What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-09 · 553 added, 451 removed, 166 unchanged (86% of the section changed)

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s

Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking statements that reflect

Management’s current views with respect to future events and financial performance.

You can identify these statements by

forward-looking words such as “may” “will,” “expect,” “anticipate,” “believe,”

“estimate” and “continue,” or similar words.

Those statements include statements regarding the intent,

belief or current expectations of us and members of its management team as well as the assumptions on which such statements are

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and

involve risk 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.

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 its 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 its assumptions.

Factors that could cause

differences include, but are not limited to:

the COVID-19 pandemic, including its impact on the Company, substantial competition;

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-looking

statements that reflect Management’s current views with respect to future events and financial performance.

You can identify

these statements by forward-looking words such as “may” “will,” “expect,” “anticipate,”

“believe,” “estimate” and “continue,” or similar words.

Those statements include statements

regarding the intent, belief or current expectations of us and members of its management team as well as the assumptions on which

such statements are based.

Prospective investors are cautioned that any such forward-looking statements are not guarantees of

future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by

such forward-looking statements.

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.

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

its 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 its assumptions.

that could cause differences include, but are not limited to:

the COVID-19 pandemic, including its impact on the Company, substantial

our possible need for additional financing;

uncertainties of patent protection and litigation;

uncertainties of government or third

party payor reimbursement;

uncertainties of government

or third party payor reimbursement;

limited research and development efforts and dependence upon third parties;

and risks related to failure

to obtain clearances or approvals from the United States Food and Drug Administration, or FDA, and noncompliance with FDA regulations.

Business Overview

and risks related

to failure to obtain clearances or approvals from the United States Food and Drug Administration, or FDA, and noncompliance with

FDA regulations.

We are a clinical-stage biopharmaceutical company focused on discovering,

1 unchanged sentence

Our portfolio is composed

of central nervous system (CNS), rare disease, immunology and infectious disease product candidates.

Our CNS portfolio includes both small

molecules and biologics to treat pain, neurologic, psychiatric and addiction conditions.

Our lead CNS candidate, TNX-102 SL (cyclobenzaprine

HCl sublingual tablet), is in mid-Phase 3 development for the management of fibromyalgia with a new Phase 3 study launched in the second

quarter of 2022 and interim data expected in the first quarter of 2023.

TNX-102 SL is also being developed to treat Long COVID, a chronic

post-acute COVID-19 condition.

We expect to initiate a Phase 2 study in Long COVID in the second quarter of 2022.

TNX-102 SL is also being

developed to treat posttraumatic stress disorder, or PTSD.

We expect to begin enrolling a Phase 2 study in PTSD in police in Kenya in

the second quarter of 2022.

TNX-1300 (cocaine esterase) is a biologic designed to treat cocaine intoxication that is expected to

start a Phase 2 trial in the second quarter of 2022.

of infectious disease, central nervous system (CNS), rare disease, and immunology product candidates.

Our infectious disease pipeline

consists of a vaccine in development to prevent smallpox and monkeypox, next-generation vaccines to prevent COVID-19, and a platform to

make fully human monoclonal antibodies to treat COVID-19.

TNX-801, Tonix’s vaccine in development to prevent smallpox and monkeypox,

is expected to enter a Phase 1 study in Kenya, in the first half of 2023.

TNX-801 also serves as the live virus vaccine platform or recombinant

pox vaccine (RPV) platform for other infectious diseases.

Our lead vaccine candidate for COVID-19 is TNX-1850, a live virus vaccine based

on Tonix’s RPV platform encoding the spike protein from SARS-CoV-2, BA.2 strain.

A Phase 1 study of the COVID-19 vaccine is expected

to be initiated in the second half of 2023.

Our CNS portfolio includes both small molecules and biologics to treat pain, neurologic, psychiatric

and addiction conditions.

Our lead CNS candidate, TNX-102 SL (cyclobenzaprine HCl sublingual tablet), is in mid-Phase 3 development for

the management of fibromyalgia with a potentially confirmatory Phase 3 study launched in the second quarter of 2022 and interim data expected

in the first quarter of 2023.

TNX-102 SL is also being developed to treat Long COVID, a chronic post-acute COVID-19 condition.

to initiate a Phase 2 study in Long COVID in the third quarter of 2022.

TNX-102 SL is also being developed to treat posttraumatic stress

disorder, or PTSD.

We expect to begin enrolling a Phase 2 study in PTSD in police in Kenya in the third quarter of 2022.

TNX-1300 (cocaine

esterase) is a biologic designed to treat cocaine intoxication that is in mid-Phase 2 development with a new potentially pivotal Phase

2 study expected to be initiated in the fourth quarter of 2022.

This study will be partially funded by the National Institute of Drug

Abuse or NIDA.

TNX-1300 has been granted Breakthrough Therapy Designation by the FDA.

TNX-1900 (intranasal

potentiated oxytocin), a small molecule in development for chronic migraine, is expected to enter the clinic with a Phase 2 study in the

second half of 2022.

Finally, TNX-601 CR (tianeptine oxalate and naloxone controlled-release tablets) is in development for the treatment

of major depressive disorder with a Phase 2 study expected to be initiated in the first quarter of 2023.

Our rare disease portfolio includes

TNX-2900 (intranasal potentiated oxytocin) for the treatment of Prader-Willi syndrome.

TNX-2900 has been granted Orphan-Drug Designation

Our immunology portfolio includes biologics to address organ transplant rejection, autoimmunity and cancer, including

TNX-1500 which is a humanized monoclonal antibody targeting CD40-ligand being developed for the prevention of allograft and xenograft

rejection and for the treatment of autoimmune diseases.

A Phase 1 study of TNX-1500 is expected to be initiated in the second half of

Our infectious disease pipeline consists of a vaccine in development to prevent smallpox and monkeypox called TNX-801, next-generation

vaccines to prevent COVID-19, and a platform to make fully human monoclonal antibodies to treat COVID-19.

Our lead vaccine candidates

for COVID-19 are TNX-1840 and TNX-1850, which are live virus vaccines based on Tonix’s recombinant pox live virus vaccine platform.

Tonix initiated a first-in-human, dose-finding clinical study for TNX-2100, a diagnostic skin test to measure delayed-type hypersensitivity

(DTH) reaction to SARS-CoV-2, in early January 2022.

However, due to the current COVID landscape in which the U.S.

Centers for Disease

Control and Prevention (CDC) reports that approximately 60% of adults and approximately 75% of children and adolescents in

have been infected with SARS-CoV-2, and the current U.S.

strategy of reducing or eliminating control measures such as mask-mandates,

lockdowns or surveillance, Tonix has stopped enrollment in the study and is terminating further development in the US.

TNX-1900 (intranasal potentiated oxytocin), a small

molecule in development for chronic migraine, is expected to enter the clinic with a Phase 2 study in the first half of 2023.

TNX-601 ER (tianeptine hemioxalate and extended-release tablets) is in development for the treatment of major depressive disorder with

a Phase 2 study expected to be initiated in the first quarter of 2023.

Our rare disease portfolio includes TNX-2900 (intranasal potentiated

oxytocin) for the treatment of Prader-Willi syndrome.

TNX-2900 has been granted Orphan-Drug Designation by the FDA.

Our immunology

portfolio includes biologics to address organ transplant rejection, autoimmunity and cancer, including TNX-1500 which is a humanized

monoclonal antibody targeting CD40-ligand being developed for the prevention of allograft and xenograft rejection and for the treatment

of autoimmune diseases.

A Phase 1 study of TNX-1500 is expected to be initiated in the first half of 2023.

In July 2022, Tonix announced

that it was terminating development of TNX-3500, an antiviral inhibitor of SARS-CoV-2, based on technology licensed from OyaGen, Inc.

The associated License Agreement with OyaGen, Inc.

is expected to be terminated, effective September 20, 2022.

We own and operate an infectious

disease research and development facility in Frederick, MD and a live virus vaccine process development and manufacturing facility in

the New Bedford Business Park in Dartmouth, MA.

Both facilities are expected to be fully functional during the third quarter of 2022.

All of our product candidates are investigational new drugs or biologics

and have not been approved for any indication.

Results of Operations

We anticipate that

our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress of our research

and development efforts and the timing and outcome of regulatory submissions.

Due to these uncertainties, accurate predictions

of future operations are difficult or impossible to make.

Three Months Ended March 31, 2022

Compared to Three Months Ended March 31, 2021

Development Expenses.

Research and development expenses for the three months ended March 31, 2022 were $18.4 million,

an increase of $3.1 million, or 20%, from $15.3 million for the three months ended March 31, 2021.

This increase is predominately

due to increased non-clinical expenses of $1.0 million and increased employee-related expenses of $2.1 million.

and none has been approved for any indication.

of Operations

anticipate that our results of operations will fluctuate for the foreseeable future due to several factors, such as the progress

of our research and development efforts and the timing and outcome of regulatory submissions.

Due to these uncertainties, accurate

predictions of future operations are difficult or impossible to make.

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

and Development Expenses .

Research and development expenses for the three months ended June 30, 2022 were $16.6 million,

a decrease of $1.5 million, or 9%, from $18.1 million for the three months ended June 30, 2021.

This decrease is predominately

due to decreased clinical expenses of $0.4 million, non-clinical expenses of $4.3 million, manufacturing expenses of $0.9 million,

offset by an increase in employee-related expenses of $2.2 million and increased lab supplies of $0.8 million.

We expect research

1 unchanged sentence

our development pipeline.

The table below summarizes

our direct research and development expenses for our product candidates and development platform for the quarters ended March 31,

2022, and 2021.

table below summarizes our direct research and development expenses for our product candidates and development platform for the

three months ended June 30, 2022, and 2021.

Three months ended June 30,

(in thousands)

1 unchanged sentence

Direct expenses – TNX - 102 SL

Direct expenses – TNX – 601 CR

Direct expenses – TNX – 601 ER

Direct expenses – TNX - 1300

3 unchanged sentences

Direct expenses – TNX - 2100

Direct expenses – TNX - 3500

Direct expenses – Other programs

1 unchanged sentence

Total research & development

Our direct research

and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such as fees paid to

contractors, consultants and CROs in connection with our development work.

Included in “Internal Staffing, Overhead and Other”

is overhead, supplies, research and development employee costs (including stock option expenses), travel, regulatory and legal.

General and Administrative

General and administrative expenses for the three months ended March 31, 2022 were $8.0 million, an increase

of $2.6 million, or 48%, from $5.4 million incurred in the three months ended March 31, 2021.

The increase is primarily due to

an increase in employee-related expenses of $1.8 million, an increase in legal fees of $0.1 million due to increased patent prosecution

costs, and an increase in financial reporting expenses of $0.3 million.

a result of the forgoing, the net loss for the three months ended March 31, 2022 was $26.4 million, compared to a net loss of $20.7

million for the three months ended March 31, 2021, an increase of $5.7 million or 28%.

License Agreements

On April 14, 2021,

we and OyaGen, Inc.

(“OyaGen”) entered into an exclusive License Agreement (the “OyaGen License Agreement”)

pursuant to which OyaGen granted us an exclusive license to certain patents and technical information related to an antiviral inhibitor

of SARS-CoV-2, sangivamycin, and to develop and commercialize products thereunder, and to acquire rights to any technology based

on the thereon for the prevention or treatment of COVID-19 developed by OyaGen during the term of the License Agreement.

As consideration for

entering into the License Agreement, we paid a low-seven digit license fee to OyaGen, and issued to OyaGen and an affiliated entity

an aggregate of 2,752,294 shares of our common stock, which is unregistered and subject to a six-month lock-up and a voting agreement,

pursuant to which OyaGen and the affiliated entity have agreed to vote the common stock on any matter put to a vote of the shareholders

of the Company in accordance with management’s recommendations.

The OyaGen License also provides for single-digit royalties

and contingent milestone payments.

As of March 31, 2022, no milestone payments have been accrued or paid in relation to this agreement.

On February 11, 2021,

we entered into a license agreement (the “Inserm License Agreement”) pursuant to which we licensed technology using

oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease from Inserm (the

French National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier Universitaire

The Inserm License Agreement provides for the payment of annual fees and milestone payments upon the occurrence of

specified sales milestones, totaling approximately $0.4 million, as well royalties on net sales of products based on the licensed

technology, and assignment/transfer and sublicense royalties.

As of March 31, 2022, no milestone payments have been accrued or

paid in relation to this agreement.

On September 16, 2019,

we entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees of Columbia University

in the City of New York (“Columbia”) pursuant to which Columbia granted to us an exclusive license, with the right

to sublicense, certain patents and technical information (collectively, the “TFF2 Technology”) related to a recombinant

Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2 Product”).

to the terms of the Columbia License Agreement, Columbia has reserved for itself the right to practice the TFF2 Technology for

academic research and educational purposes.

We paid a five-digit

license fee to Columbia as consideration for entering into the Columbia License Agreement, which was previously recorded to research

and development expenses in the statement of operations.

We are obligated to use Commercially Reasonable Efforts, as defined in

the Columbia License Agreement, to develop and commercialize the TFF2 Product, and to achieve specified developmental milestones.

We have agreed

to pay Columbia single-digit royalties on net sales of (i) TFF2 Products sold by us or a sublicensee and (ii) any other products

that involve material or technical information related to the TFF2 Product and transferred to us pursuant to the License Agreement

(“Other Products”) sold by us or a sublicensee.

Royalties on each particular TFF2 Product are payable on a country-by-country

and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in the last to expire of the

issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after the first commercial sale of

a TFF2 Product in the country in question.

Royalties on each particular Other Product are payable on a country-by-country and product-by-product

basis until a specified period of time after the first commercial sale of such particular Other Product in such country.

payable on net sales of the TFF2 Product and Other Products may be reduced by 50% of the royalties payable by us to any third party

for intellectual property rights which are necessary for the practice of the rights licensed to us under the Columbia License Agreement,

provided that the royalty payable on a TFF2 Product or Other Product may not be reduced by more than 50%.

We are also obligated

to make contingent milestone payments to Columbia totaling $4.1 million on a Product-by-Product basis upon the achievement of certain

development, approval and sales milestones related to a TFF2 Product.

In addition, we shall pay Columbia 5% of consideration, other

than royalty payments and certain other categories of consideration, payable to us by a sublicensee.

As of March 31, 2022, no milestone

payments have been accrued or paid in relation to this agreement.

On May 20, 2019, we

entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to which Columbia, for

itself and on behalf of the University of Kentucky and the University of Michigan (collectively, the “Institutions”)

direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such

as fees paid to contractors, consultants and CROs in connection with our development work.

Included in “Internal Staffing,

Overhead and Other” is overhead, supplies, research and development employee costs (including stock option expenses), travel,

regulatory and legal.

and Administrative Expenses .

General and administrative expenses for the three months ended June 30, 2022 were $6.8

million, an increase of $1.4 million, or 26%, from $5.4 million incurred in the three months ended June 30, 2021.

in primarily due to an increase in employee-related expenses of $1.2 million, and an increase in travel-related expenses of $0.2

As a result of the forgoing, the net loss for the three months ended June 30, 2022 was $23.1 million, compared

to a net loss of $23.6 million for the three months ended June 30, 2021.

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

and Development Expenses .

Research and development expenses for the six months ended June 30, 2022 were $35.0 million,

an increase of $1.5 million, or 5%, from $33.5 million for the six months ended June 30, 2021.

This increase is predominately

due to increased employee-related expenses of $4.1 million, regulatory/legal expenses of $0.3 million and lab supplies of $1.0

million offset by a decrease in non-clinical expenses of $3.3 million, clinical expenses of $1.4 million and manufacturing expenses

of $0.7 million.

We expect research and development expenses to increase during 2022 as we move our clinical development programs

forward and continue to invest in our development pipeline.

table below summarizes our direct research and development expenses for our product candidates and development platform for the

six months ended June 30, 2022, and 2021.

Six months ended June 30,

(in thousands)

Research and development expenses:

Direct expenses – TNX - 102 SL

Direct expenses – TNX – 601 ER

Direct expenses – TNX - 1300

Direct expenses – TNX - 1500

Direct expenses – TNX - 1800

Direct expenses – TNX - 1900

Direct expenses – TNX - 2100

Direct expenses – TNX - 3500

Direct expenses – Other programs

Internal staffing, overhead and other

Total research & development

direct research and development expenses consist principally of external costs for clinical, nonclinical and manufacturing, such

as fees paid to contractors, consultants and CROs in connection with our development work.

Included in “Internal Staffing,

Overhead and Other” is overhead, supplies, research and development employee costs (including stock option expenses), travel,

regulatory and legal.

and Administrative Expenses .

General and administrative expenses for the six months ended June 30, 2022 were $14.8

million, an increase of $4.0 million, or 37%, from $10.8 million incurred in the six months ended June 30, 2021.

is primarily due to employee-related expenses of $2.9 million, and an increase in travel related expenses of $0.3 million.

As a result of the foregoing, the net loss for the six months ended June 30, 2022 was $49.6 million, compared to

a net loss of $44.2 million for the six months ended June 30, 2021.

May 18, 2022, we entered into an exclusive License Agreement with the University of Alberta focused on identifying and testing

broad-spectrum antiviral drugs against future variants of SARS-CoV-2 and other emerging viruses.

As consideration for entering into

the License Agreement, we paid a low-five digit license fee to University of Alberta.

The License Agreement also provides for

single-digit royalties and contingent milestone payments.

As of June 30, 2022, other than the upfront fee, no payments have been accrued or paid in relation to

this agreement.

April 14, 2021, we and OyaGen, Inc.

(“OyaGen”) entered into an exclusive License Agreement (the “OyaGen License

Agreement”) pursuant to which OyaGen granted us an exclusive license to certain patents and technical information related

to an antiviral inhibitor of SARS-CoV-2, sangivamycin, and to develop and commercialize products thereunder, and to acquire rights

to any technology based thereon for the prevention or treatment of Covid-19 developed by OyaGen during the term of the License

consideration for entering into the License Agreement, we agreed to pay a low-seven digit license fee to OyaGen, and agreed to

issue to OyaGen and an affiliated entity an aggregate of 86,010 shares of our common stock, valued at $3.0 million, which are

unregistered and subject to a six-month lock-up and a voting agreement, pursuant to which OyaGen and the affiliated entity have

agreed to vote the common stock on any matter put to a vote of the shareholders of the Company in accordance with management’s

recommendations.

The OyaGen License also provides for single-digit royalties and contingent milestone payments.

As of June 30,

2022, no milestone payments have been accrued or paid in relation to this agreement.

In July 2022, we notified OyaGen of

our intent to terminate the License Agreement, with an effective date of September 20, 2022.

February 11, 2021, we entered into a license agreement (the “Inserm License Agreement”) pursuant to which we licensed

technology using oxytocin-based therapeutics for the treatment of Prader-Willi syndrome and non-organic failure to thrive disease

from Inserm (the French National Institute of Health and Medical Research), Aix-Marseille Université and Centre Hospitalier

Universitaire of Toulouse.

The Inserm License Agreement provides for the payment of annual fees and milestone payments upon the

occurrence of specified sales milestones, totaling approximately $0.4 million, as well royalties on net sales of products based

on the licensed technology, and assignment/transfer and sublicense royalties.

As of June 30, 2022, no milestone payments have

been accrued or paid in relation to this agreement.

September 16, 2019, we entered into an exclusive License Agreement (the “Columbia License Agreement”) with the Trustees

of Columbia University in the City of New York (“Columbia”) pursuant to which Columbia granted to us an exclusive

license, with the right to sublicense, certain patents and technical information (collectively, the “TFF2 Technology”)

related to a recombinant Trefoil Family Factor 2 (TFF2), and to develop and commercialize products thereunder (each, a “TFF2

Pursuant to the terms of the Columbia License Agreement, Columbia has reserved for itself the right to practice

the TFF2 Technology for academic research and educational purposes.

paid a five-digit license fee to Columbia as consideration for entering into the Columbia License Agreement, which was recorded

to research and development expenses in the statement of operations for the year ended December 31, 2019.

We are obligated to

use Commercially Reasonable Efforts, as defined in the Columbia License Agreement, to develop and commercialize the TFF2 Product,

and to achieve specified developmental milestones.

paid Columbia single-digit royalties on net sales of (i) TFF2 Products sold by us or a sublicensee and (ii) any

other products that involve material or technical information related to the TFF2 Product and transferred to us pursuant to the

License Agreement (“Other Products”) sold by us or a sublicensee.

Royalties on each particular TFF2 Product are payable

on a country-by-country and Product-by-Product basis until the latest of (i) the date of expiration of the last valid claim in

the last to expire of the issued patents covered by the Columbia License Agreement, and (ii) a specified period of time after

the first commercial sale of a TFF2 Product in the country in question.

Royalties on each particular Other Product are payable

on a country-by-country and product-by-product basis until a specified period of time after the first commercial sale of such

particular Other Product in such country.

Royalties payable on net sales of the TFF2 Product and Other Products may be reduced

by 50% of the royalties payable by us to any third party for intellectual property rights which are necessary for the practice

of the rights licensed to us under the Columbia License Agreement, provided that the royalty payable on a TFF2 Product or Other

Product may not be reduced by more than 50%.

are also obligated to make contingent milestone payments to Columbia totaling $4.1 million on a Product-by-Product basis upon

the achievement of certain development, approval and sales milestones related to a TFF2 Product.

In addition, we shall pay Columbia

5% of consideration, other than royalty payments and certain other categories of consideration, payable to us by a sublicensee.

As of June 30, 2022, no milestone payments have been accrued or paid in relation to this agreement.

May 20, 2019, we entered into an exclusive License Agreement (the “License Agreement”) with Columbia pursuant to which

Columbia, for itself and on behalf of the University of Kentucky and the University of Michigan (collectively, the “Institutions”)

granted to us an exclusive license, with the right to sublicense, certain patents, technical information and material (collectively,

3 unchanged sentences

the right to practice the Technology for academic research and educational purposes.

We paid a six-digit

license fee to Columbia as consideration for entering into the License Agreement.

We are obligated to use Commercially Reasonable

Efforts, as defined in the License Agreement, to develop and commercialize the Product, and to achieve specified developmental

The first 50% of the license fee was paid by June 30, 2019, while the remaining 50% license fee, was paid during the

second quarter of 2020.

Both installments of the license fee were previously recorded to research and development expenses.

We agreed to pay Columbia

single-digit royalties on net sales of (i) Products sold by us or a sublicensee and (ii) any other products that involve material

or technical information related to the Product and transferred to us pursuant to the License Agreement (“Other Products”)

sold by us or a sublicensee.

Royalties on each particular Product are payable on a country-by-country and Product-by-Product basis

until the latest of (i) the date of expiration of the last valid claim in the last to expire of the issued patents covered by the

License Agreement, (ii) a specified period of time after the first commercial sale of a Product in the country in question, or

(iii) expiration of any market exclusivity period granted by a regulatory agency.

Royalties on each particular Other Product are

payable on a country-by-country and product-by-product basis until the later of (i) a specified period of time after the first

commercial sale of such particular Other Product in such country or (ii) expiration of any market exclusivity period granted by

a regulatory agency.

Royalties payable on net sales of the Product and Other Products may be reduced by 50% of the royalties payable

by us to any third party for intellectual property rights which are necessary for the practice of the rights licensed to us under

the License Agreement, provided that the royalty payable on a Product or Other Product may not be reduced by more than 50%.

We are also obligated

to make contingent milestone payments to Columbia totaling $3 million on a Product-by-Product basis upon the achievement of certain

development, approval and sales milestones related to a Product.

In addition, we shall pay Columbia 5% of consideration, other

than royalty payments and certain other categories of consideration, payable to us by a sublicensee.

As of March 31, 2022, no milestone

payments have been accrued or paid in relation to this agreement.

Asset Purchase Agreements

On December 22, 2020,

we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Katana Pharmaceuticals, Inc.

pursuant to which we acquired Katana assets related to insulin resistance and related syndromes, including obesity (the “Katana

In connection with the acquisition of the Assets, we assumed Katana’s rights and obligations under that certain

Exclusive License Agreement by and between Katana and The University of Geneva (“Geneva”) (the “Geneva License

“Agreement”) pursuant to an Assignment and Assumption Agreement with Geneva (“Geneva Assignment and Assumption

Agreement”), dated December 22, 2020.

As consideration for entering into the Asset Purchase Agreement, we paid $0.7 million

The costs associated with the cash payments were recorded to research and development expenses in the statement of operations

for the year ended December 31, 2020.

Because the Katana intellectual property was acquired prior to FDA approval, the cash consideration

totaling $0.7 million, was expensed as research and development costs since there is no alternative future use and the acquired

intellectual property does not constitute a business.

Pursuant to the terms

of the Geneva Assignment and Assumption Agreement, Geneva granted us an exclusive license, with the right to sublicense, certain

patents related to the Katana Assets.

We paid a six-digit license fee

to Columbia as consideration for entering into the License Agreement.

We are obligated to use Commercially Reasonable Efforts, as defined

in the License Agreement, to develop and commercialize the Product, and to achieve specified developmental milestones.

We paid Columbia single-digit

royalties on net sales of (i) Products sold by us or a sublicensee and (ii) any other products that involve material or technical information

related to the Product and transferred to us pursuant to the License Agreement (“Other Products”) sold by us or a sublicensee.

Royalties on each particular Product are payable on a country-by-country and Product-by-Product basis until the latest of (i) the date

of expiration of the last valid claim in the last to expire of the issued patents covered by the License Agreement, (ii) a specified period

of time after the first commercial sale of a Product in the country in question, or (iii) expiration of any market exclusivity period

granted by a regulatory agency.

Royalties on each particular Other Product are payable on a country-by-country and product-by-product

basis until the later of (i) a specified period of time after the first commercial sale of such particular Other Product in such country

or (ii) expiration of any market exclusivity period granted by a regulatory agency.

Royalties payable on net sales of the Product and

Other Products may be reduced by 50% of the royalties payable by us to any third party for intellectual property rights which are necessary

for the practice of the rights licensed to us under the License Agreement, provided that the royalty payable on a Product or Other Product

may not be reduced by more than 50%.

are also obligated to make contingent milestone payments to Columbia totaling $3 million on a Product-by-Product basis upon the

achievement of certain development, approval and sales milestones related to a Product.

In addition, we shall pay Columbia 5%

of consideration, other than royalty payments and certain other categories of consideration, payable to us by a sublicensee.

of June 30, 2022, no milestone payments have been accrued or paid in relation to this agreement.

Purchase Agreements

On December 22, 2020, we entered into an asset purchase agreement (the

“Asset Purchase Agreement”) with Katana Pharmaceuticals, Inc.

(“Katana”) pursuant to which we acquired Katana

assets related to insulin resistance and related syndromes, including obesity (the “Katana Assets”).

In connection with the

acquisition of the Assets, we assumed Katana’s rights and obligations under that certain Exclusive License Agreement by and between

Katana and The University of Geneva (“Geneva”) (the “Geneva License “Agreement”) pursuant to an Assignment

and Assumption Agreement with Geneva (“Geneva Assignment and Assumption Agreement”), dated December 22, 2020.

As consideration

for entering into the Asset Purchase Agreement, we paid $0.7 million to Katana.

Because the Katana intellectual property was acquired

prior to FDA approval, the cash consideration totaling $0.7 million, was expensed as research and development costs since there is no

alternative future use and the acquired intellectual property does not constitute a business.

to the terms of the Geneva Assignment and Assumption Agreement, Geneva granted us an exclusive license, with the right to sublicense,

certain patents related to the Katana Assets.

We are obligated to use commercially reasonable efforts to diligently develop, manufacture,

and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for

such products.

and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets

for such products.

The Geneva License Agreement specifies developmental milestones and the period of time during which such milestones

must be completed and provides for an annual maintenance fee payable to Geneva.

As of March 31, 2022,

no milestone payments have been accrued or paid in relation to this agreement.

On June 11, 2020, we

entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina, Inc.

(“Trigemina”)

and certain shareholders named therein (the “Executive Shareholders”) pursuant to which we acquired Trigemina assets

related to migraine and pain treatment technologies (the “Trigemina Assets”).

In connection with the acquisition of

the Trigemina Assets, we assumed Trigemina’s rights and obligations under that certain Amended and Restated Exclusive License

Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees of the Leland Stanford Junior

University (“Stanford”) (the “Stanford License “Agreement”) pursuant to an Assignment and Assumption

Agreement with Stanford (“Assignment and Assumption Agreement”), dated June 11, 2020.

As consideration for entering

into the Trigemina Asset Purchase Agreement, we paid $824,759 to Trigemina and issued to Trigemina 2,000,000 shares of our common

stock and paid Stanford $250,241 pursuant to the terms of the Assignment and Assumption Agreement.

The common stock is unregistered

and subject to a 12 month lock-up and a Shareholder Voting Agreement, dated June 11, 2020, pursuant to which Trigemina and the

Executive Shareholders have agreed to vote the common stock on any matter put to a vote of our shareholders in accordance with

management’s recommendations.

Both the costs associated with the cash payments and share issuance, totaling $2.4 million,

were recorded to research and development in the statement of operations for the year ended December 31, 2020.

Because the Trigemina

intellectual property was acquired prior to FDA approval, the cash and stock consideration was expensed as research and development

costs since there is no alternative future use and the acquired intellectual property does not constitute a business.

Pursuant to the terms

of the Assignment and Assumption Agreement, Stanford has granted us an exclusive license, with the right to sublicense, certain

patents related to the Trigemina Assets.

Stanford has reserved for itself the right to practice under the patents for academic

research and educational purposes.

We are obligated to use commercially reasonable efforts to diligently develop, manufacture,

and sell products claimed or covered by the patent and will use commercially reasonable efforts to diligently develop markets for

such products.

The Stanford License Agreement specifies developmental milestones and the period of time during which such milestones

must be completed and provides for an annual maintenance fee payable to Stanford.

As of March 31, 2022,

no milestone payments have been accrued or paid in relation to this agreement.

On August 19, 2019,

we entered into an asset purchase agreement (the “TRImaran Asset Purchase Agreement”) with TRImaran Pharma, Inc.

and the selling shareholders named therein (the “Selling Shareholders”) pursuant to which we acquired TRImaran’s

assets related to certain pyran-based compounds (the “TRImaran Assets”).

In connection with the acquisition of the

TRImaran Assets, we entered into a First Amended and Restated Exclusive License Agreement (the “WSU License Agreement”)

with Wayne State University (“WSU”) on August 19, 2019.

As consideration for entering into the TRImaran Asset Purchase

Agreement, we paid $100,000 to TRImaran and have assumed certain liabilities of TRImaran totaling $68,500.

The $168,500 was previously

recorded to research and development expenses in the statement of operations.

Upon the achievement of specified development, regulatory

and sales milestones, we also agreed to pay TRImaran and the Selling Shareholders, in restricted stock or cash, at our option,

a total of approximately $3.4 million.

Pursuant to the terms of the TRImaran Asset Purchase Agreement, TRImaran and the Selling

Shareholders are prohibited from disclosing confidential information related to the TRImaran Assets and are restricted from engaging,

for a period of three years, in the development or commercialization of any therapeutic containing any pyran-based drug compound

for the treatment of post-traumatic stress disorder, attention deficit hyperactivity disorder or major depressive disorder.

for a period of three years, if TRImaran or any Selling Shareholder engage in the research or development of any potential therapeutic

compound for the treatment of any central nervous system disorder, TRImaran or such Selling Shareholder is obliged to provide notice

and opportunity to Tonix to make an offer to acquire or license rights with respect to such product candidate.

As of March 31, 2022, no milestone payments have been accrued or paid in relation to this agreement.

Pursuant to the terms

of the WSU License Agreement, WSU granted us an exclusive license, with the right to sublicense, certain patents, technical information

and material (collectively, the “Technology”) related to the TRImaran Assets.

WSU has reserved for itself the right

to practice the Technology for academic research and educational purposes.

We are obligated to use commercially reasonable efforts

to obtain regulatory approval for one or more products utilizing the Technology (“WSU Products”) and to use commercially

reasonable marketing efforts throughout the term of the WSU License Agreement.

The WSU License Agreement specifies developmental

milestones and the period of time during which such milestones must be completed and provides for an annual maintenance fee payable

We are obligated to substantially manufacture WSU Products in the United States if WSU Products will be sold in the United

Pursuant to the WSU

License Agreement, we paid $75,000 to WSU as reimbursement of certain patent expenses, and, upon the achievement of specified development,

regulatory and sales milestones, we also agreed to pay WSU, milestone payments totaling approximately $3.4 million.

We also agreed

to pay WSU single-digit royalties on net sales of WSU Products sold by us or a sublicensee on a tiered basis based on net sales,

and additional sublicense fees on certain consideration received from sublicensees.

Royalties on each particular WSU Product are

payable on a country-by-country and Product-by-Product basis until the date of expiration of the last valid claim in the last to

expire of the issued patents covered by the WSU License Agreement.

Royalties payable on net sales of WSU Products may be reduced

by 50% of the royalties payable by us to any third party for intellectual property rights which are necessary for the practice

of the rights licensed to us under the WSU License Agreement, provided that the royalty payable on a WSU Product may not be reduced

by more than 50%.

Each party also has the right to terminate the agreement for customary reasons such as material breach and bankruptcy.

The WSU License Agreement contains provisions relating to termination, indemnification, confidentiality and other customary matters

for an agreement of this kind.

As of March 31, 2022, no milestone payments have been accrued or paid in relation to this agreement.

As of June 30, 2022, no milestone payments have

been accrued or paid in relation to this agreement.

June 11, 2020, we entered into an asset purchase agreement (the “Trigemina Asset Purchase Agreement”) with Trigemina,

(“Trigemina”) and certain shareholders named therein (the “Executive Shareholders”) pursuant to which

we acquired Trigemina assets related to migraine and pain treatment technologies (the “Trigemina Assets”).

In connection

with the acquisition of the Trigemina Assets, we assumed Trigemina’s rights and obligations under that certain Amended and

Restated Exclusive License Agreement, dated November 30, 2007, as amended, by and between Trigemina and The Board of Trustees

of the Leland Stanford Junior University (“Stanford”) (the “Stanford License “Agreement”) pursuant

to an Assignment and Assumption Agreement with Stanford (“Assignment and Assumption Agreement”), dated June 11, 2020.

As consideration for entering into the Trigemina Asset Purchase Agreement, we paid $824,759 to Trigemina and issued to Trigemina

62,500 shares of our common stock and paid Stanford $250,241 pursuant to the terms of the Assignment and Assumption Agreement.

The common stock is unregistered and subject to a 12 month lock-up and a Shareholder Voting Agreement, dated June 11, 2020, pursuant

to which Trigemina and the Executive Shareholders have agreed to vote the common stock on any matter put to a vote of our shareholders

in accordance with management’s recommendations.

Both the costs associated with the cash payments and share issuance, totaling

$2.4 million, were recorded to research and development in the statement of operations for the year ended December 31, 2020.

the Trigemina intellectual property was acquired prior to FDA approval, the cash and stock consideration was expensed as research

and development costs since there is no alternative future use and the acquired intellectual property does not constitute a business.

to the terms of the Assignment and Assumption Agreement, Stanford has granted us an exclusive license, with the right to

sublicense, certain patents related to the Trigemina Assets.

Stanford has reserved for itself the right to practice under the

patents for academic research and educational purposes.

We are obligated to use commercially reasonable efforts to diligently

develop, manufacture, and sell products claimed or covered by the patent and will use commercially reasonable efforts to

diligently develop markets for such products.

The Stanford License Agreement specifies developmental milestones and the

period of time during which such milestones must be completed, and provides for an annual maintenance fee payable to

As of June 30, 2022, other than the annual maintenance fee, no milestone payments have been accrued or paid

in relation to this agreement.

August 19, 2019, we entered into an asset purchase agreement (the “TRImaran Asset Purchase Agreement”) with TRImaran

(“TRImaran”) and the selling shareholders named therein (the “Selling Shareholders”) pursuant

to which we acquired TRImaran’s assets related to certain pyran-based compounds (the “TRImaran Assets”).

connection with the acquisition of the TRImaran Assets, we entered into a First Amended and Restated Exclusive License Agreement

(the “WSU License Agreement”) with Wayne State University (“WSU”) on August 19, 2019.

As consideration

for entering into the TRImaran Asset Purchase Agreement, we paid $100,000 to TRImaran and have assumed certain liabilities of

TRImaran totaling $68,500.

The $168,500 was recorded to research and development expenses in the statement of operations in 2019.

Upon the achievement of specified development, regulatory and sales milestones, we also agreed to pay TRImaran and the Selling

Shareholders, in restricted stock or cash, at our option, a total of approximately $3.4 million.

Pursuant to the terms of the

TRImaran Asset Purchase Agreement, TRImaran and the Selling Shareholders are prohibited from disclosing confidential information

related to the TRImaran Assets and are restricted from engaging, for a period of three years, in the development or commercialization

of any therapeutic containing any pyran-based drug compound for the treatment of post-traumatic stress disorder, attention deficit

hyperactivity disorder or major depressive disorder.

Also for a period of three years, if TRImaran or any Selling Shareholder

engage in the research or development of any potential therapeutic compound for the treatment of any central nervous system disorder,

TRImaran or such Selling Shareholder is obliged to provide notice and opportunity to Tonix to make an offer to acquire or license

rights with respect to such product candidate.

As of June 30, 2022, no milestone payments have been accrued or paid in relation

to this agreement.

to the terms of the WSU License Agreement, WSU granted us an exclusive license, with the right to sublicense, certain patents,

technical information and material (collectively, the “Technology”) related to the TRImaran Assets.

WSU has reserved

for itself the right to practice the Technology for academic research and educational purposes.

We are obligated to use commercially

reasonable efforts to obtain regulatory approval for one or more products utilizing the Technology (“WSU Products”)

and to use commercially reasonable marketing efforts throughout the term of the WSU License Agreement.

The WSU License Agreement

specifies developmental milestones and the period of time during which such milestones must be completed and provides for an annual

maintenance fee payable to WSU.

We are obligated to substantially manufacture WSU Products in the United States if WSU Products

will be sold in the United States.

to the WSU License Agreement, we paid $75,000 to WSU as reimbursement of certain patent expenses, and, upon the achievement of

specified development, regulatory and sales milestones, we also agreed to pay WSU, milestone payments totaling approximately $3.4

We have also agreed to pay WSU single-digit royalties on net sales of WSU Products sold by us or a sublicensee on a tiered

basis based on net sales, and additional sublicense fees on certain consideration received from sublicensees.

Royalties on each

particular WSU Product are payable on a country-by-country and Product-by-Product basis until the date of expiration of the last

valid claim in the last to expire of the issued patents covered by the WSU License Agreement.

Royalties payable on net sales of

WSU Products may be reduced by 50% of the royalties payable by us to any third party for intellectual property rights which are

necessary for the practice of the rights licensed to us under the WSU License Agreement, provided that the royalty payable on

a WSU Product may not be reduced by more than 50%.

Each party also has the right to terminate the agreement for customary reasons

such as material breach and bankruptcy.

The WSU License Agreement contains provisions relating to termination, indemnification,

confidentiality and other customary matters for an agreement of this kind.

As of June 30, 2022, no milestone payments have been

accrued or paid in relation to this agreement.

Liquidity and Capital Resources

As of March 31, 2022, we had working capital of $137.6 million, comprised

primarily of cash and cash equivalents of $140.4 million and prepaid expenses and other of $12.6 million, offset by $9.4 million of accounts

payable, $5.6 million of accrued expenses and current lease liabilities of $0.4 million.

A significant portion of the accounts payable

and accrued expenses are due to work performed in relation to our Phase 3 clinical trial in FM and our vaccine program.

The following table provides a summary

of operating, investing and financing cash flows for the quarters ended March 31, 2022, and 2021, respectively (in thousands):

As of June 30, 2022,

we had working capital of $144.3 million, which excludes restricted cash of $31.5 million, comprised primarily of cash and cash equivalents of $145.5 million and prepaid expenses

and other of $14.8 million, offset by $9.6 million of accounts payable, $5.8 million of accrued expenses and current lease liabilities

of $0.5 million.

A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our

Phase 3 clinical trial in FM, our vaccine program and the build-out of our facilities.

The following table

provides a summary of operating, investing and financing cash flows for the six months ended June 30, 2022, and 2021, respectively

(in thousands):

Net cash used in operating activities

1 unchanged sentence

Net cash provided by financing activities

For the three months ended March 31, 2022 and 2021, we used approximately

$31.1 million and $21.1 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

For the six months ended June, 2022 and 2021, we used approximately $52.2

million and $40.2 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 both research

and development and general and administrative activities.

For the three months ended March 31, 2022 and 2021, net proceeds from financing

activities were $13.1 million and $108.7 million, respectively, predominately from the sale of our common stock and warrants.

by investing activities for the three months ended March 31, 2022 and 2021, was $20.2 million and $0.5 million respectively, related to

the purchase of property and equipment.

We believe that our

cash resources at March 31, 2022, and the proceeds that we raised from equity offerings subsequent to the end of the first quarter

of 2022, will meet our operating and capital expenditure requirements through the end of 2022, but not beyond.

For the six months ended June 30, 2022 and 2021, net proceeds from financing

activities were $85.2 million and $130.8 million, respectively, predominately from the sale of our common and preferred stock, $31.5 million

of which is expected to fund the redemption of our outstanding redeemable preferred stock.

Cash used in investing activities for the six

months ended June 30, 2022 and 2021, was $34.7 million and $1.9 million respectively, related to the purchase of property and equipment.

We believe that our cash resources at June 30, 2022, and the proceeds that

we raised from equity offerings subsequent to the end of the second quarter of 2022 will meet our operating and capital expenditure requirements

into the second quarter of 2023, but not beyond.

We continue to face

significant challenges and uncertainties and, as a result, our available capital resources may be consumed more rapidly than

currently expected due to changes we may make in our research and development spending plans.

These factors raise substantial doubt

about our ability to continue as a going concern for the one year period from the date of filing of this Form 10-Q.

ability to obtain additional funding through public or private financing or collaborative arrangements with strategic partners to

increase the funds available to fund operations.

However, we may not be able to raise capital on terms acceptable to us.

additional funds, we may be forced to delay, scale back or eliminate some of our research and development activities, or other

operations and potentially delay product development in an effort to provide sufficient funds to continue our operations.

these events occurs, our ability to achieve our development and commercialization goals would be adversely affected.

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 have the ability

to obtain additional funding through public or private financing or collaborative arrangements with strategic partners to increase

the funds available to fund operations.

Without additional funds, we may be forced to delay, scale back or eliminate some of our

research and development activities, or other operations and potentially delay product development in an effort to provide sufficient

funds to continue our operations.

If any of these events occurs, our ability to achieve our development and commercialization goals

would be adversely affected.

Future Liquidity Requirements

2 unchanged sentences

We expect to incur increasing research and development expenses, including expenses

related to additional clinical trials and the buildout of our research and development operations and manufacturing.

have enough resources to meet our operating requirements for the one-year period from filing date of this report.

related to clinical trials and the build out of recently acquired research and development and manufacturing facilities.

not have enough resources to meet our operating requirements for the one-year from filing date of this report.

Our future capital

4 unchanged sentences

We will need to obtain

additional capital in order to fund future research and development activities.

Future financing may include the issuance of equity

or debt securities, obtaining credit facilities, or other financing mechanisms.

Even if we are able to raise the funds required,

it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience

unexpected cash requirements that would force us to seek alternative financing.

Furthermore, if we issue additional equity or debt

securities, shareholders may experience additional dilution or the new equity securities may have rights, preferences or privileges

senior to those of existing holders of our common stock.

capital in order to fund future research and development activities and the build out of our recently acquired research and development

and manufacturing facilities.

Future financing may include the issuance of equity or debt securities, obtaining credit facilities,

or other financing mechanisms.

Even if we are able to raise the funds required, it is possible that we could incur unexpected costs

and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to

seek alternative financing.

Furthermore, if we issue additional equity or debt securities, shareholders may experience additional

dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common

If additional financing

3 unchanged sentences

independently.

Convertible redeemable Preferred stock

June 24, 2022, we issued 2,500,000 shares of Series A Preferred Stock and 500,000 shares of Series B Preferred Stock to certain

institutional investors in a private placement.

The Preferred Stock has an aggregate stated value of $30,000,000.

Each share of

the Preferred Stock has a purchase price of $9.50, representing an OID of 5% of the stated value.

The shares of the Preferred

Stock are convertible into shares of our common stock, upon the occurrence of certain events, at a conversion price of $4.00 per

The Preferred Stock may convert at the option of the holder.

We may compel conversion of the Preferred Stock after the

fulfillment of certain conditions and subject to certain limitations.

The Company and the holders of the Preferred Stock also

entered into a registration rights agreement to register the resale of the shares of common stock issuable upon conversion of

the Preferred Stock.

The $28.5 million in gross proceeds of the Offering are held in an escrow account, along with an additional

$3.0 million deposited by the Company to cover the aggregate OID as well as the additional amount that would be necessary to fund

the 105% redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the

earlier payment to redeeming holders.

We expect redemption to occur in 2022.

The holders of Preferred Stock

are entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of common stock.

Preferred Stock is convertible, at the option of the holders and, in certain circumstances, by the Company, into shares of common

stock at a conversion price of $4.00 per share.

The conversion price will be adjusted for stock dividends and stock splits, subsequent

rights offering, pro rata distributions of dividends or the occurrence of a fundamental transaction.

The holders of the Preferred

Stock have the right to require the Company to redeem their shares of Preferred Stock for cash at 105% of the stated value of

such shares through September 22, 2022.

The Company has the option to redeem

the Preferred Stock for cash at 105% of the stated value, subject to the holders’ rights to convert the shares prior to such redemption.

Purchase Agreement with Lincoln Park

2 unchanged sentences

(the “Lincoln Park Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the terms of the Purchase Agreement with Lincoln Park, Lincoln Park has agreed to purchase from us up to $80,000,000

of our common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement.

Pursuant to the

terms of the Lincoln Park Registration Rights Agreement, we filed with the SEC a registration statement to register for resale

under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement with Lincoln Park.

Pursuant to the terms of the Purchase Agreement with Lincoln Park, Lincoln Park agreed to purchase from us up to $80,000,000

of our common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement with Lincoln Park.

Pursuant to the terms of the Lincoln Park Registration Rights Agreement, we filed with the SEC a registration statement to register

for resale under the Securities Act the shares that have been or may be issued to Lincoln Park under the Purchase Agreement with

Lincoln Park.

Pursuant to the terms

of the Purchase Agreement with Lincoln Park, at the time we signed the Purchase Agreement with Lincoln Park and the Lincoln Park

Registration Rights Agreement, we issued 2,909,091 shares of common stock to Lincoln Park as consideration for its commitment to

purchase shares of our common stock under the Purchase Agreement with Lincoln Park.

The commitment shares were valued at $1.6 million

and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital

Registration Rights Agreement, we issued 90,910 shares of common stock to Lincoln Park as consideration for its commitment to purchase

shares of our common stock under the Purchase Agreement with Lincoln Park.

The commitment shares were valued at $1.6 million and

recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity as a cost of capital

to be raised under the Purchase Agreement with Lincoln Park.

During the quarter ended March 31, 2022, we sold 22.0 million shares of

our common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately $4.5 million.

Subsequent to March 31,

2022, we sold 13.0 million shares of our common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately

$2.0 million.

During the six months ended June 30, 2022, we sold 1.1 million shares of

common stock under the Purchase Agreement with Lincoln Park, for net proceeds of approximately $6.5 million.

Subsequent to June 30, 2022,

we sol d 1.8 million shares of common stock under the

Purchase Agreement with Lincoln Park, for net proceeds of approximately $ 2.2 million.

Under applicable rules of the NASDAQ

Global Market, the Company could not issue or sell more than 19.99% of the shares of its common stock outstanding immediately prior to

the execution of the Purchase Agreement (approximately 3 million shares) with Lincoln Park under the Purchase Agreement without stockholder

approval, unless the average price of all applicable sales of its common stock to Lincoln Park under the Purchase Agreement equals or

exceeds a threshold amount.

As we have issued approximately 3,000,000 shares to Lincoln Park under the Purchase Agreement at less than

the threshold amount, we will not sell any additional shares under the Purchase Agreement without shareholder approval.

2021 Lincoln Park Transaction

May 14, 2021, we entered into a purchase agreement (the “2021 Purchase Agreement”) and a registration rights agreement

(the “2021 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

to the terms of the 2021 Purchase Agreement, Lincoln Park agreed to purchase from us up to $80,000,000 of our common stock

(subject to certain limitations) from time to time during the term of the 2021 Purchase Agreement.

Pursuant to the terms of the

2021 Registration Rights Agreement, we filed with the SEC a registration statement to register for resale under the Securities

Act the shares that have been or may be issued to Lincoln Park under the 2021 Purchase Agreement.

to the terms of the 2021 Purchase Agreement, at the time we signed the 2021 Purchase Agreement and the 2021 Registration Rights

Agreement, we issued 40,000 shares of common stock to Lincoln Park as consideration

for its commitment to purchase shares of our common stock under the 2021 Purchase Agreement.

The commitment shares were valued

at $1.6 million and recorded as an addition to equity for the issuance of the common stock and treated as a reduction to equity

as a cost of capital to be raised under the 2021 Purchase Agreement.

the six months ended June 30, 2021, we sold an aggregate of approximately 86,000 shares of common stock under the 2021 Purchase

Agreement, for gross proceeds of approximately $3.3 million.

February 2021 Financing

On February 8, 2021, we entered into a securities purchase agreement (the

“February 2021 Financing”) with certain institutional investors relating to the issuance and sale of 58,333,334 shares of

our common stock, in a registered direct public offering (the “February 2021 Financing”), with A.G.P/Alliance Global Partners

(“AGP”), acting as placement agent.

On February 8, 2021,

we entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 1.8 million

shares of our common stock, in a registered direct public offering (the “February 2021 Financing”), with A.G.P/Alliance

Global Partners (“AGP”), acting as placement agent.

The public offering price for each share of common stock was $38.40.

The February 2021

Financing closed on February 9, 2021.

AGP received a cash fee of 7% of the gross proceeds, for an aggregate amount of $4.9 million.

incurred other offering expenses of approximately $0.1 million.

We received net proceeds of approximately $65.0 million, after deducting

the fees and other offering expenses.

The February 2021 Financing closed on February 9, 2021.

AGP received a cash fee of 7% of the gross proceeds, for an aggregate amount

of $4.9 million.

We incurred other offering expenses of approximately $0.1 million.

We received net proceeds of approximately $65.0

million, after deducting the fees and other offering expenses.

January 2021 Financing

On January 11, 2021,

we entered into a securities purchase agreement (the “January 2021 Financing”) with AGP, relating to the issuance and

sale of 50,000,000 shares of our common stock, in a registered direct public offering.

The public offering price for each share

of common stock was $0.80.

we entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale of 1.6 million

shares of our common stock in a registered direct public offering (the “January 2021 Financing”), with AGP as placement

The public offering price for each share of common stock was $25.60.

The January 2021 Financing closed on January 13, 2021.

AGP purchased the shares at a seven percent discount

to the then current public price, for an aggregate discount of $2.8 million.

AGP received a cash fee of 7% of the gross proceeds, for an aggregate of $2.8 million.

We incurred other offering expenses of approximately

$0.3 million.

We received net proceeds of approximately $36.9 million, after deducting the underwriting discount and other offering

At-the-Market Offering

On April 8, 2020, we

entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which we may issue and sell, from time

to time, shares of our Common stock having an aggregate offering price of up to $240.0 million in at-the-market offerings (“ATM”)

AGP will act as sales agent and will be paid a 3% commission on each sale under the Sales Agreement.

Our common stock will

be sold at prevailing market prices at the time of the sale, and, as a result, prices will vary.

During the quarter ended March

31, 2022, we sold approximately 34.5 million shares of common stock under the Sales Agreement, for net proceeds of approximately

$8.5 million.

During the quarter ended March 31, 2021, we sold approximately 9.5 million shares of common stock under the Sales

We received net proceeds of approximately $36.9 million, after deducting the fees and other offering expenses.

At-the-Market Offerings

On April 8, 2020, we entered into a sales agreement (the “Sales Agreement”)

with AGP pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of

up to $240.0 million in at-the-market offerings (“ATM”) sales.

AGP will act as sales agent and will be paid a 3% commission

on each sale under the Sales Agreement.

Our common stock will be sold at prevailing market prices at the time of the sale, and, as a result,

prices will vary.

During the six months ended June 30, 2022, we sold approximately 15.0 million shares of common stock under the Sales

Agreement, for net proceeds of approximately $51.5 million.

Subsequent to March 31, 2022, we sold 33.9 million shares of common

stock under the Sales Agreement, for net proceeds of approximately $6.8 million.

During the six months ended June 30, 2021, we sold approximately 0.8 million

shares of common stock under the Sales Agreement, for net proceeds of approximately $25.5 million.

Subsequent to June 30, 2022, we sold

9.6 million shares of common stock under the Sales Agreement, for net proceeds of approximately $16.2 million.

Stock Compensation

Stock Incentive Plans

2019 Stock Incentive Plan

On May 3, 2019, our

stockholders approved the Tonix Pharmaceuticals Holding Corp.

On May 3, 2019, our stockholders approved the Tonix Pharmaceuticals Holding

2019 Stock Incentive Plan (the “2019 Plan”).

Plan provided for the issuance of up to 140,000 shares of common stock.

With the adoption of the Amended and Restated 2020 Plan

(as defined below), no further grants may be made under the 2019 Plan.

On January 16, 2020, our stockholders approved the Tonix

Pharmaceuticals Holding Corp.

The 2019 Plan provided for the issuance of up to 4,375 shares of common

With the adoption of the 2020 Plan (as defined below), no further grants may be made under the 2019 Plan.

On January 16, 2020,

our stockholders approved the Tonix Pharmaceuticals Holding Corp.

2020 Stock Incentive Plan (the “2020 Plan”).

The 2020 Plan provided for the issuance

of up to 600,000 shares of common stock.

With the adoption of the Amended and Restated 2020 Stock Incentive Plan, no further grants

may be made under the 2020 Plan.

The 2020 Plan

provided for the issuance of up to 18,750 shares of common stock.

With the adoption of the Amended and Restated 2020 Plan (as defined

below), no further grants may be made under the 2020 Plan.

On May 1, 2020, our

5 unchanged sentences

(4) RSUs, (5) other stock-based awards, and (6) cash-based awards.

The Amended and Restated 2020 Plan provides for the issuance

of up to 10,000,000 shares of common stock, which amount will be increased to the extent that awards granted under the Plans

are forfeited, expire or are settled for cash (except as otherwise provided in the Amended and Restated 2020 Plan).

The Amended and Restated 2020 Plan initially provided for the

issuance of up to 312,500 shares of common stock, which amount will be increased to the extent that awards granted under the

Plans are forfeited, expire or are settled for cash (except as otherwise provided in the Amended and Restated 2020 Plan).

the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual increase in the number

12 unchanged sentences

be more than ten years.

As of March 31, 2022, 32,808,160 shares were available for future grants under the Amended and Restated

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

As of June 30, 2022, 606,227 shares were available for future grants under the Amended and Restated 2020

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

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, 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

vesting period using the straight-line method.

The weighted average

fair value of options granted for the three-month periods ended March 31, 2022 and 2021 was $0.18 and $1.10 per share, respectively.

For employees and directors, the fair value of

the award is measured on the grant date.

Most stock options granted pursuant to the Plans typically vest 1/3rd 12 months from the

date of grant and 1/36th each month thereafter for 24 months and expire ten years from the date of grant.

In addition, we issue

options to directors which vest over a one-year period.

We also issue premium options to executive officers, which have an exercise

price greater than the grant date fair value, subject to a one year minimum service period prior to vesting.

Stock-based compensation

expense related to awards is amortized over the applicable vesting period using the straight-line method.

The weighted average fair value of options granted during the three and

six months ended June 2022 was $3.78 per share and $5.25 per share, respectively.

The weighted average fair value of options granted during

the three and six months ended June 2021 was $30.62 per share and $34.45 per share, respectively.

The risk-free interest

rate is based on the yield of Daily U.S.

Treasury Yield Curve Rates with terms equal to the expected term of the options as of

the grant date.

The expected term of options is determined using the simplified method, as provided in an SEC Staff Accounting

Bulletin, and the expected stock price volatility is based on the Company’ historical stock price volatility.

Stock-based compensation

expense relating to options granted of $2.8 million, of which $2.0 million and $0.8 million, related to General and Administration

and Research and Development, respectively was recognized for the quarter ended March 31, 2022.

and Research and Development, respectively was recognized for the quarter ended June 30, 2022.

Stock-based compensation expense

relating to options granted of $2.1 million, of which $1.5 million and $0.6 million, related to General and Administration and

Research and Development, respectively was recognized for the quarter ended June 30, 2021.

Stock-based compensation

expense relating to options granted of $5.4 million, of which $3.9 million and $1.5 million, related to General and Administration

and Research and Development, respectively was recognized for the quarter ended March 31, 2021.

As of March 31, 2022,

we had approximately $18.9 million of total unrecognized compensation cost related to non-vested awards granted under the Plans,

and Research and Development, respectively was recognized for the six-month period ended June 30, 2022.

Stock-based compensation

expense relating to options granted of $3.3 million, of which $2.3 million and $1.0 million, related to General and Administration

and Research and Development, respectively was recognized for the six-month period ended June 30, 2021.

As of June 30, 2022,

we have approximately $17.3 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 2.09 years.

Employee Stock Purchase Plan

On May 3, 2019, our stockholders

approved the Tonix Pharmaceuticals Holdings Corp.

2019 Employee Stock Purchase Plan (the “2019 ESPP”).

As a result of adoption

of the 2020 ESPP, as defined below, by the stockholders, no further grants may be made under the 2019 ESPP Plan.

On May 1, 2020, our stockholders

approved the Tonix Pharmaceuticals Holdings Corp.

Employee Stock Purchase Plans

On May 3, 2019, our

stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2019 Employee Stock Purchase Plan (the “2019 ESPP”).

As a result of the

adoption of the 2022 ESPP, as defined below, by the stockholders, no further grants may be made under the 2020 ESPP Plan.

On May 6, 2022,

our stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2022 Employee Stock Purchase Plan (the “2022 ESPP”, and

together with the 2019 ESPP and the 2020 ESPP, the “ESPP Plans”)).

The 2022 ESPP allows eligible

employees to purchase up to an aggregate of 3,000,000 shares of our common stock.

Under the 2022 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 2022 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

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 2022 ESPP, subject to the statutory limit under the Code.

As of March 31, 2022, 7

shares were available for future sales under the 2020 ESPP and 3,000,000 shares were available for future sales under the 2022 ESPP.

The ESPP Plans are considered

As a result of adoption of the 2020 ESPP, as defined below, by our stockholders, no further grants may be made under the 2019 ESPP

On May 1, 2020, our stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2020 Employee Stock Purchase Plan (the

“2020 ESPP”).

As a result of the adoption of the 2022 ESPP, as defined below, by our stockholders, no further grants

may be made under the 2020 ESPP Plan.

On May 6, 2022, our stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2022 Employee

Stock Purchase Plan (the “2022 ESPP”, and together with the 2019 ESPP and the 2020 ESPP, the “ESPP Plans”)).

The 2022 ESPP allows

eligible employees to purchase up to an aggregate of 93,750 shares of our common stock.

Under the 2020 ESPP, on the first

day of each offering period, each eligible employee for that offering period has the option to enroll for that offering period,

which allows the eligible employees to purchase shares of our common stock at the end of the offering period.

Each offering period

under the 2020 ESPP is for six months, which can be modified from time-to-time.

Subject to limitations, each participant will be

permitted to purchase a number of shares determined by dividing the employee’s accumulated payroll deductions for the offering

period by the applicable purchase price, which is equal to 85 percent of the fair market value of our common stock at

the beginning or end of each offering period, whichever is less.

A participant must designate in his or her enrollment package

the percentage (if any) of compensation to be deducted during that offering period for the purchase of stock under the 2020 ESPP,

subject to the statutory limit under the Code.

As of June 30, 2022, 1 share was available for future sales under the 2020 ESPP

and 93,750 shares were available for future sales under the 2022 ESPP.

The 2022 and 2020 ESPP are considered

compensatory plans with the related compensation cost expensed over the six-month offering period.

For the quarters ended March 31, 2022

For the six months ended June 30, 2022

and 2021, $0 and $47,000, respectively were expensed.

13 unchanged sentences

contracts with various contract research organizations with outstanding commitments aggregating approximately $62.5 million at

March 31, 2022 for future work to be performed.

June 30, 2022 for future work to be performed.

We have entered into

a construction contract with outstanding commitments aggregating approximately $18.1 million at March 31, 2022 for future work

to be performed.

On March 3, 2021, we

entered into a $2.9 million contingent non-binding Purchase and Sales Agreement in connection with a property in Massachusetts.

The property is intended for process development activities.

The purchase is expected to close during the second quarter of

a construction contract with outstanding commitments aggregating approximately $8.4 million at June 30, 2022 for future work to

be performed.

Operating leases

As of March 31, 2022,

As of June 30, 2022,

future minimum lease payments are as follows (in thousands):

Year Ending December 31,

Remainder of 2022

2026 and beyond

Included interest

40 unchanged sentences

the measurement date is the date the award is issued.

Redeemable Convertible Preferred Stock.

Preferred shares subject to mandatory redemption are classified as liability instruments and are

measured at fair value.

The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature

redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not

solely within the Company’s control, as temporary equity (“mezzanine”) until such time as the conditions are removed

Other than contractual

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis