Business Update

Positive Interim Results for Investigator-Initiated Study of HyBryte™ in CTCL

On July 9, 2024, Soligenix, Inc. (NASDAQ:SNGX) announced positive interim results from an open-label, investigator-initiated study evaluating HyBryte™ in patients with early-stage cutaneous T cell lymphoma (CTCL). The trial is being sponsored by Dr. Ellen Kim, who was also a leading enroller in the Phase 3 FLASH trial, and is being supported by a $2.6 million FDA Orphan Products Development Grant. This study is designed to enroll up to 50 patients at select U.S. clinical sites, with patients having the potential to be treated for up to 12 months with twice a week dosing. There is also an option for the patients to transition to a "real-world" setting with home use. The primary endpoint is evaluating the number of "treatment successes", which is defined as ≥50% reduction in the cumulative mCAILS (modified Composite Assessment of Index Lesion Severity).

Thus far, six patients have been enrolled and treated with HyBryte. Of the four evaluable patients that have completed at least 12 weeks of therapy, three of them already achieved "treatment success". Of the three "treatment successes", two were achieved within the first 12 weeks of treatment and a third was within 18 weeks. The fourth evaluable patient had a substantial improvement documented at the Week 18 visit but has not achieved the success threshold. The other two patients have only recently initiated HyBryte therapy and have not yet reached their first efficacy evaluation (i.e., at Week 6). Importantly, HyBryte continues to be safe and well tolerated by patients and no treatment-related adverse events have been reported.

HyBryte Provides More Rapid and Robust Treatment Effect Compared to Valchlor®

In June 2024, Soligenix announced positive results from comparability study evaluating HyBryte versus Valchlor (mechlorethamine gel) in the treatment of CTCL. This was an open label study that enrolled 10 patients (5 per group) with treatment success defined as a ≥50% improvement in a patient's mCAILS score after 12 weeks of topical treatment compared to baseline. The results showed that 60% of patients treated with HyBryte achieved "treatment success" compared to 20% of Valchor-treated patients. Of the two HyBryte-treated patients who did not achieve "treatment success", both had a substantial (>30%) reduction in their mCAILS score. Conversely, of the four Valchlor-treated patients that did not achieve treatment success, one worsened (and dropped out of the study), one improved <30% and two improved ≥30%. The average cumulative improvement in mCAILS at 12 weeks was 52.5% in the HyBryte group compared to 34.7% in the Valchlor group.

HyBryte had a more favorable safety profile than Valchlor and all patients tolerated HyBryte well and had no adverse events. In contrast, 60% of Valchlor-treated patients had at least one adverse event "related" to therapy, which included rashes, application site sensitivity, allergic contact dermatitis, and dermatitis. In the Valchlor group, one patient required steroid treatment, one required temporary interruption of treatment, and one required permanent discontinuation. There were no such instances reported in the HyBryte group.

Confirmatory Phase 3 Trial of HyBryte Set to Initiate Before End of 2024

Soligenix is on track to initiate a confirmatory Phase 3 trial of HyBryte for the treatment of CTCL before the end of 2024. The FLASH2 trial will be very similar in design to the Phase 3 FLASH trial, as shown in the following figure, which provides a comparison between the two studies. This similarity in design increases our confidence in a positive outcome for the FLASH2 trial. With the trial expected to begin enrollment prior to the end of 2024, we anticipate topline results in the second half of 2026.

After reaching agreement with the European Medicines Agency (EMA) on the key design elements of the FLASH2 trial, the company is continuing discussions with the U.S. Food and Drug Administration (FDA) on an appropriate study design as the agency has expressed a preference for a longer duration comparative study over a placebo-controlled trial.

Financials

For the full year 2023, Soligenix reported annual revenue of $839,359, annual net loss of $6,140,730, annual operating cash flow of -$8,604,109, and annual free cash flow of -$8,604,109.

For the first quarter of 2024, the company reported revenue of $117,029, a net loss of $1,915,327, operating cash flow of -$1,342,482, and free cash flow of -$1,342,482. The decrease in revenue and gross profit during the first quarter of 2024 was primarily related to the conclusion of higher margin grants associated with the development of SGX943 and CiVax™ and a decrease in revenue associated with the zero margin grant for the HyBryte™ investigator initiated study.

Research and development expenses were $1,095,040 for the first quarter of 2024, compared to $946,451 for the same period in 2023, representing an increase of 16%. The increase was primarily due to an increase in preliminary costs associated with the anticipated initiation of the Phase 2 study in Behçet's Disease and the second confirmatory Phase 3 CTCL trial. General and administrative expenses were $1,022,051 for the first quarter of 2024, compared to $1,235,376 for the same period in 2023, representing a decrease of 17%. The decrease in general and administrative expenses was primarily attributable to a reduction in legal and professional fees.

As of March 31, 2024, Soligenix had cash and cash equivalents of $7,091,548, compared to $8,446,158 as of December 31, 2023, representing a decrease of 16%. The decrease in cash and cash equivalents was primarily related to cash used in operating activities during the first quarter of 2024. As of March 31, 2024, the company had working capital of $607,499, compared to working capital of $3,355,212 as of December 31, 2023, representing a decrease of 82%. The decrease in working capital is primarily the result of the reclassification of approximately $1 million of the convertible debt balance from a non-current liability as of December 31, 2023 to a current liability as of March 31, 2024.

The company does not have sufficient cash and cash equivalents as of the date of filing the Q1 2024 10-Q to support its operations for at least the 12 months following the date the financial statements are issued. These conditions raise substantial doubt about the company's ability to continue as a going concern through 12 months after the date the financial statements are issued.

To alleviate the conditions that raise substantial doubt about its ability to continue as a going concern, Soligenix plans to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, securing additional proceeds from government contract and grant programs, securing additional proceeds available from the sale of shares of its common stock via an At Market Issuance Sales Agreement and potentially amending the loan agreement with Pontifax Medison Finance to reduce the conversion price in order to allow for conversion of a portion of the debt which will reduce the company's debt repayments.

Nasdaq Listing Requirements

On June 23, 2023, Soligenix received a letter from Nasdaq indicating that the company did not meet the minimum bid price of $1.00 per share required for continued listing on Nasdaq. The company was unable to regain compliance prior to the expiration of the 180-day period. On December 21, 2023, Soligenix received another notice stating that it had not complied with the minimum bid price requirement and was not eligible for a second 180-day period because it did not comply with the $5,000,000 minimum stockholders' equity initial listing requirement for Nasdaq.

On March 26, 2024, Soligenix had an oral hearing with a Nasdaq Hearings Panel to appeal the Staff's delisting determination, which stayed the trading suspension of the company's common stock pending a final written decision by the Nasdaq Hearings Panel and expiration of any additional extension period granted by the panel following the hearing. In order to regain compliance with Nasdaq's minimum bid price requirement, Soligenix's common stock must maintain a minimum closing bid price of $1.00 for at least ten consecutive business days during the compliance period.

Conclusion

The interim results for the investigator-initiated study along with the comparative trial further increase our confidence in the likelihood of success for the upcoming FLASH2 trial, which similar to those studies is following a more "real world" treatment approach. The results of the investigator-initiated study were well received by the market, with the company's stock rising ~300% on the news. However, even after the significant move in the stock price we continue to believe there is additional upside and our valuation has increased to $35 per share.