controls on pharmaceuticals, and other fundamental changes to the health care delivery system.
Any changes of this type could negatively impact the commercial viability of our products, if approved. Our ability to
successfully commercialize our product candidates, if they are approved, will depend in part on the extent to which
appropriate reimbursement codes and authorized cost reimbursement levels of these products and related treatment are
obtained from governmental authorities, private health insurers and other organizations, such as health maintenance
organizations. In the absence of national Medicare coverage determination, local contractors that administer the Medicare
program may make their own coverage decisions. Any of our product candidates, if approved and when commercially
available, may not be included within the then current Medicare coverage determination or the coverage determination of
state Medicaid programs, private insurance companies or other health care providers. In addition, third-party payers are
increasingly challenging the necessity and prices charged for medical products, treatments and services.
Our product candidates may cause serious adverse events or undesirable side effects which may delay or prevent
marketing approval, or, if approval is received, require them to be taken off the market, require them to include safety
warnings or otherwise limit their sales.
Serious adverse events or undesirable side effects from any of our product candidates could arise either during clinical
development or, if approved, after the approved product has been marketed. The results of future clinical trials may show that
our product candidates cause serious adverse events or undesirable side effects, which could interrupt, delay or halt clinical
trials, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities.
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If any of our product candidates cause serious adverse events or undesirable side effects:
● regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our
ability to continue development of the product;
● regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field
alerts to physicians and pharmacies;
● we may be required to change the way the product is administered, conduct additional clinical trials or change the
labeling of the product;
● we may be required to implement a risk minimization action plan, which could result in substantial cost increases and
have a negative impact on our ability to commercialize the product;
● we may be required to limit the patients who can receive the product;
● we may be subject to limitations on how we promote the product;
● sales of the product may decrease significantly;
● regulatory authorities may require us to take our approved product off the market;
● we may be subject to litigation or product liability claims; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or could
substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating
significant revenues from the sale of our products.
If we fail to obtain or maintain orphan drug exclusivity for our product candidates, our competitors may sell products
to treat the same conditions and our revenue will be reduced.
Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare disease or
condition, defined as a patient population of fewer than 200,000 in the U.S., or a patient population greater than 200,000 in
the U.S. where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the
U.S. In the EU, the European Medicines Agency’s Committee for Orphan Medicinal Products grants orphan drug designation
to promote the development of products that are intended for the diagnosis, prevention, or treatment of a life-threatening or
chronically debilitating condition affecting not more than five in 10,000 persons in the EU. Additionally, designation is granted
for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriously debilitating or serious and
chronic condition when, without incentives, it is unlikely that sales of the drug in the EU would be sufficient to justify the
necessary investment in developing the drug or biological product or where there is no satisfactory method of diagnosis,
prevention, or treatment, or, if such a method exists, the medicine must be of significant benefit to those affected by the
condition.
In the U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards
clinical trial costs, tax advantages, and user-fee waivers. In addition, if a product receives the first FDA approval for the
indication for which it has orphan designation, the product is entitled to orphan drug exclusivity, which means the FDA may
not approve any other application to market the same drug for the same indication for a period of seven years, except in
limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the
manufacturer is unable to assure sufficient product quantity. In the EU, orphan drug designation entitles a party to financial
incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug or biological product
approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it
is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.
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Even though we have orphan drug designation for HyBryte™ in the U.S. and Europe, and RiVax® in the U.S., we may not be
the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated with developing
drugs or biologic products. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively
protect the product from competition because different drugs with different active moieties can be approved for the same
condition. Absent patent or other intellectual property protection, even after an orphan drug is approved, the FDA or European
Medicines Agency may subsequently approve the same drug with the same active moiety for the same condition if the FDA or
European Medicines Agency concludes that the later drug is safer, more effective, or makes a major contribution to patient
care.
Federal and/or state health care reform initiatives could negatively affect our business.
The availability of reimbursement by governmental and other third-party payers affects the market for any pharmaceutical
product. These third-party payers continually attempt to contain or reduce the costs of healthcare. There have been a number
of legislative and regulatory proposals to change the healthcare system and further proposals are likely. Medicare’s policies
may decrease the market for our products. Significant uncertainty exists with respect to the reimbursement status of newly
approved healthcare products.
Third-party payers are increasingly challenging the price and cost-effectiveness of medical products and services. Once
approved, we might not be able to sell our products profitably or recoup the value of our investment in product development if
reimbursement is unavailable or limited in scope, particularly for product candidates addressing small patient populations. On
July 15, 2008, the Medicare Improvements for Patients and Providers Act of 2008 became law with a number of Medicare and
Medicaid reforms to establish a bundled Medicare payment rate that includes services and drug/labs that were separately
billed at that time. Bundling initiatives that have been implemented in other healthcare settings have occasionally resulted in
lower utilization of services that had not previously been a part of the bundled payment.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
The requirements governing drug pricing vary widely from country to country. We expect that there will continue to be a
number of U.S. federal and state proposals to implement governmental pricing controls. While we cannot predict whether
such legislative or regulatory proposals will be adopted, the adoption of such proposals could have a material adverse effect
on our business, financial condition and profitability.
We may not be able to retain rights licensed to us by third parties to commercialize key products or to develop the
third party relationships we need to develop, manufacture and market our products.
We currently rely on license agreements from New York University, Yeda Research and Development Company Ltd., the
University of Texas Southwestern Medical Center, the University of British Columbia, and George B. McDonald, MD as well as
sublicense agreement from VitriVax for the rights to commercialize key product candidates. We may not be able to retain the
rights granted under these agreements or negotiate additional agreements on reasonable terms, if at all. Our existing license
agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty,
and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a
bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the
licensor may have the right to terminate the license, in which event we would not be able to develop or market products
covered by the license.
Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our
drug candidates. See “Business – Patents and Other Proprietary Rights” for a description of our license agreements.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business, and scientific
issues. Disputes may arise regarding intellectual property subject to a licensing agreement, including but not limited to:
● the scope of rights granted under the license agreement and other interpretation-related issues;
● the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to
the licensing agreement;
● the sublicensing of patent and other rights;
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● our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our
licensors and us and our collaborators; and
● the priority of invention of patented technology.
If disputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current
licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected
product candidates.
Additionally, the research resulting in certain of our licensed patent rights and technology was funded by the U.S. government.
As a result, the government may have certain rights, or march-in rights, to such patent rights and technology. When new
technologies are developed with government funding, the government generally obtains certain rights in any resulting patents,
including a non-exclusive license authorizing the government to use the invention for non-commercial purposes. The
government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical
application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet
requirements of federal regulations or to give preference to U.S. industry. In addition, our rights in such inventions may be
subject to certain requirements to manufacture products embodying such inventions in the U.S. Any exercise by the
government of such rights could harm our competitive position, business, financial condition, results of operations and
prospects.
Furthermore, we currently have very limited product development capabilities and no manufacturing, marketing or sales
capabilities. For us to research, develop and test our product candidates, we need to contract or partner with outside
researchers, in most cases with or through those parties that did the original research and from whom we have licensed the
technologies. If products are successfully developed and approved for commercialization, then we will need to enter into
additional collaboration and other agreements with third parties to manufacture and market our products. We may not be able
to induce the third parties to enter into these agreements, and, even if we are able to do so, the terms of these agreements
may not be favorable to us. Our inability to enter into these agreements could delay or preclude the development,
manufacture and/or marketing of some of our product candidates or could significantly increase the costs of doing so. In the
future, we may grant to our development partners rights to license and commercialize pharmaceutical and related products
developed under the agreements with them, and these rights may limit our flexibility in considering alternatives for the
commercialization of these products. Furthermore, third-party manufacturers or suppliers may not be able to meet our needs
with respect to timing, quantity and quality for the products.
Additionally, if we do not enter into relationships with additional third parties for the marketing of our products, if and when
they are approved and ready for commercialization, we would have to build our own sales force or enter into
commercialization agreements with other companies. Development of an effective sales force in any part of the world would
require significant financial resources, time and expertise. We may not be able to obtain the financing necessary to establish a
sales force in a timely or cost effective manner, if at all, and any sales force we are able to establish may not be capable of
generating demand for our product candidates, if they are approved.
We may suffer product and other liability claims; we maintain only limited product liability insurance, which may not
be sufficient.
The clinical testing, manufacture and sale of our products involves an inherent risk that human subjects in clinical testing or
consumers of our products may suffer serious bodily injury or death due to side effects, allergic reactions or other unintended
negative reactions to our products. As a result, product and other liability claims may be brought against us. We currently
have clinical trial and product liability insurance with aggregate limits of liability of $10 million, which may not be sufficient to
cover our potential liabilities. Because liability insurance is expensive and difficult to obtain, we may not be able to maintain
existing insurance or obtain additional liability insurance on acceptable terms or with adequate coverage against potential
liabilities. Furthermore, if any claims are brought against us, even if we are fully covered by insurance, we may suffer harm
such as adverse publicity.
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We may use hazardous chemicals in our business. Potential claims relating to improper handling, storage or
disposal of these chemicals could affect us and be time consuming and costly.
Our research and development processes and/or those of our third party contractors involve the controlled use of hazardous
materials and chemicals. These hazardous chemicals are reagents and solvents typically found in a chemistry laboratory. Our
operations also may produce hazardous waste products. Federal, state and local laws and regulations govern the use,
manufacture, storage, handling and disposal of hazardous materials. While we attempt to comply with all environmental laws
and regulations, including those relating to the outsourcing of the disposal of all hazardous chemicals and waste products, we
cannot eliminate the risk of contamination from or discharge of hazardous materials and any resultant injury. In the event of
such an accident, we could be held liable for any resulting damages and any liability could materially adversely affect our
business, financial condition and results of operations.
Compliance with environmental laws and regulations may be expensive. Current or future environmental regulations may
impair our research, development or production efforts. We might have to pay civil damages in the event of an improper or
unauthorized release of, or exposure of individuals to, hazardous materials. We are not insured against these environmental
risks. We may agree to indemnify our collaborators in some circumstances against damages and other liabilities arising out of
development activities or products produced in connection with these collaborations.
In addition, the federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal
of hazardous or radioactive materials and waste products may require us to incur substantial compliance costs that could
materially adversely affect our business, financial condition and results of operations.
We may not be able to compete with our larger and better financed competitors in the biotechnology industry.
The biotechnology industry is intensely competitive, subject to rapid change and sensitive to new product introductions or
enhancements. Most of our existing competitors have greater financial resources, larger technical staffs, and larger research
budgets than we have, as well as greater experience in developing products and conducting clinical trials. Our competition is
particularly intense in the gastroenterology and transplant areas and is also intense in the therapeutic area of inflammatory
bowel diseases. We face intense competition in the biodefense area from various public and private companies and
universities as well as governmental agencies, such as the U.S. Army, which may have their own proprietary technologies that
may directly compete with our technologies. In addition, there may be other companies that are currently developing
competitive technologies and products or that may in the future develop technologies and products that are comparable or
superior to our technologies and products. We may not be able to compete with our existing and future competitors, which
could lead to the failure of our business.
Additionally, if a competitor receives FDA approval before we do for a drug that is similar to one of our product candidates,
FDA approval for our product candidate may be precluded or delayed due to periods of non-patent exclusivity and/or the
listing with the FDA by the competitor of patents covering its newly-approved drug product. Periods of non-patent exclusivity
for new versions of existing drugs such as our current product candidates can extend up to three and one-half years. See
“Business – The Drug Approval Process.”
These competitive factors could require us to conduct substantial new research and development activities to establish new
product targets, which would be costly and time consuming. These activities would adversely affect our ability to
commercialize products and achieve revenue and profits.
Competition and technological change may make our product candidates and technologies less attractive or
obsolete.
We compete with established pharmaceutical and biotechnology companies that are pursuing other forms of treatment for the
same indications we are pursuing and that have greater financial and other resources. Other companies may succeed in
developing products earlier than us, obtaining FDA approval for products more rapidly, or developing products that are more
effective than our product candidates. Research and development by others may render our technology or product candidates
obsolete or noncompetitive, or result in treatments or cures superior to any therapy we develop. We face competition from
companies that internally develop competing technology or acquire competing technology from universities and other
research institutions. As these companies develop their technologies, they may develop competitive positions that may
prevent, make futile, or limit our product commercialization efforts, which would result in a decrease in the revenue we would
be able to derive from the sale of any products.
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There can be no assurance that any of our product candidates will be accepted by the marketplace as readily as these or
other competing treatments. Furthermore, if our competitors’ products are approved before ours, it could be more difficult for
us to obtain approval from the FDA. Even if our products are successfully developed and approved for use by all governing
regulatory bodies, there can be no assurance that physicians and patients will accept our product(s) as a treatment of choice.
Furthermore, the pharmaceutical research industry is diverse, complex, and rapidly changing. By its nature, the business risks
associated therewith are numerous and significant. The effects of competition, intellectual property disputes, market
acceptance, and FDA regulations preclude us from forecasting revenues or income with certainty or even confidence.
Our business could be harmed if we fail to retain our current personnel or if they are unable to effectively run our
business.
We currently have 15 employees and we depend upon these employees, in particular Dr. Christopher Schaber, our President
and Chief Executive Officer, to manage the day-to-day activities of our business. Because we have such limited personnel,
the loss of any of them or our inability to attract and retain other qualified employees in a timely manner would likely have a
negative impact on our operations. We may be unable to effectively manage and operate our business, and our business may
suffer, if we lose the services of our employees.
Instability and volatility in the financial markets could have a negative impact on our business, financial condition,
results of operations, and cash flows.
During recent years, there has been substantial volatility in financial markets due at least in part to the uncertainty with regard
to the global economic environment. In addition, there has been substantial uncertainty in the capital markets and access to
additional financing is uncertain. Moreover, customer spending habits may be adversely affected by current and future
economic conditions. These conditions could have an adverse effect on our industry and business, including our financial
condition, results of operations, and cash flows.
To the extent that we do not generate sufficient cash from operations, we may need to issue stock or incur indebtedness to
finance our plans for growth. Recent turmoil in the credit markets and the potential impact on the liquidity of major financial
institutions may have an adverse effect on our ability to fund our business strategy through borrowings, under either existing
or newly created instruments in the public or private markets on terms we believe to be reasonable, if at all.
Adverse developments affecting financial institutions such as actual events or concerns involving liquidity, defaults
or non-performance, could adversely affect our operations and liquidity.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial
institutions, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-
wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California
Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (the “FDIC”)
as receiver. Despite subsequent actions taken by the U.S. Department of the Treasury, the U.S. Federal Reserve and the
FDIC to ensure that all depositors of SVB had access to all of their cash deposits following the closure of SVB, uncertainty
and liquidity concerns in the broader financial services industry remain.
We maintain cash balances at a third-party financial institution in excess of the FDIC insurance limit. Our access to our cash
and cash equivalents in amounts adequate to finance our operations could be significantly impaired to the extent the financial
institution with which we maintain cash balances faces liquidity constraints or failures. Any material decline in our ability to
access our cash and cash equivalents could adversely impact our ability to meet our operating expenses, result in breaches
of our contractual obligations or result in significant disruptions to our business, any of which could have material adverse
impacts on our operations and liquidity. There is no guarantee that the U.S. Department of Treasury, the U.S. Federal
Reserve and the FDIC will provide access to uninsured funds in the future in the event of the closure of other banks or
financial institutions in a timely fashion or at all.
We may not be able to utilize all of our net operating loss carryforwards.
The State of New Jersey’s Technology Business Tax Certificate Program allows certain high technology and biotechnology
companies to sell unused net operating loss (“NOL”) carryforwards to other New Jersey-based corporate taxpayers. We
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sold 2022, 2021 and 2020 New Jersey NOL carryforwards, resulting in the recognition of $1,767,803 and $1,154,935 of
income tax benefit, net of transaction costs during the years ended December 31, 2023 and 2022, respectively. We have not
yet sold our 2023 New Jersey NOL carryforwards but may do so in the future. If there is an unfavorable change in the State of
New Jersey’s Technology Business Tax Certificate Program (whether as a result of a change in law, policy or otherwise) that
terminates the program or eliminates or reduces our ability to use or sell our NOL carryforwards or if we are unable to find a
suitable buyer to utilize our New Jersey NOL carryforwards to the extent the NOLs expire before we are able to utilize them
against our taxable income, our cash taxes may increase which may have an adverse effect on our financial condition.
Global pathogens that could have an impact on financial markets, materials sourcing, patients, governments and
population (e.g. COVID-19).
Global pathogens (e.g., SARS-CoV-2, the pathogen responsible for COVID-19) could cause an impact on financial markets
and therefore repercussions to our operating business, including but not limited to, the sourcing of materials for our product
candidates, manufacture of supplies for our preclinical and/or clinical studies, delays in clinical operations, which may include
the availability or the continued availability of patients for our trials due to such things as quarantines, our conduct of patient
monitoring and clinical trial data retrieval at investigational study sites.
The impacts of outbreaks are highly uncertain and cannot be predicted, and we cannot provide any assurance that any
outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.
The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the pathogen.
Risks Related to our Intellectual Property
We may be unable to commercialize our products if we are unable to protect our proprietary rights, and we may be
liable for significant costs and damages if we face a claim of intellectual property infringement by a third party.
Our near and long-term prospects depend in part on our ability to obtain and maintain patents, protect trade secrets and
operate without infringing upon the proprietary rights of others. In the absence of patent and trade secret protection,
competitors may adversely affect our business by independently developing and marketing substantially equivalent or
superior products and technology, possibly at lower prices. We could also incur substantial costs in litigation and suffer
diversion of attention of technical and management personnel if we are required to defend ourselves in intellectual property
infringement suits brought by third parties, with or without merit, or if we are required to initiate litigation against others to
protect or assert our intellectual property rights. Moreover, any such litigation may not be resolved in our favor.
Although we and our licensors have filed various patent applications covering the uses of our product candidates, patents
may not be issued from the patent applications already filed or from applications that we might file in the future. Moreover, the
patent position of companies in the pharmaceutical industry generally involves complex legal and factual questions, and has
been the subject of much litigation. Any patents we own or license, now or in the future, may be challenged, invalidated or
circumvented. To date, no consistent policy has been developed in the U.S. Patent and Trademark Office (the “PTO”)
regarding the breadth of claims allowed in biotechnology patents.
In addition, because patent applications in the U.S. are maintained in secrecy until patent applications publish or patents
issue, and because publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we
cannot be certain that we and our licensors are the first creators of inventions covered by any licensed patent applications or
patents or that we or they are the first to file. The PTO may commence interference proceedings involving patents or patent
applications, in which the question of first inventorship is contested. Accordingly, the patents owned or licensed to us may not
be valid or may not afford us protection against competitors with similar technology, and the patent applications licensed to us
may not result in the issuance of patents.
It is also possible that our owned and licensed technologies may infringe on patents or other rights owned by others, and
licenses to which may not be available to us. We may be unable to obtain a license under such patent on terms favorable to
us, if at all. We may have to alter our products or processes, pay licensing fees or cease activities altogether because of
patent rights of third parties.
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In addition to the products for which we have patents or have filed patent applications, we rely upon unpatented proprietary
technology and may not be able to meaningfully protect our rights with regard to that unpatented proprietary technology.
Furthermore, to the extent that consultants, key employees or other third parties apply technological information developed by
them or by others to any of our proposed projects, disputes may arise as to the proprietary rights to this information, which
may not be resolved in our favor.
We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming.
The pharmaceutical industry has been characterized by extensive litigation regarding patents and other intellectual property
rights, and companies have employed intellectual property litigation to gain a competitive advantage. We may become subject
to infringement claims or litigation arising out of patents and pending applications of our competitors, or additional interference
proceedings declared by the PTO to determine the priority of inventions. The defense and prosecution of intellectual property
suits, PTO proceedings, and related legal and administrative proceedings are costly and time-consuming to pursue, and their
outcome is uncertain. Litigation may be necessary to enforce our issued patents, to protect our trade secrets and know-how,
or to determine the enforceability, scope, and validity of the proprietary rights of others. An adverse determination in litigation
or interference proceedings to which we may become a party could subject us to significant liabilities, require us to obtain
licenses from third parties, or restrict or prevent us from selling our products in certain markets. Although patent and
intellectual property disputes might be settled through licensing or similar arrangements, the costs associated with such
arrangements may be substantial and could include our paying large fixed payments and ongoing royalties. Furthermore, the
necessary licenses may not be available on satisfactory terms or at all.
Competitors may infringe our patents, and we may file infringement claims to counter infringement or unauthorized use. This
can be expensive, particularly for a company of our size, and time-consuming. In addition, in an infringement proceeding, a
court may decide that a patent of ours is not valid or is unenforceable or may refuse to stop the other party from using the
technology at issue on the grounds that our patents do not cover its technology. An adverse determination of any litigation or
defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly.
Also, a third party may assert that our patents are invalid and/or unenforceable. There are no unresolved communications,
allegations, complaints or threats of litigation related to the possibility that our patents are invalid or unenforceable. Any
litigation or claims against us, whether or not merited, may result in substantial costs, place a significant strain on our financial
resources, divert the attention of management and harm our reputation. An adverse decision in litigation could result in
inadequate protection for our product candidates and/or reduce the value of any license agreements we have with third
parties.
Interference proceedings brought before the PTO may be necessary to determine priority of invention with respect to our
patents or patent applications. During an interference proceeding, it may be determined that we do not have priority of
invention for one or more aspects in our patents or patent applications and could result in the invalidation in part or whole of a
patent or could put a patent application at risk of not issuing. Even if successful, an interference proceeding may result in
substantial costs and distraction to our management.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or
interference proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In
addition, there could be public announcements of the results of hearings, motions or other interim proceedings or
developments. If investors perceive these results to be negative, the price of our common stock could be adversely affected.
If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and
defend against litigation.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur
substantial costs and we may have to: obtain licenses, which may not be available on commercially reasonable terms, if at all;
abandon an infringing product candidate; redesign our products or processes to avoid infringement; stop using the subject
matter claimed in the patents held by others; pay damages; and/or defend litigation or administrative proceedings which may
be costly whether we win or lose, and which could result in a substantial diversion of our financial and management
resources.
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Risks Related to Technology and Intellectual Property
Our strategy includes an increasing dependence on technology in our operations. If any of our key technology fails,
our business could be adversely affected.
Our operations are increasingly dependent on technology. Our information technology systems are critical to our ability to
develop our products and otherwise operating our business. Problems with the operation of the information or communication
technology systems we use could adversely affect, or temporarily disable, all or a portion of our operations. Further, any
systems failures could impede our ability to timely collect and report financial results in accordance with applicable laws.
A cybersecurity incident could negatively impact our business and our relationships with our employees, service
providers, patients, clinical study sites and government agencies.
We use information technology and operational technology assets, including computer and information networks, in
substantially all aspects of our business operations. We also use mobile devices, social networking and other online activities
to connect with our employees, service providers, patients, clinical study sites and government agencies. Such uses give rise
to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information.
Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and
intellectual property, including clinical trial participants’ personal information, private information about employees and
financial and strategic information about us and our business partners. If we fail to assess and identify cybersecurity threats,
we may become increasingly vulnerable to such threats. Additionally, while we have implemented measures to prevent
security breaches and cyber incidents, our preventive measures and incident response efforts may not be entirely effective.
Also, the regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent
imposition of new and constantly changing requirements. This changing regulatory landscape may cause increasingly
complex compliance challenges, which may increase our compliance costs. Any failure to comply with these changing
security and privacy laws and regulations could result in significant penalties, fines, legal challenges and reputational harm.
The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or
interference with our information technology systems or the technology systems of third parties on which we rely, could result
in business disruption, negative publicity, brand damage, violation of privacy laws, loss of confidence, potential liability and
competitive disadvantage.
Risks Related to our Securities
The price of our common stock may be highly volatile.
The market price of our securities, like that of many other research and development public pharmaceutical and
biotechnology companies, has been highly volatile and the price of our common stock may be volatile in the future due to a
wide variety of factors, including:
● announcements by us or others of results of pre-clinical testing and clinical trials;
● announcements of technological innovations, more important bio-threats or new commercial therapeutic products by
us, our collaborative partners or our present or potential competitors;
● failure of our common stock to continue to be listed or quoted on a national exchange or market system, such as
Nasdaq or the New York Stock Exchange;
● our quarterly operating results and performance;
● developments or disputes concerning patents or other proprietary rights;
● mergers or acquisitions;
● litigation and government proceedings;
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● adverse legislation;
● changes in government regulations;
● our available working capital;
● economic and other external factors; and
● general market conditions.
Since January 1, 2023, the closing stock price of our common stock has fluctuated between a high of $7.65 per share to a low
of $0.40 per share. On March 8, 2024, the last reported sale price of our common stock on The Nasdaq Capital Market was
$0.77 per share. The fluctuation in the price of our common stock has sometimes been unrelated or disproportionate to our
operating performance. In addition, potential dilutive effects of future sales of shares of common stock and warrants by us, as
well as potential sale of common stock by the holders of warrants, options and convertible promissory notes, could have an
adverse effect on the market price of our shares.
If we fail to meet Nasdaq’s listing requirements, we could be removed from The Nasdaq Capital Market, which would
limit the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the
secondary market and negatively impact our ability to raise capital.
Companies trading on Nasdaq, such as our Company, must be reporting issuers under Section 12 of the Exchange Act, and
must meet the listing requirements in order to maintain the listing of common stock on The Nasdaq Capital Market. If we do
not meet these requirements, the market liquidity for our securities could be severely adversely affected by limiting the ability
of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.
On June 23, 2023, we received a letter from the Listing Qualifications Department of Nasdaq stating that we were not in
compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on
the Nasdaq Capital Market (the “Minimum Bid Price Rule”) because our common stock failed to maintain a minimum closing
bid price of $1.00 for 30 consecutive trading days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were afforded
an initial period of 180 calendar days, or until December 20, 2023, to regain compliance with the Minimum Bid Price Rule. We
were unable to regain compliance with the Minimum Bid Price Rule prior to the expiration of the 180 calendar day period.
On December 21, 2023, we received written notice from Nasdaq stating that we had not complied with the Minimum Bid Price
Rule and were not eligible for a second 180-day period because we did not comply with the $5,000,000 minimum
stockholders’ equity initial listing requirement for The Nasdaq Capital Market. In that regard, our Quarterly Report on Form 10-
Q for the quarter ended September 30, 2023 reported stockholders’ equity of $4,221,155. As a result, the notice indicated that
our common stock would be suspended from trading on Nasdaq unless we requested a hearing before a hearings panel by
December 28, 2023. Nasdaq has scheduled a hearing for March 26, 2024, which stayed any trading suspension of our
common stock until completion of the Nasdaq hearing process and expiration of any additional extension period granted by
the panel following the hearing.
There can be no assurance that we will be able to regain compliance with the Minimum Bid Price Rule prior to the hearing
date or at all, that Nasdaq will grant us an extension of time to achieve compliance with the Minimum Bid Price Rule or that
our common stock will remain listed on The Nasdaq Capital Market. If the hearing does not result in Nasdaq granting us an
extension of time to achieve compliance with the Minimum Bid Price Rule, our common stock will be delisted from Nasdaq.
If our common stock is delisted from Nasdaq, it will have material negative impact on the actual and potential liquidity of our
securities, as well as material negative impact on our ability to raise future capital. If, for any reason, Nasdaq should delist our
common stock from trading on its exchange and we are unable to obtain listing on another national securities exchange
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or take action to restore our compliance with the Nasdaq continued listing requirements, a reduction in some or all of the
following may occur, each of which could have a material adverse effect on our shareholders:
●
●
●
●
●
●
●
the liquidity of our common stock;
the market price of our common stock;
our ability to obtain financing for the continuation of our operations;
the number of institutional and general investors that will consider investing in our securities;
the number of market makers in our common stock;
the availability of information concerning the trading prices and volume of our common stock; and
the number of broker-dealers willing to execute trades in shares of our common stock.
Shareholders may suffer substantial dilution related to issued stock warrants, options and convertible notes.
As of December 31, 2023, we had a number of agreements or obligations that may result in dilution to investors. These
include:
● warrants to purchase a total of approximately 6,538,073 shares of our common stock at a current weighted average
exercise price of $1.50;
● options to purchase approximately 906,892 shares of our common stock at a current weighted average exercise price
of $5.73; and
● convertible promissory notes issued to Pontifax Medison Finance, of which there was $3,000,000 of principal and
$63,351 of accrued interest outstanding. The Convertible Notes were convertible at (i) 90% of the closing price of our
common stock on the day before the delivery of the conversion notice with respect to the first 588,599 shares
issuable upon conversion at December 31, 2023 and (ii) $1.70 with respect to all shares issuable upon conversion in
excess of the first 588,599 shares issued upon conversion at December 31, 2023.
We also have an incentive compensation plan for our management, employees and consultants. We have granted, and
expect to grant in the future, options to purchase shares of our common stock to our directors, employees and consultants. To
the extent that warrants, options or convertible promissory notes are exercised or converted, our stockholders will experience
dilution and our stock price may decrease.
Additionally, the sale, or even the possibility of the sale, of the shares of common stock underlying these warrants, options
and convertible promissory notes could have an adverse effect on the market price for our securities or on our ability to obtain
future financing.
Our shares of common stock are thinly traded, so stockholders may be unable to sell at or near ask prices or at all if
they need to sell shares to raise money or otherwise desire to liquidate their shares.
Our common stock has from time to time been “thinly-traded,” meaning that the number of persons interested in purchasing
our common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable
to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even
if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven
company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned
and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or
non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally
support continuous sales without an adverse effect on share price. We cannot give stockholders any assurance that a
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broader or more active public trading market for our common shares will develop or be sustained, or that current trading
levels will be sustained.
Our common stock is deemed to be a “penny stock,” which may make it more difficult for investors to sell their
shares due to suitability requirements.
Our common stock is subject to Rule 15g-1 through 15g-9 under the Exchange Act, which imposes certain sales practice
requirements on broker-dealers which sell our common stock to persons other than established customers and “accredited
investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000 (or
$300,000 together with their spouses)). For transactions covered by this rule, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. This
rule adversely affects the ability of broker-dealers to sell our common stock and the ability of our stockholders to sell their
shares of common stock.
Additionally, our common stock is subject to SEC regulations for “penny stock.” The regulations require that prior to any non-
exempt buy/sell transaction in a penny stock, a disclosure schedule set forth by the SEC relating to the penny stock market
must be delivered to the purchaser of such penny stock. This disclosure must include the amount of commissions payable to
both the broker-dealer and the registered representative and current price quotations for the common stock. The regulations
also require that monthly statements be sent to holders of penny stock that disclose recent price information for the penny
stock and information of the limited market for penny stocks. These requirements may adversely affect the market liquidity of
our common stock.
We do not currently intend to pay dividends on our common stock in the foreseeable future, and consequently, our
stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common
stock.
We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends to
holders of our common stock in the foreseeable future. Consequently, our stockholders must rely on sales of their common
stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. There
is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which our stockholders
have purchased their shares.
Upon our dissolution, our stockholders may not recoup all or any portion of their investment.
In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, the proceeds and/or our assets
remaining after giving effect to such transaction, and the payment of all of our debts and liabilities will be distributed to the
holders of common stock on a pro rata basis. There can be no assurance that we will have available assets to pay to the
holders of common stock, or any amounts, upon such a liquidation, dissolution or winding-up. In this event, our stockholders
could lose some or all of their investment.
The issuance of our common stock pursuant to the terms of the asset purchase agreement with Hy Biopharma Inc.
may cause dilution and the issuance of such shares of common stock, or the perception that such issuances may
occur, could cause the price of our common stock to fall.
On April 1, 2014, we entered into an option agreement pursuant to which Hy Biopharma granted us an option to purchase
certain assets, properties and rights (the “Hypericin Assets”) related to the development of Hy Biopharma’s synthetic hypericin
product candidate for the treatment of CTCL, which we refer to as HyBryte™, from Hy Biopharma. In exchange for the option,
we paid $50,000 in cash and issued 288 shares of common stock in the aggregate to Hy Biopharma and its assignees. We
subsequently exercised the option, and on September 3, 2014, we entered into an asset purchase agreement (the “Asset
Purchase Agreement”) with Hy Biopharma, pursuant to which we purchased the Hypericin Assets. Pursuant to the Asset
Purchase Agreement, we initially paid $275,000 in cash and issued 12,328 shares of common stock in the aggregate to Hy
Biopharma and its assignees, and the licensors of the license agreement acquired from Hy Biopharma. Also, on September 3,
2014, we entered into a Registration Rights Agreement with Hy Biopharma, pursuant to which we may be required to file a
registration statement with the SEC. In March 2020, we issued 130,413 shares of common stock at a value of $5,000,000
(based upon an effective per share price of $38.40 as a result of HyBryte™ demonstrating statistically significant treatment
response in the Phase 3 clinical trial. We will be required to issue up to $5.0
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million worth of our common stock (subject to a cap equal to 19.9% of our issued and outstanding common stock) in the
aggregate, if HyBryte™ is approved for the treatment of CTCL by either the FDA or the EMA.
The number of shares that we may issue under the Asset Purchase Agreement will fluctuate based on the market price of our
common stock. Depending on market liquidity at the time, the issuance of such shares may cause the trading price of our
common stock to fall.
We may ultimately issue all, some or none of the additional shares of our common stock that may be issued pursuant to the
Asset Purchase Agreement. We are required to register any shares issued pursuant to the purchase agreement for resale
under the Securities Act of 1933, as amended (the “Securities Act”). After any such shares are registered, the holders will be
able to sell all, some or none of those shares. Therefore, issuances by us under the purchase agreement could result in
substantial dilution to the interests of other holders of our common stock. Additionally, the issuance of a substantial number of
shares of our common stock pursuant to the Asset Purchase Agreement, or the anticipation of such issuances, could make it
more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish
to effect sales.
Repayment of certain convertible notes, if they are not otherwise converted, will require a significant amount of
cash, and we may not have sufficient cash flow from our business to make payments on our indebtedness.
Our ability to pay the principal of and/or interest on the convertible notes issued pursuant to the Loan and Security Agreement
with Pontifax Medison Finance (the “Convertible Notes”) depends on our future performance, which is subject to economic,
financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations in the
future sufficient to service the Convertible Notes or other future indebtedness and make necessary capital expenditures. If we
are unable to generate such cash flow, we may be required to adopt and implement one or more alternatives, such as selling
assets, restructuring indebtedness or obtaining additional debt financing or equity financing on terms that may be onerous or
highly dilutive. Our ability to refinance the Convertible Notes or other future indebtedness will depend on the capital markets
and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities
on desirable terms, which could result in a default on our debt obligations, including the Convertible Notes.
The issuance of shares of common stock upon conversion of the Convertible Notes could substantially dilute
shareholders’ investments and could impede our ability to obtain additional financing.
The Convertible Notes are convertible into shares of our common stock and give the holders an opportunity to profit from a
rise in the market price of our common stock such that conversion or exercise thereof could result in dilution of the equity
interests of our shareholders. As of March 8, 2024, there was $2,900,858 of principal and $45,840 of accrued interest
outstanding under the Convertible Notes. We have no control over whether the holders will exercise their right to convert their
Convertible Notes. While the Convertible Notes are convertible at (i) 90% of the closing price of our common stock on the day
before the delivery of the conversion notice with respect to the first 442,400 shares issuable upon conversion as of March 8,
2024 and (ii) $1.70 with respect to all shares issuable upon conversion in excess of the first 442,400 shares issued upon
conversion as of March 8, 2024, we cannot predict the market price of our common stock at any future date, and therefore,
cannot predict whether the Convertible Notes will be converted. We also may choose to reduce the conversion price of the
Convertible Notes, which would likely cause the Convertible Notes to be converted into a significant amount of our common
stock and reduce our liabilities. The existence and potentially dilutive impact of the Convertible Notes may prevent us from
obtaining additional financing in the future on acceptable terms, or at all.
Our Board of Directors can, without stockholder approval, cause preferred stock to be issued on terms that
adversely affect holders of our common stock.
Under our Certificate of Incorporation, our Board of Directors is authorized to issue up to 230,000 shares of preferred stock, of
which none are issued and outstanding as of the date of this prospectus. Also, our Board of Directors, without stockholder
approval, may determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares. If
our Board of Directors causes shares of preferred stock to be issued, the rights of the holders of our common stock would
likely be subordinate to those of preferred holders and therefore could be adversely affected. Our Board of Directors’ ability to
determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire
a majority of our outstanding common stock. Preferred shares issued by our Board of Directors could include voting
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rights or super voting rights, which could shift the ability to control the Company to the holders of the preferred stock.
Preferred stock could also have conversion rights into shares of our common stock at a discount to the market price of our
common stock, which could negatively affect the market for our common stock. In addition, preferred stock would have
preference in the event of liquidation of the Company, which means that the holders of preferred stock would be entitled to
receive the net assets of the Company distributed in liquidation before the holders of our common stock receive any
distribution of the liquidated assets.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
Our technology and cybersecurity programs are crucial to maintaining secure operations, which enable us to deliver on our
promise to maintain stakeholder trust. Our Chief Financial Officer is responsible for establishing, implementing and executing
our cybersecurity program and strategy. Our CFO has over eight years of information technology, information technology
audit, and cybersecurity experience, and is involved in following the latest developments in cybersecurity, including potential
threats and innovative risk management techniques.
Our cybersecurity program is a critical component of our enterprise risk management process overseen by our Board of
Directors, and we have integrated cybersecurity-related risks into our overall enterprise risk management framework.
Additionally, cybersecurity-related risks are included in the risk universe that the risk management function evaluates to
assess top risks to the enterprise on an annual basis.
Our personnel responsible for cybersecurity proactively identifies, manages, and mitigates cyber risk in a variety of ways,
including but not limited to:
a.
b.
c.
d.
e.
f.
g.
h.
A formal enterprise-wide cybersecurity policy and related standards;
Cybersecurity training and employee phishing simulations;
Scheduled and ad hoc internal and external penetration tests;
Cyber incident response, IT disaster recovery, and business continuity plans;
Cybersecurity assessments and remediation planning as part of our due diligence process;
Identity and access management controls;
Third-party risk assessment and management for vendors and third-party service providers; and
Cyber incident exercises for our Board of Directors and management.
A primary element of our cybersecurity program is the implementation of controls that are aligned with industry guidelines and
applicable regulations to identify threats, deter attacks, and protect our information security assets. We have procedures in
place for selecting and managing our relationships with third-party service providers and other business partners, including to
monitor compliance with our agreements and regulatory and legal requirements. We also actively engage with industry
participants as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and
procedures.
Our cybersecurity program is designed based on the concepts of control maturity and control efficacy. For control maturity, our
cybersecurity program is aligned to the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework
(“CSF”) and is assessed annually by an independent third party against our yearly control maturity targets in the context of
current cyber threat and industry trends. The NIST CSF assessment results are used to validate the progress made against
the current year maturity targets, inform the program’s strategic priorities and establish maturity targets for the following year.
These assessment results are provided to our Board of Directors on an annual basis.
For control efficacy, the cybersecurity program leverages a variety of metrics and measurements to demonstrate whether the
control objectives are being consistently achieved within the target range. Monthly security operation (“SecOps”) reviews are
utilized to monitor metric trends and root causes to determine potential capability improvements. The monthly SecOps
reviews and related actions are aggregated into a subset of key metrics reviewed quarterly by the Board of Directors.
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Cybersecurity Governance
Our Board of Directors oversees the management of our cybersecurity risk exposures and the steps management has taken
to monitor and control such exposures. At each quarterly meeting, the Board of Directors receives an update from our CFO
and other members of management on relevant topics, including cybersecurity program maturity progress, new capabilities
implemented, penetration testing results, key cyber risk metrics (e.g., simulated phishing testing and vulnerability
management) and notable incidents or events should they occur. On an annual basis, our Board of Directors meets with our
CFO and our third-party cybersecurity consultant to review our cybersecurity strategy and the results of our NIST CSF
assessment. In accordance with our cybersecurity incident response plan, our Board of Directors is promptly informed of
potentially material cybersecurity incidents, including with respect to our third-party service providers.
Although we have experienced cybersecurity incidents from time to time that have not had a material adverse effect on our
business, financial condition, or results of operations, there can be no assurance that a cyber-attack, security breach, or other
cybersecurity incident will not have a material adverse effect on us in the future. For a discussion regarding risks from
cybersecurity threats that have or are reasonably likely to affect us, see our risk factors, including the risk factors titled “Our
strategy includes an increasing dependence on technology in our operations. If any of our key technology fails, our business
could be adversely affected.” and “A cybersecurity incident could negatively impact our business and our relationships with
employees, service providers, patients, clinical study sites and government agencies.” in Item 1A of this Annual Report on
Form 10-K.
Item 2. Properties
We currently lease approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey.
This office space currently serves as our corporate headquarters, and both of our business segments (Specialized
BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an amendment on June 21, 2022, the
lease has been extended from November 2022 to October 2025. The current rent is approximately $11,367 per month and will
remain so through October 2024. The rent for the lease period starting November 2024 is approximately $11,625 per month.
Our office space is sufficient for our current needs. We may add new space or expand existing space as we add employees,
and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion
of our operations.
Item 3. Legal Proceedings
None.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Our common stock is traded on The Nasdaq Capital Market under the symbol “SNGX.” The following table sets forth the high
and low sales prices per share of our common stock for the periods indicated, as reported by The Nasdaq Capital Market.
Period
Year Ended December 31, 2022:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year Ended December 31, 2023:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Price Range
High
Low
$
$
$
$
$
$
$
$
13.65
12.00
15.00
10.95
8.10
4.20
0.74
2.00
$
$
$
$
$
$
$
$
8.70
5.70
6.45
5.85
1.75
0.64
0.42
0.38
Our stock is listed on The Nasdaq Capital Market under the symbol “SNGX.” The Nasdaq Capital Market prices set forth
above represent inter-dealer quotations, without adjustment for retail mark-up, mark-down or commission, and may not
represent the prices of actual transactions. On March 8, 2024, the last reported price of our common stock quoted on The
Nasdaq Capital Market was $0.77 per share.
Unregistered Sales of Equity Securities
Other than as previously reported, we did not issue any unregistered shares during the year ended December 31, 2023. We
issued a total of 146,199 shares of common stock to two lenders upon conversion of approximately $100,000 of principal
under promissory notes at a conversion price of $0.68 on January 3, 2024. Such promissory notes may be converted at
(i) 90% of the closing price of our common stock on the day before the delivery of the conversion notice with respect to the
first 442,400 shares issuable upon conversion as of March 8, 2024 and (ii) $1.70 with respect to all shares issuable upon
conversion in excess of the first 442,400 shares issued upon conversion as of March 8, 2024.
The issuance of common stock as described above was exempt under Section 4(a)(2) of the Securities Act of 1933, as
amended. The recipients are knowledgeable, sophisticated and experienced in making investment decisions of this kind and
received adequate information about us or had adequate access to information about us.
Transfer Agent
Shares of our common stock are issued in registered form. Equiniti Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY
11219 (Telephone: (718) 921-8200; Facsimile: (718) 765-8719) is the registrar and transfer agent for shares of our common
stock.
Holders of Common Stock
As of March 8, 2024, there were 112 holders of record of our common stock. As of such date, 10,524,437 shares of our
common stock were issued and outstanding.
Dividends
We have never declared nor paid any cash dividends, and currently intend to retain all our cash and any earnings for use in
our business and, therefore, do not anticipate paying any cash dividends in the foreseeable future. Any future determination
to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our
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consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors
deems relevant.
Item 6. Selected Financial Data
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our Business Overview
We are a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases
where there is an unmet medical need. We maintain two active business segments: Specialized BioTherapeutics and Public
Health Solutions.
Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of
HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy (“PDT”),
utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
With successful completion of the Phase 3 FLASH (Fluorescent Light And Synthetic Hypericin) study, regulatory approval is
being pursued in the U.S. and Europe. Following submission of a new drug application (“NDA”) for HyBryte™ in the treatment
of CTCL, we received a refusal to file (“RTF”) letter from the U.S. Food and Drug Administration (“FDA”). We had a Type A
meeting with the FDA to clarify and respond to the issues identified in the RTF letter and to seek additional guidance
concerning information that the FDA would require for a resubmitted NDA to be deemed acceptable to file, in order to
advance HyBryte™ towards U.S. marketing approval and commercialization. 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 are
collaboratively engaging in active discussions with both the FDA and the European Medicines Agency (“EMA”) in order to
define the protocol and evaluate the feasibility of conducting the additional Phase 3 clinical trial evaluating HyBryte™ in the
treatment of CTCL in support of potential marketing approval.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our
first-in-class Innate Defense Regulator (“IDR”) technology, and dusquetide (SGX942 and SGX945) for the treatment of
inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s Disease.
Our Public Health Solutions business segment includes development programs for RiVax®, our ricin toxin vaccine candidate
and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs
targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19
(caused by SARS-CoV-2). The development of our vaccine programs incorporates the use of our proprietary heat stabilization
platform technology, known as ThermoVax®. To date, this business segment has been supported with government grant and
contract funding from the National Institute of Allergy and Infectious Diseases, the Biomedical Advanced Research and
Development Authority and the Defense Threat Reduction Agency.
An outline of our business strategy follows:
● Following positive primary endpoint results for the Phase 3 FLASH (Florescent Light Activated Synthetic Hypericin)
clinical trial of HyBryte™ in CTCL as well as further statistically significant improvement in response rates with longer
treatment (18 weeks compared to 12 and 6 weeks of treatment), collaboratively engage in discussions with both the
FDA and EMA in order to define the protocol and evaluate the feasibility of conducting a second clinical study in order
to advance HyBryte™ towards U.S. marketing approval and commercialization while continuing to explore potential
marketing approval and partnership in Europe.
● Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a
Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a
small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.
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● Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency
(“MHRA”) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment of oral mucositis would be
required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to
continue this development program.
● Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease with the conduct of a
Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the biologic activity in
aphthous ulcers induced by chemotherapy and radiation.
● Continue development of our heat stabilization platform technology, ThermoVax®, in combination with programs for
RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses and multivalent
combinations), with U.S. government and non-governmental organization funding support.
● Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and
Public Health Solutions programs through grants, contracts and/or procurements.
● Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives,
including but not limited to merger/acquisition strategies.
● Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing
pipeline compounds for development.
Corporate Information
We were incorporated in Delaware in 1987 under the name Biological Therapeutics, Inc. In 1987, we merged with Biological
Therapeutics, Inc., a North Dakota corporation, pursuant to which we changed our name to “Immunotherapeutics, Inc.” We
changed our name to “Endorex Corp.” in 1996, to “Endorex Corporation” in 1998, to “DOR BioPharma, Inc.” in 2001, and
finally to “Soligenix, Inc.” in 2009. Our principal executive offices are located at 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540 and our telephone number is (609) 538-8200.
Our Product Candidates in Development
The following tables summarize our product candidates under development:
Soligenix Product Candidate
HyBryte™
Specialized BioTherapeutics Product Candidates
Therapeutic Indication
Stage of Development
Cutaneous T-Cell Lymphoma
55
treatment
Phase 2
trial completed; demonstrated
significantly higher response rate compared
trial completed;
to placebo; Phase 3
demonstrated statistical significance
in
primary endpoint in March 2020 (Cycle 1)
and demonstrated continued improvement
response with extended
in
treatment
in April 2020 (Cycle 2) and
October 2020 (Cycle 3); NDA submitted
December 2022; FDA RTF letter received
February 2023; Type A meeting with the
FDA convened April 2023, in which the FDA
determined that a second positive Phase 3
study would be required to support a NDA
submission; actively engaged
formal
protocol discussions with both the FDA and
the EMA to define the protocol for, and
feasibility of conducting, an
evaluate
additional Phase 3 clinical
(as
trial
requested by the FDA); final outcome of
in
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Soligenix Product Candidate
Therapeutic Indication
SGX302
Mild-to-Moderate Psoriasis
SGX942†
Oral Mucositis in Head and Neck Cancer
Stage of Development
these discussions anticipated in the first half
of 2024
Positive proof-of-concept demonstrated in a
small Phase 1/2 pilot study; Phase 2a
protocol and Investigation New Drug (“IND”)
clearance received from the FDA; Phase 2a
study remains ongoing having demonstrated
biological effect in Cohort 1 and clinically
meaningful benefit in Cohort 2
criterion
Phase 2
trial completed; demonstrated
significant response compared to placebo
with positive long-term (12 month) safety
also reported; Phase 3 clinical trial results
announced December 2020: The primary
endpoint of median duration of severe oral
mucositis (“SOM”) did not achieve the pre-
specified
statistical
significance (p≤0.05); although biological
activity was observed with a 56% reduction
in the median duration of SOM from 18 days
in the placebo group to 8 days in the
full
SGX942
dataset from Phase 3 study and designing a
second Phase 3 clinical trial; continued
development contingent upon identification
of partnership
treatment group; analyzed
for
SGX945
Aphthous Ulcers in Behçet’s Disease
Phase 2a protocol and
IND clearance
received from the FDA; Phase 2a study to
be initiated in the second half of 2024
Public Health Solutions†
Soligenix Product Candidate
ThermoVax®
Indication
Thermostability of vaccines for Ricin toxin,
Ebola, and Marburg viruses
Pre-clinical
Stage of Development
RiVax®
SGX943
Vaccine against Ricin Toxin Poisoning
Phase 1a, 1b and 1c trials completed,
safety and neutralizing antibodies for
protection demonstrated
Therapeutic against Emerging Infectious
Diseases
Pre-clinical
† Contingent upon continued government contract/grant funding or other funding source.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in
the U.S. 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
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assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or
conditions.
While our significant accounting policies are described in more detail in the notes to our financial statements appearing at the
end of this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the
assumptions and estimates used in the preparation of our financial statements.
Revenue Recognition
Our revenues include revenues generated from government contracts and grants. The revenue from government contracts
and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and
grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These
revenues are recognized when expenses have been incurred by subcontractors or when we incur reimbursable internal
expenses that are related to the government contracts and grants.
We also record revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606
(“ASC 606”), Revenue From Contracts with Customers. Under ASC 606, an entity recognizes revenue when its customer
obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in
exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are
within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii)
identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to
the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance
obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are
entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is
determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine
those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as
revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the
performance obligation is satisfied.
Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future
performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties
are classified as license revenues. Sales-based royalties under our license agreements would be recognized as royalty
revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the
royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any royalty revenue.
Research and Development Costs
As part of the process of preparing our financial statements, we are required to estimate our accrued research and
development expenses. This process involves reviewing open contract and purchase orders, communicating with our
personnel to identify services that have been performed on our behalf and estimating the level of service performed and the
associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The
majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when
contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as
of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Examples
of estimated accrued research and development expenses include fees paid to:
● contract research organizations (“CROs”) in connection with performing research activities on our behalf and
conducting preclinical studies and clinical trials on our behalf;
● investigative sites or other service providers in connection with clinical trials;
● vendors in connection with preclinical and clinical development activities; and
● vendors related to product manufacturing and distribution of preclinical and clinical supplies.
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We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts
expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials
on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may
result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of
services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors
such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing fees, we estimate the
time period over which services will be performed, enrollment of patients, number of sites active and the level of effort to be
expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we
adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially
different from amounts actually incurred, our understanding of the status and timing of services performed relative to the
actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in
any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and
development expenses.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires
management to make estimates and assumptions such as the fair value of stock options and to accrue for clinical trials in
process that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from
those estimates.
Material Changes in Results of Operations
Year Ended December 31, 2023 Compared to 2022
For the year ended December 31, 2023, we had a net loss of $6,140,730 as compared to a net loss of $13,798,339 for the
prior year, representing decreased net loss of $7,657,609 or 55%. The decrease in net loss is primarily attributed to
decreases in operating expenses and interest expense as well as an increase in other income. For the year ended
December 31, 2023, we had revenues of $839,359 as compared to $948,911 for the prior year, representing a decrease of
$109,552 or 12%. The decrease in revenues was primarily a result of the recognition of licensing revenue in 2022 partially
offset by an increase in grant revenue during 2023.
We incurred costs related to contract and grant revenues in the year ended December 31, 2023 and 2022 of $742,048 and
$550,822, respectively, representing an increase of $191,226 or 35%. The increase in costs was primarily the result of an
increase in costs relating to the HyBryte™ investigator-initiated study.
Our gross profit for the year ended December 31, 2023 was $97,311 or 12% of total revenues as compared to $398,089 or
42% of total revenues for the prior year, representing a decrease of $300,778 or 76%. The decrease in gross profit was
primarily the result of the recognition of higher margin licensing revenue in 2022 and the lower margin grant revenue
associated with the HyBryte™ investigator-initiated study during 2023.
Research and development expenses decreased by $4,631,390 or 58% to $3,312,699 for year ended December 31, 2023 as
compared to $7,944,089 for the prior year. The decrease in research and development spending for the year ended
December 31, 2023 was primarily related to the decrease in manufacturing and regulatory costs associated with the
HyBryte™ NDA filing.
General and administrative expenses decreased by $2,210,352 or 33%,
the year ended
December 31, 2023, as compared to $6,692,904 for the prior year. This decrease is primarily related to a reduction in legal
and consulting expenses.
to $4,482,552
for
The amendment to the convertible debt financing agreement with Pontifax Medison Finance (“Pontifax”) – see Note 5 –,
resulted in the extinguishment of the original convertible debt for accounting purposes. 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. The fair value of the convertible debt on the date of the amendment was approximately
$3,304,000, which resulted in the recognition of a loss on extinguishment of approximately $394,000 on our accompanying
consolidated statements of operations during the year ended December 31, 2023. The fair value of the convertible debt as of
December 31, 2023 was approximately $3,260,934, which resulted in the recognition of $43,066 of other income from
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the change in the fair value of the convertible debt on our accompanying consolidated statements of operations during the
year ended December 31, 2023. The fair value of the convertible debt was estimated using the Monte Carlo valuation
method.
Total other expense for the year ended December 31, 2023 was $210,593 as compared to $714,370 of total other expense for
the prior year, reflecting a decrease of $503,777 or 71%. The decrease in total other expense was primarily associated with
the reduction in interest resulting from the repayment of a portion of the convertible debt principal balance and higher interest
income earned on cash balances.
The State of New Jersey’s Technology Business Tax Certificate Program allows certain high technology and biotechnology
companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers. We sold 2022, 2021 and 2020
New Jersey NOL carryforwards resulting in the recognition of income tax benefits, net of transaction costs of $1,767,803 and
$1,154,935 during the years ended December 31, 2023 and 2022, respectively. We sold our 2022 New Jersey NOLs and
have recorded a receivable of $606,606 which is included in prepaid expenses and other current assets on the accompanying
consolidated balance sheet for the year ended December 31, 2023. We have not yet sold our 2023 New Jersey NOL
carryforwards but may do so in the future. We will continue to explore opportunities to sell unused NOL carryforwards for the
year ended December 31, 2023. However, there can be no assurance as to the continuation or magnitude of this program in
future years.
Business Segments
We maintain two active business segments for the years ended December 31, 2023 and 2022: Specialized BioTherapeutics
and Public Health Solutions.
The Specialized BioTherapeutics business segment had revenue of $395,124 for the year ended December 31, 2023 as
compared to $31,929 for the year ended December 31, 2022, representing an increase of $363,195 or 100%. The increase
was due to increased reimbursable development activity under the grant to support the investigator-initiated study of
HyBryte™ for expanded treatment in patients with early-stage CTCL.
Revenues for the Public Health Solutions business segment for the year ended December 31, 2023 were $444,235 as
compared to $916,982 for the year ended December 31, 2022, representing a decrease of $472,747 or 52%. The decrease in
revenues was primarily the result of the recognition of licensing revenue in 2022 and the conclusion of the grant associated
with the development of SGX943.
Loss from operations for the Public Health Solutions business segment for the year ended December 31, 2023 was $36,531
as compared to income from operations of $26,612 for the year ended December 31, 2022, representing a decrease of
$63,143 or 237%. The loss for the year ended December 31, 2023 is attributable to the recognition of licensing revenue in
2022 and additional expenses incurred due to the expiration of grants and contracts. Loss from operations for the Specialized
BioTherapeutics business segment for the year ended December 31, 2023 was $2,812,303 as compared to $7,614,988 for
the year ended December 31, 2022, representing a decreased loss of $4,802,685 or 63%. This decreased loss is primarily
attributed to the decrease in manufacturing and regulatory costs associated with the HyBryte™ NDA filing.
Financial Condition and Liquidity
Cash and Working Capital
As of December 31, 2023, we had cash and cash equivalents of $8,446,158 as compared to $13,359,615 as of
December 31, 2022, representing a decrease of $4,913,457 or 37%. As of December 31, 2023, we had working capital of
$3,355,212, representing an increase of $6,018,933 as compared to a working capital deficit of ($2,663,721) for the prior year.
The decrease in cash and cash equivalents was primarily related to cash used in operating activities. The increase in working
capital is primarily the result of the net proceeds received from financing activities partially offset by the immediate paydown of
$5 million of outstanding debt principal balance and any accrued interest resulting from the amendment to the convertible
debt financing agreement with Pontifax during the year ended December 31, 2023.
We believe that we have sufficient resources available to support our development activities and business operations and
timely satisfy our obligations as they become due into the fourth quarter of 2024. We do not have sufficient cash and cash
equivalents as of the date of filing this Annual Report on Form 10-K to support our operations for at least the 12 months
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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.
To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure
additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including
potential alliances and drug product collaborations, securing additional proceeds from government contract and grant
programs, securing additional proceeds available from the sale of shares of our common stock via an At Market Issuance
Sales Agreement and potentially amending the loan agreement with Pontifax to reduce the conversion price in order to allow
for conversion of a portion of the debt which will reduce our debt repayments; however, none of these alternatives are
committed at this time. 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.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to
recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be
necessary should we be unable to continue as a going concern.
Our plans with respect to our liquidity management include, but are not limited to, the following:
● We have up to $844,000 in active government grant funding still available as of December 31, 2023 to support our
associated research programs through May 2026, provided the federal agencies do not elect to terminate the grants
for convenience. We plan to submit additional contract and grant applications for further support of our programs with
various funding agencies. However, there can be no assurance that we will obtain additional governmental grant
funding;
● We have continued to use equity instruments to provide a portion of the compensation due to vendors and
collaboration partners and expect to continue to do so for the foreseeable future;
● We will continue to pursue NOL sales in the state of New Jersey pursuant to its Technology Business Tax Certificate
Transfer Program if the program is available;
● We plan to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition
strategies. However, there can be no assurances that we can consummate such transactions;
● We completed a public offering of 2,301,500 shares of our common stock, pre-funded warrants to purchase
4,237,000 shares of our common stock and common warrants to purchase up to 6,538,500 shares of our common
stock at a combined public offering price of $1.30. The pre-funded warrants had an exercise price of $0.001. The
common warrants have an exercise price of $1.50 per share, are exercisable immediately and expire five years from
the issuance date. The total gross proceeds to us from this offering were approximately $8.5 million before deducting
commissions and other estimated offering expenses. We plan to use the proceeds for further support of our
programs, as well as for working capital; and
● We are currently evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them
when appropriate. However, there can be no assurances that we can consummate such a transaction, or
consummate a transaction at favorable pricing.
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Reverse Stock Split
On February 9, 2023, we completed a reverse stock split of our issued and outstanding shares of common stock at a ratio of
one-for-fifteen, whereby, every fifteen shares of our issued and outstanding common stock was converted automatically into
one issued and outstanding share of common stock without any change in the par value per share. No fractional shares were
issued as a result of the reverse stock split. Any fractional shares that would otherwise have resulted from the reverse stock
split were rounded up to the next whole number. Our common stock began trading on The NASDAQ Capital Market on a
reverse split basis at the market opening on February 10, 2023. All share and per share data have been restated to reflect
this reverse stock split.
Expenditures
Under our budget and based upon our existing product development agreements and license agreements pursuant to letters
of intent and option agreements, we expect our total research and development expenditures for the year ending
December 31, 2024 to be approximately $5.5 million before any contract or grant reimbursements, of which approximately all
relates to the Specialized BioTherapeutics business segment. We anticipate grant reimbursements for the same period of
approximately $0.3 million to offset research and development expenses in the Specialized BioTherapeutics business
segment.
The table below details our costs for research and development by program and amounts reimbursed for the years ended
December 31, 2023 and 2022:
Research & Development Expenses
RiVax® and ThermoVax® Vaccines
SGX942 (Dusquetide)
CiVax™
HyBryte™ (SGX301 or synthetic hypericin)
Other
Total
Reimbursed under Government Contracts and Grants
RiVax® and ThermoVax® Vaccines
CiVax™
SGX943
HyBryte™ (investigator-initiated study)
Total
Grand Total
Contractual Obligations
2023
2022
$
$
$
$
133,186
(28,570)
—
2,698,609
509,474
3,312,699
—
311,495
35,429
395,124
742,048
4,054,747
$
$
$
$
346,894
295,376
22,901
6,831,827
447,091
7,944,089
22,161
398,001
98,731
31,929
550,822
8,494,911
We have licensing fee commitments of approximately $230,000 as of December 31, 2023 over the next five years for several
licensing agreements with partners and universities. 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.
We currently lease approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey.
This office space currently serves as our corporate headquarters, and both of our business segments (Specialized
BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an amendment on June 21, 2022, the
lease has been extended to October 2025. The current rent of $11,367 per month will be maintained until November 2024
when it will be increased to $11,625 where it will remain until expiration. Our office space is sufficient for our current needs.
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In September 2014, we entered into an asset purchase agreement with Hy Biopharma pursuant to which we acquired certain
intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma’s synthetic hypericin
product. As consideration for the assets acquired, we initially paid $275,000 in cash and issued 12,328 shares of common
stock with a fair value based upon our stock price on the date of grant of $3.75 million. These amounts were charged to
research and development expense during the third quarter of 2014 as the assets will be used in our research and
development activities and do not have alternative future use pursuant to generally accepted accounting principles in the U.S.
In January 2020, our Board of Directors authorized an amendment to Dr. Schaber’s employment agreement to increase the
number of shares of common stock from 334 to 33,334, issuable to Dr. Schaber immediately prior to the completion of a
transaction, or series or a combination of related transactions, negotiated by our Board of Directors whereby, directly or
indirectly, a majority of our capital stock or a majority of our assets are transferred from us and/or our stockholders to a third
party.
In March 2020, we filed a prospectus supplement covering the offer and sale of up to 130,413 shares of our common stock,
which were issued to Hy Biopharma. We were required to issue the shares to Hy Biopharma as payment following the
achievement of a milestone under the asset purchase agreement, specifically, the Phase 3 clinical trial of HyBryte™ being
successful in the treatment of CTCL. The number of shares of our common stock issued to Hy Biopharma was calculated
using an effective price of $38.40 per share, based upon a formula set forth in the asset purchase agreement.
Provided the final success-oriented milestone is attained, we will be required to make a payment of up to $5 million, if and
when achieved. The potential future payment will be payable in our common stock, not to exceed 19.9% of our outstanding
stock.
In December 2020, we entered into a $20 million convertible debt financing agreement with Pontifax, the healthcare-
dedicated venture and debt fund of the Pontifax life science funds. 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.
Upon the closing of this transaction, we borrowed the first tranche of $10 million. We did not utilize our option to draw the
second or third tranche of $5 million each, which expired on December 15, 2021 and March 15, 2022, respectively.
On April 19, 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 588,599
shares of our common stock issuable upon conversion and to (ii) $1.70 with respect to all shares of our common stock
issuable upon conversion in excess of the first 588,599 shares so issued. The remaining terms of the agreement remain in
effect without modification.
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. The fair value of the
convertible debt on the date of the amendment was approximately $3,304,000, which resulted in the recognition of a loss on
extinguishment of approximately $394,000 on our accompanying consolidated statements of operations during the year
ended December 31, 2023. The fair value of the convertible debt as of December 31, 2023 was approximately $3,260,934,
which resulted in the recognition of $43,066 of other income from the change in the fair value of the convertible debt on our
accompanying consolidated statements of operations during the year ended December 31, 2023. The fair value of the
convertible debt was estimated using the Monte Carlo valuation method.
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Pontifax may elect to convert the outstanding loan drawn under the first tranche into shares of our common stock at any time
prior to repayment. We also have the ability to force the conversion of the loan into shares of our common stock, subject to
certain conditions.
Contingencies
We follow subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain
conditions may exist as of the date the financial statements are issued, which may result in a loss to us but which will only be
resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment
inherently involves an exercise of judgment. A liability is only recorded if management determines that it is both probable and
reasonably estimable.
CARES Act Employee Retention Credit
The Coronavirus Aid, Relief, and Economic Security Act provides for an employee retention credit (“CARES ERC”), which is a
refundable tax credit equal to 70% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified
wages per employee.
We qualified for the CARES ERC for qualified wages through September 30, 2021. We have submitted filings for refunds of
the CARES ERC but cannot reasonably estimate when or if we will receive any or all of the requested refunds. We have
elected to follow subtopic 450-30 of the FASB Accounting Standards Codification and to account for the CARES ERC only
when all uncertainties regarding realization have been resolved. During October 2023, we received a refund of $120,771. The
refund was recorded as other income on our accompanying consolidated statements of operations.
COVID-19
Based on the current outbreak of SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on
financial markets, there could be additional repercussions to our operating business, including but not limited to, the sourcing
of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations,
which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct
of patient monitoring and clinical trial data retrieval at investigational study sites.
COVID-19 affected our operations but did not have a material impact on our business, operating results, financial condition or
cash flows as of and for the year ended December 31, 2023.
The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the
outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities.
The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the coronavirus.
Item 8. Financial Statements and Supplementary Data
The information required by this Item 8 is contained on pages F-1 through F-22 of this Annual Report on Form 10-K and is
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On September 15, 2023, we filed a Form 8-K announcing a change in our independent registered public accounting firm.
Subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2022 and the Proxy Statement
for our 2023 Annual Meeting of Stockholders, the Audit Committee of our Board of Directors conducted a competitive process
to determine our independent registered public accounting firm for the fiscal year ending December 31, 2023. The Audit
Committee solicited information from several independent registered public accounting firms, including EisnerAmper LLP
(“EisnerAmper”), our former independent registered public accounting firm, in this process.
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Following receipt and review of proposals from the independent registered public accounting firms that participated in the
process, the Audit Committee of our Board of Directors recommended and authorized the dismissal of EisnerAmper as our
independent registered public accounting firm, and authorized the engagement of Cherry Bekaert LLP (“Cherry Bekaert”) to
serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023. The termination of
EisnerAmper as our independent registered public accounting firm became effective immediately, with Cherry Bekaert
commencing work with respect to our unaudited interim financial statements as of and for the quarter ended September 30,
2023, and the filing of the related Quarterly Report on Form 10-Q.
No audit report of EisnerAmper on our financial statements for either of the past two fiscal years contained an adverse opinion
or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. The report of
EisnerAmper on our financial statements for the fiscal year ended December 31, 2022 was prepared assuming that we would
continue as a going concern and included an explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern as result of recurring losses from operations and an expectation that losses would be incurred for the
foreseeable future.
During our two most recent fiscal years and subsequent interim period preceding EisnerAmper’s dismissal, there was no
“disagreement” (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with EisnerAmper on any
matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not
resolved to the satisfaction of EisnerAmper, would have caused EisnerAmper to make reference to the matter in their report.
During our two most recent fiscal years and subsequent interim period preceding EisnerAmper’s dismissal, there were no
“reportable events” requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K. Our principal executive officer and
principal financial officer concluded that, as of June 30, 2023, our disclosure controls and procedures were not effective
because of material weaknesses in our internal control over financial reporting. Specifically, our management concluded that
our processes and procedures around the accounting for complex financial instruments issued by us resulted in a delay in
finalizing the financial statements. Inasmuch as such delay caused us to utilize the five-day extension of the original due date
of the Quarterly Report on Form 10-Q provided by Rule 12b-25 of the Exchange Act, our management concluded that our
disclosure controls and procedures were not effectively designed to ensure that information required to be disclosed by us in
reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC.
We provided EisnerAmper with a copy of the September 15, 2023 Form 8-K prior to its filing with the SEC and requested
EisnerAmper to furnish us with a letter addressed to the SEC stating whether EisnerAmper agreed with the statements made
by us in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it did not agree.
In conjunction with the request for proposal and review of information from other independent registered public accounting
firms noted above, on September 15, 2023, we engaged Cherry Bekaert to serve as our independent registered public
accounting firm to audit our financial statements for the fiscal year ending December 31, 2023, and to perform a review of our
interim financial statements for the third fiscal quarter of 2023.
During our two most recent fiscal years and subsequent interim period preceding Cherry Bekaert’s engagement, neither we
nor anyone on our behalf consulted Cherry Bekaert regarding (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and
no written report or oral advice was provided by Cherry Bekaert to us that Cherry Bekaert concluded was an important factor
considered by us in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was
either the subject of a “disagreement” (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a
“reportable event” (as described in Item 304(a)(1)(v) of Regulation S-K).
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information
required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure
that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and
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communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no
matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and
management necessarily applies its judgment in evaluating the possible controls and procedures.
Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the
effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our management, including our
principal executive officer and principal financial officer, has concluded that, as of the end of the period covered by this report,
our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Company management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and
principal financial officers and effected by our Board of Directors, management and other personnel to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and includes those policies and procedures that:
● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets;
● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of management and directors; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections
of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control-Integrated Framework, 2013.
Based on our assessment, management has concluded that, as of December 31, 2023, our internal control over financial
reporting is effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation of such
internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B. Other Information
Item 9C Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Not applicable.
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Item 10. Directors, Executive Officers and Corporate Governance
PART III
The table below contains information regarding the current members of the Board of Directors and executive officers. The
ages of individuals are provided as of March 15, 2024.
Name
Christopher J. Schaber, PhD
Gregg A. Lapointe, CPA, MBA
Diane L Parks, MBA
Robert J. Rubin, MD
Jerome B. Zeldis, MD, PhD
Jonathan Guarino, CPA, CGMA
Oreola Donini, PhD
Richard Straube, MD
Age
57
65
71
78
73
51
52
72
Position
Chairman of the Board, Chief Executive Officer and President
Director
Director
Director
Director
Chief Financial Officer, Senior Vice President and Corporate Secretary
Chief Scientific Officer and Senior Vice President
Chief Medical Officer and Senior Vice President
Christopher J. Schaber, PhD has over 30 years of experience in the pharmaceutical and biotechnology industry.
Dr. Schaber has been our President and Chief Executive Officer and a director since August 2006. He was appointed
Chairman of the Board in October 2009. He also has served on the board of directors of the Biotechnology Council of New
Jersey (“BioNJ”) since January 2009 and the Alliance for Biosecurity since October 2014, and has been a member of the
corporate council of the National Organization for Rare Disorders (“NORD”) since October 2009. He also serves on the
scientific advisory board for private start-up medical device company, Simphotek, Inc. Prior to joining Soligenix, Dr. Schaber
served from 1998 to 2006 as Executive Vice President and Chief Operating Officer of Discovery Laboratories, Inc., where he
was responsible for overall pipeline development and key areas of commercial operations, including regulatory affairs, quality
control and assurance, manufacturing and distribution, pre-clinical and clinical research, and medical affairs, as well as
coordination of commercial launch preparation activities. From 1996 to 1998, Dr. Schaber was a co-founder of Acute
Therapeutics, Inc., and served as its Vice President of Regulatory Compliance and Drug Development. From 1994 to 1996,
Dr. Schaber was employed by Ohmeda PPD, Inc., as Worldwide Director of Regulatory Affairs and Operations. From 1989 to
1994, Dr. Schaber held a variety of regulatory, development and operations positions with The Liposome Company, Inc., and
Elkins-Sinn Inc., a division of Wyeth-Ayerst Laboratories. Dr. Schaber received his BA degree from Western Maryland
College, his MS degree in Pharmaceutics from Temple University School of Pharmacy and his PhD degree in Pharmaceutical
Sciences from the Union Graduate School. During his career, Dr. Schaber has played a significant role in raising in excess of
$350 million through both public offerings and private placements, as well as approximately $100 million in non-dilutive
funding awards from state and federal governmental agencies. Dr. Schaber was selected to serve as a member of our Board
of Directors because of his extensive experience in drug development and pharmaceutical operations, including his
experience as a senior executive officer with our Company and Discovery Laboratories, Inc., and as a member of the board of
directors of BioNJ and Simphotek; because of his proven ability to raise funds and provide access to capital; and because of
his advanced degrees in science and business.
Gregg A. Lapointe, CPA, MBA has been a director since March 2009. Mr. Lapointe is currently CEO of Cerium
Pharmaceuticals, Inc. and serves on the board of directors of Rigel Pharmaceuticals, Inc., and Astria Therapeutics, Inc.
ImmunoCellular Therapeutics Ltd., Raptor
the board of directors of
Mr. Lapointe has previously served on
Pharmaceuticals, Inc., SciClone Pharmaceuticals, Inc., the Pharmaceuticals Research and Manufacturers of America
(PhRMA), Questcor Pharmaceuticals, Inc. and the board of trustees of the Keck Graduate Institute of Applied Life Sciences.
He previously served in varying roles for Sigma-Tau Pharmaceuticals, Inc. (now known as Leadiant Biosciences, Inc.), a
private biopharmaceutical company, from September 2001 through February 2012, including Chief Operating Officer from
November 2003 to April 2008 and Chief Executive Officer from April 2008 to February 2012. From May, 1996 to August 2001,
he served as Vice President of Operations and Vice President, Controller of AstenJohnson, Inc. (formerly JWI Inc.). Prior to
that, Mr. Lapointe spent several years in the Canadian medical products industry in both distribution and manufacturing.
Mr. Lapointe began his career at Price Waterhouse. Mr. Lapointe received his B.A. degree in Commerce from Concordia
University in Montreal, Canada, a graduate diploma in Accountancy from McGill University and his M.B.A. degree from Duke
University. He is a C.P.A. in the state of Illinois. Mr. Lapointe was selected to serve as a member of our Board of Directors
because of his significant experience in the areas of global strategic planning and implementation, business development,
corporate finance, and acquisitions, and his experience as an executive officer and board member in the pharmaceutical and
medical products industries.
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Diane L. Parks, MBA has been a director since July 2019. From February 2016 until July 2018, she served as Head of U.S.
Commercial and Senior Vice President of Marketing, Sales & Market Research at Kite Pharma, Inc., a privately-held
biopharma company developing cancer immunotherapy products with a primary focus on genetically engineered autologous T
cell therapy with chimeric antigen receptors. From October 2014 to October 2015, Ms. Parks served as Vice President of
Global Marketing at Pharmacyclics LLC, a privately-held biopharmaceutical company primarily focused on the development of
cancer therapies. Prior to Pharmacyclics LLC, Ms. Parks held senior leadership roles as Vice President of Sales for
Amgen, Inc., a publicly-traded biopharmaceutical company, representing oncology and nephrology products, and Senior Vice
President of Specialty Biotherapeutics and Managed Care at Genentech, Inc., a biotechnology company that discovers,
develops, manufactures and commercializes medicines to treat patients with serious or life-threatening medical conditions
that was acquired by Roche Holding AG in 2009. At Genentech, she led the launches of multiple products as well as
commercial development of Lucentis® and Rituxan®. Since May 2019, she has been a member of the board of directors of
Calliditas Therapeutics AB, a biopharmaceutical company, the shares of which are traded on the Nasdaq Stockholm
Exchange, that is developing and commercializing pharmaceutical products for patients with significant unmet medical needs
in niche indications. She is also a member of the board of directors of Kura Oncology, a biopharmaceutical company, the
shares of which are traded on US Nasdaq, that is developing a pipeline of precision medicines for the treatment of solid
tumors and blood cancers. Since October 2019 Ms. Parks has been a member of the board of directors for TriSalus Life
Sciences, an early stage company focused on improving patient outcomes in pancreatic and other highly intractable solid
tumors. Ms. Parks holds a BS from Kansas State University and a master’s of business administration in marketing from
Georgia State University. She has been a commercial leader in the biotech and pharma industry for over 30 years. Ms. Parks
was selected to serve as a member of our Board of Directors because of her over 30 years’ experience as a businesswoman
and commercial executive with an extensive record of driving profitable growth for large pharmaceutical and biotech
companies.
Robert J. Rubin, MD has been a director since October 2009. Dr. Rubin was a clinical professor of medicine at Georgetown
University from 1995 until 2012 when he was appointed a Distinguished Professor of Medicine. From 1987 to 2001, he was
President of the Lewin Group (purchased by Quintiles Transnational Corp. in 1996), an international health policy and
management consulting firm. From 1994 to 1996, Dr. Rubin served as Medical Director of ValueRx, a pharmaceutical benefits
company. From 1992 to 1996, Dr. Rubin served as President of Lewin-VHI, a health care consulting company. From 1987 to
1992, he served as President of Lewin-ICF, a health care consulting company. From 1984 to 1987, Dr. Rubin served as a
principal of ICF, Inc., a health care consulting company. From 1981 to 1984, Dr. Rubin served as the Assistant Secretary for
Planning and Evaluation at the Department of Health and Human Services and as an Assistant Surgeon General in the U.S.
Public Health Service. Dr. Rubin has served on the Board of BioTelemetry, Inc. (formerly known as CardioNet, Inc.) from 2007
to February 2021. He is currently on the Board of Cerium Pharmaceuticals where he is also the acting Chief Medical Officer
since July 2022. He is a board certified nephrologist and internist. Dr. Rubin received an undergraduate degree in Political
Science from Williams College and his medical degree from Cornell University Medical College. Dr. Rubin was selected to
serve as a member of our Board of Directors because of his vast experience in the health care industry, including his
experience as a nephrologist, internist, clinical professor of medicine and Assistant Surgeon General, and his business
experience in the pharmaceutical industry.
Jerome B. Zeldis, MD, PhD has been a director since June 2011. In March 2023 Dr. Zeldis retired as Executive Vice
President, Research and Development of Neximmune. He was the Chief Medical Officer and President of Clinical Research,
Drug Safety and Regulatory of Sorrento Therapeutics, Inc. and Celularity, Inc. Previously, Dr. Zeldis was Chief Executive
Officer of Celgene Global Health and Chief Medical Officer of Celgene Corporation, a publicly traded, fully integrated
biopharmaceutical company. He was employed by Celgene from 1997 to 2016. From September 1994 to February 1997, Dr.
Zeldis worked at Sandoz Research Institute and the Janssen Research Institute in both clinical research and medical
development. He has been a board member of several biotechnology companies and is currently on the boards of Metastat,
Inc., PTC Therapeutics Inc., BioSig Technologies, Inc., the Castleman's Disease Organization and Alliqua, Inc. He has
previously served on the boards of the NJ Chapter of the Arthritis Foundation and PTC Therapeutics, Inc. Additionally, he has
served as Assistant Professor of Medicine at the Harvard Medical School from July 1987 to September 1988, Associate
Professor of Medicine at University of California, Davis from September 1988 to September 1994, Clinical Associate
Professor of Medicine at Cornell Medical School from January 1995 to December 2003 and Professor of Clinical Medicine at
the Robert Wood Johnson Medical School from July 1998 to June 2010. Dr. Zeldis received a BA and an MS from Brown
University, and an MD, and a PhD in Molecular Biophysics and Biochemistry from Yale University. Dr. Zeldis trained in Internal
Medicine at the UCLA Center for the Health Sciences and in Gastroenterology at the Massachusetts General Hospital and
Harvard Medical School. Dr. Zeldis was selected to serve as a member of our Board of Directors because of his experience
as an executive officer of a publicly traded biopharmaceutical company and in clinical research and medical
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development, and his experience in the health care industry, including his experience as an internist, gastroenterologist and
professor of medicine.
Jonathan Guarino, CPA, CGMA has been with our company since September 2019 and is currently our Senior Vice
President and Chief Financial Officer. Mr. Guarino has had significant experience with both development-stage and
commercial companies. From September 2016
for Hepion
Pharmaceuticals, Inc. (formerly ContraVir Pharmaceuticals, Inc.), a New Jersey-based public biotechnology company, where
he contributed to the establishment of the financial infrastructure, as well as assisted with capital fund-raising and debt
financings. He worked as Controller for Suite K Value Added Services LLC from August 2015 to September 2016 and as a
senior manager of technical accounting for Covance, Inc., from June 2014 to May 2015. Prior to these positions, he held
accounting and finance positions of increasing importance with several companies, including PricewaterhouseCoopers LLP,
BlackRock, Inc. and Barnes & Noble, Inc. Mr. Guarino is a CPA (certified public accountant) and CGMA (chartered global
management accountant), who received his BS in Business from Montclair State University.
to July 2019, he served as Corporate Controller
Oreola Donini, PhD, has been with our company since August 2013 and is currently our Chief Scientific Officer and Senior
Vice President, a position she has held since December 2014. Dr. Donini served as our Vice President of Preclinical
Research and Development from August 2013 until December 2014. She has more than 20 years’ experience in drug
discovery and preclinical development with start-up biotechnology companies. From 2012 to 2013, Dr. Donini worked with
ESSA Pharma Inc. as Vice President Research and Development. From 2004 to 2013, Dr. Donini worked with Inimex
Pharmaceuticals Inc. (“Inimex”), lastly as Senior Director of Preclinical R&D from 2007 to 2013. Prior to joining Inimex, she
worked with Kinetek Pharmaceuticals Inc., developing therapies for infectious disease, cancer and cancer supportive care.
Dr. Donini is a co-inventor and leader of our SGX94 innate defense regulator technology, developed by Inimex and
subsequently acquired by us. She was responsible for overseeing the manufacturing and preclinical testing of SGX94, which
demonstrated efficacy in combating bacterial infections and mitigating the effects of tissue damage due to trauma, infection,
radiation and/or chemotherapy treatment. These preclinical studies resulted in a successful Phase 1 clinical study and
clearance of Phase 2 protocols for oral mucositis in head and neck cancer and acute bacterial skin and skin structure
infections. While with ESSA Pharma Inc. as the Vice President of Research and Development, Dr. Donini led the preclinical
testing of a novel N-terminal domain inhibitor of the androgen receptor for the treatment of prostate cancer. While with Kinetek
Pharmaceuticals Inc., her work related to the discovery of novel kinase and phosphatase inhibitors for the treatment of
cancer. Dr. Donini received her PhD from Queen’s University in Kinston, Ontario, Canada and completed her post-doctoral
work at the University of California, San Francisco. Her research has spanned drug discovery, preclinical development,
manufacturing and clinical development in infectious disease, cancer and cancer supportive care.
Richard Straube, MD has been with our company since January 2014 and is currently our Senior Vice President and Chief
Medical Officer. Dr. Straube is a board-certified pediatrician with over 35 years’ experience in both academia and industry,
including clinical research experience in host-response modulation. From 2009 until joining our company, he was Chief
Medical Officer of Stealth Peptides Incorporated, a privately-held, clinical stage, biopharmaceutical company. Prior to joining
us, Dr. Straube served from 1988 to 1993 in various capacities, including most recently as Senior Director, Infectious
Diseases and Immunology, Clinical Research, for Centocor, Inc., a privately-held biopharmaceutical company focused on
developing monoclonal antibody-based diagnostics. While at Centocor, Inc., Dr. Straube was responsible for the initial anti-
cytokine and anti-endotoxin programs targeted at ameliorating inappropriate host responses to infectious and immunologic
challenges. Programs that he managed at Centocor, Inc. include assessments of immunomodulation using monoclonal
removal of inciting molecular triggers, removal of internal immune-messengers, augmentation of normal host defenses, and
maintenance of normal sub-cellular function in the face of injury. From 1993 to 1995, Dr. Straube was Director of Medical
Affairs at T-cell Sciences, Inc., a privately-held biotechnology company. From 1995 to 1997, he was Director of Clinical
Investigations of the Pharmaceutical Products Division of Ohmeda Corp., a privately-held biopharmaceutical company. He
served from 1998 to 2007 as Executive Vice President of Research and Development and Chief Scientific Officer at INO
Therapeutics LLC, a privately-held biotherapeutics company, where he was responsible for the clinical trials and subsequent
approval of inhaled nitric oxide for the treatment of persistent pulmonary hypertension of the newborn. From 2007 to 2009,
Dr. Straube was the Chief Medical Officer at Critical Biologics Corporation, a privately-held biotechnology company.
Dr. Straube received his medical degree and residency training at the University of Chicago, completed a joint adult and
pediatrician infectious diseases fellowship at the University of California, San Diego (“UCSD”), and as a Milbank Scholar
completed training in clinical trial design at the London School of Hygiene and Tropical Medicine. While on the faculty at the
UCSD Medical Center, his research focused on interventional studies for serious viral infections.
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Board Leadership Structure
Our Board of Directors believes that Dr. Schaber’s service as both the Chairman of our Board of Directors and our Chief
Executive Officer is in the best interest of our Company and our stockholders. Dr. Schaber possesses detailed and in-depth
knowledge of the issues, opportunities and challenges facing our Company and our business and, therefore, is best
positioned to develop agendas that ensure that the Board of Directors’ time and attention are focused on the most important
matters. His combined role enables decisive leadership, ensures clear accountability, and enhances our ability to
communicate our message and strategy clearly and consistently to our stockholders, employees, and collaborative partners.
Mr. Lapointe, Ms. Parks, Dr. Rubin, and Dr. Zeldis are independent and the Board of Directors believes that the independent
directors provide effective oversight of management. Moreover, in addition to feedback provided during the course of
meetings of the Board of Directors, the independent directors hold executive sessions. Following an executive session of
independent directors, the independent directors’ report back to the full Board of Directors regarding any specific feedback or
issues, provide the Chairman with input regarding agenda items for Board of Directors and Committee meetings, and
coordinate with the Chairman regarding information to be provided to the independent directors in performing their duties. The
Board of Directors believes that this approach appropriately and effectively complements the combined Chairman/Chief
Executive Officer structure.
Although we believe that the combination of the Chairman and Chief Executive Officer roles is appropriate under the current
circumstances, our corporate governance guidelines do not establish this approach as a policy, and the Board of Directors
may determine that it is more appropriate to separate the roles in the future.
Role of the Board of Directors in Risk Oversight
One of the key functions of our Board of Directors is informed oversight of our risk management process. Our Board of
Directors does not have a standing risk management committee, but rather administers this oversight function directly through
the Board of Directors as a whole, as well as through various standing committees of our Board of Directors that address risks
inherent in their respective areas of oversight. The Board of Directors is engaged in the oversight of risk through regular
updates from Dr. Schaber, in his role as our Chief Executive Officer, and other members of our management team, regarding
those risks confronting us (including risks relating to regulatory compliance, information technology and cybersecurity,
environmental and sustainability, climate change and public health), the actions and strategies necessary to mitigate those
risks and the status and effectiveness of those actions and strategies. The updates are provided at regularly scheduled Board
of Directors and committee meetings as well as through more frequent informal meetings that include our Board of Directors,
our Chief Executive Officer, our Chief Financial Officer, our Chief Medical Officer and our Chief Scientific Officer and other
members of our management team. The Board of Directors provides insight into the issues, based on the experience of its
members, and provides constructive challenges to management’s assumptions and assertions.
In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure and our Audit
Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management
has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk
assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory
requirements. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance
practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation
committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage
excessive risk-taking.
Committees of the Board of Directors
Our Board of Directors has the following three committees: (1) Compensation, (2) Audit and (3) Nominating and Corporate
Governance. Our Board of Directors has adopted a written charter for each of these committees, which are available on our
website at www.soligenix.com under the “Investors” section.
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Audit
Committee
Compensation
Committee
Nominating and
Corporate Governance
Committee
Table of Contents
Director
Gregg A. Lapointe, CPA
Diane L. Parks, MBA
Robert J. Rubin, MD
Jerome B. Zeldis, MD, PhD
– Committee Chair
– Member
Audit Committee
Our Board of Directors has an Audit Committee, which is comprised of Mr. Lapointe (Chair), Ms. Parks and Dr. Rubin. The
Audit Committee assists our Board of Directors in monitoring the financial reporting process, the internal control structure and
the independent registered public accountants. Its primary duties are to serve as an independent and objective party to
monitor the financial reporting process and internal control system, to review and appraise the audit effort of the independent
registered public accountants and to provide an open avenue of communication among the independent registered public
accountants, financial and senior management, and our Board of Directors. Our Board of Directors has determined that
Mr. Lapointe, Ms. Parks and Dr. Rubin are “independent” directors, within the meaning of applicable listing standards of The
Nasdaq Stock Market LLC (“Nasdaq”) and the Exchange Act and the rules and regulations thereunder. Our Board of Directors
has also determined that the members of the Audit Committee are qualified to serve on the committee and have the
experience and knowledge to perform the duties required of the committee and that Mr. Lapointe qualifies as an “audit
committee financial expert” as that term is defined in the applicable regulations of the Exchange Act.
Compensation Committee
Our Board of Directors has a Compensation Committee, which is comprised of Dr. Rubin (Chair), Ms. Parks and Dr. Zeldis.
The Compensation Committee is responsible for reviewing and approving the executive compensation program, assessing
executive performance, setting salary, making grants of annual incentive compensation and approving certain employment
agreements. Our Board of Directors has determined that Dr. Rubin, Mr. Lapointe and Dr. Zeldis are “independent” directors
within the meaning of applicable listing standards of Nasdaq and the Exchange Act and the rules and regulations thereunder.
Nominating and Corporate Governance Committee
Our Board of Directors has a Nominating and Corporate Governance Committee (“Nominating Committee”), which is
comprised of Dr. Zeldis (Chair), Mr. Lapointe and Dr. Rubin. The Nominating Committee makes recommendations to the
Board of Directors regarding the size and composition of our Board of Directors, establishes procedures for the nomination
process, identifies and recommends candidates for election to our Board of Directors. Our Board of Directors has determined
that Dr. Zeldis, Mr. Lapointe and Ms. Parks are “independent” directors, as such term is defined by the applicable Nasdaq
listing standards.
Code of Ethics
We have adopted a code of ethics that applies to all our executive officers and senior financial officers (including our chief
executive officer, chief financial officer, chief accounting officer and any person performing similar functions). A copy of our
code of ethics is publicly available on our website at www.soligenix.com under the “Investors” section. If we make any
substantive amendments to our code of ethics or grant any waiver, including any implicit waiver, from a provision of the code
to our chief executive officer, chief financial officer or chief accounting officer, we will disclose the nature of such amendment
or waiver in a Current Report on Form 8-K.
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Diversity Considerations in Identifying Director Nominees
We do not have a formal diversity policy or set of guidelines in selecting and appointing directors that comprise our Board of
Directors. However, when making recommendations to our Board of Directors regarding the size and composition of our
Board of Directors, our Nominating Committee does consider each individual director’s qualifications, skills, business
experience and capacity to serve as a director and the diversity of these attributes for the Board of Directors as a whole.
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee is or has at any time during the past year been one of our officers or employees.
None of our executive officers currently serves or in the past year has served as a member of the Board of Directors or
Compensation Committee of any entity that has one or more executive officers serving on our Board of Directors or
Compensation Committee.
Clawback Policy
In 2023, we adopted a Clawback Policy in compliance with Nasdaq rules. Under our Clawback Policy, if we are required to
prepare an accounting restatement due to material noncompliance with the financial reporting requirements under United
States securities laws, we will be entitled to recover (and will seek to recover), from our executive officers, any excess
incentive-based compensation received by our executive officers during the three-year period prior to the date on which we
are required to prepare the restatement. This policy applies to both equity-based and cash compensation awards. The
“excess compensation” is the difference between the actual amount that was paid and the amount that would have been paid
if the financial statements were prepared properly in the first instance. To ensure that we can enforce the Clawback Policy, we
require each executive officer subject to the policy to execute an acknowledgement stating that the executive has received
and reviewed the policy and agrees that he or she is fully bound by the policy.
Item 11. Executive Compensation
In 2018, in furtherance of our compensation philosophy and objectives, the Compensation Committee engaged Setren
Smallberg & Associates (“SS&A”), an outside executive compensation consulting firm determined to be independent by the
Compensation Committee, to conduct a review of, and recommend changes to, our compensation program for our most
highly compensated executive officers. A representative of SS&A attended Compensation Committee meetings at the
invitation of the Compensation Committee Chairman and was also in direct contact with the Compensation Committee and
company management from time to time. SS&A provided the Compensation Committee with assistance and advice in the
review of our salary structure, annual and equity incentive awards and other related executive pay issues. In addition, SS&A
provided advice regarding marketplace trends and best practices relating to competitive pay levels.
SS&A did not provide any services to us other than its services as the Compensation Committee’s independent compensation
consultant, and SS&A did not receive any fees or compensation from us other than the fee it received as the independent
compensation consultant. SS&A did not provide any services to us in 2022 or 2023. The Compensation Committee confirmed
that SS&A’s work for the Compensation Committee did not create any conflicts of interest.
Summary Compensation
The following table contains information concerning the compensation paid during each of the two years ended
December 31, 2023 and 2022, respectively to our Chief Executive Officer and each of the three other most highly
compensated executive officers (collectively, the “Named Executive Officers”).
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Summary Compensation
Option
All Other
Name
Christopher J. Schaber (1)
Position Year
CEO & 2023 $ 519,476
President 2022 $ 499,496
Salary
Bonus
$ 72,727
$ 107,891
Awards Compensation
$
$
$ 75,482
$ 73,059
32,800
30,740
Total
$ 700,484
$ 711,185
Jonathan Guarino (2)
Oreola Donini (3)
Richard C. Straube (4)
CFO & 2023 $ 245,000
Senior VP 2022 $ 231,132
$ 31,605
$ 42,436
$ 45,289
$ 51,042
CSO & 2023 $ 300,000
Senior VP 2022 $ 280,800
$ 37,800
$ 51,555
$ 45,289
$ 27,259
CMO & 2023 $ 189,461
Senior VP 2022 $ 182,174
$ 22,736
$ 32,901
$ 37,741
$ 27,259
$
$
$
$
$
$
32,800
30,740
$ 354,693
$ 355,350
4,505
4,628
$ 387,594
$ 364,242
— $ 249,938
— $ 242,334
(1) Dr. Schaber deferred the payment of his 2023 bonus of $72,727 until January 15, 2024. Option awards figure includes the
value of common stock option awards at grant date as calculated under FASB ASC 718. Other compensation represents
health insurance costs paid by us.
(2) Mr. Guarino deferred the payment of his 2023 bonus of $31,605 until January 15, 2024. Option awards figure includes the
value of common stock option awards at grant date as calculated under FASB ASC 718. Other compensation represents
health insurance costs paid by us.
(3) Dr. Donini deferred the payment of her 2023 bonus of $37,800 until January 15, 2024. Option awards figure includes the
value of common stock option awards at grant date as calculated under FASB ASC 718. Other compensation represents
health insurance costs paid by us.
(4) Dr. Straube deferred the payment of his 2023 bonus of $22,736 until January 15, 2024. Option awards figure includes the
value of common stock option awards at grant date as calculated under FASB ASC 718. Other compensation represents
health insurance costs paid by us.
Employment and Severance Agreements
In August 2006, we entered into a three-year employment agreement with Christopher J. Schaber, PhD. Pursuant to this
employment agreement we agreed to pay Dr. Schaber a base salary of $300,000 per year and a minimum annual bonus of
$100,000. Dr. Schaber’s employment agreement automatically renews every three years, unless otherwise terminated, and
last was automatically renewed in December 2019 for an additional term of three years. We agreed to issue him options to
purchase 833 shares of our common stock, with one third immediately vesting and the remainder vesting over three years.
Upon termination without “Just Cause” as defined by this agreement, we would pay Dr. Schaber nine months of severance, as
well as any accrued bonuses, accrued vacation, and we would provide health insurance and life insurance benefits for
Dr. Schaber and his dependents. No unvested options shall vest beyond the termination date. Dr. Schaber’s monetary
compensation (base salary of $300,000 and bonus of $100,000) remained unchanged from 2006 with the 2007 renewal.
Upon a change in control of the company due to merger or acquisition, all of Dr. Schaber’s options shall become fully vested,
and be exercisable for a period of five years after such change in control (unless they would have expired sooner pursuant to
their terms). In the event of his death during the term of the agreement, all of his unvested options shall immediately vest and
remain exercisable for the remainder of their term and become the property of Dr. Schaber’s immediate family.
In January 2020, our Board of Directors authorized an amendment to Dr. Schaber’s employment agreement to increase the
number of shares of common stock from 334 to 33,334, issuable to Dr. Schaber immediately prior to the completion of a
transaction or series or a combination of related transactions negotiated by our Board of Directors whereby, directly or
indirectly, a majority of our capital stock or a majority of our assets are transferred from us and/or our stockholders to a third
party.
In December 2020, our Board of Directors authorized an amendment to Dr. Schaber’s employment agreement to modify the
severance terms. Upon termination without “Just Cause” as defined by this agreement, we would pay Dr. Schaber
twelve months of severance, as well as a pro rata bonus calculated by the average of his prior two year’s annual bonuses,
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if any, and based on the number of months that he was employed during the year in which his employment was terminated;
however, in the case of termination without “Just Cause” within one year following a change in control or the sale or other
disposition of all or substantially all of our assets Dr. Schaber will be entitled 18 months of severance and health insurance
and life insurance benefits for him and his dependents.
On June 22, 2011, the Compensation Committee eliminated his fixed minimum annual bonus payable and revised it to an
annual targeted bonus of 40% of his annual base salary. On December 10, 2021, the Compensation Committee approved an
increase in salary for Dr. Schaber to $499,496. On December 8, 2022, the Compensation Committee approved an increase in
salary for Dr. Schaber to $519,476. On December 8, 2023, the Compensation Committee approved an increase in salary for
Dr. Schaber to $540,255.
In July 2013, we entered into a one-year employment agreement with Oreola Donini, PhD, our Vice President Preclinical
Research & Development. Pursuant to the agreement, we agreed to pay Dr. Donini $170,000 (CAD) per year and a targeted
annual bonus of 20% of base salary. We also issued her options to purchase 2,666 shares of our common stock with one-
quarter immediately vesting and the remainder vesting over three years. Dr. Donini’s employment agreement automatically
renews each year, unless otherwise terminated, and has automatically renewed each year since execution. Upon termination
without “Just Cause”, as defined in Dr. Donini’s employment agreement, we would pay Dr. Donini three months of severance,
accrued bonuses and vacation, and health insurance benefits. No unvested options vest beyond the termination date. In
December 2014, Dr. Donini was named Chief Scientific Officer and Senior Vice President. Upon Dr. Donini’s promotion to
Chief Scientific Officer, the Compensation Committee increased her targeted bonus to 30% of her annual base salary. On
December 10, 2021, the Compensation Committee approved an increase in salary for Dr. Donini to $280,800. On
December 8, 2022, the Compensation Committee approved an increase in salary for Dr. Donini to $300,000. On December 8,
2023, the Compensation Committee approved an increase in salary for Dr. Donini to $312,000.
In December 2014, we entered into a one-year employment agreement with Richard C. Straube, MD, our Chief Medical
Officer and Senior Vice President. Pursuant to the agreement, we agreed to pay Dr. Straube $300,000 per year and a
targeted annual bonus of 30% of base salary. We also issued him options to purchase 666 shares of our common stock with
one-third immediately vesting and the remainder vesting over three years. On March 26, 2019, we entered into an
amendment to our employment agreement with Dr. Straube. Pursuant to the amended agreement, which amendment
becomes effective as of April 1, 2019, Dr. Straube will be required to devote at least 20 hours per week to the performance of
his duties and we will pay him $170,000 per year. The amended employment agreement automatically renews each year,
unless otherwise terminated. Upon termination without “Just Cause”, as defined in the amended employment agreement, we
would pay Dr. Straube one month of severance. No unvested options vest beyond the termination date. On December 10,
2021, the Compensation Committee approved an increase in salary for Dr. Straube to $182,174. On December 8, 2022, the
Compensation Committee approved an increase in salary for Dr. Straube to $189,461. On December 8, 2023, the
Compensation Committee approved an increase in salary for Dr. Straube to $197,039.
On September 9, 2019, we entered into a one-year employment agreement with Jonathan Guarino, CPA, CGMA, our Senior
Vice President and Chief Financial Officer. Pursuant to the agreement, we agreed to pay Mr. Guarino $220,000 per year and
a targeted annual bonus of 30% of base salary. We also issued him options to purchase 2,666 shares of our common stock
with one-quarter immediately vesting and the remainder vesting over three years. Mr. Guarino’s employment agreement
automatically renews each year, unless otherwise terminated. Upon termination without “Just Cause”, as defined in
Mr. Guarino’s employment agreement, we would pay Mr. Guarino three months of severance, accrued salary, bonuses and
vacation, and health insurance benefits. No unvested options vest beyond the termination date. On December 10, 2021, the
Compensation Committee approved an increase in salary for Mr. Guarino to $231,132. On December 8, 2022, the
Compensation Committee approved an increase in salary for Mr. Guarino to $245,000. On December 8, 2023, the
Compensation Committee approved an increase in salary for Mr. Guarino to $254,800.
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Outstanding Equity Awards at Fiscal Year-End
The following table contains information concerning unexercised options, stock that has not vested, and equity incentive plan
awards for the Named Executive Officers outstanding at December 31, 2023. We have never issued Stock Appreciation
Rights.
Name
Christopher J. Schaber
Jonathan Guarino
Oreola Donini
Richard C. Straube
Number of Securities
Underlying Unexercised
Options (#)
Exercisable Unexercisable
—
—
—
—
—
—
—
—
250
1,000
—
1,249
4,663
112,500
666
933
4,000
4,000
4,000
4,000
4,000
4,000
3,750
3,000
845
1,905
4,670
37,500
—
—
—
1,036
2,663
67,500
—
—
—
—
—
—
—
1,163
2,663
67,500
—
—
—
—
—
—
—
—
663
2,663
56,250
2,666
666
2,666
2,297
2,670
22,500
200
466
1,333
2,333
2,666
4,000
4,666
3,503
2,670
22,500
666
333
466
1,333
2,333
2,666
2,000
2,666
2,003
2,670
18,750
74
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price
($)
Option
Expiration
Date
— $ 225.00 12/04/2024
— $ 169.50 12/30/2025
— $ 30.15 12/06/2027
— $ 14.55 12/12/2028
— $ 14.40 01/01/2029
— $ 18.60 12/11/2029
01/01/2030
— $ 21.75
12/09/2030
— $ 35.10
$ 19.20 01/03/2031
11.70 12/08/2031
$
01/02/2032
01/02/2032
12/07/2032
12/07/2033
— $ 10.35
$ 10.35
8.10
$
0.67
$
250
1,000
1,249
4,663
112,500
— $ 14.55 09/08/2029
— $ 18.60 12/11/2029
— $ 35.10 12/09/2030
12/08/2031
12/07/2032
12/07/2033
11.70
8.10
0.67
$
$
$
1,036
2,663
67,500
— $ 225.00 12/04/2024
— $ 169.50 12/30/2025
— $ 40.05 03/30/2027
— $ 30.15 12/06/2027
— $ 14.55 12/12/2028
— $ 18.60 12/11/2029
— $ 35.10 12/09/2030
12/08/2031
12/07/2032
12/07/2033
11.70
8.10
0.67
$
$
$
1,163
2,663
67,500
— $ 301.50 01/06/2024
— $ 225.00 12/04/2024
— $ 169.50 12/30/2025
— $ 40.05 03/30/2027
— $ 30.15 12/06/2027
— $ 14.55 12/12/2028
— $ 18.60 12/11/2029
12/09/2030
— $ 35.10
11.70 12/08/2031
12/07/2032
8.10
12/07/2033
0.67
$
$
$
663
2,663
56,250
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Compensation of Directors
The following table contains information concerning the compensation of the non-employee directors during the year ended
December 31, 2023.
Name
Gregg A. Lapointe
Diane L. Parks
Robert J. Rubin
Jerome B. Zeldis
Timothy Cote (3)
Fees Earned
Paid in Cash
(1)
55,000
47,500
57,500
50,000
6,435
$
$
$
$
$
Option
Awards (2)
$
$
$
$
$
22,500
22,500
22,500
22,500
21,300
$
$
$
$
$
Total
77,500
70,000
80,000
72,500
27,735
(1) Directors who are compensated as full-time employees receive no additional compensation for service on our Board of
Directors. Each independent director who is not a full-time employee is paid $35,000 annually, on a prorated basis, for
their service on our Board of Directors, the chairman of our Audit Committee is paid $15,000 annually, on a prorated
basis, and the chairmen of our Compensation and Nominating Committees is paid $10,000 annually, on a prorated basis.
Additionally, Audit Committee members are paid $7,500 annually and Compensation and Nominating Committee
members are paid $5,000 annually. This compensation is paid quarterly.
(2) We maintain a stock option grant program pursuant to the nonqualified stock option plan, whereby members of our Board
of Directors or its committees who are not full-time employees receive an initial grant of fully vested options to purchase
15,000 shares of common stock. Upon re-election to the Board, each Board member will receive stock options with a
value of $30,000, calculated using the closing price of the common stock on the trading day prior to the date of the annual
meeting of our stockholders, which vest at the rate of 25% per quarter, commencing with the first quarter after each
annual meeting of stockholders. Our Board of Directors determined to reduce the number of stock options issuable upon
reelection in 2023 by 25% to $22,500.
(3) Dr. Cote was appointed by our Board of Directors in May 2023 and resigned, for personal reasons, as a member of our
Board of Directors on July 7, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The table below provides information regarding the beneficial ownership of the common stock as of March 8, 2024, of
(1) each person or entity who owns beneficially 5% or more of the shares of our outstanding common stock, (2) each of our
directors, (3) each of the Named Executive Officers, and (4) our directors and officers as a group. Except as otherwise
indicated, and subject to applicable community property laws, we believe the persons named in the table have sole voting and
investment power with respect to all shares of common stock held by them.
Name of Beneficial Owner
Christopher J. Schaber (1)
Gregg A. Lapointe (2)
Diane L. Parks (3)
Robert J. Rubin (4)
Jerome B. Zeldis (5)
Jonathan Guarino (6)
Oreola Donini (7)
Richard Straube (8)
All directors and executive officers as a group (8 persons) (9)
Shares of
Common
Stock
Beneficially
Owned **
84,863
20,682
19,623
20,483
21,718
36,149
46,370
37,427
287,315
Percent
of Class
*
*
*
*
*
*
*
*
2.66 %
(1) Includes 6,010 shares of common stock and options to purchase 78,853 shares of common stock exercisable within
60 days of March 8, 2024. The address of Dr. Schaber is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
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(2) Includes 492 shares of common stock and options to purchase 20,190 shares of common stock exercisable within
60 days of March 8, 2024. The address of Mr. Lapointe is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
(3) Includes 996 shares of common stock and options to purchase 18,627 shares of common stock exercisable within
60 days of March 8, 2024. The address of Ms. Parks is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
(4) Includes 293 shares of common stock and options to purchase 20,190 shares of common stock exercisable within
60 days of March 8, 2024. The address of Dr. Rubin is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
(5) Includes 1,528 shares of common stock and options to purchase 20,190 shares of common stock exercisable within
60 days of March 8, 2024. The address of Dr. Zeldis is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
(6) Includes 734 shares of common stock and options to purchase 35,415 shares of common stock exercisable within
60 days of March 8, 2024. The address of Mr. Guarino is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New
Jersey 08540.
(7) Includes options to purchase 46,370 shares of common stock exercisable within 60 days of March 8, 2024. The address
of Dr. Donini is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New Jersey 08540.
(8) Includes 534 shares of common stock and options to purchase 36,893 shares of common stock exercisable within 60
days of March 8, 2024. The address of Dr. Straube is c/o Soligenix, 29 Emmons Drive, Suite B-10, Princeton, New Jersey
08540.
(9) Includes 10,587 shares of common stock and options to purchase 276,728 shares of common stock exercisable within
60 days of March 8, 2024.
*
Indicates less than 1%.
** Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options
or warrants currently exercisable or exercisable within 60 days of March 8, 2024 are deemed outstanding for computing
the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for
computing the percentage ownership of any other stockholder. Percentage of ownership is based on 10,524,437 shares
of common stock outstanding as of March 8, 2024.
Equity Compensation Plan Information
In December 2005, our Board of Directors approved the 2005 Equity Incentive Plan, which was approved by stockholders on
December 29, 2005. The maximum number of shares of our common stock available for issuance under the 2005 Equity
Incentive Plan is 300,000 shares. In April 2015, our Board of Directors approved the 2015 Equity Incentive Plan, which was
approved by stockholders on June 18, 2015. On September 22, 2022, the stockholders approved an amendment to the 2015
Plan to increase the maximum numbers of shares of common stock available for issuance under the plan from 2,000,000 to
6,000,000 shares. As of December 31, 2023, there are 5,096,447 shares currently available for future grants under the 2015
Plan.
The following table sets forth certain information, as of December 31, 2023, with respect to the following compensation plans
(including individual compensation arrangements) under which our equity securities are authorized for issuance:
● all compensation plans previously approved by our security holders; and
● all compensation plans not previously approved by our security holders.
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Plan Category
Equity compensation plans approved by security holders (1)
Equity compensation plans not approved by security holders
Total
Number of
Securities to
be Issued
upon Exercise
of
Outstanding
Options,
Warrants and
Rights
Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants and
Rights
906,892
$
—
$
906,892
5.73
—
5.73
Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(excluding
securities
reflected in
the first
column)
5,096,447
—
5,096,447
(1) Includes our 2005 Equity Incentive Plan and our 2015 Equity Incentive Plan. Our 2005 Equity Incentive Plan expired in
2015 and thus no securities remain available for future issuance under that plan.
Item 13. Certain Relationships and Related Transactions and Director Independence
Related Party Transactions
Our audit committee is responsible for the review, approval and ratification of related party transactions. The audit committee
reviews these transactions under our Code of Ethics, which governs conflicts of interests, among other matters, and is
applicable to our employees, officers and directors.
We are party to a registration rights agreement with certain stockholders. The agreement provides that the stockholders have
the right to require that we register its shares under the Securities Act for sale to the public, subject to certain conditions. The
stockholders also have piggyback registration rights, which means that, if not already registered, they have the right to include
their shares in any registration that we effect under the Securities Act, subject to specified exceptions. We must pay all
expenses incurred in connection with the exercise of these demand registration rights.
We are unable to estimate the dollar value of the registration rights to the holders of these rights. The amount of reimbursable
expenses under the agreements depends on a number of variables, including whether registration rights are exercised
incident to a primary offering by us, the form on which we are eligible to register such a transaction, and whether we have a
shelf registration in place at the time of a future offering.
On April 27, 2023, we entered into an exclusive option agreement with Silk Road Therapeutics, Inc. ("Silk Road"), pursuant to
which Silk Road granted us an exclusive option to purchase all assets and rights, including intellectual property and regulatory
documents, related to Silk Road’s PTX product candidate, a non-biological anti-TNF-alpha inhibitor, for the treatment of
mucocutaneous ulcers in patient’s suffering from Behçet’s Disease (“BD”). The option agreement expired on August 25, 2023.
In consideration for the option, we paid $50,000 of cash and issued 31,646 shares of common stock with a value of $50,000.
The consideration paid for the option was recorded as general and administrative expense on the accompanying consolidated
statements of operations. As of August 25, 2023, we concluded our due diligence activities and decided to allow the option to
expire. A member of our Board of Directors has an ownership interest in Silk Road.
Other than as described above, the employment agreements and compensation paid to our directors, we did not engage in
any other transactions with related parties since January 1, 2022. For a discussion of our employment agreements and
compensation paid to our directors, see “Item 11. Executive Compensation.”
Director Independence
The Board of Directors has determined that Mr. Lapointe, Ms. Parks, Dr. Rubin, and Dr. Zeldis are “independent” as such term
is defined by the applicable listing standards of Nasdaq. Our Board of Directors based this determination primarily on a review
of the responses of the Directors to questionnaires regarding their employment, affiliations and family and other relationships.
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Item 14. Principal Accountant Fees and Services
The following table highlights the aggregate fees billed during each of the two years ended December 31, 2023 and 2022 by
Cherry Bekaert LLP.
Audit fees
Total
Audit Fees
2023
2022
$
$
59,870
59,870
$
$
—
—
This category includes the fees for the examination of our consolidated financial statements, review of our Annual Report on
Form 10-K and quarterly reviews of the interim financial statements included in our Quarterly Reports on Form 10-Q.
Tax Fees
Our principal accountants did not bill us for any services for tax compliance, tax advice and tax planning.
Other Fees
Our principal accountants did not bill us for any services or products other than as reported above in this Item 14 during each
of the two years.
Pre-Approval Policies and Procedures
The audit committee has adopted a policy that requires advance approval of all audit services and permitted non-audit
services to be provided by the independent auditor as required by the Exchange Act. The audit committee must approve the
permitted service before the independent auditor is engaged to perform it. The audit committee approved all of the services
described above in accordance with its pre-approval policies and procedures.
Item 15. Exhibits and Financial Statements Schedules
(1) Consolidated Financial Statements:
Part IV
The financial statements required to be filed by Item 8 of this Annual Report on Form 10-K and filed in this Item 15, are as
follows:
Table of Contents
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2023 and 2022
Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity (Deficit) for the Years Ended
December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00677)
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00274)
F-1
F-2
F-3
F-4
F-5
F-6
F-7 – F-24
F-26
F-28
(2) Financial Statement Schedules
Schedules are omitted because they are not applicable, or are not required, or because the information is included in the
consolidated financial statements and notes thereto.
78
Table of Contents
(3) Exhibits:
2.1
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
4.1
4.2
10.1
10.2
10.3
10.4
Agreement and Plan of Merger, dated May 10, 2006 by and among the Company, Corporate Technology
Development, Inc., Enteron Pharmaceuticals, Inc. and CTD Acquisition, Inc. (incorporated by reference to Exhibit
2.1 included in our Registration Statement on Form SB-2 (File No. 333-133975) filed on May 10, 2006).
Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 included in
our current report on Form 8-K filed on June 22, 2012).
Amended and Restated By-laws (incorporated by reference to Exhibit 3.1 included in our Quarterly Report on
Form 10-QSB, as amended, for the fiscal quarter ended June 30, 2003).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 included in our current report on Form 8-K filed on June 22, 2016).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 included in our current report on Form 8-K filed on October 7, 2016).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 included in our current report on Form 8-K filed on June 14, 2017).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 of our current report on Form 8-K filed on September 28, 2018).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 of amendment number 1 to current report on Form 8-K filed on December 3, 2020).
Amendment to Amended and Restated By-laws (incorporated by reference to Exhibit 3.1 included in our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020).
Certificate of Designation of the Series D preferred stock of the Company dated December 27, 2022
(incorporated by reference to Exhibit 3.1 to our Registration Statement on Form 8-A filed on December 27,
2022).
Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Soligenix, Inc.
(incorporated by reference to Exhibit 3.1 included in our current report on Form 8-K filed on February 9, 2023).
Description of Securities. *
Registration Rights Agreement, dated December 15, 2020 by and among Soligenix, Inc. and the other parties
named therein (incorporated by reference to Exhibit 4.1 included in our current report on Form 8-K filed on
December 16, 2020).
License Agreement between the Company and the University of Texas Southwestern Medical Center
(incorporated by reference to Exhibit 10.9 included in our Annual Report on Form 10-KSB filed March 30, 2004,
as amended, for the fiscal year ended December 31, 2004).
2005 Equity Incentive Plan, as amended on September 25, 2013 (incorporated by reference to Exhibit 10.1
included in our current report on Form 8-K filed on September 30, 2013). **
Form S-8 Registration of Stock Options Plan dated December 30, 2005 (incorporated by reference to our
registration statement on Form S-8 filed on December 30, 2005). **
Form S-8 Registration of Stock Options Plan dated June 20, 2014 (incorporated by reference to our registration
statement on Form S-8 filed on June 20, 2014). **
79
Table of Contents
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
Form S-8 Registration of Stock Options Plan dated December 11, 2015 (incorporated by reference to our
registration statement on Form S-8 filed on December 14, 2015). **
Employment Agreement dated December 27, 2007, between Christopher J. Schaber, PhD and the Company
(incorporated by reference to Exhibit 10.30 included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008). **
Exclusive License Agreement dated November 24, 1998, between Enteron Pharmaceuticals, Inc. and George B.
McDonald, MD and amendments (incorporated by reference to Exhibit 10.42 included in our Registration
Statement on Form S-1 (File No. 333-157322) filed on February 13, 2009).
First Amendment to Employment Agreement dated as of July 12, 2011, between the Company and Christopher
J. Schaber, PhD (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on July 14,
2011).**
Amendment to the Exclusive License Agreement dated as of July 26, 2011, between George McDonald, MD and
the Company (incorporated by reference to Exhibit 10.2 of our current report on Form 8-K filed on July 28, 2011).
Amendment No. 2 to the Collaboration and Supply Agreement between the Company, Enteron and Sigma-Tau
dated as of December 20, 2012 (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed
on December 27, 2012). †
Amendment to Exclusive License Agreement dated as of December 20, 2012 between Enteron and McDonald
(incorporated by reference to Exhibit 10.4 of our current report on Form 8-K filed on December 27, 2012).
Amendment to Consulting Agreement dated as of December 20, 2012 between Enteron and McDonald
(incorporated by reference to Exhibit 10.5 of our current report on Form 8-K filed on December 27, 2012).
Contract HHSO100201300023C dated September 18, 2013 between the Company and the U.S. Department of
Health and Human Services Biomedical Advanced Research and Development Authority (incorporated by
reference to Exhibit 10.1 of our current report on Form 8-K filed on September 24, 2013). †
Contract HHSN272201300030C dated September 24, 2013 by and between the Company and the National
Institutes of Health (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on
September 30, 2013). †
Employment Agreement dated as of January 6, 2014 between the Company and Richard Straube, M.D.
(incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on January 8, 2014). **
Asset Purchase Agreement dated September 3, 2014 between the Company and Hy Biopharma, Inc.
(incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on September 5, 2014). †
Registration Rights Agreement dated September 3, 2014 between the Company and Hy Biopharma, Inc.
(incorporated by reference to Exhibit 10.2 of our current report on Form 8-K filed on September 5, 2014).
Contract HHSN272201400039C dated September 17, 2014 by and between the Company and the National
Institutes of Health (incorporated by reference to Exhibit 10.1 of our current report on Form 8-K filed on
September 23, 2014). †
Lease Agreement dated November 21, 2014, between the Company and CPP II, LLC (incorporated by reference
to Exhibit 10.42 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014).
At Market Issuance Sales Agreement dated August 11, 2017 between Soligenix, Inc. and FBR Capital Markets &
Co. (incorporated by reference to Exhibit 1.1 included in our Quarter Report on Form 10-Q for the fiscal quarter
ended June 30, 2017).
80
Table of Contents
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
19.1
21.1
23.1
23.2
31.1
31.2
Form of Registration Rights Agreement dated October 31, 2017 (incorporated by reference to Exhibit 10.3
included in our current report on Form 8-K filed on October 31, 2017).
First Amendment to Employment Agreement dated as of April 1, 2019 between the Company and Richard
Straube, M.D. (incorporated by reference to Exhibit 10.30 included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2018.**
Soligenix, Inc. 2015 Equity Incentive Plan, as amended on June 18, 2017, September 27, 2018, September 6,
2019 and September 22, 2022. (incorporated by reference to Exhibit 10.1 included in our current report on Form
8-K filed on September 23, 2022).
Employment Agreement dated as of September 6, 2019 between the Company and Jonathan L. Guarino
(incorporated by reference to Exhibit 10.2 included in our current report on Form 8-K filed on September 11,
2019).**
Second Amendment to Employment Agreement dated as of January 2, 2020, between Soligenix, Inc. and
Christopher J. Schaber, PhD (incorporated by reference to Exhibit 10.2 included in our current report on Form 8-
K filed on January 3, 2020).**
Amendment No. 1 to At Market Issuance Sales Agreement dated August 28, 2020 between Soligenix, Inc. and B.
Riley FBR, Inc. (incorporated by reference to Exhibit 10.2 included in our current report on Form 8-K filed on
August 28, 2020).
Third Extension and Amendment to Lease dated July 7, 2020 between CPP II LLC and Soligenix, Inc.
(incorporated by reference to Exhibit 10.1 included in our Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2020).
Loan and Security Agreement, dated December 15, 2020. (incorporated by reference to Exhibit 10.1 included in
our current report on Form 8-K filed on December 16, 2020).
Third Amendment to Employment Agreement dated as of December 10, 2020, between Soligenix, Inc. and
Christopher J. Schaber, PhD. (incorporated by reference to Exhibit 10.2 included in our current report on Form 8-
K filed on December 16, 2020). **
Form S-8 Registration Statement dated December 11, 2015 relating to Soligenix, Inc. 2015 Equity Incentive Plan
(incorporated by reference to our registration statement on Form S-8 filed on October 28, 2022). **
First Amendment to Loan and Security Agreement, dated April 19, 2023 (incorporated by reference to Exhibit
10.1 included in our current report on Form 8-K filed on April 19, 2023).
Insider Trading Policy. *
Subsidiaries of the Company. *
Consent of Cherry Bekaert LLP. *
Consent of EisnerAmper LLP. *
Certification of the Chief Executive Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the
Sarbanes-Oxley Act of 2002). *
Certification of the Chief Financial Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the
Sarbanes-Oxley Act of 2002). *
32.1
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
81
Table of Contents
32.2
97
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
Incentive Compensation Recoupment Policy. *
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document
Filed herewith.
Indicates management contract or compensatory plan.
*
**
† Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
82
Table of Contents
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SOLIGENIX, INC.
By: /s/ Christopher J. Schaber
Christopher J. Schaber, PhD
Chief Executive Officer and President
Date: March 15, 2024
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant
and in the capacities indicated and on the dates indicated.
Name
Capacity
Date
/s/ Christopher J. Schaber
Christopher J. Schaber, PhD
/s/ Gregg A. Lapointe
Gregg A. Lapointe, CPA
/s/ Diane L. Parks
Diane L. Parks, MBA
/s/ Robert J. Rubin
Robert J. Rubin, MD
/s/ Jerome B. Zeldis
Jerome B. Zeldis, MD, PhD
/s/ Jonathan Guarino
Jonathan Guarino, CPA, CGMA
Chairman of the Board, Chief Executive
Officer
and
President (principal executive officer)
Director
Director
Director
Director
Chief Financial Officer, Senior Vice
President, and
Corporate Secretary (principal accounting
officer)
83
March 15, 2024
March 15, 2024
March 15, 2024
March 15, 2024
March 15, 2024
March 15, 2024
Table of Contents
SOLIGENIX, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2023 and 2022
Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity (Deficit) for the Years Ended
December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00677)
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 00274)
Page
F-2
F-3
F-4
F-5
F-6
F-7 – F-24
F-26
F-28
F-1
Table of Contents
Soligenix, Inc. and Subsidiaries
Consolidated Balance Sheets
As of December 31, 2023 and 2022
Assets
Current assets:
Cash and cash equivalents
Contracts and grants receivable
Unbilled revenue
Research and development incentives receivable, current
Prepaid expenses and other current assets
Total current assets
Security deposit
Office furniture and equipment, net of accumulated depreciation of $121,320 and $114,766
Deferred issuance cost
Right-of-use lease assets
Research and development incentives receivable, net of current portion
Total assets
Liabilities, mezzanine equity and shareholders' equity/(deficit)
Current liabilities:
Accounts payable
Accrued expenses
Accrued compensation
Lease liabilities, current
Convertible debt, net of debt discount of $0 and $102,309
Total current liabilities
Non-current liabilities:
Convertible debt
Lease liabilities, net of current portion
Total liabilities
Commitments and contingencies (Note 10)
Mezzanine equity:
Series D preferred stock, $.001 par value; 0 and 50,000 shares authorized, none issued or
outstanding as of December 31, 2023 and December 31, 2022, respectively
Shareholders’ equity/(deficit):
Preferred stock, 350,000 and 300,000 shares authorized as of December 31, 2023 and
December 31, 2022, respectively; none issued or outstanding
Common stock, $.001 par value; 75,000,000 shares authorized; 10,378,238 and 2,908,578
shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total shareholders’ equity/(deficit)
Total liabilities, mezzanine equity and shareholders’ equity/(deficit)
December 31,
2023
December 31,
2022
8,446,158
$
—
171,254
23,894
866,014
9,507,320
22,777
11,927
—
$
$
229,834
25,468
9,797,326
1,111,226
2,418,002
251,115
121,765
2,250,000
6,152,108
1,010,934
111,862
7,274,904
13,359,615
115,130
—
104,198
274,209
13,853,152
22,777
18,481
20,206
340,987
24,114
14,279,717
3,865,796
2,307,746
336,692
108,948
9,897,691
16,516,873
—
233,627
16,750,500
—
—
43
—
10,378
228,193,977
22,243
(225,704,176)
2,522,422
9,797,326
2,909
217,064,964
24,747
(219,563,446)
(2,470,826)
14,279,717
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-2
Table of Contents
Soligenix, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31, 2023 and 2022
Year Ended
December 31,
2023
2022
Revenues:
Licensing revenue
Grant revenue
Total revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
General and administrative
Total operating expenses
Loss from operations
Other income (expense):
Foreign currency transaction gain (loss)
Interest income (expense), net
Research and development incentives
CARES Act Employee Retention Credit
Other income
Loss on extinguishment of debt
Change in fair value of convertible debt
Total other income (expense)
Net loss before income taxes
Income tax benefit
Net loss applicable to common stockholders
Basic and diluted net loss per share
Basic and diluted weighted average common shares outstanding
$
— $
839,359
839,359
(742,048)
97,311
3,312,699
4,482,552
7,795,251
(7,697,940)
1,483
(49,129)
23,784
120,771
43,223
(393,791)
43,066
(210,593)
(7,908,533)
1,767,803
$ (6,140,730)
(0.79)
$
7,758,036
250,000
698,911
948,911
(550,822)
398,089
7,944,089
6,692,904
14,636,993
(14,238,904)
(30,549)
(822,611)
132,869
—
5,921
—
—
(714,370)
(14,953,274)
1,154,935
$ (13,798,339)
(4.81)
$
2,871,345
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
Soligenix, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Loss
For the Years Ended December 31, 2023 and 2022
Net loss
Other comprehensive income (loss):
Foreign currency translation adjustments
Comprehensive loss
Year Ended
December 31,
$
$
2023
(6,140,730)
(2,504)
(6,143,234)
$
$
2022
(13,798,339)
(17,195)
(13,815,534)
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
Soligenix, Inc. and Subsidiaries
Consolidated Statements of Changes in Mezzanine Equity and Shareholders’ Equity (Deficit)
For the Years Ended December 31, 2023 and 2022
Mezzanine Equity-
Series D Preferred Stock
Common Stock
Shares
Par Value Shares
Par Value
Additional
Paid–In
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Accumulated
— $
— 2,858,244
$
2,859
$ 216,442,904
$
41,942
$ (205,765,107)
$ 10,722,598
8,542
8
79,346
—
—
79,354
—
43
—
—
19,544
22,248
—
—
20
22
(2,593)
—
—
(2,593)
(43)
(20)
—
—
—
—
(43)
—
211,981
—
—
212,003
—
—
333,389
—
—
333,389
—
—
—
—
—
—
(17,195)
—
—
(13,798,339)
(17,195)
(13,798,339)
— $
43
2,908,578
$
2,909
$ 217,064,964
$
24,747
$ (219,563,446)
$
(2,470,826)
851,130
851
3,090,611
—
—
3,091,462
—
(43)
—
—
—
—
—
(113,217)
—
—
(113,217)
—
—
—
—
—
—
—
8,495,817
(834,061)
2,301,500
2,301
8,493,516
—
50,000
—
50
(834,061)
72,950
—
—
73,000
4,235,384
4,235
(936)
31,646
32
49,968
—
—
—
—
3,299
50,000
—
—
370,182
—
—
370,182
—
—
—
—
—
—
(2,504)
—
—
(6,140,730)
(2,504)
(6,140,730)
— $
— 10,378,238
$ 10,378
$ 228,193,977
$
22,243
$ (225,704,176)
$
2,522,422
Balance,
December 31, 2021
Issuance of
common stock
pursuant to B. Riley
At Market Issuance
Sales Agreement
Issuance costs
associated with B.
Riley At Market
Issuance Sales
Agreement
Declaration of
Series D preferred
stock for stock
dividend
Fractional shares
issued in reverse
stock split
Issuance of
common stock to
vendors
Share-based
compensation
expense
Foreign currency
translation
adjustment
Net loss
Balance,
December 31, 2022
Issuance of
common stock
pursuant to B. Riley
At Market Issuance
Sales Agreement
Issuance costs
associated with B.
Riley At Market
Issuance Sales
Agreement
Redemption of
Series D preferred
stock
Issuance of
common stock and
pre-funded warrants
in connection with
May 2023 public
offering
Issuance costs
associated with May
2023 public offering
Issuance of
common stock to
vendors
Issuance of
common stock upon
exercise of pre-
funded warrants
Issuance of
common stock for
unexercised
purchase option
Share-based
compensation
expense
Foreign currency
translation
adjustment
Net loss
Balance,
December 31, 2023
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
Soligenix, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2023 and 2022
Operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation
Non-cash lease expense
Share-based compensation
Issuance of common stock to vendors for services
Issuance of common stock for unexercised purchase option
Loss on extinguishment of debt
Change in fair value of convertible debt
Amortization of deferred issuance costs associated with convertible debt
Change in operating assets and liabilities:
Licensing, contracts and grants receivable
Prepaid expenses and other current assets
Research and development incentives receivable
Operating lease liability
Accounts payable and accrued expenses
Accrued compensation
Net cash used in operating activities
Investing activities:
Purchases of office furniture and equipment
Net cash used in investing activities
Financing activities:
Proceeds from issuance of common stock pursuant to B. Riley At Market Issuance Sales
Agreement
Costs associated with B. Riley At Market Issuance Sales Agreement
Proceeds from issuance of common stock and pre-funded warrants pursuant to public offering
Stock issuance costs associated with public offering
Proceeds from the exercise of pre-funded warrants
Convertible debt repayments
Net cash provided by financing activities
Effect of exchange rate on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental information:
Cash paid for state income taxes
Cash paid for interest
Cash paid for lease liabilities:
Operating lease
Non-cash investing and financing activities:
Right-of-use assets and lease liabilities recorded
Deferred issuance cost reclassified to additional paid-in capital
Declaration of Series D preferred stock for stock dividend
Redemption of Series D preferred stock for stock dividend
$
$
$
$
$
$
$
$
2023
2022
$
(6,140,730)
$
(13,798,339)
6,554
111,153
370,182
73,000
50,000
393,791
(43,066)
12,518
(56,124)
(591,805)
90,016
(108,948)
(2,685,073)
(85,577)
(8,604,109)
—
—
3,091,462
(93,011)
8,495,817
(834,061)
3,299
(7,000,000)
3,663,506
27,146
(4,913,457)
13,359,615
8,446,158
20,730
552,058
133,817
—
20,208
—
43
$
$
$
$
$
$
$
$
24,562
112,714
333,389
212,003
—
—
—
41,538
23,759
8,694
73,374
(111,122)
396,651
33,756
(12,649,021)
(13,073)
(13,073)
79,354
(2,533)
—
—
—
—
76,821
(99,009)
(12,684,282)
26,043,897
13,359,615
16,043
857,411
133,300
347,546
60
43
—
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
Note 1. Nature of Business
Basis of Presentation
Soligenix, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Soligenix, Inc. (the “Company”) is a late-stage biopharmaceutical company focused on developing and commercializing
products to treat rare diseases where there is an unmet medical need. The Company maintains two active business
segments: Specialized BioTherapeutics and Public Health Solutions.
The Company’s Specialized BioTherapeutics business segment is developing and moving toward potential commercialization
of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin sodium), a novel photodynamic therapy (“PDT”)
utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma (“CTCL”).
With successful completion of the Phase 3 FLASH (Fluorescent Light And Synthetic Hypericin) study, regulatory approval is
being pursued in the United States (“U.S.”) and Europe. Following submission of a new drug application (“NDA”) for
HyBryte™ in the treatment of CTCL in December 2022, the Company received a refusal to file (“RTF”) letter from the U.S.
Food and Drug Administration (“FDA”) in February 2023. In April 2023, the Company had a Type A meeting with the FDA to
clarify and respond to the issues identified in the RTF letter and to seek additional guidance concerning information that the
FDA would require for a resubmitted NDA to be deemed acceptable to file, in order to advance HyBryte™ towards U.S.
marketing approval and commercialization. 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, the Company is collaboratively engaging in
active discussions with both the FDA and the European Medicines Agency (“EMA”) in order to define the protocol and
evaluate the feasibility of conducting the additional Phase 3 clinical trial evaluating HyBryte™ in the treatment of CTCL in
support of potential marketing approval.
Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, the
Company’s first-in-class Innate Defense Regulator (“IDR”) technology, and dusquetide (SGX942 and SGX945) for the
treatment of inflammatory diseases, including oral mucositis in head and neck cancer and aphthous ulcers in Behçet’s
Disease.
The Company’s Public Health Solutions business segment includes development programs for RiVax®, its ricin toxin vaccine
candidate and SGX943, its therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine
programs, including a program targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the
prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs incorporates the use of the
Company’s proprietary heat stabilization platform technology, known as ThermoVax®. To date, this business segment has
been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases
(“NIAID”), the Biomedical Advanced Research and Development Authority and the Defense Threat Reduction Agency.
The Company primarily generates revenues under government grants and contracts principally from the National Institutes of
Health (“NIH”). The Company was awarded a subcontract that originally provided for approximately $1.5 million from a NIAID
grant over two years for development of CiVax™ and a subcontract that originally provided for approximately $1.1 million from
a FDA Orphan Products Development grant over four years for an expanded study of HyBryte™ in the treatment of CTCL.
The Company will continue to apply for additional government funding.
The Company is subject to risks common to companies in the biotechnology industry including, but not limited to,
development of new technological innovations, dependence on key personnel, protections of proprietary technology,
compliance with the FDA regulations, and other regulatory authorities, litigation, and product liability.
Liquidity
In accordance with Accounting Standards Codification 205-40, Going Concern, the Company has evaluated whether there
are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue
as a going concern within one year after the date the consolidated financial statements are issued. As of December 31, 2023,
the Company had an accumulated deficit of $225,704,176 and working capital of $3,355,212. During
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the year ended December 31, 2023, the Company incurred a net loss of $6,140,730 and used $8,604,109 of cash in
operating activities. The Company expects to continue to generate losses in the foreseeable future. The Company’s liquidity
needs will be determined largely by the budgeted operational expenditures incurred in regards to the progression of its
product candidates. Management believes that the Company has sufficient resources available to support its development
activities and business operations and timely satisfy its obligations as they become due into the fourth quarter of 2024. The
Company does not have sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to
support its operations for at least the 12 months following the date the financial statements are issued. These conditions raise
substantial doubt about the Company’s ability to continue as a going concern through 12 months after the date the financial
statements are issued.
To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, the
Company plans to secure additional capital, potentially through a combination of public or private equity offerings and
strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from
government contract and grant programs, securing additional proceeds available from the sale of shares of the common stock
via an At Market Issuance Sales Agreement and potentially amending the loan agreement with Pontifax to reduce the
conversion price in order to allow for conversion of a portion of the debt which will reduce the Company’s debt repayments;
however, none of these alternatives are committed at this time. There can be no assurance that the Company will be
successful in obtaining sufficient funding on terms acceptable to it to fund continuing operations, if at all, identify and enter into
any strategic transactions that will provide the capital that it will require or achieve the other strategies to alleviate the
conditions that raise substantial doubt about the Company’s ability to continue as a going concern. If none of these
alternatives are available, or if available, are not available on satisfactory terms, the Company will not have sufficient cash
resources and liquidity to fund its 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 the Company to delay, limit,
or eliminate the development of business opportunities and its ability to achieve its business objectives and its
competitiveness, and its 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 the Company’s ability to access capital,
which could negatively affect its liquidity and ability to continue as a going concern. In addition, the perception that the
Company may not be able to continue as a going concern may cause others to choose not to deal with it due to concerns
about its ability to meet its contractual obligations.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to
recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.
As of December 31, 2023, the Company had cash and cash equivalents of $8,446,158 as compared to $13,359,615 as of
December 31, 2022, representing a decrease of $4,913,457 or 37%. As of December 31, 2023, the Company had working
capital of $3,355,212 as compared to a working capital deficit of ($2,663,721) as of December 31, 2022, representing an
increase of $6,018,933 or 226%. The decrease in cash and cash equivalents was primarily related to cash used in operating
activities. The increase in working capital is primarily the result of the net proceeds received from financing activities partially
offset by the immediate paydown of $5 million of outstanding debt principal balance and any accrued interest resulting from
the amendment to the convertible debt financing agreement with Pontifax during the year ended December 31, 2023.
Management’s business strategy can be outlined as follows:
● Following positive primary endpoint results for the Phase 3 FLASH (Florescent Light Activated Synthetic Hypericin)
clinical trial of HyBryte™ in CTCL as well as further statistically significant improvement in response rates with longer
treatment (18 weeks compared to 12 and 6 weeks of treatment), collaboratively engage in discussions with both the
FDA and the EMA in order to define the protocol and evaluate the feasibility of conducting a second clinical study in
order to advance HyBryte™ towards U.S. marketing approval and commercialization while continuing to explore
potential marketing approval and partnership in Europe.
● Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the
conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept
demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.
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● Following feedback from the United Kingdom (“UK”) Medicines and Healthcare products Regulatory Agency
(“MHRA”) that a second Phase 3 clinical trial of SGX942 (dusquetide) in the treatment in oral mucositis would
be required to support a marketing authorization; design a second study and attempt to identify a potential
partner(s) to continue this development program.
● Expanding development of dusquetide under the research name SGX945 into Behçet’s Disease with the
conduct of a Phase 2a clinical trial, where previous studies with dusquetide in oral mucositis have validated the
biologic activity in aphthous ulcers induced by chemotherapy and radiation.
● Continue development of the Company’s heat stabilization platform technology, ThermoVax®, in combination
with its programs for RiVax® (ricin toxin vaccine), and filovirus vaccines (targeting Ebola, Sudan, and Marburg
viruses and multivalent combinations), with U.S. government or non-governmental organization funding
support.
● Continue to apply for and secure additional government funding for the Specialized BioTherapeutics and Public
Health Solutions programs through grants, contracts and/or procurements.
● Pursue business development opportunities for pipeline programs, as well as explore all strategic alternatives,
including but not limited to merger/acquisition strategies.
● Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with
existing pipeline compounds for development.
The Company’s plans with respect to its liquidity management include, but are not limited to, the following:
● The Company has up to approximately $844,000 in active government grant funding still available as of
December 31, 2023 to support its associated research programs through May 2026, provided the federal agencies do
not elect to terminate the grants for convenience. The Company plans to submit additional contract and grant
applications for further support of its programs with various funding agencies. However, there can be no assurance
that the Company will obtain additional governmental grant funding.
● The Company has continued to use equity instruments to provide a portion of the compensation due to vendors and
collaboration partners and expects to continue to do so for the foreseeable future.
● The Company will continue to pursue Net Operating Loss (“NOL”) sales in the state of New Jersey pursuant to its
Technology Business Tax Certificate Transfer Program if the program is available.
● The Company plans to pursue potential partnerships for pipeline programs as well as continue to explore merger and
acquisition strategies. However, there can be no assurances that the Company can consummate such transactions.
● The Company completed a public offering of 2,301,500 shares of its common stock, pre-funded warrants to purchase
4,237,000 shares of its common stock and common warrants to purchase up to 6,538,500 shares of its common
stock at a combined public offering price of $1.30. The pre-funded warrants had an exercise price of $0.001. The
common warrants have an exercise price of $1.50 per share, are exercisable immediately and expire five years from
the issuance date. The total gross proceeds to the Company from this offering was approximately $8.5 million before
deducting commissions and other estimated offering expenses. The Company plans to use the proceeds for further
support of its programs, as well as for working capital; and
●
The Company is currently evaluating additional equity/debt financing opportunities on an ongoing basis and may
execute them when appropriate. However, there can be no assurances that it can consummate such a transaction, or
consummate a transaction at favorable pricing.
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Note 2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include Soligenix, Inc., and its wholly and majority owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated as a result of consolidation.
Operating Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that
is evaluated on a regular basis by the chief operating decision maker, or decision-making group, in deciding how to allocate
resources to an individual segment and in assessing the performance of the segment. The Company divides its operations
into two operating segments: Specialized BioTherapeutics and Public Health Solutions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash
equivalents.
Contracts and Grants Receivable
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13,
Financial Instruments – Credit Losses (Topic 326) and subsequently related amendments (ASU 2018-19, ASU 2019-04, ASU
2019-05, ASU 2019-10, ASU 2019-11, and ASU 2022-02). This guidance replaces the existing incurred loss impairment
guidance and establishes a single allowance framework for financial assets carried at amortized cost based on expected
credit losses. The estimate of expected credit losses requires the incorporation of historical information, current conditions,
and reasonable and supportable forecasts. The Company adopted this new accounting standard effective January 1, 2023
and all of the related amendments using the retrospective method. The Company determined there was no effect to its
opening balance of shareholders’ equity of initially applying the new credit loss standard to its contracts and grants receivable.
There was no significant impact to the Company’s operating results for the current period due to this standard update.
Management has evaluated the adoption of ASC Topic 326 and concluded the effect of the adoption was immaterial to the
financial statements as a whole.
Contracts and grants receivable consist of amounts due from various grants from the NIH and contracts from NIAID, an
institute of NIH, for costs incurred prior to the period end under reimbursement contracts. The amounts were billed to the
respective governmental agencies in the month subsequent to period end and collected shortly thereafter. Accordingly, no
allowance for credit losses has been established. If amounts become uncollectible, they are charged to operations.
Impairment of Long-Lived Assets
Office furniture and equipment, right of use assets and website development costs with finite lives are evaluated and reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The
Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated
future undiscounted cash flows attributable to such assets. If the sum of the expected undiscounted cash flows is less than
the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and
the carrying value of the related asset or group of assets. Such analyses necessarily involve significant judgment.
The Company did not record any impairment of long-lived assets for the years ended December 31, 2023 and 2022.
Fair Value of Financial Instruments
FASB ASC 820 — Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC
820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement
purposes. Disclosures about the fair value of financial instruments are based on pertinent information available
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to the Company on December 31, 2023 and 2022. Accordingly, the estimates presented in these financial statements are not
necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are
observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable
inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the fair value hierarchy are as follows:
● Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to
access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted
market prices such as exchange-traded instruments and listed equities.
● Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation
methodologies. These models consider various assumptions, including volatility factors, current market prices and
contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in
the marketplace, can be derived from observable data or are supported by observable levels at which transactions
are executed in the marketplace.
● Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair
values are determined using pricing models, discounted cash flows or similar techniques and at least one significant
model assumption or input is unobservable.
In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value
hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level
input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a
particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or
liability.
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, contracts and grants
receivable, research and development incentives receivable, accounts payable, accrued expenses, and accrued
compensation approximate their fair value based on the short-term maturity of these instruments.
The carrying amount reported in the consolidated balance sheet as of December 31, 2023 for the convertible debt is its fair
value – see Note 5. The principal amount of the convertible debt was $3,000,000 at December 31, 2023 and the fair value
was approximately $3,260,934. The fair value of the debt was estimated using the Monte Carlo valuation method, which
utilizes certain unobservable inputs. As a result, the fair value estimate represents a Level 3 measurement.
A roll forward of the carrying value of the convertible debt to December 31, 2023 is as follows:
Convertible debt at fair value
$
—
$
3,304,000
$
(43,066)
$
3,260,934
Balance
December 31, 2022
Issued
Adjustment to
fair value
Balance
December 31, 2023
Deferred Issuance Costs
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-
process equity financings as deferred issuance costs until such financings are consummated. After consummation of the
equity financing, these costs are recorded in shareholders’ equity as a reduction of additional paid-in capital generated as a
result of the issuance.
Revenue Recognition
The Company’s revenues include revenues generated from government contracts and grants. The revenue from government
contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered
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by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and
management fees. These revenues are recognized when expenses have been incurred by subcontractors or when the
Company incurs reimbursable internal expenses that are related to the government contracts and grants.
The Company also records revenue from contracts with customers in accordance with Accounting Standards Codification
Topic 606 (“ASC 606”), Revenue From Contracts with Customers. Under ASC 606, an entity recognizes revenue when its
customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to
receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity
determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a
customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a
performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will
collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract
inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services
promised within each contract and determines those that are performance obligations, and assesses whether each promised
good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to
the respective performance obligation when (or as) the performance obligation is satisfied.
Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future
performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties
are classified as licensing revenue. Sales-based royalties under the Company’s license agreements would be recognized as
royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of
the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty
revenue.
Research and Development Costs
Research and development costs are charged to expense when incurred in accordance with FASB ASC 730, Research and
Development. Research and development includes costs such as clinical trial expenses, contracted research and license
agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee
benefits, equipment depreciation and allocation of various corporate costs.
Share-Based Compensation
Stock options are issued with an exercise price equal to the market price on the date of grant. Stock options issued to
directors upon re-election vest quarterly for a period of one year (new director issuances are fully vested upon issuance).
Stock options issued to employees generally vest 25% on the grant date, then 25% each subsequent year for a period of
three years. These options have a ten year life for as long as the individuals remain employees or directors. In general, when
an employee or director terminates their position, the options will expire within three months, unless otherwise extended by
the Board.
From time to time, the Company issues restricted shares of common stock to vendors and consultants as compensation for
services performed under the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant
of stock options, restricted stock, deferred stock and unrestricted stock to the Company’s employees and non-employees
(including consultants). The shares issued under the 2015 Plan are registered on Form S-8 (SEC File No. 333-208515).
However, as shares of common stock are not covered by a reoffer prospectus, the certificates reflecting such shares reflect a
Securities Act of 1933, as amended restrictive legend. Stock compensation expense for equity-classified awards to non-
employees is measured on the date of grant and is recognized when the services are performed.
The fair value of options issued during the years ended December 31, 2023 and 2022 was estimated using the Black-Scholes
option-pricing model and the following assumptions:
● a dividend yield of 0%;
● an expected life of four years;
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● volatility of 94% - 110% for 2023 and 84% - 87% for 2022; and
● risk-free interest rates ranging from 3.48% to 4.35% in 2023 and ranging from 1.12% to 4.51% in 2022.
The fair value of each option grant made during 2023 and 2022 was estimated on the date of each grant and recognized as
share-based compensation expense ratably over the option vesting periods, which approximates the service period. The
expected term of options granted is derived using company history of options exercised. The risk-free rate is based on the
U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. The Company accounts for
forfeitures as they are incurred.
Foreign Currency Transactions and Translation
In 2018, the Company changed the status of a wholly-owned subsidiary in the UK from inactive to active and incurred
expenditures in multiple currencies including the U.S. dollar, the British Pound and the Euro to fund its clinical trial operations
in the UK and select countries in Europe. In accordance with FASB ASC 830 Foreign Currency Matters, the UK subsidiary
expresses its U.S. dollar and Euro denominated transactions in its functional currency, the British Pound, with related
transaction gains or losses included in net loss. On a quarterly basis, the financial statements of the UK subsidiary are
translated into U.S. dollars and consolidated into the Company’s financials, with related translation adjustments reported as a
cumulative translation adjustment (“CTA”), which is a component of accumulated other comprehensive loss. In 2023 and
2022, the Company recognized a foreign currency transaction gain of $1,483 and a foreign currency transaction loss of
($30,549), respectively, in the accompanying consolidated statements of operations.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is
established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all
available positive and negative evidence is considered, including the Company’s current and past performance, the market
environment in which the Company operates, the utilization of past tax credits, and the length of carryback and carryforward
periods. Deferred tax assets and liabilities are measured utilizing tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The Company sold 2022, 2021 and 2020 New
Jersey NOL carryforwards resulting in the recognition of income tax benefits, net of transaction costs of $1,767,803 and
$1,154,935 during the years ended December 31, 2023 and 2022, respectively. The Company sold its 2022 New Jersey
NOLs and has recorded a receivable of $606,606 which is included in prepaid expenses and other current assets on the
accompanying consolidated balance sheet for the year ended December 31, 2023. The Company recognizes accrued interest
and penalties associated with uncertain tax positions, if any, as part of income tax expense. There were no tax related interest
and penalties recorded for 2023 and 2022. Additionally, the Company has not recorded an asset for unrecognized tax benefits
or a liability for uncertain tax positions at December 31, 2023 or 2022.
Research and Development Incentive Income and Receivable
The Company recognizes other income from UK research and development incentives when there is reasonable assurance
that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured.
The small or medium sized enterprise (“SME”) research and development tax relief program supports companies that seek to
research and develop an advance in their field and is governed through legislative law by HM Revenue & Customs as long as
specific eligibility criteria are met.
Management has assessed the Company’s research and development activities and expenditures to determine which
activities and expenditures are likely to be eligible under the SME research and development tax relief program described
above. At each period end, management estimates the refundable tax offset available to the Company based on available
information at the time. As the tax incentives may be received without regard to an entity’s actual tax liability, they are not
subject to accounting for income taxes. As a result, amounts realized under the SME research and development tax relief
program are recorded as a component of other income.
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The research and development incentive receivable represents an amount due in connection with the above-described tax
relief program. The Company has recorded a research and development incentive receivable of approximately $49,000 and
$128,000 as of December 31, 2023 and 2022, respectively in the consolidated balance sheets.
The following table shows the change in the UK research and development incentives receivable from December 31, 2022 to
December 31, 2023:
Balance at December 31, 2022
UK research and development incentives, transfer
UK research and development incentives
Adjustments to 2021 and 2022 incentives earned
UK research and development incentives cash receipt
Foreign currency translation
Balance at December 31, 2023
Loss Per Share
Current
Long-Term
Total
$
$
104,198
24,114
—
(1,113)
(104,422)
1,117
23,894
$
$
24,114 $
(24,114)
24,897
—
—
571
25,468 $
128,312
—
24,897
(1,113)
(104,422)
1,688
49,362
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing loss applicable to common stockholders by
the weighted-average number of common shares outstanding for the period. Included within the Company’s weighted average
common shares outstanding for the year ended December 31, 2023, are common shares issuable upon the exercise of the
pre-funded warrants associated with the May 2023 public offering, as these pre-funded warrants are exercisable at any time
for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted
net loss per share attributable to common stockholders. Diluted EPS reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of
common stock that shared in the earnings of the entity. Since there is a significant number of options and warrants
outstanding, fluctuations in the actual market price can have a variety of results for each period presented.
The following table summarizes potentially dilutive adjustments to the number of common shares which were excluded from
the diluted calculation because their effect would be anti-dilutive due to the losses in each period:
Common stock purchase warrants
Stock options
Convertible debt
Total
Use of Estimates and Assumptions
December 31,
2023
December 31,
2022
6,538,073
906,892
2,114,403
9,559,368
667
192,273
162,602
355,542
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires
management to make estimates and assumptions such as the fair value of warrants and stock options and to accrue for
clinical trials in process that affect the reported amounts in the financial statements and accompanying notes. Actual results
could differ from those estimates.
Note 3. Leases
The Company classifies a lease for its office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey as an operating
lease, and recorded a related right-of-use lease asset and lease liability accordingly. Pursuant to an amendment executed on
June 21, 2022, the lease has been extended to October 2025. The current rent of $11,367 per month will be maintained until
November 2024 when it will be increased to $11,625 where it will remain until expiration. As of December 31, 2023 and 2022,
the Company’s consolidated balance sheets included a right-of-use lease asset of $229,834 and $340,987 for the office
space, respectively. The Company’s consolidated balance sheets as of December 31, 2023 and 2022 included corresponding
lease liabilities of $233,627 and $342,575 for the office space, respectively.
F-14
Operating
Lease
136,917
116,250
19,540
233,627
8.47 %
22
106,155
347,546
112,714
340,987
111,153
229,834
106,151
347,546
111,122
342,575
108,948
233,627
134,892
134,892
136,022
136,022
$
$
$
$
$
$
$
$
$
$
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The following represents a reconciliation of contractual lease cash flows to the right-of-use lease asset and liability recognized
in the financial statements:
Contractual cash payments for the remaining lease term as of December 31, 2023
2024
2025
Less implied interest
Total
Discount rate applied
Remaining lease term (months) as of December 31, 2023
Right-of-use lease asset:
Right-of-use lease asset, January 1, 2022
New lease extension June 21, 2022
Less: reduction/amortization
Right-of-use lease asset, December 31, 2022
Less: reduction/amortization
Right-of-use lease asset, December 31, 2023
Lease liability:
Lease liability, January 1, 2022
New lease extension June 21, 2022
Less: repayments
Lease liability, December 31, 2022
Less: repayments
Lease liability, December 31, 2023
Lease expense for the year ended December 31, 2022:
Lease expense
Total
Lease expense for the year ended December 31, 2023:
Lease expense
Total
Note 4. Accrued Expenses
The following is a summary of the Company’s accrued expenses:
Clinical trial expenses
Other
Total
Note 5. Debt
2023
December 31,
1,993,784
424,218
2,418,002
$
$
2022
1,884,117
423,629
2,307,746
$
$
In December 2020, the Company entered into a $20 million convertible debt financing agreement with Pontifax Medison Debt
Financing (“Pontifax”), the healthcare-dedicated venture and debt fund of the Pontifax life science funds. Under the terms of
the agreement with Pontifax, the Company had access to up to $20 million in convertible debt financing in three tranches,
which will mature on June 15, 2025 and 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 is to be repaid in quarterly payments of $1 million each
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commencing in the first quarter of 2023. The agreement is secured by a lien covering substantially all of the Company’s
assets, other than intellectual property.
Upon the closing of this transaction, the Company accessed the first tranche of $10 million, had the option to draw the second
tranche of $5 million at any time during the initial 12 months of the loan and the third tranche of $5 million upon filing of the
HyBryte™ NDA, subject to certain conditions. The Company elected to let the options to borrow both the second and third
tranches expire as of December 15, 2021 and March 15, 2022, respectively.
On April 19, 2023, the Company entered into an amendment to the convertible debt financing agreement dated December 15,
2020 with Pontifax. The 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 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 the Company’s common stock on the day before the delivery of
the conversion notice with respect to the first 588,599 shares of the Company’s common stock issuable upon conversion and
to (ii) $1.70 with respect to all shares of the Company’s common stock issuable upon conversion in excess of the first 588,599
shares so issued. The remaining terms of the agreement remain in effect without modification.
The amendment to the convertible debt financing agreement with Pontifax resulted in the extinguishment of the original
convertible debt for accounting purposes. The Company concluded that the amended debt instrument has an embedded
derivative that requires bifurcation pursuant to ASC 815-15-25-1 and qualifies for the fair value option in accordance with ASC
815-15-25-4 through ASC 815-15-25-6. The Company elected to account for the amended convertible debt using the fair
value option, which requires the Company to record changes in fair value as a component of other income or expense. The
fair value of the convertible debt on the date of the amendment was approximately $3,304,000, which resulted in the
recognition of a loss on extinguishment of approximately $394,000 on the Company’s accompanying consolidated statements
of operations for the year ended December 31, 2023. The fair value of the convertible debt as of December 31, 2023 was
approximately $3,260,934, which resulted in the recognition of $43,066 of other income from the change in the fair value of
the convertible debt on the Company’s accompanying consolidated statements of operations for the year ended
December 31, 2023. The fair value of the convertible debt was estimated using the Monte Carlo valuation method.
Assumptions
Stock price
Volatility
Discount rate
Risk-free rate
$
4/19/2023
9/30/2023
12/31/2023
$
1.72
75.20%
16.28%
4.27%
$
0.56
110.50%
14.84%
5.24%
0.76
141.90%
13.62%
4.65%
Interest expense incurred during the years ended December 31, 2023 and 2022 was $402,615 and $847,000, respectively.
Interest expense paid during the years ended December 31, 2023 and 2022 was $552,058 and $857,411, respectively.
Pontifax may elect to convert the outstanding loan drawn into shares of the Company’s common stock at any time prior to
repayment. There was $3,000,000 of principal and $63,351 of accrued interest outstanding as of December 31, 2023.The
Convertible Notes were convertible at (i) 90% of the closing price of our common stock on the day before the delivery of the
conversion notice with respect to the first 588,599 shares issuable upon conversion as of December 31, 2023 and (ii) $1.70
with respect to all shares issuable upon conversion in excess of the first 588,599 shares issued upon conversion as of
December 31, 2023. The Company also has the ability to force the conversion of the loan into shares of the Company’s
common stock at the same conversion price, subject to certain conditions.
Annual principal and interest payments due, according to the agreement’s contractual terms, assuming no conversion is as
follows:
Year
2024
2025
Total
Principal
Interest
$
$
2,250,000
750,000
3,000,000
$
$
270,808
16,012
286,820
$
$
Total
2,520,808
766,012
3,286,820
F-16
Table of Contents
Note 6. Income Taxes
The income tax benefit consisted of the following for the years ended December 31, 2023 and 2022:
Federal
Foreign
State & Local
Income tax benefit
2023
2022
$
$
—
—
(1,767,803)
(1,767,803)
$
$
—
—
(1,154,935)
(1,154,935)
The significant components of the Company’s deferred tax assets and liabilities at December 31, 2023 and 2022 are as
follows:
Net operating loss carry forwards
Orphan drug and research and development credit carry forwards
Equity based compensation
Intangibles
Capitalized research and development (Section 174)
Lease liability
Other
Total
Valuation allowance
Net deferred tax assets
Right of use asset
Total gross deferred tax liabilities
Net deferred tax assets
$
$
2023
27,522,000
8,921,000
246,000
1,409,000
2,311,000
66,000
(12,000)
40,463,000
(40,398,000)
65,000
(65,000)
(65,000)
$
— $
2022
27,252,000
8,837,000
285,000
1,696,000
1,832,000
96,000
—
39,998,000
(39,902,000)
96,000
(96,000)
(96,000)
—
The Company had gross NOLs at December 31, 2023 of approximately $123.0 million for federal tax purposes, approximately
$12.9 million for state tax purposes and approximately $3.7 million for foreign tax purposes. Federal losses generated in 2018
or later will carry forward indefinitely. In addition, the Company has approximately $8.9 million of various tax credits which
credit the Company may be able to utilize its NOLs to reduce future federal and state income tax liabilities. However, these
NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of
NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL
carryforwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams.
Although the Company has not undergone an IRC Section 382 analysis, it is likely that the utilization of the NOLs may be
substantially limited.
The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state
and local jurisdictions. During the years ended December 31, 2023 and 2022 in accordance with the State of New Jersey’s
Technology Business Tax Certificate Program, which allowed certain high technology and biotechnology companies to sell
unused NOL carryforwards to other New Jersey-based corporate taxpayers, the Company sold New Jersey NOL carry
forwards, resulting in the recognition of $1,767,803 and $1,154,935, respectively, of income tax benefit, net of transaction
costs. The Company sold its 2022 New Jersey NOLs and has recorded a receivable of $606,606 which is included in prepaid
expenses and other current assets on the accompanying consolidated balance sheet for the year ended December 31, 2023.
There can be no assurance as to the continuation or magnitude of this program in the future.
The Tax Cuts and Jobs Act of 2017 (“TCJA”) has modified the IRC 174 expenses related to research and development for
the tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures
related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S.
activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with
IRC 174 resulted in a deferred tax asset of $2,310,677.
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Table of Contents
Reconciliations of the difference between income tax benefit computed at the federal and state statutory tax rates and the
provision for income tax benefit for the years ended December 31, 2023 and 2022 were as follows:
Federal tax at statutory rate
State tax benefits, plus sale of NJ NOL, net of federal benefit
Foreign tax rate difference
Orphan drug and research and development credits
Permanent differences
Foreign NOL adjustments
Expiration of tax attributes
Change in valuation allowance
Income tax benefit
2023
2022
(21.0)%
(21.6)
0.1
(2.0)
0.9
0.7
14.2
6.3
(22.4)%
(21.0)%
(2.4)
0.2
(3.9)
3.1
0.4
9.1
6.8
(7.7)%
Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their
income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2023, there
were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception and
as such, tax years subject to potential tax examination could apply from 2011, the earliest year with a net operating loss
carryover, because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or
state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax
provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the
years ended December 31, 2023 and 2022.
Note 7. Shareholders’ Equity (Deficit)
Preferred Stock
The Company has 350,000 shares of preferred stock authorized, of which 50,000 were designated as Series D preferred
stock during the year ended December 31, 2023.
Series D Preferred Stock
On December 21, 2022, the Board of Directors of the Company declared a dividend for the stockholders of record on January
3, 2023. The dividend consists of one one-thousandth of a share of Series D preferred stock, par value $0.001 per share, for
each outstanding share of the Company's common stock. The Series D preferred stock has the following rights and
restrictions:
General; Transferability - Series D preferred stock shares will be in book-entry form without certificates. Transfers can only
happen alongside common stock transfers, with 1/1,000th of a Series D preferred stock share transferred for each common
stock share transferred.
Voting Rights - Each Series D preferred stock share gives the holder 1,000,000 votes. If a shareholder owns a fraction of a
share, they will have a proportional number of votes.
Series D preferred stock and common stock shares only vote together on two specific matters:
1. Any plan to change the Company's Certificate of Incorporation for a reverse stock split.
2. Any plan to delay a stockholders' meeting to vote on a reverse stock split (the "Adjournment Proposal").
When voting on the reverse stock split or the Adjournment Proposal, each Series D preferred stock share (or fraction of a
share) will vote the same way as the common stock share it was issued from.
Dividend Rights - The holders of Series D preferred stock will not be entitled to receive dividends of any kind.
Liquidation Preference - If the Company undergoes liquidation, dissolution, or winding up, Series D preferred stock has
priority over common stock for asset distribution. In such a situation, Series D preferred stockholders will receive a cash
payment of $0.001 per share before any distribution is made to common stockholders.
F-18
Table of Contents
Redemption - If Series D preferred stockholders do not attend or vote by proxy at a meeting for the reverse stock split and
Adjournment Proposal, their shares will be automatically redeemed by the Company. If any Series D preferred stock remains
after this redemption, it can be redeemed in one of two ways:
1. The Board decides to redeem the shares at a time and date of their choosing.
2. The shares will be automatically redeemed when the Company's stockholders approve the reverse stock split during
a meeting for this purpose.
When Series D preferred stock is redeemed, stockholders receive a cash payment based on the number of shares they own.
For every 100 whole shares redeemed, the stockholder will get $0.10 in cash.
The Series D preferred stock shares were classified as mezzanine equity as of December 31, 2022 since they were not
mandatorily redeemable but were redeemable based on an event not entirely controlled by the Company. All Series D
preferred stock were redeemed in conjunction with the special meeting of the shareholders’ on February 8, 2023.
Common Stock
The following items represent transactions in the Company’s common stock for the year ended December 31, 2023:
● The Company issued a vendor 50,000 shares of fully vested common stock with a fair value based on a closing price
of $1.46 per share on April 27, 2023, the date of issuance.
● The Company sold 851,130 shares of common stock pursuant to the At Market Issuance Sales Agreement (“B. Riley
Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”) at a weighted average price of $3.63 per share.
● The Company issued 31,646 shares of fully vested common stock pursuant to an exclusive option agreement at
$1.58 per share on May 2, 2023. The share price was calculated using the average closing price of the common
stock for the ten days immediately preceding April 27, 2023, the effective date of the option agreement.
● The Company sold 2,301,500 shares of common stock and 4,237,000 pre-funded warrants pursuant to the May 2023
public offering for $1.30 per share on May 9, 2023.
● The Company issued 2,023,000 shares of common stock pursuant to the exercise of pre-funded warrants associated
with the May 2023 public offering with an exercise price of $0.001 on May 9, 2023.
● The Company issued 938,000 shares of common stock pursuant to the exercise of pre-funded warrants associated
with the May 2023 public offering with an exercise price of $0.001 on May 10, 2023.
● The Company issued 338,000 shares of common stock pursuant to the exercise of pre-funded warrants associated
with the May 2023 public offering with an exercise price of $0.001 on May 22, 2023.
● The Company issued 400,000 shares of common stock pursuant to the cashless exercise of pre-funded warrants
associated with the May 2023 public offering with an exercise price of $0.001 on June 8, 2023.
● The Company issued 536,384 shares of common stock pursuant to the cashless exercise of pre-funded warrants
associated with the May 2023 public offering with an exercise price of $0.001 on September 6, 2023.
The following items represent transactions in the Company’s common stock for the year ended December 31, 2022:
● The Company issued a vendor 5,377 shares of fully vested common stock with a fair value of $9.30 per share on
February 7, 2022.
● The Company issued a vendor 6,411 shares of fully vested common stock with a fair value of $7.80 per share on May
6, 2022.
F-19
Table of Contents
● The Company issued a vendor 3,664 shares of fully vested common stock with a fair value of $13.65 per share on
August 5, 2022.
● The Company issued a vendor 1,667 shares of fully vested common stock with a fair value of $7.20 per share on
October 4, 2022.
● The Company issued a vendor 5,129 shares of fully vested common stock with a fair value of $9.75 per share on
November 7, 2022.
● The Company issued 8,542 shares of common stock pursuant to the B. Riley Sales Agreement at a weighted
average price of $9.29 per share.
All issuances of the Company’s common stock for the years ended December 31, 2023 and 2022 described above, other than
shares issued to vendors or issued pursuant to the exclusive option agreement, were registered on a Registration Statement
on Form S-8 (SEC File No. 333-208515), a Registration Statement on Form S-1 (333-271049) and a Registration Statement
on Form S-3 (SEC File No. 333-239928). The certificates evidencing unregistered shares reflect a Securities Act of 1933, as
amended, restrictive legend.
The issuances of the Company’s common stock to vendors and pursuant to the exclusive option agreement as described
above were exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. The recipients are knowledgeable,
sophisticated and experienced in making investment decisions of this kind and received adequate information about the
Company or had adequate access to information about the Company. The vendors represented to the Company that the
vendors are not “consultants” for purposes of Nasdaq Listing Rule 5635(c).
B. Riley At Market Issuance Sales Agreement
On August 11, 2017, the Company entered into the B. Riley Sales Agreement to sell shares of the Company’s common stock
from time to time, through an “at-the-market” equity offering program under which B. Riley acts as sales agent. Under the B.
Riley Sales Agreement, the Company set the parameters for the sale of shares, including the number of shares to be issued,
the time period during which sales may be requested to be made, limitation on the number of shares that may be sold in any
one trading day and any minimum price below which sales may not be made. The B. Riley Sales Agreement provided that B.
Riley was entitled to compensation for its services in an amount equal to 3% of the gross proceeds from the sale of shares
sold under the B. Riley Sale Agreement. The B. Riley Sales Agreement has expired.
Note 8. Stock Option Plans and Warrants to Purchase Common Stock
Stock Option Plans
The Amended and Restated 2005 Equity Incentive Plan (“2005 Plan”) was replaced by the 2015 Plan, which was approved in
June 2015. No securities are available for future issuance under the 2005 Plan. In September 2022, the stockholders
approved an amendment to the 2015 Plan to increase the maximum number of shares of common stock available for
issuance under the plan by 4,000,000 shares. As of December 31, 2023, there are 5,096,447 shares currently available for
grants under the 2015 Plan. The plan is divided into four separate equity programs:
1)
2)
3)
4)
the Discretionary Option Grant Program, under which eligible persons may, at the discretion of the Plan Administrator,
be granted options to purchase shares of common stock,
the Salary Investment Option Grant Program, under which eligible employees may elect to have a portion of their
base salary invested each year in options to purchase shares of common stock,
the Automatic Option Grant Program, under which eligible nonemployee Board members will automatically receive
options at periodic intervals to purchase shares of common stock, and
the Director Fee Option Grant Program, under which non-employee Board members may elect to have all, or any
portion, of their annual retainer fee otherwise payable in cash applied to a special option grant.
F-20
Table of Contents
Shares available for grant under the 2015 Plan were as follows:
Shares available for grant at January 1, 2023
Options granted
Options forfeited
Options exercised
Shares available for grant at December 31, 2023
Activity under the 2005 Plan and the 2015 Plan for the years ended December 31, 2023 and 2022
Balance outstanding at December 31, 2021
Granted
Forfeited
Cancelled
Exercised
Balance outstanding at December 31, 2022
Granted
Forfeited
Cancelled
Exercised
Balance outstanding at December 31, 2023
5,812,991
(731,544)
15,000
—
5,096,447
Weighted
Average
Exercise
Price
37.12
8.85
107.83
11.70
—
27.56
0.65
34.71
—
—
5.73
$
Options
140,996
55,730
(3,908)
(545)
—
192,273
731,544
(16,925)
—
—
$
906,892
$
As of December 31, 2023, there were 306,588 options exercisable with a weighted average exercise price of $15.01 and a
weighted average remaining contractual term of 7.99 years. As of December 31, 2023, there were 906,892 options
outstanding with a weighted average remaining term of 9.25 years. Options outstanding as of December 31, 2023 had no
intrinsic value.
The Company awarded 731,544 and 55,730 stock options during the years ended December 31, 2023 and 2022,
respectively, which had a weighted average grant date fair value per share of $0.50 and $5.57, respectively. The weighted-
average exercise price, by price range, for outstanding options to purchase common stock at December 31, 2023 was:
Price Range
$0.59 - $40.05
$111.00- $328.50
Total
Weighted
Average
Remaining
Contractual
Life in Years
9.31
1.52
9.25
Outstanding
Options
899,794
7,098
906,892
Exercisable
Options
299,490
7,098
306,588
The Company’s share-based compensation expense for the years ended December 31, 2023 and 2022 was recognized as
follows:
Share-based compensation
Research and development
General and administrative
Total
2023
2022
$
$
150,466
219,716
370,182
$
$
142,879
190,510
333,389
At December 31, 2023, the total compensation cost for stock options not yet recognized was approximately $421,000 and will
be expensed over the next three years.
F-21
Table of Contents
Warrants to Purchase Common Stock
Warrant activity for the years ended December 31, 2023 and 2022 was as follows:
Balance at December 31, 2021
Granted
Exercised
Expired
Balance at December 31, 2022
Granted
Exercised
Expired
Balance at December 31, 2023
The remaining life, by grant date, for outstanding warrants at December 31, 2023 was:
Warrants
221,872
$
—
—
(221,205)
667
10,775,073
(4,237,000)
(667)
6,538,073
$
$
Weighted
Average
Exercise
Price
33.79
—
—
33.81
29.25
0.91
0.001
29.25
1.50
Grant Date
May 09, 2023
Note 9. Concentrations
$
Exercise
Price
Remaining
Contractual
Outstanding
Exercisable
Life in Years Warrants
4.36
6,538,073
1.50
Warrants
6,538,073
At December 31, 2023 and 2022, the Company had deposits in major financial institutions that exceeded the amount under
protection by the Securities Investor Protection Corporation (“SIPC”) and the Federal Deposit Insurance Corporation (“FDIC”).
Currently, the Company is covered up to $250,000 by the SIPC and FDIC and at times maintains cash balances in excess of
the SIPC and FDIC coverages.
Note 10. Commitments and Contingencies
The Company has commitments of approximately $230,000 as of December 31, 2023 over the next five years for several
licensing agreements with partners and universities. Additionally, the Company has collaboration and license agreements,
which upon clinical or commercialization success, may require the payment of milestones of up to approximately $13.2
million, royalties on net sales of covered products ranging from 2% to 3%, sub-license income royalties on covered products
up to 15% and sub-license global net sales royalties on covered products ranging from 1.5% to 2.5%, if and when achieved.
However, there can be no assurance that clinical or commercialization success will occur.
The Company currently leases approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton,
New Jersey. This office space currently serves as the Company’s corporate headquarters, and both of the Company’s
business segments (Specialized BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an
amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025. The current rent is
approximately $11,367 per month and will remain so through October 2024. The rent for the lease period starting November
2024 is approximately $11,625 per month.
On September 3, 2014, the Company entered into an asset purchase agreement with Hy Biopharma, Inc. (“Hy Biopharma”)
pursuant to which the Company acquired certain intangible assets, properties and rights of Hy Biopharma related to the
development of Hy BioPharma’s synthetic hypericin product. As consideration for the assets acquired, the Company paid
$275,000 in cash and issued 12,328 shares of common stock with a fair value based on the Company’s stock price on the
date of grant of $3.75 million. These amounts were charged to research and development expense during the third quarter of
2014 as the assets will be used in the Company’s research and development activities and do not have alternative future use
pursuant to generally accepted accounting principles in the U.S. In March 2020, the Company issued 130,413 fully vested
shares of common stock to Hy Biopharma as payment for achieving a milestone: the Company determining the Phase 3
clinical trial of HyBryte™ to be successful in the treatment of CTCL. The number of shares of common stock issued
F-22
Table of Contents
to Hy Biopharma was calculated using an effective price of $38.40 per share, based upon a formula set forth in the purchase
agreement.
Provided the sole remaining future success-oriented milestone of FDA approval is attained, the Company will be required to
make an additional payment of $5 million, if and when achieved. Such payment will be payable in restricted securities of the
Company provided such number of shares does not exceed 19.9% ownership of the Company’s outstanding stock. As of
December 31, 2023, no other milestone or royalty payments have been paid or accrued.
In January 2020, the Company’s Board of Directors authorized the amendment of Dr. Schaber’s employment agreement to
increase the number of shares of the Company’s common stock from 334 to 33,334 issuable to Dr. Schaber immediately prior
to the completion of a transaction, or series or a combination of related transactions, negotiated by its Board of Directors
whereby, directly or indirectly, a majority of its capital stock or a majority of its assets are transferred from the Company and/or
its stockholders to a third party.
As a result of the above agreements, the Company has future contractual obligations over the next five years as follows:
Year
2024
2025
2026
2027
2028
Total
Contingencies
Research and Property and
Other Leases
Development
Total
$
$
46,000
46,000
46,000
46,000
46,000
230,000
$
$
136,917
116,250
—
—
—
253,167
$
$
182,917
162,250
46,000
46,000
46,000
483,167
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies.
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but
which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. A liability is only recorded if management
determines that it is both probable and reasonably estimable.
COVID-19
Based on the current outbreak of SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on
financial markets, there could be additional repercussions to the Company’s operating business, including but not limited to,
the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in
clinical operations, which may include the availability or the continued availability of patients for trials due to such things as
quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.
COVID-19 affected the Company’s operations but did not have a material impact on the Company’s business, operating
results, financial condition or cash flows as of and for the year ended December 31, 2023.
The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any
assurance that the outbreak will not have a material adverse impact on the Company’s operations or future results or filings
with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments,
including actions taken to contain the coronavirus.
F-23
Table of Contents
Note 11. Operating Segments
The Company maintains two active operating segments: Specialized BioTherapeutics and Public Health Solutions. Each
segment includes an element of overhead costs specifically associated with its operations, with its corporate shared services
group responsible for support functions generic to both operating segments.
Revenues
Specialized BioTherapeutics
Public Health Solutions
Total
Income (loss) from Operations
Specialized BioTherapeutics
Public Health Solutions
Corporate
Total
Amortization and Depreciation Expense
Specialized BioTherapeutics
Public Health Solutions
Corporate
Total
Other (Expense) Income, Net
Specialized BioTherapeutics
Corporate
Total
Share-Based Compensation
Specialized BioTherapeutics
Public Health Solutions
Corporate
Total
Identifiable Assets
Specialized BioTherapeutics
Public Health Solutions
Corporate
Total
Note 12. Subsequent Event
Convertible Debt Financing Agreement
$
$
$
$
$
$
$
$
$
$
For the Years Ended
December 31,
2023
2022
395,124
444,235
839,359
(2,812,303)
(36,531)
(4,849,106)
(7,697,940)
3,932
655
1,967
6,554
25,267
(235,860)
(210,593)
145,683
4,782
219,717
370,182
$
$
$
$
$
$
$
$
$
$
31,929
916,982
948,911
(7,614,988)
26,612
(6,650,528)
(14,238,904)
10,087
1,681
12,794
24,562
102,320
(816,690)
(714,370)
138,075
4,804
190,510
333,389
As of December 31,
2023
2022
$
$
272,099
3,976
9,521,251
9,797,326
$
$
103,742
121,290
14,054,685
14,279,717
On April 19, 2023, the Company entered into an amendment to the convertible debt financing agreement with Pontifax (See
Note 5). The amendment reduced the conversion price with respect to the remaining principal amount outstanding under the
agreement. The conversion price was amended to be (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 588,599 shares of our common stock issuable upon conversion and
(ii) $1.70 with respect to all shares of our common stock issuable upon conversion in excess of the first 588,599 shares so
issued.
F-24
Table of Contents
Conversion of Promissory Notes
On January 3, 2024, the Company issued an aggregate of 146,199 shares of common stock to two lenders upon conversion
of approximately $100,000 of principal under promissory notes at a conversion price of $0.68 per share.
Remaining Convertible Debt
As of March 8, 2024, $2,900,585 of principal and $45,840 of accrued interest remain outstanding under the agreement. The
conversion price for the remaining principal amount as of March 8, 2024 is (i) 90% of the closing price of our common stock
on the day before the delivery of the conversion notice with respect to the first 442,400 shares of common stock issuable
upon conversion and (ii) $1.70 with respect to all shares issuable upon conversion in excess of the first 442,400 shares so
issued.
F-25
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Soligenix, Inc.
Princeton, New Jersey
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Soligenix, Inc. (the “Company”) as of December 31, 2023, and
the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows the year ended December 31, 2023,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash
flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of
America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As
discussed in Note 1 to the financial statements, the Company has recurring losses and negative cash flows from operations
that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and
conditions and management’s plans regarding those matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Prior Period Financial Statements
The financial statements of the Company as of December 31, 2022 were audited by other auditors whose report dated March
31, 2023 expressed an unqualified opinion on those statements.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial
reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
The communication of a critical audit matter does not alter in any way our opinion on the financial statements,
F-26
Table of Contents
taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical
audit matter or on the accounts or disclosures to which it relates.
Critical Audit Matter Description
As disclosed in Note 5 to the financial statements, on April 19, 2023, the Company amended the convertible debt financing
agreement dated December 15, 2020 with Pontifax. The Company has elected the fair value option and has accounted for the
Pontifax note at fair value.
There is no current observable market for the Pontifax note and, as such, the Company determined the fair value using the
Monte Carlo pricing model. As a result, a high degree of auditor judgment and effort was required in performing audit
procedures to evaluate the valuation technique and the significant unobservable inputs.
How the Critical Audit Matter was Addressed in the Audit
Our principal audit procedures performed to address this critical audit matter included the following:
● We obtained an understanding and evaluated the Company’s election of accounting policy related to the Pontifax
note.
● We obtained an understanding and evaluated the Company’s process and methodology used in the valuation of the
Pontifax note.
● We reviewed the fair value model used, significant assumptions, and underlying data used in the model and
evaluated whether the estimates and assumptions were consistent with audit evidence obtained.
● We evaluated the disclosures surrounding the fair value election with respect to the Pontifax note and ensured that
these were disclosed in accordance with the relevant accounting guidance.
/s/ Cherry Bekaert LLP
We have served as the Company’s auditor since 2023.
Tampa, Florida
March 15, 2024
F-27
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Soligenix, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Soligenix, Inc and Subsidiaries (the “Company”) as of
December 31, 2022, and the related consolidated statements of operations, comprehensive loss, changes in mezzanine
equity and shareholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated
financial position of the Company as of December 31, 2022, and the consolidated results of their operations and their cash
flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and expects to
incur losses for the foreseeable future, that raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ EisnerAmper LLP
We have served as the Company’s auditor from 2010 to 2022.
EISNERAMPER LLP
New York, New York
March 31, 2023
F-28
SOLIGENIX, INC.
DESCRIPTION OF SECURITIES
EXHIBIT 4.1
The following description of the terms of our securities is not complete and is qualified in its entirety by reference to
our Certificate of Incorporation, as amended (the “Certificate of Incorporation”) and our Bylaws, as amended (the “Bylaws”),
both of which are filed as exhibits to our Annual Reports on Form 10-K.
Under our Certificate of Incorporation and Bylaws, we are authorized to issue 75,350,000 shares of capital stock,
consisting of 75,000,000 shares of common stock, par value $0.001 per share, 230,000 shares of undesignated preferred
stock (none of which are currently outstanding), 10,000 shares of Series B Convertible Preferred Stock, par value $0.05 per
share (none of which are currently outstanding), 10,000 shares of Series C Convertible Preferred Stock, par value $0.05 per
share (none of which are currently outstanding), and 100,000 shares of Series A Junior Participating Preferred Stock, par
value $0.001 per share (none of which are currently outstanding).
All outstanding shares of common stock are validly issued, fully paid, and nonassessable.
Common Stock
Voting Rights
Holders of our common stock are entitled to one vote for each share held in the election of directors and in all other
matters to be voted on by stockholders. There is no cumulative voting in the election of directors. The affirmative vote of the
holders of a plurality of the shares of common stock represented at an annual meeting is required to elect each director.
Dividends and Liquidation Rights
Holders of common stock are entitled to receive dividends as may be declared from time to time by our Board of
Directors out of funds legally available therefor. In the event of liquidation, dissolution or winding up of the Company, holders
of common stock are to share in all assets remaining after the payment of liabilities.
Conversion, Redemption and Other Rights
Holders of common stock have no pre-emptive or conversion rights and are not subject to further calls or
assessments. There are no redemption or sinking fund provisions applicable to the common stock. The rights of the holders
of the common stock are subject to any rights that may be fixed for holders of preferred stock.
Preferred Stock
Our Certificate of Incorporation authorizes the issuance of 230,000 shares of undesignated preferred stock, 10,000
shares of Series B Convertible Preferred Stock, par value $0.05 per share (the “Series B Preferred Stock”), 10,000 shares of
Series C Convertible Preferred Stock, par value $0.05 per share (the “Series C Preferred Stock”), and 100,000 shares of
Series A Junior Participating Preferred Stock, par value $0.001 per share (the “Junior Preferred Stock”). Our Board of
Directors is empowered, without stockholder approval, to designate and issue additional series of preferred stock with
dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with no limitations on
conversion, which could adversely affect the voting power or other rights of the holders of our common stock, substantially
dilute a common stockholder’s interest and depress the price of our common stock.
No shares of the Series B Preferred Stock, the Series C Preferred Stock or the Junior Preferred Stock are
outstanding. Due to the terms of the Series C Preferred Stock, no additional shares of Series C Preferred Stock can be
issued.
Series B Preferred Stock
Our Certificate of Incorporation authorizes the issuance of 10,000 shares of Series B Preferred Stock, none of which
are outstanding and 6,411 of which have been converted to common stock and therefore are not reissuable.
2
Voting Rights
Each holder of Series B Preferred Stock is entitled to the number of votes equal to the number of whole shares of
common stock into which the shares of Series Preferred Stock held by such holder is then convertible (as adjusted from time
to time pursuant to our Certificate of Incorporation) with respect to any and all matters presented to the stockholders for their
action or consideration. Except as provided by law, holders of Series B Preferred Stock vote together with the holders of
common stock as a single class.
Dividends and Liquidation Rights
The holders of the Series B Preferred Stock are entitled to a dividend of 8% per annum, payable annually in shares of
Series B Preferred Stock. In addition, when and if our Board of Directors shall declare a dividend payable with respect to the
then outstanding shares of common stock, the holders of the Series B Preferred Stock are entitled to the amount of dividends
per share as would be payable on the largest number of whole shares of common stock into which each share of Series B
Preferred Stock could then be converted.
In the event of liquidation, dissolution or winding up of the Company, the holders of Series B Preferred Stock then
outstanding will be entitled to be paid an amount equal to $1,000 per share (subject to adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting such shares pursuant to our Certificate of
Incorporation), plus any dividends declared but unpaid thereon before any payment is made to the holders of common stock,
Junior Preferred Stock or any other class or series of stock ranking on liquidation junior to the Series B Preferred Stock. After
the holders of the Series B Preferred Stock have been paid in full, the remaining assets of the Company will be distributed to
the holders of Junior Preferred Stock and common stock, subject to the preferences of the Junior Preferred Stock.
Conversion, Redemption and Other Rights
Each share of Series B Preferred Stock is convertible into 1.333 shares of common stock. The conversion ratio is
subject to an adjustment upon the issuance of additional shares of common stock for a price below the closing price of the
common stock and equitable adjustment for stock splits, dividends, combinations, reorganizations and similar events.
Subject to certain conditions, after the second anniversary of the issuance of the Series B Preferred Stock, the
Company will have the right, but not the obligation, to redeem the then-outstanding shares of Series B Preferred Stock for
cash in an amount calculated pursuant to the terms of our Certificate of Incorporation.
Junior Preferred Stock
Voting Rights
The holders of the Junior Preferred Stock will have 10,000 votes per share of Junior Preferred Stock on all matters
submitted to a vote of our stockholders, including the election of directors.
Dividends and Liquidation Rights
If our Board of Directors declares or pays dividends on common stock, the holders of the Junior Preferred Stock
would be entitled to receive a per share dividend payment of 10,000 times the dividend declared per share of common stock.
In the event we make a distribution on the common stock, the holders of the Junior Preferred Stock will be entitled to a per
share distribution, in like kind, of 10,000 times such distribution made per share of common stock. In the event of any merger,
consolidation or other transaction in which shares of common stock are exchanged, each share of Junior Preferred Stock will
be entitled to receive 10,000 times the amount received per share of common stock. These rights are protected by customary
anti-dilution provisions.
Upon any liquidation, dissolution or winding up, no distribution may be made to the holders of shares of stock ranking
junior to the Junior Preferred Stock unless the holders of the Junior Preferred Stock have received the greater of (i) $37.00
per one one-thousandth share plus an amount equal to accrued and unpaid dividends and distributions thereon, and (ii) an
amount equal to 10,000 times the aggregate amount to be distributed per share to holders of common stock. Further, no
distribution may be made to the holders of stock ranking on a parity upon liquidation, dissolution or winding up with the Junior
Preferred Stock, unless distributions are made ratably on the Junior Preferred Stock and all other shares of
3
such parity stock in proportion to the total amounts to which the holders of the Junior Preferred Stock are entitled above and
to which the holders of such parity shares are entitled.
Anti-Takeover Provisions
Provisions in our Certificate of Incorporation and Bylaws may discourage certain types of transactions involving an
actual or potential change of control of our company which might be beneficial to us or our security holders.
As noted above, our Certificate of Incorporation permits our Board of Directors to issue shares of any class or series
of preferred stock in the future without stockholder approval and upon such terms as our Board of Directors may determine.
The rights of the holders of common stock will be subject to, and may be adversely affected by, the rights of the holders of any
class or series of preferred stock that may be issued in the future.
Our Bylaws generally provide that any board vacancy, including a vacancy resulting from an increase in the
authorized number of directors, may be filled by a majority of the directors, even if less than a quorum.
Additionally, our Bylaws provide that stockholders must provide timely notice in writing to bring business before an
annual meeting of shareholders or to nominate candidates for election as directors at an annual meeting of shareholders.
Notice for an annual meeting is timely if our secretary receives the written notice not less than 45 days and no more than 75
days prior to the anniversary of the date that we mailed proxy materials for the preceding year’s annual meeting. However, if
the date of the annual meeting is advanced more than thirty (30) days prior to, or delayed by more than thirty (30) days after,
the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be delivered not later than
the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which
public announcement of the date of such annual meeting is first made. Our Bylaws also specify the form and content of a
shareholder’s notice. These provisions may prevent shareholders from bringing matters before an annual meeting of
shareholders or from making nominations for directors at an annual meeting of shareholders.
Delaware Anti-Takeover Statute
We are subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”) regulating
corporate takeovers. In general, Section 203 prohibits a publicly held Delaware corporation from engaging, under certain
circumstances, in a business combination with an interested stockholder for a period of three years following the date the
person became an interested stockholder unless:
●
●
●
prior to the date of the transaction, our Board of Directors approved either the business combination or the
transaction which resulted in the stockholder becoming an interested stockholder;
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, calculated as provided under Section 203; or
at or subsequent to the date of the transaction, the business combination is approved by our Board of
Directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested
stockholder.
Generally, a business combination includes a merger, asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns
or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s
outstanding voting stock. We expect the existence of this provision to have an anti-takeover effect with respect to transactions
our Board of Directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that
might result in a premium over the market price for the shares of common stock held by stockholders.
Forum Selection Provisions
As permitted by the DGCL, our Bylaws require, to the fullest extent permitted by law, unless we consent in writing to
the selection of an alternative forum, that the Court of Chancery of the State of Delaware, shall be the sole and exclusive
forum for (i) any derivative action or proceeding brought on behalf of the company, (ii) any action asserting a claim for breach
of a fiduciary duty owed by any director, officer, other employee or stockholder of the company to the company or
4
the our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our Certificate of
Incorporation or our Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine.
Further, our Bylaws provided that, unless we consent in writing to the selection of an alternative forum, the federal
district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for
the resolution of any complaint asserting a cause of action arising under the Securities Act.
Exclusions or Limitations to Forum Selection Provisions
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations thereunder. Accordingly, the exclusive forum provisions in
our Bylaws do not apply to claims arising under the Exchange Act. The forum selection provisions, however, are intended to
apply to the fullest extent permitted by law, including to actions or claims arising under the Securities Act. However, it is
possible that a court could find our forum selection provisions to be inapplicable or unenforceable with respect to actions or
claims arising under the Securities Act. Even if a court accepts that our forum selection provisions apply to actions or claims
arising under the Securities Act, our stockholders shall not be deemed to have waived compliance with the federal securities
laws and the rules and regulations thereunder.
Transfer Agent
The transfer agent and registrar for our common stock is Equiniti Trust Company, LLC. Its address is 6201 15th
Avenue, Brooklyn, NY 11219 and its telephone number is (718) 921-8200.
Listing
Our common stock is listed on The Nasdaq Capital Market under the symbol “SNGX.”
5
Exhibit 19.1
ADMINISTRATIVE POLICY
INSIDER TRADING
ADM 1100
REVISION DATE: May 18, 2021
I. PURPOSE
The following is the insider trading policy of Soligenix, Inc. and Subsidiaries (the "Company") and outlines the procedures that all
Company personnel must follow. This policy and these procedures arise from the Company’s responsibilities as a publicly-traded entity.
Failure to comply with these procedures could result in a serious violation of the securities laws by the employee and/or the Company and
can involve both civil and criminal penalties. It is important that every Employee reviews this policy carefully.
II. APPLICABILITY OF POLICY
This policy applies to all transactions in Company stock by "insiders." As a rule of thumb insiders are (1) members of the Board of
Directors and officers of the Company, (2) any employee of the Company and its subsidiaries, and (3) any consultant, representative, or
independent contractor ("Representative") who knows material information regarding the Company that has not been fully disclosed to the
public. This policy also applies to the immediate families (defined as direct family members living in the same household) of such
insiders. A person can be an insider for a limited time with respect to certain material information even though he or she is not an officer
or director. For example, a secretary who knows that a large contract has just been received or that an acquisition is about to occur may be
an insider with respect to that information until the news has been fully disclosed to the public.
Definition of “Insider”
An "insider" is any person who possesses, or has access to, material information concerning the Company that has not been fully disclosed
to the public (see below for a definition of "material information"). Insiders may be subject to criminal prosecution and/or civil liability
for trading (purchase or sale) in Company stock when they know material information concerning the Company that has not been fully
disclosed to the public.
Persons found liable for insider trading face penalties of up to three times the profit gained or loss avoided, a criminal fine of up to $1
million, and up to 10 years in jail. The Company (and its Officers and Directors) could face penalties, the greater of $1 million or three
times the profit gained or loss avoided, as a result of the Employee's violation, additional criminal monetary penalties and up to ten years
in jail. Finally, in addition to the potential criminal and civil liabilities mentioned above, in certain circumstances the Company may be
able to recover all profits made by an insider, plus collect other damages.
Without regard to the penalties that may be imposed by others, willful violation of this policy constitutes grounds for dismissal from the
Board of Directors, termination of employment or, with respect to representatives, termination of the contract.
Insider trading proscriptions are not limited to trading by the insider alone; it is also illegal to advise others to trade on the basis of
undisclosed material information. Liability in such cases can extend both to the "tippee"--the person to whom the insider disclosed inside
information--and to the "tipper," the insider himself.
Finally, insider trading can cause a substantial loss of confidence in the Company and its stock on the part of the public and the securities
markets. This could obviously have an adverse impact on Company and its stockholders.
Definition of “Full Disclosure”
Full disclosure to the public generally means issuing a press release through a reputable and national wire service. A speech to an
audience, a TV or radio appearance, or an article in an obscure magazine does not qualify as full disclosure. Full disclosure means that
the securities markets have had the opportunity to digest the news. Generally, a full trading day following disclosure is regarded as
sufficient for dissemination and interpretation of material information.
Definition of “Material Information”
It is not possible to define all categories of material information. In general, information should be regarded as material if there is a
likelihood that it would be considered important by an investor in making a decision regarding the purchase or sale of Company stock.
Although it may be difficult under this standard to determine whether certain information is material, there are various categories of
information that would almost always be regarded as material. Examples of such information are:
Clinical trial results
New government grants
Regulatory (FDA or EMEA) actions and correspondence
Resignation of key personnel
Receipt, cancellation or deferral of significant purchase orders
New project or product announcements of a significant nature
1. Major corporate partnering transactions or proposed acquisitions or divestitures
2.
3.
4.
5.
6.
7.
8. Material pricing changes
9.
10. Planned stock splits
11. New equity or debt offerings
12. Significant litigation exposure
13. Any other factors which would cause the Company's financial results to be substantially different from analyst estimates
14. Financial results
Proposed commencement or changes in dividends
If any insider has questions as to the materiality of information, he or she should contact the CFO of the Company for clarification. If the
CFO is unavailable, they should contact the CEO.
Further, any officer, director or employee who believes he or she would be regarded as an insider who is contemplating a transaction in
Company stock must contact the principal financial officer of the Company prior to executing the transaction to determine if he or she may
properly proceed. Officers and directors should be particularly careful, since avoiding the appearance of engag ing in stock transactions on
the basis of material undisclosed information can be as important as avoiding a transaction actually based on such information.
III. ALMOST NO EXCEPTIONS
There are almost no exceptions to the prohibition against insider trading. For example, it does not matter that the transactions in question
may have been planned or committed to before the insider came into possession of the undisclosed material information, regardless of the
economic loss that the person may believe he or she might suffer as a consequence of not trading.
As noted above, this policy applies to the immediate families of insiders. Although immediate family is narrowly defined, an employee
should be especially careful with respect to family members or to unrelated persons living in the same household.
Notwithstanding the restrictions and prohibitions on trading in the Company’s securities set forth in this Policy, persons subject to this
Policy are permitted to effect transactions in the Company’s securities pursuant to approved trading plans established under Rule 10b5-1
under the Securities Exchange Act of 1934, including transactions during Black-Out Periods. Rule 10b5-1 requires that these transactions
be made pursuant to a plan that was established while the person was not in possession of material nonpublic information. In order to
comply with this Policy, the CFO must review and approve any such trading plan prior to its effectiveness pursuant to the same time frame
and notification requirements as required for the pre-clearance of trades. Insiders seeking to establish a trading plan should contact the
Company’s CFO.
Finally, remember that there are no limits on the size of a transaction that will trigger insider trading liability; relatively small trades have
in the past occasioned SEC investigations and lawsuits.
IV. SPECIFIC REQUIREMENTS
A. Prior to disclosure to any third party, any officer, director or employee who is aware of any material information concerning
Company (see "Definition of Material Information" above) that has not been disclosed to the public should report the intention to disclose
such information promptly to the CEO of the Company and obtain approval to do so.
B. Employees, officers and directors may not engage in a transaction (purchase or sale) of Company stock at any time between
the date on which any non-public material information becomes known to the individual and the close of business on the second business
day after such information is publicly disclosed.
C. Insiders should contact the CFO prior to engaging in a transaction, to determine if there is any non-public material information
at that time. If the CFO is unavailable, contact the CEO. The CFO or CEO who was contacted should confirm the contact in writing via
memo or email with a copy to the insider’s personnel file.
D. No insider may engage in transactions of a speculative nature at any time, including, but not limited to, puts and sell or limit
orders, although placing of call options while not in possession of material non-public information is not prohibited. All insiders are
prohibited from short-selling Company Common Stock or engaging in transactions involving Company-based derivative securities.
"Derivative Securities" are options, warrants, stock appreciation rights or similar rights whose value is derived from the value of an equity
security, such as Company Common Stock. This prohibition includes, but is not limited to, trading in Company-based option contracts
(for example, buying and/or writing puts and calls, transacting in straddles and the like). However, as indicated below, holding and
exercising options or other derivative securities granted under Company's employee stock option or equity incentive plans is not prohibited
by this policy, nor is trading in Company's convertible debentures.
E. The only exceptions to the policy are set forth below. It does not matter that the "insider" may have decided to engage in a
transaction before learning of the undis closed material information or that delaying the transaction might result in economic loss. It is also
irrelevant that publicly disclosed information about the Company might, even aside from the undisclosed material information, provide a
sub stantial basis for engaging in the transaction. One simply cannot trade in Company stock while in possession of undis closed material
information about Company. The only excep tions to the policy are as follows:
(a) Exercise of a stock option under the Company Stock Option Plan. Note that this exception does not include a
subsequent sale of the shares acquired pursuant to the exercise of the option under the Stock Option Plan.
(b) Bonafide gifts of securities are not deemed to be transactions for the purposes of this policy. Whether a gift is truly
bonafide will depend on the circumstances surrounding each gift. The more unrelated the donee is to the donor, the more likely the gift
would be considered "bonafide" and not a "transaction". For example, gifts to charities, churches and service organizations would clearly
not be "transactions". On the other hand, gifts to dependent children followed by a sale of the "gift" securities in close proximity to the
time of the gift may imply some economic benefit to the donor and, therefore, make the gift non-bonafide.
(c) Any transaction specifically approved in writing in advance by the CFO or CEO of the Company.
V. TRANSACTIONS BY OFFICERS AND DIRECTORS
The following procedures must be followed by Officers and Directors with respect to any purchase or sale of Company securities:
(a) Despite the above provisions, there may be times when there exists a corporate basis for requesting that each Officer
or Director refrain from trading in the Company's securities even though such trading would otherwise be permitted under this policy. In
order to comply with this restriction, all purchases and/or sales by Officers or Directors shall be cleared beforehand with the Company's
CFO. This restriction does not apply to the exercise of stock options.
(b) Before each transaction in Company securities, each Officer and Director is required to contact the CFO regarding (i)
compliance with Rule 144, if required; and (ii) the preparation of the requisite Form 4 to be filed with SEC. The Finance Department will
assist the Officer or Director in completing the Form 4 and may file it on his or her behalf with the SEC.
in the dissemination of information must be directed to the CEO or in his absence, another officer of the Company.
(c) All outside requests for information, comments or interviews (other than routine product inquiries) which may result
APPROVED:
___________________________________
Christopher J. Schaber
President & CEO
Date
ACKNOWLEDGED:
___________________________________
Employee / Director
Date
INSIDER TRADING POLICY
The following represents a list of Soligenix, Inc.’s subsidiaries:
SUBSIDIARIES OF SOLIGENIX, INC.
Name
Enteron Pharmaceuticals, Inc.
Orasomal Technologies Inc.
Soligenix BioPharma Canada Incorporated
Soligenix UK Limited
Soligenix NE B.V.
Soligenix Biopharma HI, Inc.
Ownership
100.00%
75.30%
100.00%
100.00%
100.00%
100.00%
State of Incorporation
Delaware
Delaware
Canada
United Kingdom
Netherlands
Hawaii
EXHIBIT 21.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements of Soligenix, Inc. on Form S-3 (Nos. 333-252153
and 333-274265) and Form S-8 (Nos. 333-130801, 333-196941, 333-208515 and 333-268051) of our report dated March 15,
2024, on our audit of the financial statements as of December 31, 2023 and for the year then ended, which report is included
in this Annual Report on Form 10-K to be filed on or about March 15, 2024. Our report includes an explanatory paragraph
about the existence of substantial doubt concerning the Company's ability to continue as a going concern.
Exhibit 23.1
/s/ Cherry Bekaert LLP
CHERRY BEKAERT LLP
Tampa, Florida
March 15, 2024
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements of Soligenix, Inc. on Form S-3 (Nos. 333-252153
and 333-274265) and Form S-8 (Nos. 333-130801, 333-196941, 333-208515 and 333-268051) of our report dated March 31,
2023, on our audit of the financial statements as of December 31, 2022 and for the year then ended, which report is included
in this Annual Report on Form 10-K to be filed on or about March 15, 2024. Our report includes an explanatory paragraph
about the existence of substantial doubt concerning the Company's ability to continue as a going concern.
Exhibit 23.2
/s/ EisnerAmper LLP
EISNERAMPER LLP
New York, New York
March 15, 2024
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Christopher J. Schaber, Ph.D., certify that:
1. I have reviewed this Form 10-K of Soligenix, Inc. for the fiscal year ended December 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
March 15, 2024
/s/ Christopher J. Schaber
Christopher J. Schaber, Ph.D.
President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Jonathan Guarino, certify that:
1.
I have reviewed this Form 10-K of Soligenix, Inc. for the fiscal year ended December 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
March 15, 2024
/s/ Jonathan Guarino
Jonathan Guarino
Senior Vice President and Chief Financial Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Form 10-K of Soligenix, Inc. (the “Company”) for the fiscal year ended December 31, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to
18 U.S.C. Section 1350, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
EXHIBIT 32.1
operations of the Company.
March 15, 2024
/s/ Christopher J. Schaber
Christopher J. Schaber, Ph.D.
President and Chief Executive Officer
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Form 10-K of Soligenix, Inc. (the “Company”) for the fiscal year ended December 31, 2023, as filed
with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to
18 U.S.C. Section 1350, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of
EXHIBIT 32.2
operations of the Company.
March 15, 2024
/s/ Jonathan Guarino
Jonathan Guarino
Senior Vice President and Chief Financial Officer
SOLIGENIX, INC.
INCENTIVE COMPENSATION RECOUPMENT POLICY
Exhibit 97
Introduction. The Board of Directors (the “Board”) of Soligenix, Inc. (the “Company”)
1.
believes that it is in the best interests of the Company and its shareholders to create and maintain a
culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-
performance compensation philosophy. The Board has therefore adopted this policy which provides
for the recoupment of Incentive-Based Compensation in the event the Company is required to
prepare a Restatement resulting from noncompliance with financial reporting requirements under
the federal securities laws (this “Policy”). This Policy is designed to comply with Section 10D of
the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the “Exchange Act”), and the corresponding listing standards adopted by The
NASDAQ Stock Market (“Nasdaq Requirements”).
2.
Recoupment. If the Company is required to prepare a Restatement, the Board shall, unless
the Board’s Compensation Committee (the “Compensation Committee”) or, in the absence of the
Compensation Committee, a majority of the independent directors serving on the Board, determines
it to be Impracticable, take Reasonably Prompt Action to recoup all Recoverable Compensation
from any Covered Person. Subject to applicable law, the Board may seek to recoup Recoverable
Compensation by requiring a Covered Person to repay such amount to the Company; by adding
“holdback” or deferral policies to incentive compensation; by adding post-vesting “holding” or “no
transfer” policies to equity awards; by set-off of a Covered Person’s other compensation; by
reducing future compensation; or by such other means or combination of means as the Board, in its
sole discretion, determines to be appropriate. This Policy is in addition to (and not in lieu of) any
right of repayment, forfeiture, or off-set against any Covered Person that may be available under
applicable law or otherwise (whether implemented prior to or after adoption of this Policy). The
Board may, in its sole discretion and in the exercise of its business judgment, determine whether
and to what extent additional action is appropriate to address the circumstances surrounding any
Restatement to minimize the likelihood of any recurrence and to impose such other discipline as it
deems appropriate.
3.
Administration of Policy. The Board shall have full authority to administer, amend, or
terminate this Policy and intends that this Policy will be applied to the fullest extent of the law. The
Board shall, subject to the provisions of this Policy, make such determinations and interpretations
and take such actions in connection with this Policy as it deems necessary, appropriate or advisable.
All determinations and interpretations made by the Board shall be final, binding and conclusive.
The Board may delegate any of its powers under this Policy to the Compensation Committee of the
Board or, subject to the Nasdaq Requirements and the provisions of this Policy, any subcommittee
or delegate thereof. This Policy and all controversies arising from or relating to this Policy shall be
governed by and construed in accordance with the laws of the State of Delaware, without giving
effect to its conflicts of law principles. It is intended that this Policy be interpreted in a manner that
is consistent with the requirements of Section 10D of the Exchange Act and any applicable rules or
standards adopted by the U.S. Securities and Exchange Commission (the “SEC”) and any
applicable Nasdaq Requirement. For the avoidance of doubt,
the enforcement of this Policy is not dependent on if or when any applicable restated financial
statements are filed with the SEC.
4.
Acknowledgement by Executive Officers. The Board shall provide notice to and seek
written acknowledgement of, and agreement to be bound by, this Policy from each Executive
Officer in the form of Appendix A (“Acknowledgement”); provided that the failure to provide such
notice or obtain such Acknowledgement shall have no impact on the applicability or enforceability
of this Policy.
5.
No Indemnification. Notwithstanding the terms of any of the Company’s organizational
documents, any corporate policy or any contract, no Covered Person shall be indemnified by the
Company against the loss of any Recoverable Compensation. Further, the Company shall not enter
into any agreement that exempts any Incentive-Based Compensation that is granted, paid or
awarded to a Covered Person from the application of this Policy or that waives the Company’s right
to recovery of any Recoverable Compensation, and this Policy shall supersede any such agreement
(whether entered into before, on or after the Effective Date of this Policy).
6.
Disclosures. The Company shall make all disclosures and filings with respect to this Policy
and maintain all documents and records that are required by the applicable rules and forms of the
SEC (including, without limitation, Rule 10D-1 promulgated under the Exchange Act) and any
Nasdaq Requirement.
Effective Date. This Policy shall be effective as of the date it is adopted by the Board (the
7.
“Effective Date”) and shall apply to Incentive-Based Compensation that is Received on or after
October 2, 2023.
Amendment. The Board may amend this Policy from time to time in its discretion and shall
8.
amend this Policy as it deems necessary to reflect any amendments or other changes to Section 10D
of the Exchange Act or any Nasdaq Requirement.
Definitions. In addition to terms otherwise defined in this Policy, the following terms, when
9.
used in this Policy, shall have the following meanings:
“Applicable Period” means the three completed fiscal years, including any Transition
Period, immediately preceding the earlier of: (i) the date that the Board, a committee of the
Board, or the officer or officers of the Company authorized to take such action if Board
action is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare a Restatement or (ii) the date a court, regulator or other legally
authorized body directs the Company to prepare a Restatement.
“Covered Person” means any person who receives Recoverable Compensation.
“Executive Officer” means the Company’s president, principal financial officer, principal
accounting officer (or if there is no such accounting officer, the controller), any vice-
president of the Company in charge of a principal business unit, division or function (such as
sales, administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policymaking functions for the
Company. Executive officers of the Company’s parent(s) or subsidiaries are deemed
Executive Officers of the Company if they perform such policy making functions for the
Company.
“Financial Reporting Measure” means the measures that are determined and presented in
accordance with the accounting principles used in preparing the Company’s financial
statements, and any measures that are derived wholly or in part from such measures. Stock
price and total shareholder return (“TSR”) are also considered Financial Reporting
Measures. A Financial Reporting Measure need not be presented within the financial
statements or included in a filing with the SEC.
“Impracticable” means, after exercising a normal due process review of all the relevant
facts and circumstances and taking all steps required by Exchange Act Rule 10D-1 and any
applicable Nasdaq Requirement, the Compensation Committee or, in the absence of the
Compensation Committee, a majority of the independent directors serving on the Board,
determines that recovery of the Incentive-Based Compensation is impracticable because: (i)
it has determined, after making a reasonable attempt to recover such Incentive-Based
Compensation, documented such reasonable attempt to recover and provided that
documentation to The NASDAQ Stock Market, that the direct expense that the Company
would pay to a third party to assist in recovering the Incentive-Based Compensation would
exceed the amount to be recovered; (ii) it has concluded that the recovery of the Incentive-
Based Compensation would violate home country law adopted prior to November 28, 2022
and has received a legal opinion from home country counsel stating that the recovery would
result in such a violation; or (iii) it has determined that the recovery of Incentive-Based
Compensation would likely cause an otherwise tax-qualified retirement plan, under which
benefits are broadly available to the Company’s employees, to fail to meet the requirements
of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
“Incentive-Based Compensation” means any compensation that is granted, earned or
vested based wholly or in part upon the attainment of a Financial Reporting Measure.
“Reasonably Prompt Action” means that each of the Company, its directors and its officers
act in a manner that is consistent with the exercise of their applicable fiduciary duties to
safeguard the assets of the Company, including the time value of any potential Recoverable
Compensation.
“Received” means Incentive-Based Compensation received in the Company’s fiscal period
during which
the Incentive-Based
Compensation award is attained, even if the payment or grant of the Incentive-Based
Compensation occurs after the end of that period.
the Financial Reporting Measure specified
in
“Recoverable Compensation” means all Incentive-Based Compensation (calculated on a
pre-tax basis) Received on or after the Effective Date by a person: (i) after beginning service
as an Executive Officer; (ii) who served as an Executive Officer at any time during the
performance period for that Incentive-Based Compensation (whether or not such
Executive Officer is serving at the time the Recoverable Compensation is required to be
repaid to the Company); (iii) while the Company had a class of securities listed on a national
securities exchange or national securities association; and (iv) during the Applicable Period,
that exceeded the amount of Incentive-Based Compensation that otherwise would have been
Received had the amount been determined based on the Financial Reporting Measures, as
reflected in the Restatement. With respect to Incentive-Based Compensation based on stock
price or TSR, when the amount of erroneously awarded compensation is not subject to
mathematical recalculation directly from the information in an accounting restatement, the
amount must be based on a reasonable estimate of the effect of the Restatement on the stock
price or TSR upon which the Incentive-Based Compensation was received.
“Restatement” means an accounting restatement of any of the Company’s financial
statements due to the Company’s material noncompliance with any financial reporting
requirement under U.S. securities laws, including any required accounting restatement to
correct an error in previously issued financial statements that is material to the previously
issued financial statements, or that would result in a material misstatement if the error were
corrected in the current period or left uncorrected in the current period.
“Transition Period” means any transition period in the Company’s financial statements that
is the result of a change in the Company’s fiscal year within or immediately following the
relevant three completed fiscal year period; provided, however, a transition period between
the last day of the Company’s previous fiscal year and the first day of its new fiscal year that
comprises a period of nine (9) to twelve (12) months shall be deemed to be a completed
fiscal year for purposes of this Policy.
Adopted by the Board on November 29, 2023.
Appendix A
AGREEMENT AND ACKNOWLEDGEMENT OF POLICY FOR THE RECOVERY OF
ERRONEOUSLY AWARDED COMPENSATION
By my signature below, I, as an Executive Officer of Soligenix, Inc. (the “Company”), acknowledge and agree
that:
1.
I have received and read the attached Incentive Compensation Recoupment Policy (the “Policy”).
2.
I am a Covered Person as defined in the Policy.
3.
I will be bound by all of the terms and conditions of the Policy, Section 10D of the Exchange Act and any
applicable rules or standards adopted by the SEC, and any applicable Nasdaq Requirements both during and
after my employment with the Company, including, without limitation, by promptly repaying or returning
any Recoverable Compensation to the Company as determined in accordance with the Policy and this
Acknowledgement.
Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Policy.
Signature:_____________________________
Printed Name:__________________________
Date:__________________________________