Company Overview
Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN) is a clinical-stage biopharmaceutical company at the forefront of developing innovative targeted immunotherapeutic drugs. The company’s proprietary platform, known as F H AB (Fully Human Albumin Binding), utilizes a fully human single-chain variable fragment (scFv) that binds to and “hitchhikes” on human serum albumin (HSA) for targeted delivery to tissues. This unique approach aims to improve drug accumulation in solid tumors and extend the duration of activity in the body.
Sonnet BioTherapeutics Holdings, Inc. was incorporated as a New Jersey corporation in 2015. The company’s journey took a significant turn in April 2020 when it completed a merger with publicly-held Chanticleer Holdings, Inc. Following this merger, Chanticleer changed its name to Sonnet BioTherapeutics Holdings, Inc., marking the beginning of a new era for the company.
Technology Platform
Sonnet’s F H AB technology is versatile in its production methods. The company’s development candidates can be produced in mammalian cell culture, which enables glycosylation of the interleukins, thereby reducing the risk of immunogenicity. Additionally, they can be produced in E. coli, offering flexibility in manufacturing processes. The F H AB technology received a U.S. patent in June 2021, further strengthening Sonnet’s intellectual property position.
In September 2021, Sonnet took a strategic step by creating a wholly-owned Australian subsidiary to conduct certain clinical trials. This move expanded the company’s global reach and provided additional avenues for clinical development.
Product Pipeline
Founded in 2015, Sonnet has dedicated itself to advancing its pipeline of cytokine-based immunotherapies, which leverage the potent immunomodulatory capabilities of specific cell signaling molecules to fight cancer and other diseases. The company’s lead proprietary asset, SON-1010, is a fully human version of Interleukin 12 (IL-12) covalently linked to the F H AB construct, currently in clinical development for solid tumor indications, including ovarian cancer, non-small cell lung cancer, and head and neck cancer.
In March 2022, Sonnet received clearance from the FDA for its Investigational New Drug (IND) application for SON-1010, allowing the company to initiate a U.S. clinical trial (SB101) in oncology patients with solid tumors. Concurrently, the company’s wholly-owned Australian subsidiary, SonnetBio Pty Ltd, received approval and initiated a separate Australian clinical study (SB102) of SON-1010 in healthy volunteers. Interim safety and tolerability data from these two studies were reported in April 2023, demonstrating an encouraging profile for SON-1010.
Building on this progress, in January 2023, Sonnet announced a collaboration agreement with Roche to clinically evaluate SON-1010 in combination with atezolizumab (Tecentriq) in a platinum-resistant ovarian cancer (PROC) patient setting. The companies have entered into a Master Clinical Trial and Supply Agreement (MCSA), along with ancillary Quality and Safety Agreements, to study the safety and efficacy of this combination therapy in a Phase 1b/2a trial (SB221). This trial was approved in June 2023, and the FDA accepted the IND for this study in August 2023.
Sonnet’s most advanced compound, SON-80, is a fully human version of Interleukin 6 (IL-6) that the company is developing for the treatment of Chemotherapy-Induced Peripheral Neuropathy (CIPN) and Diabetic Peripheral Neuropathy (DPN). In July 2022, the company received approval to initiate an ex-U.S. Phase 1b/2a study with SON-80 in CIPN, and the Data Safety Monitoring Board (DSMB) has now cleared the trial to proceed to Part 2 during the first quarter of 2024 after reviewing the unblinded safety and tolerability data.
In May 2021, Sonnet entered into a licensing agreement with New Life Therapeutics Pte, Ltd. of Singapore to develop and commercialize SON-80 for DPN in several Southeast Asian markets. The company is currently seeking a partnership to support the initiation of a Phase 2 clinical trial of SON-80 in this larger, high-value indication with significant unmet medical need.
Sonnet’s pipeline also includes several other promising programs, such as SON-1210, a bifunctional construct combining IL-12 and IL-15, and SON-1411, which combines a modified version of IL-18 with IL-12. These assets are being developed for solid tumor indications, with SON-1210 recently completing successful IND-enabling toxicology studies in non-human primates. SON-1210 is being developed for solid tumor indications, including colorectal cancer, while SON-1411 has advanced through cell line development and process development activities.
Financials
Financially, Sonnet reported a net loss of $4.31 million for the nine months ended June 30, 2024, compared to a net loss of $15.16 million for the same period in the prior year. The company had cash of $3.60 million as of June 30, 2024, which it believes will fund projected operations into November 2024.
For the fiscal year 2023, Sonnet reported revenue of $147,810, a net loss of $18.83 million, operating cash flow of -$21.34 million, and free cash flow of -$21.79 million. In the most recent quarter (Q3 2024), the company reported no revenue, a net loss of $3.51 million, operating cash flow of -$3.07 million, and free cash flow of -$3.08 million. The decrease in revenue compared to the prior year quarter was due to the completion of the research and development activities under the New Life Agreement during the first quarter of fiscal 2024.
Research and development expenses were $4.54 million for the nine-month period ended June 30, 2024, down from $9.97 million in the prior-year period, mainly due to cost-saving initiatives and the cancellation of accrued but unpaid bonuses. General and administrative expenses were $4.16 million, a decrease from $5.33 million in the same period of 2023.
The company reported collaboration revenue of $18,630 for the nine months ended June 30, 2024, a decrease from $110,550 in the same period of the prior year, primarily due to the completion of research and development activities related to the New Life Agreement.
Sonnet operates primarily in the United States and has not reported any significant scandals, short seller reports, or CEO departures.
Liquidity
Sonnet has been actively exploring various financing options, including an at-the-market equity facility and a recent $3.4 million warrant exercise, to support its ongoing development efforts. The company’s debt-to-equity ratio stands at 0.031, with cash of $3.55 million as of the latest reporting period. Sonnet has a $25 million committed equity facility in place with Chardan Capital Markets. The company’s current ratio and quick ratio are both 1.65, indicating a relatively stable short-term liquidity position.
Conclusion
Despite the challenges of navigating the complex biopharmaceutical landscape, Sonnet has made impressive strides in advancing its pipeline of targeted immunotherapies. The company’s unique F H AB platform, coupled with a diversified portfolio of cytokine-based drug candidates, positions Sonnet well to continue its mission of developing innovative treatments for solid tumors and other debilitating conditions. As Sonnet navigates the road ahead, investors will be closely watching for key milestones, such as the upcoming topline data readouts from the SON-1010 monotherapy and combination trials, as well as progress in securing partnerships to advance the SON-80 program. The company’s focus on managing expenses for liquidity purposes and tightening its focus on research and development projects with the greatest near-term potential demonstrates a strategic approach to resource allocation in a challenging market environment.
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