UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
Commission File Number 001-36019
TONIX PHARMACEUTICALS HOLDING CORP.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
26-1434750
(IRS Employer Identification No.)
26 Main Street, Suite 101
Chatham, New Jersey
(Address of principal executive office)
07928
(Zip Code)
(862) 799-8599
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.001 par value
Trading Symbol
TNXP
Name of each exchange on which registered
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by 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 15(d) of the Act. Yes ☐ No ☒
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 on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 229.405 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, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting common equity held by non-affiliates as of June 30, 2021, based on the closing sales price of the common stock as quoted on The
NASDAQ Global Market was $384,121,940. For purposes of this computation, all officers and directors are deemed to be affiliates. Such determination should not be deemed
an admission that such directors, officers, or 5 percent beneficial owners are, in fact, affiliates of the registrant.
As of March 14, 2022, there were 533,928,624, shares of registrant’s common stock outstanding.
None.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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 Accounting Fees and Services
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Exhibits, Financial Statement Schedules
Signatures
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F-1 – F-32
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108
ITEM 1 - BUSINESS
PART I
This Annual Report on Form 10-K (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains
forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,”
“believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-
inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K. Additionally, statements concerning future matters are forward-
looking statements.
Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our Management, such statements can only be based on
facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ
materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and
outcomes include, without limitation, those specifically addressed under the heading “Risks Factors” below, as well as those discussed elsewhere in this Annual Report on
Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file
reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file or will file with the SEC, which, among other places, can be found
on the SEC's website at http://www.sec.gov, as well as on our corporate website at www.tonixpharma.com).
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual
Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise
interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Tonix Pharmaceuticals®, Tonmya®, Protectic™, Angstro-Technology™ and other trademarks and intellectual property of ours appearing in this report are our
property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to
imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
Business Overview
We are a clinical-stage biopharmaceutical company focused on discovering, licensing, acquiring and developing therapeutics and diagnostics to treat and prevent
human disease and alleviate suffering. We are building capabilities in synthetic biology, precision medicine, protein engineering and vaccine manufacturing through internal
efforts as well as through collaborations with academic institutions and contract research organizations. Our therapeutics under development include both small molecules and
biologics. All of our drug, biologic and diagnostic candidates are still in development.
Tonix’s portfolio is primarily composed of immunology, central nervous system, or CNS, and infectious disease product candidates. Tonix’s immunology portfolio
includes biologics to address organ transplant rejection, autoimmune diseases and cancer. The CNS portfolio includes small molecules and biologics to treat pain, neurologic,
psychiatric and addiction conditions. Tonix’s infectious disease portfolio of product candidates includes next-generation vaccines to prevent COVID-19, an antiviral to treat
COVID-19, and a potential treatment for Long COVID. The infectious disease portfolio also includes a vaccine in development to prevent smallpox and monkeypox.
Tonix’s lead candidate within its immunology pipeline is TNX-1500*, a humanized monoclonal antibody, or mAb, directed against CD40-ligand, or CD40L,
engineered to modulate binding to Fc receptors, that is being developed as a prophylaxis against organ transplant rejection as well as to treat autoimmune conditions. In
experiments at the Massachusetts General Hospital, a teaching hospital of Harvard Medical School, TNX-1500 is being studied as monotherapy or in combination with other
immunosuppressive agents in heart and kidney organ transplants in non-human primates. Preliminary results from an ongoing experiment in heart transplants indicate that
TNX-1500 appears to have comparable efficacy to historical experiments using the chimeric mouse/human IgG1 version (5c8H1) of the anti-CD40L mAb 5c8. First generation
anti-CD40L mAb were associated with an increased risk of blood clots or thrombosis. In the non-human primate studies with TNX-1500, no evidence of thrombosis has been
observed so far. We expect to start a Phase 1 study of TNX-1500 in the second half of 2022.
Among the CNS candidates in development is TNX-1300* (double-mutant cocaine esterase) which is in Phase 2 for the treatment of life-threatening cocaine
intoxication. TNX-1300 has been granted Breakthrough Therapy designation, or BTD, by the U.S. Food and Drug Administration, or FDA. TNX-1300 was licensed from
Columbia University in 2019 after a Phase 2 study showed that it rapidly and efficiently disintegrates cocaine in the blood of volunteers who received intravenous, or i.v.,
cocaine. We expect to initiate a Phase 2 open-label safety study of TNX-1300 in an emergency room setting in the first half of 2022.
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Our latest stage CNS product candidate is TNX-102 SL*, a proprietary sublingual tablet formulation of CBP, designed for bedtime administration. TNX-102 SL has
active INDs for fibromyalgia, or FM, posttraumatic stress disorder, or PTSD, agitation in Alzheimer’s disease, or AAD, and alcohol use disorder, or AUD. We also intend to
develop TNX-102 SL as a treatment for Long COVID, which is also known as post-acute sequelae of COVID-19, or PASC.
TNX-102 SL is in mid-Phase 3 development for the management of FM, a pain disorder characterized by chronic widespread pain, non-restorative sleep, fatigue and
impaired cognition. In December 2020, we reported positive results from the Phase 3 RELIEF study of TNX-102 SL 5.6 mg for the management of FM. In July 2021, we
reported pre-planned interim analysis results from a second Phase 3 study, RALLY. Based on the recommendation from the independent data monitoring committee that the
RALLY trial was unlikely to demonstrate a statistically significant improvement in the primary endpoint, we stopped enrollment of new participants but allowed those
participants who were already enrolled to complete the study. We expect to report topline data from the completed study in the first quarter of 2022. We expect to analyze the
RALLY results to improve the design of subsequent Phase 3 studies. In addition, we plan to employ pharmacogenomic techniques to compare the RALLY and RELIEF study
populations, which may provide a path to precision medicine-based companion diagnostics for TNX-102 SL in FM. We intend to start a new Phase 3 study of TNX-102 SL in
FM in the first half of 2022.
TNX-102 SL is also being developed as a potential treatment for Long COVID. We met with the FDA in the third quarter of 2021 to seek agreement on the design of a
Phase 2 potential pivotal study and the overall clinical development plan to qualify TNX-102 SL as an indicated treatment for Long COVID. We intend to focus our clinical
development on the subgroup of Long COVID patients whose symptoms overlap with FM, particularly with respect to widespread pain. We received the official minutes from
this meeting in the third quarter of 2021 and intend to initiate a Phase 2 study in the first half of 2022.
For TNX-102 SL in PTSD, we completed the Phase 3 RECOVERY trial and reported topline results in the fourth quarter of 2020 in which TNX-102 SL did not meet
the primary efficacy endpoint. PTSD is a serious psychiatric condition that develops in response to experiencing a traumatic event. We subsequently completed a meeting with
the FDA to discuss potential new endpoints for the indication of treatment of PTSD, and we expect to begin enrolling a Phase 2 study of TNX-102 SL in police in Kenya in the
first half of 2022. The AAD program is Phase 2 ready with an active IND and FDA Fast Track designation. AAD, which includes emotional lability, restlessness, irritability,
and aggression, is one of the most distressing and debilitating of the behavioral complications of Alzheimer’s disease. Tonix does not have any near-term plans to start a Phase
2 study in AAD. The AUD program is also Phase 2 ready with an active IND. AUD is a chronic relapsing brain disease characterized by compulsive alcohol use, loss of control
over alcohol intake, and a negative emotional state when not using alcohol. Tonix does not have any near-term plans to start a Phase 2 study in AUD.
TNX-1900* (intranasal potentiated oxytocin) is in development for prophylaxis of chronic migraine and for the treatment of craniofacial pain, insulin resistance and
related conditions as well binge eating disorder, or BED. TNX-1900 was acquired from Trigemina, Inc. and licensed from Stanford University in 2020. The potentiated
formulation includes magnesium, which has been shown in animals to potentiate binding of oxytocin to the oxytocin receptor in the trigeminal ganglion. We received IND
clearance from the FDA in the fourth quarter of 2021 and intend to initiate a Phase 2 study in migraine in the second half of 2022. Tonix also licensed technology to use TNX-
1900 for the treatment of insulin resistance from the University of Geneva. TNX-1900 will be studied as a potential treatment for BED in an investigator-initiated Phase 2
clinical trial. The Phase 2 clinical trial is expected to start in the second half of 2022. In March 2022, we announced an agreement with Massachusetts General Hospital, a
teaching hospital of Harvard Medical School, to conduct this study. Tonix does not own an IND for BED.
TNX-2900* is another intranasal oxytocin-based therapeutic in development for the treatment of Prader-Willi syndrome, or PWS. The technology for TNX-2900 was
licensed from Inserm, the French National Institute of Health and Medical Research. PWS, an orphan condition, is a rare genetic disorder of failure to thrive in infancy,
associated with uncontrolled appetite beginning in childhood with complications of obesity and diabetes. We have sponsored a research program at the Inserm to study oxytocin
on suckling behavior in mice that have been engineered to express one of the Prader-Willi genes. TNX-2900 has been granted Orphan-Drug Designation for the treatment of
PWS.
TNX-601 CR* (tianeptine oxalate and naloxone controlled-release tablets) is a CNS product candidate in development as a treatment for major depressive disorder, or
depression, for PTSD, and for neurocognitive dysfunction associated with corticosteroid use. We completed a Phase 1 trial for formulation development outside of the U.S.
Based on official minutes from a pre-IND meeting with the FDA, we expect to initiate a pharmacokinetic study in the third quarter of 2022, and a Phase 2 study in the first
quarter of 2023.
Tonix’s infectious disease portfolio includes vaccines based on Tonix’s recombinant pox vaccine, or “RPV” technology platform. RPV vaccines are believed to protect
against negative outcomes of infectious diseases by eliciting T cell responses in addition to antibody responses. TNX-801* is an RPV live horsepox virus vaccine for
percutaneous administration in the pre-IND stage of development to protect against smallpox and monkeypox. TNX-801 vaccinated non-human primates were protected from
monkeypox in studies reported in the first quarter of 2020.
TNX-1800* is a live virus vaccine that expresses the SARS-CoV-2 spike protein from the ancestral Wuhan strain, which has shown encouraging results in non-human
primates. Because the subsequent omicron variant has out-competed the ancestral Wuhan strain, we are now planning new vaccine versions, TNX-1840* and TNX-1850*, that
are designed to express spike protein from the omicron variant and from the BA.2 variant, respectively. The COVID-19 vaccines that are approved for use, or have emergency
use authorization, or EUA, in the U.S. have provided significant health benefits to the vaccinated population; however, they are showing limitations in the durability of
protection conferred and, in their ability, to block forward transmission. Live virus vaccines that protect against other viral diseases by eliciting T cell responses have shown
durability of protection that lasts years to decades and some live virus vaccines have significantly inhibited forward transmission. With respect to TNX-1800 vaccination, we
reported positive efficacy data from animal challenge studies using live SARS-CoV-2 in the first quarter of 2021. In this study, TNX-1800 vaccinated, SARS-CoV-2 challenged
animals had undetectable SARS-CoV-2 in the upper airways, which we believe relates to potential inhibition of forward transmission of this respiratory pathogen.
4
TNX-3500* (sangivamycin) is an antiviral inhibitor of SARS-CoV-2 which has demonstrated broad-spectrum activity in laboratory-based assays against the
coronaviruses SARS-CoV-2 and MERS-CoV. Tonix licensed this technology from OyaGen, Inc. and intends to develop it as a treatment for COVID-19 and potentially other
viral diseases. The active ingredient of TNX-3500 has been studied for safety in humans in prior studies with cancer patients at the U.S. National Cancer Institute but has not
been approved for marketing in any jurisdiction. Tonix intends to conduct further animal studies in preparation for filing an IND.
TNX-3600* refers to a series of fully human mAbs generated by a human-human hybridomas from COVID-19 convalescent volunteers. Tonix is collaborating with
Columbia University to produce these fully human mAbs to SARS-CoV-2 spike proteins from variants such as delta and omicron and to other viral targets. The initial focus is
to develop COVID-19 therapeutic mAbs. Tonix plans to seek indications similar to current EUA therapeutic mAbs for treating individuals with mild-to-moderate COVID-19
who are at high risk for progression to severe disease. TNX-3600 mAbs may also be used in combination therapy with other COVID-19 therapeutic mAbs. Combination
therapies with other anti-SARS-CoV-2 mAbs may reduce the emergence of resistant viral strains. Given the unpredictable trajectory of the SARS-CoV-2 virus and new
variants, we seek to contribute to a broad set of mAbs from a variety of patients, that can be scaled up quickly and potentially combined with other mAbs. We envision the
future of mAb therapy for COVID-19 to be cocktails of mAbs with specificity to variants of concern. TNX-3600 is in the preclinical stage of development. Tonix intends to
study inhibition of SARS-CoV-2 variants in tissue culture and initiate animal studies in the first half of 2022.
Tonix also is collaborating with Columbia University to better understand immune responses to SARS-CoV-2 in healthy individuals who have recovered from
COVID-19, which is expected to provide a foundation for tailoring therapeutics to appropriate individuals using precision medicine.
TNX-3700* is a COVID-19 mRNA vaccine candidate employing a zinc nanoparticle (ZNP) formulation. In collaboration with Kansas State University, Tonix is
developing this ZNP technology as a potential replacement for the lipid nanoparticle (LNP) technology used in current mRNA vaccines. ZNP technology potentially allows for
improved stability which facilitates shipping and storage and addresses the limitations in current mRNA vaccines which require ultra-cold storage and shipping. This current
requirement limits the use of mRNA vaccines in less developed countries. We plan to seek initial indications as a booster, similar to the current FDA approved mRNA vaccines.
Tonix intends to conduct research with Kansas State University on ZNP SARS-CoV-2 spike based vaccines in tissue culture and animals in the first half of 2022.
TNX-2100* is an in vivo diagnostic skin test we are developing to measure SARS-CoV-2 exposure and T cell immunity. T cell immunity is more durable than
antibody immunity since serum antibodies wane between six months and one year after vaccination. TNX-2100 is a potential test to measure delayed-type hypersensitivity
(DTH) response to SARS-CoV-2. The DTH response for other pathogens, notably tuberculosis, can serve as an in vivo measure of functional T cell immunity. TNX-2100 is
comprised of GMP peptides designed to mimic SARS-CoV-2 proteins and stimulate SARS-CoV-2 specific T cells. We initiated a first-in-human, dose-finding clinical study in
the first quarter of 2022 and expect study results in the first half of 2022.
Our immunology pipeline also includes TNX-1700*. TNX-1700 is a recombinant modified form of Trefoil Family Factor 2, or rTFF2, that was licensed from
Columbia University in 2019. TNX-1700 is a biologic being developed to treat gastric and colorectal cancers by an immune-oncology mechanism and is in the preclinical stage
of development.
Our biodefense pipeline includes TNX-701*, an undisclosed small molecule technology being developed to prevent deleterious effects of radiation exposure which has
the potential to be used as a medical countermeasure to improve biodefense. TNX-701 is in the preclinical stage of development.
5
Finally, our CNS pipeline includes TNX-1600*, an inhibitor of the reuptake of neurotransmitters serotonin, norepinephrine and dopamine, or a triple reuptake
inhibitor. TNX-1600 was licensed from Wayne State University in 2019 and is being developed as a treatment for PTSD, depression and attention-deficit/hyperactivity disorder,
or ADHD. TNX-1600 is in the preclinical stage of development.
Relating to our COVID-19 and other infectious disease development programs, we are developing the resources necessary to enable internal research, development
and manufacturing capabilities necessary to meet the goal of producing new vaccine candidates within 100 days of recognition and new diagnostics within weeks of obtaining
sequence information. As articulated in the American Pandemic Preparedness Plan, or AP3, released by the U.S. Office of Science and Technology Policy, this 100-day goal for
vaccines is a key component of preparedness for future pandemics. We intend to establish the infrastructure necessary to support the pandemic preparedness goals established in
the AP3, specifically with respect to our RPV vaccine and skin test platforms and potentially to other vaccine, diagnostic and therapeutic platforms. This infrastructure consists
of (i) our infectious disease R&D Center, or “RDC”, (ii) our Advanced Development Center, or ADC, and (iii) our Commercial Manufacturing Center, or CMC. We acquired
the infectious disease RDC in Frederick, Maryland consisting of two buildings totaling approximately 48,000 square feet. The acquisition closed in October 2021 and was
operational at closing, but as of December 31, 2021, the facility was not ready for its intended use. It is our intention to have the facility ready for use in the first half of 2022.
The RDC facility will focus on our development of vaccines and antiviral drugs against SARS-CoV-2, its variants, and other infectious diseases. The RDC facility is currently
biosafety level 2 (BSL-2), but we intend to upgrade components to BSL-3. We are in the process of a substantial renovation of the ADC located in the New Bedford business
park in Dartmouth, Massachusetts. This facility is intended to accelerate development and clinical scale manufacturing of live-virus vaccines to support Phase 1 and Phase 2
clinical trials. It is currently under construction and will be an approximately 45,000 square foot BSL-2 facility once completed. It is expected to be partially operational in the
first half of 2022. We also plan to build the CMC in Hamilton, Montana, where we purchased approximately 44 acres of land. The CMC will focus on developing and
manufacturing commercial scale live-virus vaccines and is also intended to be BSL-2. Site enabling work is expected to be initiated for the CMC in 2022. Together, we expect
these facilities may qualify the RPV vaccine and skin test platforms for programs that are designed to carry out the goals of AP3.
*All of Tonix’s product candidates are investigational new drugs or biologics and have not been approved for any indication.
We are led by a management team with significant industry experience in drug development. We complement our management team with a network of scientific, clinical, and
regulatory advisors that includes recognized experts in their respective fields.
Corporate Information
We were incorporated on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. On October 11, 2011, we changed our name to
Tonix Pharmaceuticals Holding Corp. Our common stock is listed on The NASDAQ Capital Market under the symbol “TNXP”. Our principal executive offices are located at
26 Main Street, Suite 101, Chatham, New Jersey 07928, and our telephone number is (862) 799-8599. Our website addresses are www.tonixpharma.com,
www.tonix.com, and www.krele.com.
Our Strategy
Our objective is to develop and commercialize our product candidates. The principal components of our strategy are to:
●
Pursue CNS, infectious disease and immunology indications with high unmet medical need and significant commercial potential. Within the therapeutic areas that
Tonix is focusing, we are pursuing multiple indications that are underserved with limited, effective treatment options. One of our latest stage product candidates, TNX-
102 SL for the management of FM, affects between 6-12 million adults in the U.S. and fewer than half of those treated for FM receive relief from the three FDA-
approved drugs. We are also pursuing a treatment for Long COVID using TNX-102 SL, a condition for which there is no currently approved therapy. Our broader
development strategy is to leverage the patented formulation to explore the clinical potential of TNX-102 SL in multiple other pain, psychiatric, and addiction
conditions, including PTSD, Agitation in Alzheimer’s and Alcohol Use Disorder (AUD), all of which are underserved by currently approved medications or have no
approved treatment thus representing large unmet medical needs. Within CNS, Tonix is also developing TNX-1300, a treatment for cocaine intoxication, one of the
leading causes of overdose deaths and for which there is no currently approved drug. Within infectious diseases, we are currently focusing on the development of
TNX-1840 and TNX-1850 for protection against COVID-19. While there are FDA-approved COVID-19 vaccines which use mRNA technology, we believe that there
are limitations to these vaccines relating to durability of protection and their relative inability to block forward transmission. We believe that the live virus technology
intended to be employed in TNX-1840 and TNX-1850 has the potential to solve these problems and serve as a booster or initial vaccine to the U.S. population. Finally,
with TNX-1500, we are pursuing a treatment to prevent organ transplant rejection as well as autoimmune conditions. TNX-1500 is a third generation humanized mAb
targeting the CD40L that has the potential to deliver efficacy without compromising safety, based on modulated binding to Fc receptors. At this time, no mAb against
CD40L has been licensed anywhere in the world.
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● Maximize the commercial potential of our lead product candidates. We plan to commercialize each of our lead product candidates, including our latest stage
candidate, TNX-102 SL, either on our own or through collaboration with partners. We believe our lead candidates can be marketed to U.S. physicians either by an
internal sales force that we would build or by a contract sales organization, which we would engage. An alternative strategy would be to enter into partnership
agreements with drug companies that already have significant marketing capabilities in the same, or similar, therapeutic areas. If we determine that such a strategy
would be more favorable than developing our own sales capabilities, we would seek to enter into collaborations with pharmaceutical or biotechnology companies for
commercialization.
● Pursue a broad intellectual property strategy to protect our product candidates. We are pursuing a broad patent strategy for our product candidates, and we endeavor
to generate new patent applications as supported by our innovations and conceptions as well as to advance their prosecution. In the case of TNX-102 SL, we own
patents and patent applications protecting its composition-of-matter, certain methods of its use, its formulation, and its pharmacokinetic properties. In the case of TNX-
801, TNX-1800, TNX-1840 and TNX-1850, we own patent applications protecting their composition-of-matter and certain methods of use. We also own patents
through in-licensing transactions for TNX-1900, TNX-1700, TNX-2900 and TNX-1300. We own patents outright for TNX-601 CR and have filed patent applications
for TNX-2100, TNX-3500, TNX-3700 and TNX-1500. We plan to opportunistically apply for new patents to protect our product candidates.
● Pursue additional indications and commercial opportunities for our product candidates. We will seek to maximize the value of our other product candidates by
pursuing other indications and commercial opportunities for such candidates. For example, we own rights related to the development and commercialization of TNX-
102 SL for generalized anxiety disorder, depression, and fatigue related to disordered sleep. For TNX-1900, we own the rights to develop this for craniofacial pain,
episodic migraine, acute migraine and insulin resistance, in addition to chronic migraine. For TNX-601 CR, we own the rights to develop this for PTSD and
neurocognitive disorder from corticosteroid use, in addition to major depressive disorder. Finally, our live virus platform using our RPV technology may be developed
for future pandemics, infectious diseases generally and oncology, in addition to COVID-19.
Disease and Market Overview
Our product candidates address disorders that are not well served by currently available therapies or have no approved treatment which represent large potential
commercial market opportunities. Background information on the disorders and related commercial markets that may be addressed by our product candidates in or nearing the
clinical-stage is set forth below.
Immunology
Organ Transplant Rejection
Organ transplant rejection occurs when the immune system of the organ recipient attacks the new organ as if it was an infection or tumor. Often transplantation is the
last resort for most end-stage organ failure patients, affecting either kidneys, liver, heart, lungs, and/or pancreas. Genetic disparity between organ donor and recipient is often at
the root of the rejection. Mismatched or not closely matched organs triggers an immune reaction that leads to rejection. Overcoming this difficulty is paramount to a patient’s
survival as organ donations are in limited supply.
Gastric and Colorectal cancers
Gastric or stomach cancer is a disease in which malignant cancer cells line the inner lumen of the stomach. Development of this form of cancer is often influenced by
age, diet and other stomach disease. This type of cancer begins to form in the mucosa, the surface of the lumen that is in direct contact with the contents of the stomach, and
spreads through the outer layers of the stomach as the tumor grows.
Currently, per the National Cancer Institute, the 5-year relative survival for stomach cancer is 32.4%. The lifetime risk of developing stomach cancer is higher in men
(about 1 in 96) than in women (about 1 in 152).2 In 2018, there were an estimated 120,301 people living with stomach cancer in the United States.
7
Colorectal cancer includes cancers in the colon and the rectum, organs that are crucial to absorption of water by the body and the elimination of food-waste. Most
colorectal cancers start as a growth or polyp on the inner lining of the colon or rectum. Some types of polyps can change into cancer over time (usually many years), but not all
polyps become cancer. Adenomatous polyps are the ones that turn malignant with time. Similar to gastric cancer, the malignancy begins in the mucosal layer and spreads
outwards.
The 5-year relative survival rate is 64.7%. Overall, the lifetime risk of developing colorectal cancer is about 1 in 23 (4.3%) for men and 1 in 25 (4.0%) for women. In
2018, there were an estimated 1,365,135 people living with colorectal cancer in the United States.
Central Nervous System
Cocaine Intoxication
Cocaine is an illegal recreational drug taken for its pleasurable effects and associated euphoria. Pharmacologically, cocaine blocks the reuptake of the neurotransmitter
dopamine from central nervous system synapses, resulting in the accumulation of dopamine within the synapse and an amplification of dopamine signaling that is related to its
role in creating positive feeling. With the continued use of cocaine, however, intense cocaine cravings occur resulting in a high potential for abuse and addiction, or
dependence, as well as the risk of cocaine intoxication. Cocaine intoxication refers to the deleterious effects on other parts of the body, especially those involving the
cardiovascular system. Common symptoms of cocaine intoxication include tachyarrhythmias and elevated blood pressure, either of which can be life-threatening. As a result,
individuals with known or suspected cocaine intoxication are sent immediately to the emergency department, preferably by ambulance in case cardiac arrest occurs during
transit. There are approximately 505,000 emergency room visits for cocaine abuse each year in the U.S., of which 61,000 require detoxification services. According to the
National Institute on Drug Abuse, over 15,883 individuals died of cocaine overdose in 2019.
Fibromyalgia (FM)
FM is a chronic syndrome characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory and mood issues. The peak incidence of FM
occurs between 20-50 years of age, and 80-90% of diagnosed patients are female. FM may have a substantial negative impact on social and occupational function, including
disrupted relationships with family and friends, social isolation, reduced activities of daily living and leisure activities, avoidance of physical activity, and loss of career or
inability to advance in career or education. According to the American Chronic Pain Association, an estimated six to twelve million adults in the U.S. have FM.
According to a report by Frost and Sullivan that we commissioned, despite the availability of approved medications, the majority of patients fail therapy due to either
insufficient efficacy, poor tolerability, or both. Prescription pain and sleep medications are frequently prescribed off-label for symptomatic relief, despite the lack of evidence
that such medications provide a meaningful or durable therapeutic benefit, and many of these medications carry significant safety risks and risk of dependence. For example,
approximately 30% of patients diagnosed with FM take chronic opioids, despite the lack of evidence for their effectiveness and the risk of addiction and toxicity, including
overdose.
Long COVID
Long COVID, or PASC, is a condition that some survivors of COVID-19 infection experience in varying degrees of severity. It is a chronic disabling condition that is
expected to result in a significant global health and economic burden. The symptoms include intense fatigue, fevers, sleep problems, pain, and cognitive issues (“brain fog”).
Post infection, many patients experience one or many of the symptoms of Long COVID: some patients have initial symptoms that become prolonged; others manifest entirely
new syndromes that impact more than one system or organ. According to a recent publication in the Journal of American Medical Association (JAMA), over 1 in 10 healthcare
workers who had recovered from COVID-19 were still coping with at least one moderate to severe symptom eight months later. Several cohort studies have reported that
persistence of symptoms following SARS-CoV-2 infection occurs in more than 30% of patients. There is currently no approved drug for the treatment of Long COVID.
8
Posttraumatic Stress Disorder, or PTSD
PTSD is a chronic condition that may develop after a person is exposed to one or more traumatic events, such as warfare, sexual assault, serious injury, or threat of
imminent death. The core symptom clusters of PTSD are avoidance, emotional numbing, hyperarousal, and intrusion, where the triggering traumatic event is commonly re-
experienced by the individual through intrusive, recurrent recollections, flashbacks, and nightmares. People with PTSD suffer significant impairment in their daily functioning,
including occupational activities and social relations, and are at elevated risk for impulsive violent behaviors toward others and themselves, including suicide. Of those who
experience a significant trauma, approximately 20% of women and 8% of men develop PTSD. An estimated 12 million adults annually in the U.S. suffer from PTSD.
According to the U.S. Department of Veterans Affairs, the prevalence rate of PTSD in the military population is higher than that among civilians. As of 2012, there were
approximately 638,000 veterans receiving treatment for PTSD in the Veterans Health Administration, or VHA. Based on March 2015 VHA data, more than 19% of military
veterans involved in recent conflicts in Iraq and Afghanistan were seen at VHA facilities for potential or provisional PTSD.
Many patients fail to adequately respond to the medications approved for PTSD and approved medications show little evidence of a treatment effect in men, lack
evidence of efficacy in those for whom the traumatic event was combat-related, and carry suicidality warnings. Sleep disturbances are central features of PTSD and are
predictive of disease severity, depression, substance abuse, and suicidal ideation, yet are resistant to the approved medications and present a difficult therapeutic challenge.
Current PTSD treatments include off-label use of anxiolytics, sedative-hypnotics, and antipsychotics, many of which lack reliable evidence of efficacy, and several have
significant safety liabilities and dependence risk.
Migraine Headaches
Migraine is a primary headache disorder characterized by recurrent headaches that are moderate to severe. Typically, episodes affect one side of the head, are pulsating
in nature, and last from a few hours to three days. Associated symptoms may include nausea, vomiting, and sensitivity to light, sound, or smell. The pain is generally made
worse by physical activity, although regular exercise may have prophylactic effects. Up to one-third of people affected have aura, typically a short period of visual disturbance
that signals that the headache will soon occur. Occasionally, aura can occur with little or no headache following it. Approximately one billion individuals worldwide suffer from
migraine (~14% of the population). Migraine is the second leading cause of years lived with disability. Chronic migraine (≥ 15 headache/migraine days per month) affects
about 1-2% of individuals (~75-150 million individuals worldwide; 3-7 million in the U.S.). CGRP antibodies are the only migraine specific prophylaxis drugs approved in
decades, but they require parenteral administration and there are long term safety concerns with prolonged systemic blockade of CGRP receptor.
Prader-Willi Syndrome
Prader-Willi syndrome (PWS) is recognized as the most common genetic cause of life-threatening childhood obesity and affects males and females with equal
frequency and all races and ethnicities. The hallmarks of PWS are lack of suckling in infants and, in children and adults, severe hyperphagia, an overriding physiological drive
to eat, leading to severe obesity and other complications associated with significant mortality. PWS is an orphan disease that occurs in approximately one in 15,000 births.
There is currently no approved treatment for the obesity and hyperphagia in adults and older children associated with PWS.
Major Depressive Disorder
According to the National Institute of Mental Health, depression affects approximately 17 million adults in the U.S., with approximately 2.5 million adults treated with
adjunctive therapy. Depression is a condition characterized by symptoms such as a depressed mood or loss of interest or pleasure in daily activities most of the time for two
weeks or more, accompanied by appetite changes, sleep disturbances, motor restlessness or retardation, loss of energy, feelings of worthlessness or excessive guilt, poor
concentration, and suicidal thoughts and behaviors. These symptoms cause clinically significant distress or impairment in social, occupational, or other important areas of
functioning. The majority of people who suffer from depression do not respond adequately to initial antidepressant therapy.
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Infectious Diseases
COVID-19
SARS-CoV-2 is a contagious virus causing the disease COVID-19 that became a global pandemic in 2019 and has resulted in more than three million deaths. While
the infection and mortality rates have slowed in regions of the world with high vaccination rates, the struggle with the pathogen is ongoing and evolving since SARS-CoV-2 is
mutating into new variants. COVID-19 is characterized by fever, sore throat, acute shortness of breath, cough, and oxygen desaturation in the blood. At least three major
variants have swept across the world in successive waves and overwhelmed healthcare systems during these waves. With new variants of the virus emerging, therapeutic
research is addressing the challenge of keeping up with this rapidly mutating virus. The early vaccines have been effective in limiting the severity of disease in vaccinated
individuals. Vaccines that elicit strong T cell responses are believed to have the potential to provide long-term or durable protection.
Smallpox and Monkeypox
Smallpox is an acute contagious disease caused by the variola virus, or VARV, which is a member of the orthopoxvirus family. Smallpox was declared eradicated in
1980 following a global immunization campaign. Smallpox is transmitted from person to person by infective droplets during close contact with infected symptomatic people.
Monkeypox is an acute contagious disease caused by the monkeypox virus or MPXV, which is also a member of the orthopoxvirus family. Monkeypox symptoms are similar to
those of smallpox, although less severe. Monkeypox is emerging as an important zoonotic infection in humans in Central and West Africa. Some cases of monkeypox have
been reported outside of Africa in patients who had been infected while in Africa.
Smallpox was eradicated by a World Health Organization program that vaccinated individuals with live replicating vaccinia vaccines wherever smallpox appeared. In
the 1970s, vaccination of civilians to protect against smallpox was discontinued in the U.S.; however, smallpox remains a material threat to national security and a proportion of
military personnel, including members of the Global Response Force continue to be vaccinated. We are developing TNX-801 as a potential smallpox-preventing vaccine for the
U.S. strategic national stockpile and for potential widespread immunization in the event of malicious reintroduction of VARV.
Lead Product Candidates
We believe that our product candidates offer innovative therapeutic approaches and may provide significant advantages relative to available therapies. We have
worldwide commercialization rights to all of our product candidates listed below. The following table summarizes our product candidates:
Product Candidate
TNX-1500
TNX-1300
TNX-102 SL
TNX-102 SL
TNX-102 SL
TNX-1900
TNX-1900
TNX-601 CR
TNX-801
TNX-1800/1840/1850
TNX-2100
Indication
Organ transplant rejection
Cocaine Intoxication
Fibromyalgia
Posttraumatic stress disorder
Long COVID
Binge eating disorder
Migraine
Depression
Smallpox and monkeypox vaccine
COVID-19 vaccine
COVID-19 Skin test
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Stage of Development
Pre-IND; Phase 1 Start Expected 2H22
Phase 2 Ready
Mid-Phase 3
Phase 2 ready
Pre-IND; Phase 2 Start Expected 1H22
Non-IND; Phase 2 Start Expected 2H22
Pre-IND; Phase 2 Start Expected 2H22
Pre-IND; Phase 2 Start Expected 1Q23
Preclinical
Preclinical
Phase 1 ongoing
TNX-1500
TNX-1500 is a humanized mAb directed against CD40-ligand, or CD40L, engineered to modulate binding to Fc receptors, that is being developed to prevent and treat
organ transplant rejection as well as to treat autoimmune conditions. TNX-1500 incorporates the antigen binding fragment (Fab) region of hu5c8, which has been extensively
characterized including at the atomic level in complex with CD40-ligand.
In experiments at the Massachusetts General Hospital, a teaching hospital of Harvard Medical School, TNX-1500 is being studied as monotherapy or in combination
with immunosuppressive drugs in heart and kidney organ transplants in non-human primates. Preliminary results from an ongoing experiment in heart transplants indicates that
TNX-1500 appears to have comparable efficacy to historical experiments using the chimeric mouse/primate version of the anti-CD40L mAb 5c8. In the non-human primate
studies with TNX-1500 no evidence of thrombosis has been observed so far.
CD40-ligand is a protein expressed on the surface of activated T lymphocytes that mediates T cell helper function. CD40-ligand is also known as CD154, the T cell-B
cell activating molecule (T-BAM), TRAP and gp39. CD154 is a member of the Tumor Necrosis Factor (TNF) Super Family. No mAb against CD154 has been approved for
commercial use anywhere in the world. Other TNF Super Family members have been successfully targeted by antagonist mAbs. Approved mAbs against TNFα include:
infliximab (Remicade®), adalimumab (Humira®), certolizumab pegol (Cimzia®), and golimumab (Simponi®) for the treatment of certain autoimmune conditions. Also,
etanercept (Enbrel®) is a TNFα antagonist receptor fusion protein. An approved mAb against RANKL (CD254) is denosumab (Prolia® or Xgeva®) for the treatment of
osteoporosis, treatment-induced bone loss, metastases to bone, and giant cell tumor of bone.
In January 2021, the World Intellectual Property Organization has published a patent application filed under the Patent Cooperation Treaty covering TNX-1500, a
humanized mAb directed against CD40-ligand, which is also known as CD154, T-BAM, 5c8 antigen, TRAP and gp39. The patent application is titled “Anti-CD154 Antibodies
and Uses Thereof” and published under International Publication No. WO 2021/001458 A1. The application entered national phase in December 2021. The patent applications
include claims related to proprietary anti-human CD40-ligand mAbs that were engineered to have modified effector function, including TNX-1500, which have reduced
potential for Fc binding to FcγRII. The patent applications also claim uses of TNX-1500 for preventing and treating conditions, such as organ transplant rejection and
autoimmune disorders. If claims are granted, a patent issuing from a national stage of this application could potentially provide U.S. patent coverage for the TNX-1500
composition of matter through 2040 excluding possible patent term extensions or patent term adjustments. We also have filed a PCT patent application, PCT/US2022/011404,
in January 2022, entitled “Methods of Inducing Immune Tolerance with Modified Anti-CD154 Antibodies.” It claims methods of inducing immune tolerance in transplant
recipients using anti-CD154 antibodies having modified effector functions. We expect to start a Phase 1 study of TNX-1500 in the second half of 2022.
Remicade® and Simponi® are trademarks of Janssen; Humira® is a trademark of AbbVie Inc.; Cimzia® is a trademark of UCB S. A.; Enbrel®, Prolia® and Xgeva®
are trademarks of Amgen Inc.
TNX-1300
TNX-1300 (T172R/G173Q double-mutant cocaine esterase 200 mg, i.v. solution) is being developed for the treatment of cocaine intoxication. TNX-1300 is a
recombinant protein enzyme produced through rDNA technology in a non-disease-producing strain of E. coli bacteria. Cocaine Esterase (CocE) was identified in bacteria
(Rhodococcus) that use cocaine as the sole source of carbon and nitrogen and that grow in soil surrounding coca plants.1 The gene encoding CocE was identified and the
protein was extensively characterized.1-4 CocE catalyzes the breakdown of cocaine into metabolite ecgonine methyl ester and benzoic acid. Wild-type CocE is unstable at body
temperature, so targeted mutations were introduced in the CocE gene and resulted in the T172R/G173Q double-mutant CocE, which is active for approximately 6 hours at body
temperature5.
Currently there is no specific pharmacotherapy indicated for cocaine intoxication, a state characterized by acute agitation, hyperthermia, tachycardia, arrhythmias, and
hypertension, with the potential life-threatening sequalae of myocardial infarction, cerebrovascular accident, rhabdomyolysis, respiratory failure, and seizures. Patients are
currently managed only by supportive care for the adverse effects of cocaine overdose on the cardiovascular and central nervous systems. By targeting the cause of cocaine
intoxication, rather than the symptoms like other medicines in emergency usage, we believe TNX-1300 may offer significant advantages to the current standard of care for
cocaine overdose. TNX-1300 was developed by Columbia University, University of Kentucky and University of Michigan, and in-licensed by Tonix from Columbia University
in 2019. TNX-1300 is designated as a breakthrough therapy by the FDA.
In a Phase 2 randomized, double-blind, placebo-controlled clinical study, TNX-1300 at 100 mg or 200 mg i.v. doses was well tolerated and interrupted cocaine effects
after cocaine 50 mg i.v. challenge.6 Tonix expects to initiate a Phase 2 open-label, safety study of TNX-1300 to take place in emergency departments in the U.S. in the first half
of 2022.
As a biologic and new molecular entity, TNX-1300 is eligible for 12 years of U.S. market exclusivity upon approval by the FDA, in addition to expected patent
protection through 2029. Since in-licensing, Tonix has requalified existing inventory, developed a lyophilized drug product to facilitate enhanced stability and handling
conditions applicable for an ER treatment, updated the process and analytical methods to current standards and are in the process of manufacturing Phase 2/3 drug product
clinical supply.
1 Bresler MM, Rosser SJ, Basran A, Bruce NC. Gene cloning and nucleotide sequencing and properties of a cocaine esterase from Rhodococcus sp. strain MB1. Appl Environ Microbiol. 2000. 66(3):904-8.
2 Larsen NA, Turner JM, Stevens J, Rosser SJ, Basran A, Lerner RA, Bruce NC, Wilson IA. Crystal structure of a bacterial cocaine esterase. Nat Struct Biol. 2002. 9(1):17-21.
3 Turner JM, Larsen NA, Basran A, Barbas CF 3rd, Bruce NC, Wilson IA, Lerner RA. Biochemical characterization and structural analysis of a highly proficient cocaine esterase. Biochemistry. 2002. 41(41):12297-307.
4 Gao D, Narasimhan DL, Macdonald J, Brim R, Ko MC, Landry DW, Woods JH, Sunahara RK, Zhan CG. Thermostable variants of cocaine esterase for long-time protection against cocaine toxicity. Mol Pharmacol.
2009. 75(2):318-23.
5 Overdose Death Rates - National Institute on Drug Abuse - https://www.drugabuse.gov/related-topics/trends-statistics/overdose-death-rates; accessed May 11, 2019
6 Nasser AF, Fudala PJ, Zheng B, Liu Y, Heidbreder C. A randomized, double-blind, placebo-controlled trial of RBP-8000 in cocaine abusers: pharmacokinetic profile of rbp-8000 and cocaine and effects of RBP-8000 on
cocaine-induced physiological effects. J Addict Dis. 2014;33(4):289-302.
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TNX-102 SL
Overview
TNX-102 SL, in clinical development for registration in five indications. TNX-102 SL is a proprietary sublingual tablet formulation of CBP that efficiently delivers
CBP across the oral mucosal membrane into the systemic circulation. We are developing TNX-102 SL as a bedtime treatment for FM, PTSD, PASC or Long Covid and AAD
and AUD. We own all rights to TNX-102 SL in all geographies, and we bear no obligations to third-parties for any future development or commercialization. Excipients used in
TNX-102 SL are approved for pharmaceutical use. Some of the excipients were specially selected to promote a local oral environment that facilitates mucosal absorption of
cyclobenzaprine or CBP.
The current TNX-102 SL sublingual tablets contain 2.8 mg of CBP. For the treatment of FM, TNX-102 SL 5.6 mg (two 2.8 mg tablets) at bedtime is in Phase 3
development. We selected this dose with the goal of providing a balance of efficacy, safety, and tolerability that would be acceptable as a first-line therapy and for long-term
use, and in-patient populations characterized by burdensome symptoms and sensitivity to medications.
The active ingredient in TNX-102 SL, is CBP, a serotonin-2A and alpha-1 adrenergic receptor antagonist as well as an inhibitor of serotonin and norepinephrine
reuptake. In addition, TNX-102 SL acts upon other receptors in the central nervous system including muscarinic M1 and histaminergic H1 receptors.
CBP is the active ingredient of two products that are approved in the U.S. for the treatment of muscle spasm: Flexeril® (5 mg and 10 mg oral immediate-release, or IR,
tablet) and Amrix® (15 mg and 30 mg oral extended-release capsule). The Flexeril brand of CBP IR tablet has been discontinued since May 2013. There are numerous generic
versions of CBP IR tablets on the market. CBP-containing products are approved for short term use (two to three weeks) only as an adjunct to rest and physical therapy for
relief of muscle spasm associated with acute, painful musculoskeletal conditions. CBP IR tablets are recommended for three times per day dosing, which results in relatively
stable blood levels of CBP after several days of treatment. Extended-release CBP capsules taken once a day mimic, and flatten, the pharmacokinetic profile of three times per
day CBP IR tablets.
We designed TNX-102 SL to be administered once-daily at bedtime and with the intention for long-term use. We believe the selected dose of TNX-102 SL and its
unique pharmacokinetic profile will enable it to achieve a desirable balance of efficacy, safety, and tolerability. Our Phase 1 comparative trials showed that, on a dose-adjusted
basis, TNX-102 SL results in faster systemic absorption and significantly higher plasma levels of CBP in the first hour following sublingual administration relative to oral IR
CBP tablets. It also showed that the sublingual route of administration, which largely bypasses the “first pass” hepatic metabolism that swallowed medications undergo, results
in a higher plasma ratio of CBP to its main active metabolite, norcyclobenzaprine. In clinical studies, TNX-102 SL 2.8 mg and TNX-102 SL 5.6 mg were generally well-
tolerated, with no drug-related serious and unexpected adverse reactions reported in these studies. Some subjects experienced transient numbness of the tongue after TNX-102
SL administration.
We have successfully completed the pivotal exposure bridging study with TNX-102 SL compared to Amrix. Results from this study support the approval of TNX-102
SL under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or FDCA, with Amrix as the reference listed drug, or RLD. In general, the development timeline for a
505(b)(2) NDA is shorter and less expensive than an NDA developed under Section 505(b)(1), which is for new chemical entities, or NCEs, that have never been approved in
the U.S. We believe that TNX-102 SL has the potential to provide clinical benefit to FM, PTSD and Long COVID patients and possibly other CNS (central nervous system)
indications that are underserved by currently marketed products or have no approved treatment.
TNX-102 SL – FM program
We are developing TNX-102 SL as a bedtime treatment for FM under an active IND application. The potential approval of TNX-102 SL for FM is expected to be
under Section 505(b)(2) of the FDCA.
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Clinical Development Plan
Phase 3 RALLY Study (F306)
The Phase 3 RALLY study is clinically complete. We enrolled the first patient in September 2020. The RALLY study is a double-blind, randomized, placebo-
controlled adaptive design trial designed to evaluate the efficacy and safety of TNX-102 SL in FM. The trial was expected to enroll approximately 670 patients across
approximately 40 U.S. sites. For the first two weeks of treatment, there was a run-in period in which patients started on TNX-102 SL 2.8 mg (1 tablet) or placebo. After the first
two weeks, all patients had the dose increased to TNX-102 SL 5.6 mg (2 x 2.8 mg tablets) or two placebo tablets for 12 weeks. The primary endpoint was daily diary pain
severity score change from baseline to Week 14 (using the weekly averages of the daily numerical rating scale scores), analyzed by mixed model repeated measures with
multiple imputation.
The RALLY study had one pre-specified unblinded interim analysis by an Independent Data Monitoring Committee, or IDMC, to be conducted when the study has
results from approximately the first 50% of efficacy-evaluable patients. In July 2021, we reported interim analysis and, based on the recommendation from the IDMC that the
RALLY trial was unlikely to demonstrate a statistically significant improvement in the primary endpoint, we stopped enrollment of new participants but allowed those
participants who were already enrolled to complete the study. We expect to report topline data from the completed study in the first quarter of 2022. We expect to analyze the
RALLY results to improve the design of subsequent Phase 3 studies. In addition, we plan to employ pharmacogenomic techniques to compare the RALLY and RELIEF study
populations, which may provide a path to precision medicine-based companion diagnostics for TNX-102 SL in FM.
Tonix intends to initiate a new Phase 3 study in FM, F307, in the first half of 2022. Following analysis of F306 results, including pharmacogenomic comparison of
RELIEF and RALLY, Tonix may modify the protocol for this next Phase 3 study.
Completed Phase 3 RELIEF Study (F304)
In the fourth quarter of 2020, we announced the results of a randomized, double-blind, placebo-controlled, 12-week Phase 3 study of TNX-102 SL in 503 participants
with FM, which we refer to as the RELIEF study. The primary objective of this study was to evaluate the potential clinical benefit of using TNX-102 SL to treat FM at a dose
of 5.6 mg, administered sublingually once daily at bedtime for 12 weeks. The primary endpoint of the RELIEF trial was the daily diary pain severity score change from
baseline to Week 14 (using the weekly averages of the daily numerical rating scale scores), analyzed by mixed model repeated measures with multiple imputation. The RELIEF
study achieved statistical significance on the primary efficacy endpoint: change from baseline in the weekly average of daily diary pain severity numerical rating scale (NRS)
scores for TNX-102 SL 5.6 mg (LS mean [SE]: -1.9 [0.12] units) versus placebo (-1.5 [0.12] units), analyzed by mixed model repeated measures with multiple imputation (LS
mean [SE] difference: -0.4 [0.16] units, p=0.010). The statistically significant improvement in pain is further substantiated when diary pain was analyzed by another standard
statistical approach, a 30 percent responder analysis, with 46.8% on active and 34.9% on placebo having a 30 percent or greater reduction in pain (logistic regression; odds ratio
[95% CI]: 1.67 [1.16, 2.40]; p=0.006). Consistent with the proposed mechanism that TNX-102 SL acts in fibromyalgia through improving sleep quality, TNX-102 SL showed
nominal improvement of sleep by several measures. For daily diary sleep quality ratings, TNX-102 SL (-2.0 [0.12] units) compared to placebo (-1.5 [0.12] units) was nominally
significant (LS mean difference: -0.6 [0.17] units; p<0.001). For the PROMIS Sleep Disturbance instrument, TNX-102 SL was also nominally significant over placebo on T-
scores (LS mean difference: -2.9 [0.82] units; p<0.001). The effect sizes on the diary sleep ratings and PROMIS Sleep Disturbance instrument were 0.31 and 0.32, respectively.
In the RELIEF study, TNX-102 SL was similarly well tolerated as in the Phase 2 BESTFIT and Phase 3 AFFIRM studies, which both studied TNX-102 SL at a lower
dose of 2.8 mg daily. There were no new safety signals observed in the RELIEF study at the 5.6 mg daily dose. Among participants randomized to the TNX-102 SL and
placebo arms, 82.3% and 83.5%, respectively, completed the 14-week dosing period. As expected based on prior TNX-102 SL studies, administration site reactions are the
most commonly reported adverse events and were higher in the TNX-102 SL treatment group, including rates of oral numbness (17.3% vs. 0.8%), oral pain/discomfort (11.7%
v. 2.0%), taste impairment (6.5% vs. 0.4%), and oral tingling (5.6% v. 0.4%). Oral numbness or tingling and taste impairment were local administration site effects nearly
always temporally related to dose administration and transiently expressed (<60 minutes) in almost all occurrences. The only systemic treatment-emergent adverse events that
occurred at a rate of 5.0% or greater in either arm was somnolence/sedation at 5.6 percent in the TNX-102 SL arm vs. 1.2% in placebo, which was consistent with known side
effects of marketed oral cyclobenzaprine. Adverse events resulted in premature study discontinuation in 8.9% of those who received TNX-102 SL compared with 3.9% of
placebo recipients. There were a total of seven serious adverse events reported during the study, none of which were deemed related to investigational product; five in placebo
arm, and two in TNX-102 SL arm. Of the two in the TNX-102 SL arm, one was a motor vehicle accident with multiple bone fractures, and the other was a pneumonia
secondary to an infection.
Completed Phase 3 AFFIRM Study (F301)
In the third quarter of 2016, we announced the results of a randomized, double-blind, placebo-controlled, 12-week Phase 3 study of TNX-102 SL in 519 participants
with FM, which we refer to as the AFFIRM study. The primary objective of this study was to evaluate the potential clinical benefit of using TNX-102 SL to treat FM at a dose
of 2.8 mg, administered sublingually once daily at bedtime for 12 weeks. The primary endpoint of the AFFIRM trial was the 30% pain responder analysis in which a responder
is defined as a subject for whom pain intensity was reduced by at least 30% at Week 12 as compared to baseline. AFFIRM did not achieve statistical significance at the primary
endpoint (p=0.095). Yet, statistical significance was achieved when pain was analyzed instead as a continuous variable, either by MMRM (p<0.001) or by MMRM with
multiple imputation for missing data (p=0.005), a generally accepted approach to pain data. TNX-102 SL also showed statistically significant improvements in the declared
secondary analyses of the Patient Global Impression of Change, or PGIC (p=0.038) and the Fibromyalgia Impact Questionnaire-Revised, or FIQ-R (p<0.001). The study also
showed statistically significant improvement with TNX-102 SL on measures of sleep quality, including the Patient-Reported Outcomes Measurement Information System, or
PROMIS, Sleep Disturbance instrument (p<0.001).
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TNX-102 SL was well tolerated in the AFFIRM trial. Among patients randomized to the active and control arms, 78% and 86%, respectively, completed the 12-week
dosing period. The most common adverse events were local in nature, with transient tongue or mouth numbness occurring in 40% of participants on TNX-102 SL vs. 1% on
placebo. These local adverse events did not appear to affect either rates of retention of study participants or their compliance with taking TNX-102 SL. Systemic adverse events
were similar between TNX-102 SL and placebo. No serious adverse events were reported.
Other NDA Requirements
The Agreed Initial Pediatric Study Plan, or Agreed iPSP, was accepted by the FDA in September 2015. An amendment to the Agreed iPSP will be submitted for FDA
agreement prior to marketing application.
Based on our discussions with the FDA and the FDA official meeting minutes, we will not have to conduct special populations, such as geriatric and renal/hepatic
impaired patients, drug-drug interaction or cardiovascular safety studies to support the TNX-102 SL NDA filing since the pivotal systemic exposure bridging study using
Amrix as the reference listed drug, or RLD, has been successfully completed. Due to the well-established safety profile of CBP at much higher doses than we proposed for FM
and the long-term safety data in PTSD, up to 15 months, on TNX-102 SL 5.6 mg, the FDA has not requested a risk management plan or medication guide for this product.
Phase 1 Bioequivalence, Bridging PK, Food-Effect and Dose-Proportionality Studies
We have completed the required Phase 1 bioequivalence, multi-dose bridging pharmacokinetic, and food effect and dose-proportionality studies.
Cyclobenzaprine Hydrochloride Nonclinical Development
In October 2016, we completed the six-month repeated-dose toxicology study of the active ingredient, CBP, in rats and a nine-month repeated-dose toxicology study in
dogs required for the NDA filing. These chronic toxicity studies were requested by the FDA to augment the nonclinical information in the AMRIX prescribing information, or
labeling, which is necessary to support the TNX-102 SL labeling for long-term use. Due to the lack of evidence of potential abuse in clinical studies of TNX-102 SL, the FDA
agreed that nonclinical study to assess CBP abuse and dependency potential is not required to support the TNX-102 SL NDA filing.
Tonix is planning to develop TNX-102 SL for the treatment of FM in Japan. Cyclobenzaprine, the active ingredient of TNX-102 SL, has not been approved in Japan,
and is considered a NCE (new chemical entity). In February 2022, Tonix held an End of Phase 2 Consultation with the Pharmaceuticals and Medical Devices Agency, or
PMDA, an independent administrative institution responsible for ensuring the safety, efficacy and quality of pharmaceuticals and medical devices in Japan, to discuss the Japan
development plan. Agreement was reached on the design of a Phase 1 bridging study (TNX-CY-F108/F108) in ethnic Japanese healthy volunteers to enable clinical studies of
TNX-102 SL in Japan. PMDA also provided guidance on the overall nonclinical package to support a Japan NDA filing for TNX-102 SL for the treatment of FM.
The F108 Phase 1 study will be initiated in March 2022.
Tonix has initiated nonclinical safety, pharmacology and embryo-fetal development toxicology studies as part of the agreed IND-enabling nonclinical data package to
support clinical studies of TNX-102 SL in Japan.
TNX 102 SL – Long COVID Program
We are developing TNX-102 SL as a bedtime treatment for Long COVID. The potential approval of TNX-102 SL for Long COVID is expected to be under Section
505(b)(2) of the FDCA.
Tonix completed a pre-IND meeting with the FDA in August 2021 to develop TNX-102 as a potential treatment for Long COVID. Tonix expects to initiate a Phase 2
study of TNX-102 SL as an indicated treatment for a subset of patients affected by Long COVID whose symptoms overlap with fibromyalgia. Long COVID is a protracted
syndrome experienced by many people following SARS-CoV-2 infection that can include a number of persistent disabling symptoms, including fatigue, widespread pain, sleep
disturbance, brain fog or difficulty concentrating, arthralgias, diffuse myalgia, olfactory dysfunction, and headache. The Phase 2 study will focus on Long COVID patients
whose primary symptoms overlap with fibromyalgia, and, therefore, the Long COVID program leverages learnings about the pharmacodynamic activity of TNX-102 SL from
more than 1,000 participants who have been or are enrolled in Tonix’s fibromyalgia trials to date. Long COVID has been compared to fibromyalgia because of the common
symptoms of sleep disturbance, persistent widespread pain, fatigue, and brain fog. Additionally, Long COVID, like fibromyalgia, is experienced by women at a rate
approximately four times that of men.
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TNX-102 SL – Posttraumatic Stress Disorder Program
We are developing TNX-102 SL as a bedtime treatment of PTSD under an active IND application. The potential approval of TNX-102 SL for PTSD is expected to be
under Section 505(b)(2) of the FDCA.
Phase 3 RECOVERY Study (P302)
We initiated the RECOVERY study (P302) in March 2019. The RECOVERY Phase 3 study was a double-blind, randomized, placebo-controlled study of TNX-102 SL
5.6 mg (2 x 2.8 mg sublingual tablets) over 12 weeks of treatment. The RECOVERY study was conducted at approximately 30 U.S. sites. The study planned to enroll 250
participants with civilian and military-related PTSD. RECOVERY restricts enrollment of study participants to individuals with PTSD who experienced an index trauma within
nine years of screening. The two previous PTSD studies of TNX-102 SL (P201 and P301) restricted enrollment to participants who experienced traumas during military service
since 2001. The primary efficacy endpoint in P302 was the Week 12 mean change from baseline in the severity of PTSD symptoms as measured by CAPS-5 between those
treated with TNX-102 SL and those receiving placebo. Based on interim analysis results of the first 50% of enrolled participants, an Independent Data Monitoring Committee
recommended stopping the Phase 3 RECOVERY trial (P302) in PTSD for futility as TNX-102 SL was unlikely to demonstrate a statistically significant improvement in the
primary endpoint of overall change from baseline in the severity of PTSD symptoms between those treated with TNX-102 SL and those receiving placebo. New enrollment for
the RECOVERY study was stopped in February 2020, but we continued studying those participants currently enrolled until completion and proceeded with a full analysis of the
unblinded data to determine the next steps in this program. Topline data was reported during the fourth quarter of 2020, which revealed that the RECOVERY study did not
achieve statistical significance in the prespecified primary efficacy endpoint of change from baseline to Week 12 in the CAPS-5 between TNX-102 SL and placebo (p=0.343).
TNX-102 SL separated from placebo in the first key secondary endpoint, CGI-S scale (p=0.024) and in the PGIC, (p=0.007). TNX-102 SL also trended for improvement on the
PROMIS Sleep Disturbance scale (p=0.055), consistent with the proposed mechanism of targeting the PTSD sleep disturbance. TNX-102 SL is generally well tolerated and no
new safety signals were observed. Tonix met with the FDA to discuss potential new endpoints for the indication of treatment of PTSD. The new PTSD study can use 1 month
look-back CAPS-5 as endpoint v. 1 week look-back.
Tonix intends to initiate a new Phase 2 study of TNX-102 SL in police in Kenya in the first half of 2022.
Discontinued Phase 3 HONOR Study (P301)
In the third quarter of 2018, we announced the results of a randomized, double-blind, placebo-controlled Phase 3 study of TNX-102 SL, planned for enrollment of
approximately 550 participants with military-related PTSD conducted at approximately 40 U.S. sites, which we refer to as the HONOR study. This study was an adaptive
design study based on the results of the Phase 2 AtEase study. The study design was very similar to the Phase 2 AtEase study, except there was one planned IA and the
involvement of an IDMC, which reviewed the unblinded IA results. In addition, only one active dose (5.6 mg administered as 2 x 2.8 mg tablets) was investigated and the
baseline severity entrance criterion was a CAPS-5 total score ≥ 33 in this Phase 3 study. The primary efficacy endpoint of the HONOR study was the 12-week mean change
from baseline in the severity of PTSD symptoms as measured by the Clinician-Administered PTSD Scale for DSM-5, or CAPS-5, between those treated with TNX-102 SL and
those receiving placebo. The CAPS-5 is a standardized structured clinical interview and serves as the standard in research for measuring the symptom severity of PTSD. The
IA was conducted when approximately 50% of the initially planned participant enrollment was evaluable for efficacy. HONOR was discontinued after the results of the IA
indicated a pre-defined threshold p-value for continuing enrollment was not achieved, i.e. IDMC recommended stopping for futility. The modified Intent-to-Treat (mITT)
population analyzed at the time of the IA included 252 participants.
The most common adverse events were mostly related to local administration site reactions, such as oral hypoaesthesia (37.3%), abnormal product taste (11.9%), and
oral paraesthesia (9.7%). The most common systemic adverse event was somnolence (15.7%).
Retrospective analysis of the HONOR study revealed a treatment effect in participants who experienced trauma less than or equal to nine years prior to screening. In
the participants who experienced trauma within nine years, the p-value of the CAPS-5 primary endpoint at Week 12, using mixed model repeated measures with multiple
imputation (MMRM with MI), was 0.039, with a least-squares mean difference from placebo of -5.9 units. In contrast, there was no difference in CAPS-5 in the participants
who experienced trauma more than nine years prior to screening compared to placebo. This analysis defined an optimal treatment window for treatment with TNX-102 SL for
PTSD of the first nine years after the index trauma that resulted in PTSD and guided the design of the next Phase 3 study in PTSD, RECOVERY.
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Long-Term Safety Exposure Study for TNX-102 SL
In October 2019, we completed long-term safety exposure studies in participants with PTSD to evaluate the tolerability of TNX-102 SL 5.6 mg to support an NDA for
the treatment of PTSD. The data provide us with exposure data of daily dosing of TNX-102 SL 5.6 mg for at least 12 months in more than 50 individuals, and daily dosing of
TNX-102 SL 5.6 mg for at least 6 months in more than 100 individuals. The data was collected in OLE studies of the PTSD program. Based on the FDA’s guidance, the long-
term safety exposure studies in PTSD are also expected to support an NDA for the management of FM.
Other NDA Requirements
An Agreed Initial Pediatric Study Plan, or Agreed iPSP, is required for the initial NDA submission. We submitted a revised iPSP in the first quarter of 2017, which
incorporated the FDA comments received on our iPSP submitted in the third quarter of 2016. Additional comments from the FDA were received in second quarter of 2017 on
our revised iPSP. We plan to submit an Agreed PSP once a therapeutic dose in adults is established. An acceptable Pediatric Study Plan will be determined at the time of the
NDA approval.
Based on our discussions with the FDA and the FDA official meeting minutes, we will not have to conduct special populations (geriatric and renal/hepatic impaired),
drug-drug interaction or cardiovascular safety studies to support the TNX-102 SL NDA filing since the pivotal systemic exposure bridging study using AMRIX as the reference
listed drug, or RLD, has been successfully completed. Due to the well-established safety profile of CBP at much higher doses than we proposed for PTSD and the long-term
safety data (up to 15 months) on TNX-102 SL 2.8 mg in a prior FM program, the FDA has not requested a risk management plan or medication guide for this product.
Manufacturing
TNX-102 SL drug product for Phase 3 and the associated registration batches for the NDA were manufactured at commercial cGMP facilities. We currently have in
excess of 24 months stability data in the proposed packaging configurations ready for commercialization. The FDA has reviewed the proposed CMC data package to support
TNX-102 SL’s NDA approval and commercial manufacturing plans as part of the IND process. Tonix is ready to manufacture TNX-102 SL commercial product for the
forecasted FM market.
TNX-1900
TNX-1900 (intranasal potentiated oxytocin) is a proprietary formulation of oxytocin in development for BED, prophylaxis of chronic migraine and for the treatment of
craniofacial pain, insulin resistance and related conditions. In 2020, TNX-1900 was acquired from Trigemina, Inc. and licensed from Stanford University. TNX-1900 is a drug-
device combination product, based on an intranasal actuator device that delivers oxytocin into the nose.
Oxytocin is a naturally occurring human hormone that acts as a neurotransmitter in the brain. Oxytocin has no recognized addiction potential. It has been observed that
low oxytocin levels in the body can lead to increase in migraine headache frequency, and that increased oxytocin levels can relieve migraine headaches. Certain other chronic
pain conditions are also associated with decreased oxytocin levels. Migraine attacks are caused, in part, by the activity of pain-sensing trigeminal nerve cells which, when
activated, release of CGRP which binds to receptors on other nerve cells and starts a cascade of events that is believed to result in headache. Oxytocin when delivered via the
nasal route, concentrates in the trigeminal system1 resulting in binding of oxytocin to receptors on neurons in the trigeminal system, inhibiting the release of CGRP and
transmission of pain signals.2 Blocking CGRP release is a distinct mechanism compared with CGRP antagonist and anti-CGRP antibody drugs, which block the binding of
CGRP to its receptor.
With TNX-1900, the addition of magnesium to the oxytocin formula enhances oxytocin receptor binding3 as well as its effects on trigeminal neurons and craniofacial
analgesic effects in animal models5. Intranasal oxytocin has been well tolerated in several clinical trials in both adults and children4. Targeted nasal delivery results in low
systemic exposure and lower risk of non-nervous system, off-target effects which could potentially occur with systemic CGRP antagonists such as anti-CGRP antibodies6. For
example, CGRP has roles in dilating blood vessels in response to ischemia, including in the heart. We believe nasally targeted delivery of oxytocin could translate into selective
blockade of CGRP release in the trigeminal ganglion and not throughout the body, which could be a potential safety advantage over systemic CGRP inhibition. In addition,
daily dosing is more quickly reversible, in contrast to monthly or quarterly dosing, as is the case with anti-CGRP antibodies, giving physicians and their patients greater control.
We intend to initiate a Phase 2 study in chronic migraine in the second half of 2022. We also plan to develop TNX-1900 for treatment of episodic migraine,
craniofacial pain and insulin resistance. Tonix has a license with the University of Geneva to use TNX-1900 for the treatment of insulin resistance and related conditions. TNX-
1900 is also being studied as a potential treatment for binge eating disorder in an investigator-initiated Phase 2 clinical trial. The Phase 2 clinical trial is expected to start in the
second half of 2022. In March 2022, we announced an agreement with Massachusetts General Hospital, a teaching hospital of Harvard Medical School, to conduct this study.
Tonix does not own this IND.
1 Yeomans DC, et al. Transl Psychiatry. 2021. 11(1) :388.
2 Tzabazis A, et al. Cephalalgia. 2016. 36(10):943-50.
3 Antoni FA and Chadio SE. Biochem J. 1989. 257(2):611-4.
4 Yeomans, DC et al. 2017. US patent US2017368095.
5 Cai Q, et al., Psychiatry Clin Neurosci. 2018. Mar;72(3):140-151.
6 MaassenVanDenBrink A, et al. Trends Pharmacol Sci. 2016. 37(9):779-788.
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TNX-2900
TNX-2900 is based on Tonix’s patented intranasal potentiated oxytocin formulation, or TNX-1900, but being developed for Prader-Willi syndrome. Tonix licensed
technology using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from the French National Institute of Health
and Medical Research (Inserm). The licensing agreement has been negotiated and signed by Inserm Transfert, the private subsidiary of Inserm, on behalf of Inserm (the French
National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier Universitaire of Toulouse. Prader-Willi syndrome is recognized as the
most common genetic cause of life-threatening childhood obesity and affects males and females with equal frequency and all races and ethnicities. There is currently no
approved treatment for either the suckling deficit in infants or the obesity and hyperphagia in older children associated with Prader-Willi syndrome. Since Prader-Willi
syndrome is an orphan disease that occurs in approximately one in 15,000 births, Tonix has been granted Orphan Drug Designation for TNX-2900 by the FDA.
In 2022, Tonix entered into a research collaboration with Inserm involving in vitro and in vivo animal studies designed to validate and characterize the role of oxytocin
in suckling and in the maturation of feeding behavior during infancy in order to support an intranasal therapeutic approach to restore a normal nutritive suckling. The studies
will include mice that have been engineered to precisely recapitulate the genetic issue underlying Prader-Willi in humans. The mechanisms involved in suckling activity
required for normal feeding and the role of oxytocin system in this process will be investigated. The results of this work are expected to be useful in the clinical care of infants
requiring support to achieve efficient suckling behavior. Intranasal oxytocin has previously been shown to improve suckling in newborn animals and suppress feeding behaviors
in adult animal models.
Our preclinical pipeline of drugs and biologic candidates includes TNX-801, a smallpox vaccine, TNX-3500, a COVID-19 antiviral; TNX-3600, a COVID-19
therapeutic platform; TNX-3700, a COVID-19 vaccine; TNX-701, a drug candidate for radioprotection; TNX-1700 a preclinical candidate for cancers of the gastrointestinal
system and TNX-1600, a preclinical candidate for PTSD, ADHD and depression.
TNX-601 CR
TNX-601 CR is a novel oral formulation of tianeptine oxalate designed for once-daily daytime dosing that is currently in development for the treatment of major
depressive disorder (MDD), but may also be developed for PTSD and neurocognitive disorder from corticosteroids. Tianeptine sodium (amorphous) immediate release was first
marketed for depression in France in 1989 and has been available for decades in Europe, Russia, Asia, and Latin America for the treatment of depression. Tianeptine sodium
has an established safety profile from decades of use in these jurisdictions. Currently there is no tianeptine-containing product approved in the U.S. and no controlled-release
tianeptine product approved in any jurisdiction. Tonix discovered a novel oxalate salt of tianeptine that may provide improved stability, consistency, and manufacturability
compared to known forms of tianeptine. Tianeptine is believed to work in depression as a modulator of the glutamatergic system. Tianeptine modulates the glutamatergic
system indirectly since it does not directly bind to NMDA, AMPA or kainate receptors. In animals, tianeptine has been shown to reverse the adverse neuroplastic changes that
are observed during periods of stress and elevated corticosteroid exposure. Tianeptine and its MC5 metabolite are weak µ-opioid receptor agonists. Tonix has added naloxone to
the TNX-601 CR tablet to mitigate potential for parenteral abuse as tianeptine has been linked to illicit misuse at much higher doses than the reported therapeutic dose in the
treatment of MDD. Neither tianeptine nor MC5 have been shown to bind other neurotransmitter receptors. Tianeptine’s reported pro-cognitive and anxiolytic effects as well as
its ability to attenuate the neuropathological effects of excessive stress responses suggest that it may also be used to treat post-traumatic stress disorder by a different
mechanism of action than TNX-102 SL.
We intend to develop TNX-601 CR under Section 505(b)(2) of the FDCA. Tonix completed a Phase 1 clinical trial for formulation development outside of the U.S in
2019. Based on this study, the final formulation of TNX-601 CR to be used in Phase 2 testing will be 39.4 mg tianeptine oxalate and 1 mg naloxone for once daily treatment of
MDD. Naloxone is included in the formulation to mitigate the potential for high dose parenteral abuse. Tianeptine has weak off-target activity at the µ-opioid receptor that
presents the potential for parenteral abuse with doses on the order of eight to 80 times the therapeutic daily dose for depression. Based on official minutes from a pre-IND
meeting with the FDA, we expect to initiate a pharmacokinetic study, in the third quarter of 2022, and a Phase 2 study in the first quarter of 2023.
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The Phase 2 study, expected to start in the first quarter of 2023, is expected to be a randomized, double-blind, placebo-controlled, parallel group study to evaluate the
efficacy and safety of TNX-601 CR monotherapy compared to placebo in MDD. Treatment duration will be six weeks, preceded by up to five weeks in screening and followed
by a two-week safety follow-up period (total up to 13 weeks of participation). We plan to randomize approximately 260 individuals with MDD at a 1:1 ratio to two arms of 130
each for drug and placebo at approximately 25-30 U.S. sites. The primary efficacy endpoint will be the change from baseline to Week 6 in the Montgomery-Åsberg Depression
Rating Scale (MADRS) total score.
TNX-801 – Potential Smallpox and Monkeypox Vaccine
TNX-801 is a novel potential smallpox-preventing vaccine based on a synthetic version of live horsepox virus, grown in cell culture. Though it shares structural
characteristics with vaccinia-based vaccines, TNX-801 has unique properties that we believe indicate potential safety advantages over existing live replicating vaccinia virus
vaccines, which have been associated with adverse side effects such as myopericarditis in some individuals. Emergent BioSolutions’ ACAM2000® is the only replicating
vaccinia virus vaccine currently approved by the FDA to protect against smallpox. We believe replicating virus vaccines have potential efficacy advantages over non-replicating
vaccines, relating to the stimulation of cell mediated immunity. Bavarian Nordic’s Jynneos® is the only non-replicating virus vaccine currently approved by the FDA to protect
against smallpox and monkeypox. We believe TNX-801 has the potential to have improved tolerability relative to replicating vaccinia vaccines and the potential to have
improved efficacy relative to non-replicating vaccinia vaccines.
Smallpox was eradicated by a World Health Organization program that vaccinated individuals with live replicating vaccinia vaccines wherever smallpox appeared. In
the 1970s, vaccination of civilians to protect against smallpox was discontinued in the U.S.; however, smallpox remains a material threat to national security and a proportion of
military personnel, including members of the Global Response Force, continue to be vaccinated. We are developing TNX-801 as a potential smallpox-preventing vaccine for
the U.S. strategic national stockpile and for potential widespread immunization in the event of malicious reintroduction of variola, the virus that causes smallpox.
Monkeypox is a growing problem in certain regions of Africa. Some cases of monkeypox have been reported outside of Africa in patients who had been infected while
in Africa.
In January 2020 at the American Society of Microbiology Biothreats conference, we reported the results of experiments on TNX-801 that were performed in
collaboration with Southern Research, that showed TNX-801 vaccinated macaques were protected against monkeypox challenge. The TNX-801 vaccinated macaques showed
no overt clinical signs after monkeypox challenge. Furthermore, eight of eight animals vaccinated with two different doses of TNX-801 showed no lesions after monkeypox
challenge.
We have filed a patent application to protect the TNX-801 vaccine candidate. In addition, we expect that TNX-801 will be eligible for 12 years of non-patent-based
exclusivity under the Patient Protection and Affordable Care Act, or PPACA. Following the passage of the 21st Century Cures Act, a law designed to help accelerate medical
product development, we believe TNX-801 will qualify as a medical countermeasure and would therefore be eligible for a Priority Review Voucher upon receiving FDA
approval. However, the Priority Review Voucher program provision of the 21st Century Cures Act is set to expire in 2023. If TNX-801 does not receive FDA approval by 2023,
we may not be able to capitalize on the incentives contained in the 21st Century Cures Act unless the provision allowing for the Priority Review Voucher Program is extended
until such time as TNX-801 is approved by the FDA.
We intend to meet with the FDA to discuss the most efficient and appropriate investigational plan for TNX-801, to establish the safety and effectiveness evidence to
support the licensure TNX-801. We are currently working to develop a vaccine that meets cGMP quality to support a clinical study.
TNX-1840 and TNX-1850 – Potential COVID-19 Vaccines
Tonix’s infectious disease portfolio includes a platform for vaccines for COVID-19. TNX-1800 is live virus vaccine based on Tonix’s RPV platform that expresses the
SARS-CoV-2 spike protein from the ancestral Wuhan strain. Because the subsequent omicron variant has out-competed the ancestral Wuhan strain, we are now planning new
versions of this vaccine, TNX-1840 and TNX-1850, that express spike protein from the omicron variant and from the BA.2 variant, respectively. Each of these RPV vaccines is
being developed to protect against COVID-19 primarily by eliciting T cell responses. The COVID-19 vaccines that are approved for use, or have emergency use authorization,
or EUA, in the U.S. have provided significant health benefits to the vaccinated population; however, they are showing limitations in the durability of protection conferred and
in their ability to block forward transmission. Live virus vaccines that protect against other viral diseases by eliciting T cell responses have shown durability of protection that
lasts years to decades and some live virus vaccines have significantly inhibited forward transmission.
We reported positive efficacy data for the TNX-1800 (spike from Wuhan strain) from animal challenge studies using live SARS-CoV-2 in the first quarter of 2021. In
this study, TNX-1800 vaccinated, SARS-CoV-2 challenged animals had undetectable SARS-CoV-2 in the upper airways, which we believe relates to potential inhibition of
forward transmission of this respiratory pathogen. This study of non-human primates compared TNX-1800 (modified horsepox virus encoding CoV-2 spike protein) to TNX-
801 (horsepox virus, live vaccine) at two doses. A control group received a placebo. Each of these five groups (TNX-1800 high and low dose; TNX-801 high and low dose and
placebo) included four animals. At day 41 after vaccination (or placebo), each animal was exposed to SARS-COV-2 by intra-tracheal (1 x 106 TCID50) and intra-nasal (1 x 106
TCID50) administration. Upper airway virus was studied by oropharyngeal swabs and lower airway virus by tracheal lavage using qRT-PCR to determine the number of
genome copies of SARS-CoV-2 present in the samples. Six days after challenge, no (0/8) samples taken from animals vaccinated with TNX-1800 showed infection (more than
1,000 genome copies of SARS CoV-2) in either upper or lower airway samples. In contrast, all (8/8) animals vaccinated with the control vaccine TNX-801 showed infection in
either the upper or lower airway samples as did all (4/4) monkeys vaccinated with vehicle control. At day 14 after a single vaccination, all eight of the TNX-1800 vaccinated
animals made anti-CoV-2 neutralizing antibodies (≥1:40 titer) and, as expected, none of the eight TNX-801 vaccinated control animals, or any of the four animals in the
placebo group made anti-CoV-2 neutralizing antibodies (≤1:10 titer). At 6 days after CoV-2 challenge, TNX-1800 vaccinated animals showed neutralizing antibody titers of
(≥1:1280 titer). The level of neutralizing anti-CoV-2 antibody production was similar between the low and high dose TNX-1800 groups (1 x 106 Plaque Forming Units [PFU]
and 3 x 106 PFU, (respectively). For unvaccinated animals challenged with SARS-CoV-2, neutralizing antibodies were measurable after vaccination (≥1:40 titer) that were
lower and appeared later than neutralizing antibodies in TNX-1800 vaccinated animals. TNX-1800 and TNX-801 were well tolerated at both doses. Further, as an expected
additional outcome, all 16 animals vaccinated with either dose of TNX-1800 or the control TNX-801 manifested a “take”, or cutaneous response, signaling that the horsepox
vector elicits a strong T cell immune response. These results support the expectation that TNX-1800 at the low dose of 1 x 106 PFU is an appropriate dose for a one-shot
vaccine in humans and indicate that 100 doses per vial is the target format for commercialization, which is well suited to manufacturing and distribution at large scale.
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Together, these data show that TNX-1800 induces protection against SARS-COV-2 infection in non-human primates. These data confirm that “take” is a biomarker of
protection of upper and lower airways from SARS-CoV-2 challenge, and a biomarker of immunological response to TNX-1800’s cargo COVID-19 antigen, which is the CoV-2
spike protein. Tonix completed a pre-IND meeting with the FDA to discuss the most efficient and appropriate investigational plan to establish the safety and effectiveness
evidence to support the licensure of TNX-1800. We believe that the animal data and manufacturing process information that we have developed for TNX-1800 will facilitate
expedited development of TNX-1840 and TNX-1850. In addition, we believe the RPV platform can be engineered to express relevant protein antigens from different infectious
diseases to make a variety of vaccines.
In June 2020, we announced a partnership with FUJIFILM Diosynth Biotechnologies (FDBT) to provide contract manufacturing and development services to support
the manufacturing of our COVID-19 vaccine candidate at the time, TNX-1800, for clinical trial supply. In February 2022, this contract ended. We continue to work with other
third party CMOs for the manufacturing and development of TNX-1800, TNX-1840 and TNX-1850, in addition to ultimately planning to utilize our in-house manufacturing
capabilities which are currently in development.
We have filed patent applications on the COVID-19 vaccines TNX-1800, TNX-1840 and TNX-1850 and also expect 12 years of non-patent-based exclusivity under
PPACA.
TNX-2100
TNX-2100 is a diagnostic product candidate (a COVID skin test) comprising three different mixtures of synthetic peptides (TNX-2110, -2120 and -2130), which are
designed to represent different protein components of the SARS-CoV-2 virus. TNX-2110 (SARS-CoV-2 multi-antigen peptides) represents epitopes of multiple proteins from
SARS-CoV-2. TNX-2120 (SARS-CoV-2 spike peptides) represents only the spike protein. TNX-2130 (SARS-CoV-2 non-spike peptides) represents non-spike proteins. Each of
these three synthetic peptide mixtures is expected to be administered as part of the same procedure, at separate locations on the forearm, and each is expected to elicit a DTH
response after approximately 48 hours in individuals with pre-existing T cell immunity to peptides in that mixture. Individuals who have been infected by or exposed to SARS-
CoV-2 would be expected to respond to all three mixtures. In contrast, a successfully vaccinated individual who has not been exposed or infected by SARS-CoV-2 would be
expected to respond only to TNX-2120 (SARS-CoV-2 spike peptides), since the currently available vaccines only encode spike protein. In the clinical protocol for testing TNX-
2100, positive skin test controls are being used to confirm that study participants have intact T cell immunity and are not immunodeficient.
The test is designed to be administered in the same manner as skin tests for tuberculosis, or TB, sold as Tubersol® or Aplisol® or generically as the Mantoux
tuberculin purified protein derivative (PPD) test. A thin gauge needle is used to apply each of the three separate TNX-2100 peptide mixtures into the skin, or intradermally, on
the inner surface of the forearm between the wrist and the elbow. In a typical positive test, the skin surrounding the injection site is expected to become red, raised and
hardened, or “indurated”, after approximately 48 hours. Induration above a threshold level would signify a positive result and the diameter of the induration would indicate the
amount of T cell immunity to the test peptides. DTH skin test responses are believed to reflect functional in vivo immunity. Clinical trials are expected to correlate skin test
results with clinical history and laboratory findings to inform estimates about the sensitivity and specificity of the test as a marker of T cell immunity in individuals who are
pre- and post-COVID-19 vaccination, recovered from COVID-19, or exposed but asymptomatic.
Discovered in 1882 by Robert Koch, the DTH reaction has been used for more than a century as a clinical test for T cell-mediated immune reactions1. In the 1940s,
Landsteiner and Chase demonstrated that the reaction was mediated by the cellular and not the antibody arm of the immune system2. The DTH reaction has been shown to be
dependent on the presence of memory T cells. Both the CD4+ and CD8+ T cells have been shown to participate in this response. DTH skin tests have been commonly used to
detect T cell responses to tuberculosis, fungal pathogens, and mumps virus.
TNX-2100 has the potential to serve as: (i) a biomarker for T cell protective immunity and durability of vaccine protection; (ii) a personalized approach for vaccine
boosters; (ii) a method to stratify participants in COVID-19 vaccine trials with a more complete picture of immune status; (iv) an endpoint in COVID-19 vaccine trials for
vaccines that elicit T cell immunity, and (v) public health surveillance. Tonix received IND clearance in the fourth quarter of 2021 and initiated enrollment in a first-in-human
study of TNX-2100 in the first quarter of 2022. We expect topline data from this study in the first half of 2022.
1 Black CA. Delayed type hypersensitivity: current theories with an historic perspective. Dermatol Online J. 1999;5:7.
2 Landsteiner K, Chase MW. Studies on the sensitization of animals with simple chemical compounds: vii. Skin sensitization by intraperitoneal injections. J Exp Med.
1940;71:237.
Tubersol® is a trademark of Sanfi Pasteur.
Aplisol® is a trademark of Par Pharmaceutical, Inc.
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Tonix’s Facilities Overview
Relating to our COVID-19 and other infectious disease development programs, we are developing the resources necessary to enable internal research, development
and manufacturing capabilities necessary to meet the goal of producing new vaccine candidates within 100 days and new diagnostics within weeks of obtaining sequence
information. As articulated in the American Pandemic Preparedness Plan, or AP3 released by the U.S. Office of Science and Technology Policy, this 100-day goal for vaccines
is a key component of preparedness for future pandemics. We are establishing the infrastructure necessary to support the pandemic preparedness goals established in the AP3,
specifically with respect to our RPV vaccine and skin test platforms and potentially to other vaccine, diagnostic and therapeutic platforms.
The Infectious Disease Research & Development Center (RDC)
We acquired the infectious disease RDC in Frederick, Maryland consisting of two buildings totaling approximately 48,000 square feet. The acquisition closed in
October 2021 and was operational at closing, but as of December 31, 2021, the facility was not ready for its intended use. It is our intention to have the facility ready for use in
the first half of 2022. The RDC facility will focus on our development of vaccines and antiviral drugs against COVID-19, its variants, and other infectious diseases. The RDC
facility is currently biosafety level 2 (BSL-2) but we intend to upgrade components to BSL-3. At full capacity, the RDC can employ 80-100 scientists and technical support
staff.
The Advanced Development Center (ADC)
We are in the process of a substantial renovation of the ADC located in the New Bedford business park in Dartmouth, Massachusetts. This facility is intended to
accelerate development and clinical scale manufacturing of live-virus vaccines to support Phase 1 and Phase 2 clinical trials. Plans for the ADC include single-use bioreactors
and purification suites with equipment for Good Manufacturing Practice (GMP) production of vaccines for clinical trials, including when fully operational, the capability of
producing sterile vaccines in glass bottles.
The ADC is currently being constructed and will be an approximately 45,000 square foot BSL-2 facility, once completed. At full capacity, the facility can employ up to
70 researchers, scientists, manufacturing, and technical support staff. It is expected to be partially operational in the first half of 2022.
The Commercial Manufacturing Center (CMC)
We intend to build the CMC in Hamilton, Montana where we purchased approximately 44 acres of land. The site is on land designated by Ravalli County as a Target
Economic Development District. The CMC will focus on developing and manufacturing Phase 3 and commercial scale live-virus vaccines and is also intended to be BSL-2.
Site enabling work is expected to be initiated for the CMC in 2022.
Competition
Our industry is highly competitive and subject to rapid and significant technological change. Our potential competitors include large pharmaceutical and biotechnology
companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. We believe that key competitive factors
that will affect the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, price and reimbursement level. Many of our
potential competitors, including many of the organizations named below, have substantially greater financial, technical, and human resources than we do and significantly
greater experience in the discovery and development of product candidates, obtaining the FDA’s and other regulatory approvals of products and the commercialization of those
products. Accordingly, our competitors may be more successful than we may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our
competitors’ drugs may be more effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete or non-
competitive before we can recover the expenses of developing and commercializing any of our product candidates. We anticipate that we will face intense and increasing
competition as new drugs enter the market and advanced technologies become available. Further, the development of new treatment methods for the conditions we are targeting
could render our drugs non-competitive or obsolete. Summarized below is the competitive landscape for the indications in which Tonix has product candidates in or nearing the
clinical stages of development.
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Anti-CD40-ligand mAbs
Tonix is aware of several companies developing biologics that target CD40-L or CD40, including UCB S.A., Belgium/Biogen Inc., Eledon Pharmaceuticals, Inc.,
Horizon Therapeutics Plc. and Sanofi S.A. Furthermore, Tonix is aware of several companies developing antagonistic anti-CD40 mAbs including Novartis, Boehringer
Ingelheim, Kiniska Pharmaceuticals, and Boston Immune Technologies.
Cocaine Intoxication
There are no approved antidotes for the treatment of cocaine intoxication. Patients generally receive supportive care. Tonix is not aware of any drugs in development
for the treatment of cocaine intoxication.
Fibromyalgia
Products approved for the treatment of fibromyalgia include Lyrica® (pregabalin), marketed by Pfizer; Cymbalta (duloxetine), marketed by Eli Lilly; and Savella
(milnacipran), marketed by Allergan (acquired by AbbVie). Tonix is aware of several other companies developing treatments for fibromyalgia, including Aptinyx, Virios
Therapeutics, Teva Pharmaceuticals, and Axsome Therapeutics.
Long COVID (Post-Acute Sequelae of COVID-19 or PASC)
There currently are no approved products for the treatment of Long COVID/PASC. Tonix is aware of several other companies developing therapeutics for Long
COVID, including PureTech Health, Direct Biologics, American CryoStem, HopeBiosciences, Axcella Health Inc., Ampio Pharmaceuticals, CytoDyn, Pieris Pharmaceuticals,
Resolve Therapeutics, PaxMedia, GeNeuro and Organicell.
PTSD
Products approved for the treatment of PTSD include Paxil® (paroxetine), marketed by GlaxoSmithKline and Zoloft® (sertraline), marketed by Pfizer. Tonix is aware
of other companies working to develop therapeutics for the treatment of PTSD including Bionomics, Otsuka/Lundbeck, Aptinyx, Nobilis Therapeutics, the Multidisciplinary
Association of Psychedelic Studies (MAPS) and Tryp Therapeutics.
Chronic or Episodic Migraine Prophylaxis
Currently there are several classes of drugs that are approved for the prophylactic treatment of chronic or episodic migraine, including generic beta blockers
(propranolol, timolol), and anticonvulsants (divalproex, topiramate). Other drug classes that are used off-label to treat migraine prophylaxis, include tricyclic antidepressants
(e.g., amitriptyline). Also, Allergan markets Botox® (onabotulinumtoxinA). More recently, several products have received FDA approval for the treatment of migraine,
including Aimovig® (erenumab), which is marketed by Amgen/Novartis; Ajovy® (fremanezumab), which is marketed by Teva Pharmaceuticals; Emgality® (galcanezumab)
which is marketed by Eli Lilly; and Yvepti® (eptinezumab), which is marketed by Lundbeck. Other therapies are approved as abortive treatment for acute migraine.
Prader-Willi Syndrome
There are no FDA approved therapies for the treatment of Prader-Willi syndrome. Patients generally receive care to best manage individual symptom presentation.
Tonix is aware of several companies developing treatments for Prader-Willi syndrome including Aadvark Therapeutics, Radius, Levo Therapeutics, ConSynance Therapeutics,
Soleno Therapeutics, Lipidio Pharma, Helsinn, Inversago Pharma, Saniona, 9 Meters Biopharma, Neuren Pharmaceuticals, Neuracle Science, Harmony Biosciences, Notitia
Biotechnologies, and Taysha Gene Therapies.
Major Depressive Disorder
Many antidepressant medications are beyond their patent life and are generally produced by generic drug companies, including several compounds in the tricyclic
class (e.g., amitriptyline), the serotonin-selective reuptake inhibitor class (e.g, fluoxetine, paroxetine and sertraline), the serotonin-norepinephrine reuptake inhibitor class (e.g.,
venlafaxine, duloxetine), as well as the norepinephrine-dopamine reuptake inhibitor, bupropion. A number of companies are marketing prescription drugs for depression,
including Johnson & Johnson’s Janssen division. Tonix is aware of several companies developing novel prescription medicines for depression including Axsome Therapeutics,
Janssen, Neumora Therapeutics (formerly BlackThorn Therapeutics), Sage Therapeutics, Relmada Therapeutics, Clexio Biosciences Ltd., Allergan (acquired by AbbVie) and
Otsuka.
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Smallpox vaccines and antivirals
Vaccines approved for the treatment of smallpox include ACAM2000, marketed by Emergent BioSolutions and JYNNEOS®, marketed by Bavarian Nordic. Approved
antivirals include TPOXX®, marketed by SIGA and TEMBEXA®, marketed by Chimerix. Tonix is aware of other companies developing treatments for smallpox including
EpiVax, HK inno.N, and BioFactura.
COVID-19 Vaccine
The environment for developing vaccines for COVID-19 is competitive and includes over 150 companies and academic institutions in various stages of development.
Vaccines granted full FDA regulatory approval include Comirnaty (BNT162b2), marketed by Pfizer-BioNTech, and Spikevax (mRNA-1273), marketed by Moderna.
Ad.26.COV2S, developed by Janssen, has received emergency use authorization (EUA) from the FDA. Other vaccines have received EUA in international markets. Tonix is
aware of 120 vaccines currently in clinical trials, and more than 75 vaccines in preclinical development.
Skin Test for COVID-19 (measure of T cell immune response)
There currently is no standardized laboratory test available to measure T cell immune responses to SARS-CoV-2, however the FDA granted EUA to T-Detect™
COVID test by Adaptive Biotechnologies Corporation in March 2021. The only other currently available methods to detect T cell immunity to SARS-CoV-2 require several
tubes of blood from the test subject, a multi-step sample preparation process including isolation of peripheral blood mononuclear cells, tissue culture with in vitro T cell
stimulation in highly specialized laboratories that have fluorescent activated cells sorting (FACS) flow cytometry technology, methodologies that have not been amenable to
standardization or scalability for commercial clinical services. Tonix is aware of other companies developing diagnostics to identify T cell immune response to SARS-CoV-2 ,
including Biovaxys.
Intellectual Property
We believe that we have an extensive patent portfolio and substantial know-how relating to TNX-1800, TNX-801, TNX-102 SL and our other product candidates. Our
patent portfolio, described more fully below, includes claims directed to various compositions and methods of use related to our product candidates. As of March 8, 2022, the
patents we are either the owner of record of or own the contractual right to include 31 issued U.S. patents and 213 issued non-U.S. patents. We are actively pursuing an
additional 31 U.S. patent applications, of which 4 are provisional and 27 are non-provisional, 13 international patent applications, and 218 non-U.S./non-international patent
applications.
We strive to protect the proprietary technology that we believe is important to our business, including our proprietary technology platform, our product candidates, and
our processes. We seek patent protection in the U.S. and internationally for our products, their methods of use and processes of manufacture, and any other technology to which
we have rights, where available and when appropriate. We also rely on trade secrets that may be important to the development of our business.
Our success will depend on 1) the ability to obtain and maintain patent and other proprietary rights in commercially important technology, inventions and know-how
related to our business, 2) the validity and enforceability of our patents, 3) the continued confidentiality of our trade secrets, and 4) our ability to operate without infringing the
valid and enforceable patents and proprietary rights of third parties. We also rely on continuing technological innovation and in-licensing opportunities to develop and maintain
our proprietary position.
We cannot be certain that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may own or
license in the future, nor can we be certain that any of our existing patents or any patents we may own or license in the future will be useful in protecting our technology. For
this and more comprehensive risks related to our intellectual property, please see “Risk Factors — Risks Relating to Our Intellectual Property.”
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent
term is 20 years from the date of filing the first non-provisional priority application. In the United States, a patent’s term may be lengthened by patent term adjustment, which
compensates a patentee for administrative delays by the PTO in granting a patent or may be shortened if a patent is terminally disclaimed over another patent.
The term of a U.S. patent that covers a drug approved by the FDA or methods of making or using that drug may also be eligible for patent term extension, which
permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Drug Price Competition and Patent Term Restoration
Act, also known as the Hatch-Waxman Act, is a federal law that encourages new drug research by restoring patent term lost to regulatory delays by permitting a patent term
extension of up to five years beyond the statutory 20-year term of the patent for the approved product or its methods of manufacture or use if the active ingredient has not been
previously approved in the U.S. The length of the patent term extension is related to the length of time the drug is under regulatory review. A patent term extension cannot
extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Similar
provisions are available in Europe and some other foreign jurisdictions to extend the term of a patent that covers an approved drug. When possible, depending upon the length
of clinical trials and other factors involved in the filing of an NDA, we expect to apply for patent term extensions for patents covering our product candidates and their methods
of use.
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The patent portfolios for our proprietary technology platform and our five most advanced product candidates as of March 8, 2022 are summarized below.
TNX-1500 — anti-CD40L Therapeutics
We are collaborating with Harvard Medical School to develop TNX-1500, a humanized mAb that targets CD40L for the prevention and treatment of organ transplant
rejection. In this regard, we filed International Application No. PCT/EP2020/068589, entitled “Anti-CD154 antibodies and uses thereof” on July 1, 2020 (nationalized in 15
countries). We also filed International Patent Application No. PCT/US2020/028002 on April 13, 2020, entitled “Inhibitors of CD40-CD154 Binding” (nationalized in Canada,
European Patent Office and Japan). We also filed International Patent Application No. PCT/US2022/011404, entitled “Methods of Inducing Immune Tolerance with Modified
Anti-CD154 Antibodies” on January 6, 2022.
TNX-1300 — Cocaine Intoxication Treatment
We have licensed rights from The Trustees of Columbia University in the City of New York, The Regents of the University of Michigan, and University of Kentucky
Research Foundation to develop a potential product, TNX-1300, for the treatment of cocaine intoxication. The licensed patents are directed to mutant cocaine esterase
polypeptides and methods of using these polypeptides as anti-cocaine therapeutics. They include U.S. Patent Nos. 8,318,156 and 9,200,265, entitled “Anti-Cocaine
Compositions and Treatment” and various counterpart patents outside of the U.S (e.g., European Patent 2046368). These patents provide TNX-1300 with US market exclusivity
until February 2029, and market exclusivity outside of the U.S. until July 10, 2027, subject to any patent term extensions.
TNX-102 SL — Central Nervous System Conditions
Our patent portfolio for TNX-102 SL includes patent applications directed to compositions of matter of CBP, formulations containing CBP, and methods for treating
CNS conditions, such as TNX-102 SL for PTSD, for acute stress disorder, for sleep disturbances in fibromyalgia, for alcohol abuse, for disordered sleep, for sexual
dysfunction, for depression in fibromyalgia and for agitation in neurodegenerative conditions, e.g., AAD, utilizing these compositions and formulations.
Certain eutectic compositions were discovered by development partners and are termed the “Eutectic Technology.” The patent portfolio for TNX-102 SL relating to
the Eutectic Technology includes patent applications directed to eutectic compositions containing CBP, eutectic CBP formulations, methods for treating PTSD and other CNS
conditions utilizing eutectic CBP compositions and formulations, and methods of manufacturing eutectic CBP compositions. The Eutectic Technology patent portfolio includes
U.S. patents, such as U.S. Patent No. 9,636,408, U.S. Patent No. 9,956,188, U.S. Patent No. 10,117,936, U.S. Patent No. 10,357,465; and U.S. Patent No. 10,864,175. If U.S.
and non-U.S. patents claiming priority from those applications issue, those patents would expire in 2034 or 2035, excluding any patent term adjustments or extensions.
The unique pharmacokinetic profile of TNX-102 SL, or the PK Technology, was discovered by Tonix and its development partners. The patent portfolio for TNX-102
SL relating to the PK Technology includes patent applications directed to compositions of matter of CBP, formulations containing CBP, methods for treating PTSD, agitation in
neurodegenerative conditions, and other CNS conditions utilizing these compositions and formulations. The PK Technology patent portfolio includes U.S. Patent Application
No. 13/918,692. If U.S. and non-U.S. patents claiming priority from those applications issue, those patents would expire in 2033, excluding any patent term adjustments or
extensions.
On May 2, 2017, U.S. Patent No. 9,636,408 entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”, issued. The patent
claims recite pharmaceutical compositions comprising the eutectic. The patent claims also recite methods of manufacturing the eutectic.
On September 13, 2017, European patent 2,501,234, entitled “Methods and Compositions for Treating Symptoms Associated with PTSD Using Cyclobenzaprine”,
issued. This patent recites the use of CBP for the treatment of PTSD, which covers the use of TNX-102 SL for the treatment of PTSD, since the active ingredient in TNX-102
SL is CBP and provides TNX-102 SL with European market exclusivity until 2030 and may be extended based on the timing of the European marketing authorization of TNX-
102 SL for PTSD. In response to an opposition filed in June 2018 by a German law firm, the European Patent Office’s Opposition Division in October 2019 upheld the patent
in unamended form. Opponent has appealed.
On December 15, 2017, Japanese Patent No. 6259452, entitled “Compositions and Methods for Transmucosal Absorption”, issued. These claims relate to the
pharmacokinetic profile of TNX-102 SL.
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On March 20, 2018, U.S. Patent No. 9,918,948 entitled “Methods and Compositions for Treating Symptoms Associated with PTSD Using Cyclobenzaprine”, issued.
The claims recite a method of using TNX-102 SL’s active ingredient cyclobenzaprine to treat PTSD and provides TNX-102 SL with US market exclusivity until 2030,
excluding any patent term extensions.
On March 23, 2018, Japanese Patent No. 6310542 entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”, issued. The
claims recite pharmaceutical compositions comprising the eutectics and methods of manufacturing these eutectic formulations.
On May 1, 2018, U.S. Patent No. 9,956,188, entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”, issued. The claims
recite a eutectic of cyclobenzaprine hydrochloride and mannitol and methods of making those eutectics.
On November 6, 2018, U.S. Patent No. 10,117,936, entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”, issued. The
claims recite pharmaceutical compositions of eutectics of cyclobenzaprine hydrochloride and mannitol and methods of making those compositions.
On April 16, 2019, Chinese Patent No. ZL 201480024011.1 entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”,
issued. The claims recite pharmaceutical compositions comprising eutectics of cyclobenzaprine hydrochloride and mannitol and methods of making those compositions.
On July 23, 2019, U.S. Patent No. 10,357,465 entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride”, issued. The claims recite pharmaceutical
compositions comprising eutectics of cyclobenzaprine hydrochloride and mannitol and methods of making those compositions.
On December 11, 2019, European patent 2968992, entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride”, issued. This patent recites pharmaceutical
compositions comprising a eutectic of mannitol and Cyclobenzaprine HCl and methods of making the same. In response to an opposition filed in September 2020 by Hexal AG,
the European Patent Office’s Opposition Division upheld the patent in unamended form in the January 2022 oral proceedings. The written decision is pending.
On December 25, 2019, European patent 2,683,245, entitled “Methods and Compositions for Treating Depression Using Cyclobenzaprine”, issued. The claims recite
the use of CBP for the treatment of depression in a FM patient. This patent provides TNX-102 SL with European market exclusivity until March 2032 and may be extended
based on the timing of the European marketing authorization of TNX-102 SL for depression in a FM patient. In September 2020, Hexal AG filed an opposition against this
patent. The European Patent Office’s Opposition Division upheld the patent claims in unamended form at the February 2022 oral proceedings. The written decision is pending.
On December 15, 2020, U.S. Patent No. 10,864,175 entitled “Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride”, issued. The
claims recite a eutectic comprising cyclobenzaprine hydrochloride and beta-mannitol.
On April 8, 2021, U.S. non-provisional Patent Application No. 17/226,058 and International Patent Application No. PCT/US2021/026492 were filed, entitled
“Cyclobenzaprine Treatment for Sexual Dysfunction”. The claims are directed to methods using pharmaceutical compositions and combinations for treating sexual dysfunction
with cyclobenzaprine or pharmaceutically acceptable salts of cyclobenzaprine.
On October 25, 2016 and July 28, 2020, U.S. Patent No. 9,474,728 and U.S. Patent No. 10,722,478, entitled “Methods and Compositions for Treating Fatigue
Associated with Disordered Sleep Using Very Low Dose Cyclobenzaprine”, issued, respectively. The claims are directed to a method for monitoring the effectiveness of
cyclobenzaprine treatment for disordered sleep and method for reducing CAP rates A2 or A3 by treating a subject with a pharmaceutical composition comprising
cyclobenzaprine.
TNX-1900 — Oxytocin-based treatments for Migraine, Pain, Insulin Resistance, Diabetes and Obesity
We have acquired the migraine and pain treatment technologies of Trigemina, Inc., and have assumed its license rights to related technologies from The Board of
Trustees of the Leland Stanford Junior University. TNX-1900, an enhanced formulation of nasal oxytocin, has demonstrated activity in several non-clinical studies in pain,
including migraine. As part of our acquisition, we acquired International Patent Application No. PCT/US2016/012512, filed on January 7, 2016, entitled “Magnesium-
Containing Oxytocin Formulations and Methods of Use” (nationalized in 13 countries). We also acquired U.S. Patent No. 9,629,894, entitled “Magnesium-Containing Oxytocin
Formulations and Methods of Use”, which will expire in January 2036, excluding any patent term extensions. We also have rights to International Patent Application No.
PCT/US2019/020419, filed on April 12, 2017, entitled “Labeled Oxytocin and Method of Manufacture and Use” (nationalized in the U.S., European Patent Office and Japan).
We have entered into an exclusive license to the University of Geneva’s technology for using oxytocin to treat insulin resistance and related syndromes, including
obesity. This license expands our intranasal potentiated oxytocin development program, TNX-1900, into cardiometabolic syndromes. Under the license, we have rights to
European Patent No. EP2571511B1, entitled “New Uses of Oxytocin-like Molecules and Related Methods”. We also have rights to U.S. Patent No. 9,101,569, entitled
“Methods for the Treatment of Insulin Resistance”. The U.S. and non-U.S. patents expire in May 2031, excluding any patent term adjustments or extensions.
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TNX-2900 — Oxytocin-based therapeutics for Prader-Willi syndrome
We have licensed technology using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from the French
National Institute of Health and Medical Research (INSERM). The co-exclusive license relates to TNX-2900, an intranasal potentiated oxytocin, for the treatment of Prader-
Willi syndrome and other feeding disorders. Under the license, we have rights to European Patent No. EP2575853B1, entitled “Methods and Pharmaceutical Composition for
the Treatment of a Feeding Disorder with Early-Onset in a Patient”; U.S. Patent No. 8,853,158, entitled “Methods for the Treatment of a Feeding Disorder with Onset During
Neonate Development Using an Agonist of the Oxytocin Receptor”; and U.S. Patent No. 9,125,862, entitled “Methods for the Treatment of Prader-Willi-like Syndrome or Non-
Organic Failure to Thrive (NOFITT) Feeding Disorder Using an Agonist of the Oxytocin Receptor”. The U.S. and non-U.S. patents expire in May 2031, excluding any patent
term extensions.
TNX-601 — Depression, Posttraumatic Stress Disorder, Neurocognitive Dysfunction
Our patent portfolio for tianeptine oxalate includes U.S. Patent No. 9,314,469 and European Patent No. 2,299,822, both entitled “Method for Treating Neurocognitive
Dysfunction”, which issued on April 29, 2016 and July 26, 2017, respectively. The ’822 patent recites pharmaceutical compositions comprising various compounds (which
include tianeptine) and uses thereof. This patent provides TNX-601 with European market exclusivity until April 2029 and may be extended based on the timing of the
European marketing authorization of TNX-601 for neurocognitive side effects associated with the use of corticosteroids. The ‘469 patent claims methods of treating cognitive
impairment associated with corticosteroid treatment using compounds, including tianeptine, excluding patent term extensions, the patent provides TNX-601 with US marketing
exclusivity until 2028.
On February 27, 2019, European Patent No. 3,246,031 entitled “Method for Treating Neurodegenerative Dysfunction”, issued. The claims recite the use of TNX-601,
or tianeptine oxalate and other salts, for treating neurocognitive dysfunction associated with corticosteroid treatment. This patent provides TNX-601 with European market
exclusivity until April 2029 and may be extended based on the timing of the European market authorization of TNX-601 for neurocognitive disfunction associated with
corticosteroid treatment.
On October 22, 2019, U.S. Patent No. 10,449,203 issued. The claims recite anhydrous crystalline oxalate salts of tianeptine and provides TNX-601 with US market
exclusivity until 2037, excluding any patent term extensions.
On March 16, 2021, U.S. Patent No. 10,946,027 issued. The claims recite pharmaceutical compositions of anhydrous crystalline oxalate salts of tianeptine and
provides TNX-601 with US market exclusivity until 2037, excluding any patent term extensions.
Our patent portfolio for TNX-601 also includes International Patent Application PCT/IB2017/001709 (now nationalized in 16 countries). It includes claims directed to
crystalline tianeptine oxalate and compositions of those crystal forms, and disclosures directed to methods of using those crystalline forms and their compositions.
TNX-801 — Live Horsepox Vaccine for Prevention of Smallpox and Monkeypox
We own the rights to develop a potential biodefense technology, TNX-801, a live horsepox that is being developed as a new smallpox and monkeypox preventing
vaccine, we have filed patent applications directed to synthetic chimeric poxviruses and methods of using these poxviruses to protect individuals against smallpox. These
applications include U.S. non-provisional Patent Application No. 15/802,189 and International Patent Application No. PCT/US2017/059782 (nationalized in 15 countries and
filed in 4 non-PCT countries). We also own the rights to develop other vaccine candidates against smallpox. With respect to these vaccine candidates, we own U.S. Patent
Application No. 14/207,727 and International Patent Application No. PCT/US2019/030486 and the non-convention and national phase applications related thereto (nationalized
in 17 countries and filed in 2 non-PCT countries). The smallpox vaccine technologies relate to proprietary forms of live horsepox and vaccinia vaccines which may be safer
than ACAM2000, the only currently available replication competent, live vaccinia vaccine to protect against smallpox disease. We believe that this technology, after further
development, may be of interest to biodefense agencies in the U.S. and other countries.
TNX-1800 — Live HPXV Vaccine for Prevention of COVID-19
We are developing TNX-1800, a live HPXV that is being developed as a new COVID-19 preventing vaccine. On February 26, 2021, we filed International Patent
Application No. PCT/US2021/020119 (as well as applications in 2 non-PCT countries) and U.S. Application No. 17/187,678, entitled “Recombinant Poxvirus Based Vaccine
Against SARS-CoV-2”. These applications are directed to synthetic poxviruses comprising a SARS-CoV-2 protein, poxvirus delivery vectors for SARS-CoV-2 proteins and
methods of using these modified poxviruses to protect individuals against COVID-19.
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TNX-1700 — Recombinant Trefoil Family Factor 2 (rTFF2) to Treat Gastric and Pancreatic Cancers
We have licensed rights from The Trustees of Columbia University in the City of New York to develop a potential product, TNX-1700, for the treatment of gastric and
pancreatic cancers. The licensed patents are directed to TFF2 compositions and methods of treatment. The licensed patents U.S. Patent No. 10,124,037 and U.S. Patent No.
11,167,010. The licensed patents provide TNX-1700 with US market exclusivity until April 2033, subject to any patent term extensions. On August 27, 2020, we filed
International Patent Application No. PCT/IB2020/000699 entitled “Modified TFF2 Polypeptides” (being nationalized in 11 countries).
TNX-1600 — Triple Reuptake Inhibitor to Treat PTSD
We have licensed rights from Wayne State University to develop a potential product, TNX-1600, for PTSD treatment. The licensed patents directed to pyran-based
derivatives and analogues. They include U.S. Patent Nos. 7,915,433, 8,017,791, 8,519,159, 8,841,464, and 8,937,189, entitled “Tri-substituted 2-benzhydryl 5-benzlamino-
tetrahydro-pyran-4-OL and 6-benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6 disubstituted pyran derivatives” and U.S. Patent No. 9,458,124,
entitled “Substituted Pyran Derivatives”. These patents provide TNX-1600 with US market exclusivity between April 2024 and February 2034, respectively, subject to any
patent term extensions.
TNX-701 — Radioprotection Biodefense Technology
We own the rights to develop a potential biodefense technology, which is a potential radioprotective therapy. For protection of our intellectual property, we have not
disclosed the identity of the new development candidate. On May 7, 2021, we filed International Patent Application No. PCT/US2021/031441 and U.S. non-provisional Patent
Application No. 17/315,258. They claim compounds, compositions and methods of use in radioprotection.
TNX-1200 — Smallpox Vaccine Technology
We own the rights to develop a potential biodefense technology, TNX-1200, a live vaccinia virus that is being developed as a new smallpox preventing vaccine, we
have patent applications directed to synthetic chimeric poxviruses and methods of using these poxviruses to protect individuals against smallpox. These applications include
U.S. non-provisional Patent Application No. 17/050,946 and International Patent Application No. PCT/US2019/030486 (nationalized in 16 countries and filed in 3 non-PCT
countries). We believe that this technology, after further development, may be of interest to biodefense agencies in the U.S. and other countries.
TNX-3500 — Sangivamycin for Treatment of COVID
We have entered into an exclusive license to OyaGen, Inc.’s antiviral technology for use in treating coronavirus infections (including SARS-CoV-2), Ebola virus,
arenaviridae infections and poxviridae infections. This license expands our pipeline for developing a potential treatment, TNX-3500, for COVID-19 and emerging variants.
Under the license, we have rights to U.S. non-provisional Patent Application No. 16/851,047 and International Patent Application Nos. PCT/US2020/028567 and
PCT/US2021/016472, entitled “Methods for Treating Coronavirus Infections”. We also have rights to U.S. non-provisional Patent Application No. 16/348,867 and European
Patent Application No. 17869003.8, entitled “Methods of Treating and Inhibiting Ebola Virus Infection”. We also have rights to International Patent Application Nos.
PCT/US2021/027352 and PCT/US2021/027354, entitled “Method for Treating Arenaviridae Infections” and “Method for Treating Poxviridae Infection,” respectively.
Trade Secrets
In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. For example, significant aspects of our proprietary
technology platform are based on unpatented trade secrets and know-how. Trade secrets and know-how can be difficult to protect. We seek to protect our proprietary technology
and processes, in part, by confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors, and commercial
partners. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies
that are developed through a relationship with a third party. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical
security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems,
agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be
independently discovered by competitors. To the extent that our contractors use intellectual property owned by others in their work for us, disputes may arise as to rights in
related or resulting inventions and know-how.
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Issued Patents
Our current patents owned or licensed include:
Anti-Cocaine Therapeutics
Patent No.
8,318,156
9,200,265
2007272955
2014201653
2657246
612929
2046368
(602007045044.6
in Germany;
502016000056543
in Italy)
2009/00197
305483
196411
Title
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Country / Region
U.S.A.
U.S.A.
Australia
Australia
Canada
New Zealand
Europe – (Germany, Spain,
France, United Kingdom, and
Italy)
Expiration
Date
February 14, 2029
December 30, 2027
July 10, 2027
July 10, 2027
July 10, 2027
July 10, 2027
July 10, 2027
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
Anti-Cocaine Compositions and Treatment
South Africa
Mexico
Israel
July 10, 2027
July 10, 2027
July 10, 2027
Sublingual CBP/Amitriptyline
Patent No.
6259452
631144
I590820
2013274003
I642429
726488
I683660
2018241128
2876902
IDP000076019
382516
Title
Country / Region
Expiration
Date
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Japan
New Zealand
Taiwan R.O.C.
Australia
Taiwan R.O.C.
New Zealand
Taiwan R.O.C.
Australia
Canada
Indonesia
Mexico
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
June 14, 2033
27
CBP – Depression
Patent No.
2012225548
2016222412
2018204633
2020203874
614725
714294
2683245
Title
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Title
Methods and Compositions for Treating Symptoms Associated with Post-
Traumatic Stress Disorder Using Cyclobenzaprine
Methods and Compositions for Treating Symptoms Associated with Post-
Traumatic Stress Disorder Using Cyclobenzaprine
CBP – PTSD
Patent No.
9,918,948
2501234
(AL/P/17/691 in
Albania;
602010045270.0 in
Germany; 3094254
in Greece;
502017000142469
in Italy;
MK/P/17/000807
in Republic of
North Macedonia;
56634 in Serbia;
SM-T-201700578
in San Marino;
201717905 in
Turkey)
HK1176235
Expiration
Date
March 6, 2032
March 6, 2032
March 6, 2032
March 6, 2032
March 6, 2032
March 6, 2032
March 6, 2032
Expiration
Date
November 18, 2030
November 16, 2030
Country / Region
Australia
Australia
Australia
Australia
New Zealand
New Zealand
European Patent Office – Albania,
Austria, Belgium, Bulgaria,
Switzerland, Cyprus, Czechia,
Germany, Denmark, Estonia,
Spain, Finland, France, United
Kingdom, Greece, Croatia,
Hungary, Ireland, Iceland, Italy,
Lithuania, Luxembourg, Latvia,
Monaco, Republic of North
Macedonia, Malta, Netherlands,
Norway, Poland, Portugal,
Romania, Serbia, Sweden,
Slovenia, Slovakia, San Marino,
and Turkey
Country / Region
U.S.A.
European Patent Office – Albania,
Austria, Belgium, Bulgaria,
Switzerland, Cyprus, Czechia,
Germany, Denmark, Estonia,
Spain, Finland, France, United
Kingdom, Greece, Croatia,
Hungary, Ireland, Iceland, Italy,
Lithuania, Luxembourg, Latvia,
Monaco, Republic of North
Macedonia, Malta, Netherlands,
Norway, Poland, Portugal,
Romania, Serbia, Sweden,
Slovenia, Slovakia, San Marino,
Turkey
Methods and Compositions for Treating Symptoms Associated with Post-
Traumatic Stress Disorder Using Cyclobenzaprine
Hong Kong
November 16, 2030
28
CBP Fatigue
Patent No.
9,474,728
10,722,478
Title
Country / Region
Methods and Compositions for Treating Fatigue Associated with Disordered
Sleep Using Very Low Dose Cyclobenzaprine
Methods and Compositions for Treating Fatigue Associated with Disordered
Sleep Using Very Low Dose Cyclobenzaprine
U.S.A.
U.S.A.
Expiration
Date
June 9, 2031
June 9, 2031
CBP/Amitriptyline Eutectic Formulations
Title
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Patent No.
631152
747040
9,636,408
9,956,188
10,117,936
10,322,094
10,357,465
10,736,859
10,864,175
10,864,176
11,026,898
6310542
6614724
6717902
6088
ZL201480024011.1
ZL.201580050140.2
2014233277
2015317336
I661825
I740136
IDP000055516
IDP000063221
IDP000076872
2968992
(1211591 in Austria,
CZ2014-762323 in Czechia,
602014058260.5 in Germany,
E018723 in Estonia,
P20200055 in Croatia,
201361792757 P in Ireland,
2020.67 in Monaco, P-
2020/0094 in Serbia,
201431487 in Slovenia,
33269 in Slovakia,
2020000045 in San Marino)
241353
251218
370021
387402
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Methods of
Producing Same
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Country / Region
Expiration
Date
New Zealand
New Zealand
U.S.A.
U.S.A.
March 14, 2034
March 14, 2034
March 14, 2034
March 14, 2034
U.S.A.
March 14, 2034
U.S.A.
U.S.A.
U.S.A.
U.S.A.
U.S.A.
U.S.A.
Japan
Japan
Japan
Saudi Arabia
China
China
Australia
Australia
Taiwan R.O.C.
March 14, 2034
September 18, 2035
March 14, 2034
March 14, 2034
March 14, 2034
September 18, 2035
March 14, 2034
September 18, 2035
September 18, 2035
March 14, 2034
March 14, 2034
September 18, 2035
March 14, 2034
September 18, 2035
March 14, 2034
Taiwan R.O.C.
March 14, 2034
Indonesia
Indonesia
Indonesia
European Patent Office -
Albania, Austria, Belgium,
Bulgaria, Croatia, Cyprus,
Czechia, Denmark, Estonia,
Finland, France, Republic of
North Macedonia, Germany,
Greece, Hungary, Iceland,
Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta,
Monaco, Netherlands, Norway,
Poland, Portugal, Romania,
San Marino, Serbia, Slovakia,
Slovenia, Spain, Sweden,
Switzerland, Turkey, United
Kingdom
Israel
Israel
Mexico
Mexico
March 14, 2034
September 18, 2035
March 14, 2034
March 14, 2034
March 14, 2034
September 18, 2035
March 14, 2034
September 18, 2035
388137
2015/07443
2017/01637
BR112015022095-9
2904812
HK1218727
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Mexico
March 14, 2034
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Pharmaceutical Composition, Method of Fabrication, Eutectic Composition
and Use of Compositions Containing Cyclobenzaprine HCl and Mannitol
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
South Africa
March 14, 2034
South Africa
Brazil
Canada
Hong Kong
September 18, 2035
March 14, 2034
March 14, 2034
March 14, 2034
MY-186047-A
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Malaysia
September 18, 2035
29
Oxytocin therapeutics
Patent No.
Magnesium-Containing Oxytocin Formulations and Methods of Use
9,629,894
11201705591P
Magnesium-Containing Oxytocin Formulations and Methods of Use
Not Yet Assigned Magnesium-Containing Oxytocin Formulations and Methods of Use
2575853
Title
8,853,158
9,125,862
Methods and Pharmaceutical Composition for the Treatment of a Feeding Disorder with
Early-Onset in a Patient
Methods for the Treatment of a Feeding Disorder with Onset During Neonate
Development Using an Agonist of the Oxytocin Receptor
Methods for the Treatment of Prader-Willi-like Syndrome or Non-Organic Failure to
Thrive (NOFITT) Feeding Disorder Using an Agonist of the Oxytocin Receptor
2571511
New Uses of Oxytocin-like Molecules and Related Methods
9,101,569
Methods for the Treatment of Insulin Resistance
30
Country / Region
U.S.A.
Singapore
Mexico
Europe – (Spain, France, and
United Kingdom)
U.S.A.
U.S.A.
Expiration
Date
January 7, 2036
January 7, 2036
January 7, 2036
May 25, 2031
May 25, 2031
May 25, 2031
Europe – (Switzerland, Spain,
France, United Kingdom, and
Ireland)
U.S.A.
May 17, 2031
June 22, 2031
Nociceptin/Orphanin FQ therapeutics
Patent No.
8,551,949
9,238,053
2010281436
ZL 201080042858.4
2459183 (602010028120.5 in
Germany)
1169804
329837
597763
10201406930U
201200584
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Methods for treatment of pain
Tianeptine Oxalate – Salts and Crystalline Forms
Title
Country / Region
U.S.A.
U.S.A.
Australia
China
Europe – (Switzerland,
Germany, Denmark, France, and
United Kingdom)
Hong Kong
Mexico
New Zealand
Singapore
South Africa
Expiration
Date
August 11, 2031
October 12, 2030
July 27, 2030
July 27, 2030
July 27, 2030
July 27, 2030
July 27, 2030
July 27, 2030
July 27, 2030
July 27, 2030
Patent No.
10,449,203
10,946,027
2019/04185
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
U.S.A.
U.S.A.
South Africa
Title
Country / Region
Tianeptine – Neurocognitive Dysfunction
Patent No.
9,314,469
2723688
2299822
(602009047361.1
in Germany)
3246031
(602009057284.9
in Germany)
Method for Treating Neurocognitive Dysfunction
Method for Treating Neurodegenerative Dysfunction
Method for Treating Neurodegenerative Dysfunction
Title
Method for Treating Neurocognitive Dysfunction
Country / Region
U.S.A.
Canada
Europe – Austria, Belgium,
Switzerland, Germany, Spain,
France, United Kingdom, Ireland,
Luxembourg, Monaco, Portugal
Europe – Austria, Belgium,
Switzerland, Germany, Spain,
France, United Kingdom, Ireland,
Luxembourg, Monaco, Portugal
31
Expiration
Date
December 28, 2037
December 28, 2037
December 28, 2037
Expiration
Date
September 24, 2030
April 30, 2029
April 30, 2029
April 30, 2029
Title
Country / Region
Tri-substituted 2-benzhydryl 5-benzlamino-tetrahydro-pyran-4-OL and 6-
benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6
disubstituted pyran derivatives
Tri-substituted 2-benzhydryl 5-benzlamino-tetrahydro-pyran-4-OL and 6-
benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6
disubstituted pyran derivatives
Tri-substituted 2-benzhydryl 5-benzlamino-tetrahydro-pyran-4-OL and 6-
benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6
disubstituted pyran derivatives
Tri-substituted 2-benzhydryl 5-benzlamino-tetrahydro-pyran-4-OL and 6-
benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6
disubstituted pyran derivatives
Tri-substituted 2-benzhydryl 5-benzlamino-tetrahydro-pyran-4-OL and 6-
benzhydryl-4-benzylamino-tetrahydro-pyran-3-OL analogues, and novel 3,6
disubstituted pyran derivatives
Substituted Pyran Derivatives
U.S.A
U.S.A.
U.S.A
U.S.A
U.S.A
Expiration
Date
March 10, 2028
April 14, 2024
December 7, 2025
April 15, 2025
January 12, 2027
U.S.A
February 6, 2034
Triple reuptake inhibitor therapeutics
Patent No.
7,915,433
8,017,791
8,519,159
8,841,464
8,937,189
9,458,124
TFF2 therapeutics
Patent No.
10,124,037
11,167,010
Trefoil family factor proteins and uses thereof
Trefoil family factor proteins and uses thereof
U.S.A
U.S.A
Title
Country / Region
Expiration
Date
April 2, 2033
April 2, 2033
Pending Patent Applications
Our current pending patent applications are as follows:
CD40 and CD154 Therapeutics
Application No.
17/623,710
Not Yet Assigned
BR112021026410-8
Not Yet Assigned
Not Yet Assigned
20764933.6
202217004870
P00202200763
289354
2021-578262
PI 2021007835
MX/a/2022/000133
Not Yet Assigned
11202114433Y
Not Yet Assigned
PCT/US2022/011404
3136725
20787970.1
Title
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Anti-CD154 antibodies and uses thereof
Methods of Inducing Immune Tolerance with Modified Anti-CD154 Antibodies
Inhibitors of CD40-CD154 Binding
Inhibitors of CD40-CD154 Binding
2021-560713
Inhibitors of CD40-CD154 Binding
CBP/Amitriptyline Eutectic Formulations
Country / Region
U.S.A.
Australia
Brazil
Canada
China
European Patent
Office
India
Indonesia
Israel
Japan
Malaysia
Mexico
New Zealand
Singapore
South Africa
PCT
Canada
European Patent
Office
Japan
Application No.
17/121,547
17/082,949
2020289838
BR112017005231-8
BR122020020968-2
2,961,822
3,119,755
201910263541.6
202011576351.9
15841528.1
19214535.7
18101200.4
42020003105.2
42020019748.1
42021036749.6
Title
Country / Region
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
U.S.A.
U.S.A.
Australia
Brazil
Brazil
Canada
Canada
China
China
European Patent Office
European Patent Office
Hong Kong
Hong Kong
Hong Kong
Hong Kong
277814
3392/KOLNP/2015
201717013182
2021-105582
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Methods of Producing Same (Allowed)
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
2021-169539
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Israel
India
India
Japan
Japan
32
Application No.
PI 2015703142
730379
768064
517381123
10201707528W
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
10201902203V
Eutectic Formulations of Cyclobenzaprine Hydrochloride
Malaysia
New Zealand
New Zealand
Saudi Arabia
Singapore
Singapore
Title
Country / Region
2014-000391
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline Hydrochloride
Venezuela
Sublingual CBP/Amitriptyline
Application No.
13/918,692
P20130102101
BR112014031394-6
BR122019024508-8
3,118,913
202010024102.2
13804115.7
2013/24661
Title
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
2013/37088
Compositions and Methods for Transmucosal Absorption
2013/40660
15110186.6
42020020336.2
P-00 2021 01421
236268
2021-100154
MX/a/2021/005317
PI 2014703784
10201605407T
2013-000737
2015/00288
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption (Allowed)
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption
Compositions and Methods for Transmucosal Absorption (Allowed)
33
Country / Region
U.S.A.
Argentina
Brazil
Brazil
Canada
China
European Patent Office
Gulf Cooperation Council
Gulf Cooperation Council
Gulf Cooperation Council
Hong Kong
Hong Kong
Indonesia
Israel
Japan
Mexico
Malaysia
Singapore
Venezuela
South Africa
CBP – PTSD
Application No.
15/915,688
Methods and Compositions for Treating Symptoms Associated with Post-Traumatic Stress Disorder Using
Cyclobenzaprine
U.S.A.
Title
Country / Region
Assessing Clinical Response – PTSD
Application No.
PCT/US2022/015327
CBP – Fatigue
Application No.
16/903,965
An Improved Method of Assessing Clinical Response in the Treatment of PTSD Symptoms
PCT
Title
Country / Region
Methods and Compositions for Treating Fatigue Associated with Disordered Sleep Using Very Low Dose
Cyclobenzaprine
U.S.A.
Title
Country / Region
CBP – Agitation in Neurodegenerative Condition
Application No.
16/215,952
2018383098
BR112020011345-0
3,083,341
201880079917.1
18847270.8
P00202004178
275289
202017023747
2020-531611
MX/a/2020/006140
PI2020002800
765792
520412146
11202004799T
2020/03243
6202002246.2
62021029558.5
Title
Country / Region
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
Cyclobenzaprine Treatment for Agitation, Psychosis and Cognitive Decline in Dementia and
Neurodegenerative Conditions
34
U.S.A.
Australia
Brazil
Canada
China
European Patent Office
Indonesia
Israel
India
Japan
Mexico
Malaysia
New Zealand
Saudi Arabia
Singapore
South Africa
Hong Kong
Hong Kong
CBP – Depression
Application No.
13/412,571
2,829,200
19214568.8
Analogs of CBP
Application No.
16/630,832
CA3069699
201880050758.2
EP18831505.5
2020-526592
CBP – ASD and PTSD
Application No.
2019/38140
108129709
17/269,106
2019323764
PI2021000802
772889
CBP – Fibromyalgia
Application No.
PCT/US2021/062244
CBP – Alcohol Use Disorder
Application No.
PCT/US2021/060011
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Methods and Compositions for Treating Depression Using Cyclobenzaprine (Allowed)
Methods and Compositions for Treating Depression Using Cyclobenzaprine
Title
Analogs of Cyclobenzaprine and Amitryptilene
Analogs of Cyclobenzaprine and Amitryptilene
Analogs of Cyclobenzaprine and Amitryptilene
Analogs of Cyclobenzaprine and Amitryptilene
Analogs of Cyclobenzaprine and Amitryptilene
Analogs of Cyclobenzaprine and Amitryptilene
Title
Title
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Cyclobenzaprine Treatment for Fibromyalgia
Title
Title
Cyclobenzaprine Treatment for Alcohol Use Disorder
Country / Region
U.S.A.
Canada
European Patent Office
Country / Region
U.S.A.
Canada
China
European Patent Office
Japan
Country / Region
Gulf Cooperation Council
Taiwan R.O.C.
U.S.A.
Australia
Malaysia
New Zealand
Country / Region
PCT
Country / Region
PCT
CBP/Amitriptyline – Single Nucleotide Polymorphisms as Predictive Markers
Application No.
63/301,313
Application No.
280921
2021-509201
BR1120210033107-3
MX/a/2021/002012
CA 3109258
11202101443W
2021/01121
P00202101716
202117011223
201980062283.3
19802247.7
62021045278.0
62022046260.5
Single Nucleotide Polymorphisms (SNPs) as Predictive Markers for Treatment with Cyclobenzaprine or
Amitriptyline
U.S.A.
Title
Country / Region
Title
Cyclobenzaprine or Amitriptyline Containing Compositions for Use in Treating Stress Disorders
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Methods of Treating Acute Stress Disorder and Posttraumatic Stress Disorder
Country / Region
Israel
Japan
Brazil
Mexico
Canada
Singapore
South Africa
Indonesia
India
China
European Patent Office
Hong Kong
Hong Kong
35
CBP – Sexual dysfunction
Application No.
PCT/US2021/026492
17/226,058
Oxytocin therapeutics
Application No.
15/541,991
2020286221
BR1120170145456
2972975
201680013809.5
16735422.4
18112297.5
253347
2017-535877
2021-179295
1020177021998
734097
771693
201705176
16/976,912
19710979.6
2020-545532
16/093,104
2017250505
3,020,179
2017800361853
17783080.9
19128645.9
2018-553235
MX/a/2018/012351
747221
63/237,727
Cyclobenzaprine Treatment for Sexual Dysfunction
Cyclobenzaprine Treatment for Sexual Dysfunction
Title
Title
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use (Allowed)
Magnesium-Containing Oxytocin Formulations and Methods of Use (Allowed)
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Labeled Oxytocin and Method of Manufacture and Use
Labeled Oxytocin and Method of Manufacture and Use
Labeled Oxytocin and Method of Manufacture and Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Magnesium-Containing Oxytocin Formulations and Methods of Use
Cationic Oxytocin Peptide Analogs
Country / Region
PCT
U.S.A
Country / Region
U.S.A.
Australia
Brazil
Canada
China
European Patent Office
Hong Kong
Israel
Japan
Japan
Republic of Korea
New Zealand
New Zealand
South Africa
U.S.A.
European Patent Office
Japan
U.S.A.
Australia
Canada
China
European Patent Office
Hong Kong
Japan
Mexico
New Zealand
U.S.A.
Title
Country / Region
Nociceptin/Orphanin FQ therapeutics
Application No.
BR122021007932-3
2,769,347
1614/CHENP/2012
Methods for Treatment of Pain
Methods for Treatment of Pain (Allowed)
Methods for Treatment of Pain
Tianeptine Oxalate – Salts and Crystalline Forms
Application No.
2017385958
BR112019013244-9
3,048,324
201780085697.9
17844642.3
62020006380.3
62020006381.1
P00201906474
267708
201917029300
2019-535330
MX/a/2019/007891
PI2019003711
754797
519402021
11201905974W
Title
Tianeptine Oxalate Salts and Polymorphs (Allowed)
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs, Compositions Comprising Same and Uses Thereof
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
Tianeptine Oxalate Salts and Polymorphs
36
Brazil
Canada
India
Country / Region
Australia
Brazil
Canada
China
European Patent Office
Hong Kong
Hong Kong
Indonesia
Israel
India
Japan
Mexico
Malaysia
New Zealand
Saudi Arabia
Singapore
Tianeptine Neurocognitive Dysfunction
Application No.
16/937,919
Method for Treating Neurocognitive Dysfunction
Tianeptine and Naloxone – Major Depressive Disorder
Title
Title
Country / Region
U.S.A.
Country / Region
Tianeptine Oxalate and Naloxone Treatment for Major Depressive Disorder
U.S.A.
Application No.
63/161,441
Novel Smallpox Vaccines
Application No.
14/207,727
Novel Smallpox Vaccines
Synthetic Chimeric Poxviruses
Application No.
15/802,189
P 20170103043
2017/34209
2017/41626
106137976
2017353868
BR112019008781-8
3,042,694
201780078546.0
17868045.0
201917021814
PID201904682
266399
2019-545700
PI2019002462
MX/a/2019/005102
752893
11201903893P
2019/02868
2017-000418
62020003684.1
62020003675.9
Synthetic Vaccinia Virus
Application No.
2019/37492
2019/41458
20190101165
108115290
17/050,946
2019262149
BR112020022181-3
3099330
201980029677.9
19796145.1
202017052398
P00202008694
278419
2020-560920
PI 2020005696
MX/a/2020/011586
768999
11202010272P
2020/06350
62021036744.2
62021038254.0
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Poxviruses
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Synthetic Chimeric Vaccinia Virus
Title
Title
Title
37
Country / Region
U.S.A.
Country / Region
U.S.A.
Argentina
Gulf Cooperation Council
Gulf Cooperation Council
Taiwan R.O.C.
Australia
Brazil
Canada
China
European Patent Office
India
Indonesia
Israel
Japan
Malaysia
Mexico
New Zealand
Singapore
South Africa
Venezuela
Hong Kong
Hong Kong
Country / Region
Gulf Cooperation Council
Gulf Cooperation Council
Argentina
Taiwan R.O.C.
U.S.A.
Australia
Brazil
Canada
China
European Patent Office
India
Indonesia
Israel
Japan
Malaysia
Mexico
New Zealand
Singapore
South Africa
Hong Kong
Hong Kong
Stem cells-scPV treatment
Application No.
2019/37505
2019/41460
20190101166
108115294
17/049,741
2019262150
3098145
201980029672.6
19797026.2
278420
2020-561064
62021038255.7
62021031667.0
Title
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Stem Cells Comprising Synthetic Chimeric Vaccinia Virus and Methods of Using Them
Poxvirus vaccine against COVID-19
Country / Region
Gulf Cooperation Council
Gulf Cooperation Council
Argentina
Taiwan R.O.C.
U.S.A.
Australia
Canada
China
European Patent Office
Israel
Japan
Hong Kong
Hong Kong
Application No.
PCT/US2021/020119
17/187,678
110107179
20210100512
63/315,520
Title
Country / Region
Recombinant Poxvirus Based Vaccine against SARS-CoV-2 virus
Recombinant Poxvirus Based Vaccine against SARS-CoV-2 virus
Recombinant Poxvirus Based Vaccine against SARS-CoV-2 virus
Recombinant Poxvirus Based Vaccine against SARS-CoV-2 virus
Recombinant Poxvirus Based Vaccine against SARS-CoV-2 virus
38
PCT
U.S.A.
Taiwan
Argentina
U.S.A.
Salts of glutathione
Application No.
17/442,258
2020249868
3,134,875
202080034626.8
20727359.0
286730
2021-557223
TFF2 therapeutics
Application No.
17/638,760
Not yet assigned
Not yet assigned
Not yet assigned
Not yet assigned
Not yet assigned
290910
2022-513154
MX/a/2022/002337
Not yet assigned
Not yet assigned
Radioprotection therapeutics
Application No.
PCT/US2021/031441
17/315,258
Detecting SARS-CoV-2
Application No.
PCT/US2021/042102
17/378,642
110126495
Title
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Salt forms of S-(N, N-diethylcarbamolyl) glutathione
Title
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Modified TFF2 polypeptides
Radio- and Chemo-Protective Compounds
Radio-Protective and Chemo-Protective Substituted Thiols
Title
Country / Region
U.S.A.
Australia
Canada
China
European Patent Office
Israel
Japan
Country / Region
U.S.A.
Australia
Canada
China
European Patent Office
India
Israel
Japan
Mexico
New Zealand
South Africa
Country / Region
PCT
U.S.A.
Skin-based Testing for Detection of Cell-Mediated Immune Responses to SARS-CoV-2
Skin-based Testing for Detection of Cell-Mediated Immune Responses to SARS-CoV-2
Skin-based Testing for Detection of Cell-Mediated Immune Responses to SARS-CoV-2
PCT
U.S.A.
Taiwan
Title
Country / Region
Clinical data statistical analysis
Application No.
PCT/US2021/056213
17/508,182
Randomization Honoring Methods to Assess the Significance of Interventions on Outcomes in Disorders
Randomization Honoring Methods to Assess the Significance of Interventions on Outcomes in Disorders
PCT
U.S.A.
Title
Country / Region
Sangivamycin and nucleoside analogs – Ebola virus
Application No.
16/348,867
3040540
17869003.8
Title
Methods of Treating and Inhibiting Ebola Virus Infection
Methods of Treating and Inhibiting Ebola Virus Infection
Methods of Treating and Inhibiting Ebola Virus Infection
Sangivamycin and nucleoside analogs – Coronavirus
Application No.
PCT/US2020/028567
PCT/US2021/016472
16/851,047
Method for Treating Coronavirus Infections
Method for Treating Coronavirus Infections
Method for Treating Coronavirus Infections
Title
39
Country / Region
U.S.A.
Canada
European Patent Office
Country / Region
PCT
PCT
U.S.A.
Sangivamycin and nucleoside analogs – Arenaviridae
Application No.
PCT/US2021/027352
Method for Treating Arenaviridae Infections
Sangivamycin and nucleoside analogs – Poxviridae
Application No.
PCT/US2021/027354
Method for Treating Poxviridae Infections
Title
Title
Trademarks and Service Marks
Country / Region
Country / Region
PCT
PCT
We seek trademark and service mark protection in the United States and outside of the United States where available and when appropriate. We are the owner of the
following U.S. federally registered marks: TONIX PHARMACEUTICALS (Reg. No. 4656463, issued December 16, 2014) and TONMYA (Reg. No. 4868328, issued
December 8, 2015).
We are the owner of the following marks for which applications for U.S. federal registration are currently pending: FYMRALIN (Serial No. 88/064191, filed August
3, 2018), MODALTIN (Serial No. 88/196892, filed November 16, 2018), RAPONTIS (Serial No. 88/196897, filed November 16, 2018), PROTECTIC (Serial No. 88/196912,
filed November 16, 2018), TONIX PHARMACEUTICALS (Serial No. 88/896150, filed April 30, 2020), and ANGSTRO-TECHNOLOGY (Serial No. 88/690384, filed
November 13, 2019) and TONMYA (Serial No. 97/185424, filed December 22, 2021).
Research and Development
We have approximately 52 employees dedicated to research and development. Our research and development operations are located in Chatham, NJ, Dartmouth, MA,
Frederick, Maryland, San Diego, CA, Dublin, Ireland and Montreal, Canada. We have used, and expect to continue to use, third parties to conduct our nonclinical and clinical
studies. We acquired the infectious disease RDC in Frederick, Maryland consisting of two buildings totaling approximately 48,000 square feet. The acquisition closed in
October 2021 and was operational at closing, but as of December 31, 2021, the facility was not ready for its intended use. It is our intention to have the facility ready for use in
the first half of 2022.
Manufacturing
We have contracted with a third-party cGMP-compliant contract manufacturer organization, or CMOs, for the manufacture of TNX-102 SL drug substances and drug
products for investigational purposes, including nonclinical and clinical testing. For TNX-102 SL, we have engaged a cGMP facility for manufacturing of to-be-marketed
product for Phase 3 clinical and commercial. Our manufacturing operations are managed and controlled in Dublin, Ireland.
All of our small molecules drug candidates are synthesized using industry standard processes, and our drug products are formulated using commercially available
pharmaceutical grade excipients.
Our smallpox-preventing vaccine candidate is a biologic and uses live form of horsepox. Both the drug substance (HPVX and the cell bank) and the drug product
(vaccine) will be manufactured by contract cGMP-compliant facilities capable of manufacturing for nonclinical/clinical testing and licensed product.
On September 28, 2020, we completed the purchase of our 40,000 square foot facility in Massachusetts, to house our new Advanced Development Center for
accelerated development and manufacturing of vaccines. As of December 31, 2021, the facility was not ready for its intended use.
On December 23, 2020, we completed the purchase of our approximately 44-acre site in Hamilton, Montana, for the construction of a vaccine development and
commercial scale manufacturing facility. As of December 31, 2021, the facility was not ready for its intended use.
On March 5, 2021, the Company announced that it entered into a $2.9 million non-binding Purchase and Sale Agreement in connection with a property in
Massachusetts, which is expected to close in the second quarter of 2022. The Property is intended for process development activities.
Government Regulations
The FDA and other federal, state, local and foreign regulatory agencies impose substantial requirements upon the clinical development, approval, labeling,
manufacture, marketing and distribution of drug products. These agencies regulate, among other things, research and development activities and the testing, approval,
manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, advertising and promotion of our product candidates. The regulatory approval process is
generally lengthy and expensive, with no guarantee of a positive result. Moreover, failure to comply with applicable requirements by the FDA or other requirements may result
in civil or criminal penalties, recall or seizure of products, injunctive relief including partial or total suspension of production, or withdrawal of a product from the market.
40
The FDA regulates, among other things, the research, manufacture, promotion and distribution of drugs in the U.S. under the FDCA and other statutes and
implementing regulations. The process required by the FDA before prescription drug product candidates may be marketed in the U.S. generally involves the following:
● completion of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA’s Good Laboratory
Practice regulations;
● submission to the FDA of an IND, which must become effective before human clinical trials may begin;
● performance of adequate and well-controlled human clinical trials in accordance with the FDA’s regulations, including Good Clinical Practices, to establish the
safety and efficacy of the product candidate for each proposed indication;
● submission to the FDA of an NDA for drug products, or a Biologics License Application, or BLA, for biologic products;
● satisfactory completion of a preapproval inspection by the FDA of the manufacturing facilities at which the product is produced to assess compliance with cGMP
regulations; and
● the FDA’s review and approval of the NDA or BLA prior to any commercial marketing, sale or shipment of the drug.
The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will
be granted on a timely basis, if at all.
Nonclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals and other animal
studies. The results of nonclinical tests, together with manufacturing information and analytical data, are submitted as part of an IND to the FDA. Some nonclinical testing may
continue even after an IND is submitted. The IND also includes one or more protocols for the initial clinical trial or trials and an investigator’s brochure. An IND automatically
becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating to the proposed clinical trials as
outlined in the IND and places the clinical trial on a clinical hold. In such cases, the IND sponsor and the FDA must resolve any outstanding concerns or questions before any
clinical trials can begin. Clinical trial holds also may be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory requirements.
An independent Institutional Review Board, or IRB, at each of the clinical centers proposing to conduct the clinical trial must review and approve the plan for any clinical trial
before it commences at that center. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are reasonable in
relation to anticipated benefits. The IRB also approves the consent form signed by the trial participants and must monitor the study until completed.
Clinical Trials
Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualified medical investigators according to approved
protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor participant safety. Each
protocol for a U.S. study is submitted to the FDA as part of the IND.
Human clinical trials are typically conducted in three sequential phases, but the phases may overlap, or be combined.
● Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product
candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
● Phase 2 clinical trials are generally conducted in a limited patient population to gather evidence about the efficacy of the product candidate for specific, targeted
indications; to determine dosage tolerance and optimal dosage; and to identify possible adverse effects and safety risks. Phase 2 clinical trials, in particular Phase
2b trials, can be undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites.
● Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial
sites. The size of Phase 3 clinical trials depends upon clinical and statistical considerations for the product candidate and disease. Phase 3 clinical trials are
intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labeling.
41
Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial approval. These clinical trials are used to gain additional
experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
Clinical testing must satisfy the extensive regulations of the FDA. Reports detailing the results of the clinical trials must be submitted at least annually to the FDA and
safety reports must be submitted for serious and unexpected adverse events. Success in early-stage clinical trials does not assure success in later-stage clinical trials. The FDA,
an IRB or we may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health
risk.
New Drug Applications
Assuming successful completion of the required clinical trials, the results of product development, nonclinical studies and clinical trials are submitted to the FDA as
part of an NDA (or BLA, in the case of a biologic product). An NDA or BLA also must contain extensive manufacturing information, as well as proposed labeling for the
finished product. An NDA or BLA applicant must develop information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the
product in accordance with cGMP. The manufacturing process must be capable of consistently producing quality product within specifications approved by the FDA. The
manufacturer must develop methods for testing the quality, purity and potency of the final product. In addition, appropriate packaging must be selected and tested, and stability
studies must be conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf life. Prior to approval, the FDA will conduct an inspection
of the manufacturing facilities to assess compliance with cGMP.
The FDA reviews all NDAs and BLAs submitted before it accepts them for filing. The FDA may request additional information rather than accept an NDA for filing.
In this event, the NDA or BLA must be resubmitted with the additional information and is subject to review before the FDA accepts it for filing. After an application is filed,
the FDA may refer the NDA or BLA to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what
conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers them carefully when making decisions. The FDA may deny approval of
an NDA or BLA if the applicable regulatory criteria are not satisfied. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently
than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical or other data or impose other conditions that must be met
in order to secure final approval of the NDA or BLA. If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the
indications for use may otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require us to conduct Phase 4 testing which
involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA or BLA approval, and may require surveillance programs to monitor the safety of
approved products which have been commercialized. Once issued, the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety or
efficacy questions are raised after the product reaches the market.
Section 505(b) NDAs
There are two types of NDAs: the Section 505(b)(1) NDA, or full NDA, and the Section 505(b)(2) NDA. We intend to file Section 505(b)(2) NDAs for TNX-102 SL
for FM and PTSD, and for certain other products, that might, if accepted by the FDA, save time and expense in the development and testing of our product candidates. We may
need to file a Section 505(b)(1) NDA for certain other products in the future. A full NDA is submitted under Section 505(b)(1) of the FDCA, and must contain full reports of
investigations conducted by the applicant to demonstrate the safety and effectiveness of the drug. A Section 505(b)(2) NDA may be submitted for a drug for which one or more
of the investigations relied upon by the applicant was not conducted by or for the applicant and for which the applicant has no right of reference from the person by or for
whom the investigations were conducted. A Section 505(b)(2) NDA may be submitted based in whole or in part on published literature or on the FDA’s finding of safety and
efficacy of one or more previously approved drugs, which are known as reference drugs. Thus, the filing of a Section 505(b)(2) NDA may result in approval of a drug based on
fewer clinical or nonclinical studies than would be required under a full NDA. The number and size of studies that need to be conducted by the sponsor depends on the amount
and quality of data pertaining to the reference drug that are publicly available, and on the similarity of and differences between the applicant’s drug and the reference drug. In
some cases, extensive, time-consuming, and costly clinical and nonclinical studies may still be required for approval of a Section 505(b)(2) NDA.
Our drug approval strategy for our new formulations of approved chemical entities is to submit Section 505(b)(2) NDAs to the FDA. As such, we plan to submit an
NDA under Section 505(b)(2) for TNX-102 SL for FM, PTSD and Long COVID; TNX-1900, TNX-2900 and TNX-601 CR. The FDA may not agree that these product
candidates are approvable as a Section 505(b)(2) NDA. If the FDA determines that a Section 505(b)(2) NDA is not appropriate and that a full NDA is required, the time and
financial resources required to obtain FDA approval could substantially and materially increase, and be less likely to be approved. If the FDA requires a full NDA, or requires
more extensive testing and development for some other reason, our ability to compete with alternative products that arrive on the market more quickly than our product
candidates would be adversely impacted. If reference listed products are withdrawn from the market by the FDA for a safety reason, we may not be able to reference such
products to support our anticipated 505(b)(2) NDAs, and we may be required to follow the requirements of Section 505(b)(1).
42
Patent Protections
An applicant submitting a Section 505(b)(2) NDA must certify to the FDA with respect to the patent status of the reference drug upon which the applicant relies in
support of approval of its drug. With respect to every patent listed in the FDA’s Orange Book, which is the FDA’s list of approved drug products, as claiming the reference drug
or an approved method of use of the reference drug, the Section 505(b)(2) applicant must certify that: (1) there is no patent information listed in the orange book for the
reference drug; (2) the listed patent has expired; (3) the listed patent has not expired, but will expire on a particular date; (4) the listed patent is invalid or will not be infringed
by the manufacture, use, or sale of the product in the Section 505(b)(2) NDA; or (5) if the patent is a use patent, that the applicant does not seek approval for a use claimed by
the patent. If the applicant files a certification to the effect of clause (1), (2) or (5), FDA approval of the Section 505(b)(2) NDA may be made effective immediately upon
successful FDA review of the application, in the absence of marketing exclusivity delays, which are discussed below. If the applicant files a certification to the effect of clause
(3), the Section 505(b)(2) NDA approval may not be made effective until the expiration of the relevant patent and the expiration of any marketing exclusivity delays.
If the Section 505(b)(2) NDA applicant provides a certification to the effect of clause (4), referred to as a paragraph IV certification, the applicant also must send
notice of the certification to the patent owner and the holder of the NDA for the reference drug. The filing of a patent infringement lawsuit within 45 days of the receipt of the
notification may prevent the FDA from approving the Section 505(b)(2) NDA for 30 months from the date of the receipt of the notification unless the court determines that a
longer or shorter period is appropriate because either party to the action failed to reasonably cooperate in expediting the action. However, the FDA may approve the Section
505(b)(2) NDA before the 30 months have expired if a court decides that the patent is invalid or not infringed, or if a court enters a settlement order or consent decree stating
the patent is invalid or not infringed.
Notwithstanding the approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years certain brand-name pharmaceutical companies and
others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged in court, the FDA may be
required to change its interpretation of Section 505(b)(2) which could delay or even prevent the FDA from approving any Section 505(b)(2) NDA that we submit. The
pharmaceutical industry is highly competitive, and it is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay
approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of
the new product. Moreover, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition.
Marketing Exclusivity
Market exclusivity provisions under the FDCA can delay the submission or the approval of Section 505(b)(2) NDAs, thereby delaying a Section 505(b)(2) product
from entering the market. The FDCA provides five-year marketing exclusivity to the first applicant to gain approval of an NDA for an NCE, meaning that the FDA has not
previously approved any other drug containing the same active moiety. This exclusivity prohibits the submission of a Section 505(b)(2) NDA for any drug product containing
the active ingredient during the five-year exclusivity period. However, submission of a Section 505(b)(2) NDA that certifies that a listed patent is invalid, unenforceable, or will
not be infringed, as discussed above, is permitted after four years, but if a patent infringement lawsuit is brought within 45 days after such certification, FDA approval of the
Section 505(b)(2) NDA may automatically be stayed until 7½ years after the NCE approval date. The FDCA also provides three years of marketing exclusivity for the approval
of new and supplemental NDAs for product changes, including, among other things, new indications, dosage forms, routes of administration or strengths of an existing drug, or
for a new use, if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by FDA to be essential to the
approval of the application. Five-year and three-year exclusivity will not delay the submission or approval of another full NDA; however, as discussed above, an applicant
submitting a full NDA under Section 505(b)(1) would be required to conduct or obtain a right of reference to all of the nonclinical and adequate and well-controlled clinical
trials necessary to demonstrate safety and effectiveness.
Other types of exclusivity in the United States include orphan drug exclusivity and pediatric exclusivity. The FDA may grant orphan drug designation to a drug
intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000
individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of
disease or condition will be recovered from sales in the United States for that drug. Seven-year orphan drug exclusivity is available to a product that has orphan drug
designation and that receives the first FDA approval for the indication for which the drug has such designation. Orphan drug exclusivity prevents approval of another
application for the same drug for the same orphan indication, for a period of seven years, regardless of whether the application is a full NDA or a Section 505(b)(2) NDA,
except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. Pediatric exclusivity, if granted, provides an additional six
months to an existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which runs from the end of other exclusivity
protection or patent delay, may be granted based on the voluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.
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Section 505(b)(2) NDAs are similar to full NDAs filed under Section 505(b)(1) in that they are entitled to any of these forms of exclusivity if they meet the qualifying
criteria. They also are entitled to the patent protections described above, based on patents that are listed in the FDA’s Orange Book in the same manner as patents claiming
drugs and uses approved for NDAs submitted as full NDAs.
Breakthrough Therapy Designation
The Food and Drug Administration Safety and Innovation Act, or FDASIA, Section 902 provides for Breakthrough Therapy designation. A Breakthrough Therapy is a
drug:
● intended alone or in combination with one or more other drugs to treat a serious or life-threatening disease or condition; and
● preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant
endpoints, such as substantial treatment effects observed early in clinical development.
Fast Track Designation
A Fast Track is a designation by the FDA of an investigational drug which:
● intended alone or in combination with one or more other drugs to treat a serious or life-threatening disease or condition; and
● non-clinical or clinical data demonstrate the potential to address an unmet medical need
Fast track is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill an unmet medical need. The benefits
of a Fast Track designation include rolling submission of portions of the NDA for the drug candidate and eligibility for priority review of the NDA. Additionally, more frequent
meetings and written communication with the FDA regarding the development plan and trial design for the drug candidate are encouraged throughout the entire drug
development and review process, with the goal of having earlier drug approval and access for patients.
Material Threat Medical Countermeasures
In 2016, the 21st Century Cures Act, or Act, was signed into law to support ongoing biomedical innovation. One part of the Act, Section 3086, is aimed at
“Encouraging Treatments for Agents that Present a National Security Threat.” The Act created a new priority review voucher program for approved “material threat medical
countermeasure applications.” The Act defines such countermeasures as drug or biological products, including vaccines intended to treat biological, chemical, radiological, or
nuclear agents that present a national security threat or to treat harm from a condition that may be caused by administering a drug or biological product against such an agent.
The Department of Homeland Security has identified 13 such threats, including anthrax, smallpox, Ebola/Marburg, tularemia, botulinum toxin, and pandemic influenza, which
includes the SARS coronavirus 2, known as SARS-CoV-2. A priority review voucher can be applied to any other product application; it shortens the FDA review timeline for a
new application from 10-12 months to 6 months. The recipient of a priority review voucher may transfer it. We intend to seek a priority review voucher if and when a TNX-801
Biologics License Application is approved as a material threat medical countermeasure. However, the Priority Review Voucher program provision of the 21st Century Cures
Act is set to expire in 2023. If TNX-801 does not receive FDA licensure by 2023, we may not be able to capitalize on the incentives contained in the 21st Century Cures Act
unless the provision allowing for the Priority Review Voucher Program is extended until such time as TNX-801 is licensed.
Other Regulatory Requirements
Maintaining substantial compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and financial
resources. Drug manufacturers are required to register their establishments with the FDA and certain state agencies, and after approval, the FDA and these state agencies
conduct periodic unannounced inspections to ensure continued compliance with ongoing regulatory requirements, including cGMPs. In addition, after approval, some types of
changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. The
FDA may require post-approval testing and surveillance programs to monitor safety and the effectiveness of approved products that have been commercialized. Any drug
products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including:
● record-keeping requirements;
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● reporting of adverse experiences with the drug;
● providing the FDA with updated safety and efficacy information;
● reporting on advertisements and promotional labeling;
● drug sampling and distribution requirements; and
● complying with electronic record and signature requirements.
In addition, the FDA strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market. There are numerous
regulations and policies that govern various means for disseminating information to health-care professionals as well as consumers, including to industry sponsored scientific
and educational activities, information provided to the media and information provided over the Internet. Drugs may be promoted only for the approved indications and in
accordance with the provisions of the approved label.
The FDA has very broad enforcement authority and the failure to comply with applicable regulatory requirements can result in administrative or judicial sanctions
being imposed on us or on the manufacturers and distributors of our approved products, including warning letters, refusals of government contracts, clinical holds, civil
penalties, injunctions, restitution and disgorgement of profits, recall or seizure of products, total or partial suspension of production or distribution, withdrawal of approvals,
refusal to approve pending applications, and criminal prosecution resulting in fines and incarceration. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. In addition, even
after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of
the product from the market.
Coverage and Reimbursement
Sales of our product candidates, if approved, will depend, in part, on the extent to which such products will be covered by third-party payors, such as government
health care programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly limiting coverage or reducing reimbursements for
medical products and services. In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-containment programs,
including price controls, restrictions on reimbursement and requirements for substitution of generic products. Third-party payors decide which therapies they will pay for and
establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement
policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any drug candidates that we develop will be made on a payor-
by-payor basis. Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its
formulary it will be placed. The position on a payor’s list of covered drugs, or formulary, generally determines the co-payment that a patient will need to make to obtain the
therapy and can strongly influence the adoption of such therapy by patients and physicians. Adoption of price controls and cost-containment measures, and adoption of more
restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our product
candidates or a decision by a third-party payor to not cover our product candidates could reduce physician usage of our product candidates, once approved, and have a material
adverse effect on our sales, results of operations and financial condition.
Other Healthcare Laws
Because of our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors, we will also be
subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we will conduct our business, including our
clinical research, proposed sales, marketing and educational programs. Failure to comply with these laws, where applicable, can result in the imposition of significant civil
penalties, criminal penalties, or both. The U.S. laws that may affect our ability to operate, among others, include: the federal Health Insurance Portability and Accountability
Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare
transactions and protects the security and privacy of protected health information; certain state laws governing the privacy and security of health information in certain
circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus
complicating compliance efforts; the federal healthcare programs’ Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting,
receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation
of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs; federal false claims laws which
prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party
payors that are false or fraudulent; federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to
healthcare matters; the Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S.
Department of Health and Human Services information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists,
podiatrists and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members; and state law equivalents
of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial
insurers.
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In addition, many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply regardless of
payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, to the extent that our product is sold in a foreign country, we may be
subject to similar foreign laws.
The Impact of New Legislation and Amendments to Existing Laws
The FDCA is subject to routine legislative amendments with a broad range of downstream effects. In addition to new legislation, such as the FDA Reauthorization Act
of 2017 or the FDASIA in 2012, Congress introduces amendments to reauthorize drug user fees and address emerging concerns every five years. We cannot predict the impact
of these new legislative acts and their implementing regulations on our business. The programs established or to be established under the legislation may have adverse effects
upon us, including increased regulation of our industry. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities. In
addition, the FDA’s regulations, policies and guidance are often revised or reinterpreted by the agency or the courts in ways that may significantly affect our business and our
products.
We expect that additional federal and state, as well as foreign, healthcare reform measures will be adopted in the future, any of which could result in reduced demand
for our products or additional pricing pressure.
Human Capital Resources
As of March 14, 2022, we had 73 full-time employees, of whom 12 hold M.D. or Ph.D. degrees. We have 52 employees dedicated to research and development. None
of our employees are represented by a collective bargaining agreement. We believe that the skills, experience and industry knowledge of our key employees significantly
benefit our operations and performance. Our research and development operations are located in Chatham, NJ, San Diego, CA, Dartmouth, MA, Frederick, Maryland, Dublin,
Ireland and Montreal, Canada. We have used, and expect to continue to use, third parties to conduct our nonclinical and clinical studies as well as part-time employees.
Employee health and safety in the workplace is one of our core values. The COVID-19 pandemic has underscored for us the importance of keeping our employees safe
and healthy. In response to the pandemic, we have taken actions aligned with the World Health Organization and the Centers for Disease Control and Prevention in an effort to
protect our workforce so they can more safely and effectively perform their work.
Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully.
Corporate Information
We lease the space for our principal executive offices, which are located at 26 Main Street, Suite 101, Chatham, New Jersey 07928, and our telephone number is (862)
799 8599. Our website addresses are www.tonixpharma.com, www.tonix.com, and www.krele.com. We do not incorporate the information on our websites into this annual
report, and you should not consider such information part of this annual report.
We were incorporated on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. On October 11, 2011, we changed our name to
Tonix Pharmaceuticals Holding Corp.
Item 1A. Risk Factors
Summary of Risk Factors
● We have a history of operating losses and may never generate revenues or achieve profitability.
● We expect our operating results to fluctuate, which may make it difficult to predict our future performance.
● Our product candidates are novel and still in development.
● We do not expect to generate any revenues from product sales in the foreseeable future, if at all.
● We are largely dependent on the success of our product candidates and cannot be certain that our product candidates will receive regulatory approval or be successfully
commercialized.
● Clinical studies required for our product candidates are expensive and time-consuming, and their outcome is uncertain.
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● We are subject to extensive and costly government regulation.
● We have never submitted an NDA before, and may be unable to do so for our product candidates we are developing.
● 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.
● We may be unable to meet our anticipated development and commercialization timelines for approval of any of our product candidates.
● Any breakthrough, fast track or orphan drug designation or grant of priority review status by the FDA may not actually lead to a faster development or regulatory
review or approval process, nor assure FDA approval of our product candidates.
● Even if approved, our products may not be accepted by the market.
● 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.
● Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our
audited financial statements. We may be unable to continue to operate without the threat of liquidation for the foreseeable future.
● We will need additional capital. If additional capital is not available or is available at unattractive terms, we may be forced to delay, reduce the scope of or eliminate
our research and development programs, reduce our commercialization efforts or curtail our operations.
● Outbreaks of communicable diseases may materially and adversely affect our business, financial condition and results of operations.
● Competition and technological change may make our product candidates and technologies less attractive or obsolete.
● If we fail to protect our intellectual property rights, our ability to pursue the development of our technologies and products would be negatively affected.
● We may be involved in lawsuits to protect or enforce our patents, which could be expensive and time consuming.
● If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, and defend against litigation.
● We rely on third parties to conduct, supervise and monitor our clinical studies, and if those third parties perform in an unsatisfactory manner, it may harm our business.
● We will need to expand our operations and increase the size of our company, and we may experience difficulties in managing growth.
● Our executive officers and other key personnel are critical to our business, and our future success depends on our ability to retain them.
● If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.
● We rely on third parties to manufacture the compounds used in our studies, and we intend to rely on them for the manufacture of any approved products for
commercial sale. If these third parties do not manufacture our product candidates in sufficient quantities and at an acceptable cost, clinical development and
commercialization of our product candidates could be delayed, prevented or impaired.
● Failure by our third-party manufacturers to comply with the regulatory guidelines set forth by the FDA with respect to our product candidates could delay or prevent
the completion of clinical studies, the approval of any product candidates or the commercialization of our products.
● Adverse global conditions, including economic uncertainty, may negatively impact our financial results.
● Our internal computer systems, or those of our CRO’s or other contractors or consultants, may fail or suffer security breaches, which could result in a material
disruption of our product development programs.
● Corporate and academic collaborators may take actions to delay, prevent, or undermine the success of our products.
● Data provided by collaborators and others upon which we rely that has not been independently verified could turn out to be false, misleading, or incomplete.
● Our product candidates may face competition sooner than expected.
● If we fail to establish marketing, sales and distribution capabilities, or fail to enter into arrangements with third parties, we will not be able to create a market for our
product candidates.
● Our relationships with customers, physicians, and third-party payors will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false
claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such
laws, we could face substantial penalties.
● Coverage and adequate reimbursement may not be available for our current or any future drug candidates, which could make it difficult for us to sell profitably, if
approved.
● Healthcare legislative reform measures may have a negative impact on our business and results of operations.
● If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations could materially
adversely affect our business.
● We face the risk of product liability claims and may not be able to obtain insurance.
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● We 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.
● If we retain collaborative partners and our partners do not satisfy their obligations, we will be unable to develop our partnered product candidates.
● We may be unsuccessful in obtaining a priority review voucher for material threat medical countermeasures.
● Government entities may take actions that directly or indirectly have the effect of limiting opportunities for our vaccines for COVID-19.
● If technology developed for the purposes of developing new medicines or vaccines can be applied to the creation or development of biological weapons, then our
technology may be considered “dual use” technology and be subject to limitations on public disclosure or export.
● We face risks in connection with existing and future collaborations with respect to the development, manufacture, and commercialization of our product candidates.
● We face risks in connection with the testing, production and storage of our vaccine product candidates.
● An active trading market for our common stock may not be sustained.
● The market price of our common stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.
● We could be delisted from Nasdaq, which could seriously harm the liquidity of our stock and our ability to raise capital.
● We do not anticipate paying dividends on our common stock and, accordingly, shareholders must rely on stock appreciation for any return on their investment.
● We expect that our quarterly results of operations will fluctuate, and this fluctuation could cause our stock price to decline.
● If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if we discover material weaknesses and
deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.
● If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our
stock price and trading volume could decline.
● Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions under our corporate charter and bylaws, as well
as Nevada law.
● Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions under our corporate charter and bylaws, as well
as Nevada law.
● Our bylaws designate the Eighth Judicial District Court of Clark County, Nevada as the sole and exclusive forum for certain types of actions and proceedings that may
be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers,
employees or agents.
RISKS RELATED TO OUR BUSINESS
We have a history of operating losses and expect to incur losses for the foreseeable future. We may never generate revenues or, if we are able to generate revenues, achieve
profitability.
We are focused on product development, and we have not generated any revenues to date. We have incurred losses in each year of our operations, and we expect to
continue to incur operating losses for the foreseeable future. These operating losses have adversely affected and are likely to continue to adversely affect our working capital,
total assets and shareholders’ equity.
We and our prospects should be examined in light of the risks and difficulties frequently encountered by new and early-stage companies in new and rapidly evolving
markets. These risks include, among other things, the speed at which we can scale up operations, our complete dependence upon development of our product candidates that
currently have no market acceptance, our ability to establish and expand our brand name, our ability to expand our operations to meet the commercial demand of our clients,
our development of and reliance on strategic and customer relationships and our ability to minimize fraud and other security risks.
The process of developing our products requires significant clinical, nonclinical and CMC development, laboratory testing and clinical studies. In addition,
commercialization of our product candidates will require that we obtain necessary regulatory approvals and establish sales, marketing and manufacturing capabilities, either
through internal hiring or through contractual relationships with others. We expect to incur substantial losses for the foreseeable future as a result of anticipated increases in our
research and development costs, including costs associated with conducting preclinical and nonclinical testing and clinical studies, and regulatory compliance activities.
We expect to incur substantial additional operating expenses over the next several years as our research, development, preclinical and nonclinical testing, and clinical
study activities increase, and if and when we acquire rights to additional product candidates. The amount of future losses and when, if ever, we will achieve profitability are
uncertain. We have no products that have generated any commercial revenue, do not expect to generate revenues from the commercial sale of products in the near future, and
might never generate revenues from the sale of products. Our ability to generate revenue and achieve profitability will depend on, among other things, successful completion of
the development of our product candidates; obtaining necessary regulatory approvals from the FDA; establishing manufacturing, sales, and marketing arrangements with third
parties; successfully commercializing our products; establishing a favorable competitive position; and raising sufficient funds to finance our activities. Many of these factors
will depend on circumstances beyond our control. We might not succeed at any of these undertakings. If we are unsuccessful at some or all of these undertakings, our business,
prospects, and results of operations may be materially adversely affected.
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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 development-stage biopharmaceutical and our operations to date have been primarily limited to developing our technology and undertaking preclinical and
nonclinical testing and clinical studies of our clinical-stage product candidate, TNX-102 SL for FM and PTSD. We have not yet obtained regulatory approvals for TNX-102 SL
or any of our other product candidates. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a longer
operating history or 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, among other things:
● our ability to obtain additional funding to develop our product candidates;
● delays in the commencement, enrollment and timing of clinical studies;
● the success of our clinical studies through all phases of clinical development, including studies of our most advanced product candidate, TNX-102 SL for FM and
PTSD;
● any delays in regulatory review and approval of product candidates in clinical development;
● our ability to obtain and maintain regulatory approval for our product candidate TNX-102 SL for FM and PTSD or any of our other product candidates in the
United States and foreign jurisdictions;
● potential nonclinical toxicity and/or side effects of our product candidates that could delay or prevent commercialization, limit the indications for any approved
drug, require the establishment of REMS, or cause an approved drug to be taken off the market;
● our ability to establish or maintain collaborations, licensing or other arrangements;
● market acceptance of our product candidates;
● 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 leverage our proprietary technology platform to discover and develop additional product candidates;
● our ability and our licensors’ abilities to successfully obtain, maintain, defend and enforce intellectual property rights important to our business; and
● potential product liability claims;
Accordingly, the results of any quarterly or annual periods should not be relied upon as indications of future operating performance.
RISKS RELATED TO PRODUCT DEVELOPMENT, REGULATORY APPROVAL, MANUFACTURING AND COMMERCILAIZATION
Our product candidates are novel and still in development.
We are a clinical-stage pharmaceutical company focused on the development of drug product candidates, all of which are still in development. Our drug development
methods may not lead to commercially viable drugs for any of several reasons. For example, we may fail to identify appropriate targets or compounds, our drug candidates may
fail to be safe and effective in clinical studies, or we may have inadequate financial or other resources to pursue development efforts for our drug candidates. Our drug
candidates will require significant additional development, clinical studies, regulatory clearances and additional investment by us or our collaborators before they can be
commercialized.
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Further, we and our product candidates are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among
other things, research, testing, clinical studies, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping. We are not permitted to market any of
our product candidates in the United States until we receive approval of an NDA for a product candidate from the FDA or the equivalent approval from a foreign regulatory
authority. Obtaining FDA approval is a lengthy, expensive and uncertain process. We currently have one product candidate, TNX-102 SL, in Phase 3 development for the
treatment of FM and Phase 2 development for the treatment of PTSD. The success of our business currently depends on the successful development, approval and
commercialization of our product candidates and TNX-102 SL. Any projected sales or future revenue predictions are predicated upon FDA approval and market acceptance. If
projected sales do not materialize for any reason, it would have a material adverse effect on our business and our ability to continue operations.
As we have no approved products on the market, we 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 generated no product revenues. We have funded our operations primarily from sales of our securities.
We have not received, and do not expect to receive for at least the next couple of 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. We may never succeed in these activities, and we may not generate sufficient revenues to continue our business operations or
achieve profitability.
We are largely dependent on the success of our lead product candidates, and we cannot be certain that these product candidates will receive regulatory approval or be
successfully commercialized.
We have not yet submitted an NDA or foreign equivalent or received marketing approval for our lead product candidates anywhere in the world. The clinical
development programs may not lead to commercial products for a number of reasons, including if we fail to obtain necessary approvals from the FDA or foreign regulatory
authorities because our clinical studies fail to demonstrate to their satisfaction that this product candidate is safe and effective or a clinical program may be put on hold due to
unexpected safety issues. We may also fail to obtain the necessary approvals if we have inadequate financial or other resources to advance our product candidates through the
clinical study process. Any failure or delay in completing clinical studies or obtaining regulatory approvals for our lead product candidates in a timely manner would have a
material adverse impact on our business and our stock price.
We may not commence or advance clinical trials for COVID-related products if the COVID-19 disease outbreak subsides.
Disease outbreaks are unpredictable. For example, the SARS virus disappeared just four months after it caused a global panic. In the event that COVID-19 has a
similar disease cycle, we may be forced to abandon or delay the development of our COVID-related products due to a lack of patients or government funding.
Successful development of our products is uncertain.
Our development of current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical products,
including: delays in product development, clinical testing, or manufacturing; unplanned expenditures in product development, clinical testing, or manufacturing; failure to
receive regulatory approvals; emergence of superior or equivalent products; inability to manufacture on its own, or through any others, product candidates on a commercial
scale; and failure to achieve market acceptance.
Because of these risks, our research and development efforts may not result in any commercially viable products. If a significant portion of these development efforts
are not successfully completed, required regulatory approvals are not obtained or any approved products are not commercially successfully, our business, financial condition,
and results of operations may be materially harmed.
Clinical studies required for our product candidates are expensive and time-consuming, and their outcome is uncertain.
In order to obtain FDA approval to market a new pharmaceutical product, we must demonstrate proof of safety and effectiveness in humans. To meet these
requirements, we must conduct “adequate and well controlled” clinical studies. Conducting clinical studies is a lengthy, time-consuming, and expensive process. The length of
time may vary substantially according to the type, complexity, novelty, and intended use of the product candidate, and often can be several years or more per study. Delays
associated with products for which we are directly conducting clinical studies may cause us to incur additional operating expenses. The commencement and rate of completion
of clinical studies may be delayed by many factors, including, for example: inability to manufacture sufficient quantities of stable and qualified materials under cGMP, for use
in clinical studies; slower than expected rates of patient recruitment; failure to recruit a sufficient number of patients; modification of clinical study protocols; changes in
regulatory requirements for clinical studies; the lack of effectiveness during clinical studies; the emergence of unforeseen safety issues; delays, suspension, or termination of the
clinical studies due to the ITB responsible for overseeing the study at a particular study site; and government or regulatory delays or “clinical holds” requiring suspension or
termination of the studies.
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The results from early clinical studies are not necessarily predictive of results obtained in later clinical studies. Accordingly, even if we obtain positive results from
early clinical studies, we may not be able to confirm the results in future clinical studies. In addition, clinical studies may not demonstrate sufficient safety and effectiveness to
obtain the requisite regulatory approvals for product candidates.
Our clinical studies may be conducted in patients with CNS conditions, and in some cases, our product candidates are expected to be used in combination with
approved therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer adverse medical events or die for reasons
that may or may not be related to our product candidates. We cannot ensure that safety issues will not arise with respect to our product candidates in clinical development.
The failure of clinical studies to demonstrate safety and effectiveness for the desired indications could harm the development of that product candidate and other
product candidates. This failure could cause us to abandon a product candidate and could delay development of other product candidates. Any delay in, or termination of, our
clinical studies would delay the filing of our NDAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues. Any
change in, or termination of, our clinical studies could materially harm our business, financial condition, and results of operations.
We are subject to extensive and costly government regulation.
Product candidates employing our technology are subject to extensive and rigorous domestic government regulation including regulation by the FDA, the Centers for
Medicare and Medicaid Services, other divisions of the United States Department of Health and Human Services, the United States Department of Justice, state and local
governments, and their respective foreign equivalents. The FDA regulates the research, development, preclinical and nonclinical testing and clinical studies, manufacture,
safety, effectiveness, record-keeping, reporting, labeling, storage, approval, advertising, promotion, sale, distribution, import, and export of biopharmaceutical products. The
FDA regulates small molecule chemical entities as drugs, subject to an NDA under the FDCA. The FDA applies the same standards for biologics, requiring an IND application,
followed by a Biologic License Application, or BLA, prior to licensure. Other products, such as vaccines, are also regulated under the Public Health Service Act. FDA has
conflated the standards for approval of NDAs and BLAs so that they require the same types of information on safety, effectiveness, and CMCs. If products employing our
technologies are marketed abroad, they will also be subject to extensive regulation by foreign governments, whether or not they have obtained FDA approval for a given
product and its uses. Such foreign regulation may be equally or more demanding than corresponding United States regulation.
Government regulation substantially increases the cost and risk of researching, developing, manufacturing, and selling our products. The regulatory review and
approval process, which includes preclinical and nonclinical testing and clinical studies of each product candidate, is lengthy, expensive, and uncertain. We or our collaborators
must obtain and maintain regulatory authorization to conduct clinical studies. We or our collaborators must obtain regulatory approval for each product we intend to market,
and the manufacturing facilities used for the products must be inspected and meet legal requirements. Securing regulatory approval requires the submission of extensive
preclinical, nonclinical and clinical data and other supporting information for each proposed therapeutic indication in order to establish the product’s safety and efficacy, and in
the case of biologics also potency and purity, for each intended use. The development and approval process takes many years, requires substantial resources, and may never
lead to the approval of a product.
Even if we are able to obtain regulatory approval for a particular product, the approval may limit the indicated medical uses for the product, may otherwise limit our
ability to promote, sell, and distribute the product, may require that we conduct costly post-marketing surveillance, and/or may require that we conduct ongoing post-marketing
studies. Material changes to an approved product, such as, for example, manufacturing changes or revised labeling, may require further regulatory review and approval. Once
obtained, any approvals may be withdrawn, including, for example, if there is a later discovery of previously unknown problems with the product, such as a previously
unknown safety issue.
If we, our collaborators, or our CMOs fail to comply with applicable regulatory requirements at any stage during the regulatory process, such noncompliance could
result in, among other things delays in the approval of applications or supplements to approved applications; refusal of a regulatory authority, including the FDA, to review
pending market approval applications or supplements to approved applications; warning letters; fines; import and/or export restrictions; product recalls or seizures; injunctions;
total or partial suspension of production; civil penalties; withdrawals of previously approved marketing applications or licenses; recommendations by the FDA or other
regulatory authorities against governmental contracts; and/or criminal prosecutions.
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We do not have, and may never obtain, the regulatory approvals we need to market our product candidates.
Following completion of clinical studies, the results are evaluated and, depending on the outcome, submitted to the FDA in the form of an NDA or BLA in order to
obtain FDA approval of the product and authorization to commence commercial marketing. In responding to an NDA, the FDA may require additional testing or information,
may require that the product labeling be modified, may impose post-approval study and other commitments or reporting requirements or other restrictions on product
distribution, or may deny the application. The FDA has established performance goals for review of NDAs or BLAs: six months for priority applications and ten months for
standard applications. However, the FDA is not required to complete its review within these time periods. The timing of final FDA review and action varies greatly but can take
years in some cases and may involve the input of an FDA advisory committee of outside experts. Product sales in the United States may commence only when an NDA or BLA
is approved.
To date, we have not applied for or received the regulatory approvals required for the commercial sale of any of our products in the United States or in any foreign
jurisdiction. None of our product candidates have been determined to be safe and effective, and we have not submitted an NDA or BLA to the FDA or an equivalent application
to any foreign regulatory authorities for any of our product candidates.
It is possible that none of our product candidates will be approved for marketing. Failure to obtain regulatory approvals, or delays in obtaining regulatory approvals,
may adversely affect the successful commercialization of any drugs or biologics that we or our partners develop, may impose additional costs on us or our collaborators, may
diminish any competitive advantages that we or our partners may attain, and/or may adversely affect our receipt of revenues or royalties.
We have never submitted an NDA before, and may be unable to do so for our product candidates we are developing.
The conduct of pivotal clinical studies and the submission of a successful NDA is a complicated process. Although members of our management team have extensive
industry experience, including in the development and clinical testing of drug candidates and the commercialization of drug, have limited experience in preparing, submitting
and prosecuting regulatory filings, and have not submitted an NDA before. Consequently, we may be unable to successfully and efficiently execute and complete this planned
clinical study in a way that leads to NDA submission and approval of our product candidates we are developing. We may require more time and incur greater costs than our
competitors and may not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays in, our planned clinical
studies would prevent or delay commercialization of TNX-102 SL and other product candidates we are developing.
Our product candidates may cause serious adverse events, or SAEs, 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.
SAEs or undesirable side effects from any of our other product candidates could arise either during clinical development or, if approved, after the approved product has
been marketed. The results of future clinical studies may show that our product candidates cause SAEs or undesirable side effects, which could interrupt, delay or halt clinical
studies, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities.
If any of our other product candidates cause SAEs or undesirable side effects or suffer from quality control issues:
● regulatory authorities may impose a clinical hold or risk evaluation and mitigation strategies, or REMS, which could result in substantial delays, significantly
increase the cost of development, and/or adversely impact our ability to continue development of the product;
● regulatory authorities may require the addition of statements, specific warnings, or contraindications to the product label, or restrict the product’s indication to a
smaller potential treatment population;
● we may be required to change the way the product is administered or conduct additional clinical studies;
● 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 participants who can receive the product;
● we may be subject to limitations on how we promote the product;
● we may, voluntarily or involuntarily, initiate field alerts for product recall, which may result in shortages;
● sales of the product may decrease significantly;
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● 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 are unable to file for approval of TNX-102 SL under Section 505(b)(2) of the FDCA or if we are required to generate additional data related to safety and efficacy in
order to obtain approval under Section 505(b)(2), we may be unable to meet our anticipated development and commercialization timelines.
Our current plans for filing NDAs for our most advanced product candidate, TNX-102 SL, include efforts to minimize the data we will be required to generate in order
to obtain marketing approval and therefore reduce the development time. We intend to file Section 505(b)(2) NDAs for TNX-102 SL for FM, PTSD, and for other proposed
indications, that might, if accepted by the FDA, save time and expense in the development and testing of TNX-102 SL.
TNX-102 SL for FM and PTSD are our most advanced development programs which are in the Phase 3 and 2 stages, respectively. The timeline for filing and review
of our NDA for TNX-102 SL for FM and PTSD is based on our plan to submit this NDA under Section 505(b)(2) of the FDCA, which would enable us to rely in part on data in
the public domain or elsewhere. We have not yet filed an NDA under Section 505(b)(2) for any of our product candidates. Depending on the data that may be required by the
FDA for approval, some of the data may be related to products already approved by the FDA. If the data relied upon is related to products already approved by the FDA and
covered by third-party patents, we would be required to certify that we do not infringe the listed patents or that such patents are invalid or unenforceable. As a result of the
certification, the third-party would have 45 days from notification of our certification to initiate an action against us. In the event that an action is brought in response to such a
certification, the approval of our NDA could be subject to a stay of up to 30 months or more while we defend against such a suit. Approval of our product candidates under
Section 505(b)(2) may therefore be delayed until patent exclusivity expires or until we successfully challenge the applicability of those patents to our product candidates.
Alternatively, we may elect to generate sufficient Alternatively, we may elect to generate sufficient additional clinical data so that we no longer rely on data which triggers a
potential stay of the approval of our product candidates. Even if no exclusivity periods apply to our applications under Section 505(b)(2), the FDA has broad discretion to
require us to generate additional data on the safety and efficacy of our product candidates to supplement third-party data on which we may be permitted to rely. In either event,
we could be required, before obtaining marketing approval for any of our product candidates, to conduct substantial new research and development activities beyond those we
currently plan to engage in order to obtain approval of our product candidates. Such additional new research and development activities would be costly and time consuming.
We may not be able to realize a shortened development timeline for TNX-102 SL for FM or PTSD (or other proposed indications under TNX-102 SL), and the FDA
may not approve our NDA based on their review of the submitted data. If cyclobenzaprine-containing products are withdrawn from the market by the FDA for any safety
reason, we may not be able to reference such products to support a 505(b)(2) NDA for TNX-102 SL, and we may need to fulfill the more extensive requirements of Section
505(b)(1). If we are required to generate additional data to support approval, we may be unable to meet our anticipated development and commercialization timelines, may be
unable to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing approval of our lead product candidate.
Any breakthrough, fast track or orphan drug designation or grant of priority review status by the FDA may not actually lead to a faster development or regulatory review
or approval process, nor will it assure FDA approval of our product candidates. Additionally, our product candidates may treat indications that do not qualify for priority
review vouchers.
If a product candidate offers major advances in treatment, the FDA may designate it eligible for priority review. The FDA has broad discretion whether or not to grant
these designations, so even if we believe a particular product candidate is eligible for these designations, we cannot assure you that the FDA would decide to grant them. Even
if we do receive fast track designation or priority review, we may not experience a faster development process, review or approval compared to conventional FDA procedures.
The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program.
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 studies.
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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 or device product; cost-effectiveness of our product relative to competing products; availability of reimbursement for
our product from government or other healthcare payors; and effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
The degree of market acceptance of any pharmaceutical 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 (including drowsiness and dry mouth), as compared to alternative
products or treatment methods;
● the timing of market entry as compared to competitive products;
● the rate of adoption of our products by doctors and nurses;
● product labeling or product insert required by the FDA for each of our products;
● reimbursement policies of government and third-party payors;
● 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.
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 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 development of our lead 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 a therapeutic area in which it
would have been more advantageous to enter into a partnering arrangement.
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RISKS RELATED TO OUR FINANCIAL CONDITION AND CAPITAL REQUIREMENTS; COMPETITION
Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our
audited financial statements. We may be unable to continue to operate without the threat of liquidation for the foreseeable future.
In connection with our management’s assessment, our report from our independent registered public accounting firm for the fiscal year ended December 31, 2021
includes an explanatory paragraph stating that our recurring losses from operations and net capital deficiency raise substantial doubt about our ability to continue as a going
concern. If we are unable to obtain sufficient funding, 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. For example, we anticipate that our existing cash and cash equivalents will enable us to maintain our current operations through
the end of 2022, but not beyond. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets
are carried on our consolidated financial statements, and investors will likely lose all or a part of their investment. Future reports from our independent registered public
accounting firm may also contain statements expressing substantial doubt about our ability 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.
We will need additional capital. If additional capital is not available or is available at unattractive terms, we may be forced to delay, reduce the scope of or eliminate our
research and development programs, reduce our commercialization efforts or curtail our operations.
In order to develop and bring our product candidates to market, we must commit substantial resources to costly and time-consuming research, preclinical and
nonclinical testing, clinical studies and marketing activities and the buildout of our research and development and manufacturing facilities. We anticipate that our existing cash
and cash equivalents will enable us to maintain our current operations through the end of 2022, but not beyond. We anticipate using our cash and cash equivalents to fund
further research and development with respect to our lead product candidate. We will, however, need to raise additional funding sooner if our business or operations change in a
manner that consumes available resources more rapidly than we anticipate. Our requirements for additional capital will depend on many factors, including:
● successful commercialization of our product candidates;
● the time and costs involved in obtaining regulatory approval for our product candidates;
● costs associated with protecting our intellectual property rights;
● development of marketing and sales capabilities;
● payments received under future collaborative agreements, if any; and
● market acceptance of our products.
To the extent we raise additional capital through the sale of equity securities, the issuance of those securities could result in dilution to our shareholders. In addition, if
we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds
available for our business activities. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate our research and development programs,
reduce our commercialization efforts or curtail our operations. In addition, we may be required to obtain funds through arrangements with collaborative partners or others that
may require us to relinquish rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize ourselves or license rights to
technologies, product candidates or products on terms that are less favorable to us than might otherwise be available.
We will require substantial additional funds to support our research and development activities, and the anticipated costs of preclinical and nonclinical testing and
clinical studies, regulatory approvals and eventual commercialization. Such additional sources of financing may not be available on favorable terms, if at all. If we do not
succeed in raising additional funds on acceptable terms, we may be unable to commence or complete clinical studies or obtain approval of any product candidates from the
FDA and other regulatory authorities. In addition, we could be forced to discontinue product development, forego sales and marketing efforts and forego attractive business
opportunities. Any additional sources of financing will likely involve the issuance of our equity securities, which will have a dilutive effect on our shareholders.
There is no assurance that we will be successful in raising the additional funds needed to fund our business plan. If we are not able to raise sufficient capital in the near
future, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets.
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Outbreaks of communicable diseases may materially and adversely affect our business, financial condition and results of operations.
We may face risks related to health epidemics or outbreaks of communicable diseases. The outbreak of such communicable diseases, such as COVID-19, has and may
result in future widespread health crisis that adversely affect general commercial activity and the economies and financial markets of many countries. An outbreak of
communicable diseases, or the perception that such an outbreak could occur, and the measures taken by the governments of countries affected could adversely affect our
business, financial condition or results of operations. For example, an outbreak could significantly disrupt our business by limiting our ability to travel or ship materials within
or outside of an affected country and forcing temporary closure of facilities or service providers that we rely upon. An outbreak could also impact our ability to conduct our
ongoing multicenter clinical trials if trial participant attendance at requisite study visits is substantially reduced and if a significant percentage of study participants and study
staff are adversely affected by coronavirus or other infections and the resulting disease course. Moreover, government or community shutdowns such as those caused by the
COVID-19 pandemic, may impair our ability to analyze and submit the results from our clinical and preclinical trials, leading to further delays in the development and approval
of our product candidates.
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 or similar 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.
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. For example, at least three vaccines for the prevention of
COVID-19 have been approved to date, and we expect that other vaccines will be approved prior to the approval of our CVOID-19 vaccine candidate, if it is approved at all.
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.
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 drug product candidate, TNX-102 SL, can extend up to three and one-half years.
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.
RISKS RELATED TO OUR INTELLECTUAL PROPERTY RIGHTS AND REGULATORY EXCLUSIVITY
If we fail to protect our intellectual property rights, our ability to pursue the development of our technologies and products would be negatively affected.
Our success will depend in part on our ability to obtain patents and maintain adequate protection of our technologies and products. If we do not adequately protect our
intellectual property, competitors may be able to use our technologies to produce and market drugs using our technologies and patents in direct competition with us and erode
our competitive advantage. Some foreign countries lack rules and methods for defending intellectual property rights and do not protect proprietary rights to the same extent as
the United States. Many companies have had difficulty protecting their proprietary rights in these foreign countries. We may not be able to prevent misappropriation of our
proprietary rights and intellectual property rights in these and other countries.
We have received, and are currently seeking, patent protection for numerous compounds and methods of treating diseases. However, the patent process is subject to
numerous risks and uncertainties, and there can be no assurance that we will be successful in protecting our products by obtaining and defending patents related to them. These
risks and uncertainties include the following: patents that may be issued or licensed may be challenged, invalidated, or circumvented, or otherwise may not provide us any
competitive advantage; our competitors, many of which have substantially greater resources than we and many of which have made significant investments in competing
technologies, may seek, or may already have obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell our potential products either in the
United States or in international markets; there may be significant pressure on the United States government and other international governmental bodies to limit the scope of
patent protection both inside and outside the United States for treatments that prove successful as a matter of public policy regarding worldwide health concerns; and countries
other than the United States may have less robust patent laws than those upheld by United States courts, allowing foreign competitors the ability to exploit these laws to create,
develop, and market competing products using our technologies and patents.
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Moreover, any patents issued to us may not provide us with meaningful protection, or others may challenge, circumvent or narrow our patents. Third parties may also
independently develop products similar to our products, duplicate our unpatented products or design around any patents or propriety technologies on products we develop.
Additionally, extensive time is required for development, testing and regulatory review of a potential product. While extensions of patent term due to regulatory delays may be
available, it is possible that, before any of our product candidates can be commercialized, any related patent, even with an extension, may expire or remain in force for only a
short period following commercialization, thereby reducing any advantages to us of the patent.
In addition, the PTO and patent offices in other jurisdictions have often required that patent applications concerning pharmaceutical and/or biotechnology-related
inventions be limited or narrowed substantially to cover only the innovations specifically exemplified in the patent application, thereby limiting the scope of protection against
competitive challenges. Thus, even if we or our licensors are able to obtain patents, the patents may be substantially narrower than anticipated.
Our success depends on our patents and patent applications that may be licensed exclusively to us and other patents and patent applications to which we may obtain
assignment or licenses. We may not be aware, however, of all patents, published applications or published literature that may affect our business either by blocking our ability
to commercialize our product candidates, by preventing the patentability of our product candidates to us or our licensors, or by covering the same or similar technologies. These
patents, patent applications, and published literature may limit the scope of our future patent claims or adversely affect our ability to market our product candidates.
In addition to patents, we rely on a combination of trade secrets, confidentiality, nondisclosure and other contractual provisions, and security measures to protect our
confidential and proprietary information. These measures may not adequately protect our trade secrets or other proprietary information. If they do not adequately protect our
rights, third parties could use our technology, and we could lose any competitive advantage we may have. In addition, others may independently develop similar proprietary
information or techniques or otherwise gain access to our trade secrets, which could impair any competitive advantage we may have.
Patent protection and other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial risk that such protections
will prove inadequate.
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 present and future patents and other
proceedings of our competitors. The defense and prosecution of intellectual property suits are costly and time-consuming to pursue, and their outcome is uncertain. Litigation
may be necessary to determine the enforceability, scope, and validity of the proprietary rights of others. An adverse determination in litigation 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. Third parties may assert that our patents are
invalid and/or unenforceable in these proceedings. Such litigation 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.
Third parties may also assert that our patents are invalid in patent office administrative proceedings. These proceedings include oppositions in the European Patent
Office and inter partes review and post-grant review proceedings in the PTO. The success rate of these administrative challenges to patent validity in the United States is higher
than it is for validity challenges in litigation.
Interference or derivation proceedings brought before the PTO may be necessary to determine priority of invention with respect to innovations disclosed in our patents
or patent applications. During these proceedings, 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 or derivation
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 or derivation 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.
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Except for the oppositions to European Patents 2501234, 2968992, and 2683245 (the Opposition Division in each of those oppositions maintained our claims in
unamended form; Opponent has appealed that decision in the ‘234 Opposition and we expect the opponents to appeal the decisions in the ‘992 and ‘245 oppositions), 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 or administrative proceedings could result in inadequate protection for our product candidates and/or reduce the value of any
license agreements we have with third parties.
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.
There are risks to our intellectual property based on our international business initiatives.
We may face risks to our technology and intellectual property as a result of our conducting strategic business discussions outside of the United States, and particularly
in jurisdictions that do not have comparable levels of protection of corporate proprietary information and assets such as intellectual property, trademarks, trade secrets, know-
how and customer information and records. While these risks are common to many companies, conducting business in certain foreign jurisdictions, housing technology, data
and intellectual property abroad, or licensing technology to joint ventures with foreign partners may have more significant exposure. For example, we have shared intellectual
properties with entities in China pursuant to confidentiality agreements in connection with discussions on potential strategic collaborations, which may expose us to material
risks of theft of our proprietary information and other intellectual property, including technical data, manufacturing processes, data sets or other sensitive information. For
example, our technology may be reverse engineered by the parties or other parties, which could result in our patents being infringed or our know-how or trade secrets stolen.
The risk can be by direct intrusion wherein technology and intellectual property is stolen or compromised through cyber intrusions or physical theft through corporate
espionage, including with the assistance of insiders, or via more indirect routes.
GENERAL COMPANY-RELATED RISKS
If preclinical and nonclinical testing or clinical studies for our product candidates are unsuccessful or delayed, we will be unable to meet our anticipated development and
commercialization timelines.
We rely and expect to continue to rely on third parties, including contract research organizations, or CROs, and outside consultants, to conduct, supervise or monitor
some or all aspects of preclinical and nonclinical testing and clinical studies involving our product candidates. We have less control over the timing and other aspects of these
preclinical and nonclinical testing activities and clinical studies than if we performed the monitoring and supervision entirely on our own. Third parties may not perform their
responsibilities for our preclinical and nonclinical testing and clinical studies on our anticipated schedule or, for clinical studies, consistent with a clinical study protocol. Delays
in preclinical and nonclinical testing, and clinical studies could significantly increase our product development costs and delay product commercialization. In addition, many of
the factors that may cause, or lead to, a delay in the clinical studies may also ultimately lead to denial of regulatory approval of a product candidate.
The commencement of clinical studies can be delayed for a variety of reasons, including delays in:
● demonstrating sufficient safety and efficacy to obtain regulatory approval to commence a clinical study;
● reaching agreement on acceptable terms with prospective CROs and study sites;
● developing a stable formulation of a product candidate;
● manufacturing sufficient quantities of a product candidate; and
● obtaining institutional review board, or IRB, approval to conduct a clinical study at a prospective site.
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Once a clinical study has begun, it may be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors, including:
● ongoing discussions with the FDA or other regulatory authorities regarding the scope or design of our clinical studies;
● failure to conduct clinical studies in accordance with regulatory requirements;
● lower than anticipated recruitment or retention rate of patients in clinical studies;
● inspection of the clinical study operations or study sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;
● lack of adequate funding to continue clinical studies;
● negative results of clinical studies;
● investigational drug product out-of-specification; or
● nonclinical or clinical safety observations, including adverse events and SAEs.
If clinical studies are unsuccessful, and we are not able to obtain regulatory approvals for our product candidates under development, we will not be able to
commercialize these products, and therefore may not be able to generate sufficient revenues to support our business.
We rely on third parties to conduct, supervise and monitor our clinical studies, and if those third parties perform in an unsatisfactory manner, it may harm our business.
We rely on CROs and clinical study sites to ensure the proper and timely conduct of our clinical studies. While we have agreements governing their activities, we will
have limited influence over their actual performance. We will control only certain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that our
clinical studies are conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our
regulatory responsibilities.
We and our CROs are required to comply with the FDA’s cGCP for conducting, recording and reporting the results of clinical studies to assure that data and reported
results are credible and accurate and that the rights, integrity and confidentiality of clinical study participants are protected. The FDA enforces these cGCPs through periodic
inspections of study sponsors, principal investigators and clinical study sites. If we or our CROs fail to comply with applicable cGCPs, the clinical data generated in our clinical
studies may be deemed unreliable and the FDA may require us to perform additional clinical studies before approving any marketing applications. Upon inspection, the FDA
may determine that our clinical studies did not comply with cGCPs. In addition, our clinical studies, including our ongoing Phase 3 RALLY study, will require a sufficiently
large number of fibromyalgia participants to evaluate the effectiveness and safety of TNX-102 SL in FM. Accordingly, if our CROs fail to comply with these regulations or fail
to recruit a sufficient number of participants, our clinical studies may be delayed or we may be required to repeat such clinical studies, which would delay the regulatory
approval process.
Our CROs are not our employees, and we are not able to control whether or not they devote sufficient time and resources to our clinical studies. These CROs may also
have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical studies, or other drug development activities which
could harm our competitive position.
If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they
obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our clinical studies may be extended, delayed or
terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our product candidates. As a result, our financial results and the
commercial prospects for such product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.
We also rely on other third parties to store and distribute drug products for our clinical studies. Any performance failure on the part of our distributors could delay
clinical development or marketing approval of our product candidates or commercialization of our products, if approved, producing additional losses and depriving us of
potential product revenue.
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We will need to expand our operations and increase the size of our company, and we may experience difficulties in managing growth.
As we advance our product candidates through preclinical and nonclinical testing and clinical studies, and develop new product candidates and buildout of our
research and development and manufacturing facilities, we will need to increase our product development, scientific, regulatory and compliance and administrative headcount
to manage these programs. In addition, to meet our obligations as a public company, we will need to increase our general and administrative capabilities. Our management,
personnel and systems currently in place may not be adequate to support this future growth. Our need to effectively manage our operations, growth and various projects
requires that we:
● successfully attract and recruit new employees with the expertise and experience we will require;
● manage our clinical programs effectively, which we anticipate being conducted at numerous clinical sites;
● develop a marketing, distribution and sales infrastructure in addition to a post-marketing surveillance program if we seek to market our products directly; and
● continue to improve our operational, manufacturing, quality assurance, financial and management controls, reporting systems and procedures.
If we are unable to successfully manage this growth and increased complexity of operations, our business may be adversely affected.
Our executive officers and other key personnel are critical to our business, and our future success depends on our ability to retain them.
Our success depends to a significant extent upon the continued services of Dr. Seth Lederman, our President and Chief Executive Officer and Dr. Gregory M. Sullivan,
our Chief Medical Officer. Dr. Lederman has overseen Tonix Pharmaceuticals, Inc., a wholly-owned subsidiary, since inception and provides leadership for our growth and
operations strategy as well as being an inventor on many of our patents. Dr. Sullivan has served as our Chief Medical Officer since 2014 and directed the Phase 2 AtEase study,
Phase 3 HONOR study, the Phase 3 RECOVERY study, Phase 3 RELIEF study and the Phase 3 RALLY study. Loss of the services of Drs. Lederman or Sullivan would have a
material adverse effect on our growth, revenues, and prospective business. The loss of any of our key personnel, or the inability to attract and retain qualified personnel, may
significantly delay or prevent the achievement of our research, development or business objectives and could materially adversely affect our business, financial condition and
results of operations.
Any employment agreement we enter into will not ensure the retention of the employee who is a party to the agreement. In addition, we have only limited ability to
prevent former employees from competing with us. Furthermore, our future success will also depend in part on the continued service of our key scientific and management
personnel and our ability to identify, hire, and retain additional personnel. We experience intense competition for qualified personnel and may be unable to attract and retain the
personnel necessary for the development of our business. Moreover, competition for personnel with the scientific and technical skills that we seek is extremely high and is
likely to remain high. Because of this competition, our compensation costs may increase significantly.
If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.
Over time we will need to hire additional qualified personnel with expertise in drug development, product registration, clinical, preclinical and nonclinical research,
quality compliance, government regulation, formulation and manufacturing, financial matters and sales and marketing. We compete for qualified individuals with numerous
biopharmaceutical companies, universities and other research institutions. Competition for such individuals is intense, and we cannot be certain that our search for such
personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.
We rely on third parties to manufacture the compounds used in our studies, and we intend to rely on them for the manufacture of any approved products for commercial
sale. If these third parties do not manufacture our product candidates in sufficient quantities and at an acceptable cost, clinical development and commercialization of our
product candidates could be delayed, prevented or impaired.
We have no experience in the clinical or commercial-scale manufacture of drugs or in designing drug manufacturing processes. We intend to rely on CMOs to
manufacture some or all of our product candidates in clinical studies and our products that reach commercialization. Completion of our clinical studies and commercialization
of our product candidates requires the manufacture of a sufficient supply of our product candidates. We have contracted with outside sources to manufacture our development
compounds. If, for any reason, we become unable to rely on our current sources for the manufacture of our product candidates, either for clinical studies or, at some future date,
for commercial quantities, then we would need to identify and contract with additional or replacement third-party manufacturers to manufacture compounds for nonclinical,
preclinical, clinical, and commercial purposes. Although we are in discussions with other manufacturers we have identified as potential alternative CMOs of TNX-102 SL, we
may not be successful in negotiating acceptable terms with any of them.
We believe that there are a variety of manufacturers that we may be able to retain to produce these products. However, once we retain a manufacturing source, if our
manufacturers do not perform in a satisfactory manner, we may not be able to develop or commercialize potential products as planned. Certain specialized manufacturers are
expected to provide us with modified and unmodified pharmaceutical compounds, including finished products, for use in our preclinical and nonclinical testing and clinical
studies. Some of these materials are available from only one supplier or vendor. Any interruption in or termination of service by such sole source suppliers could result in a
delay or interruption in manufacturing until we locate an alternative source of supply. Any delay or interruption in manufacturing operations (or failure to locate a suitable
replacement for such suppliers) could materially adversely affect our business, prospects, or results of operations. We do not have any short-term or long-term manufacturing
agreements with many of these manufacturers. If we fail to contract for manufacturing on acceptable terms or if third-party manufacturers do not perform as we expect, our
development programs could be materially adversely affected. This may result in delays in filing for and receiving FDA approval for one or more of our products. Any such
delays could cause our prospects to suffer significantly.
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Failure by our third-party manufacturers to comply with the regulatory guidelines set forth by the FDA with respect to our product candidates could delay or prevent the
completion of clinical studies, the approval of any product candidates or the commercialization of our products.
Such third-party manufacturers must be inspected by FDA for cGMP compliance before they can produce commercial product. We may be in competition with other
companies for access to these manufacturers’ facilities and may be subject to delays in manufacture if the manufacturers give other clients higher priority than they give to us.
If we are unable to secure and maintain third-party manufacturing capacity, the development and sales of our products and our financial performance may be materially
affected.
Manufacturers are obligated to operate in accordance with FDA-mandated requirements. A failure of any of our third-party manufacturers to establish and follow
cGMP requirements and to document their adherence to such practices may lead to significant delays in the availability of material for clinical studies, may delay or prevent
filing or approval of marketing applications for our products, and may cause delays or interruptions in the availability of our products for commercial distribution following
FDA approval. This could result in higher costs to us or deprive us of potential product revenues.
Drug manufacturers are subject to ongoing periodic unannounced inspections by the FDA, the Drug Enforcement Administration, or DEA, and corresponding state
and foreign agencies to ensure strict compliance with cGMP requirements and other requirements under Federal drug laws, other government regulations and corresponding
foreign standards. If we or our third-party manufacturers fail to comply with applicable regulations, sanctions could be imposed on us, including fines, injunctions, civil
penalties, failure by the government to grant marketing approval of drugs, delays, suspension or withdrawal of approvals, seizures or recalls of product, operating restrictions
and criminal prosecutions.
Adverse global conditions, including economic uncertainty, may negatively impact our financial results.
Global conditions, dislocations in the financial markets, or inflation could adversely impact our business. In addition, the global macroeconomic environment has been
and may continue to be negatively affected by, among other things, instability in global economic markets, increased U.S. trade tariffs and trade disputes with other countries,
instability in the global credit markets, supply chain weaknesses, instability in the geopolitical environment as a result of the Russian invasion of the Ukraine, the withdrawal of
the United Kingdom from the European Union, and other political tensions, and foreign governmental debt concerns. Such challenges have caused, and may continue to cause,
uncertainty and instability in local economies and in global financial markets, which may adversely affect our business.
Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption
of our product development programs.
Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage
or disruption from computer viruses, software bugs, unauthorized access, natural disasters, terrorism, war, and telecommunication, equipment and electrical failures. While we
have not, to our knowledge, experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our
operations, it could result in a material disruption of our programs. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our product
candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Moreover, our information security
systems and those of our CROs are also subject to laws and regulations requiring that we take measures to protect the privacy and security of certain information gathered and
used in our business. For example, HIPAA and its implementing regulations impose, among other requirements, certain regulatory and contractual requirements regarding the
privacy and security of personal health information. In the European Union the General Data Protection Regulation, or GDPR, is even more restrictive with respect to all
personal information, including information masked by a coding system. In addition to HIPAA and GDPR, numerous other federal and state laws, including, without limitation,
state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and storage
of personal information. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure or theft of
confidential or proprietary information, we could incur liability, the further development of our product candidates could be delayed, our competitive position could be
compromised, or our business reputation could be harmed.
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Corporate and academic collaborators may take actions to delay, prevent, or undermine the success of our products.
Our operating and financial strategy for the development, clinical testing, manufacture, and commercialization of drug candidates is heavily dependent on our entering
into collaborations with corporations, academic institutions, licensors, licensees, and other parties. Our current strategy assumes that we will successfully establish these
collaborations, or similar relationships; however, there can be no assurance that we will be successful establishing such collaborations. Some of our existing collaborations are,
and future collaborations may be, terminable at the sole discretion of the collaborator. Replacement collaborators might not be available on attractive terms, or at all. The
activities of any collaborator will not be within our control and may not be within our power to influence. There can be no assurance that any collaborator will perform its
obligations to our satisfaction or at all, that we will derive any revenue or profits from such collaborations, or that any collaborator will not compete with us. If any
collaboration is not pursued, we may require substantially greater capital to undertake development and marketing of our proposed products and may not be able to develop and
market such products effectively, if at all. In addition, a lack of development and marketing collaborations may lead to significant delays in introducing proposed products into
certain markets and/or reduced sales of proposed products in such markets.
Data provided by collaborators and others upon which we rely that has not been independently verified could turn out to be false, misleading, or incomplete.
We rely on third-party vendors, scientists, and collaborators to provide us with significant data and other information related to our projects, clinical studies, and our
business. If such third parties provide inaccurate, misleading, or incomplete data, our business, prospects, and results of operations could be materially adversely affected.
Our product candidates may face competition sooner than expected.
We intend to seek data exclusivity or market exclusivity for our product candidates provided under the FDCA and similar laws in other countries. We believe that
TNX-801 could qualify for 12 years of data exclusivity under the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which was enacted as part of the Patient
Protection and Affordable Care Act. Under the BPCIA, an application for a biosimilar product or BLA cannot be submitted to the FDA until four years, or if approved by the
FDA, until 12 years, after the original brand product identified as the reference product is approved under a BLA. The BPCIA provides an abbreviated pathway for the approval
of biosimilar and interchangeable biological products. The new abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar
biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. The new law is complex and is only
beginning to be interpreted and implemented by the FDA. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes could have a
material adverse effect on the future commercial prospects for any of our product candidates that are biologics. There is also a risk that BPCIA could be repealed or amended to
shorten this exclusivity period, potentially creating the opportunity for biosimilar competition sooner than anticipated after the expiration of our patent protection. Although
there is no current discussion of repeal or modification of the BPCIA, the future remains uncertain. Moreover, the extent to which a biosimilar, once approved, will be
substituted for any reference product in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of
marketplace and regulatory factors that are still developing.
Our product candidates that are not, or are not considered, biologics that would qualify for exclusivity under the BPCIA may be eligible for market exclusivity as
drugs under the FDCA. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first applicant to gain approval of an NDA for an
NCE. A drug is an NCE if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action
of the drug substance. During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA, submitted by
another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an
application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity
for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the
applicant are deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages, or strengths of an existing drug. This three-year
exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original
active agent.
Even if, as we expect, our product candidates are considered to be reference products eligible for 12 years of exclusivity under the BPCIA or five years of exclusivity
under the FDCA, another company could market competing products if the FDA approves a full BLA or full NDA for such product containing the sponsor’s own preclinical
data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of the products. Moreover, an amendment or repeal of the BPCIA
could result in a shorter exclusivity period for our product candidates, which could have a material adverse effect on our business.
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If we fail to establish marketing, sales and distribution capabilities, or fail to enter into arrangements with third parties, we will not be able to create a market for our
product candidates.
Our strategy with our product candidates is to control, directly or through contracted third parties, all or most aspects of the product development process, including
marketing, sales and distribution. Currently, we do not have any sales, marketing or distribution capabilities. In order to generate sales of any product candidates that receive
regulatory approval, we must either acquire or develop an internal marketing and sales force with technical expertise and with supporting distribution capabilities or make
arrangements with third parties to perform these services for us. The acquisition or development of a sales and distribution infrastructure would require substantial resources,
which may divert the attention of our management and key personnel and defer our product development efforts.
To the extent that we enter into marketing and sales arrangements with other companies, our revenues will depend on the efforts of others. These efforts may not be
successful. If we fail to develop sales, marketing and distribution channels, or enter into arrangements with third parties, we will experience delays in product sales and incur
increased costs.
Sales of pharmaceutical products largely depend on the reimbursement of patients’ medical expenses by government health care programs and private health insurers.
Without the financial support of the government or third-party payors, the market for our products will be limited. These third-party payors are increasingly challenging the
price and examining the cost effectiveness of medical products and services. Recent proposals to change the health care system in the United States have included measures that
would limit or eliminate payments for medical products and services or subject the pricing of medical treatment products to government control. Significant uncertainty exists
as to the reimbursement status of newly approved health care products. Third-party payors may not reimburse sales of our products or enable our collaborators to sell them at
profitable prices.
Our business strategy might involve out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling pharmaceutical
products. There can be no assurance that we will be able to successfully establish marketing, sales, or distribution relationships; that such relationships, if established, will be
successful; or that we will be successful in gaining market acceptance for our products. To the extent that we enter into any marketing, sales, or distribution arrangements with
third parties, our product revenues will be lower than if we marketed and sold our products directly, and any revenues we receive will depend upon the efforts of such third-
parties. If we are unable to establish such third-party sales and marketing relationships, or choose not to do so, we will have to establish and rely on our own in-house
capabilities.
We, as a company, have no experience in marketing or selling pharmaceutical products and currently have no sales, marketing, or distribution infrastructure. To market
any of our products directly, we would need to develop a marketing, sales, and distribution force that both has technical expertise and the ability to support a distribution
capability. The establishment of a marketing, sales, and distribution capability would significantly increase our costs, possibly requiring substantial additional capital. In
addition, there is intense competition for proficient sales and marketing personnel, and we may not be able to attract individuals who have the qualifications necessary to
market, sell, and distribute our products. There can be no assurance that we will be able to establish internal marketing, sales, or distribution capabilities. If we are unable to, or
choose not to establish these capabilities, or if the capabilities we establish are not sufficient to meet our needs, we will be required to establish collaborative marketing, sales,
or distribution relationships with third parties.
Our relationships with customers, physicians, and third-party payors will be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false
claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such
laws, we could face substantial penalties.
Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any
drug candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and
third-party payors may subject us to various federal and state fraud and abuse laws and other health care laws, including, without limitation, the federal Anti-Kickback Statute,
the federal civil and criminal false claims laws and the law commonly referred to as the Physician Payments Sunshine Act and regulations. These laws will impact, among other
things, our clinical research, proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy laws by both the federal government and
the states in which we conduct or may conduct our business. The laws that will affect our operations include, but are not limited to:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving, offering or paying
any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in return for the purchase,
recommendation, leasing or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;
● federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit, among other
things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other
government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit a person from
knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program, regardless of the payor (e.g.,
public or private);
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, and as amended
again by the final HIPAA omnibus rule, Modifications to the HIPAA Privacy, Security, Enforcement, and Breach Notification Rules Under HITECH and the
Genetic Information Nondiscrimination Act; Other Modifications to HIPAA, published in January 2013, which imposes certain requirements relating to the
privacy, security and transmission of individually identifiable health information without appropriate authorization by entities subject to the rule, such as health
plans, health care clearinghouses and health care providers, and their respective business associates;
● federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of PPACA, that require certain manufacturers of drugs, devices,
biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to
report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to: (i) payments or other “transfers of value’’ made to physicians
and teaching hospitals; and (ii) ownership and investment interests held by physicians and their immediate family members;
● state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to payments and other
transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws that require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance
programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; and
● state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways
and often are not preempted by HIPAA, thus complicating compliance efforts.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could
be subject to challenge under one or more of such laws.
It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving
applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations
that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion of drugs from
government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity
agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailment or restructuring of our operations.
The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the
courts, and their provisions are open to a variety of interpretations. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare
laws and regulations will involve substantial costs. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur
significant legal expenses and divert our management’s attention from the operation of our business. The shifting compliance environment and the need to build and maintain
robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare
company may run afoul of one or more of the requirements.
Coverage and adequate reimbursement may not be available for our current or any future drug candidates, which could make it difficult for us to sell profitably, if
approved.
Market acceptance and sales of any drug candidates that we commercialize, if approved, will depend in part on the extent to which reimbursement for these drugs and
related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and other private health
insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy and
payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be
provided for any drug candidates that we develop will be made on a payor-by-payor basis. One payor’s determination to provide coverage for a drug does not assure that other
payors will also provide coverage, and adequate reimbursement, for the drug. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that
an adequate reimbursement rate will be approved. Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the
therapy, and on what tier of its formulary it will be placed. The position on a payor’s list of covered drugs, or formulary, generally determines the co-payment that a patient will
need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their
conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our
drugs unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our drugs.
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A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the
amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any drug that we commercialize and, if
reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which
we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully
commercialize our current and any future drug candidates that we develop.
Healthcare legislative or regulatory reform measures, including government restrictions on pricing and reimbursement, may have a negative impact on our business and
results of operations.
In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes regarding the
healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any
product candidates for which we obtain marketing approval.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of
containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has
been significantly affected by major legislative initiatives. For example, in the United States, the Patient Protection and Affordable Care Act of 2010 (“ACA”) substantially
changed the way healthcare is financed by both the government and private insurers, and significantly affects the pharmaceutical industry. Many provisions of the ACA impact
the biopharmaceutical industry, including that in order for a biopharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or
to be sold directly to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the drug pricing program under the Public Health
Services Act, or PHS. Since its enactment, there have been judicial and Congressional challenges and amendments to certain aspects of the ACA. There is continued
uncertainty about the implementation of the ACA, including the potential for further amendments to the ACA and legal challenges to or efforts to repeal the ACA.
Additionally, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs
and biologics. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring
more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement
methodologies for products. At the federal level, the now-departed Trump administration proposed numerous prescription drug cost control measures. Similarly, the new Biden
administration has made lowering prescription drug prices one of its priorities. The Biden administration has not yet proposed any specific plans, but we expect that these will
be forthcoming in the near term. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and
biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Other examples of proposed changes include, but are not limited to,
expanding post-approval requirements, changing the Orphan Drug Act, and restricting sales and promotional activities for pharmaceutical products.
We cannot be sure whether additional legislative changes will be enacted, or whether government regulations, guidance or interpretations will be changed, or what the
impact of such changes would be on the marketing approvals, sales, pricing, or reimbursement of our drug candidates or products, if any, may be. We expect that these and
other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we
receive for any approved drug. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private
payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or
commercialize our drugs.
In addition, FDA regulations and guidance may be revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new
regulations or guidance, or revisions or reinterpretations of existing regulations or guidance, may impose additional costs or lengthen FDA review times for our product
candidates. We cannot determine how changes in regulations, statutes, policies, or interpretations when and if issued, enacted or adopted, may affect our business in the future.
Such changes could, among other things, require:
● additional clinical trials to be conducted prior to obtaining approval;
● changes to manufacturing methods;
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● recalls, replacements, or discontinuance of one or more of our products; and
● additional recordkeeping.
Such changes would likely require substantial time and impose significant costs, or could reduce the potential commercial value of our product candidates. In addition,
delays in receipt of or failure to receive regulatory clearances or approvals for any other products would harm our business, financial condition, and results of operations.
If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations could materially
adversely affect our business.
If TNX-102 SL or any of our other product candidates are approved for commercialization outside of the United States, we intend to enter into agreements with third
parties to market them on a worldwide basis or in more limited geographical regions. We expect that we will be subject to additional risks related to entering into international
business relationships, including:
● different regulatory requirements for drug approvals;
● reduced protection for intellectual property rights, including trade secret and patent rights;
● unexpected changes in tariffs, trade barriers and regulatory requirements;
● economic weakness, including inflation, or political instability in particular foreign economies and markets;
● compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
● foreign taxes, including withholding of payroll taxes;
● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in
another country;
● workforce uncertainty in countries where labor unrest is more common than in the United States;
● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
● business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, hurricanes, floods and fires; and
● difficulty in importing and exporting clinical study materials and study samples.
We face the risk of product liability claims and may not be able to obtain insurance.
Our business exposes us to the risk of product liability claims that are inherent in the development of drugs. If the use of one or more of our or our collaborators’
drugs harms people, we may be subject to costly and damaging product liability claims brought against us by clinical study participants, consumers, health care providers,
pharmaceutical companies or others selling our products. Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators. While we currently carry clinical study
insurance and product liability insurance, we cannot predict all of the possible harms or side effects that may result and, therefore, the amount of insurance coverage we hold
now or in the future may not be adequate to cover all liabilities we might incur. We intend to expand our insurance coverage to include the sale of commercial products if we
obtain marketing approval for our drug candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for any products
approved for marketing. If we are unable to obtain insurance at an acceptable cost or otherwise protect against potential product liability claims, we will be exposed to
significant liabilities, which may materially and adversely affect our business and financial position. If we are sued for any injury allegedly caused by our or our collaborators’
products, our liability could exceed our total assets and our ability to pay the liability. A product liability claim or series of claims brought against us would decrease our cash
and could cause our stock price to fall.
We 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 may 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 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.
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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.
If we enter into collaborations with third parties, they might also work with hazardous materials in connection with our collaborations. 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.
Our insurance policies are expensive and protect us only from some business risks, which will leave us exposed to significant uninsured liabilities.
We carry insurance for most categories of risk that our business may encounter, however, we may not have adequate levels of coverage. We currently maintain general
liability, clinical study, property, workers’ compensation, products liability and directors’ and officers’ insurance, along with an umbrella policy, which collectively costs
approximately $1,700,000 per annum. We cannot provide any assurances that we will be able to maintain existing insurance at current or adequate levels of coverage. Any
significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.
If we retain collaborative partners and our partners do not satisfy their obligations, we will be unable to develop our partnered product candidates.
In the event we enter into any collaborative agreements, we may not have day-to-day control over the activities of our collaborative partners with respect to any of
these product candidates. Any collaborative partner may not fulfill its obligations under these agreements. If a collaborative partner fails to fulfill its obligations under an
agreement with us, we may be unable to assume the development of the products covered by that agreement or enter into alternative arrangements with a third party. In
addition, we may encounter delays in the commercialization of the product candidate that is the subject of the agreement. Accordingly, our ability to receive any revenue from
the product candidates covered by these agreements will be dependent on the efforts of our collaborative partner. We could also become involved in disputes with a
collaborative partner, which could lead to delays in or termination of our development and commercialization programs and time-consuming and expensive litigation or
arbitration. In addition, any such dispute could diminish our collaborators’ commitment to us and reduce the resources they devote to developing and commercializing our
products. Conflicts or disputes with our collaborators, and competition from them, could harm our relationships with our other collaborators, restrict our ability to enter future
collaboration agreements and delay the research, development or commercialization of our product candidates. If any collaborative partner terminates or breaches its
agreement, or otherwise fails to complete its obligations in a timely manner, our chances of successfully developing or commercializing these product candidates would be
materially and adversely affected. We may not be able to enter into collaborative agreements with partners on terms favorable to us, or at all. Our inability to enter into
collaborative arrangements with collaborative partners, or our failure to maintain such arrangements, would limit the number of product candidates that we could develop and
ultimately, decrease our sources of any future revenues.
We may be unsuccessful in obtaining a priority review voucher for material threat medical countermeasures.
In 2016, the 21st Century Cures Act, or the Act, was signed into law to support ongoing biomedical innovation. One part of the Act, Section 3086, is aimed at
“Encouraging Treatments for Agents that Present a National Security Threat.” The Act created a new priority review voucher program for approved “material threat medical
countermeasures.” The Act defines such countermeasures as drug or biologic products, including vaccines, intended to treat biological, chemical, radiological, or nuclear agents
that present a national security threat or to treat harm from a condition that may be caused by administering a drug or biological product against such an agent. The Department
of Homeland Security has identified 13 such threats, including anthrax, smallpox, Ebola/Marburg, tularemia, botulinum toxin, and pandemic influenza, which includes the
SARS coronavirus 2 known as SARS-CoV-2. A priority review voucher can be applied to any other product; it shortens the FDA review timeline for a new application from 10
to 12 months to 6 months. The recipient of a priority review voucher may transfer it.
We intend to seek a priority review voucher if and when a TNX-801 Biologics License Application is approved as a material threat medical countermeasure. However,
the structure of voucher programs limits the number of medical countermeasures eligible for a priority review voucher. Further, the medical countermeasure must qualify for
priority review in order to be eligible and may not include any commercially approved indication. Moreover, the Priority Review Voucher program provision of the 21st
Century Cures Act is set to expire in 2023. If TNX-801 does not receive FDA approval by 2023, we may not be able to capitalize on the incentives contained in the 21st
Century Cures Act unless the provision allowing for the Priority Review Voucher Program is extended until such time as TNX-801 is approved.
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There may not be market interest in TNX-801.
The government is the only market for most medical countermeasures. This is because unlike other drugs and vaccines, these products are not sold to doctors,
hospitals, or pharmacies. The BioShield Special Reserve Fund, or SRF, has been the sole medical countermeasures market for the last decade. The SRF is now appropriated
annually and has not kept pace with the need for purchasing products ready for stockpiling. During 2020, $735 million was appropriated to SRF. As such, even if TNX-801
were to receive FDA licensure, the commercial success of TNX-801 remains uncertain.
Government entities may take actions that directly or indirectly have the effect of limiting opportunities for our vaccine candidates for COVID-19.
Various government entities, including the U.S. government, are offering incentives, grants and contracts to encourage additional investment by commercial
organizations into preventative and therapeutic agents against COVID-19, which may have the effect of increasing the number of competitors and/or providing advantages to
competitors. Accordingly, there can be no assurance that we will be able to successfully establish a competitive market share if we ultimately receive regulatory approval for
our vaccines as a vaccine for COVID-19. COVID-19 vaccines may also be subject to government pricing controls, which could adversely affect the profitability of any
COVID-19 vaccine we are able to develop and commercialize.
If technology developed for the purposes of developing new medicines or vaccines can be applied to the creation or development of biological weapons, then our technology
may be considered “dual use” technology and be subject to limitations on public disclosure or export.
Our research and development of synthetic poxviruses is dedicated not only to creating tools that better protect public health but also to safeguarding any information
with broad, dual-use potential that could be inappropriately applied. “Dual use research” is research conducted for legitimate purposes that generates knowledge, information,
technologies, and/or products that can be reasonably anticipated to provide knowledge, information, products, or technologies that could be directly misapplied to pose a
significant threat to public health, agricultural crops, or national security. Because variola, the agent that causes smallpox, is a pox virus, the technology we created could be
considered dual use and could be subject to export control, for example under the Wassenaar Arrangement. Further, if federal authorities determine that our research is subject
to institutional oversight, we will need to implement a risk-management plan developed in collaboration with the institutional review entity. Failure to comply with the plan
may result in suspension, limitation, or termination of federal funding or loss of future federal funding opportunities for any of our research.
We face risks in connection with existing and future collaborations with respect to the development, manufacture, and commercialization of our product candidates.
We face a number of risks in connection with our current collaborations. Our collaboration agreements are subject to termination under various circumstances. Our
collaborators may change the focus of their development and commercialization efforts or may have insufficient resources to effectively assist in the development of our
products. Any future collaboration agreements may have the effect of limiting the areas of research and development that we may pursue, either alone or in collaboration with
third parties. Further, disagreements with collaborators, including disagreements over proprietary rights, contract interpretation, or the preferred course of development, might
cause delays, might result in litigation or arbitration, or might result in termination of the research, development or commercialization of our products. Any such disagreements
would divert management attention and resources and be time-consuming and costly.
We face risks in connection with the testing, production and storage of our vaccine product candidates.
Developing our TNX-1800 and TNX-801 vaccine candidates each require testing of challenges with monkeypox or SARS-CoV-2 viruses under controlled
experimental conditions. The testing of TNX-1800 and TNX-801 may carry risk of infection and harm to individuals.
In addition, our TNX-1800 and TNX-801 vaccine candidates are both live forms of the horsepox. We have initiated vaccine-manufacturing activities to support further
nonclinical testing of TNX-801. The production and storage of the synthesized horsepox virus stock and, once initiated, TNX-1800 virus stock, may carry risk of infection and
harm to individuals. Any such infection could expose us to product and general liability claims, and may carry risk of infection and harm to individuals.
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RISKS RELATED TO OUR STOCK
Sales of additional shares of our common stock could cause the price of our common stock to decline.
Sales of substantial amounts of our common stock in the public market, or the availability of such shares for sale, by us or others, including the issuance of common
stock upon exercise of outstanding options and warrants, could adversely affect the price of our common stock. We and our directors and officers may sell shares into the
market, which could adversely affect the market price of shares of our common stock.
An active trading market for our common stock may not be sustained.
Although our common stock is listed on the NASDAQ Capital Market, the market for our shares has demonstrated varying levels of trading activity. Furthermore, the
current level of trading may not be sustained in the future. The lack of an active market for our common stock may impair investors’ ability to sell their shares at the time they
wish to sell them or at a price that they consider reasonable, may reduce the fair market value of their shares and may impair our ability to raise capital to continue to fund
operations by selling shares and may impair our ability to acquire additional intellectual property assets by using our shares as consideration.
The market price of our common stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.
The market price of our common stock has fluctuated, and may continue to fluctuate, widely, due to many factors, some of which may be beyond our control. These
factors include, without limitation:
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“short squeezes”;
comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media;
large stockholders exiting their position in our common stock or an increase or decrease in the short interest in our common stock;
actual or anticipated fluctuations in our financial and operating results;
risks and uncertainties associated with the ongoing COVID-19 pandemic;
the timing and allocations of new product candidates;
public perception of our product candidates and competitive products;
changes in financial estimates or recommendations by securities analysts;
changes in the reimbursement policies of third party insurance companies or government agencies; and
overall general market fluctuations.
Stock markets in general and our stock price in particular have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of those companies and our company. Broad market fluctuations may adversely affect the trading price of our common stock. In particular, a
proportion of our common stock has been and may continue to be traded by short sellers which may put pressure on the supply and demand for our common stock, further
influencing volatility in its market price. Additionally, these and other external factors have caused and may continue to cause the market price and demand for our common
stock to fluctuate, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common
stock.
A “short squeeze” due to a sudden increase in demand for shares of our common stock that largely could lead to extreme price volatility in shares of our common
stock.
Investors may purchase shares of our common stock to hedge existing exposure or to speculate on the price of our common stock. Speculation on the price of our
common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of our common stock available for purchase on the
open market, investors with short exposure may have to pay a premium to repurchase shares of our common stock for delivery to lenders of our common stock. Those
repurchases may in turn, dramatically increase the price of our common stock until additional shares of our common stock are available for trading or borrowing. This is often
referred to as a “short squeeze.” A proportion of our common stock has been and may continue to be traded by short sellers which may increase the likelihood that our common
stock will be the target of a short squeeze. A short squeeze could lead to volatile price movements in shares of our common stock that are unrelated or disproportionate to our
operating performance or prospectus and, once investors purchase the shares of our common stock necessary to cover their short positions, the price of our common stock may
rapidly decline. Investors that purchase shares of our common stock during a short squeeze may lose a significant portion of their investment.
We could be delisted from Nasdaq, which could seriously harm the liquidity of our stock and our ability to raise capital.
We have had in the past, and may in the future, have difficulty satisfying Nasdaq listing requirements for our common stock. We are currently not in compliance with
Nasdaq listing requirements, specifically the minimum bid price requirement, and must regain compliance prior to August 29, 2022. If we are unable to regain such compliance,
we will cease to be eligible to trade on Nasdaq. In such event:
● We may have to pursue trading on a less recognized or accepted market, such as the OTC Bulletin Board or the “pink sheets.”
● Shares of our common stock could be less liquid and marketable, thereby reducing the ability of stockholders to purchase or sell our shares as quickly and as
inexpensively as they have done historically. If our stock is traded as a “penny stock,” transactions in our stock would be more difficult and cumbersome.
● We may be unable to access capital on favorable terms or at all, as companies trading on alternative markets may be viewed as less attractive investments with
higher associated risks, such that existing or prospective institutional investors may be less interested in, or prohibited from, investing in our common stock. This
may also cause the market price of our common stock to decline.
We do not anticipate paying dividends on our common stock and, accordingly, shareholders must rely on stock appreciation for any return on their investment.
We have never declared or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. The declaration of dividends is subject to the
discretion of our board of directors and will depend on various factors, including our operating results, financial condition, future prospects and any other factors deemed
relevant by our board of directors. You should not rely on an investment in our company if you require dividend income from your investment in our company. The success of
your investment will likely depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There is no guarantee
that our common stock will appreciate in value.
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We expect that our quarterly results of operations will fluctuate, and this fluctuation could cause our stock price to decline.
Our quarterly operating results are likely to fluctuate in the future. These fluctuations could cause our stock price to decline. The nature of our business involves
variable factors, such as the timing of the research, development and regulatory pathways of our product candidates, which could cause our operating results to fluctuate.
Due to the possibility of fluctuations in our revenues and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of
our future performance.
The rights of the holders of common stock may be impaired by the potential issuance of preferred stock.
Our articles of incorporation give our board of directors the right to create new series of preferred stock. As a result, the board of directors may, without stockholder
approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could adversely affect the voting power and equity interest of the holders of
common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a
change of control. The possible impact on takeover attempts could adversely affect the price of our common stock. Although we have no present intention to issue any shares of
preferred stock or to create a series of preferred stock, we may issue such shares in the future.
If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if we discover material weaknesses and
deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.
If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses and
other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. Section 404 of the
Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting. If material weaknesses or significant
deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure that we can conclude on an
ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls
are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud,
our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop
significantly.
If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock
price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. Our
research coverage by industry and financial analysts is currently limited. Even if our analyst coverage increases, if one or more of the analysts who cover us downgrade our
stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in
the financial markets, which in turn could cause our stock price or trading volume to decline.
Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions under our corporate charter and bylaws, as well as
Nevada law.
Provisions in our articles of incorporation, our bylaws, and under Nevada law could make it more difficult for other companies to acquire us, even if doing so would
benefit our stockholders. Our articles of incorporation and bylaws contain the following provisions, among others, which may inhibit an acquisition of our company by a third
party:
● advance notification procedures for matters to be brought before stockholder meetings
● a limitation on who may call stockholder meetings
● a limitation on the removal of directors
● the ability of our board of directors to issue up to 5,000,000 shares of preferred stock without a stockholder vote
We are also subject to provisions of Nevada law that prohibit us from engaging in any business combination with any “interested stockholder,” meaning generally that
a stockholder who beneficially owns 10 percent or more of our stock cannot acquire us for a period of time after the date this person became an interested stockholder, unless
various conditions are met, such as approval of the transaction by our board of directors and stockholders.
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Our bylaws designate the Eighth Judicial District Court of Clark County, Nevada as the sole and exclusive forum for certain types of actions and proceedings that may be
initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or
agents.
Our bylaws require that, to the fullest extent permitted by law, and unless the Company consents in writing to the selection of an alternative forum, the Eighth Judicial
District Court of Clark County, Nevada, will, to the fullest extent permitted by law, be the sole and exclusive forum for each of the following:
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any derivative action or proceeding brought in the name or right of the Company or on its behalf,
any action asserting a claim for breach of any fiduciary duty owed by any director, officer, employee or agent of the Company to the Company or the
Company’s stockholders,
any action arising or asserting a claim arising pursuant to any provision of NRS Chapters 78 or 92A or any provision of our articles of incorporation or
bylaws, or
any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the
validity of our articles of incorporation or bylaws.
Because the applicability of the exclusive forum provision is limited to the extent permitted by law, we believe that the exclusive forum provision would not apply to
suits brought to enforce any duty or liability created by the Securities Exchange Act of 1934, as amended (Exchange Act), or any other claim for which the federal courts have
exclusive jurisdiction, and that federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act of 1933, as
amended (Securities Act). We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal
securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Nevada law in
the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
ITEM 1B – UNRESOLVED STAFF COMMENTS
There are no unresolved staff comments at December 31, 2021.
ITEM 2 – PROPERTIES
We maintain our principal office at 26 Main Street, Suite 101, Chatham, New Jersey 07928. Our telephone number at that office is (862) 799-8599 and our fax number
is (212) 923-5700. On August 28, 2020, we entered into a lease, whereby we agreed to lease new office space, commencing September 2020 and expiring December 2025. In
connection therewith, we maintain a letter of credit, which has a remaining balance of $139,729 as of December 31, 2021, and such amount is deposited into the restricted cash
account maintained at the bank that issued the letter of credit. The total square footage of our principal office space is approximately 4,269.
On December 6, 2018, we entered into a lease amendment, whereby we agreed to lease new office space in New York, New York, commencing January 15, 2019, and
expiring on November 30, 2020. In August 2020, we signed a one-year extension, expiring in November 2021. In September 2021, we signed a one-year extension, expiring in
November 2022. In connection therewith, we maintain a letter of credit, which has a remaining balance of $100,314 as of December 31, 2021, and such amount is deposited
into the restricted cash account maintained at the bank that issued the letter of credit. The total square footage of our office space is approximately 2,658.
On October 1, 2021, we completed the purchase of a research and development facility in Maryland totaling $17.5 million, to process development activities. As of
December 31, 2021, the asset was operational but the asset was not ready for its intended use. It is our intention to have the facility ready for use in the first half of 2022.
On March 5, 2021, we announced that we had entered into a $2.9 million non-binding Purchase and Sales Agreement in connection with a property in Massachusetts
that is expected to close in the second quarter of 2022. The Property is intended for process development activities.
On December 23, 2020, we completed the purchase of our approximately 44-acre site in Hamilton, Montana for $4.5 million, for the construction of a vaccine
development and commercial scale manufacturing facility. As of December 31, 2021, the facility was not ready for its intended use.
On September 28, 2020, we completed the purchase of our 40,000 square foot facility in Massachusetts for $4.0 million, to house our new Advanced Development
Center for accelerated development and manufacturing of vaccines. As of December 31, 2021, the facility was not ready for its intended use.
Future minimum lease payments are as follows (in thousands):
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Year Ending December 31,
2022
2023
2024
2025
Included interest
$
$
511
169
145
150
975
(19)
956
We believe that our existing facilities are suitable and adequate to meet our current business requirements.
ITEM 3 - LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal
proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, operating results or cash flows.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
On March 11, 2022, the closing sale price of our common stock, as reported by The NASDAQ Stock Market, was $0.22 per share. On March 11, 2022, there were 233
holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to
estimate the total number of stockholders represented by these record holders.
Dividend Policy
We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend
to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of
the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.
Recent Sales of Unregistered Securities
None.
Repurchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our registered securities during the period covered by this Annual Report.
ITEM 6 – RESERVED
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect
Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may” “will,”
“expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us
and members of its management team as well as the assumptions on which such statements are based and should be read together with the “Risk Factors” section of this
Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-
looking statements contained in the following discussion and analysis. Our actual results could differ materially from those anticipated in these forward-looking statements as a
result of various factors, including those discussed below and elsewhere in this Annual Report and in other reports we file with the Securities and Exchange Commission,
particularly those under “Risk Factors.”.
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Business Overview
We are a clinical-stage biopharmaceutical company focused on discovering, licensing, acquiring and developing therapeutics and diagnostics to treat and prevent
human disease and alleviate suffering. We are building capabilities in synthetic biology, precision medicine, protein engineering and vaccine manufacturing through internal
efforts as well as through collaborations with academic institutions and contract research organizations. Our therapeutics under development include both small molecules and
biologics. All of our drug, biologic and diagnostic candidates are still in development.
Tonix’s portfolio is primarily composed of immunology, central nervous system, or CNS, and infectious disease product candidates. Tonix’s immunology portfolio
includes biologics to address organ transplant rejection, autoimmune diseases and cancer. The CNS portfolio includes small molecules and biologics to treat pain, neurologic,
psychiatric and addiction conditions. Tonix’s infectious disease portfolio of product candidates includes next-generation vaccines to prevent COVID-19, an antiviral to treat
COVID-19, and a potential treatment for Long COVID. The infectious disease portfolio also includes a vaccine in development to prevent smallpox and monkeypox.
Tonix’s lead candidate within its immunology pipeline is TNX-1500*, a humanized monoclonal antibody, or mAb, directed against CD40-ligand, or CD40L,
engineered to modulate binding to Fc receptors, that is being developed to prevent and treat organ transplant rejection as well as to treat autoimmune conditions. In experiments
at the Massachusetts General Hospital, a teaching hospital of Harvard Medical School, TNX-1500 is being studied as monotherapy or in combination with other
immunosuppressive agents in heart and kidney organ transplants in non-human primates. Preliminary results from an ongoing experiment in heart transplants indicate that
TNX-1500 appears to have comparable efficacy to historical experiments using the chimeric mouse/human IgG1 version (5c8H1) of the anti-CD40L mAb 5c8. First generation
anti-CD40L mAbs were associated with an increased risk of blood clotting or thrombosis. In the non-human primate studies with TNX-1500, no evidence of thrombosis has
been observed so far. We expect to start a Phase 1 study of TNX-1500 in the second half of 2022.
Among the CNS candidates in development is TNX-1300* (double-mutant cocaine esterase) which is in Phase 2 for the treatment of life-threatening cocaine
intoxication. TNX-1300 has been granted Breakthrough Therapy designation, or BTD, by the U.S. Food and Drug Administration, or FDA. TNX-1300 was licensed from
Columbia University in 2019 after a Phase 2 study showed that it rapidly and efficiently disintegrates cocaine in the blood of volunteers who received intravenous, or i.v.,
cocaine. We expect to initiate a Phase 2 open-label safety study of TNX-1300 in an emergency room setting in the first half of 2022.
Our latest stage CNS product candidate is TNX-102 SL*, a proprietary sublingual tablet formulation of CBP, designed for bedtime administration. TNX-102 SL has
active INDs for fibromyalgia, or FM, posttraumatic stress disorder, or PTSD, agitation in Alzheimer’s disease, or AAD, and alcohol use disorder, or AUD. We also intend to
develop TNX-102 SL as a treatment for Long COVID, which is also known as post-acute sequelae of COVID-19, or PASC.
TNX-102 SL is in mid-Phase 3 development for the management of FM, a pain disorder characterized by chronic widespread pain, non-restorative sleep, fatigue and
impaired cognition. In December 2020, we reported positive results from the Phase 3 RELIEF study of TNX-102 SL 5.6 mg for the management of FM. In July 2021, we
reported pre-planned interim analysis results from a second Phase 3 study, RALLY. Based on the recommendation from the independent data monitoring committee that the
RALLY trial was unlikely to demonstrate a statistically significant improvement in the primary endpoint, we stopped enrollment of new participants but allowed those
participants who were already enrolled to complete the study. We expect to report topline data from the completed study in the first quarter of 2022. We expect to analyze the
RALLY results to improve the design of subsequent Phase 3 studies. In addition, we plan to employ pharmacogenomic techniques to compare the RALLY and RELIEF study
populations, which may provide a path to precision medicine-based companion diagnostics for TNX-102 SL in FM. We intend to start a new Phase 3 study of TNX-102 SL in
FM in the first half of 2022.
TNX-102 SL is also being developed as a potential treatment for Long COVID. We met with the FDA in the third quarter of 2021 to seek agreement on the design of a
Phase 2 potential pivotal study and the overall clinical development plan to qualify TNX-102 SL as an indicated treatment for Long COVID. We intend to focus our clinical
development on the subgroup of Long COVID patients whose symptoms overlap with FM, particularly with respect to widespread pain. We received the official minutes from
this meeting in the third quarter of 2021 and intend to initiate a Phase 2 study in the first half of 2022.
For TNX-102 SL in PTSD, we completed the Phase 3 RECOVERY trial and reported topline results in the fourth quarter of 2020 in which TNX-102 SL did not meet the
primary efficacy endpoint. PTSD is a serious psychiatric condition that develops in response to experiencing a traumatic event. We subsequently completed a meeting with the
FDA to discuss potential new endpoints for the indication of treatment of PTSD, and we expect to begin enrolling a Phase 2 study of TNX-102 SL in police in Kenya in the
first half of 2022. The AAD program is Phase 2 ready with an active IND and FDA Fast Track designation. AAD, which includes emotional lability, restlessness, irritability,
and aggression, is one of the most distressing and debilitating of the behavioral complications of Alzheimer’s disease. Tonix does not have any near-term plans to start a Phase
2 study in AAD. The AUD program is also Phase 2 ready with an active IND. AUD is a chronic relapsing brain disease characterized by compulsive alcohol use, loss of control
over alcohol intake, and a negative emotional state when not using alcohol. Tonix does not have any near-term plans to start a Phase 2 study in AUD.
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TNX-1900* (intranasal potentiated oxytocin) is in development for prophylaxis of chronic migraine and for the treatment of craniofacial pain, insulin resistance and
related conditions as well as binge eating disorder, or BED. TNX-1900 was acquired from Trigemina, Inc. and licensed from Stanford University in 2020. The potentiated
formulation includes magnesium, which has been shown in animals to potentiate binding of oxytocin to the oxytocin receptor in the trigeminal ganglion. We received IND
clearance from the FDA in the fourth quarter of 2021 and intend to initiate a Phase 2 study in migraine in the second half of 2022. Tonix also licensed technology to use TNX-
1900 for the treatment of insulin resistance from the University of Geneva. TNX-1900 will be studied as a potential treatment for BED in an investigator-initiated Phase 2
clinical trial. The Phase 2 clinical trial is expected to start in the second half of 2022. In March 2022, we announced an agreement with Massachusetts General Hospital, a
teaching hospital of Harvard Medical School, to conduct this study. Tonix does not own an IND for BED.
TNX-2900* is another intranasal oxytocin-based therapeutic in development for the treatment of Prader-Willi syndrome, or PWS. The technology for TNX-2900 was
licensed from Inserm, the French National Institute of Health and Medical Research. PWS, an orphan condition, is a rare genetic disorder of failure to thrive in infancy,
associated with uncontrolled appetite beginning in childhood with complications of obesity and diabetes. We have sponsored a research program at the Inserm to study oxytocin
on suckling behavior in mice that have been engineered to express one of the Prader-Willi genes. TNX-2900 has been granted Orphan-Drug Designation for the treatment of
PWS.
TNX-601 CR* (tianeptine oxalate and naloxone controlled-release tablets) is a CNS product candidate in development as a treatment for major depressive disorder, or
depression, for PTSD, and for neurocognitive dysfunction associated with corticosteroid use. We completed a Phase 1 trial for formulation development outside of the U.S.
Based on official minutes from a pre-IND meeting with the FDA, we expect to initiate a pharmacokinetic study, in the third quarter of 2022, and a Phase 2 study in the first
quarter of 2023.
Tonix’s infectious disease portfolio includes vaccines based on Tonix’s recombinant pox vaccine, or “RPV” technology platform. RPV vaccines are believed to protect
against negative outcomes of infectious diseases by eliciting T cell responses in addition to antibody responses. TNX-801* is an RPV live horsepox virus vaccine for
percutaneous administration in the pre-IND stage of development to protect against smallpox and monkeypox. TNX-801 vaccinated non-human primates were protected from
monkeypox in studies reported in the first quarter of 2020.
TNX-1800* is a live virus vaccine that expresses the SARS-CoV-2 spike protein from the ancestral Wuhan strain, which has shown encouraging results in non-human
primates. Because the subsequent omicron variant has out-competed the ancestral Wuhan strain, we are now planning new vaccine versions, TNX-1840* and TNX-1850*, that
are designed to express spike protein from the omicron variant and from the BA.2 variant, respectively. The COVID-19 vaccines that are approved for use, or have emergency
use authorization, or EUA, in the U.S. have provided significant health benefits to the vaccinated population; however, they are showing limitations in the durability of
protection conferred and, in their ability, to block forward transmission. Live virus vaccines that protect against other viral diseases by eliciting T cell responses have shown
durability of protection that lasts years to decades and some live virus vaccines have significantly inhibited forward transmission. With respect to TNX-1800 vaccination, we
reported positive efficacy data from animal challenge studies using live SARS-CoV-2 in the first quarter of 2021. In this study, TNX-1800 vaccinated, SARS-CoV-2 challenged
animals had undetectable SARS-CoV-2 in the upper airways, which we believe relates to potential inhibition of forward transmission of this respiratory pathogen.
TNX-3500* (sangivamycin) is an antiviral inhibitor of SARS-CoV-2 which has demonstrated broad-spectrum activity in laboratory-based assays against the
coronaviruses SARS-CoV-2 and MERS-CoV. Tonix licensed this technology from OyaGen, Inc. and intends to develop it as a treatment for COVID-19 and potentially other
viral diseases. The active ingredient of TNX-3500 has been studied for safety in humans in prior studies with cancer patients at the U.S. National Cancer Institute but has not
been approved for marketing in any jurisdiction. Tonix intends to conduct further animal studies in preparation for filing an IND.
TNX-3600* refers to a series of fully human mAbs generated by a human-human hybridomas from COVID-19 convalescent volunteers. Tonix is collaborating with
Columbia University to produce these fully human mAbs to SARS-CoV-2 spike proteins from variants such as delta and omicron and to other viral targets. The initial focus is
to develop COVID-19 therapeutic mAbs. Tonix plans to seek indications similar to current EUA therapeutic mAbs for treating individuals with mild-to-moderate COVID-19
who are at high risk for progression to severe disease. TNX-3600 mAbs may also be used in combination therapy with other COVID-19 therapeutic mAbs. Combination
therapies with other anti-SARS-CoV-2 mAbs may reduce the emergence of resistant viral strains. Given the unpredictable trajectory of the SARS-CoV-2 virus and new
variants, we seek to contribute to a broad set of mAbs from a variety of patients, that can be scaled up quickly and potentially combined with other mAbs. We envision the
future of mAb therapy for COVID-19 to be cocktails of mAbs with specificity to variants of concern. TNX-3600 is in the preclinical stage of development. Tonix intends to
study inhibition of SARS-CoV-2 variants in tissue culture and initiate animal studies in the first half of 2022.
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Tonix also is collaborating with Columbia University to better understand immune responses to SARS-CoV-2 in healthy individuals who have recovered from
COVID-19, which is expected to provide a foundation for tailoring therapeutics to appropriate individuals using precision medicine.
TNX-3700* is a COVID-19 mRNA vaccine candidate employing a zinc nanoparticle (ZNP) formulation. In collaboration with Kansas State University, Tonix is
developing this ZNP technology as a potential replacement for the lipid nanoparticle (LNP) technology used in current mRNA vaccines. ZNP technology potentially allows for
improved stability which facilitates shipping and storage and addresses the limitations in current mRNA vaccines which require ultra-cold storage and shipping. This current
requirement limits the use of mRNA vaccines in less developed countries. We plan to seek initial indications as a booster, similar to the current FDA approved mRNA vaccines.
Tonix intends to conduct research with Kansas State University on ZNP SARS-CoV-2 spike based vaccines in tissue culture and animals in the first half of 2022.
TNX-2100* is an in vivo diagnostic skin test we are developing to measure SARS-CoV-2 exposure and T cell immunity. T cell immunity is more durable than
antibody immunity, since serum antibodies wane between six months and one year after vaccination. TNX-2100 is a potential test to measure delayed-type hypersensitivity
(DTH) response to SARS-CoV-2. The DTH response for other pathogens, notably tuberculosis, can serve as an in vivo measure of functional T cell immunity. TNX-2100 is
comprised of GMP peptides designed to mimic SARS-CoV-2 proteins and stimulate SARS-CoV-2 specific T cells. We initiated a first-in-human, dose-finding clinical study in
the first quarter of 2022 and expect study results in the first half of 2022.
Our immunology pipeline also includes TNX-1700*. TNX-1700 is a recombinant modified form of Trefoil Family Factor 2, or rTFF2, that was licensed from
Columbia University in 2019. TNX-1700 is a biologic being developed to treat gastric and colorectal cancers by an immune-oncology mechanism and is in the preclinical stage
of development.
Our biodefense pipeline includes TNX-701*, an undisclosed small molecule technology being developed to prevent deleterious effects of radiation exposure which has
the potential to be used as a medical countermeasure to improve biodefense. TNX-701 is in the preclinical stage of development.
Finally, our CNS pipeline includes TNX-1600*, an inhibitor of the reuptake of neurotransmitters serotonin, norepinephrine and dopamine, or a triple reuptake
inhibitor. TNX-1600 was licensed from Wayne State University in 2019 and is being developed as a treatment for PTSD, depression and attention-deficit/hyperactivity disorder,
or ADHD. TNX-1600 is in the preclinical stage of development.
Relating to our COVID-19 and other infectious disease development programs, we are developing the resources necessary to enable internal research, development
and manufacturing capabilities necessary to meet the goal of producing new vaccine candidates within 100 days of recognition and new diagnostics within weeks of obtaining
sequence information. As articulated in the American Pandemic Preparedness Plan, or AP3, released by the U.S. Office of Science and Technology Policy, this 100-day goal for
vaccines is a key component of preparedness for future pandemics. We intend to establish the infrastructure necessary to support the pandemic preparedness goals established in
the AP3, specifically with respect to our RPV vaccine and skin test platforms and potentially to other vaccine, diagnostic and therapeutic platforms. This infrastructure consists
of (i) our infectious disease R&D Center, or “RDC”, (ii) our Advanced Development Center, or ADC, and (iii) our Commercial Manufacturing Center, or CMC. We acquired
the infectious disease RDC in Frederick, Maryland consisting of two buildings totaling approximately 48,000 square feet. The acquisition closed in October 2021 and was
operational at closing, but as of December 31, 2021, the facility was not ready for its intended use. It is our intention to have the facility ready for use in the first half of 2022.
The RDC facility will focus on our development of vaccines and antiviral drugs against SARS-CoV-2, its variants, and other infectious diseases. The RDC facility is currently
biosafety level 2 (BSL-2), but we intend to upgrade components to BSL-3. We are in the process of a substantial renovation of the ADC located in the New Bedford business
park in Dartmouth, Massachusetts. This facility is intended to accelerate development and clinical scale manufacturing of live-virus vaccines to support Phase 1 and Phase 2
clinical trials. It is currently under construction and will be an approximately 45,000 square foot BSL-2 facility once completed. It is expected to be partially operational in the
first half of 2022. We also plan to build the CMC in Hamilton, Montana, where we purchased approximately 44 acres of land. The CMC will focus on developing and
manufacturing commercial scale live-virus vaccines and is also intended to be BSL-2. Site enabling work is expected to be initiated for the CMC in 2022. Together, we expect
these facilities may qualify the RPV vaccine and skin test platforms for programs that are designed to carry out the goals of AP3.
*All of Tonix’s product candidates are investigational new drugs or biologics and have not been approved for any indication.
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Results of Operations
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research and development efforts
and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.
Fiscal year Ended December 31, 2021 Compared to Fiscal year Ended December 31, 2020
The following table sets forth our operating expenses for the fiscal years ended December 31, 2021 and 2020 (in thousands):
COSTS AND EXPENSES:
Research and development
General and administrative
Total operating expenses
Operating loss
Interest income, net
Net loss
Year ended December 31,
2021
2020
$
$
68,838
23,474
92,312
(92,312)
25
$
(92,287)
$
36,157
14,354
50,511
(50,511)
48
(50,463)
Research and Development Expenses. Research and development expenses for the fiscal year ended December 31, 2021 were $68.8 million, an increase of $32.6
million, or 90%, from $36.2 million for the fiscal year ended December 31, 2020. This increase is predominately due to increased non-clinical expenses of $14.0 million,
manufacturing expenses of $10.9 million, employee-related expenses of $5.3 million and regulatory/legal expenses of $1.9 million, offset by a decrease in clinical expenses of
$0.7 million. We expect research and development expenses to increase during 2022 as we move our clinical development programs forward and continue to invest in our
development pipeline.
The table below summarizes our direct research and development expenses for our product candidates and development platform for the years ended December 31,
2021, and 2020.
Research and development expenses:
Direct expenses – TNX - 102 SL
Direct expenses – TNX - 1800
Direct expenses – TNX – 601 CR
Direct expenses – TNX - 1300
Direct expenses – TNX - 1500
Direct expenses – TNX - 1900
Direct expenses – TNX - 2100
Direct expenses – TNX - 3500
Direct expenses – Other programs
Internal staffing, overhead and other
Total research & development
2021
December 31,
(in thousands)
2020
Change
$
$
13,974
8,049
4,602
5,882
5,334
2,429
3,410
5,368
4,942
14,848
68,838
$
$
14,889 $
3,682
776
1,678
1,044
2,853
1,015
137
3,728
6,355
36,157 $
(915)
4,367
3,826
4,204
4,290
(424)
2,395
5,231
1,214
8,493
32,681
Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such as fees paid to contractors,
consultants and CROs in connection with our development work. Included in “Internal Staffing, Overhead and Other” is overhead, supplies, research and development
employee costs (including stock option expenses), travel, regulatory and legal.
General and Administrative Expenses. General and administrative expenses for the fiscal year ended December 31, 2021 were $23.5 million, an increase of $9.1
million, or 63%, from $14.4 million incurred in the fiscal year ended December 31, 2020. The increase is primarily due to employee-related expenses of $4.9 million, an
increase in legal fees of $0.7 million due to increased patent prosecution costs, an increase in investor relations/public relations expenses of $0.6 million, an increase in
financial reporting expenses of $1.2 million, and an increase in insurance premiums of $0.4 million.
Net Loss. As a result of the foregoing, the net loss for the year ended December 31, 2021 was $92.3 million, compared to a net loss of $50.5 million for the year ended
December 31, 2020.
License Agreements
On April 14, 2021, we entered into an exclusive License Agreement (the “OyaGen License Agreement”) with OyaGen, Inc. (“OyaGen”), pursuant to which OyaGen
granted to us an exclusive license to certain patents and technical information related to an antiviral inhibitor of SARS-CoV-2, sangivamycin, and to develop and commercialize
products thereunder, and to acquire rights to any technology based thereon for the prevention or treatment of Covid-19 developed by OyaGen during the term of the License
Agreement.
As consideration for entering into the License Agreement, we paid a low-seven digit license fee to OyaGen, and issued to OyaGen and an affiliated entity an aggregate
of 2,752,294 shares of our common stock, which are unregistered and subject to a six-month lock-up and a voting agreement, pursuant to which OyaGen and the affiliated
entity have agreed to vote the common stock on any matter put to a vote of the our shareholders in accordance with management’s recommendations. The shares were valued at
$3.0 million, which was recorded as research and development expense. The OyaGen License also provides for single-digit royalties and contingent milestone payments.
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As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement
On February 11, 2021, we announced that we have licensed technology using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic
failure to thrive disease from Inserm (the French National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier Universitaire of Toulouse.
The licensing agreement has been negotiated and signed by Inserm Transfert, the private subsidiary of Inserm, on behalf of Inserm.
The co-exclusive license allows us to expand our intranasal potentiated oxytocin development program to a new indication. The patents covering the technology are
expected to provide market exclusivity for the co-licensees in the U.S. and Europe through 2031, which exclusivity could be extended after marketing authorization by a
Supplemental Protection Certificate in Europe or a Patent Term Extension in the U.S., independent of other Tonix-held patents covering the formulation and oxytocin
potentiation technologies for intranasal administration.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
On September 16, 2019, we entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees of Columbia University in the City
of New York (“Columbia”) pursuant to which Columbia granted to us an exclusive license, with the right to sublicense, certain patents and technical information (collectively,
the “TFF2 Technology”) related to a recombinant Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2 Product”). Pursuant to
the terms of the Columbia License Agreement, Columbia has reserved for itself the right to practice the TFF2 Technology for academic research and educational purposes.
We paid a five-digit license fee to Columbia as consideration for entering into the Columbia License Agreement, which was previously recorded to research and
development expenses in the statement of operations. We are obligated to use Commercially Reasonable Efforts, as defined in the Columbia License Agreement, to develop and
commercialize the TFF2 Product, and to achieve specified developmental milestones.
We have agreed to pay Columbia single-digit royalties on net sales of (i) TFF2 Products sold by us or a sublicensee and (ii) any other products that involve material or
technical information related to the TFF2 Product and transferred to us pursuant to the License Agreement (“Other Products”) sold by us or a sublicensee. Royalties on each
particular TFF2 Product are payable on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire
of the issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after the first commercial sale of a TFF2 Product in the country in
question. Royalties on each particular Other Product are payable on a country-by-country and product-by-product basis until a specified period of time after the first
commercial sale of such particular Other Product in such country. Royalties payable on net sales of the TFF2 Product and Other Products may be reduced by 50% of the
royalties payable by us to any third party for intellectual property rights which are necessary for the practice of the rights licensed to us under the Columbia License Agreement,
provided that the royalty payable on a TFF2 Product or Other Product may not be reduced by more than 50%.
We are also obligated to make contingent milestone payments to Columbia totaling $4.1 million on a Product-by-Product basis upon the achievement of certain
development, approval and sales milestones related to a TFF2 Product. In addition, we shall pay Columbia 5% of consideration, other than royalty payments and certain other
categories of consideration, payable to us by a sublicensee. As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
On May 20, 2019, we entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to which Columbia, for itself and on behalf of
the University of Kentucky and the University of Michigan (collectively, the “Institutions”) granted to us an exclusive license, with the right to sublicense, certain patents,
technical information and material (collectively, the “Technology”) related to a double-mutant cocaine esterase, and to develop and commercialize products thereunder (each, a
“Product”). Pursuant to the terms of the License Agreement, Columbia has reserved for itself and the Institutions the right to practice the Technology for academic research and
educational purposes.
We paid a six-digit license fee to Columbia as consideration for entering into the License Agreement. We are obligated to use Commercially Reasonable Efforts, as
defined in the License Agreement, to develop and commercialize the Product, and to achieve specified developmental milestones. The first 50% of the license fee was paid by
June 30, 2019, while the remaining 50% license fee, was paid during the second quarter of 2020. Both installments of the license fee were previously recorded to research and
development expenses.
We agreed to pay Columbia single-digit royalties on net sales of (i) Products sold by us or a sublicensee and (ii) any other products that involve material or technical
information related to the Product and transferred to us pursuant to the License Agreement (“Other Products”) sold by us or a sublicensee. Royalties on each particular Product
are payable on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire of the issued patents
covered by the License Agreement, (ii) a specified period of time after the first commercial sale of a Product in the country in question, or (iii) expiration of any market
exclusivity period granted by a regulatory agency. Royalties on each particular Other Product are payable on a country-by-country and product-by-product basis until the later
of (i) a specified period of time after the first commercial sale of such particular Other Product in such country or (ii) expiration of any market exclusivity period granted by a
regulatory agency. Royalties payable on net sales of the Product and Other Products may be reduced by 50% of the royalties payable by us to any third party for intellectual
property rights which are necessary for the practice of the rights licensed to us under the License Agreement, provided that the royalty payable on a Product or Other Product
may not be reduced by more than 50%.
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We are also obligated to make contingent milestone payments to Columbia totaling $3 million on a Product-by-Product basis upon the achievement of certain
development, approval and sales milestones related to a Product. In addition, we shall pay Columbia 5% of consideration, other than royalty payments and certain other
categories of consideration, payable to us by a sublicensee. As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
Asset Purchase Agreements
On December 22, 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Katana Pharmaceuticals, Inc. (“Katana”) pursuant to
which we acquired Katana assets related to insulin resistance and related syndromes, including obesity (the “Katana Assets”). In connection with the acquisition of the Assets,
we assumed Katana’s rights and obligations under that certain Exclusive License Agreement by and between Katana and The University of Geneva (“Geneva”) (the “Geneva
License “Agreement”) pursuant to an Assignment and Assumption Agreement with Geneva (“Geneva Assignment and Assumption Agreement”), dated December 22, 2020. As
consideration for entering into the Asset Purchase Agreement, we paid $0.7 million to Katana. The costs associated with the cash payments were recorded to research and
development expenses in the statement of operations for the year ended December 31, 2020. Because the Katana intellectual property was acquired prior to FDA approval, the
cash consideration totaling $0.7 million, was expensed as research and development costs since there is no alternative future use and the acquired intellectual property does not
constitute a business.
Pursuant to the terms of the Geneva Assignment and Assumption Agreement, Geneva granted us an exclusive license, with the right to sublicense, certain patents
related to the Katana Assets. We are obligated to use commercially reasonable efforts to diligently develop, manufacture, and sell products claimed or covered by the patent and
will use commercially reasonable efforts to diligently develop markets for such products. The Geneva License Agreement specifies developmental milestones and the period of
time during which such milestones must be completed and provides for an annual maintenance fee payable to Geneva.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
On June 11, 2020, we entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina, Inc. (“Trigemina”) and certain
shareholders named therein (the “Executive Shareholders”) pursuant to which we acquired Trigemina assets related to migraine and pain treatment technologies (the
“Trigemina Assets”). In connection with the acquisition of the Trigemina Assets, we assumed Trigemina’s rights and obligations under that certain Amended and Restated
Exclusive License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford Junior University
(“Stanford”) (the “Stanford License “Agreement”) pursuant to an Assignment and Assumption Agreement with Stanford (“Assignment and Assumption Agreement”), dated
June 11, 2020. As consideration for entering into the Trigemina Asset Purchase Agreement, we paid $824,759 to Trigemina and issued to Trigemina 2,000,000 shares of our
common stock and paid Stanford $250,241 pursuant to the terms of the Assignment and Assumption Agreement. The common stock is unregistered and subject to a 12 month
lock-up and a Shareholder Voting Agreement, dated June 11, 2020, pursuant to which Trigemina and the Executive Shareholders have agreed to vote the common stock on any
matter put to a vote of our shareholders in accordance with management’s recommendations. Both the costs associated with the cash payments and share issuance, totaling $2.4
million, were recorded to research and development in the statement of operations for the year ended December 31, 2020. Because the Trigemina intellectual property was
acquired prior to FDA approval, the cash and stock consideration was expensed as research and development costs since there is no alternative future use and the acquired
intellectual property does not constitute a business.
Pursuant to the terms of the Assignment and Assumption Agreement, Stanford has granted us an exclusive license, with the right to sublicense, certain patents related
to the Trigemina Assets. Stanford has reserved for itself the right to practice under the patents for academic research and educational purposes. We are obligated to use
commercially reasonable efforts to diligently develop, manufacture, and sell products claimed or covered by the patent and will use commercially reasonable efforts to
diligently develop markets for such products. The Stanford License Agreement specifies developmental milestones and the period of time during which such milestones must
be completed, and provides for an annual maintenance fee payable to Stanford.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
On August 19, 2019, we entered into an asset purchase agreement (the “TRImaran Asset Purchase Agreement”) with TRImaran Pharma, Inc. (“TRImaran”) and the
selling shareholders named therein (the “Selling Shareholders”) pursuant to which we acquired TRImaran’s assets related to certain pyran-based compounds (the “TRImaran
Assets”). In connection with the acquisition of the TRImaran Assets, we entered into a First Amended and Restated Exclusive License Agreement (the “WSU License
Agreement”) with Wayne State University (“WSU”) on August 19, 2019. As consideration for entering into the TRImaran Asset Purchase Agreement, we paid $100,000 to
TRImaran and have assumed certain liabilities of TRImaran totaling $68,500. The $168,500 was previously recorded to research and development expenses in the statement of
operations. Upon the achievement of specified development, regulatory and sales milestones, we also agreed to pay TRImaran and the Selling Shareholders, in restricted stock
or cash, at our option, a total of approximately $3.4 million. Pursuant to the terms of the TRImaran Asset Purchase Agreement, TRImaran and the Selling Shareholders are
prohibited from disclosing confidential information related to the TRImaran Assets and are restricted from engaging, for a period of three years, in the development or
commercialization of any therapeutic containing any pyran-based drug compound for the treatment of post-traumatic stress disorder, attention deficit hyperactivity disorder or
major depressive disorder. Also for a period of three years, if TRImaran or any Selling Shareholder engage in the research or development of any potential therapeutic
compound for the treatment of any central nervous system disorder, TRImaran or such Selling Shareholder is obliged to provide notice and opportunity to Tonix to make an
offer to acquire or license rights with respect to such product candidate. As of December 31, 2021, no milestone payments have been accrued or paid in relation to this
agreement.
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Pursuant to the terms of the WSU License Agreement, WSU granted us an exclusive license, with the right to sublicense, certain patents, technical information and
material (collectively, the “Technology”) related to the TRImaran Assets. WSU has reserved for itself the right to practice the Technology for academic research and
educational purposes. We are obligated to use commercially reasonable efforts to obtain regulatory approval for one or more products utilizing the Technology (“WSU
Products”) and to use commercially reasonable marketing efforts throughout the term of the WSU License Agreement. The WSU License Agreement specifies developmental
milestones and the period of time during which such milestones must be completed and provides for an annual maintenance fee payable to WSU. We are obligated to
substantially manufacture WSU Products in the United States if WSU Products will be sold in the United States.
Pursuant to the WSU License Agreement, we paid $75,000 to WSU as reimbursement of certain patent expenses, and, upon the achievement of specified development,
regulatory and sales milestones, we also agreed to pay WSU, milestone payments totaling approximately $3.4 million. We also agreed to pay WSU single-digit royalties on net
sales of WSU Products sold by us or a sublicensee on a tiered basis based on net sales, and additional sublicense fees on certain consideration received from sublicensees.
Royalties on each particular WSU Product are payable on a country-by-country and Product-by-Product basis until the date of expiration of the last valid claim in the last to
expire of the issued patents covered by the WSU License Agreement. Royalties payable on net sales of WSU Products may be reduced by 50% of the royalties payable by us to
any third party for intellectual property rights which are necessary for the practice of the rights licensed to us under the WSU License Agreement, provided that the royalty
payable on a WSU Product may not be reduced by more than 50%. Each party also has the right to terminate the agreement for customary reasons such as material breach and
bankruptcy. The WSU License Agreement contains provisions relating to termination, indemnification, confidentiality and other customary matters for an agreement of this
kind. As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
Liquidity and Capital Resources
As of December 31, 2021, we had working capital of $167.3 million, comprised primarily of cash and cash equivalents of $178.7 million and prepaid expenses and
other of $10.4 million, offset by $13.3 million of accounts payable, $7.9 million of accrued expenses and other current liabilities and $0.5 million of lease liabilities, short term.
A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our Phase 3 clinical trial in FM and our vaccine program.
The following table provides a summary of operating, investing and financing cash flows for the years ended December 31, 2021, and 2020, respectively (in
thousands):
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
$
December 31,
2021
2020
$
(75,557)
(35,307)
212,487
(48,566)
(8,564)
123,105
For the years ended December 31, 2021 and 2020, we used approximately $75.6 million and $48.6 million of cash in operating activities, respectively, which
represents cash outlays for research and development and general and administrative expenses in such periods. The increase in cash outlays principally resulted from an
increase in research and development and general and administrative activities. For the year ended December 31, 2021 and 2020, net proceeds from financing activities were
$212.5 million and $123.1 million, respectively, predominately from the sale of our common stock and exercise of warrants.
Cash used by investing activities for the years ended December 31, 2021 and 2020 was approximately $35.3 million and $8.6 million, respectively, related to the
purchase of property and equipment.
For the year ended December 31, 2021 and 2020, net proceeds from financing activities were $212.5 million and $123.1 million, respectively, predominately from the
sale of our common stock and exercise of warrants.
We believe that our cash resources at December 31, 2021 and the proceeds that we raised from equity offerings in the first quarter of 2022 will meet our operating and
capital expenditure requirements through the end of 2022, but not beyond.
We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due
to changes we may make in our research and development spending plans. These factors raise substantial doubt about our ability to continue as a going concern for the one year
period from the date of filing of this Form 10-K. We have the ability to obtain additional funding through public or private financing or collaborative arrangements with
strategic partners to increase the funds available to fund operations. Without additional funds, we may be forced to delay, scale back or eliminate some of our research and
development activities, or other operations and potentially delay product development in an effort to provide sufficient funds to continue our operations. If any of these events
occurs, our ability to achieve our development and commercialization goals would be adversely affected.
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Future Liquidity Requirements
We expect to incur losses from operations for the near future. We expect to incur increasing research and development expenses, including expenses related to
additional clinical trials and the buildout of our research and development operations and manufacturing. We will not have enough resources to meet our operating requirements
for the one-year period from filing date of this report.
Our future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates, the timing and
outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights,
the status of competitive products, the availability of financing and our success in developing markets for our product candidates.
We will need to obtain additional capital in order to fund future research and development activities. Future financing may include the issuance of equity or debt
securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue
additional equity or debt securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of
existing holders of our common stock.
If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our research and
development programs, reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights
to certain product candidates that we might otherwise seek to develop or commercialize independently.
Purchase Agreement with Lincoln Park
On December 3, 2021, we entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration rights agreement (the “Lincoln Park
Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the Purchase Agreement with Lincoln Park, Lincoln Park has
agreed to purchase from us up to $80,000,000 of our common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement. Pursuant to
the terms of the Lincoln Park Registration Rights Agreement, we filed with the SEC a registration statement to register for resale under the Securities Act the shares that have
been or may be issued to Lincoln Park under the Purchase Agreement with Lincoln Park.
Pursuant to the terms of the Purchase Agreement with Lincoln Park, at the time we signed the Purchase Agreement with Lincoln Park and the Lincoln Park
Registration Rights Agreement, we issued 2,909,091 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock
under the Purchase Agreement with Lincoln Park. The commitment shares were valued at $1.6 million and recorded as an addition to equity for the issuance of the common
stock and treated as a reduction to equity as a cost of capital to be raised under the Purchase Agreement with Lincoln Park.
No shares were sold during the year ended December 31, 2021, under the Purchase agreement with Lincoln Park. Subsequent to December 31, 2021, we have sold
22.0 million shares of common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately $4.5 million.
2021 Lincoln Park Transaction
On May 14, 2021, we entered into a purchase agreement (the “2021 Purchase Agreement”) and a registration rights agreement (the “2021 Registration Rights
Agreement”) with Lincoln Park. Pursuant to the terms of the 2021 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $80,000,000 of our common stock
(subject to certain limitations) from time to time during the term of the 2021 Purchase Agreement. Pursuant to the terms of the 2021 Registration Rights Agreement, we filed
with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2021 Purchase
Agreement.
Pursuant to the terms of the 2021 Purchase Agreement, at the time we signed the 2021 Purchase Agreement and the 2021 Registration Rights Agreement, we issued
1,280,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2021 Purchase Agreement. The
commitment shares were valued at $1.6 million and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of
capital to be raised under the 2021 Purchase Agreement.
During the year ended December 31, 2021, we sold an aggregate of approximately 64.5 million shares of common stock under the 2021 Purchase Agreement, for gross
proceeds of approximately $41.3 million.
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Under applicable rules of the NASDAQ Global Market, we could not issue or sell more than 19.99% of the shares of its common stock outstanding immediately prior
to the execution of the 2021 Purchase Agreement (approximately 64.5 million shares) to Lincoln Park under the 2021 Purchase Agreement without stockholder approval, unless
the average price of all applicable sales of its common stock to Lincoln Park under the 2021 Purchase Agreement equals or exceeds a threshold amount. As we have issued
approximately 64.5 million shares to Lincoln Park, during the year end December 31, 2021, under the 2021 Purchase Agreement at less than the threshold amount, we will not
sell any additional shares under the 2021 Purchase Agreement without shareholder approval.
February 2021 Financing
On February 8, 2021, we entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 58,333,334 shares of our
common stock, in a registered direct public offering (“the February 2021 Financing”), with A.G.P/Alliance Global Partners (“AGP”), acting as placement agent. The public
offering price for each share of common stock was $1.20. The February 2021 Financing closed on February 9, 2021. AGP received a cash fee of 7% of the gross proceeds, for
an aggregate amount of $4.9 million. We incurred other offering expenses of approximately $0.1 million. We received net proceeds of approximately $65.0 million, after
deducting the fees and other offering expenses.
January 2021 Financing
On January 11, 2021, we entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 50,000,000 shares of its
common stock in a registered direct public offering (“the January 2021 Financing”), with AGP as placement agent. The public offering price for each share of common stock
was $0.80. The January 2021 Financing closed on January 13, 2021. AGP received a cash fee of 7% of the gross proceeds, for an aggregate of $2.8 million. We incurred other
offering expenses of approximately $0.3 million. The Company received net proceeds of approximately $36.9 million, after deducting the fees and other offering expenses.
At-the-Market Offerings
On April 8, 2020, we entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which we may issue and sell, from time to time, shares of our
common stock having an aggregate offering price of up to $240.0 million in at-the-market offerings (“ATM”) sales. On the same day, we filed a prospectus supplement under a
shelf registration relating to the Sales Agreement. AGP will act as sales agent and will be paid a 3% commission on each sale under the Sales Agreement. Our common stock
will be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the year ended December 31, 2021, we sold approximately 110.2 million
shares of common stock under the Sales Agreement, for net proceeds of approximately $69.3 million. Subsequent to December 31, 2021, we sold 15.6 million shares of
common stock under the Sales Agreement, for net proceeds of approximately $4.3 million.
2020 Lincoln Park Transaction
On September 3, 2020, we entered into a purchase agreement (the “2020 Purchase Agreement”) and a registration rights agreement (the “2020 Registration Rights
Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the 2020 Purchase Agreement, Lincoln Park has agreed to purchase from us up to
$30,000,000 of our common stock (subject to certain limitations) from time to time during the term of the 2020 Purchase Agreement. Pursuant to the terms of the 2020
Registration Rights Agreement, we filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to
Lincoln Park under the 2020 Purchase Agreement.
Pursuant to the terms of the 2020 Purchase Agreement, we issued 600,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase
shares of our common stock under the 2020 Purchase Agreement. The commitment shares were valued at $498,000 and recorded as an addition to equity for the issuance of the
common stock and treated as a reduction to equity as a cost of capital to be raised under the 2020 Purchase Agreement.
During the year ended December 31, 2020, we sold an aggregate of approximately 25.4 million shares of common stock under the 2020 Purchase Agreement, for gross
proceeds of approximately $14.6 million.
Under applicable rules of the NASDAQ Global Market, we could not issue or sell more than 19.99% of the shares of our common stock outstanding immediately prior
to the execution of the 2020 Purchase Agreement (approximately 26 million shares) to Lincoln Park under the 2020 Purchase Agreement without stockholder approval, unless
the average price of all applicable sales of our common stock to Lincoln Park under the 2020 Purchase Agreement equals or exceeds a threshold amount. As we have issued
approximately 26 million shares to Lincoln Park, during the year end December 31, 2020, under the 2020 Purchase Agreement at less than the threshold amount, we will not
sell any additional shares under the 2020 Purchase Agreement without shareholder approval.
82
July 2020 Financing
On July 13, 2020, we entered into an underwriting agreement with AGP, relating to the issuance and sale of 20,940,000 shares of common stock, in a registered direct
public offering (“the July 2020 Financing”). The public offering price for each share of common stock was $0.50. The July 2020 Financing closed on July 15, 2020. AGP
purchased the shares at a seven percent discount, for an aggregate discount of $0.7 million. We incurred other offering expenses of approximately $0.1 million. We received net
proceeds of approximately $9.6 million, after deducting the underwriting discount and other offering expenses.
March 2020 Financing
On February 28, 2020, we entered into an underwriting agreement with AGP, relating to the issuance and sale of 14,550,000 shares of our common stock, in a
registered direct public offering (“the March 2020 Financing”). The public offering price for each share of common stock was $1.10. The March 2020 Financing closed on
March 3, 2020. AGP purchased the shares at a seven-percent discount to the then current public price, for an aggregate discount of $1.1 million. We incurred other offering
expenses of approximately $0.1 million. We received net proceeds of approximately $14.8 million, after deducting the underwriting discount and other offering expenses.
February 2020 Financing
On February 7, 2020, we entered into an underwriting agreement with AGP pursuant to which we sold securities consisting of 3,837,000 Class A Units at a public
offering price of $0.57 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock, and 5,313 Class B Units at a
public offering price of $1,000 per unit, with each unit consisting of one share of Series B Convertible Preferred Stock, with a conversion price of $0.57 per share, convertible
into 1,754.386 shares of common stock and warrants to purchase 1,754.386 shares of our common stock (“the February 2020 Financing”). The warrants have an exercise price
of $0.57, are immediately exercisable and expire five years from the date of issuance.
The February 2020 Financing closed on February 11, 2020. AGP purchased the Class A and Class B Units at a seven-percent discount to the public offering price, for
an aggregate discount of approximately $0.5 million. We incurred other offering expenses of approximately $0.5 million. We received net proceeds of approximately $6.5
million, after deducting the underwriting discount and other offering expenses.
After allocating proceeds to the warrants issued with the Series B Convertible Preferred Stock, the effective conversion price of the Series B Convertible Preferred
stock was determined to be less than the fair value of the underlying common stock at the date of commitment, resulting in a beneficial conversion feature (“BCF”) at that date.
Since the Series B Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by the BCF of $1.3
million, based on intrinsic value, was charged to additional paid in capital as a non-cash “deemed dividend” and included in net loss to common stockholders.
During the first quarter of 2020, all 5,313 shares of Series B Convertible Preferred Stock were converted into common stock.
During February and March 2020, 10.8 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57, were exercised for proceeds of
approximately $6.2 million.
During August 2020, 2.2 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57, were exercised for proceeds of approximately
$1.3 million.
November 2019 Financing
On November 14, 2019, we sold securities consisting of 547,420 Class A Units at a public offering price of $1.94 per unit, with each unit consisting of one share of
common stock, one warrant to purchase one share of common stock (“primary warrant”) and one-half of one warrant to purchase one half of one share common stock
(“common warrant”), and 7,938 Class B Units at a public offering price of $1,000 per unit, with each unit consisting of one share of Series A Convertible Preferred Stock, with
a conversion price of $1.94 per share, convertible into 515.464 shares of common stock, primary warrants to purchase 515.464 shares of common stock, and common warrants
to purchase 257.732 shares of our common stock. The primary warrants have an exercise price of $1.94, are immediately exercisable and expire five years from the date of
issuance. The common warrants had an exercise price of $1.94 and expired 12 months from the date of issuance. The common warrants were exercisable on a cashless basis at
the option of the holder on the earlier of 30 days from issuance and the date by which an aggregate of $9.0 million of our securities were traded.
With the February 2020 Financing, warrants that were issued as part of the November 2019 Financing were repriced at $0.57. As a result of the issuance of common
stock in February 2020 for less than the November 2019 warrant exercise price, a repricing of the warrants issued in the November 2019 Financing was triggered. We
recognized a one-time non-cash “deemed dividend” of $0.5 million, representing the increase in the fair value of the warrants. The “deemed dividend” was charged to
additional paid in capital and included in net loss to stockholders. During February and March 2020, 2.3 million of the warrants issued in the November 2019 Financing, with
an exercise price of $0.57, were exercised for proceeds of approximately $1.3 million.
83
2019 Lincoln Park Transaction
On August 20, 2019, we entered into a purchase agreement (the “2019 Purchase Agreement”) and a registration rights agreement (the “2019 Registration Rights
Agreement”) with Lincoln Park. Pursuant to the terms of the 2019 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $15,000,000 of our common stock
(subject to certain limitations) from time to time during the term of the 2019 Purchase Agreement. Pursuant to the terms of the 2019 Registration Rights Agreement, we filed
with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2019 Purchase
Agreement.
Pursuant to the terms of the 2019 Purchase Agreement, we issued 35,529 shares of common stock to Lincoln Park as consideration for its commitment to purchase
shares of our common stock under the 2019 Purchase Agreement. The commitment shares were valued at $200,000 and recorded as an addition to equity for the issuance of the
common stock and treated as a reduction to equity as a cost of capital to be raised under the 2019 Purchase Agreement.
As a result of receiving stockholder approval on January 16, 2020, we may sell more than 19.9% of its common stock outstanding pursuant to the 2019 Purchase
Agreement without violating Nasdaq Marketplace Rules, including Rule 5635(d), requiring shareholder approval for the sale, issuance or potential issuance by an issuer of
common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value.
During the year ended December 31, 2020, we sold an aggregate of approximately 464,471 shares of common stock under the 2019 Purchase Agreement, for gross
proceeds of approximately $0.3 million.
Stock Compensation
Stock Options
On May 3, 2019, our stockholders approved the Tonix Pharmaceuticals Holding Corp. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan provided for the
issuance of up to 140,000 shares of common stock. With the adoption of the 2020 Plan (as defined below), no further grants may be made under the 2019 Plan. On January 16,
2020, our stockholders approved the Tonix Pharmaceuticals Holding Corp. 2020 Stock Incentive Plan (the “2020 Plan”). The 2020 Plan provided for the issuance of up to
600,000 shares of common stock. With the adoption of the Amended and Restated 2020 Plan (as defined below), no further grants may be made under the 2020 Plan.
On May 1, 2020, our stockholders approved the Tonix Pharmaceuticals Holding Corp. Amended and Restated 2020 Stock Incentive Plan (“Amended and Restated
2020 Plan”), and together with the 2020 Plan and the 2019 Plan, the “Plans”).
Under the terms of the Amended and Restated 2020 Plan, we may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) SARs, (4) RSUs, (5)
other stock-based awards, and (6) cash-based awards. The Amended and Restated 2020 Plan initially provided for the issuance of up to 10,000,000 shares of common stock,
which amount will be increased to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except as otherwise provided in the Amended and
Restated 2020 Plan). In addition, the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our
common stock available for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021 and
ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent (20%) of the total number of shares of common stock outstanding
on December 31st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended and Restated 2020 Plan on December 31st
of such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards or available for future awards). The Board of Directors determines
the exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan. However, the exercise price of an incentive stock option may not be
less than 110% of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100% of fair value for a grantee who is not a 10% shareholder. The
fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the Board of Directors in good faith. Additionally, the
expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years. As of December 31, 2021, 16,085,796 shares were available for future
grants under the Amended and Restated 2020 Plan. As of March 11, 2022, there are 32,939,410 shares available for future grants under the Amended and Restated 2020 Plan.
We measure the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions discussed below, and the
closing market price of our common stock on the date of the grant. For employees and directors, the fair value of the award is measured on the grant date. Most stock options
granted pursuant to the Plans typically vest 1/3rd 12 months from the date of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant.
In addition, we issue options to directors which vest over a one-year period. We also issue premium options to executive officers, which have an exercise price greater than the
grant date fair value, subject to a one year minimum service period prior to vesting. Stock-based compensation expense related to awards is amortized over the applicable
vesting period using the straight-line method.
84
The weighted average grant date fair value of options granted during the years ended December 31, 2021 and 2020, was $1.06 and $0.66 per share, respectively.
Stock-based compensation expense relating to options granted of $7.9 million, of which $5.5 million and $2.4 million, related to General and Administration and
Research and Development, respectively was recognized for the year ended December 31, 2021. Stock-based compensation expense relating to options granted of $2.9 million,
of which $2.0 million and $0.9 million, related to General and Administration and Research and Development, respectively was recognized for the year ended December 31,
2020.
As of December 31, 2021, we had approximately $14.2 million of unrecognized compensation cost related to non-vested awards granted under the Plans, which we
expect to recognize over a weighted average period of 1.91 years.
Employee Stock Purchase Plan
On May 3, 2019, our stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2019 Employee Stock Purchase Plan (the “2019 ESPP”). As a result of
adoption of the 2020 ESPP, as defined below, by our stockholders, no further grants may be made under the 2019 ESPP Plan. On May 1, 2020, our stockholders approved the
Tonix Pharmaceuticals Holdings Corp. 2020 Employee Stock Purchase Plan (the “2020 ESPP”).
The 2020 ESPP allows eligible employees to purchase up to an aggregate of 300,000 shares of our common stock. Under the 2020 ESPP, on the first day of each
offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of our
common stock at the end of the offering period. Each offering period under the 2020 ESPP is for six months, which can be modified from time-to-time. Subject to limitations,
each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the
applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A
participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under
the 2020 ESPP, subject to the statutory limit under the Code. As of December 31, 2021, 7 shares were available for future sales under the 2020 ESPP.
The 2020 and 2019 ESPP are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the year ended
December 31, 2021, and 2020, $89,000 and $23,000, respectively, was expensed. In January 2020, 1,578 shares that were purchased as of December 31, 2019, under the 2019
ESPP, were issued. Accordingly, during the first quarter of 2020, approximately $2,000 of employee payroll deductions accumulated at December 31, 2019, related to acquiring
such shares, was transferred from accrued expenses to additional paid in capital. The remaining $7,000 was returned to the employees. As of December 31, 2020,
approximately $32,000 of employee payroll deductions have accumulated and have been recorded in accrued expenses. In January 2021, 54,447 shares that were purchased as
of December 31, 2020, under the 2020 ESPP, were issued. Accordingly, during the first quarter of 2021, approximately $28,000 of employee payroll deductions accumulated at
December 31, 2020, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $4,000 was returned to the employees.
In July 2021, 116,505 shares that were purchased as of June 30, 2021, under the 2020 ESPP, were issued. Accordingly, during July 2021, approximately $68,000 of employee
payroll deductions accumulated at June 30, 2021, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $7,000
was returned to the employees. In January 2022, 129,041 shares that were purchased as of December 31, 2021, under the 2020 ESPP, were issued. Accordingly, during the first
quarter of 2022, approximately $40,000 of employee payroll deductions accumulated at December 31, 2021, related to acquiring such shares, was transferred from accrued
expenses to additional paid in capital. The remaining $30,000 was returned to the employees.
Commitments
Research and Development Contracts
We have entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $47.9 million at December 31,
2021 for future work to be performed.
We have entered into a construction contract with outstanding commitments aggregating approximately $30.1 million at December 31, 2021 for future work to be
performed.
On March 3, 2021, we entered into a $2.9 million contingent non-binding Purchase and Sales Agreement in connection with a property in Massachusetts. The property
is intended for process development activities. The purchase is expected to close during the second quarter of 2022.
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Operating Leases
Future minimum lease payments under operating leases were as follows (in thousands):
Year Ending December 31,
2022
2023
2024
2025
Included interest
$
$
511
169
145
150
975
(19)
956
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities and expenses. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and
on assumptions that we believe to be 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. Actual results may differ from these estimates.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial
statements.
Research and Development. We outsource our research and development efforts and expense the related costs as incurred, including the cost of manufacturing product
for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired was expensed
as research and development costs, as it related to particular research and development projects and had no alternative future uses.
We estimate our accrued expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors,
consultants and clinical research organizations and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to
negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such
contracts. We account for trial expenses according to the progress of the trial as measured by participant progression and the timing of various aspects of the trial. We determine
accrual estimates that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services
completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued
expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals and prepaid assets are dependent upon the
timely and accurate reporting of contract research organizations and other third-party vendors.
Stock-Based Compensation. All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock
and stock options, which are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation expense over the relevant
vesting period. In addition, for awards that vest immediately and are nonforfeitable, the measurement date is the date the award is issued.
Accounting for sale of Class B Units in February 2020 including beneficial conversion feature. In connection with the February 2020 underwritten offering, we issued
warrants to purchase our common stock and convertible preferred stock. To account for the transaction, we calculated the relative fair value of each instrument issued in the
financing. We also determined if a beneficial conversion feature existed. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at
the commitment date. A conversion feature is in the money if its conversion price is less than the current fair value of the share. For purposes of measuring a beneficial
conversion feature, the effective conversion price should be based on the proceeds allocated to the convertible instrument.
86
We determined the fair value of the warrants, using the Black Scholes method, for the February 2020 warrants. Estimates and assumptions impacting the fair value
measurement include the number of shares for which the warrants are exercisable, remaining contractual term of the warrants, risk-free interest rate, expected dividend yield
and expected volatility of the price of the underlying common shares. We estimate expected share volatility based on our historical volatility for a term equal to the contractual
term of the warrants adjusted for a discount that a market participant would have taken when pricing the instrument. The risk-free interest rate is determined by reference to the
U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. We estimated a 0% expected dividend yield based on the fact
that we have never paid or declared dividends and do not intend to do so in the foreseeable future. In general, the assumptions used in calculating the fair value of the warrant
represent management’s best estimates, but the estimates involve inherent uncertainties and the application of management judgment. We determine the fair value of the
convertible preferred stock utilizing the price of the common stock on the commitment date. We then allocated the relative fair value between the preferred shares and the
warrants. Since the effective conversion price of the Preferred Stock is less than the fair value of the underlying common stock at the date of commitment, there is a beneficial
conversion feature at the commitment date. Since the Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the
discount created by the beneficial conversion feature was charged to additional paid in capital as a “deemed dividend” and impacted earnings per share, reflected as an increase
to loss to common stockholders.
Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee
contracts, retain or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity.
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.
87
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TONIX PHARMACEUTICALS HOLDING CORP.
Report of Independent Registered Public Accounting Firm
Consolidated balance sheets as of December 31, 2021 and 2020
Consolidated statements of operations for the years ended December 31, 2021 and 2020
Consolidated statements of comprehensive loss for the years ended December 31, 2021 and 2020
Consolidated statements of stockholders’ equity for the years ended December 31, 2021 and 2020
Consolidated statements of cash flows for the years ended December 31, 2021 and 2020
Notes to consolidated financial statements
F-1
F-2
F-4
F-5
F-6
F-7 – F-8
F-9
F-10 – F-32
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Tonix Pharmaceuticals Holding Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Tonix Pharmaceuticals Holding Corp and Subsidiaries (the “Company”) as of December 31, 2021 and 2020,
and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years 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, 2021 and 2020, and the consolidated results of their operations and their cash flows for each of the years 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 continuing losses and negative cash flows from operating activities 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
audits. 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 audits 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 audits 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
F-2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be
communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it
relates.
Accrual for clinical trial expenses
As described in Note 2 to the consolidated financial statements, at each balance sheet date the Company estimates its expenses resulting from its obligations under contracts
with vendors, clinical research organizations and under clinical site agreements in connection with conducting clinical trials. The Company accounts for trial expenses
according to the timing of various aspects of the trial. The Company’s accrual for clinical trial expenses of approximately $2.8 million is included in accrued expenses and other
current liabilities in the December 31, 2021 consolidated balance sheet. The Company also recorded prepaid clinical trial expenses of approximately $7.7 million within prepaid
expenses and other in the December 31, 2021 consolidated balance sheet. The amounts recorded for clinical trial expenses represent the Company’s estimates of the unpaid and
prepaid clinical trial expenses based on facts and circumstances known to the Company at that time, and are dependent upon the timely and accurate reporting of contract
research organizations and other third-party vendors. The estimation of clinical trial expenses was also identified as a critical accounting estimate by management.
We identified the accrual for clinical trial expenses as a critical audit matter due to the significant judgment and estimation required by management in determining progress or
state of completion of clinical trials or services completed. This in turn led to a high degree of auditor subjectivity, and significant audit effort was required in performing our
procedures and evaluating audit evidence relating to estimates made by management.
Addressing the matter involved performing procedures and evaluating audit evidence, in connection with forming our overall opinion on the consolidated financial statements.
We obtained an understanding of Management’s process and evaluated the design of controls over developing its estimate of accrued and prepaid clinical trial expenses,
including the process of estimating the expenses incurred to date based on the status of the clinical trials. Our procedures also included, among others, reading agreements and
contract amendments with vendors, consultants and clinical research organizations and clinical site agreements in connection with conducting clinical trials, and evaluating the
significant assumptions described above and the methods used in developing the clinical trial estimates and re-calculating the amounts that were unpaid and prepaid at the
balance sheet date. We confirmed contractual commitments and amounts completed, paid and unpaid directly with the third parties involved in performing the clinical trial
services on behalf of the Company. We also made direct inquiries of financial and clinical Company personnel regarding the contract amount including change orders, status
and progress to completion of clinical trials, amounts paid to date under each contract, and description of future commitments. We also assessed the historical accuracy of
management’s estimates, and compared the current estimate of expenses incurred to estimates previously made by management.
/s/ EisnerAmper LLP
We have served as the Company’s auditor since 2010.
EISNERAMPER LLP
Iselin, New Jersey
March 14, 2022
F-3
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2021 AND 2020
(In Thousands, Except Par Value and Share Amounts)
ASSETS
2021
2020
Current assets:
Cash and cash equivalents
Prepaid expenses and other
Total current assets
Property and equipment, net
Operating lease right-to-use assets
Security deposit
Restricted cash
Intangible asset
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Lease liability, short term
Total current liabilities
Lease liability, long term
Total liabilities
Commitments (See Note 17)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized
Series B Convertible Preferred stock, 5,313 shares designated as of both December 31, 2021 and 2020; issued and outstanding
- None
Series A Convertible Preferred stock, 0 shares designated as of both December 31, 2021 and 2020; issued and outstanding -
None
Common stock, $0.001 par value; 800,000,000 and 400,000,000 shares authorized as of December 31, 2021 and 2020,
respectively; 496,245,564 and 206,008,683 shares issued and outstanding as of December 31, 2021 and 2020, respectively
and 129,041 and 54,447 shares to be issued as of December 31, 2021 and December 31, 2020, respectively
Additional paid in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
See the accompanying notes to the consolidated financial statements
F-4
$
$
$
178,660 $
10,389
189,049
50,558
914
19
240
120
77,068
10,921
87,989
8,571
1,258
5
240
120
240,900 $
98,183
13,282 $
7,945
489
21,716
467
4,598
4,626
595
9,819
716
22,183
10,535
—
—
496
578,133
(359,820)
(92)
218,717
$
240,900 $
—
—
206
355,037
(267,533)
(62)
87,648
98,183
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
COSTS AND EXPENSES:
Research and development
General and administrative
Operating loss
Interest income, net
Net loss
Warrant deemed dividend
Preferred stock deemed dividend
Net loss available to common stockholders
Net loss per common share, basic and diluted
Year ended December 31,
2021
2020
68,838 $
23,474
92,312
36,157
14,354
50,511
(92,312)
(50,511)
25
48
(92,287)
(50,463)
—
—
(451)
(1,260)
(92,287) $
(52,174)
(0.26) $
(0.55)
$
$
$
Weighted average common shares outstanding, basic and diluted
360,215,323
94,591,715
See the accompanying notes to the consolidated financial statements
F-5
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands)
Net loss
Other comprehensive loss:
Foreign currency translation loss
Comprehensive loss
Year ended December 31,
2021
2020
$
(92,287) $
(50,463)
(30)
(16)
$
(92,317) $
(50,479)
See the accompanying notes to the consolidated financial statements
F-6
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Amounts)
Balance, December 31, 2020
Issuance of common stock in January 2021($0.80
per share), net of transactional expenses of
$3,096
Issuance of common stock in exchange for
exercise of warrants in March 2021 ($0.57 per
share)
Issuance of common stock in February
2021($1.20 per share), net of transactional
expenses of $5,002
Issuance of common stock under At-the-market
offering, net of transactional expenses of
$2,332
Issuance of common stock under 2021 Purchase
Agreement, net of transactional expenses of
$75
Issuance of commitment shares under 2021
Purchase agreement
Issuance of common stock in the acquisition of
the OyaGen license
Issuance of commitment shares under Lincoln
park Purchase agreement
Employee stock purchase plan
Stock-based compensation
Foreign currency transaction loss
Net loss
Balance, December 31, 2021
Series B Convertible
Preferred stock
Common stock
Shares
Amount
Shares
Amount
Additional
Paid in
Capital
Accumulated
Other
Comprehensive
Income (loss)
Accumulated
Deficit
Total
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
206,008,683
$
206
$
355,037
$
(62) $
(267,533) $
87,648
50,000,000
3,400
58,333,334
110,248,449
64,539,361
1,280,000
2,752,294
2,909,091
170,952
—
—
—
496,245,564
$
50
—
58
111
65
—
3
3
—
—
—
—
496
36,854
2
64,939
69,181
41,131
—
2,997
—
—
—
—
—
—
—
(3)
96
7,899
—
—
578,133
$
$
—
—
—
(30)
—
(92) $
—
—
—
—
—
—
—
—
—
—
—
(92,287)
(359,820) $
36,904
2
64,997
69,292
41,196
—
3,000
—
96
7,899
(30)
(92,287)
218,717
See the accompanying notes to the consolidated financial statements
F-7
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Dollars In Thousands Except Per Share Amounts)
Series B Convertible
Preferred stock
Common stock
Shares
Amount
Shares
Amount
Additional
Paid in
Capital
Accumulated
Other
Comprehensive
Income (loss)
Accumulated
Deficit
Total
Balance, December 31, 2019
Issuance of common stock in exchange for
exercise of warrants in February and March
2020 ($0.57 per share)
Deemed dividend in connection with repricing of
November 2019 warrants
Warrant deemed dividend
Issuance of Series B Convertible preferred stock
and common stock warrants in February 2020
($1,000.00 per share, net of transactional
expenses of $711)
Beneficial conversion feature in connection with
issuance of Series B Convertible preferred
stock
Preferred stock deemed dividend
Issuance of common stock and common stock
warrants in February 2020 net of transactional
expenses of $292
Issuance of common stock upon conversion of
Series B Convertible preferred stock
Issuance of common stock in March 2020 net of
transactional expenses of $1,221
Issuance of common stock in June 2020 under the
equity line
Issuance of common stock under At-the-market
offering, net of transaction expenses of $2,304
Issuance of common stock in the acquisition of
Trigemina assets
Issuance of common stock in July 2020 net of
transactional expenses of $829
Issuance of common stock in exchange for
exercise of warrants in July and August 2020
(see note 13)
Issuance commitment under 2020 Purchase
Agreement
Issuance of common stock under 2020 Purchase
Agreement
Employee stock purchase plan
Stock-based compensation
Foreign currency transaction loss
Net loss
Balance, December 31, 2020
—
$
—
—
—
5,313
—
—
—
(5,313)
—
—
—
—
—
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,531,504
$
9
$
226,524
$
(46) $
(217,070) $
9,417
13,111,999
—
—
—
—
—
3,837,000
9,321,053
14,550,000
464,471
102,676,174
2,000,000
20,940,000
4,533,404
600,000
25,441,500
1,578
—
—
—
206,008,683
$
13
—
—
—
—
—
4
9
14
1
102
2
21
5
—
26
—
—
—
—
206
$
7,461
451
(451)
4,602
1,260
(1,260)
1,891
(9)
14,770
277
68,700
1,358
9,620
2,417
—
14,548
2
2,876
—
—
355,037
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(16)
—
(62) $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(50,463)
(267,533) $
7,474
451
(451)
4,602
1,260
(1,260)
1,895
—
14,784
278
68,802
1,360
9,641
2,422
—
14,574
2
2,876
(16)
(50,463)
87,648
See the accompanying notes to the consolidated financial statements
F-8
TONIX PHARMACEUTICALS HOLDING CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Common stock issued to acquire in-process research and development
Stock-based compensation
Changes in operating assets and liabilities:
Prepaid expenses
Accounts payable
Lease liabilities and ROU asset, net
Accrued expenses and other current liabilities
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants
Proceeds from ESPP
Proceeds, net of $0 and $711 expenses, from sale of preferred stock
Proceeds, net of $10,505 and $4,646 expenses, from sale of common stock and warrants
Net cash provided by financing activities
Effect of currency rate change on cash
Net increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash beginning of the period
Cash, cash equivalents and restricted cash end of period
Supplemental disclosures of cash flow information:
Purchases of property and equipment included in accounts payable and accrued liabilities
Warrants deemed dividend
Series A Convertible preferred stock and deemed dividend
See the accompanying notes to consolidated financial statements
F-9
Year ended December 31,
2021
2020
$
(92,287) $
(50,463)
50
3,000
7,899
518
3,526
(11)
1,748
(75,557)
(35,307)
(35,307)
2
96
—
212,389
212,487
(31)
101,592
77,308
178,900 $
6,730 $
— $
— $
27
1,360
2,876
(6,859)
1,528
51
2,914
(48,566)
(8,564)
(8,564)
9,896
2
4,602
108,605
123,105
(16)
65,959
11,349
77,308
—
451
1,260
$
$
$
$
NOTE 1 – BUSINESS
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tonix Pharmaceuticals Holding Corp., through its wholly owned subsidiary Tonix Pharmaceuticals, Inc. (“Tonix Sub”), is a clinical-stage biopharmaceutical company
focused on discovering, licensing, acquiring and developing therapeutics and diagnostics to treat and prevent human disease and alleviate suffering. The therapeutics include
small molecules and biologics and all drug product and diagnostic candidates are still in development.
The consolidated financial statements include the accounts of Tonix Pharmaceuticals Holding Corp. and its wholly owned subsidiaries, Tonix Sub, Krele LLC, Tonix
Pharmaceuticals (Canada), Inc., Tonix Medicines, Inc., Jenner LLC, Tonix R&D Center LLC, Tonix Pharma Holdings Limited and Tonix Pharma Limited (collectively
hereafter referred to as the “Company” or “Tonix”). All intercompany balances and transactions have been eliminated in consolidation.
Going Concern
The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the
realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has suffered recurring losses from operations and negative
cash flows from operating activities. At December 31, 2021, the Company had working capital of approximately $167.3 million. At December 31, 2021, the Company had an
accumulated deficit of approximately $359.8 million. The Company held cash and cash equivalents of approximately $178.7 million as of December 31, 2021.
The Company believes that its cash resources at December 31, 2021 and the proceeds that it raised from equity offerings in the first quarter of 2022 (See Note 19), will
meet its operating and capital expenditure requirements through the end of 2022, but not beyond.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company continues to face significant challenges and
uncertainties and, as a result, its available capital resources may be consumed more rapidly than currently expected due to changes it may make in its research and development
spending plans. The Company has the ability to obtain additional funding through public and private financing and collaborative arrangements with strategic partners to
increase the funds available to fund operations. However, the Company may not be able to raise capital on terms acceptable to the Company. Without additional funds, it may
be forced to delay, scale back or eliminate some of its research and development activities, or other operations and potentially delay product development in an effort to provide
sufficient funds to continue operations. If any of these events occurs, our ability to achieve our development and commercialization goals would be adversely affected. The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-10
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Risks and uncertainties
The Company’s primary efforts are devoted to conducting research and development of innovative pharmaceutical and biological products to address public health
challenges. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable
future. Further, the Company does not have any commercial products available for sale and has not generated revenues, and there is no assurance that if its products are
approved for sale, that the Company will be able to generate cash flow to fund operations. In addition, there can be no assurance that the Company’s research and development
will be successfully completed or that any product will be approved or commercially viable. Moreover, the extent to which COVID-19 impacts the Company’s operations will
depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time.
Use of estimates
The preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the assumptions used in the fair value of stock-
based compensation and other equity instruments, and the percent of completion of research and development contracts.
Cash Equivalents and Restricted Cash
The Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original maturity of three months or
less when purchased. At December 31, 2021 and December 31, 2020, cash equivalents, which consisted of money market funds, amounted to $120.4 million and $ 40.4 million
, respectively. Restricted cash at both December 31, 2021 and December 31, 2020 of approximately $240,000, collateralizes a letter of credit issued in connection with the lease
of office space in Chatham, New Jersey and New York City (see Note 16).
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the
same amounts shown in the consolidated statement of cash flows:
Cash and cash equivalents
Restricted cash
Total
Property and equipment
December 31,
2021
December 31,
2020
$
$
(in thousands)
178,660 $
240
178,900 $
77,068
240
77,308
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the asset’s estimated useful
life, which is 20 years for buildings and laboratory equipment, three years for computer assets, five years for furniture and all other equipment and term of lease for leasehold
improvements. Depreciation on assets begin when the asset is placed in service. Depreciation and amortization expense for the years ended December 31, 2021, and 2020 was
$50,000 and $27,000, respectively. The Company’s property and equipment is located in the United States.
Intangible assets with indefinite lives
During the year ended December 31, 2015, the Company purchased certain internet domain rights, which were determined to have an indefinite life. Identifiable
intangibles with indefinite lives are not amortized but are tested for impairment annually or whenever events or changes in circumstances indicate that their carrying amount
may be less than fair value. As of December 31, 2021, and 2020, the Company believed that no impairment existed.
F-11
Leases
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease
liabilities, current and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset
for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an
incremental borrowing rate based on the information available at the transition date and subsequent lease commencement dates in determining the present value of lease
payments. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term to each lease. The operating lease ROU asset excludes
lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
Lease expense for lease payments made under operating leases is recognized on a straight-line basis over the lease term.
Research and Development Costs
The Company outsources certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products for testing,
as well as licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired has been
expensed as research and development costs, as such property related to particular research and development projects and had no alternative future uses.
The Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site
agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result
in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company accounts for trial expenses according to the
timing of various aspects of the trial. The Company determines accrual estimates taking into account discussion with applicable personnel and outside service providers as to
the progress or state of consummation of trials, or the services completed.
During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its
accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the
timely and accurate reporting of contract research organizations and other third-party vendors.
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary
differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a
valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing
authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the
largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of December 31, 2021, the Company has not recorded any unrecognized tax
benefits. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The CARES Act, among other things, includes
provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit
refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods
for qualified improvement property.
F-12
Stock-based compensation
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All stock-based payments to employees and to nonemployees for their services, including grants of restricted stock units (“RSUs”), and stock options, are measured at
fair value on the grant date and recognized in the consolidated statements of operations as compensation or other expense over the requisite service period. The Company
accounts for share-based awards in accordance with the provisions of the Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation.
Foreign Currency Translation
Operations of the Company’s Canadian subsidiary, Tonix Pharmaceuticals (Canada), Inc., are conducted in local currency, which represents its functional currency.
The U.S. dollar is the functional currency of the other foreign subsidiaries. Balance sheet accounts of the Canadian subsidiary were translated from foreign currency into U.S.
dollars at the exchange rate in effect at the balance sheet date and income statement accounts were translated at the average rate of exchange prevailing during the
period. Translation adjustments resulting from this process were included in accumulated other comprehensive loss on the consolidated balance sheets.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners
sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income
(loss) represents foreign currency translation adjustments.
Per Share Data
The computation of basic and diluted loss per share for the years ended December 31, 2021 and 2020 excludes potentially dilutive securities when their inclusion
would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period.
All warrants issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the Board of Directors, on the
Company’s common stock. For purposes of computing EPS, these warrants are considered to participate with common stock in earnings of the Company. Therefore, the
Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and
participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants for the years ended
December 31, 2021 and 2020, as results of operations were a loss for the period.
Potentially dilutive securities (See Note 14 and Note 15) excluded from the computation of basic and diluted net loss per share, as of December 31, 2021 and 2020, are
as follows:
Warrants to purchase common stock
Options to purchase common stock
Totals
2021
638,991
25,780,262
26,419,253
2020
648,306
10,209,286
10,857,592
F-13
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following (in thousands):
Property and equipment, net:
Land
Construction in progress
Office furniture and equipment
Laboratory equipment
Leasehold improvements
Less: Accumulated depreciation and amortization
December 31
2021
December 31
2020
(in thousands)
$
$
7,911 $
41,921
756
347
23
50,958
(400)
50,558 $
5,713
2,800
385
—
23
8,921
(350)
8,571
On October 1, 2021, the Company completed the acquisition of a research and development facility in Maryland totaling $17.5 million, to process development
activities. Of the total purchase price, $2.1 million was allocated to the value of land acquired, and $13.9 million was allocated to construction in progress, as the building was
not ready for its intended use, and approximately $1.5 million was allocated to Office furniture and equipment and Laboratory equipment. Of the $1.5 million, $1.0 million is
included in Construction in progress as those assets were not ready for their intended use. Additionally, we have incurred approximately $1.1 million in work-in-process, which
is included in construction in progress as of December 31, 2021. As of December 31, 2021, the asset was operational, but the asset was not ready for its intended use.
On September 28, 2020, the Company completed the purchase of its 40,000 square foot facility in Massachusetts for $4.0 million, to house its new Advanced
Development Center for the development and manufacturing of vaccines. Of the total purchase price, $1.2 million was allocated to the value of land acquired, and $2.8 million
was allocated to construction in progress, as the building was not ready for its intended use. Additionally, we have incurred approximately $22.8 million in work-in-process,
which is included in construction in progress as of December 31, 2021. As of December 31, 2021, the asset the asset was not ready for its intended use.
On December 23, 2020, the Company completed the purchase of its approximately 44-acre site in Hamilton, Montana for $4.5 million, for the construction of a
vaccine development and commercial scale manufacturing facility. As of December 31, 2021, the asset the asset was not ready for its intended use.
F-14
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – OTHER BALANCE SHEET INFORMATION
Components of selected captions in the consolidated balance sheets consist of:
Prepaid expenses and other:
Contract-related
Insurance
Other
Accrued expenses and other current liabilities:
Contract-related
Compensation and compensation-related
Construction in progress
Professional fees and other
F-15
December 31,
2021
2020
(in thousands)
7,726 $
1,482
1,181
10,389 $
2,832 $
2,868
1,572
673
7,945 $
7,627
1,634
1,660
10,921
2,169
2,005
—
452
4,626
$
$
$
$
NOTE 5 – FAIR VALUE MEASUREMENTS
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair value measurements affect the Company’s accounting for certain of its financial assets. Fair value is defined 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 and is measured according to a hierarchy that includes:
Level 1:
Observable inputs, such as quoted prices in active markets.
Level 2:
Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 2 assets and
liabilities include debt securities with quoted market prices that are traded less frequently than exchange-traded
instruments. This category includes U.S. government agency-backed debt securities and corporate-debt securities.
Level 3:
Unobservable inputs in which there is little or no market data.
As of December 31, 2021, and December 31, 2020, the Company used Level 1 quoted prices in active markets to value cash equivalents of $120.4 million and $40.4
million, respectively. The Company did not have any Level 2 or Level 3 assets or liabilities as of both December 31, 2021 and 2020.
NOTE 6 – STOCKHOLDERS’ EQUITY
On March 26, 2021, the Company filed an amendment to its articles of incorporation, as amended, to increase the number of shares of common stock authorized from
400,000,000 to 800,000,000.
On September 3, 2021, the Company received a letter (the “Notice”) from the Listing Qualifications staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating
that, based upon the closing bid price of the Company’s common stock for the last 30 consecutive business days, the Company no longer meets the requirement to maintain a
minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 55450(a)(1) (the “Minimum Bid Price Requirement”).
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was initially provided with a 180 calendar day period, or until March 2, 2022, in which to regain
compliance. In order to regain compliance with the Minimum Bid Price Requirement, the closing bid price of the Company’s common stock must be at least $1 per share for a
minimum of ten consecutive business days during this 180-day period. As the Company did not regain compliance within this 180-day period, the Company requested and
received an additional compliance period of 180 calendar days to regain compliance with the Minimum Bid Price Requirement, and provided written notice to Nasdaq of its
intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq Staff that the Company
will not be able to cure the deficiency, or if the Company is otherwise not eligible, Nasdaq will provide notice to the Company that its common stock will be subject to
delisting.
On February 10, 2022, the Company filed an amendment to its articles of incorporation, as amended, to increase the number of shares of common stock authorized
from 800,000,000 to 1,600,000,000.
F-16
NOTE 7 – ASSET PURCHASE AGREEMENT WITH KATANA
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On December 22, 2020, the Company entered into an asset purchase agreement (the “Katana Asset Purchase Agreement”) with Katana Pharmaceuticals, Inc.
(“Katana”) pursuant to which Tonix acquired Katana assets related to insulin resistance and related syndromes, including obesity (the “Katana Assets”). In connection with the
acquisition of the Katana Assets, Tonix assumed Katana’s rights and obligations under that certain Exclusive License Agreement by and between Katana and The University of
Geneva (“Geneva”) (the “Geneva License “Agreement”) pursuant to an Assignment and Assumption Agreement with Geneva (“Geneva Assignment and Assumption
Agreement”), dated December 22, 2020. As consideration for entering into the Katana Asset Purchase Agreement, Tonix paid $0.7 million to Katana. The costs associated with
the cash payments were recorded to research and development expenses in the statement of operations for the year ended December 31, 2020. Because the Katana intellectual
property was acquired prior to FDA approval, the cash consideration totaling $0.7 million, was expensed as research and development costs since there is no alternative future
use and the acquired intellectual property does not constitute a business.
Pursuant to the terms of the Geneva Assignment and Assumption Agreement, Geneva has granted to Tonix an exclusive license, with the right to sublicense, certain
patents related to the Katana Assets. Tonix is obligated to use commercially reasonable efforts to diligently develop, manufacture, and sell products claimed or covered by the
patent and will use commercially reasonable efforts to diligently develop markets for such products. The Geneva License Agreement specifies developmental milestones and
the period of time during which such milestones must be completed and provides for an annual maintenance fee payable to Geneva.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
NOTE 8 – ASSET PURCHASE AGREEMENT WITH TRIGEMINA
On June 11, 2020, the Company entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina, Inc. (“Trigemina”) and certain
shareholders named therein (the “Executive Shareholders”) pursuant to which Tonix acquired Trigemina assets related to migraine and pain treatment technologies (the
“Trigemina Assets”). In connection with the acquisition of the Trigemina Assets, Tonix assumed Trigemina’s rights and obligations under that certain Amended and Restated
Exclusive License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford Junior University
(“Stanford”) (the “Stanford License “Agreement”) pursuant to an Assignment and Assumption Agreement with Stanford (“Assignment and Assumption Agreement”), dated
June 11, 2020. As consideration for entering into the Asset Purchase Agreement, Tonix paid $824,759 to Trigemina and issued to Trigemina 2,000,000 shares of the Company’s
common stock, valued at $0.68 per share, based on the closing stock price on June 11, 2020, and paid Stanford $250,241 pursuant to the terms of the Assignment and
Assumption Agreement. The common stock is unregistered and subject to a 12-month lock-up and a Shareholder Voting Agreement, dated June 11, 2020, pursuant to which
Trigemina and the Executive Shareholders have agreed to vote the common stock on any matter put to a vote of the shareholders of the Company in accordance with
management’s recommendations. Both the costs associated with the cash payments and share issuance, totaling $2.4 million, were recorded to research and development
expenses in the statement of operations for the year ended December 31, 2020. Because the Trigemina intellectual property was acquired prior to FDA approval, the cash and
stock consideration, was expensed as research and development costs since there is no alternative future use and the acquired intellectual property does not constitute a
business.
Pursuant to the terms of the Assignment and Assumption Agreement, Stanford has granted to Tonix an exclusive license, with the right to sublicense, certain patents
related to the Trigemina Assets. Stanford has reserved for itself the right to practice under the patents for academic research and educational purposes. Tonix is obligated to use
commercially reasonable efforts to diligently develop, manufacture, and sell products claimed or covered by the patent and will use commercially reasonable efforts to
diligently develop markets for such products. The Trigemina License Agreement specifies developmental milestones and the period of time during which such milestones must
be completed and provides for an annual maintenance fee payable to Stanford.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
F-17
NOTE 9 – ASSET PURCHASE AGREEMENT WITH TRIMARAN
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On August 19, 2019, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with TRImaran Pharma, Inc. (“TRImaran”) and the
selling shareholders named therein (the “Selling Shareholders”) pursuant to which Tonix acquired TRImaran’s assets related to certain pyran-based compounds (the “Assets”).
In connection with the acquisition of the Assets, Tonix entered into a First Amended and Restated Exclusive License Agreement (the “WSU License Agreement”) with Wayne
State University (“WSU”) on August 19, 2019. As consideration for entering into the Asset Purchase Agreement, Tonix paid $100,000 to TRImaran and has assumed certain
liabilities of TRImaran totaling $68,500. The $168,500 was previously recorded to research and development expenses in the statement of operations. Upon the achievement of
specified development, regulatory and sales milestones, Tonix also agreed to pay TRImaran and the Selling Shareholders, in restricted stock or cash, at Tonix’s option, a total of
approximately $3.4 million. Pursuant to the terms of the Asset Purchase Agreement, TRImaran and the Selling Shareholders are prohibited from disclosing confidential
information related to the Assets and are restricted from engaging, for a period of three years, in the development or commercialization of any therapeutic containing any pyran-
based drug compound for the treatment of post-traumatic stress disorder, attention deficit hyperactivity disorder or major depressive disorder. Also for a period of three years, if
TRImaran or any Selling Shareholder engage in the research or development of any potential therapeutic compound for the treatment of any central nervous system disorder,
TRImaran or such Selling Shareholder is obliged to provide notice and opportunity to Tonix to make an offer to acquire or license rights with respect to such product
candidate.
Pursuant to the terms of the WSU License Agreement, WSU has granted to Tonix an exclusive license, with the right to sublicense, certain patents, technical
information and material (collectively, the “Technology”) related to the Assets. WSU has reserved for itself the right to practice the Technology for academic research and
educational purposes. Tonix is obligated to use commercially reasonable efforts to obtain regulatory approval for one or more products utilizing the Technology (“WSU
Products”) and to use commercially reasonable marketing efforts throughout the term of the WSU License Agreement. The WSU License Agreement specifies developmental
milestones and the period of time during which such milestones must be completed and provides for an annual maintenance fee payable to WSU. Tonix is obligated to
substantially manufacture WSU Products in the United States if WSU Products will be sold in the United States.
Pursuant to the WSU License Agreement, Tonix paid $75,000 to WSU as reimbursement of certain patent expenses, and, upon the achievement of specified
development, regulatory and sales milestones, the Company also agreed to pay WSU, milestone payments totaling approximately $3.4 million. Tonix has also agreed to pay
WSU single-digit royalties on net sales of WSU Products sold by Tonix or a sublicensee on a tiered basis based on net sales, and additional sublicense fees on certain
consideration received from sublicensees. Royalties on each particular WSU Product are payable on a country-by-country and Product-by-Product basis until the date of
expiration of the last valid claim in the last to expire of the issued patents covered by the WSU License Agreement. Royalties payable on net sales of WSU Products may be
reduced by 50% of the royalties payable by Tonix to any third party for intellectual property rights which are necessary for the practice of the rights licensed to Tonix under the
WSU License Agreement, provided that the royalty payable on a WSU Product may not be reduced by more than 50%. Each party also has the right to terminate the agreement
for customary reasons such as material breach and bankruptcy. The WSU License Agreement contains provisions relating to termination, indemnification, confidentiality and
other customary matters for an agreement of this kind.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
NOTE 10 – LICENSE AGREEMENT WITH OYAGEN
On April 14, 2021, the Company and OyaGen, Inc. (“OyaGen”) entered into an exclusive License Agreement (the “OyaGen License Agreement”) pursuant to which
OyaGen granted to Tonix an exclusive license to certain patents and technical information related to an antiviral inhibitor of SARS-CoV-2, sangivamycin, and to develop and
commercialize products thereunder, and to acquire rights to any technology based thereon for the prevention or treatment of Covid-19 developed by OyaGen during the term of
the License Agreement.
As consideration for entering into the License Agreement, Tonix paid a low-seven digit license fee to OyaGen, and issued to OyaGen and an affiliated entity an
aggregate of 2,752,294 shares of the Company’s common stock, which are unregistered and subject to a six-month lock-up and a voting agreement, pursuant to which OyaGen
and the affiliated entity have agreed to vote the common stock on any matter put to a vote of the shareholders of the Company in accordance with management’s
recommendations. The shares were valued at $3.0 million, which was recorded as research and development expense. The OyaGen License also provides for single-digit
royalties and contingent milestone payments.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
F-18
NOTE 11 – LICENSE AGREEMENT WITH INSERM
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On February 11, 2021, the Company entered into a license agreement (the “Inserm License Agreement”) pursuant to which it licensed technology using oxytocin-
based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from Inserm (the French National Institute of Health and Medical
Research), Aix-Marseille Université and Centre Hospitalier Universitaire of Toulouse. The Inserm License Agreement provides for the payment of annual fees and milestone
payments upon the occurrence of specified sales milestones totaling approximately $0.4 million, as well royalties on net sales of products based on the licensed technology, and
assignment/transfer and sublicense royalties.
As of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.
NOTE 12 – LICENSE AGREEMENTS WITH COLUMBIA UNIVERSITY
On September 16, 2019, the Company entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees of Columbia University in
the City of New York (“Columbia”) pursuant to which Columbia granted to Tonix an exclusive license, with the right to sublicense, certain patents and technical information
(collectively, the “TFF2 Technology”) related to a recombinant Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2
Product”). Pursuant to the terms of the Columbia License Agreement, Columbia reserved for itself the right to practice the TFF2 Technology for academic research and
educational purposes.
The Company paid a five-digit license fee to Columbia as consideration for entering into the Columbia License Agreement, which was previously recorded to research
and development expenses in the statement of operations. The Company is obligated to use Commercially Reasonable Efforts, as defined in the Columbia License Agreement,
to develop and commercialize the TFF2 Product, and to achieve specified developmental milestones.
The Company agreed to pay Columbia single-digit royalties on net sales of (i) TFF2 Products sold by Tonix or a sublicensee and (ii) any other products that involve
material or technical information related to the TFF2 Product and transferred to Tonix pursuant to the Columbia License Agreement (“Other Products”) sold by Tonix or a
sublicensee. Royalties on each particular TFF2 Product are payable on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last
valid claim in the last to expire of the issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after the first commercial sale of a TFF2
Product in the country in question. Royalties on each particular Other Product are payable on a country-by-country and product-by-product basis until a specified period of time
after the first commercial sale of such particular Other Product in such country. Royalties payable on net sales of the TFF2 Product and Other Products may be reduced by 50%
of the royalties payable by Tonix to any third party for intellectual property rights which are necessary for the practice of the rights licensed to Tonix under the Columbia
License Agreement, provided that the royalty payable on a Product or Other Product may not be reduced by more than 50%.
The Company is also obligated to make contingent milestone payments to Columbia totaling $4.1 million on a Product-by-Product basis upon the achievement of
certain development, approval and sales milestones related to a TFF2 Product. In addition, the Company shall pay Columbia 5% of consideration, other than royalty payments
and certain other categories of consideration, payable to the Company by a sublicensee. As of December 31, 2021, no milestone payments have been accrued or paid in relation
to this agreement.
On May 20, 2019, the Company entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to which Columbia, for itself and on
behalf of the University of Kentucky and the University of Michigan (collectively, the “Institutions”) granted to the Company an exclusive license, with the right to sublicense,
certain patents, technical information and material (collectively, the “Technology”) related to a double-mutant cocaine esterase, and to develop and commercialize products
thereunder (each, a “Product”). Pursuant to the terms of the License Agreement, Columbia has reserved for itself and the Institutions the right to practice the Technology for
academic research and educational purposes.
F-19
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company paid a six-digit license fee to Columbia as consideration for entering into the License Agreement. The Company is obligated to use Commercially
Reasonable Efforts, as defined in the License Agreement, to develop and commercialize the Product, and to achieve specified developmental milestones. The first 50% of the
license fee was paid by June 30, 2019, while the remaining 50% license fee, was paid during the second quarter of 2020. Both installments of the license fee were previously
recorded to research and development expenses.
The Company agreed to pay Columbia single-digit royalties on net sales of (i) Products sold by the Company or a sublicensee and (ii) any other products that involve
material or technical information related to the Product and transferred to the Company pursuant to the License Agreement (“Other Products”) sold by the Company or a
sublicensee. Royalties on each particular Product are payable on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last valid
claim in the last to expire of the issued patents covered by the License Agreement, (ii) a specified period of time after the first commercial sale of a Product in the country in
question, or (iii) expiration of any market exclusivity period granted by a regulatory agency. Royalties on each particular Other Product are payable on a country-by-country
and product-by-product basis until the later of (i) a specified period of time after the first commercial sale of such particular Other Product in such country or (ii) expiration of
any market exclusivity period granted by a regulatory agency. Royalties payable on net sales of the Product and Other Products may be reduced by 50% of the royalties payable
by the Company to any third party for intellectual property rights which are necessary for the practice of the rights licensed to the Company under the License Agreement,
provided that the royalty payable on a Product or Other Product may not be reduced by more than 50%.
The Company is also obligated to make contingent milestone payments to Columbia totaling $3 million on a Product-by-Product basis upon the achievement of certain
development, approval and sales milestones related to a Product. In addition, the Company shall pay Columbia 5% of consideration, other than royalty payments and certain
other categories of consideration, payable to the Company by a sublicensee. As of December 31, 2021, no milestone payments have been accrued or paid in relation to this
agreement.
F-20
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 – SALE OF COMMON STOCK
Purchase Agreement with Lincoln Park
On December 3, 2021, the Company entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration rights agreement (the
“Lincoln Park Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the Purchase Agreement with Lincoln Park,
Lincoln Park has agreed to purchase from the Company up to $80,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of
the Purchase Agreement with Lincoln Park. Pursuant to the terms of the Lincoln Park Registration Rights Agreement, the Company filed with the SEC a registration statement
to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement with Lincoln Park.
Pursuant to the terms of the Purchase Agreement with Lincoln Park, at the time the Company signed the Purchase Agreement with Lincoln Park and the Lincoln Park
Registration Rights Agreement, the Company issued 2,909,091 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common
stock under the Purchase Agreement with Lincoln Park. The commitment shares were valued at $1.6 million and recorded as an addition to equity for the issuance of the
common stock and treated as a reduction to equity as a cost of capital to be raised under the Purchase Agreement with Lincoln Park.
No shares were sold during the year ended December 31, 2021, under the Purchase Agreement with Lincoln Park. Subsequent to December 31, 2021, the Company
has sold 22.0 million shares of common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately $4.5 million.
2021 Lincoln Park Transaction
On May 14, 2021, the Company entered into a purchase agreement (the “2021 Purchase Agreement”) and a registration rights agreement (the “2021 Registration
Rights Agreement”) with Lincoln Park. Pursuant to the terms of the 2021 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $80,000,000 of
the Company’s common stock (subject to certain limitations) from time to time during the term of the 2021 Purchase Agreement. Pursuant to the terms of the 2021 Registration
Rights Agreement, the Company filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln
Park under the 2021 Purchase Agreement.
Pursuant to the terms of the 2021 Purchase Agreement, at the time the Company signed the 2021 Purchase Agreement and the 2021 Registration Rights Agreement,
the Company issued 1,280,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2021 Purchase
Agreement. The commitment shares were valued at $1.6 million and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity
as a cost of capital to be raised under the 2021 Purchase Agreement.
During the year ended December 31, 2021, the Company sold an aggregate of approximately 64.5 million shares of common stock under the 2021 Purchase
Agreement, for gross proceeds of approximately $41.3 million.
Under applicable rules of the NASDAQ Global Market, the Company could not issue or sell more than 19.99% of the shares of its common stock outstanding
immediately prior to the execution of the 2021 Purchase Agreement (approximately 64.5 million shares) to Lincoln Park under the 2021 Purchase Agreement without
stockholder approval, unless the average price of all applicable sales of its common stock to Lincoln Park under the 2021 Purchase Agreement equals or exceeds a threshold
amount. As the Company has issued approximately 64.5 million shares to Lincoln Park, during the year end December 31, 2021, under the 2021 Purchase Agreement at less
than the threshold amount, the Company will not sell any additional shares under the 2021 Purchase Agreement without shareholder approval.
F-21
February 2021 Financing
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On February 8, 2021, the Company entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 58,333,334
shares of its common stock, in a registered direct public offering (“the February 2021 Financing”), with A.G.P/Alliance Global Partners (“AGP”), acting as placement agent.
The public offering price for each share of common stock was $1.20. The February 2021 Financing closed on February 9, 2021. AGP received a cash fee of 7% of the gross
proceeds, for an aggregate amount of $4.9 million. The Company incurred other offering expenses of approximately $0.1 million. The Company received net proceeds of
approximately $65.0 million, after deducting the fees and other offering expenses.
January 2021 Financing
On January 11, 2021, the Company entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 50,000,000
shares of its common stock in a registered direct public offering (“the January 2021 Financing”), with AGP as placement agent. The public offering price for each share of
common stock was $0.80. The January 2021 Financing closed on January 13, 2021. AGP received a cash fee of 7% of the gross proceeds, for an aggregate of $2.8 million. The
Company incurred other offering expenses of approximately $0.3 million. The Company received net proceeds of approximately $36.9 million, after deducting the fees and
other offering expenses.
At-the-Market Offerings
On April 8, 2020, the Company entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which the Company may issue and sell, from time to
time, shares of the Company’s common stock having an aggregate offering price of up to $240.0 million in at-the-market offerings (“ATM”) sales. AGP will act as sales agent
and will be paid a 3% commission on each sale under the Sales Agreement. The Company’s common stock will be sold at prevailing market prices at the time of the sale, and,
as a result, prices will vary. During the year ended December 31, 2021, the Company sold approximately 110.2 million shares of common stock under the Sales Agreement, for
net proceeds of approximately $69.3 million. Subsequent to December 31, 2021, the Company has sold 15.6 million shares of common stock under the Sales Agreement, for
net proceeds of approximately $4.3 million
2020 Lincoln Park Transaction
On September 3, 2020, the Company entered into a purchase agreement (the “2020 Purchase Agreement”) and a registration rights agreement (the “2020 Registration
Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the 2020 Purchase Agreement, Lincoln Park has agreed to purchase from
the Company up to $30,000,000 of the Company’s common stock (subject to certain limitations) from time to time during the term of the 2020 Purchase Agreement. Pursuant
to the terms of the 2020 Registration Rights Agreement, the Company filed with the SEC a registration statement to register for resale under the Securities Act the shares that
have been or may be issued to Lincoln Park under the 2020 Purchase Agreement.
Pursuant to the terms of the 2020 Purchase Agreement, at the time the Company signed the 2020 Purchase Agreement and the 2020 Registration Rights Agreement,
the Company issued 600,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2020 Purchase
Agreement. The commitment shares were valued at $498,000 and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as
a cost of capital to be raised under the 2020 Purchase Agreement.
During the year ended December 31, 2020, the Company sold an aggregate of approximately 25.4 million shares of common stock under the 2020 Purchase
Agreement, for gross proceeds of approximately $14.6 million.
F-22
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under applicable rules of the NASDAQ Global Market, the Company could not issue or sell more than 19.99% of the shares of its common stock outstanding
immediately prior to the execution of the 2020 Purchase Agreement (approximately 26 million shares) to Lincoln Park under the 2020 Purchase Agreement without stockholder
approval, unless the average price of all applicable sales of its common stock to Lincoln Park under the 2020 Purchase Agreement equals or exceeds a threshold amount. As the
Company has issued approximately 26 million shares to Lincoln Park, during the year end December 31, 2020, under the 2020 Purchase Agreement at less than the threshold
amount, the Company will not sell any additional shares under the 2020 Purchase Agreement without shareholder approval.
July 2020 Financing
On July 13, 2020, the Company entered into an underwriting agreement with AGP, relating to the issuance and sale of 20,940,000 shares of common stock, in a
registered direct public offering (“the July 2020 Financing”). The public offering price for each share of common stock was $0.50. The July 2020 Financing closed on July 15,
2020. AGP purchased the shares at a seven percent discount to the then current public price, for an aggregate discount of $0.7 million. The Company incurred other offering
expenses of approximately $0.1 million. The Company received net proceeds of approximately $9.6 million, after deducting the underwriting discount and other offering
expenses.
March 2020 Financing
On February 28, 2020, the Company entered into an underwriting agreement with AGP, relating to the issuance and sale of 14,550,000 shares of common stock, in a
registered direct public offering (“the March 2020 Financing”). The public offering price for each share of common stock was $1.10. The March 2020 Financing closed on
March 3, 2020. AGP purchased the shares at a seven percent discount to the then current public price, for an aggregate discount of $1.1 million. The Company incurred other
offering expenses of approximately $0.1 million. The Company received net proceeds of approximately $14.8 million, after deducting the underwriting discount and other
offering expenses.
February 2020 Financing
On February 7, 2020, the Company entered into an underwriting agreement with AGP pursuant to which the Company sold securities consisting of 3,837,000 Class A
Units at a public offering price of $0.57 per unit, with each unit consisting of one share of common stock and one warrant to purchase one share of common stock, and 5,313
Class B Units at a public offering price of $1,000 per unit, with each unit consisting of one share of Series B Convertible Preferred Stock, with a conversion price of $0.57 per
share, convertible into 1,754.386 shares of common stock and warrants to purchase 1,754.386 shares of common stock (“the February 2020 Financing”). The warrants have an
exercise price of $0.57, are immediately exercisable and expire five years from the date of issuance.
The February 2020 Financing closed on February 11, 2020. AGP purchased the Class A and Class B Units at a seven-percent discount to the public offering price, for
an aggregate discount of approximately $0.5 million. The Company incurred other offering expenses of approximately $0.5 million. The Company received net proceeds of
approximately $6.5 million, after deducting the underwriting discount and other offering expenses.
After allocating proceeds to the warrants issued with the Series B Convertible Preferred Stock, the effective conversion price of the Series B Convertible Preferred
Stock was determined to be less than the fair value of the underlying common stock at the date of commitment, resulting in a beneficial conversion feature (“BCF”) at that date.
Since the Series B Preferred Stock has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by the BCF of $1.3
million, based on intrinsic value, was charged to additional paid in capital as a non-cash “deemed dividend” and included in net loss to common stockholders.
During the first quarter of 2020, all 5,313 shares of Series B Convertible Preferred Stock were converted into common stock.
During February and March 2020, 10.8 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57, were exercised for proceeds of
approximately $6.2 million.
During August 2020, 2.2 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57, were exercised for proceeds of approximately
$1.3 million.
F-23
November 2019 Financing
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On November 14, 2019, the Company sold securities consisting of 547,420 Class A Units at a public offering price of $1.94 per unit, with each unit consisting of one
share of common stock, one warrant to purchase one share of common stock (“primary warrant”) and one-half of one warrant to purchase one half of one share common stock
(“common warrant”), and 7,938 Class B Units at a public offering price of $1,000 per unit, with each unit consisting of one share of Series A Convertible Preferred Stock, with
a conversion price of $1.94 per share, convertible into 515.464 shares of common stock, primary warrants to purchase 515.464 shares of common stock, and common warrants
to purchase 257.732 shares of common stock (the “November 2019 Financing”). The primary warrants have an exercise price of $1.94, are immediately exercisable and expire
five years from the date of issuance. The common warrants had an exercise price of $1.94 and expired 12 months from the date of issuance. The common warrants were
exercisable on a cashless basis at the option of the holder on the earlier of 30 days from issuance and the date by which an aggregate of $9.0 million of the Company’s securities
were traded.
As a result of the issuance of common stock in February 2020 for less than the November 2019 warrant exercise price, a repricing of the warrants issued in the
November 2019 Financing was triggered. The Company recognized a one-time non-cash “deemed dividend” of $0.5 million, representing the increase in the fair value of the
warrants. The non-cash “deemed dividend” was charged to additional paid in capital and included in net loss to stockholders. During February and March 2020, 2.3 million of
the warrants issued in the November 2019 financing, with an exercise price of $0.57, were exercised for proceeds of approximately $1.3 million.
2019 Lincoln Park Transaction
On August 20, 2019, the Company entered into a purchase agreement (the “2019 Purchase Agreement”) and a registration rights agreement (the “2019 Registration
Rights Agreement”) with Lincoln Park. Pursuant to the terms of the 2019 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $15,000,000 of the
Company’s common stock (subject to certain limitations) from time to time during the term of the 2019 Purchase Agreement. Pursuant to the terms of the 2019 Registration
Rights Agreement, the Company filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln
Park under the 2019 Purchase Agreement.
Pursuant to the terms of the 2019 Purchase Agreement, at the time the Company signed the 2019 Purchase Agreement and the 2019 Registration Rights Agreement,
the Company issued 35,529 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2019 Purchase
Agreement. The commitment shares were valued at $200,000 and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as
a cost of capital to be raised under the 2019 Purchase Agreement.
As a result of receiving stockholder approval on January 16, 2020, the Company may sell more than 19.9% of its common stock outstanding pursuant to the 2019
Purchase Agreement without violating Nasdaq Marketplace Rules, including Rule 5635(d), requiring shareholder approval for the sale, issuance or potential issuance by an
issuer of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value.
During the year ended December 31, 2020, the Company sold an aggregate of approximately 464,471 shares of common stock under the 2019 Purchase Agreement,
for gross proceeds of approximately $0.3 million.
F-24
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 – STOCK-BASED COMPENSATION
Stock Incentive Plans
On May 3, 2019, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan
provided for the issuance of up to 140,000 shares of common stock. With the adoption of the 2020 Plan (as defined below), no further grants may be made under the 2019 Plan.
On January 16, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2020 Stock Incentive Plan (the “2020 Plan”). The 2020 Plan provided
for the issuance of up to 600,000 shares of common stock. With the adoption of the Amended and Restated 2020 Plan (as defined below), no further grants may be made under
the 2020 Plan.
On May 1, 2020, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. Amended and Restated 2020 Stock Incentive Plan (“Amended and
Restated 2020 Plan”), and together with the 2020 Plan and the 2019 Plan, the “Plans”).
Under the terms of the Amended and Restated 2020 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock
appreciation rights (“SARs”), (4) RSUs, (5) other stock-based awards, and (6) cash-based awards. The Amended and Restated 2020 Plan initially provided for the issuance of
up to 10,000,000 shares of common stock, which amount will be increased to the extent that awards granted under the Plans are forfeited, expire or are settled for cash (except
as otherwise provided in the Amended and Restated 2020 Plan). In addition, the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual
increase in the number of shares of our common stock available for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years,
commencing on January 1, 2021 and ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent (20%) of the total number of
shares of common stock outstanding on December 31st of the preceding calendar year, and (y) the total number of shares of common stock reserved under the Amended and
Restated 2020 Plan on December 31st of such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards or available for future
awards). The Board of Directors determines the exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 Plan. However, the exercise
price of an incentive stock option may not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100% of fair value
for a grantee who is not a 10% shareholder. The fair value of the common stock is determined based on quoted market price or in absence of such quoted market price, by the
Board of Directors in good faith. Additionally, the expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years. As of December 31,
2021, 16,085,796 shares were available for future grants under the Amended and Restated 2020 Plan.
F-25
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
General
A summary of the stock option activity and related information for the Plans for the years ended December 31, 2021, and 2020 is as follows:
Shares
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value
Outstanding at December 31, 2019
Grants
Exercised
Forfeitures or expirations
Outstanding at December 31, 2020
Grants
Exercised
Forfeitures or expirations
Outstanding at December 31, 2021
Exercisable at December 31, 2021
$
$
109,036
10,100,250
—
—
10,209,286
15,572,190
—
(1,214) $
$
$
25,780,262
5,747,787
$
$
199.57
0.81
—
—
2.93
1.28
—
2,155.81
1.83
3.91
8.60 $
—
9.26 $
— $
8.83 $
8.21 $
—
—
131,558
—
—
—
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing
stock price at the respective dates.
The weighted average grant date fair value of options granted during the years ended December 31, 2021 and 2020, was $1.06 and $0.66 per share, respectively.
The Company measures the fair value of stock options on the date of grant, based on the Black Scholes option pricing model using certain assumptions discussed
below, and the closing market price of the Company’s common stock on the date of the grant. The fair value of the award is measured on the grant date. One-third of most stock
options granted pursuant to the Plans vest 12 months from the date of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant. In
addition, the Company issues options to directors which vest over a one-year period. The Company also issues premium options to executive officers which have an exercise
price greater than the grant date fair value and has issued performance-based options which vest when target parameters are met or probable of being met, subject in each case
to a one year minimum service period prior to vesting. Stock-based compensation expense related to awards is amortized over the applicable service period using the straight-
line method.
The assumptions used in the valuation of stock options granted during the year ended December 31, 2021 and 2020 were as follows:
2021
2020
Risk-free interest rate
Expected term of option
Expected stock price volatility
Expected dividend yield
0.79% to 1.63%
5.5 to 6 years
0.36% to 1.25%
5.5 to 6 years
124.37% to 137.73% 120.62% to 129.29%
0.0%
0.0%
The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected term of the options as of the grant date. The
expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting Bulletin, and the expected stock price volatility is based on the
Company’ historical stock price volatility.
F-26
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
Stock-based compensation expense relating to options granted of $7.9 million, of which $5.5 million and $2.4 million, related to General and Administration and
Research and Development, respectively was recognized for the year ended December 31, 2021. Stock-based compensation expense relating to options granted of $2.9 million,
of which $2.0 million and $0.9 million, related to General and Administration and Research and Development, respectively was recognized for the year ended December 31,
2020.
As of December 31, 2021, the Company had approximately $14.2 million of unrecognized compensation cost related to non-vested awards granted under the Plans,
which the Company expects to recognize over a weighted average period of 1.91 years.
Employee Stock Purchase Plans
On May 3, 2019, the Company’s stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2019 Employee Stock Purchase Plan (the “2019 ESPP”). As a
result of adoption of the 2020 ESPP, as defined below, by the stockholders, no further grants may be made under the 2019 ESPP Plan. On May 1, 2020, the Company’s
stockholders approved the Tonix Pharmaceuticals Holdings Corp. 2020 Employee Stock Purchase Plan (the “2020 ESPP”).
The 2020 ESPP allows eligible employees to purchase up to an aggregate of 300,000 shares of the Company’s common stock. Under the 2020 ESPP, on the first day of
each offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of
the Company’s common stock at the end of the offering period. Each offering period under the 2020 ESPP is for six months, which can be modified from time-to-time. Subject
to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period
by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A
participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under
the 2020 ESPP, subject to the statutory limit under the Code. As of December 31, 2021, 7 shares were available for future sales under the 2020 ESPP.
The 2020 and 2019 ESPP are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the year ended
December 31, 2021, and 2020, $89,000 and $23,000, respectively, was expensed. In January 2020, 1,578 shares that were purchased as of December 31, 2019, under the 2019
ESPP, were issued. Accordingly, during the first quarter of 2020, approximately $2,000 of employee payroll deductions accumulated at December 31, 2019, related to acquiring
such shares, was transferred from accrued expenses to additional paid in capital. The remaining $7,000 was returned to the employees. As of December 31, 2020,
approximately $32,000 of employee payroll deductions have accumulated and have been recorded in accrued expenses. In January 2021, 54,447 shares that were purchased as
of December 31, 2020, under the 2020 ESPP, were issued. Accordingly, during the first quarter of 2021, approximately $28,000 of employee payroll deductions accumulated at
December 31, 2020, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $4,000 was returned to the employees.
In July 2021, 116,505 shares that were purchased as of June 30, 2021, under the 2020 ESPP, were issued. Accordingly, during July 2021, approximately $68,000 of employee
payroll deductions accumulated at June 30, 2021, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital. The remaining $7,000
was returned to the employees. In January 2022, 129,041 shares that were purchased as of December 31, 2021, under the 2020 ESPP, were issued. Accordingly, during the first
quarter of 2022, approximately $40,000 of employee payroll deductions accumulated at December 31, 2021, related to acquiring such shares, was transferred from accrued
expenses to additional paid in capital. The remaining $30,000 was returned to the employees.
F-27
NOTE 15 – WARRANTS TO PURCHASE COMMON STOCK
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at December 31, 2021:
Exercise
Price
Number
Outstanding
Expiration
Date
$
$
$
0.50
0.57
35.00
24,920
123,500
490,571
638,991
November 2024
February 2025
December 2023
During the year ended December 31, 2021, 3,400 warrants from the February 2020 Financing, with an exercise price of $0.57, were exercised for proceeds of
approximately $2,000.
During the year ended December 31, 2021, 5,441 and 474 warrants with a per share exercise price of $630 and $687.50, respectively, expired.
During the year ended December 31, 2020, 2.3 million warrants from the November 2019 financing, with an exercise price of $0.57, were exercised for proceeds of
approximately $1.3 million. During the year ended December 31, 2020, 2.3 million warrants from the November 2019 financing, with an exercise price of $0.50, were
exercised for proceeds of approximately $1.2 million.
During the year ended December 31, 2020, 13.0 million warrants from the February 2020 financing, with an exercise price of $0.57, were exercised for proceeds of
approximately $7.5 million.
During the year ended December 31, 2020, 2,500 warrants with a per share exercise price of $0.50 expired.
F-28
NOTE 16 – LEASES
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has various operating lease agreements, which are primarily for office space. These agreements frequently include one or more renewal options and
require the Company to pay for utilities, taxes, insurance and maintenance expense. No lease agreement imposes a restriction on the Company’s ability to engage in financing
transactions or enter into further lease agreements. At December 31, 2021, the Company has right-of-use assets of $0.9 million and a total lease liability for operating leases of
$1.0 million of which $0.5 million is included in long-term lease liabilities and $0.5 million is included in current lease liabilities.
At December 31, 2021, future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in thousands):
Year Ending December 31,
2022
2023
2024
2025
Included interest
$
$
511
169
145
150
975
(19)
956
During the year ended December 31, 2021, the Company entered into lease amendments, resulting in the Company recognizing an operating lease liability of
approximately $467,000 based on the present value of the future minimum rental payments. The Company also recognized corresponding ROU assets of approximately
$467,000.
During the year ended December 31, 2020, the Company entered into new operating leases and lease amendments, resulting in the Company recognizing an additional
operating lease liability of approximately $1.4 million based on the present value of the minimum rental payments. The Company also recognized a corresponding increase to
ROU assets of approximately $1.4 million.
Operating lease expense was $0.6 and $0.5 million for the years ended December 31, 2021 and 2020, respectively.
Other information related to leases was as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases (in thousands)
Weighted Average Remaining Lease Term
Operating leases
Weighted Average Discount Rate
Operating leases
F-29
December 31, 2021
632
$
December 31, 2020
540
$
2.71 years
3.27 years
1.34%
1.42%
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 – COMMITMENTS
Contractual agreements
The Company has entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $47.9 million at
December 31, 2021 for future work to be performed.
The Company entered into a construction contract with outstanding commitments aggregating approximately $30.1 million at December 31, 2021 for future work to be
performed.
On March 3, 2021, the Company entered into a $2.9 million contingent non-binding Purchase and Sales Agreement in connection with a property in Massachusetts.
The property is intended for process development activities. The purchase is expected to close during the second quarter of 2022.
Defined contribution plan
The Company has a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby all eligible employees may participate.
Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) Plan, subject to defined limitations. The Company is required to make
contributions to the 401(k) Plan equal to 100 percent of each participant’s pretax contributions of up to six percent of his or her eligible compensation, and the Company is also
required to make a contribution equal to three percent of each participant’s salary, on an annual basis, subject to limitations under the Code. The Company charged operations
$0.4 million and $0.1 million for the year ended December 31, 2021, and 2020, respectively, for contributions under the 401(k) Plan.
NOTE 18 – INCOME TAXES
Components of the net loss consist of the following (in thousands):
Foreign
Domestic
Total
Year ended December 31,
2021
2020
$
$
(73,689) $
(18,598)
(92,287) $
(41,155)
(9,308)
(50,463)
In 2021, the foreign losses are comprised of $71.9 million related to the Irish operations and $1.8 million related to the Bermudan operations of Tonix International
Holding. In 2020, the foreign losses were primarily comprised of $40.4 million related to the Bermudan operations of Tonix International Holding.
A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate used to calculate the Company’s income tax
provision is as follows:
Statutory federal income tax
Change in valuation allowance
Foreign loss not subject to income tax
Attribute reduction from control change
Other
Income Tax Provision
Year Ended December 31,
2021
2020
(21.0)%
15.0%
7.0%
(1.2)%
0.2%
0.0%
(21.0)%
3.9%
16.9%
0.3%
(0.1)%
0.0%
F-30
Deferred tax assets (liabilities) and related valuation allowance as of December 31, 2021 and 2020 were as follows (in thousands):
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets/(liabilities):
Net operating loss carryforward
Stock-based compensation
Other
Total deferred assets
Valuation allowance
Net deferred tax assets
December 31,
2021
2020
$
$
13,297 $
5,832
2,285
21,414
(21,414)
— $
2,193
3,662
220
6,075
(6,075)
—
The Company has incurred research and development (“R&D”) expenses, a portion of which qualifies for tax credits. The Company conducted an R&D credit study to
quantify the amount of credits and has claimed an R&D credit on its 2014-2017 tax returns. A portion of these R&D credit carryforwards are subject to annual limitations in
their use in accordance with Internal Revenue Service Code (“IRC”) section 383. The R&D credit carryforwards at December 31, 2021 have been reduced to $0.0 million to
reflect IRC section 383 ownership changes through December 31, 2021 and the resulting inability to utilize a portion of the R&D credit prior to its expiration.
At December 31, 2021, the Company has $66.4 million of Ireland NOL carryforwards that do not expire. At December 31, 2021, the Company has NOL
carryforwards of $21.0 million, which do not expire, but their utilization is limited to 80% of taxable income. Additionally, a portion of the federal NOL carryforward is subject
to annual limitation in their use in accordance with IRC section 382. As of December 31, 2021, the Company’s Federal NOL carryforwards of $12.9 million have an annual
limitation of $2.4 million, and $8.6 million are not subject to limitations. At December 31, 2021, the Company has New Jersey NOL carryforwards of $6.6 million, which
expire in 20 years, are subject to annual limitations in their use in accordance with IRC section 382. The New Jersey NOL carryforwards at December 31, 2021 have been
reduced to reflect IRC section 382 ownership changes through December 31, 2021 and resultant inability due to annual limitations, to utilize a portion of the NOL prior to its
expiration.
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax
assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2021. Such objective
evidence limits the ability to consider other subjective evidence such as our projections for future growth. As such, the Company has determined that it is not more likely than
not that the deferred tax assets will be realized and accordingly, has provided a full valuation allowance against its gross deferred tax assets. The increase in the valuation
allowance for the years ended December 31, 2021 and 2020 were $15.3 million, and $2.2 million respectively.
The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. However, as of December 31, 2021 there are no
unrecognized tax benefits recorded. The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of December 31, 2021, the
Company’s tax returns remain open and subject to examination by the tax authorities for the tax years 2018 and after.
F-31
NOTE 19 – SUBSEQUENT EVENTS
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On February 15, 2022, the Company granted options to purchase an aggregate of 15,480,690 shares of the Company’s common stock to employees with an exercise
price of $0.21, with a term of ten years, vesting 1/3 on the first anniversary and 1/36th each month thereafter for 24 months. Additionally, the Company granted options to
purchase 24,750,000 shares of the Company’s common stock to certain employees with 10% of such options vesting on the first anniversary of issuance, 10% on the second
anniversary of issuance, 40% on the third anniversary of issuance, and 40% on the fourth anniversary of issuance, and expiring 10 years from the date of issuance. One-third of
the stock options granted have an exercise price per share of $0.414; one-third of the stock options granted have an exercise price per share of $0.621; and one-third of the stock
options granted have an exercise price per share of $0.828.
On February 10, 2022, the Company filed an amendment to its articles of incorporation, as amended, to increase the number of shares of common stock authorized
from 800,000,000 to 1,600,000,000.
Subsequent to December 31, 2021, the Company sold 15.6 million shares of common stock under the Sales Agreement with AGP for net proceeds of approximately
$4.3 million.
Subsequent to December 31, 2021, the Company sold 22.0 million shares of common stock under the Purchase Agreement with Lincoln Park for net proceeds of
approximately $4.5 million.
F-32
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.
ITEM 9A – CONTROLS AND PROCEDURES
Management’s evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible
controls and procedures relative to their costs.
Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to
our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Internal control over financial
reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the supervision of, a company’s principal
executive and principal financial officer and effected by the 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:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made in accordance with authorizations of management and directors of
the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its 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 risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible enhancements to controls and procedures.
We conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our principal executive officer and principal financial
officer conclude that, at December 31, 2021, our internal control over financial reporting was effective.
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This annual report does not include an attestation report by EisnerAmper LLP, our independent registered public accounting firm regarding internal control over
financial reporting. As a smaller reporting company, our management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the
Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
ITEM 9B – OTHER INFORMATION
None.
ITEM 9C – DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
The Board of Directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be
elected for the term of one year and until his successor is elected and qualified or until his earlier resignation or removal. Our directors and executive officers are as follows:
NAME
AGE
CURRENT POSITION
Seth Lederman
Richard Bagger
Margaret Smith Bell
Daniel Goodman
David Grange
Adeoye Olukotun
Carolyn Taylor
James Treco
Jessica Morris
Bradley Saenger
Gregory Sullivan
64
61
62
61
74
77
62
66
44
48
56
President, CEO and Chairman of the Board of Directors
Director
Director
Director
Director
Director
Director
Lead Director
Chief Operating Officer
Chief Financial Officer and Treasurer
Chief Medical Officer and Secretary
The following information with respect to the principal occupation or employment of each nominee for director, the principal business of the corporation or other
organization in which such occupation or employment is carried on, and such nominee’s business experience during the past five years, as well as the specific experiences,
qualifications, attributes and skills that have led the Board to determine that such Board members should serve on our Board, has been furnished to the Company by the
respective director nominees:
Seth Lederman, MD became our President, Chief Executive Officer, Chairman of the Board and a Director in October 2011. Dr. Lederman founded Tonix
Pharmaceuticals, Inc., a wholly-owned subsidiary of us (“Tonix Sub”) in 2007 and has acted as its Chairman of the Board of Directors since its inception and as President since
2010. Dr. Lederman is an inventor on key patents and patent applications underlying our programs including: TNX-102 SL’s eutectic composition; TNX-102 SL’s
pharmacokinetic profile and related therapeutic properties, and the use of TNX-102 SL for posttraumatic stress disorder (PTSD). Dr. Lederman served as an Associate
Professor at Columbia University, between 1996 and 2017. As an Assistant Professor at Columbia, Dr. Lederman discovered and characterized the CD40-ligand, or CD154 and
invented therapeutic candidates to treat autoimmune diseases and transplant rejection. TNX-1500 is a mAb directed against CD154 invented by Dr. Lederman. Dr. Lederman
has been a Manager of L&L Technologies LLC, or L&L, since 1996. In addition, Dr. Lederman has been the Managing Member of Seth Lederman Co, LLC since 2007 and the
Managing Member of Lederman & Co, LLC, or Lederman & Co, since 2002, both of which are biopharmaceutical consulting and investing companies. Dr. Lederman has also
been the Managing Member of Targent Pharmaceuticals, LLC, or Targent, since 2000, and Managing Member of Plumbline LLC since 2002. Targent was a founder of Targent
Pharmaceuticals Inc. on which Board of Directors Dr. Lederman served from inception in 2001 until the sale of its assets to Spectrum Pharmaceuticals Inc. in 2006. Between
January 2007 and November 2008, Dr. Lederman was a Managing Partner of Konanda Pharma Partners, LLC, a Director of Konanda Pharma Fund I, LP, and a Managing
Partner of Konanda General Partner, LLC, which were related private growth equity fund entities. As well, between 2007 and 2008, Dr. Lederman was Chairman of Validus
Pharmaceuticals, Inc. and Fontus Pharmaceuticals, Inc., which were portfolio companies of the Konanda private growth equity funds. Since 2011, Dr. Lederman has served as
CEO and Chairman of Leder Laboratories Inc., or Leder Labs, and Starling Pharmaceuticals Inc., or Starling, which are biopharmaceutical development companies. Dr.
Lederman was the chairman of Leder Laboratories, Ltd., a wholly-owned subsidiary of Leder Laboratories Inc., between 2013 and 2018, when the entity was dissolved. In
2015, Dr. Lederman served as a member of the US – Japan Business Council. Between 2006 and 2011, Dr. Lederman was a director of Research Corporation, a New York-
based non-profit organization. Dr. Lederman received his BA degree in Chemistry from Princeton University in 1979 and his MD from Columbia University in 1983. Dr.
Lederman’s significant experience with our patent portfolio and his experience as an entrepreneur, seed capital investor, fund manager, and director of start-up
biopharmaceutical companies were instrumental in his selection as a member of the Board.
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Richard Bagger became a Director in June 2020. Mr. Bagger has been a Partner and Executive Director of Christie 55 Solutions, LLC, a New Jersey based consulting
firm, since January 2020. Mr. Bagger has also been an Adjunct Faculty member at the Rutgers University Eagleton Institute since 2018. From 2012 through 2019, Mr. Bagger
was Executive Vice President of Corporate Affairs and Market Access for Celgene Corporation (NASDAQ: CELG), a global biopharmaceutical company, as well as a member
of its Executive Committee. From 1993 to 2010, Mr. Bagger held roles of increasing responsibility with Pfizer Inc. (NYSE: PFE), a global pharmaceutical company, and served
as Senior Vice President, Worldwide Public Affairs and Policy, from 2006 to 2009. Prior to joining Pfizer, Mr. Bagger was Assistant General Counsel of Blue Cross and Blue
Shield of New Jersey, a health insurer, and practiced law with the law firm of McCarter & English. Mr. Bagger served as Board Chair of the National Pharmaceutical Council
for 2019 and is a member of the Board of Directors of the U.S. Chamber of Commerce. He is also on the advisory board for the Lerner Center for the Study of Pharmaceutical
Management Issues at Rutgers University Business School. Mr. Bagger received an A.B. degree from Princeton University’s Woodrow Wilson School of Public and
International Affairs and a J.D. degree from Rutgers University Law School. Mr. Bagger’s extensive healthcare and public policy experience were instrumental in his selection
as a member of the Board.
Margaret Smith Bell became a Director in September 2017. Ms. Bell has been retired for the last ten years. Previously, Ms. Bell was a Vice President at Standard Life
Investments where she was a portfolio manager and health care equity analyst. Ms. Bell was also a Managing Director at Putnam Investments, and served as a senior health
care analyst and a portfolio manager of the Putnam Health Sciences Trust. Ms. Bell was an analyst and vice president at State Street Research and a research analyst at Alex.
Brown & Sons, Inc. Ms. Bell is a past member of the Board of Overseers at Beth Israel Deaconess Medical Center. Ms. Bell holds a B.A. from Wesleyan University and an
M.B.A. from the Wharton School at the University of Pennsylvania. Ms. Bell’s extensive healthcare and investment banking experience were instrumental in her selection as a
member of the Board.
Daniel Goodman, MD became a Director in May 2019. Dr. Goodman founded Riverside Pharmaceuticals, a drug discovery company, in 2012 and has been its Chief
Executive Officer since inception. Dr. Goodman co-founded PsychoGenics Inc., a preclinical neuropharmacology company, in 1998, was its Chief Executive Officer from 1998
to 2000, and has served on its Board of Directors since 2000. Dr. Goodman is also a practicing physician and has been President and cofounder of The Midtown Practice for
Psychiatry PC since 2017 and President and founder of Daniel Goodman MD PC since 2003. Dr. Goodman graduated from Harvard Medical School and has an M.B.A. from
Columbia Business School. Dr. Goodman’s experience in drug discovery and development was instrumental in his selection as a member of our Board.
Brigadier General David Grange (U.S. Army retired) became a director in February 2018. BG Grange has been President and founder of Osprey Global Solutions,
LLC (“OGS”), a Service Disabled Veterans Organization, since 2011. BG Grange was Chief Executive Officer of Pharm-Olam International, Ltd. (“Pharm-Olam”), a contract
research organization, from April 2017 to October 2019. Prior to founding OGS, BG Grange was a member of the Board of Pharmaceutical Product Development, Inc.
(Nasdaq: PPDI), a contract research organization, from 2003 to 2009, and Chief Executive Officer from 2009 to 2011. Prior to PPDI he served in the McCormick Tribune
Foundation for 10 years most recently as Chief Executive Officer and President, where he also oversaw the support of Veteran Programs. BG Grange served 30 years in the
U.S. Army as a Ranger, Green Beret, Aviator, Infantryman and a member of special operating units. At the Pentagon, he was Director of Army Current Operations, Readiness,
and Mobilization.BG Grange commanded the Ranger Regiment and the First Infantry Division (the Big Red One).BG Grange holds a master’s degree in Public Service from
Western Kentucky University. BG Grange’s extensive experience in the pharmaceutical industry and service with the U.S. military was instrumental in his selection as a
member of our Board.
Adeoye Olukotun, MD became a Director in September 2018. Dr. Olukotun is a board member of Arrowhead Pharmaceuticals. Dr Olukotun is a member of
management of Genesis Unicorn Corporation, a special acquisition company recently listed on Nasdaq (GENQU). Dr. Olukotun has been the Chief Executive Officer of CR
Strategies, LLC, a medical products consulting company, since 2000, and was the Chief Executive Officer of EpiGen Pharmaceuticals, Inc., a pharmaceutical company, from
2014 to January of 2018. Dr. Olukotun served as Vice Chairman of CardoVax, Inc., a pharmaceutical company, from 2012 to 2016, and as its Chief Executive Officer from
2006 to 2012. He is also co-founder of VIA Pharmaceuticals, Inc., a pharmaceutical company, and served as the company’s Chief Medical Officer from 2004 to 2008. Dr.
Olukotun’s extensive medical background and experience in the pharmaceutical industry was instrumental in his selection as a member of our Board.
Carolyn Taylor became a Director in July 2021. Ms. Taylor was general counsel of Strike Protocols Inc., a financial technology company, from 2019 to 2020, and held
positions of varying responsibility, including partner, and most recently, of counsel, at the law firm of Covington & Burling LLP from 1989 to 2000 and 2004 to 2015. From
2000 to 2003, Ms. Taylor served as Executive Vice President and General Counsel of Longitude, Inc., a financial services company. Ms. Taylor graduated from Columbia Law
School and earned a B.A. from Brown University. Ms. Taylor’s broad transactional experience was instrumental in her selection as a member of the Board.
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James Treco became a director in February 2019 and has been our Lead Director since March 2020. Mr. Treco has been a Managing Partner at First Chicago
Advisors, Inc., a boutique financial advisory firm where he advises executives and boards of directors of a wide range of companies, from global, large-cap companies to
emerging companies, from 2009 to 2012 and from 2014 to the present. From 2012 to 2013 Mr. Treco was an investment banker with Gleacher & Company, a company that
previously operated an investment banking business, providing corporate and institutional clients with strategic and financial advisory services. Mr. Treco held various
positions of increasing responsibility at Salomon Brothers/Citigroup from 1984 to 2008, where he used his extensive experience in the global capital markets to advise a wide
range of clients. Mr. Treco holds a B.A. from Yale University and an M.B.A. from the Stanford University Graduate School of Business. Mr. Treco’s extensive healthcare and
investment banking experience were instrumental in his selection as a member of the Board.
Jessica Morris is our Chief Operating Officer and has worked for the Company since April 2013, first as a consultant (April 2013 – September 2013), then as SVP of
Finance (September 2013 – October 2015), followed by Chief Administrative Officer (October 2015 – January 2016), Acting Chief Financial Officer (January 2016 – February
2016), and Executive Vice President, Operations (February 2016 – January 2018). Prior to joining the Company, Ms. Morris was a Vice President in investment management at
Zhong Rong Group. Previously, Ms. Morris was a Senior Associate in the Sponsor Finance Group at American Capital, a Vice President of the mezzanine debt fund at Calvert
Street Capital Partners, an Associate in the commercial finance department of Silicon Valley Bank, and a Financial Analyst in the investment banking group at Deutsche Bank.
Ms. Morris earned a B.S. in Commerce and a B.A. in Music from the University of Virginia, where she was an Echols Scholar.
Bradley Saenger, CPA became our Chief Financial Officer in February 2016. Mr. Saenger has worked for us since May 2014, as the Director of Accounting (May
2014 – December 2015) and VP of Accounting (January 2016 – February 2016). Between June 2013 and March 2014, Mr. Saenger worked for Shire Pharmaceuticals as a
consultant in the financial analyst research and development group. Since November 2015, Mr. Saenger has been a director of Tonix Pharma Holdings Limited. Between
February 2013 and May 2013, Mr. Saenger worked for Stewart Health Care System as a financial consultant. Between October 2011 and December 2012, Mr. Saenger was an
Associate Director of Accounting at Vertex Pharmaceuticals, Inc. Between January 2005 and September 2011, Mr. Saenger worked for Alere Inc., as a Manager of Corporate
Accounting and Consolidations (2007 – 2011) and Manager of Financial Reporting (2005 – 2006). Mr. Saenger also worked for PricewaterhouseCoopers LLP, Shifren
Hirsowitz, public accountants and auditors in Johannesburg, South Africa, Investec Bank in Johannesburg, South Africa and Norman Sifris and Company, public accountants
and auditors in Johannesburg, South Africa. Mr. Saenger received his Bachelor’s and Honors’ degrees in Accounting Science from the University of South Africa. Mr. Saenger
is a Chartered Accountant in South Africa and a Certified Public Accountant in the Commonwealth of Massachusetts.
Gregory Sullivan, MD became our Chief Medical Officer on June 3, 2014 and our Secretary in March 2017. Prior to becoming our Chief Medical Officer, he served
on our Scientific Advisory Board since October 2010, and had also provided ad hoc consulting services. Previously, Dr. Sullivan had been a member of the faculty of Columbia
University since July 1999, where he served as an Assistant Professor of Psychiatry in the Department of Psychiatry at Columbia University Medical Center (CUMC) until June
2014. Between June 1997 and August 2014, Dr. Sullivan maintained a part-time psychiatry practice. He served as a Research Scientist at the New York State Psychiatric
Institute (NYSPI) from December 2006 to June 2014. He also served as a member of the Institutional Review Board of the NYSPI from January 2009 to June 2014. As
Principal Investigator and Co-Investigator on several human studies of PTSD, Dr. Sullivan has administered the recruitment, biological assessments, treatment, and safety of
participants with PTSD in clinical trials of the disorder. He has published more than 50 articles and chapters on research topics ranging from stress and anxiety disorders to
abnormal serotonin receptor expression in depression, PTSD and panic disorder. He is a recipient of grants from the National Institute of Mental Health (NIMH), the Anxiety
Disorders Association of America, NARSAD, the Dana Foundation, and the American Foundation for Suicide Prevention. Dr. Sullivan received a BA in Biology from the
University of California, Berkeley, and received his MD from the College of Physicians & Surgeons at Columbia University. He completed his residency training in psychiatry
at CUMC, and then a two-year NIMH-sponsored research fellowship in anxiety and affective disorders before joining the faculty at Columbia.
Directors serve until the next annual meeting of shareholders or until their successors are elected and qualified. Officers serve at the discretion of the Board.
Board Independence
The Board has determined that (i) Seth Lederman has a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director and is not an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market and (ii) Richard Bagger,
Margaret Smith Bell, Daniel Goodman, David Grange, Adeoye Olukotun, Carolyn Taylor and James Treco are each an independent director as defined in the Marketplace
Rules of The NASDAQ Stock Market.
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Board Leadership Structure
Our CEO also serves as the chairman of the Board. An independent director serves as the Board’s lead director. This structure allows one person to speak for and
lead both the Company and the Board, while also providing for effective independent board oversight through an independent lead director. Having Dr. Lederman, our CEO,
serve as Chairman creates clear and unambiguous authority, which is essential to effective management. Our Board and management can respond more effectively to a clearer
line of authority. By designating our CEO as its Chairman, our Board also sends as an important signal to our employees and shareholders about who is accountable. Further,
since Dr. Lederman is the founder of our Company and is an inventor on key patents and patent applications underlying our programs, we believe that Dr. Lederman is best-
positioned to set our Board’s agenda and provide leadership.
We have established the position of lead director, which is filled by Mr. Treco. The lead director has the following responsibilities, as detailed in the Lead Director
charter, adopted by the Board (and also performs any other functions the Board may request):
● Board leadership — provides leadership to the Board in any situation where the chairman’s role may be, or may be perceived to be, in conflict, and also
chairs meetings when the chairman is absent;
● Leadership of independent director meetings — leads independent director meetings, which take place without any management directors or Tonix
employees present;
● Additional meetings — calls additional independent director meetings as needed;
● Chairman-independent director liaison — regularly meets with the chairman and serves as liaison between the chairman and the independent directors;
● Stockholder communications — makes himself available for direct communication with our stockholders;
● Board agenda, schedule & information — works with the chairman regarding meeting agendas, meeting schedules and information sent to directors
for Board meetings, including the quality, quantity, appropriateness and timeliness of such information; and
● Advisors and consultants — recommends to the Board the retention of outside advisors and consultants who report directly to the Board on Board-wide
issues.
Board Role in Risk Oversight
Risk is an integral part of the Board and Board committee deliberations throughout the year. While the Board has the ultimate oversight responsibility for the risk
management process, various committees of the Board also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including
internal controls, and receives financial risk assessment reports from management. Risks related to the compensation programs are reviewed by the Compensation Committee.
The Board is advised by these committees of significant risks and management’s response through periodic updates.
Stockholder Communications with the Board
The Company’s stockholders may communicate with the Board, including non-executive directors or officers, by sending written communications addressed to such
person or persons in care of Tonix Pharmaceuticals Holding Corp., Attention: Secretary, 26 Main Street, Suite 101, Chatham, New Jersey 07928. All communications will be
compiled by the Secretary and submitted to the addressee. If the Board modifies this process, the revised process will be posted on the Company’s website.
Meetings and Committees of the Board
During the fiscal year ended December 31, 2021, the Board held 11 meetings, the Audit Committee held eight meetings, the Compensation Committee held nine
meetings and the Nominating and Corporate Governance Committee held six meetings. The Board and Board committees also approved certain actions by unanimous written
consent.
Board Committees
The Board has standing Audit, Compensation, and Nominating and Corporate Governance Committees. Information concerning the membership and function of each
committee is as follows:
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Board Committee Membership
Audit
Committee
Compensation
Committee
Nominating and
Corporate
Governance Committee
*
*
*
**
**
*
*
*
*
*
**
Name
Richard Bagger
Margaret Smith Bell
Daniel Goodman
David Grange
Adeoye Olukotun
Carolyn Taylor
James Treco
* Member of Committee
** Chairman of Committee
Audit Committee
Our Audit Committee consists of Margaret Smith Bell, Daniel Goodman and James Treco, Chair of the Committee. Our Board has determined each of the members
are “independent” as that term is defined under applicable SEC rules and under the current listing standards of the NASDAQ Stock Market. Mr. Treco is our audit committee
financial expert.
Our Audit Committee’s responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent auditors, (ii)
appointing, replacing and discharging the independent auditor, (iii) pre-approving the professional services provided by the independent auditor, (iv) reviewing the scope of the
annual audit and reports and recommendations submitted by the independent auditor, and (v) reviewing our financial reporting and accounting policies, including any
significant changes, with management and the independent auditor. The Audit Committee reviewed and discussed with management the Company’s audited financial
statements for the year ended December 31, 2021.
Compensation Committee
Our Compensation Committee consists of Margaret Smith Bell, Chair of the Committee, David Grange, Carolyn Taylor and Adeoye Olukotun. Our Board has
determined that all of the members are “independent” under the current listing standards of the NASDAQ Stock Market. Our Board has adopted a written charter setting forth
the authority and responsibilities of the Compensation Committee.
Our Compensation Committee has responsibility for, among other things, evaluating and making decisions regarding the compensation of our executive officers,
assuring that the executive officers are compensated effectively in a manner consistent with our stated compensation strategy, producing an annual report on executive
compensation in accordance with the rules and regulations promulgated by the SEC and periodically evaluating and administering the terms and administration of our incentive
plans and benefit programs. In addition, our Compensation Committee reviews and makes recommendations to the Board regarding incentive compensation plans that require
shareholder approval, director compensation, the Company’s compensation discussion and analysis (“CD&A”) and the related executive compensation information for
inclusion in the Company’s Annual Report on Form 10-K and proxy statement, and employment and severance agreements relating to the chief executive officer.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Richard Bagger, Daniel Goodman, David Grange and James Treco, Chair of the Committee. The
Board has determined that all of the members are “independent” under the current listing standards of the NASDAQ Stock Market.
Our Nominating and Corporate Governance Committee has responsibility for assisting the Board in, among other things, effecting the organization, membership and
function of the Board and its committees. The Nominating and Corporate Governance Committee identifies and evaluates the qualifications of all candidates for nomination for
election as directors, and seeks director nominees that complement and enhance the effectiveness of the existing Board to ensure that its members have varied and relevant
backgrounds, skills, knowledge, perspectives and experiences. Our Board currently includes two female directors and one director who contributes racial/ethnic diversity. In
addition, the Nominating and Corporate Governance Committee is responsible for developing, recommending and evaluating corporate governance standards and a code of
business conduct and ethics.
Nomination of Directors
As provided in its charter and our Company’s corporate governance principles, the Nominating and Corporate Governance Committee is responsible for identifying
individuals qualified to become directors. The Nominating and Corporate Governance Committee seeks to identify director candidates based on input provided by a number of
sources, including (1) the Nominating and Corporate Governance Committee members, (2) our other directors, (3) our shareholders, (4) our Chief Executive Officer or
Chairman, and (5) third parties such as professional search firms. In evaluating potential candidates for director, the Nominating and Corporate Governance Committee
considers the entirety of each candidate’s credentials.
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Qualifications for consideration as a director nominee may vary according to the particular areas of expertise being sought as a complement to the existing
composition of the Board. However, at a minimum, candidates for director must possess:
● high personal and professional ethics and integrity;
● the ability to exercise sound judgment;
● the ability to make independent analytical inquiries;
● a willingness and ability to devote adequate time and resources to diligently perform Board and committee duties; and
● the appropriate and relevant business experience and acumen.
In addition to these minimum qualifications, the Nominating and Corporate Governance Committee also takes into account when considering whether to nominate a
potential director candidate the following factors:
● whether the person possesses specific industry expertise and familiarity with general issues affecting our business;
● whether the person’s nomination and election would enable the Board to have a member that qualifies as an “audit committee financial expert” as such
term is defined by the SEC in Item 401 of Regulation S-K;
● whether the person would qualify as an “independent” director under the listing standards of the Nasdaq Stock Market;
● the importance of continuity of the existing composition of the Board to provide long term stability and experienced oversight; and
● the importance of diversified Board membership, in terms of both the individuals involved and their various experiences and areas of expertise.
The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders provided such recommendations are submitted
in accordance with the procedures set forth below. In order to provide for an orderly and informed review and selection process for director candidates, the Board has
determined that shareholders who wish to recommend director candidates for consideration by the Nominating and Corporate Governance Committee must comply with the
following:
● The recommendation must be made in writing to the Corporate Secretary at Tonix Pharmaceuticals Holding Corp.;
● The recommendation must include the candidate’s name, home and business contact information, detailed biographical data and qualifications,
information regarding any relationships between the candidate and the Company within the last three years and evidence of the recommending person’s
ownership of the Company’s common stock;
● The recommendation shall also contain a statement from the recommending shareholder in support of the candidate; professional references, particularly
within the context of those relevant to board membership, including issues of character, judgment, diversity, age, independence, expertise, corporate
experience, length of service, other commitments and the like; and personal references; and
● A statement from the shareholder nominee indicating that such nominee wants to serve on the Board and could be considered “independent” under the
Rules and Regulations of the Nasdaq Stock Market and the SEC, as in effect at that time.
All candidates submitted by shareholders will be evaluated by the Nominating and Corporate Governance Committee according to the criteria discussed above and in
the same manner as all other director candidates.
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Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees.
Involvement in Certain Legal Proceedings
Except as disclosed below, our directors and executive officers have not been involved in any of the following events during the past ten years:
1.
2.
3.
4.
5.
6.
any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in
banking or securities activities;
being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have
violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated,
relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance
companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any
equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
In January 2013, the Chief Operating Officer filed for bankruptcy protection under Chapter 7 of Title 11 under the United States Code in the U. S. Bankruptcy Court in
New York, New York. The petition was discharged in April 2013.
ITEM 11 - EXECUTIVE COMPENSATION
Compensation Philosophy and Practices
We believe that the performance of our executive officers significantly impacts our ability to achieve our corporate goals. We, therefore, place considerable importance
on the design and administration of our executive officer compensation program. This program is intended to enhance stockholder value by attracting, motivating and retaining
qualified individuals to perform at the highest levels and to contribute to our growth and success. Our executive officer compensation program is designed to provide
compensation opportunities that are tied to individual and corporate performance.
Our compensation packages are also designed to be competitive in our industry. The Compensation Committee from time-to-time consults with compensation
consultants, legal counsel and other advisors in designing our compensation program, including in evaluating the competitiveness of individual compensation packages and in
relation to our corporate goals.
Our overall compensation philosophy has been to pay our executive officers an annual base salary and to provide opportunities, through cash and equity incentives, to
provide higher compensation if certain key performance goals are satisfied. We believe that many of our key practices and programs demonstrate good governance. The main
principles of our fiscal year 2021 compensation strategy included the following:
● An emphasis on pay for performance. A significant portion of our executive officers’ total compensation is variable and at risk and tied directly to measurable
performance, including pre-specified corporate, strategic or developmental goals, which aligns the interests of our executives with those of our stockholders;
● Performance results are linked to Company and individual performance. When looking at performance over the year, we equally weigh individual
performance as well as that of the Company as a whole. Target annual compensation is positioned to allow for above-median compensation to be earned
through an executive officer’s and the Company’s extraordinary performance;
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● Equity as a key component to align the interests of our executives with those of our stockholders. Our Compensation Committee believes that keeping
executives interests aligned with those of our stockholders is critical to driving toward achievement of long-term goals of both our stockholders and the
Company. Accordingly, a significant portion of our executives’ compensation are stock based, including stock options that are exercisable at a percentage
above market value at the time of grant; and
● Peer group positioning. While the Compensation Committee considers the level of compensation paid by the companies in our peer group as a reference
point that provides a framework for its compensation decisions, in order to maintain competitiveness and flexibility, the Compensation Committee does not
target compensation at a particular level relative to the peer group; nor does the Compensation Committee employ a formal benchmarking strategy or rely
upon specific peer–derived targets.
In 2021, we also continued practices that demonstrate good governance and careful stewardship of corporate assets, including:
● Limited personal benefits. Our executive officers are eligible for the same benefits as our non-executive salaried employees, and they do not receive any
additional perquisites.
● No retirement benefits. We do not provide our executive officers with a traditional retirement plan, or with any supplemental deferred compensation or
retirement benefits.
● No tax gross-ups. We do not provide our executive officers with any tax gross-ups.
● No single-trigger cash change in control benefits. We do not provide cash benefits to, or accelerate the vesting of unvested equity grants issued to, our
executives upon a change in control, absent an actual termination of employment.
At our annual meeting in May 2019, we conducted our tri-annual advisory vote on executive compensation, commonly referred to as a “say-on-pay” vote. At that time,
a majority of the votes affirmatively cast on the advisory say-on-pay proposal were voted in favor of the compensation of our named executive officers. The Compensation
Committee understood this level of approval to indicate strong stockholder support for our executive compensation policies and programs generally, and as a result, our
Compensation Committee made no fundamental changes to our executive compensation programs. We will hold our next say-on-pay vote at the 2022 annual meeting. Our
Compensation Committee and our Board will consider shareholder feedback through the say-on-pay vote and remains committed to engaging with shareholders and are open to
feedback from shareholders.
Summary Compensation Table
The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer, and the two next
most highly paid executive officers for fiscal years 2021 and 2020.
Name & Principal
Position
Seth Lederman
Chief Executive Officer
Bradley Saenger
Chief Financial Officer
Gregory Sullivan
Chief Medical Officer
Year
2021
2020
2021
2020
2021
2020
Salary
($)
675,000
614,250
Bonus
($)
506,250
460,688
425,000
404,250
170,000
181,913
440,000
420,000
176,000
256,200
Stock
Awards
($)
—
—
—
—
—
—
Option
Awards
($) (1)
6,527,139
2,799,884
1,174,885
505,645
1,631,785
706,220
Change in
Pension Value
and
Non-
Qualified
Deferred
Compensation
Earnings ($)
—
—
Non-Equity
Incentive Plan
Compensation
($)
—
—
—
—
—
—
—
—
—
—
All Other
Compensation
($)
Total
($)
— 7,708,389
— 3,874,822
— 1,769,885
— 1,091,808
— 2,247,785
— 1,382,420
(1)Represents the aggregate grant date fair value of options granted in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or
ASC, Topic 718, “Stock Compensation.” For the relevant assumptions used in determining these amounts, refer to Note 14 to our audited financial statements.
96
Grants of Plan-Based Awards in Fiscal 2021
The following table provides information with regard to each grant of plan-based award made to a named executive officer under any plan during the fiscal year ended
December 31, 2021.
Name
Seth Lederman
Bradley Saenger
Gregory Sullivan
Grant Date
All Other Option Awards:
Number of Securities
Underlying Options (#)
Exercise or
Base Price of
Option Awards ($/Share)
Grant Date Fair Value of
Stock and Option Awards
($) (1)
2/23/2021
2/23/2021
2/23/2021
2/23/2021
2/23/2021
2/23/2021
3,000,000
3,000,000
540,000
540,000
750,000
750,000
1.22
1.53(2)
1.22
1.53(2)
1.22
1.53(2)
3,285,830
3,241,309
591,449
583,436
821,458
810,327
(1)Represents the aggregate grant date fair value of options granted in accordance with FASB ASC Topic 718.
(2)Represents an exercise price at a 125% premium of the closing price of the Company’s common stock on the grant date.
Outstanding Equity Awards at December 31, 2021
The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2021.
Name
Seth Lederman
Bradley Saenger
Number of
Securities
underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
underlying
Unexercised
Options (#)
Unexercisable
Option
Exercise
Price ($/Sh)
Option
Expiration
Date
35
68
71
100
100
189
8
110
—
160
1,567
1,567
2,195
2,194
11,175
11,175
73,335
73,335
1,055,555
1,055,555
—
—
11
11
13
15
—
20
48
392
392
492
491
2,482
2,482
14,670
14,670
190,000
190,000
—
—
—
—
—
—
—
—
—
—
110(1)
—
—
—
132(2)
133(2)
1,801(3)
1,801(3)
46,665(4)
46,665(4)
944,445(5)
944,445(5)
3,000,000(6)
3,000,000(6)
—
—
—
—
60(1)
—
—
—
—
25(2)
26(2)
402(3)
402(3)
9,330(4)
9,330(4)
170,000(5)
170,000(5)
540,000(6)
540,000(6)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
30,000.00
10,200.00
15,880.00
9,870.00
6,680.00
5,950.00
5,950.00
5,030.00
5,030.00
550.00
340.00
425.00
18.90
23.60
20.50
25.60
0.40
0.50
0.77
0.96
1.22
1.53
9,870.00
6,680.00
5,950.00
5,030.00
2,420.00
2,420.00
550.00
340.00
425.00
18.90
23.60
20.50
25.60
0.40
0.50
0.77
0.96
1.22
1.53
5/9/2022
2/12/2023
2/11/2024
6/17/2024
10/29/2024
2/25/2025
2/25/2025
2/9/2026
2/9/2026
3/1/2027
2/13/2028
2/13/2028
2/26/2029
2/26/2029
5/6/2029
5/6/2029
2/25/2030
2/25/2030
5/4/2030
5/4/2030
2/23/2031
2/23/2031
6/17/2024
10/29/2024
2/25/2025
2/9/2026
5/27/2026
5/27/2026
3/1/2027
2/13/2028
2/13/2028
2/26/2029
2/26/2029
5/6/2029
5/6/2029
2/25/2030
2/25/2030
5/4/2030
5/4/2030
2/23/2031
2/23/2031
Gregory Sullivan
27
27
27
30
—
75
588
588
732
731
3,722
3,722
23,835
23,835
263,890
263,890
—
—
—
—
—
—
30(1)
—
—
—
44(2)
45(2)
604(3)
604(3)
15,165(4)
15,165(4)
236,110(5)
236,110(5)
750,000(6)
750,000(6)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
9,870.00
6,680.00
5,950.00
5,030.00
5,030.00
550.00
340.00
425.00
18.90
23.60
20.50
25.60
0.40
0.50
0.77
0.96
1.22
1.53
6/17/2024
10/29/2024
2/25/2025
2/9/2026
2/9/2026
3/1/2027
2/13/2028
2/13/2028
2/26/2029
2/26/2029
5/6/2029
5/6/2029
2/25/2030
2/25/2030
5/4/2030
5/4/2030
2/23/2031
2/23/2031
(1) The shares subject to this stock option vest 1/3rd upon the date(s) that certain stock price goals are achieved. The stock price goals are such date(s) when the Company’s
common stock has an average closing sales price equal to or exceeding each of $6,000.00, $7,000.00 and $8,000.00 per share for 20 consecutive trading days, subject to a
one year minimum service period prior to vesting.
(2) The shares subject to this stock option vested as to 1/3 of the shares on February 26, 2020, with the remaining shares vesting on an equal monthly basis over the following
24 months.
(3) The shares subject to this stock option vested as to 1/3 of the shares on May 6, 2020, with the remaining shares vesting on an equal monthly basis over the following 24
months.
(4) The shares subject to this stock option vested as to 1/3 of the shares on February 25, 2021, with the remaining shares vesting on an equal monthly basis over the following
24 months.
(5) The shares subject to this stock option vested as to 1/3 of the shares on May 4, 2021, with the remaining shares vesting on an equal monthly basis over the following 24
months.
(6) The shares subject to this stock option vested as to 1/3 of the shares on February 23, 2022, with the remaining shares vesting on an equal monthly basis over the following
24 months.
97
Option Exercises and Stock Vested
No options were exercised by any of the named executive officers and no named executive officers held restricted stock units during the fiscal year ended December
31, 2021.
Equity Compensation Plan Information
The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2021.
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
(A)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(B)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column A)
(2)
(C)
25,780,262
—
25,780,262
$
$
1.83
—
1.83
16,085,803
—
16,085,803
(1) Consists of the Company’s 2012 Amended and Restated Incentive Stock Option Plan, the 2014 Stock Incentive Plan, the 2016 Stock Incentive Plan, the 2017 Stock
Incentive Plan, the 2018 Equity Incentive Plan, the 2019 Stock Incentive Plan, the 2020 Stock Incentive Plan, the Amended and Restated 2020 Stock Incentive Plan and the
2019 Employee Stock Purchase Plan, and the 2020 Employee Stock Purchase Plan (the “ESPP”).
(2) Consists of shares available for future issuance under the Amended and Restated 2020 Plan and our ESPP. As of December 31, 2021, 16,085,796 shares of common stock
were available for issuance under the Amended and Restated 2020 Plan and 7 shares of common stock were available for issuance under the ESPP.
98
Employment Contracts and Termination of Employment and Change-In-Control Arrangements
Employment Agreement with Seth Lederman
On February 11, 2014, the Company entered into an employment agreement (the “Lederman Agreement”) with Dr. Seth Lederman to continue to serve as our
President, Chief Executive Officer and Chairman of the Board.
The base salary for Dr. Lederman under the Lederman Agreement was $425,000 per annum and as of January 1, 2022, the base salary is $675,000. The Lederman
Agreement has an initial term of one year and automatically renew for successive one year terms unless either party delivers written notice not to renew at least 60 days prior to
the end of the current term.
Pursuant to the Lederman Agreement, if the Company terminates Dr. Lederman’s employment without Cause (as defined in the Lederman Agreement) or Dr.
Lederman resigns for Good Reason (as defined in the Lederman Agreement), Dr. Lederman is entitled to the following payments and benefits: (1) his fully earned but unpaid
base salary through the date of termination at the rate then in effect, plus all other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan,
equity award plan or agreement, health benefits plan or other group benefit plan to which Dr. Lederman may be entitled to under the terms of such plans or agreements; (2) a
lump sum cash payment in an amount equal to 12 months of his base salary as in effect immediately prior to the date of termination; (3) continuation of health benefits for Dr.
Lederman and his eligible dependents for a period of 12 months following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of
outstanding unvested stock awards as to the number of stock awards that would have vested over the 12-month period following termination had Dr, Lederman remained
continuously employed by the Company during such period.
Pursuant to the Lederman Agreement, if Dr. Lederman’s employment is terminated as a result of death or permanent disability, Dr. Lederman or his estate, as
applicable, is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect; (2) a lump
sum cash payment in an amount equal to six months of his base salary as in effect immediately prior to the date of termination; and (3) the automatic acceleration of the vesting
and exercisability of outstanding unvested stock awards.
If Dr. Lederman is terminated without Cause or resigns for Good Reason during the period commencing 90 days prior to a Change in Control (as defined below) or
12 months following a Change in Control, Dr. Lederman shall be entitled to receive, in lieu of the severance benefits described above, the following payments and benefits:
(1) a lump sum cash payment in an amount equal to 36 months of his base salary as in effect immediately prior to the date of termination, except that, if and while Dr. Dr.
Lederman is still entitled to the Sale Bonus (as defined below), it will only be 18 months; (2) continuation of health benefits for Dr. Lederman and his eligible dependents for a
period of 24 months following the date of termination, except that, if and while Dr. Lederman is still entitled to the Sale Bonus it will only be 12 months; and (3) the automatic
acceleration of the vesting and exercisability of outstanding unvested stock awards.
If during the term of the Lederman Agreement or within 120 days after Dr. Lederman is terminated without Cause or resigns for Good Reason, following a Change in
Control, the Company consummates a Change in Control transaction in which the Enterprise Value (as defined below) equals or exceeds $50 million, Dr. Lederman shall be
entitled to receive a lump sum payment equal to 4.4% of the Enterprise Value (the “Sale Bonus”). The Sale Bonus provision of the Lederman Agreement will terminate upon
the Company granting Dr. Lederman long-term incentive compensation mutually agreed to by the Board and Dr. Lederman.
For purposes of the Lederman Agreement, “Cause” generally means (1) commission of an act of fraud, embezzlement or dishonesty or some other illegal act that has a
demonstrable material adverse impact on the Company or any successor or affiliate of the Company, (2) conviction of, or entry into a plea of “guilty” or “no contest” to, a
felony, (3) unauthorized use or disclosure of the Company’s confidential information or trade secrets or any successor or affiliate of the Company that has, or may reasonably
be expected to have, a material adverse impact on any such entity; (4) gross negligence, failure to follow a material, lawful and reasonable request of the Board or material
violation of any duty of loyalty to the Company or any successor or affiliate of the Company, or any other demonstrable material willful misconduct by Dr. Lederman,
(5) ongoing and repeated failure or refusal to perform or neglect of his duties as required by his employment agreement, which failure, refusal or neglect continues for 30 days
following Dr. Lederman’s receipt of written notice from the Board stating with specificity the nature of such failure, refusal or neglect, provided that such failure to perform is
not as a result of illness, injury or medical incapacity, or (6) material breach of any Company policy or any material provision of the Lederman Agreement.
99
For purposes of the Lederman Agreement, “Good Reason” generally means (1) a material diminution in Dr. Lederman’s title, authority, duties or responsibilities, (2) a
material diminution in Dr. Lederman’s base compensation, unless such a reduction is imposed across-the-board to the Company’s senior management, and such reduction is not
greater than 15%, (3) a material change in the geographic location at which Dr. Lederman must perform his duties, (4) any other action or inaction that constitutes a material
breach by the Company or any successor or affiliate of the Company’s obligations to Dr. Lederman under the Lederman Agreement, or (5) the Company elects not to renew
the Lederman Agreement for another term.
For purposes of the Lederman Agreement, “Change in Control” generally means:
● A transaction or series of transactions (other than public offerings) that results in any person or entity or related group of persons or entities (other than the
Company, its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a person or entity that, prior to such transaction,
directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of more than 40% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition;
● (1) a merger, consolidation, reorganization, or business combination or (2) the sale, exchange or transfer of all or substantially all of the Company’s assets in
any single transaction or series of transactions or (3) the acquisition of assets or stock of another entity, in each case other than a transaction:
○ which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent, directly or indirectly, at
least 60% of the combined voting power of the successor entity’s outstanding voting securities immediately after the transaction, and
○ after which no person or group beneficially owns voting securities representing 40% or more of the combined voting power of the Company or its
successor; provided, however, that no person or group is treated as beneficially owning 40% or more of combined voting power of the Company
or its successor solely as a result of the voting power held in the Company prior to the consummation of the transaction.
For purposes of the Lederman Agreement, “Enterprise Value” generally means (1) in a Change in Control in which consideration is received by the Company, the total
cash and non-cash consideration, including debt assumed, received by the Company, net of any fees and expenses in connection with the transaction and (2) in a Change in
Control in which consideration is payable to the stockholders of the Company, the total cash and non-cash consideration, including debt assumed, payable to the Company’s
stockholders net of any fees and expenses in connection with the transaction. Enterprise Value also includes any cash or non-cash consideration payable to the Company or to
the Company’s stockholders on a contingent, earnout or deferred basis.
Employment Agreement with Gregory Sullivan
On June 3, 2014, the Company entered into an employment agreement (the “Sullivan Agreement”) with Dr. Gregory Sullivan to serve as our Chief Medical
Officer. The base salary for Dr. Sullivan under the Sullivan Agreement was $225,000 per annum and as of January 1, 2022, the base salary is $461,120. The Sullivan
Agreement had an initial term of one year and automatically renews for successive one year terms unless either party delivers written notice not to renew at least 60 days prior
to the end of the current term.
Pursuant to the Sullivan Agreement, if the Company terminates Dr. Sullivan’s employment without Cause (as defined below) or Executive resigns for Good Reason
(as defined below), Dr. Sullivan is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in
effect, plus all other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other
group benefit plan to which Dr. Sullivan may be entitled to under the terms of such plans or agreements; (2) a lump sum cash payment in an amount equal to 12 months of his
base salary as in effect immediately prior to the date of termination; (3) continuation of health benefits for Dr. Sullivan and his eligible dependents for a period of 12 months
following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of outstanding unvested stock awards as to the number of stock awards
that would have vested over the 12-month period following termination had Dr. Sullivan remained continuously employed by the Company during such period.
100
Pursuant to the Sullivan Agreement, if Dr. Sullivan’s employment is terminated as a result of death or permanent disability, Sullivan or his estate, as applicable, is
entitled to his fully earned but unpaid base salary through the end of the month in which termination occurs at the rate then in effect.
For purposes of the Sullivan Agreement, “Cause” generally means (1) commission of an act of fraud, embezzlement or dishonesty or some other illegal act that has a
demonstrable material adverse impact on the Company or any successor or affiliate of the Company, (2) conviction of, or entry into a plea of “guilty” or “no contest” to, a
felony, (3) unauthorized use or disclosure of the Company’s confidential information or trade secrets or any successor or affiliate of the Company that has, or may reasonably
be expected to have, a material adverse impact on any such entity, (4) gross negligence, failure to follow a material, lawful and reasonable request of the Company or material
violation of any duty of loyalty to the Company or any successor or affiliate of the Company, or any other demonstrable material misconduct by Dr. Sullivan, (5) ongoing and
repeated failure or refusal to perform or neglect of his duties as required by his employment agreement, which failure, refusal or neglect continues for 30 days following Dr.
Sullivan’s receipt of written notice from the Company stating with specificity the nature of such failure, refusal or neglect, or (6) material breach of any Company policy or any
material provision of the Sullivan Agreement.
For purposes of the Sullivan Agreement, “Good Reason” generally means (1) a material diminution in Dr. Sullivan’s title, authority, duties or responsibilities, (2) a
material diminution in the executive officer’s base compensation, unless such a reduction is imposed across-the-board to the Company’s senior management and such reduction
is not greater than 15%, (3) a material change in the geographic location at which the executive officer must perform his duties, (4) any other action or inaction that constitutes
a material breach by the Company or any successor or affiliate of the Company’s obligations to Dr. Sullivan under the Agreement, or (5) the Company elects not to renew
the Agreement for another term.
Employment Agreement with Bradley Saenger
On February 23, 2021, the Company entered into an employment agreement (the “Saenger Agreement”) with Mr. Bradley Saenger to serve as our Chief Financial
Officer. The base salary for Saenger under the Saenger Agreement was $445,400 per annum as of January 1, 2022. The Saenger Agreement has an initial term of one year and
automatically renews for successive one year terms unless either party delivers written notice not to renew at least 60 days prior to the end of the current term.
Pursuant to the Saenger Agreement, if the Company terminates Mr. Saenger’s employment without Cause (as defined below) or Executive resigns for Good Reason (as
defined below), Saenger is entitled to the following payments and benefits: (1) his fully earned but unpaid base salary through the date of termination at the rate then in effect,
plus all other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other group
benefit plan to which Mr. Saenger may be entitled to under the terms of such plans or agreements; (2) a lump sum cash payment in an amount equal to 12 months of his base
salary as in effect immediately prior to the date of termination; (3) continuation of health benefits for Mr. Saenger and his eligible dependents for a period of 12 months
following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of outstanding unvested stock awards as to the number of stock awards
that would have vested over the 12-month period following termination had Saenger remained continuously employed by the Company during such period.
Pursuant to the Saenger Agreement, if Mr. Saenger’s employment is terminated as a result of death or permanent disability, Saenger or his estate, as applicable, is
entitled to his fully earned but unpaid base salary through the end of the month in which termination occurs at the rate then in effect.
For purposes of the Saenger Agreement, “Cause” generally means (1) commission of an act of fraud, embezzlement or dishonesty or some other illegal act that has a
demonstrable material adverse impact on the Company or any successor or affiliate of the Company, (2) conviction of, or entry into a plea of “guilty” or “no contest” to, a
felony, (3) unauthorized use or disclosure of the Company’s confidential information or trade secrets or any successor or affiliate of the Company that has, or may reasonably
be expected to have, a material adverse impact on any such entity, (4) gross negligence, failure to follow a material, lawful and reasonable request of the Company or material
violation of any duty of loyalty to the Company or any successor or affiliate of the Company, or any other demonstrable material misconduct by Mr. Saenger, (5) ongoing and
repeated failure or refusal to perform or neglect of his duties as required by his employment agreement, which failure, refusal or neglect continues for 30 days following Mr.
Saenger’s receipt of written notice from the Company stating with specificity the nature of such failure, refusal or neglect, or (6) material breach of any Company policy or any
material provision of the Saenger Agreement.
For purposes of the Saenger Agreement, “Good Reason” generally means (1) a material diminution in Mr. Saenger’s title, authority, duties or responsibilities, (2) a
material diminution in the executive officer’s base compensation, unless such a reduction is imposed across-the-board to the Company’s senior management and such reduction
is not greater than 15%, (3) a material change in the geographic location at which the executive officer must perform his duties, (4) any other action or inaction that constitutes
a material breach by the Company or any successor or affiliate of the Company’s obligations to Mr. Saenger under the Agreement, or (5) the Company elects not to renew
the Agreement for another term.
101
Directors Compensation Table
As of May 2021, each of our non-employee directors, other than the lead director, receives an annual cash retainer of $50,000; the retainer for the lead director is
$70,000. Prior to May 2021, each of our non-employee directors received an annual cash retainer of $35,000. In addition, during 2021, each of our non-employee directors
received stock options to purchase shares of our common stock valued at $250,000 as determined by the Black Scholes method on the date of grant, which vest on the next
annual meeting of stockholders. The following table sets forth summary information concerning the total compensation paid to our non-employee directors in 2021 for services
to our Company.
Name
Cash
Compensation ($)
Option
Awards ($)(1)
Total ($)
Richard Bagger
Margaret Smith Bell
Daniel Goodman
David Grange
Adeoye Olukotun
Carolyn Taylor
James Treco (2)
Total:
$
$
$
$
$
$
$
$
45,000
45,000
45,000
45,000
45,000
22,984
58,333
306,317
$
$
$
$
$
$
$
$
250,000 $
250,000 $
250,000 $
250,000 $
250,000 $
208,945 $
250,000 $
1,708,945 $
295,000
295,000
295,000
295,000
295,000
231,929
308,333
2,015,262
(1) Represents the aggregate grant date fair value of stock options granted in accordance with FASB ASC Topic 718. For the relevant assumptions used in determining these
amounts, refer to Note 14 to our audited financial statements. These amounts do not necessarily correspond to the actual value that may be recognized from the stock
option grant.
(2) Mr. Treco received additional cash compensation for serving as lead director.
ITEM 12- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of our common stock as of March 14, 2022:
● by each person who is known by us to beneficially own more than 5% of our common stock;
● by each of our officers and directors; and
● by all of our officers and directors as a group.
Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is c/o
Tonix Pharmaceuticals Holding Corp., 26 Main Street, Suite 101, Chatham, New Jersey 07928.
NAME OF OWNER
5% Stockholders
BlackRock, Inc.
Directors and Executive Officers
Seth Lederman
Jessica Morris
Bradley Saenger
Gregory Sullivan
Richard Bagger
Margaret Smith Bell
Daniel Goodman
David Grange
Adeoye Olukotun
Carolyn Taylor
James Treco
Officers and Directors as a Group (11 persons)
TITLE OF
CLASS
NUMBER OF
SHARES OWNED (1)
PERCENTAGE OF
COMMON STOCK (2)
Common Stock
30,631,558(3)
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
Common Stock
102
5,355,942(4)
942,441(5)
962,023(6)
1,417,130(7)
349,632(8)
354,673(9)
353,883(10)
349,152(11)
354,232(12)
237,437(13)
402,382(14)
11,078,926(15)
5.7%
1%
*
*
*
*
*
*
*
*
*
*
2.0%
* Denotes less than 1%
(1) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of
common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 14, 2022 are deemed outstanding for
computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.
(2) Percentage based upon 533,928,624 shares of common stock issued and outstanding as of March 14, 2022.
(3) Based solely on information contained in a Schedule 13G filed with the SEC on February 4, 2022. The mailing address of this beneficial owner is 55 East 52nd street, New
York, NY 10055.
(4) Includes 5,207,918 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days, 205 shares of common stock owned
by Lederman & Co, 33 shares of common stock owned by L&L, 59 shares of common stock owned by Targent, 30 shares of common stock owned by Leder Laboratories, Inc.
(Leder Labs), 30 shares of common stock owned by Starling, 135,000 shares owned through a 401(k) account, 459 shares owned through an IRA account and 31 shares owned
by Dr. Lederman’s spouse. Seth Lederman, as the Managing Member of Lederman & Co and Targent, the Manager of L&L and the Chairman of Leder Labs and Starling, has
investment and voting control over the shares held by these entities.
(5) Includes 942,424 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.
(6) Includes 942,380 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.
(7) Includes 1,317,907 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days.
(8) Includes 339,632 shares of common stock underlying options and restricted stock units which are currently exercisable or vested or become exercisable within 60 days.
(9) Includes 349,282 shares of common stock underlying options and restricted stock units which are currently exercisable or vested or become exercisable within 60 days.
(10) Includes 348,882 shares of common stock underlying options and restricted stock units which are currently exercisable or vested or become exercisable within 60 days.
(11) Includes 349,152 shares of common stock underlying options and restricted stock units which are currently exercisable or vested or become exercisable within 60 days.
(12) Includes 348,882 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days
(13) Includes 237,437 shares of common stock underlying options which are currently exercisable or become exercisable within 60 days
(14) Includes 392,382 shares of common stock underlying options and restricted stock units which are currently exercisable or vested or become exercisable within 60 days.
(15) Includes 10,776,277 shares of common stock underlying options which are currently exercisable or vested or become exercisable within 60 days, 205 shares of common
stock owned by Lederman & Co, 33 shares of common stock owned by L&L, 59 shares of common stock owned by Targent, 30 shares of common stock owned by Leder Labs,
30 shares of common stock owned by Starling, 135,000 shares owned through a 401(k) account of Dr. Lederman, 459 shares owned through an IRA account of Dr. Lederman,
31 shares owned by Dr. Lederman’s spouse.
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ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We have adopted a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and
oversight of “related-party transactions.” For purposes of our policy only, a “related-party transaction” is a transaction, arrangement or relationship (or any series of similar
transactions, arrangements or relationships) in which we and any “related party” are participants involving an amount that exceeds $120,000.
Transactions involving compensation for services provided to us as an employee, consultant or director are not considered related-person transactions under this
policy. A related party is any executive officer, director or a holder of more than five percent of our common stock, including any of their immediate family members and any
entity owned or controlled by such persons.
Under the policy, where a transaction has been identified as a related-party transaction, our Chief Compliance Officer must present information regarding the proposed
related-party transaction to our Nominating and Corporate Governance Committee for review. The presentation must include a description of, among other things, the material
facts, the direct and indirect interests of the related parties, the benefits of the transaction to us and whether any alternative transactions are available. To identify related-party
transactions in advance, we rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-party transactions, our
Nominating and Corporate Governance Committee will take into account the relevant available facts and circumstances including, but not limited to:
● whether the transaction was undertaken in the ordinary course of our business;
● whether the related party transaction was initiated by us or the related party;
● whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached
with an unrelated third party;
● the purpose of, and the potential benefits to us from the related party transaction;
● the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party;
● the related party’s interest in the related party transaction, and
● any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the
particular transaction.
The Nominating and Corporate Governance Committee shall then make a recommendation to the Board, who will determine whether or not to approve of the related
party transaction, and if so, upon what terms and conditions. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from
the deliberations and approval.
During the last two fiscal years, there have been no related party transactions.
ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is EisnerAmper LLP, Iselin, New Jersey, PCAOB ID: 274.
Audit Fees
The aggregate fees billed by our independent registered public accounting firm, for professional services rendered for the audit of our annual financial statements for
the years ended December 31, 2021 and 2020, including review of our interim financial statements as well as registration statement filings with the SEC and comfort letters
issued to underwriters were $312,291 and $313,320, respectively.
Audit-Related Fees
We did not incur fees to our independent registered public accounting firm for audit related fees during the fiscal years ended December 31, 2021 and 2020.
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Tax and Other Fees
We did not incur fees to our independent registered public accounting firm for tax services during the fiscal years ended December 31, 2021 and 2020.
Pre-Approval Policies and Procedures
Consistent with SEC policies and guidelines regarding audit independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-
audit services provided by our principal accountants on a case-by-case basis. Our Audit Committee has established a policy regarding approval of all audit and permissible non-
audit services provided by our principal accountants. Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved all of
the services provided by our principal accountants.
ITEM 15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(c)
Index to Exhibits
PART IV
The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by an asterisk (*) are
management contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.
Exhibit
No.
Description
EXHIBIT INDEX
1.01
3.01
3.02
3.03
3.04
3.05
3.06
3.07
3.08
3.09
Form of Underwriting Agreement, filed herewith.
Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the “Commission”)
on April 9, 2008 and incorporated herein by reference.
Articles of Merger between Tamandare Explorations Inc. and Tonix Pharmaceuticals Holding Corp., effective October 11, 2011, filed as an exhibit to the Current
Report on Form 8-K, filed with the Commission on October 17, 2011 and incorporated herein by reference.
Third Amended and Restated Bylaws, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on June 3, 2016 and incorporated herein
by reference.
Certificate of Change of Tonix Pharmaceuticals Holding Corp., dated March 13, 2017 and effective March 17, 2017, filed as an exhibit to the Current Report on
Form 8-K, filed with the Commission on March 16, 2017 and incorporated herein by reference.
Certificate of Amendment to Articles of Incorporation, effective June 16, 2017, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission
on June 16, 2017 and incorporated herein by reference.
Specimen Common Stock Certificate, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on May 24, 2018 and incorporated herein
by reference.
Certificate of Amendment to Tonix Pharmaceuticals Holding Corp.’s Articles of Incorporation, as amended, filed with the Secretary of State of the State of
Nevada on May 3, 2019.
Certificate of Designation of Series A Convertible Preferred Stock, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on
November 15, 2019 and incorporated herein by reference.
Form of Certificate of Designation of Series B Convertible Preferred Stock, filed as an exhibit to the Registration Statement on Form S-1, filed with the
Commission on January 17, 2020 and incorporated herein by reference.
105
4.01
4.02
4.03
4.04
4.05
4.06
10.01
10.02
10.03
10.04
10.05
10.06
10.07
10.08
10.09
10.10
10.11
10.12
Specimen Common Stock Certificate of the Registrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on May 24, 2018 and
incorporated herein by reference.
Form of Warrant, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on November 14, 2019 and incorporated herein by
reference.
Form of Warrant Agency Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on November 14, 2019 and
incorporated herein by reference.
Form of Warrant, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on February 6, 2020 and incorporated herein by
reference
Form of Warrant Agency Agreement, filed as an exhibit to the Registration Statement on Form S-1, filed with the Commission on February 6, 2020 and
incorporated herein by reference.
Description of Registrant’s Securities, filed herewith.
Tonix Pharmaceuticals Holding Corp. 2012 Amended and Restated Incentive Stock Option Plan, incorporated herein by reference to Appendix B to our
Definitive Proxy Statement on Schedule 14A (File No. 000-54879), filed with the Commission on April 3, 2013.*
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Seth Lederman, dated February 11, 2014, filed as an exhibit to the Current Report
on Form 8-K filed with the Commission on February 14, 2014 and incorporated herein by reference.*
Tonix Pharmaceuticals Holding Corp. 2014 Stock Incentive Plan, incorporated herein by reference to Annex A to our Definitive Proxy Statement on Schedule
14A (File No. 001-36019), filed with the Commission on May 2, 2014.*
Lease Amendment and Expansion Agreement, dated February 11, 2014, by and between 509 Madison Avenue Associates, L.P. and Tonix Pharmaceuticals, Inc.,
filed as an exhibit to the Annual Report on Form 10-K filed with the Commission on February 27, 2015 and incorporated herein by reference.
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Gregory Sullivan, dated June 3, 2014, filed as an exhibit to the Current Report on
Form 8-K filed with the Commission on June 3, 2014 and incorporated herein by reference.*
Tonix Pharmaceuticals Holding Corp. 2016 Stock Incentive Plan, incorporated herein by reference to Annex A to our Definitive Proxy Statement on Schedule
14A (File No. 001-36019), filed with the Commission on March 25, 2016.*
Tonix Pharmaceuticals Holding Corp. 2017 Stock Incentive Plan, incorporated herein by reference to Appendix A to our Definitive Proxy Statement on Schedule
14A (File No. 001-36019), filed with the Commission on May 2, 2017.*
Tonix Pharmaceuticals Holding Corp. 2018 Equity Incentive Plan, incorporated herein by reference to our Definitive Proxy Statement on Schedule 14A (File No.
001-36019), filed with the Commission on April 19, 2018.*
Purchase Agreement, dated October 18, 2018, between Tonix Pharmaceuticals Holding Corp. and Lincoln Park Capital Fund, LLC, filed as an exhibit to the
Current Report on Form 8-K filed with the Commission on October 24, 2018 and incorporated herein by reference.
Tonix Pharmaceuticals Holding Corp. 2019 Stock Incentive Plan, incorporated herein by reference to Appendix A to our Definitive Proxy Statement on Schedule
14A (File No. 001-36019), filed with the Commission on March 18, 2019.*
Tonix Pharmaceuticals Holding Corp. 2019 Employee Stock Purchase Plan, incorporated herein by reference to Appendix B to our Definitive Proxy Statement on
Schedule 14A (File No. 001-36019), filed with the Commission on March 18, 2019.*
License Agreement, dated May 20, 2019, between Tonix Pharmaceuticals Holding Corp. and The Trustees of Columbia University in the City of New York, filed
as an exhibit to the Quarterly Report on Form 10-Q filed with the Commission on August 12, 2019 and incorporated herein by reference.
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10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
Purchase Agreement, dated August 20, 2019, between Tonix Pharmaceuticals Holding Corp. and Lincoln Park Capital Fund, LLC, filed as an exhibit to the
Current Report on Form 8-K filed with the Commission on August 23, 2019 and incorporated herein by reference.
Asset Purchase Agreement, dated August 19, 2019, between Tonix Pharmaceuticals Holding Corp. and TRImaran Pharma, Inc., filed as an exhibit to the
Quarterly Report on Form 10-Q filed with the Commission on November 8, 2019 and incorporated herein by reference.
First Amended and Restated Exclusive License Agreement, dated August 19, 2019, between Tonix Pharmaceuticals Holding Corp. and Wayne State University,
filed as an exhibit to the Quarterly Report on Form 10-Q filed with the Commission on November 8, 2019 and incorporated herein by reference.
Exclusive License Agreement, dated September 16, 2019, between Tonix Pharmaceuticals Holding Corp. and The Trustees of Columbia University in the City of
New York, filed as an exhibit to the Quarterly Report on Form 10-Q filed with the Commission on November 8, 2019 and incorporated herein by reference.
Tonix Pharmaceuticals Holding Corp. 2020 Stock Incentive Plan, incorporated herein by reference to Appendix A to our Definitive Proxy Statement on Schedule
14A (File No. 001-36019), filed with the Commission on December 13, 2019.*
Research Collaboration Agreement between Tonix Pharmaceutical, Inc. and Southern Research Institute, dated November 7, 2018, filed as an exhibit to the
Annual Report on Form 10-K, filed with the Commission on March 24, 2020 and incorporated herein by reference.
License Agreement, dated May 5, 2020, between Tonix Pharmaceuticals (Canada) Inc. and The Governors of the University of Alberta, filed as an exhibit to the
Quarterly Report on Form 10-Q, filed with the Commission on August 10, 2020 and incorporated herein by reference. †
Asset Purchase Agreement, dated June 11, 2020, between Tonix Pharmaceuticals, Inc. and Trigemina, Inc., filed as an exhibit to the Quarterly Report on Form
10-Q, filed with the Commission on May 12, 2020 and incorporated herein by reference. †
Amended and Restated Exclusive License Agreement, dated June 11, 2020, between Tonix Pharmaceuticals, Inc. and The Board of Trustees of the Leland
Stanford Junior University, filed as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 10, 2020 and incorporated herein by
reference.
Assignment and Agreement, dated June 11, 2020, between Tonix Pharmaceuticals, Inc. and The Board of Trustees of the Leland Stanford Junior University, filed
as an exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on August 10, 2020 and incorporated herein by reference.
Purchase and Sale Agreement, dated July 1, 2020, between Tonix Pharmaceuticals Holding Corp. and Seller named therein, filed as an exhibit to the Quarterly
Report on Form 10-Q, filed with the Commission on August 10, 2020 and incorporated herein by reference. †
Real Property Purchase and Sale Agreement, dated October 14, 2020, between Tonix Pharmaceuticals Holding Corp. and the Seller named therein, filed as an
exhibit to the Quarterly Report on Form 10-Q, filed with the Commission on November 9, 2020 and incorporated herein by reference. †
Tonix Pharmaceuticals Holding Corp. Amended and Restated 2020 Stock Incentive Plan, incorporated herein by reference to Appendix A to our Definitive Proxy
Statement on Schedule 14A (File No. 001-36019), filed with the Commission on March 30, 2020.*
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Jessica Morris, dated February 23, 2021, filed as an exhibit to the Current Report on
Form 8-K filed with the Commission on February 26, 2021 and incorporated herein by reference.*
Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Bradley Saenger, dated February 23, 2021, filed as an exhibit to the Current Report
on Form 8-K filed with the Commission on February 26, 2021 and incorporated herein by reference.*
Purchase and Sale Agreement, dated March 5, 2021, between Tonix Pharmaceuticals Holding Corp. and the Seller named therein, filed as an exhibit to the
Annual Report on Form 10-K, filed with the Commission on March 15, 2021 and incorporated herein by reference. †
107
10.29
10.30
10.31
10.32
14.01
21.01
23.01
31.01
31.02
32.01
101
License Agreement, dated April 14, 2021, between the Company and OyaGen, Inc., filed as an exhibit to the Quarterly Report on Form 10-Q filed with the
Commission on May 10, 2021 and incorporated herein by reference †
Purchase Agreement, dated May 14, 2021, by and between Tonix Pharmaceuticals Holding Corp. and Lincoln Park Capital Fund, LLC, filed as an exhibit to the
Current Report on Form 8-K, filed with the Commission on May 14, 2021 and incorporated herein by reference.
Purchase and Sale Agreement, dated July 26, 2021, between the Company and Southern Research, filed as an exhibit to the Quarterly Report on Form 10-Q filed
with the Commission on August 9, 2021 and incorporated herein by reference.
Purchase Agreement, dated December 3, 2021, by and between Tonix Pharmaceuticals Holding Corp. and Lincoln Park Capital Fund, LLC, filed as an exhibit to
the Current Report on Form 8-K filed with the Commission on December 3, 2021 and incorporated herein by reference.
Code of Business Conduct and Ethics for Employees, Executive Officers and Directors, filed as an exhibit to the Current Report on Form 8-K, filed with the
Commission on February 16, 2016 and incorporated herein by reference.
List of Subsidiaries.
Consent of Independent Registered Public Accounting Firm, filed herewith.
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
The following materials from Tonix Pharmaceuticals Holding Corp.’s Annual Report on Form 10-K for the year ended December 31, 2018, formatted in XBRL
(Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements
of Comprehensive Loss, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to
Consolidated Financial Statements.
104
The cover page from this Annual Report on Form 10-K, formatted as Inline XBRL.
† Certain portions of this exhibit, that are not material and would likely cause competitive harm to the registrant if publicly disclosed, have been redacted
pursuant to Item 601(b)(10) of Regulation S-K.
* Denotes a management compensatory agreement or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 14, 2022
Date: March 14, 2022
TONIX PHARMACEUTICALS HOLDING CORP.
/s/ SETH LEDERMAN
Seth Lederman
Chief Executive Officer (Principal Executive Officer)
/s/ BRADLEY SAENGER
Bradley Saenger
Chief Financial Officer (Principal Financial Officer and Principal Accounting
Officer)
By:
By:
108
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Seth Lederman and Bradley Saenger,
jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form
10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Name
Position
/s/ SETH LEDERMAN
Seth Lederman
/s/ BRADLEY SAENGER
Bradley Saenger
/s/ RICHARD BAGGER
Richard Bagger
/s/ MARGARET SMITH BELL
Margaret Smith Bell
/s/ DAVID GRANGE
David Grange
/s/ DANIEL GOODMAN
Daniel Goodman
/s/ ADEOYE OLUKOTUN
Adeoye Olukotun
/s/ CAROLYN TAYLOR
Carolyn Taylor
/s/ JAMES TRECO
James Treco
Chief Executive Officer, President and Director
(Principal Executive Officer)
Date
March 14, 2022
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
March 14, 2022
Director
Director
Director
Director
Director
Director
Director
109
March 14, 2022
March 14, 2022
March 14, 2022
March 14, 2022
March 14, 2022
March 14, 2022
March 14, 2022
Tonix Pharmaceuticals Holding Corp. 10-K
Exhibit 4.06
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
The following is a summary of all material characteristics of our common stock as set forth in our articles of incorporation and bylaws. The summary does not purport
to be complete and is qualified in its entirety by reference to our articles of incorporation and bylaws, each as amended, and to the provisions of Chapter 78 of the Nevada
Revised Statutes, as amended (“NRS”).
Common Stock
We are authorized to issue up to 1,600,000,000 shares of our common stock, par value $0.001 per share.
Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of our common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of our common stock voting for the election of directors can elect all of the directors. Holders of our
common stock representing a majority of the voting power of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to
constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate
changes such as dissolution, merger or an amendment to our articles of incorporation. However, a two-thirds vote is required for stockholders to amend our bylaws.
Subject to the rights of holders of shares of our preferred stock, if any, the holders of our common stock are entitled to share in all dividends that our Board of
Directors, in its discretion, declares on our common stock from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share of our
common stock entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over our common stock. Our common stock has no pre-emptive, subscription or conversion rights and there are no redemption provisions applicable to our common stock.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock is vStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598.
DESCRIPTION OF PREFERRED STOCK
The following is a summary of all material characteristics of our preferred stock as set forth in our articles of incorporation and bylaws. The summary does not
purport to be complete and is qualified in its entirety by reference to our articles of incorporation and bylaws, each as amended, and to the provisions of Chapter 78 of the
Nevada Revised Statutes, as amended (“NRS”).
Preferred Stock
We are authorized to issue up to 5,000,000 shares of preferred stock, par value $0.001 per share, none of which are currently outstanding. The shares of preferred stock
may be issued in series, and shall have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance of such stock
adopted from time to time by the board of directors. The board of directors is expressly vested with the authority to determine and fix in the resolution or resolutions providing
for the issuances of preferred stock the voting powers, designations, preferences and rights, and the qualifications, limitations or restrictions thereof, of each such series to the
full extent now or hereafter permitted by the laws of the State of Nevada.
Terms of the Preferred Stock That We May Offer and Sell to You
We summarize below some of the provisions that will apply to the preferred stock that we may offer to you unless the applicable prospectus supplement provides
otherwise. This summary may not contain all information that is important to you. You should read the prospectus supplement, which will contain additional information and
which may update or change some of the information below. Prior to the issuance of a new series of preferred stock, we will further amend our articles of incorporation, as
amended, designating the stock of that series and the terms of that series. We will file a copy of the certificate of designation that contains the terms of each new series of
preferred stock with the Nevada Secretary of State and the SEC each time we issue a new series of preferred stock. Each certificate of designation will establish the number of
shares included in a designated series and fix the designation, powers, privileges, preferences and rights of the shares of each series as well as any applicable qualifications,
limitations or restrictions. You should refer to the applicable certificate of designation as well as our articles of incorporation, as amended, before deciding to buy shares of our
preferred stock as described in the applicable prospectus supplement.
Our board of directors has the authority, without further action by the stockholders, to issue preferred stock in one or more series and to fix the number of shares,
dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking funds, and any other rights, preferences, privileges and restrictions
applicable to each such series of preferred stock.
The issuance of any preferred stock could adversely affect the rights of the holders of common stock and, therefore, reduce the value of the common stock. The ability
of our board of directors to issue preferred stock could discourage, delay or prevent a takeover or other corporate action.
110
The terms of any particular series of preferred stock will be described in the prospectus supplement relating to that particular series of preferred stock, including, where
applicable:
● the designation, stated value and liquidation preference of such preferred stock;
● the number of shares within the series;
● the offering price;
● the dividend rate or rates (or method of calculation), the date or dates from which dividends shall accrue, and whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence to cumulate;
● any redemption or sinking fund provisions;
● the amount that shares of such series shall be entitled to receive in the event of our liquidation, dissolution or winding-up;
● the terms and conditions, if any, on which shares of such series shall be convertible or exchangeable for shares of our stock of any other class or classes, or
other series of the same class;
● the voting rights, if any, of shares of such series; the status as to reissuance or sale of shares of such series redeemed, purchased or otherwise reacquired, or
surrendered to us on conversion or exchange;
● the conditions and restrictions, if any, on the payment of dividends or on the making of other distributions on, or the purchase, redemption or other acquisition
by us or any subsidiary, of the common stock or of any other class of our shares ranking junior to the shares of such series as to dividends or upon liquidation;
● the conditions and restrictions, if any, on the creation of indebtedness by us or by any subsidiary, or on the issuance of any additional stock ranking on a parity
with or prior to the shares of such series as to dividends or upon liquidation; and
● any additional dividend, liquidation, redemption, sinking or retirement fund and other rights, preferences, privileges, limitations and restrictions of such
preferred stock.
The description of the terms of a particular series of preferred stock in the applicable prospectus supplement will not be complete. You should refer to the applicable
amendment to our articles of incorporation, as amended, for complete information regarding a series of preferred stock.
The preferred stock will, when issued against payment of the consideration payable therefore, be fully paid and nonassessable.
111
Tonix Pharmaceuticals Holding Corp. 10-K
Exhibit 21.01
Subsidiary Name
State/ Jurisdiction of Incorporation/Formation
SUBSIDIARIES OF THE COMPANY
Tonix Pharmaceuticals, Inc.
Krele, LLC
Tonix Pharmaceuticals (Canada), Inc.
Tonix Pharma Holdings Limited
Tonix Pharma Limited
Jenner LLC
Tonix R&D Center, LLC
Tonix Medicines, Inc.
Delaware
Delaware
New Brunswick, Canada
Ireland
Ireland
Delaware
Delaware
Delaware
112
Tonix Pharmaceuticals Holding Corp. 10-K
Exhibit 23.01
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements of Tonix Pharmaceuticals Holding Corp. on Form S-1 (Nos. 333-234263 and 333-235976) Form S-
3 (Nos. 333-224586, 333-251500, 333-237610, and 333-254975) and Form S-8 (Nos. 333-202006, 333-212300, 333-219928, 333-226776, 333-232137, 333-239152, and 333-
257437) of our report dated March 14, 2022, on our audits of the consolidated financial statements as of December 31, 2021 and 2020 and for each of the years then ended,
which report is included in this Annual Report on Form 10-K. Our report includes an explanatory paragraph about the existence of substantial doubt concerning the Company's
ability to continue as a going concern.
/s/ EisnerAmper LLP
EISNERAMPER LLP
Iselin, New Jersey
March 14, 2022
113
Tonix Pharmaceuticals Holding Corp. 10-K
I, Seth Lederman, certify that:
1.
I have reviewed this annual report on Form 10-K of Tonix Pharmaceuticals Holding Corp.;
CERTIFICATION
Exhibit 31.01
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 reasonable 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 controls over
financial reporting.
Date: March 14, 2022
/s/ SETH LEDERMAN
Seth Lederman
Chief Executive Officer
114
Tonix Pharmaceuticals Holding Corp. 10-K
I, Bradley Saenger, certify that:
1.
I have reviewed this annual report on Form 10-K of Tonix Pharmaceuticals Holding Corp.;
CERTIFICATION
Exhibit 31.02
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 reasonable 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 controls over
financial reporting.
Date: March 14, 2022
/s/ BRADLEY SAENGER
Bradley Saenger
Chief Financial Officer
115
Tonix Pharmaceuticals Holding Corp. 10-K
Exhibit 32.01
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Seth Lederman, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Tonix
Pharmaceuticals Holding Corp. on Form 10-K for the fiscal year ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in this Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of
operations of Tonix Pharmaceuticals Holding Corp.
Date: March 14, 2022
/s/ SETH LEDERMAN
By:
Name: Seth Lederman
Title:
Chief Executive Officer
I, Bradley Saenger, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of Tonix
Pharmaceuticals Holding Corp. on Form 10-K for the fiscal year ended December 31, 2021 fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that information contained in this Annual Report on Form 10-K fairly presents in all material respects the financial condition and results of
operations of Tonix Pharmaceuticals Holding Corp.
Date: March 14, 2022
/s/ BRADLEY SAENGER
By:
Name: Bradley Saenger
Title:
Chief Financial Officer
116