Tonix expects cash to last into early Q3 2027
Management believes cash and subsequent equity proceeds will fund planned needs into early Q3 2027, but not 12 months from issuance.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Tonix Pharmaceuticals Holding Corp. (TNXP) reported product revenue of $17.234 million for the three months ended September 30, 2026, versus $3.290 million a year earlier, primarily reflecting TONMYA sales after its November 2025 launch; TONMYA generated $15.024 million. Nine-month product revenue was $37.656 million versus $7.717 million. Net loss was $53.329 million for the quarter and $134.075 million for nine months, compared with $32.010 million and $77.111 million, respectively, in 2025.
Cash and cash equivalents were $162.793 million as of September 30, 2026. Operating cash use totaled $125.635 million for nine months. The company sold 6.3 million shares under its 2025 at-the-market program for $81.7 million in net proceeds over nine months, then raised $1.5 million net from subsequent sales. Management said it believes cash and subsequent proceeds will fund planned operating and capital spending into early third quarter 2027, but not 12 months from issuance; it said these conditions raise substantial doubt about continuing as a going concern and that further funding is needed. A Phase 2 MDD study is enrolling; a TNX-4800 Phase 2 study is planned for first quarter 2027, pending final FDA review and agreement on the study protocol.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointProduct revenue was $17.234 million in Q3 2026, versus $3.290 million in Q3 2025.
Negative
- Major pointManagement cited substantial doubt about the company’s ability to continue as a going concern.
- Moderate pointQuarterly net loss was $53.329 million versus $32.010 million a year earlier.
- Moderate pointNine-month operating cash use was $125.635 million versus $60.194 million in 2025.
Filing Explained
Tonix’s stated next step is planned patent litigation within forty-five days and a request for a thirty-month stay of FDA approval.
This quarterly report lists approximately
The company reports receiving an
Key Figures
Key Terms
going concern financial
at-the-market (ATM) offering financial
gross-to-net deductions financial
investigational new drug (IND) application regulatory
adaptive Phase 2 field study technical
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
When is TNXP’s TNX-4800 Phase 2 study expected to begin?
How much funding is available for TNXP’s TNX-4200 program?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the Quarterly Period Ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from _________ to _________
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||
| (Address of Principal Executive Offices) | (Zip Code) |
(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 | ||||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
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 | ☐ | |
| ☒ | 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 ☐
As
of November 6, 2026, there were
TONIX PHARMACEUTICALS HOLDING CORP.
INDEX
| PART I. | FINANCIAL INFORMATION | |||
| ITEM 1. | Financial Statements | |||
| Condensed consolidated balance sheets as of September 30, 2026 (unaudited) and December 31, 2025 | 1 | |||
| Condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 2 | |||
| Condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 3 | |||
| Condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2026 and 2025 (unaudited) | 4-5 | |||
| Condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 (unaudited) | 6 | |||
| Notes to condensed consolidated financial statements (unaudited) | 7-24 | |||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 36 | ||
| ITEM 4. | Controls and Procedures | 36 | ||
| PART II. | OTHER INFORMATION | |||
| ITEM 1. | Legal Proceedings | 36 | ||
| ITEM 1A. | Risk Factors | 36 | ||
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 38 | ||
| ITEM 3. | Defaults Upon Senior Securities | 38 | ||
| ITEM 4. | Mine Safety Disclosures | 38 | ||
| ITEM 5. | Other Information | 38 | ||
| ITEM 6. | Exhibits | 38 | ||
| SIGNATURES | 41 | |||
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value and Share Amounts) (unaudited)
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Lease liability, short term | ||||||||
| Total current liabilities | ||||||||
| Lease liability, long term | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See Note 15) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ | — | — | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See the accompanying notes to the condensed consolidated financial statements
1
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| REVENUE: | ||||||||||||||||
| Product revenue, net | $ | $ | $ | $ | ||||||||||||
| COSTS AND EXPENSES: | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Contract income | ||||||||||||||||
| Loss on extinguishment of debt | — | — | — | ( | ) | |||||||||||
| Interest income, net | ||||||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Net loss available to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding, basic and diluted | ||||||||||||||||
See the accompanying notes to the condensed consolidated financial statements
2
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In Thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | ||||||||||||||||
| Foreign currency translation gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See the accompanying notes to the condensed consolidated financial statements
3
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Amounts)
(unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Gain (Loss) | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stock under ATM program, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Employee stock purchase plan (ESPP) | — | — | — | |||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation gain (loss) | — | — | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, March 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock under ATM program, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Issuance of common stock upon exercise of stock option | — | — | — | |||||||||||||||||||||
| Foreign currency translation gain (loss) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, June 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock under ATM program, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Employee stock purchase plan (ESPP) | — | — | — | |||||||||||||||||||||
| Issuance of common stock upon exercise of stock option | — | — | — | |||||||||||||||||||||
| Foreign currency translation gain (loss) | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See the accompanying notes to the condensed consolidated financial statements
4
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(In Thousands, Except Share and Per Share Amounts)
(unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stock under the At-the-Market agreement, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Repurchase of common stock under share repurchase program, including transactional expenses of $ | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock, under the At-the-Market agreement, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Repurchase of common stock under share repurchase program, including transactional expenses of $ | ( | ) | — | ( | ) | — | — | ( | ) | |||||||||||||||
| Issuance of commitment shares | — | — | — | |||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock under the At-the-Market agreement, net of transactional expenses of $ | — | — | ||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | ||||||||||||||||||||
| Foreign currency translation loss | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See the accompanying notes to the condensed consolidated financial statements
5
TONIX PHARMACEUTICALS HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on note | — | |||||||
| Loss on extinguishment of debt | — | |||||||
| Bad debt | — | |||||||
| Issuance costs of derivative instruments | — | |||||||
| Inventory write-off | — | |||||||
| Amortization of debt discount | — | |||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Other non-current assets | ( | ) | — | |||||
| Accounts receivable | ( | ) | ||||||
| Inventory, current and non-current | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Lease liabilities and ROU asset, net | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Issuance of note | — | ( | ) | |||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repurchase of common stock | — | ( | ) | |||||
| Proceeds from exercise of options | — | |||||||
| Proceeds from ESPP | — | |||||||
| Payment of term loan | — | ( | ) | |||||
| Proceeds, net of $ | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of currency rate change on cash | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash beginning of the period | ||||||||
| Cash, cash equivalents and restricted cash end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest expense paid | $ | — | $ | |||||
| Non-cash financing and investing activities: | ||||||||
| Issuance costs from derivative instruments | $ | — | $ | |||||
| Purchases of property and equipment included in accounts payable and accrued liabilities | $ | $ | ||||||
6
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – BUSINESS
Tonix Pharmaceuticals (“Tonix” or the “Company”) is a fully integrated biopharmaceutical company commercializing and developing innovative therapies for central nervous system (“CNS”) disorders, infectious diseases, and immunology. The Company’s portfolio consists of commercial, development-stage and discovery programs.
TONMYA® (cyclobenzaprine HCl sublingual tablets 2.8 mg), the Company’s flagship internally conceived and developed medicine, is the first new medicine for fibromyalgia in adults approved by the U.S. Food and Drug Administration (“FDA”) in more than 15 years. Tonix’s CNS commercial infrastructure supports its marketed products, including its acute migraine products, Zembrace® SymTouch® (sumatriptan injection 3 mg) and Tosymra® (sumatriptan nasal spray 10 mg). Tonix received approval from the FDA for TONMYA for the treatment of fibromyalgia in adults in August 2025 and commercially launched TONMYA in November 2025. TONMYA is a centrally acting, non-opioid analgesic designed for bedtime administration and long-term use, for which the Company holds worldwide commercialization rights. Tonix’s commercial platform includes sales, marketing, market access, distribution, and patient support capabilities.
Tonix is advancing a diversified pipeline generated through internal discovery, in-licensing, acquisitions, and collaborations with academic and non-profit institutions. The Company’s pipeline addresses conditions that span CNS, infectious disease, immunology, and rare disease, with several programs in clinical and preclinical development.
Clinical Stage Pipeline
TONMYA’s proprietary cyclobenzaprine HCl sublingual tablet formulation is referred to as “TNX-102 SL” outside of the fibromyalgia indication. Tonix is exploring the utility of TNX-102 SL (cyclobenzaprine HCl sublingual tablets) in Phase 2 clinical trials for major depressive disorder (“MDD”) and acute stress disorder (“ASD”)/acute stress reaction (“ASR”). A potentially pivotal Phase 2 study of TNX-102 SL as a first-line monotherapy in adults with MDD, the HORIZON study, commenced in June 2026 and is currently enrolling.
TNX-102 SL is being developed to treat ASD/ASR under an investigator-initiated investigational new drug (“IND”) application at the University of North Carolina (“UNC”) in the ongoing OASIS study funded by a grant UNC received from the U.S. Department of Defense (“DoD”). Topline data from the OASIS study is expected to be reported mid-2027.
Tonix’s clinical-stage infectious disease portfolio includes TNX-4800, a human monoclonal antibody targeting Borrelia OspA, for the prevention of Lyme disease in the U.S., where no vaccines or prophylactics for Lyme disease are approved by the FDA. Tonix received positive, final minutes from the FDA following a Type C meeting in the third quarter of 2026. The minutes support the planned initiation of an adaptive Phase 2 field study in the first quarter of 2027. The Phase 2 study is expected to enroll in the 2027 and 2028 seasons, with the majority of participants enrolled in 2028, pending final FDA review and agreement on the study protocol. If the attack rate is lower than expected, the study could continue enrolling in 2029. TNX-4800 was licensed from UMass Chan Medical School.
Tonix’s clinical-stage immunology development portfolio includes TNX-1500 (provisional international nonproprietary name: mosdaprubart), which is a Phase 2-ready Fc-modified humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of kidney transplant rejection and for the treatment of autoimmune diseases. A Phase 2, open-label, investigator-initiated study to prevent rejection in adult kidney transplant patients at Massachusetts General Hospital (“MGH”) is expected to begin in the first quarter of 2027.
Tonix’s clinical-stage CNS portfolio includes the biologic candidate TNX-1300 (double-mutant cocaine esterase), which is being developed for the treatment of cocaine intoxication. TNX-1300 has been granted Breakthrough Therapy designation by the FDA, and a Phase 2 study has been completed. Tonix met with the FDA in the fourth quarter of 2026 to discuss the clinical design of the next Phase 2 study but does not plan to initiate a study in the near term in order to prioritize its cash and resource allocation toward TONMYA and TNX-4800.
Tonix uses artificial intelligence (“AI”) and computational tools to support scientific research, drug development and corporate activities. The Company’s AI-assisted scientific analyses are subject to appropriate human review and, where relevant, experimental and clinical validation.
The Company is focused on supporting TONMYA’s commercial growth and the advancement of TNX-102 SL in MDD, TNX-4800 for Lyme disease prevention, and TNX-1500 in an investigator-initiated study to prevent kidney transplant rejection.
Research Contract with the U.S. Department of Defense
Tonix is developing a
pre-IND infectious disease program designated TNX-4200, which is a small molecule broad-spectrum antiviral agent targeting CD45 to
improve the medical readiness of military personnel in biological threat environments. The TNX-4200 program is supported by a $
7
Our product candidates are investigational and have not been approved for the indications for which they are being developed.
The condensed consolidated financial statements include the accounts of Tonix Pharmaceuticals Holding Corp. and its wholly owned subsidiaries, Tonix Pharmaceuticals, Inc., Krele LLC, Tonix Pharmaceuticals (Canada), Inc., Tonix Medicines, Jenner Institute LLC, Tonix R&D Center LLC, Tonix Pharma Limited and Ixovia Corp. (collectively, the “Company” or “Tonix”). All intercompany balances and transactions have been eliminated in consolidation.
Zembrace SymTouch and Tosymra are registered trademarks of Tonix Medicines. TONMYA is a registered trademark of Tonix Pharma Limited. All other marks are the property of their respective owners. Tonix is led by a management team with significant industry experience in drug development and commercialization.
Going Concern
The
accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and
which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The
Company has suffered recurring losses from operations and negative cash flows from operating activities. At September 30, 2026, the
Company had working capital of approximately $
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company continues to face significant challenges and uncertainties and must obtain additional funding through public and private financing and collaborative arrangements with strategic partners to increase the funds available to fund operations. However, the Company may not be able to raise capital on terms acceptable to the Company, or at all. Without additional funds, it may be forced to delay, scale back, or eliminate some of its research and development activities, or other operations and potentially delay product development in an effort to maintain sufficient funds to continue operations. If any of these events occurs, its ability to achieve development and commercialization goals would be adversely affected and the Company may be forced to cease operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Interim financial statements
The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The condensed consolidated balance sheet as of December 31, 2025, contained herein has been derived from audited financial statements.
Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of results that may be expected for the year ending December 31, 2026. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 12, 2026.
8
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Risks and uncertainties
The Company’s primary efforts are devoted to commercializing its approved products and conducting research and development of innovative pharmaceutical and biological products to address public health challenges. The Company has experienced net losses and negative cash flows from operations since inception and expects these conditions to continue for the foreseeable future. Further, the Company currently generates revenue from the sale of its commercial products, TONMYA, Zembrace SymTouch and Tosymra. There is no assurance that the Company will be able to generate sufficient cash flow to fund operations from the sale of its commercial products or products in development, if and when approved. In addition, there can be no assurance that the Company’s research and development will be successfully completed or that any product in development will be approved or commercially viable.
Use of estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, impairments, provisions for product returns, coupons, rebates, chargebacks, discounts, allowances, inventory realization, the assumptions used in the fair value of stock-based compensation and other equity instruments, and the percent of completion of research and development contracts.
Cash, Cash Equivalents and Restricted Cash
The
Company considers cash equivalents to be those investments which are highly liquid, readily convertible to cash and have an original
maturity of three months or less when purchased. At September 30, 2026, and December 31, 2025, cash equivalents, which consisted of money
market funds and other cash equivalents, amounted to approximately $
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statement of cash flows:
| September 30, 2026 | December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total | $ | $ | ||||||
Accounts Receivable, net
Accounts receivable consist of amounts due from our wholesale and other third-party distributors and pharmacies, with standard payment terms that generally require payment within 30 to 90 days. For certain customers, the accounts receivable for the customer is net of cash discounts, chargebacks and customer rebates. We provide reserves against accounts receivable for estimated losses that may result from a customer’s inability to pay. Amounts determined to be uncollectible are charged or written off against the reserve.
As
of September 30, 2026, and December 31, 2025, the Company had $
9
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Concentration of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents by investing in a broad and diverse range of financial instruments, and we have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. Concentrations of credit risk with respect to receivables, which are typically unsecured, are somewhat mitigated due to the financial stability of our primary customers using our products.
We monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. We continue to monitor these conditions and assess their possible impact on our business.
Inventories
Inventories are recorded at the lower of cost or net realizable value, with cost determined by the first-in-first-out method. The Company periodically reviews the composition of inventory in order to identify excess, obsolete, slow-moving or otherwise non-saleable items taking into account anticipated future sales compared with quantities on hand, and the remaining shelf life of goods on hand. If non-saleable items are observed and there are no alternate uses for the inventory, the Company records a write-down to net realizable value in the period that the decline in value is first recognized. Although the Company makes every effort to ensure the accuracy of forecasts of future product demand, any significant unanticipated decreases in demand could have a material impact on the carrying value of inventories and reported operating results.
Property and equipment
Property
and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization are calculated using the
straight-line method over the asset’s estimated useful life, which ranges from
Impairment testing of long-lived assets
The
Company evaluates long-lived assets for impairment, including property and equipment and operating lease right-of-use assets whenever
events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist,
the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated
useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair
value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which
the determination is made. For the nine months ended September 30, 2026 and 2025, the Company believed that
Leases
The Company determines if an arrangement is, or contains, a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, noncurrent in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the transition date and subsequent lease commencement dates in determining the present value of lease payments. This is the rate the Company would have to pay if borrowing on a collateralized basis over a similar term to each lease. The operating lease ROU asset excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments made under operating leases is recognized on a straight-line basis over the lease term.
10
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Revenue Recognition
The Company records and recognizes revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company’s revenues primarily result from contracts with customers, which are generally short-term and have a single performance obligation - the delivery of product.
The
Company’s performance obligation to deliver products is satisfied at the point in time that the goods are received by the customer,
which is when the customer obtains title to and has the risks and rewards of ownership of the products, which is generally upon delivery
to the customer as stipulated by the terms of the sale agreements. The transaction price is the amount of consideration to which the
Company expects to be entitled in exchange for transferring promised goods to a customer. The consideration promised in a contract with
a customer may include fixed amounts, variable amounts, or both. Our contractual payment terms are typically
Revenues from product sales, net of gross-to-net deductions, are recorded only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring and when the uncertainty associated with gross-to-net deductions is subsequently resolved. Taxes assessed by governmental authorities and collected from customers are excluded from product sales. Shipping and handling activities are considered to be fulfillment activities and not a separate performance obligation.
Many of the Company’s products sold are subject to a variety of deductions. Revenues are recognized net of estimated rebates and chargebacks, cash discounts, distributor fees, sales return provisions and other related deductions. Deductions to product sales are referred to as gross-to-net deductions and are estimated and recorded in the period in which the related product sales occur. Accruals for these provisions are presented in the consolidated financial statements as reductions to gross sales in determining net sales, and as a contra asset within accounts receivable, net (if settled via credit) and other current liabilities (if paid in cash). Amounts recorded for revenue deductions can result from a complex series of judgements about future events and uncertainties and can rely heavily on estimates and assumptions. The following section briefly describes the nature of the Company’s provisions for variable consideration and how such provisions are estimated:
Chargebacks - The Company sells a portion of its products indirectly through wholesaler distributors, and enters into specific agreements with indirect customers to establish pricing for the Company’s products, and in turn, the indirect customers and entities independently purchase these products. Because the price paid by the indirect customers and/or entities is lower than the price paid by the wholesaler, the Company provides a credit, called a chargeback, to the wholesaler for the difference between the contractual price with the indirect customers and the wholesale customer’s purchase price. The Company’s provision for chargebacks is based on expected sell-through levels by the Company’s wholesale customers to the indirect customers and estimated wholesaler inventory levels as well as historical chargeback rates. The Company continually monitors its reserve for chargebacks and adjusts the reserve accordingly when expected chargebacks differ from actual experience.
Rebates - The Company participates in certain government and specific sales rebate programs that provide discounted prescription drugs to qualified recipients and primarily relate to Medicaid and managed care rebates, pharmacy rebates, Tri-Care rebates and discounts, specialty pharmacy program fees and other governmental rebates or applicable allowances.
| ● | Managed Care Rebates are processed in the quarter following the quarter in which they are earned. The managed care reporting entity submits utilization data after the end of the quarter and the Company processes the payment in accordance with contract terms. All rebates earned but not paid are estimated by the Company according to historical payments trended for market growth assumptions and new and/or updated contract terms. | |
| ● | Medicaid and State Agency rebates are based upon historical experience of claims submitted by various states. The Company monitors Medicaid legislative changes to determine what impact such legislation may have on the provision for Medicaid rebates. The accrual of State Agency reserves is based on historical payment rates and new and/or updated contract terms impacting Medicaid rebates. There is an approximate four- to six-month lag from the time of product sale until the rebate is paid. | |
| ● | Tri-Care represents a regionally managed health care program for active duty and retired members, dependents and survivors of the US military. The Tri-Care program supplements health care resources of the US military with civilian health care professionals for greater access and quality healthcare coverage. Through the Tri-Care program, the Company provides pharmaceuticals on a direct customer basis. Prices of pharmaceuticals sold under the Tri-Care program are pre-negotiated and a reserve amount is established to represent the proportionate rebate amount associated with product sales. | |
| ● | The Inflation Reduction Act (IRA) enacted on August 16, 2022, replaced the coverage gap provisions effective January 1, 2025. The IRA shifts a portion of the Medicare beneficiary costs after meeting a certain annual threshold to manufacturers in the form of rebates to the government. Since the nature of the program is that coverage limits are reset at the beginning of the calendar year, the payments escalate each quarter as the beneficiaries reach the annual threshold. The Company has determined that the cost of this reserve will be viewed as an annual cost. Therefore, the accrual will be incurred evenly during the year with quarterly review of the liability based on payment trends and any revision to the projected annual cost. |
11
Prompt-Pay and other Sales Discounts - The Company provides for prompt pay discounts, which are recorded as a reduction of revenue and as a reduction in the accounts receivable at the time of sale based on the customer’s contracted discount rate. Consumer sales discounts represent programs the Company has in place to reduce costs to the patient. This includes copay buy down and eVoucher programs.
Product Returns - Consistent with industry practice, the customer’s right of return commences typically six months prior to product expiration date and ends one year after product expiration date. Products returned for expiration are reimbursed at current wholesale acquisition cost or indirect contract price. The Company estimates the amount of its product sales that may be returned by the Company’s customers and accrues this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates product returns as a percentage of sales to its customers. The rate is estimated by using historical sales information or appropriate industry average for newly launched products. Adjustments are made to the current provision for returns when data suggest product returns may differ from original estimates.
Research and Development Costs
The Company outsources certain of its research and development efforts and expenses these costs as incurred, including the cost of manufacturing products for testing, as well as licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired has been expensed as research and development costs, as such property is related to particular research and development projects and had no alternative future uses.
The Company estimates its expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials.
The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company accounts for trial expenses according to the timing of various aspects of the trial. The Company determines accrual estimates taking into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed.
During the course of a clinical trial, the Company adjusts its clinical expense recognition if actual results differ from its estimates. The Company makes estimates of its accrued expenses as of each balance sheet date based on the facts and circumstances known to it at that time. The Company’s clinical trial accruals are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors.
Government Grants and Contracts
From time to time, the Company may enter into arrangements with governmental entities for the purpose of obtaining funding for research and development activities. The Company is reimbursed for costs incurred that are associated with specified research and development activities covered by the applicable grant or contract approved by the government authority. U.S. GAAP does not provide specific recognition and measurement guidance for government grants to business entities. The Company applies International Accounting Standard 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for government grants. Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. After initial recognition, government grants received are recognized in earnings in the same period the underlying costs for which the grant is intended to compensate are incurred. The Company classifies government funding received under these arrangements as either a reduction to the related research and development expense or as contract income in the consolidated statements of operations, depending on the fee structure of the arrangement. The Company also applies the disclosure requirements of ASC 832, Government Assistance.
In
August 2022, the Company received a Cooperative Agreement grant from the National Institute on Drug Abuse (“NIDA”), part
of the National Institutes of Health, to support the development of its TNX-1300 product candidate for the treatment of cocaine intoxication.
No funding was received or recognized during the three and nine months ended September 30, 2026. During the three and nine months ended
September 30, 2025, the Company recorded $
In June 2024, the Company was awarded a prototype Other Transaction Agreement from
DTRA, an agency within the U.S. Department of Defense, to fund the Company’s TNX-4200 program for the development of a small molecule
broad-spectrum antiviral for the prevention or treatment of viral infections to improve the medical readiness of military personnel in
biological threat environments. The DTRA contract provides for payments totaling up to $
12
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Advertising and Promotion Costs
Advertising
and promotion costs are expensed as incurred. The Company recorded advertising and promotion expenses of approximately $
Stock-based Compensation.
All stock-based payments to employees and to nonemployees for their services, including stock options, are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation expense over the requisite service period. The Company accounts for share-based awards in accordance with the provisions of the Accounting Standards Codification (“ASC”) 718, Compensation – Stock Compensation.
Foreign Currency Translation
Operations of the Company’s Canadian subsidiary, Tonix Pharmaceuticals (Canada), Inc., are conducted in local currency, which represents its functional currency. The U.S. dollar is the functional currency of the other foreign subsidiaries. Balance sheet accounts of the Canadian subsidiary were translated from foreign currency into U.S. dollars at the exchange rate in effect at the balance sheet date and income statement accounts were translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process were included in accumulated other comprehensive loss on the consolidated balance sheets.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) represents foreign currency translation adjustments.
Income Taxes
Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records a valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized.
The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of September 30, 2026, the Company has not recorded any unrecognized tax benefits. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
Per Share Data
The computation of basic and diluted loss per share for the three and nine months ended September 30, 2026 and 2025 excludes potentially dilutive securities when their inclusion would be anti-dilutive, or if their exercise prices were greater than the average market price of the common stock during the period. Prefunded warrants are assumed exercised on the date of issuance and are included in the basic earnings per share (“EPS”) calculation and are therefore excluded from the table below.
All warrants (See Note 14) issued participate on a one-for-one basis with common stock in the distribution of dividends, if and when declared by the Board of Directors, on the Company’s common stock. For purposes of computing EPS, these warrants are considered to participate with common stock in earnings of the Company. Therefore, the Company calculates basic and diluted EPS using the two-class method. Under the two-class method, net income for the period is allocated between common stockholders and participating securities according to dividends declared and participation rights in undistributed earnings. No income was allocated to the warrants for the three and nine months ended September 30, 2026 and 2025, as results of operations were a loss for the periods.
13
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Potentially dilutive securities excluded from the computation of basic and diluted net loss per share, as of September 30, 2026, and 2025, are as follows:
| 2026 | 2025 | |||||||
| Warrants to purchase common stock | ||||||||
| Options to purchase common stock | ||||||||
| Totals | ||||||||
Recently Adopted and Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides guidance for estimating credit losses under the current expected credit losses (CECL) model for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification 606. The Company has adopted this ASU on a prospective basis, and it did not have a material impact on its consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832). The amendments in this ASU establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-10 on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU amends the existing standard to remove all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year. The amendments can be applied prospectively, retrospectively, or via a modified prospective transition method. The Company is evaluating the impact of adoption on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to improve transparency in financial reporting by requiring entities to present more detailed information about the nature of expenses included within the Income Statement. The guidance will first be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is in the process of assessing the impact of ASU 2024-03 on its financial statements.
14
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 – INVENTORY
The components of inventory consisted of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Raw Materials | $ | $ | ||||||
| Work-in-process | — | |||||||
| Finished Goods | ||||||||
| Total Inventory | $ | $ | ||||||
| Recognized as: | ||||||||
| Inventory | $ | $ | ||||||
| Other non-current assets | — | |||||||
| Total Inventory | $ | $ | ||||||
Inventory amounts recognized within Other non-current assets consist almost entirely of raw materials that are not expected to be sold within one year.
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following (in thousands):
| September 30, 2026 | December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Property and equipment, net: | ||||||||
| Land | $ | $ | ||||||
| Land improvements | ||||||||
| Buildings | ||||||||
| Office furniture and equipment | ||||||||
| Laboratory equipment | ||||||||
| Leasehold improvements | ||||||||
| Property and equipment gross | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
NOTE 5 – FAIR VALUE MEASUREMENTS
Fair value measurements affect the Company’s accounting for certain of its financial assets. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes:
| Level 1: | Observable inputs, such as quoted prices in active markets. |
| Level 2: | Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange-traded instruments. This category includes U.S. government agency-backed debt securities and corporate-debt securities. |
| Level 3: | Unobservable inputs in which there is little or no market data. |
As
of September 30, 2026, and December 31, 2025, the Company used Level 1 quoted prices in active markets to value cash equivalents of $
15
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 – SEGMENT INFORMATION AND CONCENTRATIONS
Operating
segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief
operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance.
The Company considers its chief executive officer to be the Company’s CODM. The CODM manages the Company’s operations and
allocates resources based on the Company’s consolidated results; therefore, the Company operates as
The accounting policies of the Company’s single operating and reportable segment are the same as those described in the summary of significant accounting policies. The Company’s method for measuring segment profitability includes net income (loss), which the CODM uses to assess performance and make decisions for resource allocation, consistent with the measurement principles for net income (loss) as reported on the Company’s consolidated statements of operations. The significant segment expenses regularly provided to the CODM are consistent with the operating expenses reported on the Company's condensed consolidated statements of operations. Research and development expenses are provided on a more disaggregated basis, as shown below. Other segment items consist of contract income, loss on extinguishment of debt, interest income, net, and other income (expense), net as presented on the condensed consolidated statements of operations.
Information about significant segment expenses regularly provided to the CODM is as follows (in thousands):
| Three Months Ended September 30, | ||||||||||||
| (in thousands) | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Research and development expenses: | ||||||||||||
| Direct expenses – TNX-102 SL | $ | $ | $ | |||||||||
| Direct expenses – TNX-801 | ( | ) | ||||||||||
| Direct expenses – TNX-1500 | ||||||||||||
| Direct expenses – TNX-1900 | ( | ) | ||||||||||
| Direct expenses – TNX-4200 | ||||||||||||
| Direct expenses – TNX-4800 | ||||||||||||
| Direct expenses – Other programs | ||||||||||||
| Internal staffing, overhead and other | ||||||||||||
| Total research & development | $ | $ | $ | |||||||||
| Nine Months Ended September 30, | ||||||||||||
| (in thousands) | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Research and development expenses: | ||||||||||||
| Direct expenses – TNX-102 SL | $ | $ | $ | |||||||||
| Direct expenses – TNX-801 | ||||||||||||
| Direct expenses – TNX-1500 | ||||||||||||
| Direct expenses – TNX-1900 | ||||||||||||
| Direct expenses – TNX-4200 | ||||||||||||
| Direct expenses – TNX-4800 | ||||||||||||
| Direct expenses – Other programs | ||||||||||||
| Internal staffing, overhead and other | ||||||||||||
| Total research & development | $ | $ | $ | |||||||||
Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing activities, such as fees paid to contractors, consultants and contract research organizations in connection with our development work. Included in “Internal Staffing, Overhead and Other” are overhead, supplies, research and development employee costs (including stock option expenses), travel, and regulatory and legal costs.
The
Company had three products that accounted for $17.2 million and $37.7 million, respectively, representing
16
As
of September 30, 2026, accounts receivable from three customers accounted for
For
the three months ended September 30, 2026, revenues from three customers accounted for
NOTE 7 – OTHER BALANCE SHEET INFORMATION
Components of selected captions in the consolidated balance sheets consist of:
| September 30, 2026 | December 31, 2025 | |||||||
| Prepaid expenses and other current assets: | (in thousands) | |||||||
| Contract research-related | $ | $ | ||||||
| Prepaid Inventory | ||||||||
| Prescription drug user fee | ||||||||
| Taxes | ||||||||
| Insurance | ||||||||
| Professional fees and other | ||||||||
| $ | $ | |||||||
| Other non-current assets: | ||||||||
| Amounts held in escrow | $ | $ | — | |||||
| Inventory | — | |||||||
| Restricted cash | ||||||||
| Domain name | ||||||||
| Security deposits | ||||||||
| $ | $ | |||||||
| Accrued expenses and other current liabilities: | ||||||||
| Contract research-related | $ | $ | ||||||
| Compensation and compensation-related | ||||||||
| Gross-to-net deductions | ||||||||
| Professional fees and other | ||||||||
| $ | $ | |||||||
NOTE 8 – DEBT FINANCING
On
December 8, 2023, the Company entered into a Loan and Guaranty Agreement (the “Loan Agreement”) by and among the
Company, Krele LLC, Tonix Pharmaceuticals, Inc., Jenner Institute LLC and Tonix R&D Center LLC (collectively, the “Loan
Parties”), with JGB Capital, LP, JGB Partners, LP, JGB (Cayman) Port Ellen Ltd., and any other lender from time to time party
hereto (collectively, the “Lenders”), and JGB Collateral LLC, as administrative agent and collateral agent for the
Lenders (in such capacity, “JGB Agent”) for a
During
the first quarter of 2025, the Company paid $
17
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 9 – STOCKHOLDERS’ EQUITY
On
February 5, 2025, the Company effected a
NOTE 10 – REVENUES
Disaggregation of Net Revenues
The Company’s net product revenues are summarized below:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| TONMYA | $ | $ | — | |||||
| Zembrace SymTouch | ||||||||
| Tosymra | ||||||||
| Total product revenues | $ | $ | ||||||
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| TONMYA | $ | $ | — | |||||
| Zembrace SymTouch | ||||||||
| Tosymra | ||||||||
| Total product revenues | $ | $ | ||||||
All sales are generated in the United States.
Gross-to-Net Sales Accruals
We record gross-to-net sales accruals for chargebacks, rebates, sales and other discounts, and product returns, which are all customary to the pharmaceutical industry.
An analysis of the change in reserves for discounts and allowances is summarized as follows (in millions):
| Accrued Liabilities | Contra Receivable | |||||||||||||||
| Rebates & Discounts | Returns | Distribution & Chargebacks | Total | |||||||||||||
| Reserve balance, January 1, 2026 | ||||||||||||||||
| Current provisions relating to sales in current year | ||||||||||||||||
| Payments/credits received in current year | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in estimate related to sales in the prior year | ( | ) | ( | ) | ( | ) | ||||||||||
| Reserve balance, September 30, 2026 | $ | |||||||||||||||
18
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| Accrued Liabilities | Contra Receivable | |||||||||||||||
| Rebates & Discounts | Returns | Distribution & Chargebacks | Total | |||||||||||||
| Reserve balance, January 1, 2025 | ||||||||||||||||
| Current provisions relating to sales in current year | ||||||||||||||||
| Payments/credits received in current year | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Reserve balance, September 30, 2025 | $ | |||||||||||||||
NOTE 11 – ASSET PURCHASE AGREEMENT WITH UPSHER-SMITH
On June 30, 2023, the Company completed the acquisition of certain assets from Upsher Smith related to Zembrace SymTouch (sumatriptan injection) 3 mg (“Zembrace”) and Tosymra (sumatriptan nasal spray) 10 mg (“Tosymra”) products.
The Company has assumed certain obligations of Upsher Smith, including the payment
of quarterly royalties on annual net sales of the acquired products in the U.S. as follows: for Tosymra,
For
Zembrace, royalty payments on annual net sales in the U.S. are
In
addition, the Company has assumed the obligation to pay an additional
NOTE 12 – SALE AND PURCHASE OF COMMON STOCK
2025 Lincoln Park Transaction
On
June 11, 2025, the Company entered into a purchase agreement (the “2025 Purchase Agreement”) and a registration rights agreement
(the “2025 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to
the terms of the 2025 Purchase Agreement, Lincoln Park has agreed to purchase from the Company up to $
Pursuant
to the terms of the 2025 Purchase Agreement, at the time the Company signed the 2025 Purchase Agreement and the 2025 Registration Rights
Agreement, the Company issued
19
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Company evaluated the 2025 Purchase Agreement under ASC 815-40 Derivatives and Hedging-Contracts on an Entity’s Own Equity as it represents the right to require Lincoln Park to purchase shares of common stock in the future, similar to a put option. The Company concluded that the 2025 Purchase Agreement represents a freestanding derivative instrument that does not qualify for equity classification and therefore requires fair value accounting. The Company analyzed the terms of the contract and concluded that the derivative instrument had insignificant value as of September 30, 2026 and December 31, 2025.
2025 At-the-Market Offerings
On
June 11, 2025, the Company entered into a Sales Agreement (the “2025 Sales Agreement”), with A.G.P./Alliance Global
Partners (“AGP”) pursuant to which the Company may issue and sell, from time to time, shares of common stock having an
aggregate offering price of up to $
2024 At-the-Market Offerings
On
July 30, 2024, the Company entered into a Sales Agreement (the “2024 Sales Agreement”), with AGP pursuant to which the Company
may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $
Stock repurchases
In
September 2024, the Board of Directors approved a 2024 share repurchase program pursuant to which the Company may repurchase up
to $
During
the nine months ended September 30, 2025, the Company repurchased
The Company repurchased the following capital stock:
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||
| Total cost of repurchased shares (in thousands) | $ | — | $ | |||||
| Shares repurchased | — | |||||||
| Weighted average price per share | $ | — | ||||||
The timing and amount of any shares repurchased will be determined based on the Company’s evaluation of market conditions and other factors and the share repurchase program may be discontinued or suspended at any time. Repurchases will be made in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and certain other legal requirements to which the Company may be subject. Repurchases may be made, in part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so.
20
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 13 – STOCK-BASED COMPENSATION
On May 7, 2026, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2026 Stock Incentive Plan (the “2026 Plan”), which replaced the Tonix Pharmaceuticals Holding Corp. Amended and Restated 2020 Stock Incentive Plan.
Under
the terms of the 2026 Plan, the Company may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation
rights (“SARs”), (4) restricted stock units (“RSUs”), (5) other stock-based awards, and (6) cash-based awards.
The 2026 Plan initially provided for the issuance of up to
The
Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2026 Plan. However, the exercise
price of an incentive stock option may not be less than
General
A summary of the stock option activity and related information for the Plans for the nine months ended September 30, 2026, is as follows:
| Shares | Weighted- Average Exercise Price | Weighted- Average Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Grants | — | |||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeitures or expirations | ( | ) | ||||||||||||||
| Outstanding at September 30, 2026 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2026 | $ | $ | ||||||||||||||
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on options with an exercise price less than the Company’s closing stock price at the respective dates.
The
weighted average fair value of options granted during the three and nine months ended September 30, 2026, was $
21
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The
Company measures the fair value of stock options on the date of grant, based on the Black-Scholes option pricing model using certain
assumptions discussed below, and the closing market price of the Company’s common stock on the date of the grant. The fair value
of the award is measured on the grant date. One-third of most stock options granted pursuant to the Plans vest 12 months from the date
of grant and 1/36th each month thereafter for 24 months and expire
The assumptions used in the valuation of stock options granted during the nine months ended September 30, 2026, and 2025 were as follows:
| Nine
Months Ended September 30, 2026 |
Nine
Months Ended September 30, 2025 |
|||||||
| Risk-free interest rate | % | % | ||||||
| Expected term of option | ||||||||
| Expected stock price volatility | % | % | ||||||
| Expected dividend yield | ||||||||
The risk-free interest rate is based on the yield of Daily U.S. Treasury Yield Curve Rates with terms equal to the expected term of the options as of the grant date. The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting Bulletin, and the expected stock price volatility is based on the Company’s historical stock price volatility.
Stock-based compensation expense related
to options granted was $
Stock-based compensation expense related
to options was $
As
of September 30, 2026, the Company had approximately $
Employee Stock Purchase Plans
On May 5, 2023, the Company’s stockholders approved the Tonix Pharmaceuticals Holding Corp. 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which was replaced by the Tonix Pharmaceuticals Holding Corp. 2025 Employee Stock Purchase Plan (the “2025 ESPP”, and together with the 2023 ESPP, the “ESPP Plans”), which was approved by the Company’s stockholders on May 8, 2025.
The
2025 ESPP allows eligible employees to purchase up to an aggregate of
22
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The
2023 ESPP allows eligible employees to purchase up to an aggregate of
The
ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the
nine months ended September 30, 2026 and 2025, $
NOTE 14 – WARRANTS TO PURCHASE COMMON STOCK
The following table summarizes information with respect to outstanding warrants to purchase common stock of the Company at September 30, 2026:
| Exercise | Number | Expiration | ||||||||
| Price | Outstanding | Date | ||||||||
| $ | (1) | |||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| $ | ||||||||||
| (1) |
During
the nine months ended September 30, 2025,
23
TONIX PHARMACEUTICALS HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Contractual agreements
The
Company has entered into contracts with various contract research organizations with outstanding commitments aggregating approximately
$
The
Company has entered into various exclusive license agreements with various institutions with the right to sublicense, certain patents,
technical information and material, and to develop and commercialize products thereunder. In addition to any upfront payments already
paid, the Company may be obligated to pay milestone fees ranging from $
Defined contribution plan
The
Company established a qualified defined contribution plan (the “401(k) Plan”) pursuant to Section 401(k) of the Code, whereby
all eligible employees may participate. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k)
Plan, subject to defined limitations. The Company is required to make contributions to the 401(k) Plan equal to
NOTE 16 – SUBSEQUENT EVENTS
Subsequent
to September 30, 2026, the Company sold
On October 1, 2026, the Company received a paragraph IV certification notice from Dr. Reddy’s Laboratories Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, “DRL”) regarding an abbreviated new drug application seeking FDA approval of a generic version of TONMYA (cyclobenzaprine hydrochloride) sublingual tablets, 2.8 mg. DRL alleges that U.S. Patent Nos. 9,636,408, 9,956,188, 10,117,936 and 10,864,175, which are listed in the Orange Book for TONMYA, are invalid, unenforceable and/or will not be infringed by its proposed product. The Company intends to commence patent infringement litigation against DRL within 45 days after receipt of the notice to enforce its patent rights and obtain a 30-month stay of FDA approval of DRL’s application, subject to applicable statutory exceptions and court orders. The Company cannot predict the outcome of this matter.
On October 30, 2026, the Company appointed George Lederman, PhD, as Executive Vice President, Strategy and Transformation. Dr. Lederman is the son of Seth Lederman, MD, the Company’s President and Chief Executive Officer. His appointment was reviewed and approved by the independent members of the Company’s Board of Directors and Audit Committee in accordance with the Company’s related party transactions policy, and his compensation was reviewed and approved by the independent members of the Company’s Board of Directors and Compensation Committee.
24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect Management’s current views with respect to future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors known to us could cause actual results to differ materially from those in forward-looking statements. Except as required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions. Factors that could cause differences include, but are not limited to: our need for additional financing; risks related to the failure to successfully market any of our products; risks related to the failure to obtain FDA clearances or approvals and noncompliance with FDA regulations; risks related to the timing and progress of clinical development of our product candidates; uncertainties of patent protection and litigation; uncertainties of government or third party payor reimbursement; limited research and development efforts and dependence upon third parties; and substantial competition.
Business Overview
We are a fully integrated biopharmaceutical company commercializing and developing innovative therapies for central nervous system (“CNS”) disorders, infectious diseases, and immunology. Our portfolio consists of commercial, development-stage and discovery programs.
TONMYA® (cyclobenzaprine HCl sublingual tablets 2.8 mg), our flagship internally conceived and developed medicine, is the first new medicine for fibromyalgia in adults approved by the U.S. Food and Drug Administration (“FDA”) in more than 15 years. Our CNS commercial infrastructure supports our marketed products, including our acute migraine products, Zembrace® SymTouch® (sumatriptan injection 3 mg) and Tosymra® (sumatriptan nasal spray 10 mg). We received approval from the FDA for TONMYA for the treatment of fibromyalgia in adults in August 2025 and commercially launched TONMYA in November 2025. TONMYA is a centrally acting, non-opioid analgesic designed for bedtime administration and long-term use, for which we hold worldwide commercialization rights. Our commercial platform includes sales, marketing, market access, distribution, and patient support capabilities.
We are advancing a diversified pipeline generated through internal discovery, in-licensing, acquisitions, and collaborations with academic and non-profit institutions. Our pipeline addresses conditions that span CNS, infectious disease, immunology, and rare disease, with several programs in clinical and preclinical development.
Clinical Stage Pipeline
TONMYA’s proprietary cyclobenzaprine HCl sublingual tablet formulation is referred to as “TNX-102 SL” outside of the fibromyalgia indication. We are exploring the utility of TNX-102 SL (cyclobenzaprine HCl sublingual tablets) in Phase 2 clinical trials for major depressive disorder (“MDD”) and acute stress disorder (“ASD”)/acute stress reaction (“ASR”). A potentially pivotal Phase 2 study of TNX-102 SL as a first-line monotherapy in adults with MDD, the HORIZON study, commenced in June 2026 and is currently enrolling.
TNX-102 SL is being developed to treat ASD/ASR under an investigator-initiated investigational new drug (“IND”) application at the University of North Carolina (“UNC”) in the ongoing OASIS study funded by a grant UNC received from the U.S. Department of Defense (“DoD”). Topline data from the OASIS study is expected to be reported mid-2027.
Our clinical-stage infectious disease portfolio includes TNX-4800, a human monoclonal antibody targeting Borrelia OspA, for the prevention of Lyme disease in the U.S., where no vaccines or prophylactics for Lyme disease are approved by the FDA. We received positive, final minutes from the FDA following a Type C meeting in the third quarter of 2026. The minutes support the planned initiation of an adaptive Phase 2 field study in the first quarter of 2027. The Phase 2 study is expected to enroll in the 2027 and 2028 seasons, with the majority of participants enrolled in 2028, pending final FDA review and agreement on the study protocol. If the attack rate is lower than expected, the study could continue enrolling in 2029. TNX-4800 was licensed from UMass Chan Medical School.
Our clinical-stage immunology development portfolio includes TNX-1500 (provisional international nonproprietary name: mosdaprubart), which is a Phase 2-ready Fc-modified humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed for the prevention of kidney transplant rejection and for the treatment of autoimmune diseases. A Phase 2, open-label, investigator-initiated study to prevent rejection in adult kidney transplant patients at Massachusetts General Hospital (“MGH”) is expected to begin in the first quarter of 2027.
25
Our clinical-stage CNS portfolio includes the biologic candidate TNX-1300 (double-mutant cocaine esterase), which is being developed for the treatment of cocaine intoxication. TNX-1300 has been granted Breakthrough Therapy designation by the FDA, and a Phase 2 study has been completed. We met with the FDA in the fourth quarter of 2026 to discuss the clinical design of the next Phase 2 study but do not plan to initiate a study in the near term in order to prioritize our cash and resource allocation toward TONMYA and TNX-4800.
We use artificial intelligence (“AI”) and computational tools to support scientific research, drug development and corporate activities. Our AI-assisted scientific analyses are subject to appropriate human review and, where relevant, experimental and clinical validation.
We are focused on supporting TONMYA’s commercial growth and the advancement of TNX-102 SL in MDD, TNX-4800 for Lyme disease prevention and TNX-1500 in an investigator-initiated study to prevent kidney transplant rejection.
Research Contract with the U.S. Department of Defense
We are developing a pre-IND infectious disease program designated TNX-4200, which is a small molecule broad-spectrum antiviral agent targeting CD45 to improve the medical readiness of military personnel in biological threat environments. The TNX-4200 program is supported by a $34.1 million contract over five years from the U.S. DoD’s Defense Threat Reduction Agency (“DTRA”). We own and operate a state-of-the-art research facility in Frederick, Maryland that supports this research.
Our product candidates are investigational and have not been approved for the indications for which they are being developed.
Zembrace SymTouch and Tosymra are registered trademarks of Tonix Medicines. TONMYA is a registered trademark of Tonix Pharma Limited. All other marks are the property of their respective owners. We are led by a management team with significant industry experience in drug development and commercialization.
Results of Operations
We anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the sales of our commercial products, progress of our research and development efforts and the timing and outcome of regulatory submissions. Due to these uncertainties, accurate predictions of future operations are difficult or impossible to make.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
The following table sets forth our operating results for the three months ended September 30, 2026 and 2025 (in thousands):
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Product revenue, net | $ | 17,234 | $ | 3,290 | ||||
| COSTS AND EXPENSES: | ||||||||
| Cost of sales | 1,252 | 1,367 | ||||||
| Research and development | 25,824 | 9,289 | ||||||
| Selling, general and administrative | 45,590 | 25,701 | ||||||
| Total operating expenses | 72,666 | 36,357 | ||||||
| Operating loss | (55,432 | ) | (33,067 | ) | ||||
| Contract income | 666 | 982 | ||||||
| Interest income, net | 1,362 | 1,231 | ||||||
| Other income (expense), net | 75 | (1,156 | ) | |||||
| Net loss | $ | (53,329 | ) | $ | (32,010 | ) | ||
26
Revenues. Revenue recognized for the three months ended September 30, 2026 and 2025, was $17.2 million and $3.3 million, respectively. The increase is predominantly due to the launch of TONMYA in November 2025.
Our net product revenues are summarized below:
| Three Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| TONMYA | $ | 15,024 | $ | — | ||||
| Zembrace SymTouch | 1,521 | 2,582 | ||||||
| Tosymra | 689 | 708 | ||||||
| Total product revenues | $ | 17,234 | $ | 3,290 | ||||
Cost of Sales. Cost of sales recognized for the three months ended September 30, 2026 and 2025, was $1.3 million and $1.4 million, respectively. The decrease in cost of sales is driven by a change in product mix.
Research and Development Expenses. Research and development expenses for the three months ended September 30, 2026 were $25.8 million, an increase of $16.5 million, or 178%, from $9.3 million for the three months ended September 30, 2025. This increase is predominantly due to increased clinical expenses of $3.6 million, non-clinical expenses of $1.1 million and manufacturing expenses of $9.8 million as a result of advancing our prioritized pipeline period over period, as well as increased employee-related costs of $1.5 million due to increased headcount.
The table below summarizes our direct research and development expenses for our product candidates and development platform for the three months ended September 30, 2026, and 2025.
| Three Months Ended September 30, | ||||||||||||
| (in thousands) | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Research and development expenses: | ||||||||||||
| Direct expenses – TNX-102 SL | $ | 3,122 | $ | 33 | $ | 3,089 | ||||||
| Direct expenses – TNX-801 | 414 | 636 | (222 | ) | ||||||||
| Direct expenses – TNX-1500 | 2,601 | 1,887 | 714 | |||||||||
| Direct expenses – TNX-1900 | 376 | 405 | (29 | ) | ||||||||
| Direct expenses – TNX-4200 | 1,039 | 306 | 733 | |||||||||
| Direct expenses – TNX-4800 | 9,640 | 45 | 9,595 | |||||||||
| Direct expenses – Other programs | 796 | 168 | 628 | |||||||||
| Internal staffing, overhead and other | 7,836 | 5,809 | 2,027 | |||||||||
| Total research & development | $ | 25,824 | $ | 9,289 | $ | 16,535 | ||||||
Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing activities, such as fees paid to contractors, consultants and CROs in connection with our development work. Included in “Internal Staffing, Overhead and Other” are overhead, supplies, research and development employee costs (including stock option expenses), travel, and regulatory and legal costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the three months ended September 30, 2026 were $45.6 million, an increase of $19.9 million, or 77% from $25.7 million incurred in the three months ended September 30, 2025. The increase is primarily due to an increase in sales and marketing expenses of $13.5 million, employee-related expenses of $4.1 million, and professional expenses of $1.5 million. These increases primarily reflect commercialization activities following the launch of TONMYA in November 2025.
Contract Income. Contract income under our DTRA contract for the three months ended September 30, 2026, was $0.7 million, a decrease of $0.3 million, or 30%, from $1.0 million for the three months ended September 30, 2025. Income under this cost-plus-fixed-fee arrangement is recognized based on reimbursable direct costs, allowable indirect costs and the fixed fee, as described in Note 2 to the condensed consolidated financial statements.
Net Loss. As a result of the foregoing, the net loss for the three months ended September 30, 2026 was $53.3 million, an increase of $21.3 million, or 66.6%, compared to a net loss of $32.0 million for the three months ended September 30, 2025.
27
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
The following table sets forth our operating results for the nine months ended September 30, 2026 and 2025 (in thousands):
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| REVENUE | ||||||||
| Product revenue, net | $ | 37,656 | $ | 7,717 | ||||
| COSTS AND EXPENSES: | ||||||||
| Cost of sales | 3,533 | 5,582 | ||||||
| Research and development | 63,454 | 27,545 | ||||||
| Selling, general and administrative | 110,173 | 52,007 | ||||||
| Total operating expenses | 177,160 | 85,134 | ||||||
| Operating loss | (139,504 | ) | (77,417 | ) | ||||
| Contract income | 1,266 | 2,941 | ||||||
| Loss on extinguishment of debt | — | (2,092 | ) | |||||
| Interest income, net | 4,140 | 2,713 | ||||||
| Other income (expense), net | 23 | (3,256 | ) | |||||
| Net loss | $ | (134,075 | ) | $ | (77,111 | ) | ||
Revenues. Revenue recognized for the nine months ended September 30, 2026 and 2025, was $37.7 million and $7.7 million, respectively. The increase is predominantly due to the launch of TONMYA in November 2025. Gross-to-net allowances decreased by approximately $2.8 million due to changes in prior estimates related to a prior year resulting in an additional $2.8 million of revenue being recognized during the nine months ended September 30, 2026.
Our net product revenues are summarized below:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| TONMYA | $ | 29,708 | $ | — | ||||
| Zembrace SymTouch | 6,447 | 6,178 | ||||||
| Tosymra | 1,501 | 1,539 | ||||||
| Total product revenues | $ | 37,656 | $ | 7,717 | ||||
Cost of Sales. Cost of sales recognized for the nine months ended September 30, 2026, was $3.5 million. Cost of sales recognized for the nine months ended September 30, 2025, was $5.6 million, including write-downs related to Tosymra and Zembrace finished goods inventory of approximately $2.3 million based on an assessment of inventory on hand and projected sales. The increase in cost of sales, excluding the write-downs, is driven by a change in product mix and sale of products that had previously been written off.
Research and Development Expenses. Research and development expenses for the nine months ended September 30, 2026 were $63.5 million, an increase of $36.0 million, or 131% from $27.5 million for the nine months ended September 30, 2025. This increase is predominantly due to increases in clinical expenses of $5.7 million, non-clinical expenses of $1.0 million and manufacturing expenses of $20.9 million as a result of advancing our prioritized pipeline programs period over period, as well as increased employee-related expenses of $6.5 million as a result of increased headcount.
The table below summarizes our direct research and development expenses for our product candidates and development platform for the nine months ended September 30, 2026, and 2025.
| Nine Months Ended September 30, | ||||||||||||
| (in thousands) | ||||||||||||
| 2026 | 2025 | Change | ||||||||||
| Research and development expenses: | ||||||||||||
| Direct expenses – TNX-102 SL | $ | 8,124 | $ | 2,530 | $ | 5,594 | ||||||
| Direct expenses – TNX-801 | 3,689 | 1,049 | 2,640 | |||||||||
| Direct expenses – TNX-1500 | 7,508 | 3,271 | 4,237 | |||||||||
| Direct expenses – TNX-1900 | 2,122 | 741 | 1,381 | |||||||||
| Direct expenses – TNX-4200 | 1,621 | 730 | 891 | |||||||||
| Direct expenses – TNX-4800 | 12,240 | 1,295 | 10,945 | |||||||||
| Direct expenses – Other programs | 3,733 | 1,823 | 1,910 | |||||||||
| Internal staffing, overhead and other | 24,417 | 16,106 | 8,311 | |||||||||
| Total research & development | $ | 63,454 | $ | 27,545 | $ | 35,909 | ||||||
28
Our direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing activities, such as fees paid to contractors, consultants and contract research organizations in connection with our development work. Included in “Internal Staffing, Overhead and Other” are overhead, supplies, research and development employee costs (including stock option expenses), travel, and regulatory and legal costs.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the nine months ended September 30, 2026 were $110.2 million, an increase of $58.2 million, or 112%, from $52.0 million incurred in the nine months ended September 30, 2025. The increase is primarily due to increased sales and marketing of $37.6 million, employee-related expenses of $11.8 million and professional expenses of $6.2 million. These increases primarily reflect commercialization activities following the launch of TONMYA in November 2025.
Contract Income. Contract income under our DTRA contract for the nine months ended September 30, 2026, was $1.3 million, a decrease of $1.6 million, or 55%, from $2.9 million for the nine months ended September 30, 2025. Income under this cost-plus-fixed-fee arrangement is recognized based on reimbursable direct costs, allowable indirect costs and the fixed fee, as described in Note 2 to the condensed consolidated financial statements.
Net Loss. As a result of the foregoing, the net loss for the nine months ended September 30, 2026 was $134.1 million, an increase of $57.0 million, or 74%, compared to a net loss of $77.1 million for the nine months ended September 30, 2025.
License Agreement
On June 26, 2025, we obtained an exclusive worldwide license from the University of Massachusetts (“UMass”) Chan Medical School for the development of TNX-4800 (formerly known as mAb 2217LS). As of September 30, 2026, other than an upfront fee of $1.3 million, no payments have been accrued or paid in relation to this agreement.
Asset Purchase Agreements
On June 23, 2023, we entered into an asset purchase agreement with Upsher Smith for the acquisition of certain assets related to Zembrace and Tosymra.
We have assumed certain obligations of Upsher Smith, including the payment of quarterly royalties on annual net sales of the acquired products in the U.S. as follows: for Tosymra, 4% for net sales of $0 to $30 million, 7% of net sales of $30 to $75 million; 9% for net sales of $75 to $100 million; 12% for net sales of $100 to $150 million; and 15% for net sales greater than $150 million. Royalty payments with respect to Tosymra are payable until the expiration or termination of the product’s Orange Book listed patent(s) with respect to the United States or, outside the United States, the expiration of the last valid claim covering the product in the relevant country of the territory. For Zembrace, royalty payments on annual net sales in the U.S. are 3% for net sales of $0 to $30 million, 6% of net sales of $30 to $75 million; 12% for net sales of $75 to $100 million; 16% for net sales greater than $100 million. Such royalty payments were payable until July 19, 2025. Upon the entry of a generic version of the relevant product, the applicable royalty rates will be reduced by 90% for Zembrace, and by 66.7% for Tosymra.
In addition, we have assumed the obligation to pay an additional 3% royalty on net sales of Tosymra, plus an additional 3% if a patent containing certain claims related to Tosymra issues in the U.S., for 15 years from the first commercial sale of Tosymra in the applicable country or for as long as the manufacture, use or sale of Tosymra in such country is covered by a valid claim of a licensed patent, and up to $15 million per Tosymra product on the achievement of sales milestones ranging from $250 million to $1 billion in annual worldwide net sales.
Liquidity and Capital Resources
As of September 30, 2026, we had working capital of $150.1 million, comprised primarily of cash and cash equivalents of $162.8 million, accounts receivable, net of $14.6 million, inventory of $4.5 million and prepaid expenses and other current assets of $10.3 million, offset by $17.1 million of accounts payable, $24.6 million of accrued expenses, and current lease liabilities of $0.3 million. A significant portion of the accounts payable and accrued expenses is due to work performed in relation to our clinical programs, accruals for gross to net deductions related to our commercial products and launch of TONMYA.
The following table provides a summary of operating, investing and financing cash flows for the nine months ended September 30, 2026, and 2025, respectively (in thousands):
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (125,635 | ) | $ | (60,194 | ) | ||
| Net cash used in investing activities | (2,882 | ) | (3,507 | ) | ||||
| Net cash provided by financing activities | 81,993 | 155,387 | ||||||
29
For the nine months ended September 30, 2026 and 2025, we used approximately $125.6 million and $60.2 million of cash in operating activities, respectively, which represents cash outlays for research and development and general and administrative expenses in such periods. The increase in cash outlays principally resulted from an increase in research and development and selling, general and administrative expenses. Cash used in investing activities for the nine months ended September 30, 2026, was $2.9 million related to the purchase of property and equipment. Cash used in investing activities for the nine months ended September 30, 2025, was $3.5 million related to the issuance of a note and purchase of property and equipment. For the nine months ended September 30, 2026 and 2025, net cash provided from financing activities was $82.0 million and $155.4 million, respectively, predominantly from the issuance of common stock.
We believe that our cash resources at September 30, 2026, and the proceeds that we raised from equity offerings subsequent to September 30, 2026, will meet our operating and capital expenditure requirements into early third quarter of 2027, but will not extend to 12 months from the issuance of these financial statements.
We continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than currently expected due to changes we may make in our research and development spending plans. These factors raise substantial doubt about our ability to continue as a going concern for the one-year period from the date of filing of this Form 10-Q. We must obtain additional funding through public or private financing or collaborative arrangements with strategic partners to increase the funds available to fund operations. Without additional funds, we may be forced to delay, scale back or eliminate some of our research and development activities, or other operations and potentially delay product development to provide sufficient funds to continue our operations. If any of these events occur, our ability to achieve our development and commercialization goals would be adversely affected and we may be forced to cease operations.
Future Liquidity Requirements
We expect to continue to incur operating losses and substantial research and development expenses as we advance our prioritized clinical programs. The level and timing of these expenses will depend on program progress, portfolio prioritization and the implementation of planned cost reductions. We do not expect our existing resources to be sufficient to meet our operating requirements for the one-year period from the filing date of this report.
Our future capital requirements will depend on a number of factors, including the availability of financing, the timing and outcome of regulatory approvals, the progress of our research and development of product candidates, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights, the status of competitive products, and our success in developing markets for our product candidates.
We will need to obtain additional capital in order to fund future commercialization, research and development activities. Future financing may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or convertible debt securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock.
If additional financing is not available or is not available on acceptable terms, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our commercialization efforts or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently.
2025 Lincoln Park Transaction
On June 11, 2025, we entered into a purchase agreement (the “2025 Purchase Agreement”) and a registration rights agreement (the “2025 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Pursuant to the terms of the 2025 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $75,000,000 of our common stock (subject to certain limitations) from time to time during the term of the 2025 Purchase Agreement. Pursuant to the terms of the 2025 Registration Rights Agreement, we filed with the SEC a registration statement to register for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the 2025 Purchase Agreement.
Pursuant to the terms of the 2025 Purchase Agreement, at the time we signed the 2025 Purchase Agreement and the 2025 Registration Rights Agreement, we issued 48,708 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under the 2025 Purchase Agreement. The commitment shares were valued at $1.8 million and recorded as an addition to equity for the issuance of the common stock and treated as other expense, net on the condensed consolidated statement of operations under the 2025 Purchase Agreement. No shares were sold during the nine months ended September 30, 2026, under the 2025 Purchase Agreement.
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We evaluated the 2025 Purchase Agreement under ASC 815-40 Derivatives and Hedging-Contracts on an Entity's Own Equity as it represents the right to require Lincoln Park to purchase shares of common stock in the future, similar to a put option. We concluded that the 2025 Purchase Agreement represents a freestanding derivative instrument that does not qualify for equity classification and therefore requires fair value accounting. We analyzed the terms of the contract and concluded that the derivative instrument had insignificant value as of September 30, 2026 and December 31, 2025.
2025 At-the-Market Offerings
On June 11, 2025, we entered into a Sales Agreement (the “2025 Sales Agreement”), with A.G.P./Alliance Global Partners (“AGP”) pursuant to which we may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $400.0 million in sales. AGP is the sales agent under the at-the-market (“ATM”) offering program and is paid a 3% commission on each sale under the 2025 Sales Agreement. Our common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the three and nine months ended September 30, 2026, we sold 2.3 million and 6.3 million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $28.1 million and $81.7 million, respectively. Subsequent to September 30, 2026, we sold 0.3 million shares of common stock under the 2025 Sales Agreement, for net proceeds of approximately $1.5 million. During each of the three and nine months ended September 30, 2025, we sold approximately 1.7 million shares of common stock under the 2025 Sales Agreement for net proceeds of approximately $55.7 million.
2024 At-the-Market Offerings
On July 30, 2024, we entered into a Sales Agreement (the “2024 Sales Agreement”), with AGP pursuant to which we may issue and sell, from time to time, shares of common stock having an aggregate offering price of up to $250.0 million in sales. AGP is the sales agent under the ATM and is paid a 3% commission on each sale under the 2024 Sales Agreement. Our common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices will vary. During the three and nine months ended September 30, 2025, we sold approximately 0.9 million and 4.5 million shares, respectively, of common stock under the 2024 Sales Agreement for net proceeds of approximately $37.5 million and $112.9 million, respectively. We can no longer sell shares under the 2024 Sales Agreement as we have reached the aggregate $250 million in sales.
Stock repurchases
In September 2024, the Board of Directors approved a 2024 share repurchase program pursuant to which we may repurchase up to $10.0 million in value of our outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors.
During the nine months ended September 30, 2025, we repurchased 400,000 shares of common stock outstanding under the 2024 share repurchase program at prices ranging from $9.98 to $20.47 per share for a gross aggregate cost of approximately $5.9 million. The repurchased shares were immediately retired. No shares of common stock were repurchased during the nine months ended September 30, 2026.
We repurchased the following capital stock:
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||
| Total cost of repurchased shares (in thousands) | $ | — | $ | 5,949 | ||||
| Shares repurchased | — | 400,000 | ||||||
| Weighted average price per share | $ | — | 14.84 | |||||
The timing and amount of any shares repurchased will be determined based on our evaluation of market conditions and other factors and the share repurchase program may be discontinued or suspended at any time. Repurchases will be made in accordance with the rules and regulations promulgated by the Securities and Exchange Commission and certain other legal requirements to which the Company may be subject. Repurchases may be made, in part, under a Rule 10b5-1 plan, which allows stock repurchases when the Company might otherwise be precluded from doing so.
Stock Compensation
On May 7, 2026, our stockholders approved the Tonix Pharmaceuticals Holding Corp. 2026 Stock Incentive Plan (the “2026 Plan”), which replaced the Tonix Pharmaceuticals Holding Corp. Amended and Restated 2020 Stock Incentive Plan.
Under the terms of the 2026 Plan, we may issue (1) stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation rights (“SARs”), (4) restricted stock units (“RSUs”), (5) other stock-based awards, and (6) cash-based awards. The 2026 Plan initially provided for the issuance of up to 1,000,000 shares of common stock, which amount will be increased to the extent that awards granted under the 2026 Plan are forfeited, expire or are settled for cash (except as otherwise provided in the 2026 Plan). In addition, the 2026 Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our common stock available for issuance under the 2026 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2027 and ending on (and including) January 1, 2036, in an amount equal to the greater of (a) the difference between (x) twenty percent (20%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year calculated on a fully diluted basis, and (y) the total number of shares of common stock reserved under the 2026 Plan on December 31st of such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards or available for future awards) and (b) five percent (5%) of the total number of shares of stock outstanding as of December 31st of the preceding calendar year, calculated on a fully diluted basis.
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The Board of Directors determines the exercise price, vesting and expiration period of the grants under the 2026 Plan. However, the exercise price of an incentive stock option may not be less than 110% of fair value of the common stock at the date of the grant for a 10% or more shareholder and 100% of fair value for a grantee who is not a 10% shareholder. The fair value of the common stock is determined based on quoted market price or in the absence of such quoted market price, by the Board of Directors in good faith. Additionally, the expiration period of grants under the 2026 Plan may not be more than ten years. As of September 30, 2026, there were 713,200 shares available for future awards under the 2026 Plan.
The weighted average fair value of options granted during the three and nine months ended September 30, 2026 was $9.94 per share and $12.93 per share, respectively. The weighted average fair value of options granted during the three and nine months ended September 30, 2025 was $31.62 per share and $12.72 per share, respectively.
We measure the fair value of stock options on the date of grant, based on the Black-Scholes option pricing model using certain assumptions discussed below, and the closing market price of our common stock on the date of the grant. The fair value of the award is measured on the grant date. One-third of most stock options granted pursuant to the Plans vest 12 months from the date of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant. In addition, we issue options to directors which vest over a one-year period. We also issue premium options to executive officers which have an exercise price greater than the grant date fair value and have issued performance-based options which vest when target parameters are met or probable of being met, subject in each case to a one-year minimum service period prior to vesting. Stock-based compensation expense related to awards is amortized over the applicable service period using the straight-line method.
Stock-based compensation expense related to options was $2.2 million for the three months ended September 30, 2026, including $1.7 million in selling, general and administrative expenses and $0.5 million in research and development expenses. Stock-based compensation expense related to options was $1.8 million for the three months ended September 30, 2025, including $1.2 million in selling, general and administrative expenses and $0.6 million in research and development expenses.
Stock-based compensation expense related to options was $6.3 million for the nine months ended September 30, 2026, including $4.6 million in selling, general and administrative expenses and $1.7 million in research and development expenses. Stock-based compensation expense related to options was $4.1 million for the nine months ended September 30, 2025, including $2.8 million in selling, general and administrative expenses and $1.3 million in research and development expenses.
As of September 30, 2026, we had approximately $19.5 million of total unrecognized compensation cost related to non-vested awards granted under the Plans, which we expect to recognize over a weighted average period of 2.7 years.
Employee Stock Purchase Plans
On May 5, 2023, our stockholders approved the Tonix Pharmaceuticals Holding Corp. 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which was replaced by the Tonix Pharmaceuticals Holding Corp. 2025 Employee Stock Purchase Plan (the “2025 ESPP”, and together with the 2023 ESPP, the “ESPP Plans”), which was approved by our stockholders on May 8, 2025.
The 2025 ESPP allows eligible employees to purchase up to an aggregate of 2,000,000 shares of our common stock. Under the 2025 ESPP, on the first day of each offering period, each eligible employee for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of our common stock at the end of the offering period. Each offering period under the 2025 ESPP is for six months, which can be modified from time to time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2025 ESPP, subject to the statutory limit under the Code.
The 2023 ESPP allows eligible employees to purchase up to an aggregate of 250 shares of our common stock. Under the 2023 ESPP, on the first day of each offering period, each employee eligible for that offering period has the option to enroll for that offering period, which allows the eligible employees to purchase shares of our common stock at the end of the offering period. Each offering period under the 2023 ESPP is for six months, which can be modified from time-to-time. Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at the beginning or end of each offering period, whichever is less. A participant must designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2023 ESPP, subject to the statutory limit under the Code. As of September 30, 2026, 159 shares were available for future sales under the 2023 ESPP and 1,980,596 shares were available under the 2025 ESPP.
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The ESPP Plans are considered compensatory plans with the related compensation cost expensed over the six-month offering period. For the nine months ended September 30, 2026 and 2025, $0.2 million and $84,000, respectively, were expensed. As of December 31, 2025, approximately $90,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses. In January 2026, 5,883 shares that were purchased as of December 31, 2025, under the 2025 ESPP, were issued. In July 2026, 13,521 shares that were purchased as of June 30, 2026, under the 2025 ESPP, were issued. As of September 30, 2026, approximately $68,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses.
Commitments
Research and Development Contracts
We have entered into contracts with various contract research organizations with outstanding commitments aggregating approximately $43.3 million at September 30, 2026 for future work to be performed.
The Company has entered into various exclusive license agreements with various institutions with the right to sublicense, certain patents, technical information and material, and to develop and commercialize products thereunder. In addition to any upfront payments already paid, the Company may be obligated to pay milestone fees ranging from $25,000 to $5.0 million based on the potential achievement of certain development milestones, as well as milestone fees ranging from $55,000 to $20.0 million based on certain potential commercial achievements, as specified in the respective license agreement. Additionally, for licensed products sold during the applicable royalty term, the Company must pay royalties in the low-to-mid single digits, beginning in the year after the Company completes its first commercial sale of a licensed product. Finally, the Company has the right to grant sublicenses to third parties under each license agreement and is required to pay a sublicense income share based on the stage of development of the licensed product at the time the sublicense is granted.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Revenue Recognition. Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in the same period that the revenues are recognized. Such variable consideration represents chargebacks, rebates, prompt pay and other sales discounts, and product returns. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. Adjustments to these estimates to reflect actual results or updated expectations will be assessed each period. If any of our ratios, factors, assessments, experiences, or judgments are not indicative of or do not accurately estimate our future experience, our results could be materially affected. The potential of our estimates to vary differs by program, product, type of customer and geographic location. In addition, estimates associated with U.S. Medicare and Medicaid governmental rebate programs are at risk for material adjustment because of the extensive time delay.
Research and Development. We outsource certain of our research and development efforts and expense the related costs as incurred, including the cost of manufacturing product for testing, licensing fees and costs associated with planning and conducting clinical trials. The value ascribed to patents and other intellectual property acquired was expensed as research and development costs, as it related to particular research and development projects and had no alternative future uses.
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We estimate our research and development accrued expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants and clinical research organizations and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts. We account for trial expenses according to the progress of the trial as measured by participant progression and the timing of various aspects of the trial. We determine accrual estimates that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us at that time. Our clinical trial accruals and prepaid assets are dependent upon the timely and accurate reporting of contract research organizations and other third-party vendors.
Stock-Based Compensation. All stock-based payments to employees and to nonemployee directors for their services as directors consisted of grants of restricted stock and stock options, which are measured at fair value on the grant date and recognized in the consolidated statements of operations as compensation expense over the relevant vesting period. In addition, for awards that vest immediately and are nonforfeitable, the measurement date is the date the award is issued.
Derivative Instruments and Warrant Liabilities. The Company evaluates all of its financial instruments, including issued warrants to purchase common stock under ASC 815 – Derivatives and Hedging, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The Company uses the Black-Scholes option pricing model to value the derivative instruments at inception and subsequent valuation dates, which is adjusted for instrument-specific terms as applicable. The Company analyzed the terms of the contract and concluded that the derivative instrument had insignificant value as of September 30, 2026 and December 31, 2025.
From time to time, certain equity-linked instruments may be classified as derivative liabilities due to the Company having insufficient authorized shares to fully settle the equity-linked financial instruments in shares. In such a case, the Company has adopted a sequencing approach under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity to determine the classification of its contracts at issuance and at each subsequent reporting date. If reclassification of contracts between equity and assets or liabilities is necessary, the Company first allocates remaining authorized shares to equity on the basis of the earliest issuance date of potentially dilutive instruments, with the earliest issuance date receiving the first allocation of shares. In the event of identical issuance dates, shares are then allocated to equity beginning with instruments with the latest maturity date first.
Other than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets or any obligation arising out of a material variable interest in an unconsolidated entity.
Recently Adopted Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides guidance for estimating credit losses under the current expected credit losses (CECL) model for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification 606. We have adopted this ASU on a prospective basis, and it did not have a material impact on our consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832). The amendments in this ASU establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. Early adoption is permitted. We are currently evaluating the impact of ASU 2025-10 on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU amends the existing standard to remove all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted as of the beginning of a fiscal year. The amendments can be applied prospectively, retrospectively, or via a modified prospective transition method. We are evaluating the impact of adoption on our consolidated financial statements and related disclosures.
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In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to improve transparency in financial reporting by requiring entities to present more detailed information about the nature of expenses included within the Income Statement. The guidance will first be effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are in the process of assessing the impact of ASU 2024-03 on our financial statements.
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ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4 – CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On October 1, 2026, we received a paragraph IV certification notice from Dr. Reddy’s Laboratories Ltd. and Dr. Reddy’s Laboratories, Inc. (collectively, “DRL”) regarding an abbreviated new drug application seeking FDA approval of a generic version of TONMYA (cyclobenzaprine hydrochloride) sublingual tablets, 2.8 mg. DRL alleges that U.S. Patent Nos. 9,636,408, 9,956,188, 10,117,936 and 10,864,175 (the “TONMYA Patents”), which are listed in the Orange Book for TONMYA, are invalid, unenforceable and/or will not be infringed by its proposed product. We intend to commence patent infringement litigation against DRL within 45 days after receipt of the notice to enforce our patent rights and obtain a 30-month stay of FDA approval of DRL’s application, subject to applicable statutory exceptions and court orders. We cannot predict the outcome of this matter. See Part II, Item 1A, “Risk Factors,” for the risks associated with DRL’s patent challenge and potential generic competition.
Item 1A. Risk Factors
We have received a paragraph IV certification notice from a generic manufacturer seeking approval to market a generic version of TONMYA prior to the expiration of our Orange Book-listed patents. If generic manufacturers are successful in their use of litigation or regulatory means to obtain approval for generic versions of TONMYA, our revenue and results of operations would be adversely affected.
The Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Act”) permits the FDA to approve abbreviated new drug applications (“ANDAs”) for generic versions of branded drugs. The ANDA process permits competitor companies to obtain marketing approval for a drug with the same active ingredient as a branded drug, but does not generally require the conduct and submission of clinical efficacy studies for the generic product. In place of such clinical studies, an ANDA applicant usually submits data demonstrating that its product is bioequivalent to the branded product.
We own four patents that cover TONMYA and have listed those patents in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). For listed patents relevant to a proposed generic product, an ANDA applicant generally must certify that the patent has expired, that approval is sought only after the patent expires, or that the patent is invalid, unenforceable or will not be infringed by the proposed product. A certification in the last category is known as a paragraph IV certification and requires notice to the NDA holder and patent owner. For a listed method-of-use patent, an applicant may instead submit a section viii statement if it seeks approval only for uses not covered by that patent.
After receiving a paragraph IV notice, we may, if we have a proper basis, bring a patent infringement action against the ANDA applicant. If we commence such an action within 45 days after receiving the notice, the FDA generally may not grant final approval of the ANDA for 30 months from our receipt of the notice, subject to earlier termination upon expiration of the applicable patent, settlement of the litigation, a court decision in favor of the ANDA applicant, or such shorter or longer period as the court may order. Patent litigation of this kind, including discovery, trial and any appeals, is expensive and time-consuming. If the ANDA applicant prevails, generic versions of TONMYA could enter the market before our patents expire.
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On October 1, 2026, we received a notice letter (the “Notice”) from DRL stating that DRL had submitted an ANDA to the FDA seeking approval to market a generic version of TONMYA (cyclobenzaprine hydrochloride) sublingual tablets, 2.8 mg, prior to the expiration of the TONMYA Patents, each of which is listed in the Orange Book for TONMYA and is scheduled to expire on March 14, 2034. The Notice includes a paragraph IV certification alleging that the TONMYA Patents are invalid, unenforceable and/or will not be infringed by DRL’s proposed generic product. Under the Hatch-Waxman Act, we have 45 days from our receipt of the Notice to commence a patent infringement action against DRL in order to obtain the 30-month stay of FDA approval of DRL’s ANDA described above. We intend to vigorously enforce our intellectual property rights relating to TONMYA, including by commencing patent infringement litigation against DRL within the 45-day period. If we do not commence litigation within the 45-day period, the 30-month stay will not apply, and the FDA could approve DRL’s ANDA once DRL satisfies the other applicable requirements for approval, subject to the expiration of regulatory exclusivity for TONMYA in August 2028. Even if we commence litigation within the 45-day period, the 30-month stay may expire or be terminated before the litigation is resolved, and the FDA could approve DRL’s ANDA upon the earliest of the expiration of the 30-month stay, a decision in the litigation that is favorable to DRL, or the entry of a settlement order or consent decree stating that the TONMYA Patents are invalid or not infringed, subject in each case to any applicable regulatory exclusivity and other requirements for FDA approval. DRL or other generic manufacturers may also seek declaratory judgments of non-infringement or invalidity, or challenge the TONMYA Patents in proceedings before the U.S. Patent and Trademark Office, such as inter partes review. Also, we may receive additional paragraph IV notices from other generic manufacturers seeking approval of generic versions of TONMYA. We cannot predict the outcome of these matters, including whether any litigation we commence will be successful, or the timing thereof.
The approval of any ANDA for a generic version of TONMYA, or developments in related patent litigation, could negatively affect the market price of our common stock. Enforcing and defending our patents is likely to be costly and will divert significant management time and attention, and we may not be able to recover our litigation costs. If a court finds the TONMYA Patents invalid or unenforceable, or finds that the product of DRL or any other ANDA filer does not infringe them, generic competition for TONMYA could follow once any applicable regulatory exclusivity expires, which would have a material adverse effect on our revenue and results of operations. In addition, a generic manufacturer may elect to launch a generic version of TONMYA “at risk” after FDA approval but before final resolution of the litigation, and any damages we may recover may not fully compensate us for lost sales. Generic products are typically sold at significantly lower prices than branded products, and the introduction of a generic version of TONMYA could rapidly reduce our sales volume and pricing, including through substitution by pharmacies and pressure from third-party payors. If we resolve any patent litigation through settlement, the terms of the settlement could permit generic entry before our patents expire, and settlement agreements between brand and generic manufacturers may be subject to review by the Federal Trade Commission and the U.S. Department of Justice and to challenge by private plaintiffs, which could result in additional costs, investigations or litigation.
Our use of artificial intelligence could adversely affect our business, financial condition and results of operations
We use artificial intelligence (“AI”) and computational tools in research, drug development and corporate activities. Inaccurate or biased outputs may remain undetected despite human review, misdirect resources or delay development and regulatory submissions. AI predictions may not translate into clinical safety or efficacy. Use of AI, including third-party services, may expose confidential or personal information, create infringement claims or impair protection of our intellectual property. Service outages and changes in vendor terms may disrupt operations, increase expenses or compromise our proprietary information. Evolving laws and regulatory expectations may increase compliance costs or limit acceptance of AI-supported analyses. These risks could result in litigation, liability, reputational harm and increased costs.
Other than the risk factors above, there were no other material changes from the risk factors set forth under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should carefully consider the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as well as other reports and statements that we file and have filed with the SEC, in addition to the other information set forth in this report which could materially affect our business, financial condition or future results. The risks and uncertainties described in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025, as well as other reports and statements that we file with the SEC, are not the only risks and uncertainties facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, results of operations or cash flows.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 2(c). Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
Item 6. Exhibits
EXHIBIT INDEX
| Exhibit
No. |
Description |
| 3.01 | Articles of Incorporation, filed as an exhibit to the Registration Statement on Form S-1, filed with the Securities and Exchange Commission (the “Commission”) on April 9, 2008 and incorporated herein by reference. |
| 3.02 | Articles of Merger between Tamandare Explorations Inc. and Tonix Pharmaceuticals Holding Corp., effective October 11, 2011, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 17, 2011 and incorporated herein by reference. |
| 3.03 | Third Amended and Restated Bylaws, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on June 3, 2016 and incorporated herein by reference. |
| 3.04 | Certificate of Change of Tonix Pharmaceuticals Holding Corp., dated March 13, 2017 and effective March 17, 2017, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on March 16, 2017 and incorporated herein by reference. |
| 3.05 | Certificate of Amendment to Articles of Incorporation, effective June 16, 2017, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on June 16, 2017 and incorporated herein by reference. |
| 3.06 | Certificate of Amendment to Tonix Pharmaceuticals Holding Corp.’s Articles of Incorporation, as amended, filed with the Secretary of State of the State of Nevada on May 3, 2019. |
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| 3.07 | Form of Certificate of Designation of Series A Convertible Preferred Stock, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 25, 2022 and incorporated herein by reference. |
| 3.08 | Form of Certificate of Designation of Series B Convertible Preferred Stock, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on October 25, 2022 and incorporated herein by reference. |
| 3.09 | Certificate of Amendment to Tonix Pharmaceuticals Holding Corp.’s Articles of Incorporation, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on May 16, 2022 and incorporated herein by reference. |
| 3.10 | Certificate of Amendment to Tonix Pharmaceuticals Holding Corp.’s Articles of Incorporation, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on January 25, 2024 and incorporated herein by reference. |
| 4.01 | Specimen Common Stock Certificate of the Registrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on May 24, 2018 and incorporated herein by reference. |
| 4.02 | Description of Registrant’s Securities, filed as an exhibit to the Annual Report on Form 10-K, filed with the Commission on March 12, 2026 and incorporated herein by reference. |
| 4.03 | Form of Common Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on July 28, 2023 and incorporated herein by reference. |
| 4.04 | Form of Series C Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on December 21, 2023 and incorporated herein by reference. |
| 4.05 | Form of Series D Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on December 21, 2023 and incorporated herein by reference. |
| 4.06 | Form of Series E Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on March 29, 2024, and incorporated herein by reference. |
| 4.07 | Amendment to Common Stock Purchase Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on March 29, 2024, and incorporated herein by reference. |
| 4.08 | Form of Pre-Funded Warrant, filed as an exhibit to the Current Report on Form 8-K, filed with the Commission on December 29, 2025 and incorporated herein by reference. |
| 10.01 | Employment Agreement, between Tonix Pharmaceuticals Holding Corp. and Thomas Englese, dated September 4, 2026, filed herewith. * |
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| 31.01 | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
| 31.02 | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. |
| 32.01 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith. |
101.INS |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document, filed herewith. |
101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents, filed herewith. |
104 |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2026 is formatted in iXBRL, filed herewith. |
| * Denotes a management compensatory agreement or arrangement. |
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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.
| TONIX PHARMACEUTICALS HOLDING CORP. | ||
| (Registrant) | ||
| Date: November 9, 2026 | By: | /s/ SETH LEDERMAN |
| Seth Lederman | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: November 9, 2026 | By: | /s/ BRADLEY SAENGER |
| Bradley Saenger | ||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
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