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Healthcare

Soligenix Inc.

08/12/2022 | Press release | Distributed by Public on 08/12/2022 14:09

Quarterly Report for Quarter Ending June 30, 2022 (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File No. 000-16929

SOLIGENIX, INC.

(Exact name of registrant as specified in its charter)


DELAWARE		41-1505029
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)



29 EMMONS DRIVE, SUITE B-10PRINCETON,NJ		08540
(Address of principal executive offices)		(Zip Code)

(609) 538-8200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	SNGX	The Nasdaq Capital Market

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T 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, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-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 ☒

As of August 5, 2022, 43,105,191 shares of the registrant's common stock (par value, $.001 per share) were outstanding.

Table of Contents

SOLIGENIX, INC.

Index

	Description	Page

Part I	FINANCIAL INFORMATION

Item 1	Consolidated Financial Statements
	Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	2
	Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	3
	Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended June 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4	Controls and Procedures	48

Part II	OTHER INFORMATION

Item 1	Legal Proceedings	49
Item 1A	Risk Factors	50
Item 6	Exhibits	51

SIGNATURES	52

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Soligenix, Inc. and Subsidiaries

Consolidated Balance Sheets


	June 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	20,157,692		$	26,043,897
Licensing, contracts and grants receivable		321,779			138,889
Research and development incentives receivable		109,017			103,832
Prepaid expenses and other current assets		237,135			282,903
Total current assets		20,825,623			26,569,521
Security deposit		22,777			22,777
Office furniture and equipment, net of accumulated depreciation of $106,948 and $167,848		26,299			22,220
Deferred issuance cost		20,266			20,266
Right-of-use lease assets		393,226			106,155
Research and development incentives receivable		24,263			121,238
Other assets		-			7,750
Total assets	$	21,312,454		$	26,869,927

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	4,141,006		$	2,925,544
Accrued expenses		2,437,596			2,956,545
Accrued compensation		57,762			302,936
Lease liabilities, current		103,949			106,151
Convertible debt, current		2,000,000			-
Deferred revenue, current		100,000			-
Total current liabilities		8,840,313			6,291,176
Non-current liabilities:
Convertible debt, net of current portion and debt discount of $123,249 and $143,847		7,876,751			9,856,153
Lease liabilities, net of current portion		289,504			-
Deferred revenue, net of current portion		100,000			-
Total liabilities		17,106,568			16,147,329
Commitments and contingencies
Shareholders' equity:
Preferred stock, 350,000 shares authorized; none issued or outstanding		-			-
Common stock, $.001 par value; 75,000,000 shares authorized; 43,050,245 shares and 42,873,445 shares issuedand outstandingat June 30, 2022 and December 31, 2021, respectively		43,050			42,873
Additional paid-in capital		216,652,655			216,402,890
Accumulated other comprehensive income		11,069			41,942
Accumulated deficit		(212,500,888)			(205,765,107)
Total shareholders' equity		4,205,886			10,722,598
Total liabilities and shareholders' equity	$	21,312,454		$	26,869,927

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Soligenix, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)


		Three Months Ended		Six Months Ended
		June 30,		June 30,
	2022		2021		2022	2021
Revenues:
Licensing revenue	$	-		$	-	$	50,000	$	-
Contract revenue		-			-		-		33,351
Grant revenue		228,640			214,824		366,703		329,066
Total revenues		228,640			214,824		416,703		362,417
Cost of revenues		(193,304)			(204,317)		(285,517)		(326,677)
Gross profit		35,336			10,507		131,186		35,740
Operating expenses:
Research and development		2,047,839			1,936,608		3,794,607		3,246,130
General and administrative		1,382,793			1,062,558		3,924,261		2,011,876
Total operating expenses		3,430,632			2,999,166		7,718,868		5,258,006
Loss from operations		(3,395,296)			(2,988,659)		(7,587,682)		(5,222,266)
Other income (expense):
Gain on forgiveness of PPP loan		-			421,584		-		421,584
Foreign currency transaction (loss)/gain		94,900			17,330		(13,393)		44,583
Interest expense, net		(214,908)			(235,736)		(426,622)		(449,241)
Research and development incentives		(26,391)			23,671		136,981		81,052
Total other income (expense)		(146,399)			226,849		(303,034)		97,978
Net loss before income taxes		(3,541,695)			(2,761,810)		(7,890,716)		(5,124,288)
Income tax benefit		1,154,935			864,742		1,154,935		864,742
Net loss applicable to common stockholders	$	(2,386,760)		$	(1,897,068)	$	(6,735,781)	$	(4,259,546)
Basic and diluted net loss per share	$	(0.06)		$	(0.05)	$	(0.16)	$	(0.11)
Basic and diluted weighted average common shares outstanding		43,012,206			40,074,275		42,966,378		38,455,210

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Soligenix, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022		2021		2022	2021
Net loss	$	(2,386,760)		$	(1,897,068)	$	(6,735,781)	$	(4,259,546)
Other comprehensive loss:
Foreign currency translation adjustments		(113,523)			3,617		(30,873)		(7,721)
Comprehensive loss	$	(2,500,283)		$	(1,893,451)	$	(6,766,654)	$	(4,267,267)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Soligenix, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

For the Six Months Ended June 30, 2022 and 2021


								Accumulated
					Additional		Other
	Common Stock	Paid-In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income		Deficit		Total
Balance, December 31, 2021	42,873,445	$	42,873		$	216,402,890		$	41,942		$	(205,765,107)	$	10,722,598
Issuance of common stock to vendors	176,800		177			99,824			-			-		100,001
Share-based compensation expense	-		-			149,941			-			-		149,941
Foreign currency translation adjustment	-		-			-			(30,873)			-		(30,873)
Net loss	-		-			-			-			(6,735,781)		(6,735,781)
Balance, June 30, 2022	43,050,245	$	43,050		$	216,652,655		$	11,069		$	(212,500,888)	$	4,205,886


								Accumulated
					Additional		Other
	Common Stock	Paid-In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Loss		Deficit		Total
Balance, December 31, 2020	30,643,656	$	30,644		$	196,949,655		$	(24,337)		$	(193,214,134)	$	3,741,828
Issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement	9,435,091		9,435			16,480,894			-			-		16,490,329
Issuance costs associated with B. Riley At Market Issuance Sales Agreement	-		-			(544,177)			-			-		(544,177)
Exercise of warrants	13		-			51			-			-		51
Share-based compensation expense	-		-			175,426			-			-		175,426
Foreign currency translation adjustment	-		-			-			(7,721)			-		(7,721)
Net loss	-		-			-			-			(4,259,546)		(4,259,546)
Balance, June 30, 2021	40,078,760	$	40,079		$	213,061,849		$	(32,058)		$	(197,473,680)	$	15,596,190

Table of Contents

Soligenix, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

For the Three Months Ended June 30, 2022 and 2021


								Accumulated
					Additional		Other
	Common Stock	Paid-In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Income		Deficit		Total
Balance, March 31, 2022	42,954,091	$	42,954		$	216,531,081		$	124,592		$	(210,114,128)	$	6,584,499
Issuance of common stock to vendors	96,154		96			49,904			-			-		50,000
Share-based compensation expense	-		-			71,670			-			-		71,670
Foreign currency translation adjustment	-		-			-			(113,523)			-		(113,523)
Net loss	-		-			-			-			(2,386,760)		(2,386,760)
Balance, June 30, 2022	43,050,245	$	43,050		$	216,652,655		$	11,069		$	(212,500,888)	$	4,205,886


								Accumulated
					Additional		Other
	Common Stock	Paid-In		Comprehensive		Accumulated
	Shares	Par Value		Capital		Loss		Deficit		Total
Balance, March 31, 2021	40,020,461	$	40,020		$	212,890,844		$	(35,675)		$	(195,576,612)	$	17,318,577
Issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement	58,299		59			94,664			-			-		94,723
Issuance costs associated with B. Riley At Market Issuance Sales Agreement	-		-			(4,280)			-			-		(4,280)
Share-based compensation expense	-		-			80,621			-			-		80,621
Foreign currency translation adjustment	-		-			-			3,617			-		3,617
Net loss	-		-			-			-			(1,897,068)		(1,897,068)
Balance, June 30, 2021	40,078,760	$	40,079		$	213,061,849		$	(32,058)		$	(197,473,680)	$	15,596,190

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Soligenix, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021

(Unaudited)


	2022		2021
Operating activities:
Net loss	$	(6,735,781)		$	(4,259,546)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		16,744			17,739
Non-cash lease expense		60,475			56,698
Share-based compensation		149,941			175,426
Issuance of common stock to vendors for services		100,001			-
Amortization of deferred issuance costs associated with convertible debt		20,598			20,986
Gain on forgiveness of PPP loan		-			(421,584)
Change in operating assets and liabilities:
Licensing, contracts and grants receivable		(182,890)			86,094
Prepaid expenses and other current assets		45,768			76,879
Research and development incentives receivable		70,335			306,651
Operating lease liability		(60,244)			(56,698)
Deferred revenue		200,000			-
Accounts payable and accrued expenses		793,324			(838,749)
Accrued compensation		(245,174)			(808,043)
Net cash used in operating activities		(5,766,903)			(5,644,147)

Investing activities:
Purchases of office furniture and equipment		(13,073)			-
Net cash used in investing activities		(13,073)			-

Financing activities:
Proceeds from issuance of common stock pursuant to B. Riley At Market Issuance Sales Agreement		-			16,490,329
Costs associated with B. Riley At Market Issuance Sales Agreement		-			(496,450)
Proceeds from the exercise of warrants		-			51
Costs associated with issuance of convertible debt		-			(45,512)
Principal repayment - financing lease		-			(4,048)
Net cash provided by financing activities		-			15,944,370
Effect of exchange rate on cash and cash equivalents		(106,229)			3,083
Net (decrease)/increase in cash and cash equivalents		(5,886,205)			10,303,306
Cash and cash equivalents at beginning of period		26,043,897			18,676,663
Cash and cash equivalents at end of period	$	20,157,692		$	28,979,969
Supplemental information:
Cash paid for state income taxes	$	5,600		$	7,382
Cash paid for interest	$	432,751		$	444,814
Cash paid for lease liabilities:
Operating lease	$	66,650		$	66,650
Financing lease	$	-		$	4,272
Non-cash activities:
Right-of-use assets and lease liabilities recorded	$	347,546		$	-
Deferred issuance cost reclassified to additional paid-in capital	$	-		$	47,727

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

Soligenix, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Nature of Business

Basis of Presentation

Soligenix, Inc. (the "Company") is a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. The Company maintains two active business segments: Specialized BioTherapeutics and Public Health Solutions.

The Company's Specialized BioTherapeutics business segment is developing and moving toward commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic (hypericin), a novel photodynamic therapy ("PDT") utilizing safe visible light for the treatment of cutaneous T-cell lymphoma ("CTCL"). With a successful Phase 3 study complete, regulatory approval is being sought and commercialization activities for this product candidate are being advanced initially in the United States ("U.S."). Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, the Company's first-in-class innate defense regulator ("IDR") technology, dusquetide (SGX942) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer, and proprietary formulations of oral beclomethasone 17,21-dipropionate ("BDP") for the prevention/treatment of gastrointestinal ("GI") disorders characterized by severe inflammation, including pediatric Crohn's disease (SGX203).

The Company's Public Health Solutions business segment includes active development programs for RiVax^®, its ricin toxin vaccine candidate and SGX943, its therapeutic candidate for antibiotic resistant and emerging infectious disease, and vaccine programs, including a program targeting filoviruses (such as Marburg and Ebola) and a program developing CiVax™, its vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of the vaccine programs is currently supported by the heat stabilization platform technology, known as ThermoVax^®. To date, this business segment has been supported with grant and contract funding from the National Institute of Allergy and Infectious Diseases ("NIAID"), the Biomedical Advanced Research and Development Authority ("BARDA") and the Defense Threat Reduction Agency ("DTRA").

The Company primarily generates revenues under government grants and contracts principally from the National Institutes of Health ("NIH"). The Company has a subcontract of approximately $700,000 from a NIAID grant over five years for its thermostabilization technology, a DTRA subcontract of approximately $600,000 over three years for SGX943 and a subcontract of approximately $1.5 million from a NIAID grant over two years for development of CiVax™. The Company will continue to apply for additional government funding.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, development of new technological innovations, dependence on key personnel, protections of proprietary technology, compliance with the U.S. Food and Drug Administration (the "FDA") regulations, and other regulatory authorities, litigation, and product liability.

Results for the three and six months ended June 30, 2022 are not necessarily indicative of results that may be expected for the full year.

Table of Contents

Liquidity

In accordance with Accounting Standards Codification 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the consolidated financial statements are issued. As of June 30, 2022, the Company had an accumulated deficit of $212,500,888. During the six months ended June 30, 2022, the Company incurred a net loss of $6,735,781 and used $5,766,903 of cash in operating activities. The Company expects to continue to generate losses in the foreseeable future. The Company's liquidity needs will be determined largely by the budgeted operational expenditures incurred in regards to the progression of its product candidates. The Company's plans to meet its liquidity needs primarily include its ability to control the timing and spending on its research and development programs and raising additional funds through potential partnerships and/or financings. Based on the Company's approved operating budget, current rate of cash outflows, cash on hand, proceeds from government contract and grant programs, and proceeds available from the sale of shares of the Company's common stock via the At Market Issuance Sales Agreement ("B. Riley Sales Agreement") with B. Riley Securities, Inc. ("B. Riley"), management believes that its current cash will be sufficient to meet the anticipated cash needs for working capital and capital expenditures for at least the next twelve months from issuance of these financial statements.

As of June 30, 2022, the Company had cash and cash equivalents of $20,157,692 as compared to $26,043,897 as of December 31, 2021, representing a decrease of $5,886,205 or 23%. As of June 30, 2022, the Company had working capital of $11,985,310 as compared to working capital of $20,278,345 as of December 31, 2021, representing a decrease of $8,293,035 or 41%. The decrease in cash and cash equivalents and working capital was primarily related to cash used in operating activities.

Management's business strategy can be outlined as follows:

●

Following positive primary endpoint results for the Phase 3 FLASH (Florescent Light Activated Synthetic Hypericin) clinical trial of HyBryte™ in CTCL as well as further statistically significant improvement in response rates with longer treatment (18 weeks compared to 12 and 6 weeks of treatment), pursue a New Drug Application ("NDA") filing and commercialization in the U.S. while continuing to explore ex-U.S. partnership.

●	Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.

●

Following feedback from the United Kingdom ("UK") Medicines and Healthcare products Regulatory Agency ("MHRA") that a second Phase 3 clinical trial of SGX942 in the treatment in oral mucositis would be required to support a marketing authorization; design a second study and attempt to identify a potential partner(s) to continue this development program.

●	Continue development of the Company's heat stabilization platform technology, ThermoVax^®, in combination with its programs for RiVax^®(ricin toxin vaccine), CiVax™ (COVID-19 vaccine) and filovirus vaccines for Ebola, Sudan, and Marburg Viruses, with U.S. government funding support.

●	Continue to apply for and secure additional government funding for each of the Company's Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements.

●	Pursue business development opportunities for the Company's pipeline programs, as well as explore merger/acquisition strategies.

●	Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development.

Table of Contents

The Company's plans with respect to its liquidity management include, but are not limited to, the following:

●

The Company has up to $1.0million in active government grant funding still available as of June 30, 2022 to support its associated research programs through March 2023, provided the federal agencies do not elect to terminate the grants for convenience. The Company plans to submit additional contract and grant applications for further support of its programs with various funding agencies. However, there can be no assurance that the Company will obtain additional governmental grant funding.

●	The Company has continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expects to continue to do so for the foreseeable future.

●	The Company will continue to pursue Net Operating Loss ("NOL") sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if available.

●	The Company plans to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that the Company can consummate such transactions.

●	The Company has up to $26.8million remaining from the B. Riley Sales Agreement as of August 5, 2022 under the prospectus supplement updated August 13, 2021.

●

The Company may seek additional capital in the private and/or public equity markets, to continue its operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. The Company is evaluating additional equity/debt financing opportunities on an ongoing basis and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include Soligenix, Inc., and its wholly and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated as a result of consolidation.

Reclassifications

Certain amounts in the statement of operations for the three and six months ended June 30, 2021 have been reclassified to conform to the current year presentation.

Operating Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing the performance of the segment. The Company divides its operations into two operating segments: Specialized BioTherapeutics and Public Health Solutions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

Table of Contents

Licensing, Contracts and Grants Receivable

Contracts and grants receivable consist of amounts due from various grants from the NIH and contracts from NIAID, an institute of NIH, for costs incurred prior to the period end under reimbursement contracts. The amounts were billed to the respective governmental agencies in the month subsequent to period end and collected shortly thereafter. Accordingly, no allowance for doubtful accounts has been established. If amounts become uncollectible, they are charged to operations.

Licensing receivables consist of amounts billed to customers pursuant to contracts with those customers. No allowance for doubtful accounts has been established for licensing receivables as all amounts billed were collected shortly thereafter.

Impairment of Long-Lived Assets

Office furniture and equipment, right of use assets and website development costs with finite lives are evaluated and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company recognizes impairment of long-lived assets in the event the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to such assets. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and the carrying value of the related asset or group of assets. Such analyses necessarily involve significant judgment.

The Company did not record any impairment of long-lived assets for the three and six months ended June 30, 2022 and 2021.

Fair Value of Financial Instruments

FASB ASC 820 - Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on June 30, 2022. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.

FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

●

Level 1 - Quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

●

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models consider various assumptions, including volatility factors, current market prices and contractual prices for the underlying financial instruments. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

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●	Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, licensing, contracts and/or grants receivable, research and development incentives receivable, accounts payable, accrued expenses, and accrued compensation approximate their fair value based on the short-term maturity of these instruments.

The carrying amount reported in the consolidated balance sheets for convertible debt approximates its fair value based on its interest rate and maturity date.

Revenue Recognition

The Company's revenues include revenues generated from government contracts and grants. The revenue from government contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These revenues are recognized when expenses have been incurred by subcontractors or when the Company incurs reimbursable internal expenses that are related to the government contracts and grants.

The Company also records revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606 ("ASC 606"), Revenue From Contracts with Customers. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties are classified as license revenues. Sales-based royalties under the Company's license agreements would be recognized as royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue.

Research and Development Costs

Research and development costs are charged to expense when incurred in accordance with FASB ASC 730, Research and Development. Research and development includes costs such as clinical trial expenses, contracted research and license agreement fees with no alternative future use, supplies and materials, salaries, share-based compensation, employee benefits, equipment depreciation and allocation of various corporate costs.

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Share-Based Compensation

Stock options are issued with an exercise price equal to the market price on the date of grant. Stock options issued to directors upon re-election vest quarterly for a period of one year(new director issuances are fully vested upon issuance). Stock options issued to employees generally vest 25% on the grant date, then 25% each subsequent year for a period of three years. These options have a ten year life for as long as the individuals remain employees or directors. In general, when an employee or director terminates their position, the options will expire within three months, unless otherwise extended by the Board.

From time to time, the Company issues restricted shares of common stock to vendors and consultants as compensation for services performed under the Company's 2015 Equity Incentive Plan (the "2015 Plan"). The 2015 Plan provides for the grant of stock options, restricted stock, deferred stock and unrestricted stock to the Company's employees and non-employees (including consultants). The shares issued under the 2015 Plan are registered on Form S-8 (SEC File No. 333-208515). However, as shares of common stock are not covered by a reoffer prospectus, the certificates reflecting such shares reflect a Securities Act of 1933, as amended restrictive legend. Stock compensation expense for equity-classified awards to nonemployees is measured on the date of grant and is recognized when the services are performed.

The fair value of options issued during the six months ended June 30, 2022 and 2021 was estimated using the Black-Scholes option-pricing model and the following assumptions:

●	a dividend yield of 0%;

●	an expected life of 4 years;

●	volatility of 87%for 2022 and 2021; and

●	risk free interest rates ranging from 1.12%- 3.23%for 2022 and 0.27%- 0.60%for 2021.

The fair value of each option grant made during the six months ended June 30, 2022 and 2021 was estimated on the date of each grant and recognized as share-based compensation expense ratably over the option vesting periods, which approximates the service period.

Foreign Currency Transactions and Translation

In 2018, the Company changed the status of a wholly-owned subsidiary in the UK from inactive to active and incurred expenditures in multiple currencies including the U.S. dollar, the British Pound and the Euro to fund its clinical trial operations in the UK and select countries in Europe. In accordance with FASB ASC 830 Foreign Currency Matters, the UK subsidiary expresses its U.S. dollar and Euro denominated transactions in its functional currency, the British Pound, with related transaction gains or losses included in net loss. On a quarterly basis, the financial statements of the UK subsidiary are translated into U.S. dollars and consolidated into the Company's financials, with related translation adjustments reported as a cumulative translation adjustment ("CTA"), which is a component of accumulated other comprehensive loss. During the three months ended June 30, 2022 and 2021, the Company recognized a foreign currency transaction gain of $94,900 and $17,330, respectively, in the accompanying consolidated statements of operations. During the six months ended June 30, 2022 and 2021, the Company recognized a foreign currency transaction (loss) and gain of ($13,393) and $44,583, respectively, in the accompanying consolidated statements of operations.

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Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence is considered, including the Company's current and past performance, the market environment in which the Company operates, the utilization of past tax credits, and the length of carryback and carryforward periods. Deferred tax assets and liabilities are measured utilizing tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company recognized an income tax benefit of $1,154,935 and $864,742 from the sale of New Jersey NOL carryforwards during both the three and six months ended June 30, 2022 and 2021, respectively. The Company recognizes accrued interest and penalties associated with uncertain tax positions, if any, as part of income tax expense. There were no tax related interest and penalties recorded for the six months ended June 30, 2022 and 2021. Additionally, the Company has not recorded an asset for unrecognized tax benefits or a liability for uncertain tax positions at June 30, 2022 or December 31, 2021.

Research and Development Incentive Income and Receivable

The Company recognizes other income from UK research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The small or medium sized enterprise ("SME") research and development tax relief program supports companies that seek to research and develop an advance in their field and is governed through legislative law by HM Revenue & Customs as long as specific eligibility criteria are met.

Management has assessed the Company's research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the SME research and development tax relief program described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time. As the tax incentives may be received without regard to an entity's actual tax liability, they are not subject to accounting for income taxes. As a result, amounts realized under the SME research and development tax relief program are recorded as a component of other income.

The research and development incentive receivable represents an amount due in connection with the above-described tax relief program. The Company has recorded a research and development incentive receivable of approximately $133,000 and $225,000 as of June 30, 2022 and December 31, 2021, respectively, in the consolidated balance sheets.

The following table shows the change in the UK research and development incentives receivable from December 31, 2021 to June 30, 2022:


	Current		Long-Term		Total
Balance at December 31, 2021	$	103,832		$	121,238	$	225,070
UK research and development incentives, transfer		121,238			(121,238)		-
UK research and development incentives		-			29,075		29,075
Additional 2020 incentive earned		107,906			-		107,906
UK research and development incentives cash receipt		(209,166)			-		(209,166)
Foreign currency translation		(14,793)			(4,812)		(19,605)
Balance at June 30, 2022	$	109,017		$	24,263	$	133,280

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Loss Per Share

Basic earnings per share ("EPS") excludes dilution and is computed by dividing loss applicable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity. Since there is a significant number of options and warrants outstanding, fluctuations in the actual market price can have a variety of results for each period presented.

The following table summarizes potentially dilutive adjustments to the number of common shares which were excluded from the diluted calculation because their effect would be anti-dilutive due to the losses in each period:


	As of June 30,
	2022	2021
Common stock purchase warrants	59,872	5,731,464
Stock options	2,195,306	1,939,386
Convertible debt	2,439,024	2,439,024
Total	4,694,202	10,109,874

The weighted average exercise price of the Company's warrants and stock options outstanding at June 30, 2022 were $2.41 and $2.30 per share, respectively, and at June 30, 2021 were $2.96 and $2.75 per share, respectively. 2,403,385 of the Company's common stock warrants associated with the December 2016 public offering expired on December 15, 2021 and 3,268,200 of the Company's common stock warrants associated with the July 2018 public offering expired on January 2, 2022.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions such as the fair value of warrants and stock options and to accrue for clinical trials in process that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

Note 3. Leases

The Company classifies a lease for its office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey as an operating lease, and recorded a related right-of-use lease asset and lease liability accordingly. Pursuant to an amendment executed on June 21, 2022, the lease has been extended to October 2025. The current rent of $11,108 per month, or approximately $21.50 per square foot will be maintained until November 2023 when it will be increased to $11,367 or approximately $22.00 per square foot and then will increase to $11,625 or approximately $22.50 per square foot in November 2024 where it will remain until expiration. As of June 30, 2022 and December 31, 2021, the Company's consolidated balance sheets included a right-of-use lease asset of $393,226 and $106,155 for the office space, respectively. The Company's consolidated balance sheets as of June 30, 2022 and December 31, 2021 included corresponding lease liabilities of $393,453 and $106,151 for the office space, respectively.

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The following represents a reconciliation of contractual lease cash flows to the right-of-use lease asset and liability recognized in the financial statements:


	Operating
	Lease
Right-of-use lease asset:
Right-of-use lease asset, January 1, 2022	$	106,155
New lease extension 6/21/2022		347,546
Reduction/amortization		(60,475)
Right of use lease asset, June 30, 2022	$	393,226

Lease liability:
Lease liability, January 1, 2022	$	106,151
New lease extension 6/21/2022		347,546
Repayments		(60,244)
Lease liability, June 30, 2022	$	393,453

Lease expense for the six months ended June 30, 2022:
Lease expense	$	66,881
Total	$	66,881

Lease expense for the six months ended June 30, 2021:
Lease expense	$	66,650
Total	$	66,650

Contractual cash payments for the remaining lease term as of June 30, 2022:
2022	$	66,650
2023		133,817
2024		136,917
2025		116,250
Total	$	453,634
Remaining lease term (months) as of June 30, 2022		40

Note 4. Accrued Expenses

The following is a summary of the Company's accrued expenses:


	June 30,		December 31,
	2022		2021
Clinical trial expenses	$	2,019,712		$	2,625,779
Other		417,884			330,766
Total	$	2,437,596		$	2,956,545

Note 5. Debt

In December 2020, the Company entered into a $20 million convertible debt financing agreement with Pontifax Medison Debt Financing ("Pontifax"), the healthcare-dedicated venture and debt fund of the Pontifax life science funds. Under the terms of the agreement with Pontifax, the Company had access to up to $20.0 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and have an interest only period for the first twoyears with an interest rate of 8.47% on borrowed amounts and an interest rate of 1% on amounts available but not borrowed as an unused line of credit fee. After the interest-only period, the outstanding principal is to be repaid in quarterly payments of $1 million each commencing in the first quarter of 2023. The agreement is secured by a lien covering substantially all of the Company's assets, other than intellectual property. The agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens, including on intellectual property, guaranties,

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mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual property and comply with all applicable laws, deliver certain financial reports, maintain a minimum cash balance and maintain our insurance coverage.

Upon the closing of this transaction, the Company accessed the first tranche of $10 million, had the option to draw the second tranche of $5 million at any time during the initial 12 months of the loan and the third tranche of $5 million upon filing of the HyBryte™ NDA, subject to certain conditions. The Company elected to let the options to borrow both the second and third tranches expire as of December 15, 2021 and March 15, 2022, respectively.

Interest expense incurred during the three months ended June 30, 2022 and 2021 was $211,170 and $223,636, respectively. Interest expense incurred during the six months ended June 30, 2022 and 2021 was $420,019 and $444,814, respectively.

Pontifax may elect to convert the outstanding loan drawn into shares of the Company's common stock at any time prior to repayment at a conversion price of $4.10 per share. The Company also has the ability to force the conversion of the loan into shares of the Company's common stock at the same conversion price, subject to certain conditions.

Annual principal and interest payments due, assuming no conversion is as follows:


Year	Principal		Interest		Total
2022	$	-		$	426,981	$	426,981
2023		4,000,000			719,138		4,719,138
2024		4,000,000			380,338		4,380,338
2025		2,000,000			60,566		2,060,566
Total	$	10,000,000		$	1,587,023	$	11,587,023

Note 6. Income Taxes

The Company had gross NOLs at December 31, 2021 of approximately $123.8 million for federal tax purposes, approximately $25.2 million for state tax purposes and approximately $1.4 million for foreign tax purposes. Federal losses generated in 2018 or later will carry forward indefinitely. In addition, the Company has approximately $8.6 million of various tax credits, which the Company may be able to utilize to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code ("IRC") Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carryforwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is likely that the utilization of the NOLs may be substantially limited.

The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions. During 2021 and 2020, in accordance with the State of New Jersey's Technology Business Tax Certificate Program, which allowed certain high technology and biotechnology companies to sell unused NOL carryforwards to other New Jersey-based corporate taxpayers, the Company sold New Jersey NOL carryforwards, resulting in the recognition of $1,154,935 and $864,742 of income tax benefit, net of transaction costs, during both the three and six months ended June 30, 2022 and 2021, respectively. The Company has not yet sold its 2021 New Jersey NOLs but may be able to do so in the future. There can be no assurance as to the continuation or magnitude of this program in the future.

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Note 7. Shareholders' Equity

Preferred Stock

The Company has 350,000 shares of preferred stock authorized, none of which are issued or outstanding.

Common Stock

The following items represent transactions in the Company's common stock for the six months ended June 30, 2022:

●	The Company issued a vendor 80,646shares of fully vested common stock with a fair value of $0.62per share on February 7, 2022.

●	The Company issued a vendor 96,154shares of fully vested common stock with a fair value of $0.52per share on May 6, 2022.

The issuance of the Company's common stock to the vendor as described above was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended. The vendor is knowledgeable, sophisticated and experienced in making investment decisions of this kind and received adequate information about the Company or had adequate access to information about the Company. The vendor represented to the Company that the vendor is not a "consultant" for purposes of Nasdaq Listing Rule 5635(c).

B. Riley At Market Issuance Sales Agreement

In August 2017, the Company entered into the B. Riley Sales Agreement to sell shares of the Company's common stock from time to time, through an "at-the-market" equity offering program under which B. Riley acts as sales agent. Under the B. Riley Sales Agreement, the Company sets the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales may be requested to be made, limitation on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. The B. Riley Sales Agreement provides that B. Riley is entitled to compensation for its services in an amount equal to 3% of the gross proceeds from the sale of shares sold under the B. Riley Sale Agreement. The Company has no obligation to sell any shares under the B. Riley Sales Agreement, and may suspend solicitation and offers under the B. Riley Sales Agreement at any time.

On August 13, 2021, the Company filed a prospectus supplement relating to the B. Riley Sales Agreement to offer and sell shares of Company common stock having an aggregate offering price of up to $30 million under the July 2020 Registration Statement. As of August 5, 2022, there was $26.8 million available for future sale of common stock under the B. Riley Sales Agreement.

Note 8. Concentrations

At June 30, 2022 and 2021, the Company had deposits in major financial institutions that exceeded the amount under protection by the Federal Deposit Insurance Corporation ("FDIC"). Currently, the Company is covered up to $250,000 by the FDIC and at times maintains cash balances in excess of the FDIC coverage.

Note 9. Commitments and Contingencies

Contractual Obligations

The Company has commitments of approximately $267,500 as of June 30, 2022 over the next five years for several licensing agreements with partners and universities. Additionally, the Company has collaboration and license agreements, which upon clinical or commercialization success, may require the payment of milestones of up to approximately $13.2 million, royalties on net sales of covered products ranging from 2% to 3%, sub-

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license Investigational New Drug ("IND") milestones on covered products of up to approximately $200,000, sub-license income royalties on covered products up to 15% and sub-license global net sales royalties on covered products ranging from 1.5% to 2.5%, if and when achieved. However, there can be no assurance that clinical or commercialization success will occur.

The Company currently leases approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey. This office space currently serves as the Company's corporate headquarters, and both of the Company's business segments (Specialized BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025.

In September 2014, the Company entered into an asset purchase agreement with Hy Biopharma Inc. ("Hy Biopharma") pursuant to which the Company acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma's synthetic hypericin product. As consideration for the assets acquired, the Company paid $275,000 in cash and issued 184,912 shares of common stock with a fair value based on the Company's stock price on the date of grant of $3.75 million. These amounts were charged to research and development expense during the third quarter of 2014 as the assets will be used in the Company's research and development activities and do not have alternative future use pursuant to generally accepted accounting principles in the U.S. In March 2020, the Company issued 1,956,182 shares of common stock to Hy Biopharma as payment for achieving a milestone: the Company determining the Phase 3 clinical trial of HyBryte™ to be successful in the treatment of CTCL. The number of shares of common stock issued to Hy Biopharma was calculated using an effective price of $2.56 per share, based upon a formula set forth in the purchase agreement.

Provided the sole remaining future success-oriented milestone is attained, the Company will be required to make an additional payment of $5.0 million, if and when achieved. Such payment will be payable in restricted securities of the Company provided such number of shares does not exceed 19.9% ownership of the Company's outstanding stock. As of June 30, 2022, no other milestone or royalty payments have been paid or accrued.

As a result of the above agreements, the Company has the following contractual obligations:


	Research and		Property and
Year	Development		Other Leases		Total
July 1 through December 31, 2022	$	33,500		$	66,650	$	100,150
2023		96,000			133,817		229,817
2024		46,000			136,917		182,917
2025		46,000			116,250		162,250
2026		46,000			-		46,000
Total	$	267,500		$	453,634	$	721,134

Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. A liability is only recorded if management determines that it is both probable and reasonably estimable.

COVID-19

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business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The continued global spread of COVID-19 has affected the Company's operations but did not have a material impact on our business, operating results, financial condition or cash flows as of and for the three and six months ended June 30, 2022.

The future impact of the outbreak is highly uncertain and cannot be predicted, and the Company cannot provide any assurance that the outbreak will not have a material adverse impact on the Company's operations or future results or filings with regulatory health authorities. The extent of the impact to the Company, if any, will depend on future developments, including actions taken to contain the coronavirus.

Emergent BioSolutions Legal Proceedings

In July 2020, the Company filed a demand for arbitration against Emergent BioSolutions, Inc. and certain of its subsidiaries (collectively, "Emergent") with the American Arbitration Association in Mercer County, New Jersey. The Company alleges in the arbitration various breaches of contracts and warranties as well as acts of fraud. Emergent has answered that demand for arbitration denying the allegations and asserting affirmative defenses. The Company presented its case at an arbitration hearing over 12 days in January 2022. Following submission of post-hearing briefs, the arbitration panel heard closing oral arguments in April 2022 (see Part II, Item 1 - Legal Proceeding). The Company was seeking to recover damages in excess of $19 million from Emergent.

OnJuly 6, 2022, the American Arbitration Association entered a final decision in connection with this arbitration. Despite the arbitration panel ruling that Emergent had committed a number of breaches of the parties' contracts, the panel did not award monetary damages to the Company. Management is reviewing the decision and is weighing its options for challenging this outcome. The Company cannot offer any assurances as to any result of the potential challenge of the arbitration decision or that the Company will recover any damages from Emergent.

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Note 10. Operating Segments

The Company maintains two active operating segments: Specialized BioTherapeutics and Public Health Solutions. Each segment includes an element of overhead costs specifically associated with its operations, with its corporate shared services group responsible for support functions generic to both operating segments.


	Three Months Ended
	June 30,
	2022		2021
Revenues
Specialized BioTherapeutics	$	-		$	-
Public Health Solutions		228,640			214,824
Total	$	228,640		$	214,824

Loss from Operations
Specialized BioTherapeutics	$	(2,000,350)		$	(1,720,566)
Public Health Solutions		(1,002)			(231,954)
Corporate		(1,393,944)			(1,036,139)
Total	$	(3,395,296)		$	(2,988,659)

Amortization and Depreciation Expense
Specialized BioTherapeutics	$	2,783		$	1,862
Public Health Solutions		463			311
Corporate		5,266			6,667
Total	$	8,512		$	8,840

Other (Expense) Income, Net
Specialized BioTherapeutics	$	68,509		$	41,001
Corporate		(214,908)			185,848
Total	$	(146,399)		$	226,849

Share-Based Compensation
Specialized BioTherapeutics	$	28,343		$	28,731
Public Health Solutions		1,054			7,189
Corporate		42,273			44,701
Total	$	71,670		$	80,621

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	Six Months Ended
	June 30,
	2022		2021
Revenues
Specialized BioTherapeutics	$	-		$	-
Public Health Solutions		416,703			362,417
Total	$	416,703		$	362,417

Loss from Operations
Specialized BioTherapeutics	$	(3,540,078)		$	(2,832,974)
Public Health Solutions		(121,623)			(362,735)
Corporate		(3,925,981)			(2,026,557)
Total	$	(7,587,682)		$	(5,222,266)

Amortization and Depreciation Expense
Specialized BioTherapeutics	$	5,397		$	3,761
Public Health Solutions		899			627
Corporate		10,448			13,351
Total	$	16,744		$	17,739

Other (Expense) Income, Net
Specialized BioTherapeutics	$	123,588		$	125,635
Corporate		(426,622)			(27,657)
Total	$	(303,034)		$	97,978

Share-Based Compensation
Specialized BioTherapeutics	$	56,847		$	58,310
Public Health Solutions		2,108			13,484
Corporate		90,986			103,632
Total	$	149,941		$	175,426


	As of		As of
	June 30,		December 31,
	2022		2021
Identifiable Assets
Specialized BioTherapeutics	$	167,524		$	128,645
Public Health Solutions		330,545			146,296
Corporate		20,814,385			26,594,986
Total	$	21,312,454		$	26,869,927

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information to explain our results of operations and financial condition. You should also read our unaudited consolidated interim financial statements and their notes included in this Form 10-Q, and our audited consolidated financial statements and their notes, Risk Factors and other information included in our Annual Report on Form 10-K for the year ended December 31, 2021. We provide addresses to internet sites solely for the information to investors. We do not intend any addresses to be active links or to otherwise incorporate the contents of any website into this report.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that reflect our current expectations about our future results, performance, prospects and opportunities. These forward-looking statements are not guarantees of future performance and are subject to significant risks, uncertainties, assumptions and other factors, which are difficult to predict and may cause actual results to differ materially from those expressed in, or implied by, any forward-looking statements. The forward-looking statements within this report may be identified by words such as "believes," "anticipates," "expects," "intends," "may," "would," "will" and other similar expressions. However, these words are not the exclusive means of identifying these statements. Statements that are not historical facts are based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the industry and markets related to our business and are forward-looking statements.

Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Important factors which may affect these actual outcomes and results include, without limitation:

●	uncertainty as to whether our product candidates will be sufficiently safe and effective to support regulatory approvals;

●	uncertainty inherent in developing therapeutics and vaccines, and manufacturing and conducting preclinical and clinical trials;

●	our ability to obtain future financing or funds when needed, either through the raising of capital, the incurrence of convertible or other indebtedness or through strategic financing or commercialization partnerships;

●	that product development and commercialization efforts will be reduced or discontinued due to difficulties or delays in clinical trials or a lack of progress or positive results from research and development efforts;

●	maintenance and progression of our business strategy;

●	the possibility that our products under development may not gain market acceptance;

●	our expectations about the potential market sizes and market participation potential for our product candidates may not be realized;

●	our expected revenues (including sales, milestone payments and royalty revenues) from our product candidates and any related commercial agreements of ours may not be realized;

●

the ability of our manufacturing partners to supply us or our commercial partners with clinical or commercial supplies of our products in a safe, timely and regulatory compliant manner and the ability of such partners to timely address any regulatory issues that have arisen or may arise in the future;

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●	competition existing today or that may arise in the future, including the possibility that others may develop technologies or products superior to our products;

●	the effect that global pathogens could have on financial markets, materials sourcing, service providers, patients, clinical study sites, governments and population (e.g. Coronavirus Disease 2019 ("COVID-19")); and

●	other factors, including those "Risk Factors" set forth under Part II, Item 1A. "Risk Factors" in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2021.

Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances occurring subsequent to the filing of this Form 10-Q with the United States ("U.S.") Securities and Exchange Commission (the "SEC") or for any other reason. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

Our Business Overview

We are a late-stage biopharmaceutical company focused on developing and commercializing products to treat rare diseases where there is an unmet medical need. We maintain two active business segments: Specialized BioTherapeutics and Public Health Solutions.

Our Specialized BioTherapeutics business segment is developing and moving toward potential commercialization of HyBryte™ (a proposed proprietary name of SGX301 or synthetic hypericin), a novel photodynamic therapy ("PDT"), utilizing topical synthetic hypericin activated with safe visible light for the treatment of cutaneous T-cell lymphoma ("CTCL"). With a successful Phase 3 study completed, regulatory approval is being sought and commercialization activities for this product candidate are being advanced initially in the U.S. Development programs in this business segment also include expansion of synthetic hypericin (SGX302) into psoriasis, our first-in-class innate defense regulator ("IDR") technology, dusquetide (SGX942) for the treatment of inflammatory diseases, including oral mucositis in head and neck cancer, and proprietary formulations of oral beclomethasone 17,21-dipropionate ("BDP") for the prevention/treatment of gastrointestinal ("GI") disorders characterized by severe inflammation including pediatric Crohn's disease (SGX203).

Our Public Health Solutions business segment includes active development programs for RiVax^®, our ricin toxin vaccine candidate and SGX943, our therapeutic candidate for antibiotic resistant and emerging infectious disease and our vaccine programs targeting filoviruses (such as Marburg and Ebola) and CiVax™, our vaccine candidate for the prevention of COVID-19 (caused by SARS-CoV-2). The development of our vaccine programs incorporates the use of our proprietary heat stabilization platform technology, known as ThermoVax^®. To date, this business segment has been supported with government grant and contract funding from the National Institute of Allergy and Infectious Diseases ("NIAID"), the Biomedical Advanced Research and Development Authority ("BARDA") and the Defense Threat Reduction Agency ("DTRA").

An outline of our business strategy follows:

●

●	Expanding development of synthetic hypericin under the research name SGX302 into psoriasis with the conduct of a Phase 2a clinical trial, following the positive Phase 3 FLASH study and positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients.

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●

Continue development of our therapeutic SGX943 and our heat stabilization platform technology, ThermoVax^®, in combination with our programs for RiVax^®(ricin toxin vaccine), CiVax™ (COVID-19 vaccine) and filovirus vaccines (targeting Ebola, Sudan, and Marburg viruses), with U.S. government funding support.

●	Continue to apply for and secure additional government funding for each of our Specialized BioTherapeutics and Public Health Solutions programs through grants, contracts and/or procurements.

●	Pursue business development opportunities for our pipeline programs, as well as explore all strategic alternatives, including but not limited to merger/acquisition strategies.

●	Acquire or in-license new clinical-stage compounds for development, as well as evaluate new indications with existing pipeline compounds for development.

Corporate Information

We were incorporated in Delaware in 1987 under the name Biological Therapeutics, Inc. In 1987, we merged with Biological Therapeutics, Inc., a North Dakota corporation, pursuant to which we changed our name to "Immunotherapeutics, Inc." We changed our name to "Endorex Corp." in 1996, to "Endorex Corporation" in 1998, to "DOR BioPharma, Inc." in 2001, and finally to "Soligenix, Inc." in 2009. Our principal executive offices are located at 29 Emmons Drive, Suite B-10, Princeton, New Jersey 08540 and our telephone number is (609) 538-8200.

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Our Product Candidates in Development

The following tables summarize our product candidates under development:

Specialized BioTherapeutics Product Candidates*


Soligenix Product Candidate	Therapeutic Indication	Stage of Development
HyBryte™	Cutaneous T-Cell Lymphoma	Phase 2 trial completed; demonstrated significantly higher response rate compared to placebo; Phase 3 trial completed; demonstrated statistical significance in primary endpoint in March 2020 (Cycle 1) and demonstrated continued improvement in treatment response with extended treatment in April 2020 (Cycle 2) and October 2020 (Cycle 3); NDA filing planned for Q4 2022

SGX302	Mild-to-Moderate Psoriasis	Positive proof-of-concept demonstrated in a small Phase 1/2 pilot study; Phase 2a protocol and Investigation New Drug ("IND") clearance received from the Food and Drug Administration ("FDA"); Phase 2a study initiation anticipated Q4 2022

SGX942	Oral Mucositis in Head and Neck Cancer	Phase 2 trial completed; demonstrated significant response compared to placebo with positive long-term (12 month) safety also reported; Phase 3 clinical trial results announced December 2020: the primary endpoint of median duration of severe oral mucositis ("SOM") did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group; analyze full dataset from Phase 3 study and design a second Phase 3 clinical trial

SGX203†	Pediatric Crohn's disease	Phase 1/2 clinical trial completed; efficacy data, pharmacokinetic(PK)/pharmacodynamic(PD) profile and safety profile demonstrated; Phase 3 clinical trial initiation contingent upon additional funding, such as through partnership

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Public Health Solutions*†


Soligenix Product Candidate	Therapeutic Indication	Stage of Development
ThermoVax^®	Thermostability of vaccines for Ricin toxin, Ebola, Marburg and SARS-CoV-2 (COVID-19) viruses	Pre-clinical

RiVax^®	Vaccine against Ricin Toxin Poisoning	Phase 1a and 1b trials completed, safety and neutralizing antibodies for protection demonstrated; Phase 1c trial initiated December 2019, closed January 2020

SGX943	Therapeutic against Emerging Infectious Diseases	Pre-clinical

CiVax™	Vaccine against COVID-19	Pre-clinical

* Timelines subject to potential disruption due to COVID-19 outbreak.

†	Contingent upon continued government contract/grant funding or other funding source.

Specialized BioTherapeutics Overview

Synthetic Hypericin

Synthetic Hypericin is a potent photosensitizer that is topically applied to skin lesions, taken up by cutaneous T-cells and then activated by safe visible light. Hypericin is also found in several species of Hypericum plants, although this active moiety is chemically synthesized by a proprietary manufacturing process and not extracted from plants. Importantly, hypericin is optimally activated with visible light thereby avoiding the negative consequences of ultraviolet ("UV") light. Other light therapies using UVA or UVB light can result in serious adverse effects including secondary skin cancers.

Combined with photoactivation, in clinical trials synthetic hypericin has demonstrated significant anti-proliferative effects on activated normal human lymphoid cells and inhibited growth of malignant T-cells isolated from CTCL patients. In both settings, it appears that the mode of action is an induction of cell death in a concentration as well as a light dose-dependent fashion. These effects appear to result, in part, from the generation of singlet oxygen during photoactivation of hypericin.

Synthetic hypericin is one of the most efficient known generators of singlet oxygen, the key component for phototherapy. The generation of singlet oxygen induces necrosis and apoptosis in adjacent cells. The use of topical synthetic hypericin coupled with directed visible light results in generation of singlet oxygen only at the treated site. We believe that the use of visible light (as opposed to cancer-causing UV light) is a major advance in photodynamic therapy. In a small published Phase 1/2 proof of concept pilot clinical study using synthetic hypericin twice weekly for six weeks, statistically significant efficacy was demonstrated in patients with CTCL (58.3% response, p=0.04) and psoriasis (80% response, p<0.02). Subsequently, a pivotal Phase 3 study in CTCL has further confirmed the biological efficacy of synthetic hypericin (termed HyBryte™ in the context of CTCL).

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HyBryte™ - for Treating Cutaneous T-Cell Lymphoma

HyBryte™ is a novel, first-in-class, PDT that utilizes safe visible light for activation. The active ingredient in HyBryte™ is synthetic hypericin, a photosensitizer which is topically applied to skin lesions and then activated by visible fluorescent light 16 to 24 hours later.

Based on the positive and previously published Phase 1/2 results, we initiated our pivotal Phase 3 clinical study of HyBryte™ for the treatment of CTCL during December 2015 and completed the trial in 2020. This trial, referred to as the "FLASH" (Fluorescent Light Activated Synthetic Hypericin) study, aimed to evaluate the response to HyBryte™ as a skin directed therapy to treat early stage CTCL. We completed the study with approximately 35 CTCL centers across the U.S. participating in this pivotal trial. The Phase 3 protocol was a highly powered, double-blind, randomized, placebo-controlled, multicenter trial that enrolled 169 subjects (166 evaluable). The trial consisted of three treatment cycles, each of eight weeks duration. Treatments were administered twice weekly for the first six weeks and treatment response was determined at the end of the eighth week. In the first treatment cycle, approximately 66% of subjects received HyBryte™ and 33% received placebo treatment of their index lesions. In the second cycle, all subjects received HyBryte™ treatment of their index lesions, and in the third cycle, all subjects received HyBryte™ treatment of all of their lesions. The majority of subjects enrolled elected to continue into the third optional, open-label cycle of the study. Subjects were followed for an additional six months after their last evaluation visit. The primary efficacy endpoint was assessed on the percentage of patients in each of the two treatment groups (i.e., HyBryte™ and placebo) achieving a partial or complete response of the treated lesions, defined as a ≥ 50% reduction in the total Composite Assessment of Index Lesion Disease Severity ("CAILS") score for three index lesions at the Cycle 1 evaluation visit (Week 8) compared to the total CAILS score at baseline. Secondary endpoints for the trial included the duration of responses, the extent of the regression of the tumors, and the safety of the treatment. We continue to work closely with the Cutaneous Lymphoma Foundation, as well as the National Organization for Rare Disorders.

Positive primary endpoint analysis for the Phase 3 study for HyBryte™ was completed in March 2020. The study enrolled 169 patients (166 evaluable) randomized 2:1 to receive either HyBryte™ (116 patients) or placebo (50 patients) and demonstrated a statistically significant treatment response (p=0.04) in the CAILS primary endpoint assessment at 8 weeks for Cycle 1. A total of 16% of the patients receiving HyBryte™ achieved at least a 50% reduction in their index lesions compared to only 4% of patients in the placebo group at 8 weeks. HyBryte™ treatment in the first cycle was safe and well tolerated.

Analysis of the second open-label treatment cycle (Cycle 2) was completed in April 2020, showing that continued treatment with HyBryte™ twice weekly for an additional 6 weeks (12 weeks total) increased the positive response rate to 40% (p<0.0001 compared to placebo and p<0.0001 compared to 6-weeks treatment). After the subsequent additional 6-week treatment, the response rate in patients receiving a total of 12 weeks treatment increased two and a half-fold. Treatment responses were assessed at Week 8 (after 6 weeks of treatment) and at Week 16 (after 12 weeks of treatment). A positive response was defined as an improvement of at least 50% in the CAILS score for the three index lesions evaluated in both Cycles 1 and 2. The data continued to indicate that HyBryte™ was safe and well tolerated.

Analysis of the optional third open-label treatment cycle (Cycle 3) was completed in October 2020. Cycle 3 was focused on safety and all patients could elect to receive HyBryte™ treatment of all their lesions for an additional 6 weeks or up to 18 weeks in total. Of note, 66% of patients elected to continue with this optional safety cycle of the study. Of the subset of patients that received HyBryte™ throughout all three cycles of treatment (18 weeks), 49% of them demonstrated a treatment response (p=0.046 vs. patients completing 12 weeks of HyBryte™ treatment in Cycle 2; p<0.0001 vs. patients receiving placebo in Cycle 1). Moreover, in a subset of patients evaluated in this cycle, it was demonstrated that HyBryte™ is not systemically available, consistent with the general safety of this topical product observed to date. At the end of Cycle 3, HyBryte™ continued to be well tolerated despite extended and increased use of the product to treat multiple lesions.

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In addition, continued analysis of results from the protocol mandated efficacy cycles (Cycles 1 and 2) of the study revealed that 12 weeks of treatment (Cycle 2) with HyBryte™ is equally effective on both patch (response 37%, p=0.0009) and plaque (response 42%, p<0.0001) lesions when compared to Cycle 1 placebo lesion responses, further demonstrating the unique benefits of the more deeply penetrating visible light activation of hypericin.

HyBryte™ has received Orphan Drug designation as well as Fast Track designation from the FDA. The Orphan Drug Act is intended to assist and encourage companies to develop safe and effective therapies for the treatment of rare diseases and disorders. In addition to providing a seven-year term of market exclusivity for HyBryte™ upon final FDA approval, Orphan Drug designation also positions us to be able to leverage a wide range of financial and regulatory benefits, including government grants for conducting clinical trials, waiver of FDA user fees for the potential submission of an NDA for HyBryte™, and certain tax credits. In addition, Fast Track is a designation that the FDA reserves for a drug intended to treat a serious or life-threatening condition and one that demonstrates the potential to address an unmet medical need for the condition. Fast Track designation is designed to facilitate the development and expedite the review of new drugs. For instance, should events warrant, we will be eligible to submit an NDA for HyBryte™ on a rolling basis, permitting the FDA to review sections of the NDA prior to receiving the complete submission. Additionally, NDAs for Fast Track development programs ordinarily will be eligible for priority review. HyBryte™ for the treatment of CTCL also was granted Orphan Drug designation from the European Medicines Agency ("EMA") Committee for Orphan Medical Products and Promising Innovative Medicine ("PIM") designation from the MHRA, as well as Innovation Passport under the Innovative Licensing and Access Pathway ("ILAP") in the UK.

During January 2021, we signed an exclusive Supply, Distribution and Services Agreement with The Daavlin Distributing Co. ("Daavlin"), securing long-term supply and distribution of a commercially ready light device, which is an integral component of the regulatory and commercial strategy for HyBryte™ for the treatment of CTCL. Pursuant to the agreement, Daavlin will exclusively manufacture the proprietary light device for use with HyBryte™ for the treatment of CTCL. Upon approval of HyBryte™ by the FDA, we will promote HyBryte™ and the companion light device, and facilitate the direct purchase of the device from Daavlin. Daavlin will exclusively distribute and sell the HyBryte™ light device to us, physicians and patients.

In April 2021, the FDA conditionally accepted HyBryte™ as the proposed brand name for SGX301 or synthetic hypericin, in the treatment of early stage CTCL. The name HyBryte™ was developed in compliance with the FDA's Guidance for Industry, Contents of a Complete Submission for the Evaluation of Proprietary Names. The FDA's conditional approval validates HyBryte™ as a proprietary name that is consistent with the FDA's goal of preventing medication errors and potential harm to the public by ensuring that only appropriate proprietary names are approved for use. Final approval of the HyBryte™ proprietary name is conditioned on FDA approval of the product candidate, SGX301.

In May 2021, HyBryte™ was awarded an "Innovation Passport" for the treatment of early stage CTCL in adults under the UK's ILAP. The decision to award the Innovation Passport to the HyBryte™ program was made by the Innovative Licensing and Access Pathway Steering Group, which is comprised of representatives from MHRA, the National Institute for Health and Care Excellence ("NICE"), and the Scottish Medicines Consortium ("SMC"). ILAP was launched at the start of 2021 to accelerate the development and access to promising medicines, thereby facilitating patient access to new medicines. The pathway, part of the UK's plan to attract life sciences development in the post-Brexit era, features enhanced input and interactions with the MHRA, NICE, and SMC. The innovation passport designation is the first step in the ILAP process and triggers the MHRA and its partner agencies to create a target development profile to chart out a roadmap for regulatory and development milestones with the goal of early patient access in the UK. Other benefits of ILAP include a 150-day accelerated assessment, rolling review and a continuous benefit risk assessment.

As a result of discussions with the FDA regarding the HyBryte™ NDA submission and due to disruptions caused by the global COVID-19 pandemic resulting in delays by the commercial active pharmaceutical ingredient ("API") contract manufacturer affecting the timing of availability of the pre-requisite amount of accrued stability data required to file the NDA, we plan to file the NDA with the FDA in the fourth quarter of 2022 with the

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corresponding potential FDA approval in the second half of 2023. We currently do not plan to pursue a rolling NDA submission, so that we may provide additional supportive data in the NDA filing.

In June 2021, we received a Paediatric Investigation Plan ("PIP") waiver from the EMA for HyBryte™. As part of the regulatory process for the registration of new medicines with the EMA, pharmaceutical companies are required to provide a PIP outlining their strategies for investigation of the new medicinal products in the pediatric population. In some instances, a waiver negating the need for a PIP for certain conditions may be granted by the EMA when development of a medicine for use in children is not feasible or appropriate, as is the case for HyBryte™ in CTCL which is extremely rare in children.

In September 2021, we were granted orphan drug designation for the active ingredient hypericin for the treatment of T-cell lymphoma, extending the target population beyond CTCL as previously granted by the FDA.

In July 2022, the results of our successful Phase 3 FLASH study evaluating HyBryte^™ for the treatment of CTCL were published in the Journal of the American Medical Association (JAMA) Dermatology.

In July 2022, we received agreement from the FDA on an initial pediatric study plan (iPSP) for HyBryte™ in for the treatment CTCL. The agreed iPSP stipulates that Soligenix intends on requesting a full waiver of pediatric studies upon submission of the NDA. Agreement with FDA on an iPSP is one of the regulatory requirements that must be met prior to submitting a NDA.

We estimate the potential worldwide market for HyBryte™ is in excess of $250 million for the treatment of CTCL. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.

Cutaneous T-Cell Lymphoma

CTCL is a class of non-Hodgkin's lymphoma ("NHL"), a type of cancer of the white blood cells that are an integral part of the immune system. Unlike most NHLs, which generally involve B-cell lymphocytes (involved in producing antibodies), CTCL is caused by an expansion of malignant T-cell lymphocytes (involved in cell-mediated immunity) normally programmed to migrate to the skin. These skin-trafficking malignant T-cells migrate to the skin, causing various lesions to appear that may change shape as the disease progresses, typically beginning as a rash and eventually forming plaques and tumors. Mycosis fungoides ("MF") is the most common form of CTCL. It generally presents with skin involvement only, manifested as scaly, erythematous patches. Advanced disease with diffuse lymph node and visceral organ involvement is usually associated with a poorer response rate to standard therapies. A relatively uncommon sub-group of CTCL patients present with extensive skin involvement and circulating malignant cerebriform T-cells, referred to as Sézary syndrome. These patients have substantially graver prognoses (expected five-year survival rate of 24%), than those with MF (expected five-year survival rate of 88%).

CTCL mortality is related to stage of disease, with median survival generally ranging from about 12 years in the early stages to only 2.5 years when the disease has advanced. There is currently no FDA-approved drug for front-line treatment of early stage CTCL. Treatment of early-stage disease generally involves skin-directed therapies. One of the most common unapproved therapies used for early-stage disease is oral 5 or 8-methoxypsoralen ("Psoralen") given with ultraviolet A ("UVA") light, referred to as PUVA, which is approved for dermatological conditions such as disabling psoriasis not adequately responsive to other forms of therapy, idiopathic vitiligo and skin manifestations of CTCL in persons who have not been responsive to other forms of treatment. Psoralen is a mutagenic chemical that interferes with DNA causing mutations and other malignancies. Moreover, UVA is a carcinogenic light source that when combined with the Psoralen, results in serious adverse effects including secondary skin cancers; therefore, the FDA requires a Black Box warning for PUVA.

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CTCL constitutes a rare group of NHLs, occurring in about 4% of the approximate 500,000 individuals living with NHL. We estimate, based upon review of historic published studies and reports and an interpolation of data on the incidence of CTCL, that it affects over 20,000 individuals in the U.S., with approximately 2,800 new cases seen annually.

SGX302 - for Treating Mild-to-Moderate Psoriasis

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

In September 2021, we announced, following the validation of synthetic hypericin's biologic activity in the positive pivotal Phase 3 FLASH study in CTCL, as well as positive proof-of-concept demonstrated in a small Phase 1/2 pilot study in mild-to-moderate psoriasis patients, we will be expanding this novel therapy into a Phase 2a clinical trial in mild-to-moderate psoriasis. We will provide further details regarding trial design and timeline; however, our high level plan in the interim is to evaluate different topical formulations of synthetic hypericin to ensure optimal absorption for broadly treating this disease. In parallel, we will be working with our psoriasis clinical experts to finalize a protocol with a plan to initiate study enrollment in the fourth quarter of 2022. We estimate the potential worldwide market for SGX302 to be in excess of $1 billion for the treatment of mild-to-moderate psoriasis. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.

In June 2022, we received FDA IND clearance for our Phase 2a clinical trial titled, "Phase 2 Study Evaluating SGX302 in the Treatment of Mild-to-Moderate Psoriasis." The study is designed to evaluate the safety and efficacy of topically-applied SGX302 and we expect to begin patient enrollment in the fourth quarter of 2022. Under this IND, the Phase 2a clinical trial of SGX302 will be a randomized, double-blind, placebo-controlled study that will enroll up to 32 patients age 18 years or older with mild to moderate, stable psoriasis covering 2 to 30% of their body. Patients will receive placebo or SGX302 (randomized 1:1) as a twice weekly treatment for up to 18 weeks. Each treatment will consist of the application of SGX302 followed approximately 24 hours later with visible light activation. Efficacy endpoints will include the extent of lesion clearance and patient reported quality of life indices.

Psoriasis

Psoriasis is a chronic, non-communicable, itchy and often painful inflammatory skin condition for which there is no cure. Psoriasis has a significantly detrimental impact on patients' quality of life, and is associated with cardiovascular, arthritic, and metabolic diseases, as well as psychological conditions such as anxiety, depression and suicide. Many factors contribute to development of psoriasis including both genetic and environmental factors (e.g., skin trauma, infections, and medications). The lesions develop because of rapidly proliferating skin cells, driven by autoimmune T-cell mediated inflammation. Of the various types of psoriasis, plaque psoriasis is the most common and is characterized by dry, red raised plaques that are covered by silvery-white scales occurring most commonly on the elbows, knees, scalp, and lower back. Approximately 80% of patients have mild-to-moderate disease. Mild psoriasis is generally characterized by the involvement of less than 3% of the body surface area ("BSA"), while moderate psoriasis will typically involve 3-10% BSA and severe

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psoriasis greater than 10% BSA. Between 20% and 30% of individuals with psoriasis will go on to develop chronic, inflammatory arthritis (psoriatic arthritis) that can lead to joint deformations and disability. Studies have also associated psoriasis, and particularly severe psoriasis, with an increased relative risk of lymphoma, particularly CTCL. Although psoriasis can occur at any age, most patients present with the condition before age 35.

Treatment of psoriasis is based on its severity at the time of presentation with the goal of controlling symptoms. It varies from topical options including PDT to reduce pain and itching, and potentially reduce the inflammation driving plaque formation, to systemic treatments for more severe disease. Most common systemic treatments and even current topical photo/photodynamic therapy such as UV A and B, carry a risk of increased skin cancer.

Psoriasis is the most common immune-mediated inflammatory skin disease. According to the World Health Organization ("WHO") Global Report on Psoriasis 2016, the prevalence of psoriasis is between 1.5% and 5% in most developed countries, with some suggestions of incidence increasing with time. It is estimated, based upon review of historic published studies and reports and an interpolation of data that psoriasis affects 3% of the U.S. population or more than 7.5 million people. Current estimates have as many as 60-125 million people worldwide living with the condition. The global psoriasis treatment market was valued at approximately $15 billion in 2020 and is projected to reach as much as $40 billion by 2027.

Dusquetide

Dusquetide (research name: SGX94) is an IDR that regulates the innate immune system to simultaneously reduce inflammation, eliminate infection and enhance tissue healing. Dusquetide is based on a new class of short, synthetic peptides known as IDRs. It has a novel mechanism of action in that it modulates the body's reaction to both injury and infection and is both simultaneously anti-inflammatory and anti-infective. IDRs have no direct antibiotic activity but modulate host responses, increasing survival after infections with a broad range of bacterial Gram-negative and Gram-positive pathogens including both antibiotic sensitive and resistant strains, as well as accelerating resolution of tissue damage following exposure to a variety of agents including bacterial pathogens, trauma and chemo- or radiation-therapy. IDRs represent a novel approach to the control of infection and tissue damage via highly selective binding to an intracellular adaptor protein, sequestosome-1, also known as p62, which has a pivotal function in signal transduction during activation and control of the innate defense system. Preclinical data indicate that IDRs may be active in models of a wide range of therapeutic indications including life-threatening bacterial infections as well as the severe side-effects of chemo- and radiation-therapy. Additionally, due to selective binding to p62, dusquetide may have potential anti-tumor action.

Dusquetide has demonstrated efficacy in numerous animal disease models including mucositis, oncology, colitis, skin infection and other bacterial infections and has been evaluated in a double-blind, placebo-controlled Phase 1 clinical trial in 84 healthy volunteers with both single ascending dose and multiple ascending dose components. Dusquetide was shown to have a good safety profile and be well-tolerated in all dose groups when administered by IV over 7 days and was consistent with safety results seen in pre-clinical studies. We believe that market opportunities for dusquetide include, but are not limited to, oral and gastrointestinal mucositis, oncology (e.g., breast cancer), acute Gram-positive bacterial infections (e.g., methicillin resistant Staphylococcus aureus ("MRSA")), acute Gram-negative infections (e.g., acinetobacter, melioidosis), and acute radiation syndrome.

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SGX942 - for Treating Oral Mucositis in Head and Neck Cancer

SGX942 is our product candidate containing our IDR technology, dusquetide, targeting the treatment of oral mucositis in head and neck cancer patients. Oral mucositis in this patient population is an area of unmet medical need where there are currently no approved drug therapies. Accordingly, we received Fast Track designation for the treatment of oral mucositis as a result of radiation and/or chemotherapy treatment in head and neck cancer patients from the FDA. In addition, dusquetide has been granted PIM designation in the UK by the MHRA for the treatment of SOM in head and neck cancer patients receiving chemoradiation therapy.

We initiated a Phase 2 clinical study of SGX942 for the treatment of oral mucositis in head and neck cancer patients in December of 2013. We completed enrollment in this trial and released positive results in December 2015. In this Phase 2 proof-of-concept clinical study that enrolled 111 patients, SGX942, at a dose of 1.5 mg/kg, successfully reduced the median duration of SOM by 50%, from 18 days to 9 days (p=0.099) in all patients and by 67%, from 30 days to 10 days (p=0.040) in patients receiving the most aggressive chemoradiation therapy for treatment of their head and neck cancer. The p-values met the prospectively defined statistical threshold of p<0.1 in the study protocol. A less severe occurrence of oral mucositis, ulcerative oral mucositis (defined as oral mucositis with a WHO score ≥2 corresponding to the occurrence of overt ulceration in the mouth), was also monitored during the study. In the patients receiving the most aggressive chemoradiation therapy, the median duration of oral mucositis was found to decrease from 65 days in the placebo treated patients to 51 days in the patients treated with SGX942 1.5 mg/kg (p=0.099).

In addition to identifying the best dose of 1.5 mg/kg, this study achieved all objectives, including increased incidence of "complete response" of tumor at the one month follow-up visit (47% in placebo vs. 63% in SGX942 at 1.5 mg/kg). Decreases in mortality and decreases in infection rate were also observed with SGX942 treatment, consistent with the preclinical results observed in animal models. Data from this Phase 2 trial are published in the Journal of Biotechnology.

SGX942 was found to be generally safe and well tolerated, consistent with the safety profile observed in the prior Phase 1 study conducted in 84 healthy volunteers. The long-term (12 month) follow-up data was consistent with the preliminary positive safety and efficacy findings. While the placebo population experienced the expected 12-month survival rate of approximately 80%, as defined in the Surveillance, Epidemiology, and End Results statistics 1975-2012 from the National Cancer Institute, the SGX942 1.5 mg/kg treatment group reported a 12-month survival rate of 93% (7% mortality in the SGX942 1.5 mg/kg group compared to 19% in the placebo group). Similarly, tumor resolution (complete response) at 12 months was better in the SGX942 1.5 mg/kg treatment group relative to the placebo population (80% in the 1.5 mg/kg group compared to 74% in the placebo group). The long-term follow-up results from the Phase 2 study are published in Biotechnology Reports.

In September 2016, we and SciClone Pharmaceuticals, Inc. ("SciClone") entered into an exclusive license agreement, pursuant to which we granted rights to SciClone to develop, promote, market, distribute and sell SGX942 in defined territories. Under the terms of the license agreement, SciClone will be responsible for all aspects of development, product registration and commercialization in the territories, having access to data generated by us. In exchange for exclusive rights, SciClone will pay us royalties on net sales, and we will supply commercial drug product to SciClone on a cost-plus basis, while maintaining worldwide manufacturing rights.

Based on the positive and previously published Phase 2 results (Study IDR-OM-01), in July 2017, we initiated a pivotal Phase 3 clinical trial referred to as the "DOM-INNATE" (Dusquetide treatment in Oral Mucositis - by modulating INNATEimmunity) study. Approximately 50 U.S. and European oncology centers participated in this trial. The Phase 3 protocol (Study IDR-OM-02) was a highly powered, double-blind, randomized, placebo-controlled, multinational trial that sought to enroll approximately 260 subjects with squamous cell carcinoma of the oral cavity and oropharynx who were scheduled to receive a minimum total cumulative radiation dose of 55 Gy fractionated as 2.0-2.2 Gy per day with concomitant cisplatin chemotherapy given as a dose of 80-100 mg/m² every third week. Subjects were randomized to receive either 1.5 mg/kg SGX942 or placebo given twice a week during and for two weeks following completion of chemoradiation therapy ("CRT"). The primary endpoint

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for the study was the median duration of SOM, which was assessed by oral examination at each treatment visit and then through six weeks following completion of CRT. Oral mucositis is evaluated using the WHO Grading system. SOM is defined as a WHO Grade of ≥3. Subjects are followed for an additional 12 months after the completion of treatment.

In April 2019, the Paediatric Committee of the EMA approved our PIP for SGX942, a prerequisite for filing a Marketing Authorization Application ("MAA") for any new medicinal product in Europe. The EMA also agreed that we may defer conducting the PIP until successful completion of our ongoing pivotal Phase 3 clinical trial of SGX942, which allows us to file the adult indication MAA prior to completion of the PIP.

In June 2020, the pivotal Phase 3 DOM-INNATE study (Study IDR-OM-02) completed enrollment of 268 subjects. In December 2020, the results of our Phase 3 clinical trial for SGX942 showed that the primary endpoint of median duration of SOM did not achieve the pre-specified criterion for statistical significance (p≤0.05); although biological activity was observed with a 56% reduction in the median duration of SOM from 18 days in the placebo group to 8 days in the SGX942 treatment group. Despite this clinically meaningful improvement, the variability in the distribution of the data yielded a p-value that was not statistically significant. Other secondary endpoints supported the biological activity of dusquetide, including a statistically significant 50% reduction in the median duration of SOM in the per-protocol population, which decreased from 18 days in the placebo group to 9 days in the SGX942 treatment group (p=0.049), consistent with the findings in the Phase 2 trial (Study IDR-OM-01). Similarly, incidence of SOM also followed this biological trend as seen in the Phase 2 study, decreasing by 16% in the SGX942 treatment group relative to the placebo group in the per-protocol population. The per-protocol population was defined as the population receiving a minimum of 55 Gy radiation and at least 10 doses of study drug (placebo or SGX942) throughout the intended treatment period, with no major protocol deviations (e.g. breaks in study drug administration longer than 8 days between successive doses).

Following analysis of the full dataset, including the 12-month long-term follow-up safety data in late 2021, we held a meeting with the MHRA to review the study results and to obtain further clarity on the future of the oral mucositis development program. The meeting was informative with the outcome being that based on the SGX942 biologic activity observed and the consistency in response between the Phase 2 and Phase 3 trials, the Phase 3 DOM-INNATE study could serve as the first of two Phase 3 studies required to support potential marketing authorization, assuming the second Phase 3 clinical trial achieves the required level of statistical significance in its primary endpoint. With the benefit of a robust preclinical and clinical data package for SGX942, we now will analyze the data to design a second Phase 3 study and will look to identify a potential partner(s) to continue this development program.

In January 2022, we announced dusquetide is effective at reducing tumor size in nonclinical xenograft models. Recent studies, recapitulating results from previously published studies, have confirmed the efficacy of dusquetide as a stand-alone and combination anti-tumor therapy, with radiation, chemotherapy and targeted therapy, in the context of the MCF-7 breast cancer cell line. Of note, these results are consistent with a potential direct anti-tumor effect identified with SGX942 and is another important consideration in the oral mucositis treatment space.

In June 2022, we announced a publication describing the binding of our Innate Defense Regulator ("IDR"), dusquetide, to the p62 protein. Dusquetide binds to p62 or SQSTM-1, a scaffold protein implicated in a number of intracellular signaling networks implicated in tumor cell survival, including autophagy. This recent publication elaborates on the direct interaction of dusquetide with p62, as well as some of the direct downstream consequences of that interaction, consistent with its observed anti-infective, anti-tumor and anti-inflammatory activities. This information advances the understanding of dusquetide's novel mechanism of action and supports the development of analogs related to dusquetide.

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Oral Mucositis

Mucositis is the clinical term for damage done to the mucosa by anticancer therapies. It can occur in any mucosal region, but is most commonly associated with the mouth, followed by the small intestine. We estimate, based upon our review of historic studies and reports, and an interpolation of data on the incidence of mucositis, that mucositis affects approximately 500,000 people in the U.S. per year and occurs in 40% of patients receiving chemotherapy. Mucositis can be severely debilitating and can lead to infection, sepsis, the need for parenteral nutrition and narcotic analgesia. The GI damage causes severe diarrhea. These symptoms can limit the doses and duration of cancer treatment, leading to sub-optimal treatment outcomes.

The mechanisms of mucositis have been extensively studied and have been linked to the interaction of chemotherapy and/or radiation therapy with the innate defense system. Bacterial infection of the ulcerative lesions is regarded as a secondary consequence of dysregulated local inflammation triggered by therapy-induced cell death, rather than as the primary cause of the lesions.

We estimate, based upon our review of historic studies and reports, and an interpolation of data on the incidence of oral mucositis, that oral mucositis is a subpopulation of approximately 90,000 patients in the U.S., with a comparable number in Europe. Oral mucositis almost always occurs in patients with head and neck cancer treated with radiation therapy (greater than 80% incidence of severe mucositis) and is common in patients undergoing high dose chemotherapy and hematopoietic cell transplantation, where the incidence and severity of oral mucositis depends greatly on the nature of the conditioning regimen used for myeloablation.

Oral BDP

Oral BDP (beclomethasone 17,21-dipropionate) has been marketed in the U.S. and worldwide since the early 1970s as the active pharmaceutical ingredient in a nasal spray and in a metered-dose inhaler for the treatment of patients with allergic rhinitis and asthma. Oral BDP is specifically formulated for oral administration as a single product consisting of two tablets. One tablet is intended to release BDP in the upper sections of the GI tract and the other tablet is intended to release BDP in the lower sections of the GI tract. Based on its pharmacological characteristics, oral BDP may have utility in treating other conditions of the GI tract having an inflammatory component, such as pediatric Crohn's disease.

SGX203 - for Treating Pediatric Crohn's Disease

SGX203 (oral BDP) represents a first-of-its-kind oral, locally acting therapy tailored to treat GI inflammation. Based on its pharmacological characteristics, oral BDP may have utility in treating multiple conditions of the GI tract having an inflammatory component. BDP has been marketed in the U.S. and worldwide since the early 1970s as the API in a nasal spray and in a metered-dose inhaler for the treatment of patients with allergic rhinitis and asthma. SGX203 for the treatment of pediatric Crohn's disease is specifically formulated as a two tablet delivery system for oral use that allows for administration of immediate and delayed release BDP throughout the small bowel and the colon. The FDA has given SGX203 Orphan Drug designation as well as Fast Track designation for the treatment of pediatric Crohn's disease. We will pursue a pivotal Phase 3 clinical trial of SGX203 for the treatment of pediatric Crohn's disease contingent upon additional funding, such as through partnership funding support.

We estimate the potential worldwide market for oral BDP is in excess of $500 million for all applications, including the treatment of pediatric Crohn's disease. This potential market information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential market size based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.

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Pediatric Crohn's Disease

Crohn's disease causes inflammation of the GI tract. Crohn's disease can affect any area of the GI tract, from the mouth to the anus, but it most commonly affects the lower part of the small intestine, called the ileum. The swelling caused by the disease extends deep into the lining of the affected organ. The swelling can induce pain and can make the intestines empty frequently, resulting in diarrhea. Because the symptoms of Crohn's disease are similar to other intestinal disorders, such as irritable bowel syndrome and ulcerative colitis, it can be difficult to diagnose. People of Ashkenazi Jewish heritage have an increased risk of developing Crohn's disease.

Crohn's disease can appear at any age, but it is most often diagnosed in adults in their 20s and 30s. However, approximately 30% of people with Crohn's disease develop symptoms before 20 years of age. We estimate, based upon our review of historic published studies and reports, and an interpolation of data on the incidence of pediatric Crohn's disease, that pediatric Crohn's disease is a subpopulation of approximately 80,000 patients in the U.S. with a comparable number in Europe. Crohn's disease tends to be both severe and extensive in the pediatric population and a relatively high proportion (approximately 40%) of pediatric Crohn's patients have involvement of their upper GI tract.

Crohn's disease presents special challenges for children and teens. In addition to bothersome and often painful symptoms, the disease can stunt growth, delay puberty, and weaken bones. Crohn's disease symptoms may sometimes prevent a child from participating in enjoyable activities. The emotional and psychological issues of living with a chronic disease can be especially difficult for young people.

Public Health Solutions Overview

ThermoVax^® - Thermostability Platform Technology

ThermoVax^® is a novel method for thermostabilizing vaccines with a variety of adjuvants, resulting in a single vial which can be reconstituted with water for injection immediately prior to use. One of the adjuvants utilized in ThermoVax^® is aluminum salts (known colloquially as "Alum"). Alum is the most widely employed adjuvant technology in the vaccine industry.

The value of ThermoVax^® lies in its potential ability to eliminate the need for cold chain production, transportation, and storage for Alum-adjuvanted vaccines. This would relieve the high costs of producing and maintaining vaccines under refrigerated conditions. Based on historical reports from WHO and other scientific reports, we believe that a meaningful proportion of vaccine doses globally are wasted due to excursions from required cold chain temperature ranges. This is due to the fact that many vaccines need to be maintained either between 2 and 8 degrees Celsius ("C"), frozen below -20 degrees C, or frozen below -60 degrees C, and even brief excursions from these temperature ranges usually necessitate the destruction of the product or the initiation of costly stability programs specific for the vaccine lots in question. ThermoVax^® has the potential to facilitate easier storage and distribution of strategic national stockpile vaccines for ricin exposure in emergency settings.

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ThermoVax^® development, specifically in the context of an Alum adjuvant, was supported pursuant to our $9.4 million NIAID grant enabling development of thermo-stable ricin (RiVax^®) and anthrax vaccines. Proof-of-concept preclinical studies with ThermoVax^® indicate that it is able to produce stable vaccine formulations using adjuvants, protein immunogens, and other components that ordinarily would not withstand long temperature variations exceeding customary refrigerated storage conditions. These studies were conducted with our Alum-adjuvanted ricin toxin vaccine, RiVax^® and our Alum-adjuvanted anthrax vaccine. Each vaccine was manufactured under precise lyophilization conditions using excipients that aid in maintaining native protein structure of the key antigen. When RiVax^® was kept at 40 degrees C (104 degrees Fahrenheit ("F")) for up to one year, all of the animals vaccinated with the lyophilized RiVax^® vaccine developed potent and high titer neutralizing antibodies. In contrast, animals that were vaccinated with the liquid RiVax^® vaccine kept at 40 degrees C did not develop neutralizing antibodies and were not protected against ricin exposure. The ricin A chain is extremely sensitive to temperature and rapidly loses the ability to induce neutralizing antibodies when exposed to temperatures higher than 8 degrees C. When the anthrax vaccine was kept for up to 16 weeks at 70 degrees C, it was able to develop a potent antibody response, unlike the liquid formulation kept at the same temperature. Moreover, we also have demonstrated the compatibility of our thermostabilization technology with other secondary adjuvants such as TLR-4 agonists.

We also entered into a collaboration agreement with Axel Lehrer, PhD of the Department of Tropical Medicine, Medical Microbiology and Pharmacology, John A. Burns School of Medicine, University of Hawaiʻi at Manoa ("UH Manoa") and Hawaii Biotech, Inc. ("HBI") to develop a heat stable subunit Ebola vaccine. Dr. Lehrer, a co-inventor of the Ebola vaccine with HBI, has shown proof of concept efficacy with subunit Ebola vaccines in non-human primates ("NHP"). The most advanced Ebola vaccines involve the use of vesicular stomatitis virus and adenovirus vectors - live, viral vectors which complicate the manufacturing, stability and storage requirements. Dr. Lehrer's vaccine candidate is based on highly purified recombinant protein antigens, circumventing many of these manufacturing difficulties. Dr. Lehrer and HBI have developed a robust manufacturing process for the required proteins. Application of ThermoVax^® may allow for a product that can avoid the need for cold chain distribution and storage, yielding a vaccine ideal for use in both the developed and developing world. This agreement has expired in accordance with its terms.

In December 2010, we executed a worldwide exclusive license agreement with the University of Colorado ("UC") for certain patents relating to ThermoVax^® in all fields of use. In April 2018, the UC delivered a notice of termination of our license agreement based upon our failure to achieve one of the development milestones: initiation of the Phase 1 clinical trial of the heat stabilization technology by March 31, 2018. After negotiating with the UC, we and the UC agreed to extend the termination date to October 31, 2018 in order to allow us time to agree upon a potential agreement that would allow us to keep the rights to, and to continue to develop, the heat stabilization technology or a product candidate containing the heat stabilization technology in our field of use.

During September 2017, we were awarded funding of approximately $700,000 over five years under a NIAID Research Project (R01) grant awarded to UH Manoa for the development of a trivalent thermostabilized filovirus vaccine (including protection against Zaire ebolavirus, Sudan ebolavirus and Marburg Marburgvirus). Previous collaborations demonstrated the feasibility of developing a heat stable subunit Ebola vaccine. Under the terms of the subaward, we will continue to support vaccine formulation development with our proprietary vaccine thermostabilization technology, ThermoVax^®. Ultimately, the objective is to produce a thermostable trivalent filovirus vaccine for protection against Ebola and related diseases, allowing worldwide distribution without the need for cold storage. Based on current U.S. government needs, efforts have recently been expanded to focus on a monovalent or bivalent vaccine to specifically address Marburg marburgvirus.

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In October 2018, in a series of related transactions, (a) we and the UC agreed to terminate the original license agreement, (b) the UC and VitriVax, Inc. ("VitriVax") executed a worldwide exclusive license agreement for the heat stabilization technology for all fields of use, and (c) we and VitriVax executed a worldwide exclusive sublicense agreement, which was amended and restated in October 2020, for the heat stabilization technology for use in the fields of ricin and Ebola vaccines. We paid a $100,000 sublicense fee on the effective date of the sublicense agreement. Under the amended sublicense agreement to maintain the sublicense we are obliged to pay a minimum annual royalty of $20,000 until first commercial sale of a sublicensed product, upon which point, we shall pay an earned royalty of 2% of net sales subject to a minimum royalty of $50,000 each year. We are also required to pay royalty on any sub-sublicense income based on a declining percentage of all sub-sublicense income calculated within the contractual period until reaching a minimum of 15% after two years. In addition, we are required to pay VitriVax milestone fees of: (a) $25,000 upon initiation of a Phase 2 clinical trial of the sublicensed product, (b) $100,000 upon initiation of a Phase 3 clinical trial of the sublicensed product, (c) $100,000 upon regulatory approval of a sublicensed product, and (d) $1 million upon achieving $10 million in aggregate net sales of a sublicensed product in the U.S. or equivalent. To date none of these milestones have been met.

In March 2020, we entered into a research collaboration with Axel Lehrer, PhD of the Department of Tropical Medicine, Medical Microbiology and Pharmacology, John A. Burns School of Medicine, UH Manoa to further expand the filovirus collaboration to investigation of potential coronavirus vaccines, including for SARS-CoV-2 (causing COVID-19). This research collaboration will utilize the technology platform developed in the search for filovirus vaccines and will use well-defined surface glycoprotein(s) from one or more coronaviruses, which are expected to be protective for COVID-19.

During April 2020, we obtained an exclusive worldwide license for CoVaccine HT™, a novel vaccine adjuvant, from SERB Pharmaceuticals (formerly BTG Specialty Pharmaceuticals, a division of Boston Scientific Corporation), for the fields of coronavirus infection (including SARS-CoV-2, the cause of COVID-19), and pandemic flu. CoVaccine HT™ is a novel adjuvant, which has been shown to enhance both cell-mediated and antibody-mediated immunity. We and our collaborators, including UH Manoa and Dr. Axel Lehrer, have successfully demonstrated the utility of CoVaccine HT™ in the development of our heat stable filovirus vaccine program, with vaccine candidates against Ebola and Marburg virus disease. Given this previous success, CoVaccine HT™ will potentially be an important component of our vaccine technology platform currently being assessed for use against coronaviruses including SARS-CoV-2, the cause of COVID-19. The license agreement was executed between us and SERB Pharmaceuticals, which owns the CoVaccine HT™ intellectual property.

In September 2020, the Journal of Pharmaceutical Sciences published a scientific article detailing the thermostabilization of the filovirus GP proteins and key assays describing their stability.

During October 2020, Frontiers in Immunology published a scientific article describing CiVax™, a prototype COVID-19 vaccine, using the novel CoVaccine HT™ adjuvant and demonstrating significant immunogenicity, including strong total and neutralizing antibody responses, with a balanced Th1 response, as well as enhancement of cell mediated immunity. These are all considered to be critical attributes of a potential COVID-19 vaccine.

In December 2020, NIAID awarded us a Direct to Phase II Small Business Innovation Research ("SBIR") grant of approximately $1.5 million to support manufacture, formulation (including thermostabilization) and characterization of COVID-19 and Ebola Virus Disease ("EVD") vaccine candidates in conjunction with the CoVaccine HT™ adjuvant. This award also is supporting immune characterization of this novel, emulsified adjuvant that has unique potency and compatibility with lyophilization strategies to enable thermostabilization of subunit vaccines.

During August 2021, we announced positive data demonstrating the efficacy of multiple filovirus vaccine candidates in NHP, including thermostabilized multivalent vaccines in a single vial platform presentation. Collaborators at UH Manoa describe the potent efficacy of vaccine candidates protecting against three life-

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threatening filoviruses, Zaire ebolavirus, Sudan ebolavirus and Marburg Marburgvirus in an article published in Frontiers in Immunology. These vaccine candidates contain highly purified protein antigens combined with the novel CoVaccine HT™ adjuvant, in both monovalent (single antigen) and bivalent (two antigen) formulations. Most recently, efforts to formulate all three antigens and adjuvant into a thermostable single-vial vaccine platform has also been shown to protect 75% of vaccinated NHPs against subsequent Sudan ebolavirus challenge, with further development to test efficacy against other filovirus infections ongoing.

During August 2021, Vaccine published a scientific article describing the formulation of single-vial platform presentations of monovalent (single antigen), bivalent (two antigens) and trivalent (three antigens) combinations of filovirus vaccine candidates.

During September 2021 an accelerated preprint was posted on bioRxiv of pre-clinical immunogenicity studies for CiVax™ (heat stable COVID-19 vaccine program) demonstrating durable broad-spectrum neutralizing antibody responses, including against the Beta, Gamma and Delta variants of concern.. The scientific article is part of the ongoing collaboration with Axel Lehrer, PhD, Associate Professor at the Department of Tropical Medicine, Medical Microbiology and Pharmacology, John A. Burns School of Medicine ("JABSOM"), UHM. Development continues under a non-dilutive $1.5M grant from the NIAID awarded to us in December 2020.

In December 2021, we announced 100% protection of NHPs against lethal Sudan ebolavirus challenge using a bivalent, thermostabilized vaccine formulated in a single vial, reconstituted only with water immediately prior to use. This milestone is part of our ongoing collaboration with UH Manoa and further demonstrates the broad applicability of the vaccine platform, and its potential role in the U.S. government's initiative for pandemic preparedness.

In May 2022, the United States Patent and Trademark Office issued a Notice of Allowance for the patent application titled "Composition and Methods of Manufacturing Trivalent Filovirus Vaccines." The allowed claims are directed to unique, proprietary composition and methods directed to combinations of glycoprotein antigens with nano-emulsion adjuvants comprising sucrose fatty acid esters prior to lyophilization. The described vaccine platform has previously been successfully applied to filovirus vaccines (as mono-, bi- and tri-valent candidates for Zaire ebolavirus, Sudan ebolavirus and Marburg marburgvirus) as well as SARS-CoV-2 vaccine.

In June 2022, we announced 100% protection of NHPs against lethal Marburg marburgvirus challenge using a bivalent, thermostabilized vaccine formulated in a single vial, reconstituted only with sterile water immediately prior to use. This important milestone is part of an ongoing collaboration with UH Manoa, demonstrating the successful presentation of one or more antigen(s) within the same formulation while maintaining full potency and thermostability. It further demonstrates the broad applicability of the heat stable vaccine platform, and its potential role in the U.S. Administration's initiative for pandemic preparedness.

RiVax^® - Ricin Toxin Vaccine

RiVax^® is our proprietary vaccine candidate being developed to protect against exposure to ricin toxin and if approved, would be the first ricin vaccine. The immunogen in RiVax^® induces a protective immune response in animal models of ricin exposure and functionally active antibodies in humans. The immunogen consists of a genetically inactivated ricin A chain subunit that is enzymatically inactive and lacks residual toxicity of the holotoxin. RiVax^® has demonstrated statistically significant (p<0.0001) preclinical survival results, providing 100% protection against acute lethality in an aerosol exposure non-human primate model (Roy et al, 2015, Thermostable ricin vaccine protects rhesus macaques against aerosolized ricin: Epitope-specific neutralizing antibodies correlate with protection, PNAS USA 112:3782-3787), and has also been shown to be well tolerated and immunogenic in two Phase 1 clinical trials in healthy volunteers. Results of the first Phase 1 human trial of RiVax^® established that the immunogen was safe and induced antibodies that we believe may protect humans from ricin exposure. The antibodies generated from vaccination, concentrated and purified, were capable of conferring immunity passively to recipient animals, indicating that the vaccine was capable of inducing functionally active antibodies in humans. The outcome of this study was published in the Proceedings of the National Academy of Sciences. The second trial that was completed in September 2012 and was sponsored

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by University of Texas Southwestern Medical Center ("UTSW") evaluated a more potent formulation of RiVax^® that contained an Alum adjuvant. The results of the Phase 1b study indicated that Alum-adjuvanted RiVax^® was safe and well tolerated, and induced greater ricin neutralizing antibody levels in humans than adjuvant-free RiVax^®. The outcomes of this second study were published in the Clinical and Vaccine Immunology.

We have adapted the original manufacturing process for the immunogen contained in RiVax^® for thermostability and large scale manufacturing and recent studies have confirmed that the thermostabilized RiVax^® formulation enhances the stability of the RiVax^® antigen, enabling storage for at least 1 year at temperatures up to 40 degrees C (104 degrees F). The program will pursue approval via the FDA "Animal Rule" since it is not possible to test the efficacy of the vaccine in a clinical study which would expose humans to ricin. Uniform, easily measured and species-neutral immune correlates of protection that can be measured in humans and animals, and are indicative of animal survival to subsequent ricin challenge, are central to the application of the "Animal Rule". Recent work has identified such potential correlates of immune protection in animals and work to qualify and validate these approaches is continuing, with the goal of utilizing these assays in a planned Phase 1/2 clinical trial with the thermostable RiVax^® formulation. During September 2018, we published an extended stability study of RiVax^®, showing up to 100% protection in mice after 12 months storage at 40 degrees C (104 degrees F) as well as identification of a potential in vitro stability indicating assay, critical to adequately confirming the long-term shelf life of the vaccine. We have entered into a collaboration with IDT Biologika GmbH ("IDT") to scale-up the formulation/filling process and continue development and validation of analytical methods established at IDT to advance the program. We also initiated a development agreement with Emergent BioSolutions, Inc. ("EBS") to implement a commercially viable, scalable production technology for the RiVax^® drug substance protein antigen.

The development of RiVax^® has been sponsored through a series of overlapping challenge grants, UC1, and cooperative grants, U01, from the NIH, granted to us and to UTSW where the vaccine originated. The second clinical trial was supported by a grant from the FDA's Office of Orphan Products to UTSW. To date, we and UTSW have collectively received approximately $25 million in grant funding from the NIH for the development of RiVax^®. In September 2014, we entered into a contract with the NIH for the development of RiVax^® pursuant to which we were awarded an additional $21.2 million of funding in the aggregate. The development agreements with EBS and IDT were specifically funded under this NIH contract.

In 2017, NIAID exercised options to fund additional animal efficacy studies and good manufacturing practices compliant RiVax^® bulk drug substance and finished drug product manufacturing, which is required for the conduct of future preclinical and clinical safety and efficacy studies. The exercised options provide us with approximately $4.5 million in additional non-dilutive funding, bringing the total amount awarded to date under this contract to $21.2 million, which expired in February 2021. The total award of up to $21.2 million supported the preclinical, manufacturing and clinical development activities necessary to advance heat stable RiVax^® with the FDA. In addition to this funding for the development of RiVax^®, biomarkers for RiVax^® testing have been successfully identified, facilitating potential approval under the FDA Animal Rule.

During December 2019, we initiated a third Phase 1 double-blind, placebo-controlled, randomized study in eight healthy adult volunteer subjects designed to evaluate the safety and immunogenicity of RiVax^® utilizing ThermoVax^®. During January 2020, we suspended the study after Emergent Manufacturing Operations Baltimore LLC ("EMOB"), the manufacturer of the drug substance, notified us that, after releasing the final drug product to us, EMOB identified that the active drug substance tested outside the established specification parameters. Two subjects had received doses as part of the study before the manufacturer provided this notice. Those two subjects were monitored with no safety issues noted and data was captured in accordance with the study protocol. They did not receive further doses of study drug.

During April 2020, we received notification from NIAID that they would not be exercising the final contract option to support the conduct of a Phase 1/2 clinical study in healthy volunteers. As a result, the total contract award will not exceed $21.2 million. This contract expired in February 2021.

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In connection with failures relating to the manufacture of RiVax^®bulk drug substance, on July 1, 2020, we filed a demand for arbitration against EBS, Emergent Product Development Gaithersburg, Inc. ("EPDG"); and EMOB (together with EBS and EPDG, "Emergent") with the American Arbitration Association in Mercer County, New Jersey. We have alleged that (a) EPDG breached contracts, (b) EMOB breached contracts; and (c) Emergent fraudulently induced us into entering into the contracts with EPDG and EMOB. We were seeking to recover damages in excess of $19 million from Emergent. Emergent has answered the demand for arbitration denying the allegations and asserting affirmative defenses. We presented our case at an arbitration hearing over 12 days in January 2022. Following submission of post-hearing briefs, the arbitration panel heard closing oral arguments in April 2022. OnJuly 6, 2022, the American Arbitration Association entered a final decision in connection with this arbitration. Despite the arbitration panel ruling that Emergent had committed a number of breaches of the parties' contracts, the panel did not award monetary damages. We are reviewing the decision and weighing our options for challenging this outcome.We cannot offer any assurances as to any result of our potential challenge of the arbitration decision or that we will recover any damages from Emergent. For more details regarding the arbitration against Emergent, see Part II - Item 1. "Legal Proceedings" in this Quarterly Report.

In November 2021, the journal mSphere published a scientific article of pre-clinical immunogenicity studies for RiVax^® demonstrating enduring protection for at least 12 months post-vaccination. These results, coupled with the previous demonstration of efficacy in mice and NHPs as well as long-term thermostability (at least 1 year at 40 degrees C or 104 degrees F), reinforce the practicality of stockpiling and potentially utilizing the RiVax^® vaccine in warfighters and civilian first responders without the complexities that arise for vaccines that require stringent cold chain handling.

RiVax^® has been granted Orphan Drug designation as well as Fast Track designation by the FDA for the prevention of ricin intoxication. In addition, RiVax^® has also been granted Orphan Drug designation in the European Union ("EU") from the EMA Committee for Orphan Medical Products.

Assuming development efforts are successful for RiVax^®, we believe potential government procurement contract(s) could reach as much as $200 million. This potential procurement contract information is a forward-looking statement, and investors are urged not to place undue reliance on this statement. While we have determined this potential procurement contract value based on assumptions that we believe are reasonable, there are a number of factors that could cause our expectations to change or not be realized.

As a new chemical entity, an FDA approved RiVax^® vaccine has the potential to qualify for a biodefense Priority Review Voucher ("PRV"). Approved under the 21st Century Cures Act in late 2016, the biodefense PRV is awarded upon approval as a medical countermeasure when the active ingredient(s) have not been otherwise approved for use in any context. PRVs are transferable and can be sold, with sales in recent years of approximately $100 million. When redeemed, PRVs entitle the user to an accelerated review period of nine months, saving a median of seven months review time as calculated in 2009. However, FDA must be advised 90 days in advance of the use of the PRV and the use of a PRV is associated with an additional user fee ($1.3 million for fiscal year 2022).

In July 2022, we announced that we signed a worldwide exclusive agreement to license and supply our ricin antigen, used in our RiVax^® vaccine, to SERB Pharmaceuticals ("SERB"), for development of a novel therapeutic treatment against ricin toxin poisoning. In pursuit of a ricin antidote, SERB will leverage its unique broad-spectrum polyclonal antibody platform, gained in its acquisition of BTG Specialty Pharmaceuticals. This specialized manufacturing process generates binding fragments from antibodies that are specific to a given antigen, helping to ensure potency and purity. This platform is currently used to manufacture two of SERB's currently marketed products, CroFab® and DigiFab®.

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Ricin Toxin

Ricin toxin can be cheaply and easily produced, is stable over long periods of time, is toxic by several routes of exposure and thus has the potential to be used as a biological weapon against military and/or civilian targets. As a bioterrorism agent, ricin could be disseminated as an aerosol, by injection, or as a food supply contaminant. The potential use of ricin toxin as a biological weapon of mass destruction has been highlighted in a Federal Bureau of Investigation Bioterror report released in November 2007 titled Terrorism 2002-2005, which states that "Ricin and the bacterial agent anthrax are emerging as the most prevalent agents involved in WMD investigations." Al Qaeda in the Arabian Peninsula had threatened the use of ricin toxin to poison food and water supplies and in connection with explosive devices. Domestically, the threat from ricin remains a concern for security agencies. In April 2013, letters addressed to the U.S. President, a Senator and a judge tested positive for ricin. As recently as September 2020, ricin-laced letters addressed to the White House and others addressed to Texas law enforcement agencies were intercepted before delivery raising fresh concerns about the deadly toxin.

The Centers for Disease Control and Prevention has classified ricin toxin as a Category B biological agent. Ricin works by first binding to glycoproteins found on the exterior of a cell, and then entering the cell and inhibiting protein synthesis leading to cell death. Once exposed to ricin toxin, there is no effective therapy available to reverse the course of the toxin. The recent ricin threat to government officials has heightened the awareness of this toxic threat. Currently, there is no FDA approved vaccine to protect against the possibility of ricin toxin being used in a terrorist attack, or its use as a weapon on the battlefield nor is there a known antidote for ricin toxin exposure.

SGX943 - for Treating Emerging and/or Antibiotic-Resistant Infectious Diseases

SGX943 is an IDR, containing the same active ingredient as SGX942. Dusquetide is a fully synthetic, 5-amino acid peptide with high aqueous solubility and stability. Extensive in vivo preclinical studies have demonstrated enhanced clearance of bacterial infection with SGX943 administration. SGX943 has shown efficacy against both Gram-negative and Gram-positive bacterial infections in preclinical models, independent of whether the bacteria is antibiotic-resistant or antibiotic-sensitive.

The innate immune system is responsible for rapid and non-specific responses to combat bacterial infection. Augmenting these responses represents an alternative approach to treating bacterial infections. In animal models, IDRs are efficacious against both antibiotic-sensitive and antibiotic-resistant infections, both Gram-positive and Gram-negative bacteria, and are active irrespective of whether the bacteria occupy a primarily extracellular or intracellular niche. IDRs are also effective as stand-alone agents or in conjunction with antibiotics. An IDR for the treatment of serious bacterial infections encompasses a number of clinical advantages including:

●	Treatment when antibiotics are contraindicated, such as:

o	before the infectious organism and/or its antibiotic susceptibility is known; or

o	in at-risk populations prior to infection.

●	An ability to be used as an additive, complementary treatment with antibiotics, thereby:

o	enhancing efficacy of sub-optimal antibiotic regimens (e.g., partially antibiotic-resistant infections);

o	enhancing clearance of infection, thereby minimizing the generation of antibiotic resistance (e.g., in treating melioidosis); and

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o	reducing the required antibiotic dose, again potentially minimizing the generation of antibiotic resistance.

●	An ability to modulate the deleterious consequences of inflammation in response to the infection, including the inflammation caused by antibiotic-driven bacterial lysis.

●	Being unlikely to generate bacterial resistance since the IDR acts on the host, and not the pathogen.

Importantly, systemic inflammation and multi-organ failure is the ultimate common outcome of not only emerging and/or antibiotic-resistant infectious diseases, but also of most biothreat agents (e.g., Burkholderia pseudomallei), indicating that dusquetide would be applicable not only to antibiotic-resistant infection, but also to biothreat agents, especially where the pathogen is not known and/or has been engineered for enhanced antibiotic resistance.

In May 2019, we were awarded a DTRA subcontract of approximately $600,000 over three years to participate in a biodefense contract for the development of medical countermeasures against bacterial threat agents. As of June 30, 2022, there was negligible revenue earned or expense incurred related to the DTRA subcontract.

Intellectual Property

In addition to orphan drug exclusivity, we maintain patent and other intellectual property protection in the U.S. and other countries with respect to our technology and product candidates. We seek to protect our proprietary position in reliance upon trade secret, patent, copyright and trademark laws, and confidentiality, licensing and other agreements with employees and third parties.

Critical Accounting Policies

Our management's discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses, and the disclosure of contingent assets and liabilities. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

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

Revenue Recognition

Our revenues include revenues generated from government contracts and grants. The revenue from government contracts and grants is based upon subcontractor costs and internal costs incurred that are specifically covered by the contracts and grants, plus a facilities and administrative rate that provides funding for overhead expenses and management fees. These revenues are recognized when expenses have been incurred by subcontractors or when we incur reimbursable internal expenses that are related to the government contracts and grants.

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We also record revenue from contracts with customers in accordance with Accounting Standards Codification Topic 606 ("ASC 606"), Revenue From Contracts with Customers. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Certain amounts received from or billed to customers in accordance with contract terms are deferred and recognized as future performance obligations are satisfied. All amounts earned under contracts with customers other than sales-based royalties are classified as license revenues. Sales-based royalties under our license agreements would be recognized as royalty revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any royalty revenue.

Research and Development Costs

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contract and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:

●	contract research organizations ("CROs") in connection with performing research activities on our behalf and conducting preclinical studies and clinical trials on our behalf;

●	investigative sites or other service providers in connection with clinical trials;

●	vendors in connection with preclinical and clinical development activities; and

●	vendors related to product manufacturing and distribution of preclinical and clinical supplies.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites active and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services

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performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions such as the fair value of stock options and to accrue for clinical trials in process that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.

Material Changes in Results of Operations

Three and Six Months Ended June 30, 2022 Compared to June 30, 2021

For the three months ended June 30, 2022 we had a net loss of $2,386,760 as compared to a net loss of $1,897,068 for the same prior year period, representing increased net loss of $489,692 or 26%. This increase in net loss was primarily due to an increase in legal and consulting expenses associated with the arbitration against EBS and certain of its subsidiaries and the $426,622 gain on the forgiveness of the paycheck protection program loan during the three months ended June 30, 2021 offset by a $290,193 increase in the income tax benefit during the three months ended June 30, 2022. For the six months ended June 30, 2022, we had a net loss of $6,735,781 as compared to a net loss of $4,259,546 for the same prior year period, representing increased net loss of $2,476,235 or 58%. The increase in net loss was primarily attributed to an increase in legal and consulting expenses associated with the arbitration against EBS and certain of its subsidiaries as well as an increase in research and development expenses associated with manufacturing and preparation of the upcoming HyBryte™ NDA filing during the six months ended June 30, 2022.

Our revenues and associated costs incurred relate to third party licensing and the government contracts and grants awarded in support of RiVax^®, our ricin toxin vaccine candidate; grants received to support the development of SGX943 for treatment of emerging and/or antibiotic-resistant infectious diseases; ThermoVax^®, our thermostabilization technology; and CiVax™, our vaccine candidate for the prevention of COVID-19. For the three months ended June 30, 2022, we had revenues of $228,640 as compared to $214,824 for the same prior year period, representing an increase of $13,816 or 6%. We also incurred costs related to those revenues for the three months ended June 30, 2022 and 2021 of $193,304 and $204,317, respectively, representing a decrease of $11,013 or 5%. Our gross profit for the three months ended June 30, 2022 was $35,336 or 15% of total revenues, as compared to a gross profit of $10,507 or 5% of total revenues for the same period in 2021, representing an increase of $24,829 or 236%. For the six months ended June 30, 2022 and 2021, we had revenues of $416,703 as compared to $362,417 for the same prior year period, representing an increase of $54,286 or 15%. We also incurred costs related to those revenues for the six months ended June 30, 2022 and 2021 of $285,517 and $326,677, respectively, representing a decrease of $41,160 or 13%. Our gross profit for the six months ended June 30, 2022 was $131,186 or 31% of total revenues, as compared to a gross profit $35,740 or 10% of total revenues for the same period in 2021, representing an increase of $95,446 or 267%. The increase in revenues and gross profit were primarily the result of licensing revenue, a greater percentage of trial work conducted for CiVax™ and SGX943 and the higher contract margins associated with those grants during the three and six months ended June 30, 2022.

Research and development expenses were $2,047,839 for the three months ended June 30, 2022 as compared to $1,936,608 for the same period in 2021, representing an increase of $111,231 or 6%. Research and development expenses were $3,794,607 for the six months ended June 30, 2022 as compared to $3,246,130 for the same period in 2021, representing an increase of $548,477 or 17%. The increase in research and development expenses during the six months ended June 30, 2022 was primarily attributable to the increased expenses associated with preparation of the upcoming HyBryte™ NDA filing.

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General and administrative expenses were $1,382,793 for the three months ended June 30, 2022, as compared to $1,062,558 for the same period in 2021, representing an increase of $320,235 or 30%. General and administrative expenses were $3,924,261 for the six months ended June 30, 2022, as compared to $2,011,876 for the same period in 2021, representing an increase of $1,912,385 or 95%. The increase in general and administrative expenses for the three and six months ended June 30, 2022 was primarily attributable to an increase in legal and consulting expenses associated with the arbitration against EBS and certain of its subsidiaries.

Interest expense, net for the three months ended June 30, 2022 was $214,908 as compared to $235,736 for the same period in 2021, representing a decrease of $20,828 or 9%. Interest expense, net for the six months ended June 30, 2022 was $426,622 as compared to $449,241 for the same period in 2021, representing a decrease of $22,619 or 5%.

Financial Condition

Cash and Working Capital

As of June 30, 2022, we had cash and cash equivalents of $20,157,692 as compared to $26,043,897 as of December 31, 2021, representing a decrease of $5,886,205 or 23%. As of June 30, 2022, we had working capital of $11,985,310 as compared to working capital of $20,278,345 as of December 31, 2021, representing a decrease of $8,293,035 or 41%. The decrease in cash and cash equivalents and working capital was primarily related to cash used in operating activities.

Based on our current rate of cash outflows, cash on hand, proceeds from government contract and grant programs, and proceeds available from the B. Riley Sales Agreement, management believes that its current cash will be sufficient to meet the anticipated cash needs for working capital and capital expenditures for at least the next twelve months from issuance of these financial statements.

Our plans with respect to our liquidity management include, but are not limited to, the following:

●

We have up to $1.0million in active government grant funding still available as of June 30, 2022to support our associated research programs through March 2023, provided the federal agencies do not elect to terminate the grants for convenience. We plan to submit additional contract and grant applications for further support of our programs with various funding agencies. However, there can be no assurance that we will obtain additional governmental grant funding;

●	We have continued to use equity instruments to provide a portion of the compensation due to vendors and collaboration partners and expect to continue to do so for the foreseeable future;

●	We will continue to pursue NOL sales in the state of New Jersey pursuant to its Technology Business Tax Certificate Transfer Program if the program is available;

●	We plan to pursue potential partnerships for pipeline programs as well as continue to explore merger and acquisition strategies. However, there can be no assurances that we can consummate such transactions;

●	We have up to $26.8million remaining from the B. Riley Sales Agreement as of August 5, 2022under the prospectus supplement updated August 13, 2021; and

●

We may seek additional capital in the private and/or public equity markets, pursue government contracts and grants as well as business development activities, to continue our operations, respond to competitive pressures, develop new products and services, and to support new strategic partnerships. We are currently evaluating additional equity/debt financing opportunities on an ongoing basis and may

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execute them when appropriate. However, there can be no assurances that we can consummate such a transaction, or consummate a transaction at favorable pricing.

Expenditures

Under our budget and based upon our existing product development agreements and license agreements pursuant to letters of intent and option agreements, we expect our total research and development expenditures for the next 12 months to be approximately $9.1 million before any contract or grant reimbursements, of which $8.1 million relates to the Specialized BioTherapeutics business and $1.0 million relates to the Public Health Solutions business. We anticipate contract and grant reimbursements and licensing revenue in the next 12 months of approximately $1.1 million to offset research and development expenses in the Public Health Solutions business segments.

The table below details our costs for research and development by program and amounts reimbursed for the six months ended June 30, 2022 and 2021:


	2022		2021
Research & Development Expenses
RiVax^® and ThermoVax^® Vaccines	$	252,808		$	259,282
SGX942 (Dusquetide)		210,838			167,433
HyBryte™ (SGX301 or synthetic hypericin)		3,106,030			2,578,591
Other		224,931			240,824
Total	$	3,794,607		$	3,246,130

Reimbursed under Government Contracts and Grants
RiVax^® and ThermoVax^® Vaccines	$	22,161		$	102,916
SGX942 (Dusquetide)		-			(15,000)
CiVax™		217,381			204,582
SGX943		45,975			34,179
Total		285,517			326,677
Grand Total	$	4,080,124		$	3,572,807

Contractual Obligations

We have licensing fee commitments of approximately $267,500 as of June 30, 2022 over the next five years for several licensing agreements with partners and universities. Additionally, we have collaboration and license agreements, which upon clinical or commercialization success may require the payment of milestones of up to approximately $13.2 million, royalties on net sales of covered products ranging from 2% to 3%, sub-license IND milestones on covered products of up to approximately $200,000, sub-license income royalties on covered products up to 15% and sub-license global net sales royalties on covered products ranging from 1.5% to 2.5%, if and when achieved. However, there can be no assurance that clinical or commercialization success will occur.

We currently lease approximately 6,200 square feet of office space at 29 Emmons Drive, Suite B-10 in Princeton, New Jersey. This office space currently serves as our corporate headquarters, and both of our business segments (Specialized BioTherapeutics and Public Health Solutions), operate from this space. Pursuant to an amendment on June 21, 2022, the lease has been extended from November 2022 to October 2025. The current rent is approximately $11,108 per month, or $21.50 per square foot and will remain so through October 2023. The rent for lease periods starting November 2023 and November 2024 is approximately $11,367 per month, or $22.00 per square foot and $11,625 per month, or $22.50 per square foot, respectively. Our office space is sufficient for our current needs.

In September 2014, we entered into an asset purchase agreement with Hy Biopharma pursuant to which we acquired certain intangible assets, properties and rights of Hy Biopharma related to the development of Hy BioPharma's synthetic hypericin product. As consideration for the assets acquired, we initially paid $275,000 in

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cash and issued 184,912 shares of common stock with a fair value based upon our stock price on the date of grant of $3.75 million. These amounts were charged to research and development expense during the third quarter of 2014 as the assets will be used in our research and development activities and do not have alternative future use pursuant to generally accepted accounting principles in the U.S.

During March 2020, we filed a prospectus supplement covering the offer and sale of up to 1,956,182 shares of our common stock which were issued to Hy Biopharma. We were required to issue the shares to Hy Biopharma as payment following the achievement of a milestone under the asset purchase agreement, specifically, the Phase 3 clinical trial of HyBryte™ being successful in the treatment of CTCL. The number of shares of our common stock issued to Hy Biopharma was calculated using an effective price of $2.56 per share, based upon a formula set forth in the asset purchase agreement.

Provided the final success-oriented milestone is attained, we will be required to make a payment of up to $5.0 million, if and when achieved. The potential future payment will be payable in our common stock, not to exceed 19.9% of our outstanding stock. As of June 30, 2022, no other milestone or royalty payments have been paid or accrued.

In December 2020, we entered into a $20.0 million convertible debt financing agreement with Pontifax Medison Finance ("Pontifax"), the healthcare-dedicated venture and debt fund of the Pontifax life science funds. Under the terms of the agreement with Pontifax, we had access to up to $20 million in convertible debt financing in three tranches, which will mature on June 15, 2025 and have an interest only period through December 2022 with a rate of 8.47% on borrowed amounts and a 1% rate on amounts available but not borrowed as an unused line of credit fee. After the interest-only period, the outstanding principal is to be repaid in quarterly payments of $1 million each commencing in the first quarter of 2023. The agreement is secured by a lien covering substantially all of our assets, other than intellectual property. The agreement contains customary representations, warranties and covenants, including covenants by us limiting additional indebtedness, liens, including on intellectual property, guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. Affirmative covenants include, among others, covenants requiring us to protect and maintain our intellectual property and comply with all applicable laws, deliver certain financial reports, maintain a minimum cash balance and maintain our insurance coverage.

Upon the closing of this transaction, we borrowed the first tranche of $10 million. We did not utilize our option to draw the second or third tranche of $5.0 million each, which expired on December 15, 2021 and March 15, 2022, respectively.

Pontifax may elect to convert the outstanding loan drawn under the first tranche into shares of our common stock at any time prior to repayment at a conversion price of $4.10 per share. We also have the ability to force the conversion of the loan into shares of our common stock, subject to certain conditions.

Contingencies

We follow subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. A liability is only recorded if we determine that it is both probable and reasonably estimable.

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COVID-19

Based on the current outbreak of SARS-CoV-2, the pathogen responsible for COVID-19, which has already had an impact on financial markets, there could be additional repercussions to our operating business, including but not limited to, the sourcing of materials for product candidates, manufacture of supplies for preclinical and/or clinical studies, delays in clinical operations, which may include the availability or the continued availability of patients for trials due to such things as quarantines, conduct of patient monitoring and clinical trial data retrieval at investigational study sites.

The continued global spread of COVID-19 has affected our operations but did not have a material impact on our business, operating results, financial condition or cash flows as of and for the three and six months ended June 30, 2022.

The future impact of the outbreak is highly uncertain and cannot be predicted, and we cannot provide any assurance that the outbreak will not have a material adverse impact on our operations or future results or filings with regulatory health authorities. The extent of the impact to us, if any, will depend on future developments, including actions taken to contain the coronavirus.

Emergent BioSolutions Legal Proceedings

In July 2020, we filed a demand for arbitration against Emergent BioSolutions, Inc. and certain of its subsidiaries (collectively, "Emergent") with the American Arbitration Association in Mercer County, New Jersey. We allege in the arbitration various breaches of contracts and warranties as well as acts of fraud. Emergent has answered that demand for arbitration denying the allegations and asserting affirmative defenses. We presented our case at an arbitration hearing over 12 days in January 2022. Following submission of post-hearing briefs, the arbitration panel heard closing or arguments in April 2022 (see Part II, Item 1 - Legal Proceedings). We were seeking to recover damages in excess of $19.0 million from Emergent.

OnJuly 6, 2022, the American Arbitration Association entered a final decision in connection with this arbitration. Despite the arbitration panel ruling that Emergent had committed a number of breaches of the parties' contracts, the panel did not award monetary damages to us. We are reviewing the decision and are weighing our options for challenging this outcome. We cannot offer any assurances as to any result of our potential challenge of the arbitration decision or that we will recover any damages from Emergent.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because the majority of our investments are in short-term marketable securities, in addition to the foreign exchange rate fluctuations related to our foreign currency transactions. We do not have any derivative financial instruments. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act") are (1) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

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As of June 30, 2022, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) using the criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission ("COSO") in Internal Control - Integrated Framework (2013 Framework). Our management recognized 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 controls and procedures. Our principal executive officer and principal financial officer have concluded, based upon the evaluation described above, that as of June 30, 2022, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such material information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There was no change in our internal control over financial reporting identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact of their design and operating effectiveness.

PART II - OTHER INFORMATION.

ITEM 1 - LEGAL PROCEEDINGS

From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and allocates additional monies for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable.

In July 2020, we filed a demand for arbitration against Emergent BioSolutions, Inc. ("EBS"); Emergent Product Development Gaithersburg, Inc. ("EPDG"); and Emergent Manufacturing Operations Baltimore LLC ("EMOB" and together with EBS and EPDG, "Emergent") with the American Arbitration Association in Mercer County, New Jersey in which we have alleged that (a) EPDG and EMOB breached agreements with us and (b) Emergent fraudulently induced us into entering into the contracts with EPDG and EMOB. Emergent has answered that demand for arbitration denying the allegations and asserting affirmative defenses. The arbitration arose as a result of the following.

After several months of negotiations and based on representations Emergent made related to its capabilities in developing upstream and downstream processes for vaccines and its designation as a Center for Innovation in Advanced Development and Manufacturing, in May 2015, we entered into a subcontract (the "EPDG Subcontract") with EPDG, pursuant to which EPDG agreed to manufacture, and provide to us, RiVax^® bulk drug substance ("BDS"). In March 2017, we entered into a quality agreement (the "EPDG Quality Agreement") with EPDG for the purpose of defining and allocating the quality-related responsibilities between EPDG and us with respect to the production of the RiVax^® BDS under the EPDG Subcontract.

After nearly three years of EPDG failing to meet the scope of work set forth in the EPDG Subcontract, Emergent recommended that both development and manufacturing work under the EPDG Subcontract be transferred to EMOB. In July 2018, we entered into a quality agreement (the "EMOB Quality Agreement") with EMOB, which agreement allocated various defined responsibilities between EMOB and us with respect to the manufacture,

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supply, and testing of the RiVax^® BDS. Under the EMOB Quality Agreement, EMOB assumed sole responsibility for, inter alia, (i) employee training; (ii) providing adequate and qualified personnel; (iii) notifying us of out-of-specification results within two (2) business days of identification of the out of-specification results; (iv) performing testing using agreed-to testing procedures, test methods, specifications, and required compendia requirements; (v) ensuring that EMOB-generated data was accurate, controlled and safe from manipulation or loss; (vi) ensuring that the procedures, the state of automation and/or management controls were in place to assure data integrity; (vii) apprising us of any significant changes to analytical methodology for intermediaries, in-process or final product; and (viii) assuring that samples were stored in appropriate, continuously monitored conditions.

In January 2020, EMOB informed us (a) of the existence of a questionable test result that could result in a determination that the RiVax^® BDS manufactured, tested and released by EMOB was out-of-specification and should never have been released by Emergent, (b) that the validity of "initial release" test results for such BDS was faulty because Emergent used an improper test method. We immediately suspended the Phase 1c trial to evaluate RiVax^® in healthy adults, ending both further enrollment and further dosing. Emergent conducted an internal review of this deviation and found multiple internal failures including an "Inadequate analytical method transfer process," an "Inability to comply with standard operating procedures around method transfer and data review," and an "Inability to comply with test method procedures." We quickly initiated a "for-cause" audit of the Emergent facility and confirmed the failures Emergent identified and admitted to in its own internal investigation.

We were seeking to recover damages in excess of $19 million from Emergent. We presented our case at an arbitration hearing over 12 days in January 2022. Following submission of post-hearing briefs, the arbitration panel heard closing oral arguments in April 2022. OnJuly 6, 2022, the American Arbitration Association entered a final decision in connection with this arbitration. Despite the arbitration panel ruling that Emergent had committed a number of breaches of the parties' contracts, the panel did not award monetary damages to us. We are reviewing the decision and are weighing our options for challenging this outcome. We cannot offer any assurances as to any result of our potential challenge of the arbitration decision or that we will recover any damages from Emergent.

ITEM 1A - RISK FACTORS

Our business faces significant risks. These risks include those disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. If any of the events or circumstances described in the referenced risks actually occur, our business, financial condition or results of operations could be materially adversely affected and such events or circumstances could cause our actual results to differ materially from the results contemplated by the "forward-looking" statements contained in this report. These risks should be read in conjunction with the other information set forth in this Quarterly Report as well as in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in our periodic reports on Form 10-Q and Form 8-K. Additional risks not presently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business, financial condition and results of operations. We do not undertake to update any of the "forward-looking" statements or to announce the results of any revisions to these "forward-looking" statements, except as required by law.

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ITEM 6 - EXHIBITS


EXHIBIT NO.		DESCRIPTION

31.1		Certification of Chief Executive Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the Sarbanes-Oxley Act of 2002).

31.2		Certification of Chief Financial Officer pursuant to Exchange Act rule 13(a)-14(a) (under Section 302 of the Sarbanes-Oxley Act of 2002).

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Schema

101.CAL		Inline XBRL Taxonomy Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Definition Linkbase

101.LAB		Inline XBRL Taxonomy Label Linkbase

101.PRE		Inline XBRL Taxonomy Presentation Linkbase

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements 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.


	SOLIGENIX, INC.

August 12, 2022	By	/s/ Christopher J. Schaber
		Christopher J. Schaber, PhD
		President and Chief Executive Officer
		(Principal Executive Officer)

August 12, 2022	By	/s/ Jonathan Guarino
		Jonathan Guarino
		Chief Financial Officer, Senior Vice President,
		and Corporate Secretary
		(Principal Financial and Accounting Officer)

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