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Item 7. Management’s Discussion and Analysis

2023-03-13 compared with 2022-03-14 · 844 added, 860 removed, 73 unchanged (96% of the section changed)

7 – 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 and should be read together with the “Risk Factors” section of this Annual Report on Form 10-K

for a discussion of important factors that could cause actual results to differ materially from the results described in or implied

by the forward-looking statements contained in the following discussion and analysis.

Our actual results could differ materially

from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and

elsewhere in this Annual Report and in other reports we file with the Securities and Exchange Commission, particularly those under

“Risk Factors.”.

Business Overview

We are a clinical-stage biopharmaceutical

company focused on discovering, licensing, acquiring and developing therapeutics and diagnostics to treat and prevent human disease and

alleviate suffering.

We are building capabilities in synthetic biology, precision medicine, protein engineering and vaccine manufacturing

through internal efforts as well as through collaborations with academic institutions and contract research organizations.

Our therapeutics

under development include both small molecules and biologics.

All of our drug, biologic and diagnostic candidates are still in development.

Tonix’s portfolio is primarily

composed of immunology, central nervous system, or CNS, and infectious disease product candidates.

Tonix’s immunology portfolio

includes biologics to address organ transplant rejection, autoimmune diseases and cancer.

The CNS portfolio includes small molecules and

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

Tonix’s infectious disease portfolio of product candidates

includes next-generation vaccines to prevent COVID-19, an antiviral to treat COVID-19, and a potential treatment for Long COVID.

The infectious

disease portfolio also includes a vaccine in development to prevent smallpox and monkeypox.

Tonix’s lead candidate within

its immunology pipeline is TNX-1500*, a humanized monoclonal antibody, or mAb, directed against CD40-ligand, or CD40L, engineered to modulate

binding to Fc receptors, that is being developed to prevent and treat organ transplant rejection as well as to treat autoimmune conditions.

In experiments at the Massachusetts General Hospital, a teaching hospital of Harvard Medical School, TNX-1500 is being studied as monotherapy

or in combination with other immunosuppressive agents in heart and kidney organ transplants in non-human primates.

Preliminary results

from an ongoing experiment in heart transplants indicate that TNX-1500 appears to have comparable efficacy to historical experiments using

the chimeric mouse/human IgG1 version (5c8H1) of the anti-CD40L mAb 5c8.

First generation anti-CD40L mAbs were associated with an increased

risk of blood clotting or thrombosis.

In the non-human primate studies with TNX-1500, no evidence of thrombosis has been observed so far.

We expect to start a Phase 1 study of TNX-1500 in the second half of 2022.

Among the CNS candidates

in development is TNX-1300* (double-mutant cocaine esterase) which is in Phase 2 for the treatment of life-threatening cocaine intoxication.

TNX-1300 has been granted Breakthrough Therapy designation, or BTD, by the U.S.

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 and should

be read together with the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors

that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained

in the following discussion and analysis.

Our actual results could differ materially from those anticipated in these forward-looking statements

as a result of various factors, including those discussed below and elsewhere in this Annual Report and in other reports we file with

the Securities and Exchange Commission, particularly those under “Risk Factors.”.

We are a clinical-stage biopharmaceutical company focused on developing

therapeutics and vaccines to treat and prevent human disease and alleviate suffering.

We have a rich pipeline of products in development

that has been curated from internal discovery, as well as licenses, acquisitions and collaborations with academic institutions and contract

research organizations.

We continue to build capabilities in synthetic biology, precision medicine, protein engineering, medicinal chemistry,

molecular biology, pharmacogenomics and clinical-scale manufacturing.

Our therapeutics under development include both small molecules

and biologics.

Our portfolio consists of central nervous system, or CNS, rare disease,

immunology, and infectious disease product candidates.

The CNS portfolio includes small molecules and biologics to treat pain, neurologic,

psychiatric and addiction conditions.

Our rare disease portfolio focuses on developing novel therapies for patients with rare diseases,

including those caused by genetic disorders which are characterized by complex symptoms and for which no drug is approved.

Our immunology

portfolio includes biologics to address organ transplant rejection, autoimmune diseases and cancer.

Our infectious disease portfolio includes

a vaccine in development to prevent smallpox and mpox (formerly known as monkeypox), next-generation vaccines to prevent COVID-19, a platform

to make fully human mAbs to treat COVID-19 and humanized anti-SARS-CoV-2 mAbs.

Our vaccine in development to prevent smallpox and mpox

also serves as the live virus vaccine platform or recombinant pox vaccine (RPV) platform for other infectious diseases.

Our latest stage CNS product

candidate is TNX-102 SL*, a proprietary sublingual tablet formulation of cyclobenzaprine (CBP) designed for bedtime administration.

SL has active INDs for fibromyalgia, or FM, FM-type Long COVID or PASC (post-acute sequelae of SARS-CoV-2 infection), posttraumatic stress

disorder, or PTSD, agitation in Alzheimer’s disease, or AAD, and alcohol use disorder, or AUD.

TNX-102 SL is in mid-Phase 3 development for the management of FM, a pain

disorder characterized by chronic widespread pain, non-restorative sleep, fatigue and impaired cognition.

In December 2020, we reported

positive results from the Phase 3 RELIEF study of TNX-102 SL 5.6 mg for the management of FM.

In July 2021, we reported pre-planned interim

analysis results from a second Phase 3 study, RALLY.

Based on the recommendation from the independent data monitoring committee that the

RALLY trial was unlikely to demonstrate a statistically significant improvement in the primary endpoint, we stopped enrollment of new

participants but allowed those participants who were already enrolled to complete the study.

We reported topline data from the completed

study in March of 2022.

As expected, based on interim analysis results, TNX-102 SL did not achieve statistical significance over placebo

on the primary endpoint of reduction in daily pain, and relative to the previous positive Phase 3 Study (RELIEF), RALLY had an unexpected

increase in study participant adverse event-related discontinuations in both drug and placebo groups.

In April 2022, we started a new

potentially confirmatory Phase 3 study of TNX-102 SL in FM, RESILIENT.

Interim analysis results are expected in the second quarter of

2023 and topline results are expected in the fourth quarter of 2023.

Following a positive outcome of the RESILIENT study, we believe we

would be positioned to file a New Drug Application (NDA) for TNX-102 SL for the management of FM.

TNX-102 SL is also

being developed as a potential treatment for a type of Long COVID, the symptoms of which overlap with FM, that we term FM-type

We initiated enrollment in the Phase 2 study PREVAIL, in August 2022.

The primary endpoint is a change in daily pain

scores from baseline.

For TNX-102 SL in PTSD,

we completed the Phase 3 RECOVERY trial and reported topline results in the fourth quarter of 2020 in which TNX-102 SL did not

meet the primary efficacy endpoint.

PTSD is a serious psychiatric condition that develops in response to experiencing a traumatic

We subsequently completed a meeting with the FDA to discuss potential new endpoints for the indication of treatment of PTSD.

Future studies will employ the one month look-back CAPS-5 as the primary endpoint rather than the one week look-back used in prior

AAD program is Phase 2 ready with an active IND and FDA Fast Track designation.

AAD, which includes emotional lability, restlessness,

irritability, and aggression, is one of the most distressing and debilitating of the behavioral complications of Alzheimer’s disease.

We do not have any near-term plans to start a Phase 2 study in AAD.

AUD program is also Phase 2 ready with an active IND.

AUD is a chronic relapsing brain disease characterized by compulsive alcohol use,

loss of control over alcohol intake, and a negative emotional state when not using alcohol.

We do not have any near-term plans to start

a Phase 2 study in AUD.

TNX-1900* (intranasal

potentiated oxytocin) is in development for the treatment of chronic migraine and obesity-associated binge eating disorder, or BED.

TNX-1900 was acquired from Trigemina, Inc.

and licensed from Stanford University in 2020.

The potentiated formulation includes

magnesium, which has been shown in animal studies to potentiate binding of oxytocin to the oxytocin receptor.

We received IND

clearance from the FDA in the fourth quarter of 2021 to study TNX-1900 in chronic migraine and we initiated a Phase 2 study in

migraine in the first quarter of 2023.

We expect interim analysis results from the first 50 percent of patients enrolled in the

fourth quarter of 2023.

In March 2022, we announced an agreement with Massachusetts General Hospital, a teaching hospital of Harvard

Medical School, to conduct an investigator-initiated Phase 2 clinical trial to study TNX-1900 in BED.

The Phase 2 clinical trial is

expected to start in the second quarter of 2023.

We do not own an IND for BED.

We also licensed technology to use TNX-1900 for the

treatment of insulin resistance from the University of Geneva and also have rights to develop it as a treatment for craniofacial

pain, but we are not imminently pursuing clinical trials in either of these indications at this time.

TNX-601 ER* (tianeptine hemioxalate extended-release tablets) is a CNS

product candidate in development as a treatment for major depressive disorder, or depression, and with possible additional indications

of PTSD, and neurocognitive dysfunction associated with corticosteroid use.

TNX-601 ER represents a novel approach to treating depression

in the U.S., since the active ingredient tianeptine induces a neuroprotective and resilient phenotype in both neurons and microglia under

conditions of stress in animals.

The dramatic and unique effects of tianeptine are illustrated in animal models by the restoration of

dendritic arborization of pyramidal neurons of CA3 region of hippocampus and the dentate gyrus region new neuron formation and integration

into hippocampal networks.

In contrast, antidepressants that are marketed in the U.S.

act by modulating the levels or receptor binding

of neurotransmitters in the synapse.

We have completed a Phase 1 trial for formulation development outside of the U.S.

We expect to initiate

a potentially pivotal Phase 2 study in the first quarter of 2023 for the treatment of major depressive disorder and we expect interim

analysis results from the first 50 percent of patients enrolled in the fourth quarter of 2023.

Another CNS candidate in development

is TNX-1300* (double-mutant cocaine esterase) which is in Phase 2 for the treatment of life-threatening cocaine intoxication.

has been granted Breakthrough Therapy designation, or BTD, by the U.S.

Food and Drug Administration, or FDA.

TNX-1300 was licensed

from Columbia University in 2019 after a Phase 2 study showed that it rapidly and efficiently disintegrates cocaine in the blood of volunteers

TNX-1300 was licensed from

Columbia University in 2019 after a Phase 2 study showed that it rapidly and efficiently disintegrates cocaine in the blood of volunteers

who received intravenous, or i.v., cocaine.

We expect to initiate a Phase 2 open-label safety study of TNX-1300 in an emergency room setting

in the first half of 2022.

stage CNS product candidate is TNX-102 SL*, a proprietary sublingual tablet formulation of CBP, designed for bedtime administration.

SL has active INDs for fibromyalgia, or FM, posttraumatic stress disorder, or PTSD, agitation in Alzheimer’s disease, or AAD, and

alcohol use disorder, or AUD.

We also intend to develop TNX-102 SL as a treatment for Long COVID, which is also known as post-acute sequelae

of COVID-19, or PASC.

SL is in mid-Phase 3 development for the management of FM, a pain disorder characterized by chronic widespread pain, non-restorative sleep,

fatigue and impaired cognition.

In December 2020, we reported positive results from the Phase 3 RELIEF study of TNX-102 SL 5.6 mg for

the management of FM.

In July 2021, we reported pre-planned interim analysis results from a second Phase 3 study, RALLY.

recommendation from the independent data monitoring committee that the RALLY trial was unlikely to demonstrate a statistically significant

improvement in the primary endpoint, we stopped enrollment of new participants but allowed those participants who were already enrolled

to complete the study.

We expect to report topline data from the completed study in the first quarter of 2022.

We expect to analyze the

RALLY results to improve the design of subsequent Phase 3 studies.

In addition, we plan to employ pharmacogenomic techniques to compare

the RALLY and RELIEF study populations, which may provide a path to precision medicine-based companion diagnostics for TNX-102 SL in FM.

We intend to start a new Phase 3 study of TNX-102 SL in FM in the first half of 2022.

SL is also being developed as a potential treatment for Long COVID.

We met with the FDA in the third quarter of 2021 to seek agreement

on the design of a Phase 2 potential pivotal study and the overall clinical development plan to qualify TNX-102 SL as an indicated treatment

for Long COVID.

We intend to focus our clinical development on the subgroup of Long COVID patients whose symptoms overlap with FM, particularly

with respect to widespread pain.

We received the official minutes from this meeting in the third quarter of 2021 and intend to initiate

a Phase 2 study in the first half of 2022.

For TNX-102 SL in PTSD, we completed the Phase 3 RECOVERY trial and reported

topline results in the fourth quarter of 2020 in which TNX-102 SL did not meet the primary efficacy endpoint.

PTSD is a serious psychiatric

condition that develops in response to experiencing a traumatic event.

We subsequently completed a meeting with the FDA to discuss potential

new endpoints for the indication of treatment of PTSD, and we expect to begin enrolling a Phase 2 study of TNX-102 SL in police in Kenya

in the first half of 2022.

The AAD program is Phase 2 ready with an active IND and FDA Fast Track designation.

AAD, which includes emotional

lability, restlessness, irritability, and aggression, is one of the most distressing and debilitating of the behavioral complications

of Alzheimer’s disease.

Tonix does not have any near-term plans to start a Phase 2 study in AAD.

The AUD program is also Phase 2

ready with an active IND.

AUD is a chronic relapsing brain disease characterized by compulsive alcohol use, loss of control over alcohol

intake, and a negative emotional state when not using alcohol.

Tonix does not have any near-term plans to start a Phase 2 study in AUD.

(intranasal potentiated oxytocin) is in development for prophylaxis of chronic migraine and for the treatment of craniofacial pain,

insulin resistance and related conditions as well as binge eating disorder, or BED.

TNX-1900 was acquired from Trigemina, Inc.

licensed from Stanford University in 2020.

The potentiated formulation includes magnesium, which has been shown in animals to

potentiate binding of oxytocin to the oxytocin receptor in the trigeminal ganglion.

We received IND clearance from the FDA in the

fourth quarter of 2021 and intend to initiate a Phase 2 study in migraine in the second half of 2022.

Tonix also licensed technology

to use TNX-1900 for the treatment of insulin resistance from the University of Geneva.

TNX-1900 will be studied as a potential

treatment for BED in an investigator-initiated Phase 2 clinical trial.

The Phase 2 clinical trial is expected to start in the second

half of 2022.

In March 2022, we announced an agreement with Massachusetts General Hospital, a teaching hospital of Harvard Medical

School, to conduct this study.

Tonix does not own an IND for BED.

is another intranasal oxytocin-based therapeutic in development for the treatment of Prader-Willi syndrome, or PWS.

The technology

for TNX-2900 was licensed from Inserm, the French National Institute of Health and Medical Research.

PWS, an orphan condition,

is a rare genetic disorder of failure to thrive in infancy, associated with uncontrolled appetite beginning in childhood with

complications of obesity and diabetes.

We have sponsored a research program at the Inserm to study oxytocin on suckling behavior

in mice that have been engineered to express one of the Prader-Willi genes.

In August of 2022, we received a Federal Grant from the National Institute on Drug Abuse (NIDA)

to advance the development of TNX-1300 as a treatment for cocaine intoxication.

We expect to initiate a potentially pivotal Phase 2 study

of TNX-1300 in emergency rooms in the second quarter of 2023.

our CNS pipeline includes TNX-1600*, an inhibitor of the reuptake of neurotransmitters serotonin, norepinephrine and dopamine, or a triple

reuptake inhibitor.

TNX-1600 was licensed from Wayne State University in 2019 and is expected to be developed as a treatment for PTSD,

depression and attention-deficit/hyperactivity disorder, or ADHD.

TNX-1600 is in the preclinical stage of development.

Our rare disease portfolio

consists of TNX-2900*, another magnesium-potentiated, intranasal oxytocin-based therapeutic in development for the treatment of Prader-Willi

syndrome, or PWS.

The technology for TNX-2900 was licensed from Inserm, the French National Institute of Health and Medical Research.

PWS, an orphan condition, is a rare genetic disorder of failure to thrive in infancy, associated with uncontrolled appetite beginning

in childhood with complications of obesity and diabetes.

We have sponsored a research program at Inserm to study oxytocin on suckling

behavior in mice that have been engineered to express one of the Prader-Willi genes.

TNX-2900 has been granted Orphan-Drug Designation

for the treatment of PWS.

CR* (tianeptine oxalate and naloxone controlled-release tablets) is a CNS product candidate in development as a treatment for major depressive

disorder, or depression, for PTSD, and for neurocognitive dysfunction associated with corticosteroid use.

We completed a Phase 1 trial

for formulation development outside of the U.S.

Based on official minutes from a pre-IND meeting with the FDA, we expect to initiate a

pharmacokinetic study, in the third quarter of 2022, and a Phase 2 study in the first quarter of 2023.

infectious disease portfolio includes vaccines based on Tonix’s recombinant pox vaccine, or “RPV” technology platform.

RPV vaccines are believed to protect against negative outcomes of infectious diseases by eliciting T cell responses in addition to antibody

TNX-801* is an RPV live horsepox virus vaccine for percutaneous administration in the pre-IND stage of development to protect

against smallpox and monkeypox.

TNX-801 vaccinated non-human primates were protected from monkeypox in studies reported in the first quarter

is a live virus vaccine that expresses the SARS-CoV-2 spike protein from the ancestral Wuhan strain, which has shown encouraging results

in non-human primates.

Because the subsequent omicron variant has out-competed the ancestral Wuhan strain, we are now planning new vaccine

versions, TNX-1840* and TNX-1850*, that are designed to express spike protein from the omicron variant and from the BA.2 variant, respectively.

The COVID-19 vaccines that are approved for use, or have emergency use authorization, or EUA, in the U.S.

have provided significant health

benefits to the vaccinated population;

however, they are showing limitations in the durability of protection conferred and, in their ability,

for the treatment of PWS, and is in the pre-IND stage of development.

Our lead candidate

in the immunology pipeline is TNX-1500*, a humanized mAb, directed against CD40-ligand, or CD40L (also

known as CD154), engineered to modulate binding to Fc receptors, that is being developed as a prophylaxis against organ transplant

rejection as well as to treat autoimmune conditions.

In experiments at the Massachusetts General Hospital or MGH, a teaching hospital

of Harvard Medical School, TNX-1500 is being studied as monotherapy or in combination with other immunosuppressive agents in heart

and kidney allogeneic organ transplants in non-human primates.

Preliminary results from ongoing experiments in kidney and heart

transplants indicate that TNX-1500 appears to have comparable efficacy to historical experiments using the chimeric mouse/human

IgG1 version (5c8H1) of the anti-CD40L mAb 5c8.

First generation anti-CD40L mAb therapies were associated with an increased risk

of blood clots or thrombosis.

In the non-human primate studies with TNX-1500 for allogeneic kidney or heart transplantation, no

evidence of thrombosis has been observed so far.

We expect to start a Phase 1 study of TNX-1500 in the second quarter of 2023.

TNX-1500 also is being studied in combination with other immunosuppressive agents in xenogeneic organ transplants in non-human

primates at MGH and at the University of Maryland at Baltimore or UMB.

In experiments at UMB, TNX-1500 is being studied to prevent

rejection of xenogeneic hearts from genetically engineered pigs developed by the Revivicor division of United Therapeutics Corporation.

Our immunology pipeline

also includes TNX-1700*, a recombinant Trefoil Factor Family 2, or rTFF2, fusion protein that was licensed from Columbia University

TNX-1700 consists of TFF2 fused to human serum albumin or I and is a biologic being developed to treat gastric and colorectal

cancers by an immune-oncology mechanism, in combination with PD1 blockers, and is in the preclinical stage of development.

presented data that show a murine version of TNX-1700 consisting of a fusion protein with murine serum albumin or MSA was able

to evoke anti-tumor immunity in the MC38 mouse model of colorectal cancer as monotherapy and that TNX-1700 augmented the efficacy

of anti-PD1 therapy in both the MC38 mouse model and the CT26.wt models of colorectal cancer.

Our infectious disease

portfolio includes vaccines based on our live virus vaccine or recombinant pox vaccine, “RPV” platform.

vaccines are believed to protect against poor clinical outcomes of infectious diseases by eliciting T cell responses in addition

to antibody responses.

TNX-801*, a live attenuated vaccine based on synthesized horsepox is in the pre-IND stage of development

to protect against smallpox and mpox.

Non-human primates vaccinated with TNX-801 were protected from monkeypox in studies reported

in the first quarter of 2020.

A Phase 1 study of TNX-801 in humans is expected to start in the second half of 2023.

also serves as the live virus vaccine platform for other infectious diseases for which subsequent products will be designed by

expressing other viral antigens in the horsepox vector.

TNX-1850* is a live

virus vaccine that expresses the SARS-CoV-2 spike protein from the BA.2 strain that has not yet been tested in animals.

is a live virus vaccine that expresses the SARS-CoV-2 spike protein from the ancestral Wuhan strain, which has shown encouraging

results in non-human primates.

Because the subsequent omicron variant out-competed the ancestral Wuhan strain, we began work on

new vaccine versions, TNX-1840* and TNX-1850*, that are designed to express spike protein from the omicron variant and from the

BA.2 variant, respectively.

Of those, based on the trajectory of COVID-19, the focus is now on TNX-1850.

The COVID-19 vaccines

that are approved for use, or have emergency use authorization, or EUA, in the U.S.

have provided significant health benefits to

the vaccinated population;

however, they have shown limitations in the durability of protection conferred and in their ability

to block forward transmission.

Live virus vaccines that protect against other viral diseases by eliciting T cell responses have shown

durability of protection that lasts years to decades and some live virus vaccines have significantly inhibited forward transmission.

respect to TNX-1800 vaccination, we reported positive efficacy data from animal challenge studies using live SARS-CoV-2 in the first quarter

In this study, TNX-1800 vaccinated, SARS-CoV-2 challenged animals had undetectable SARS-CoV-2 in the upper airways, which we

believe relates to potential inhibition of forward transmission of this respiratory pathogen.

(sangivamycin) is an antiviral inhibitor of SARS-CoV-2 which has demonstrated broad-spectrum activity in laboratory-based assays

against the coronaviruses SARS-CoV-2 and MERS-CoV.

Tonix licensed this technology from OyaGen, Inc.

and intends to develop it as a

treatment for COVID-19 and potentially other viral diseases.

The active ingredient of TNX-3500 has been studied for safety in humans

in prior studies with cancer patients at the U.S.

National Cancer Institute but has not been approved for marketing in any

jurisdiction.

Tonix intends to conduct further animal studies in preparation for filing an IND.

refers to a series of fully human mAbs generated by a human-human hybridomas from COVID-19 convalescent volunteers.

Tonix is collaborating

with Columbia University to produce these fully human mAbs to SARS-CoV-2 spike proteins from variants such as delta and omicron and to

other viral targets.

Live virus vaccines that protect against other viral diseases by eliciting T cell responses have

shown durability of protection that lasts years to decades and some live virus vaccines have significantly inhibited forward transmission.

With respect to TNX-1800 vaccination, we reported positive efficacy data from animal challenge studies using live SARS-CoV-2 in

the first quarter of 2021.

In this study, TNX-1800 vaccinated, SARS-CoV-2 challenged animals had undetectable SARS-CoV-2 in the

upper airways, which we believe relates to potential inhibition of forward transmission of this respiratory pathogen.

TNX-2300* is a live

virus vaccine based on bovine parainfluenza virus in development to protect against COVID-19.

In April 2022, we extended a sponsored

research agreement with Kansas State University to develop a vaccine candidate, TNX-2300, for the prevention of COVID-19 that utilizes

a novel live virus vaccine vector platform based on bovine parainfluenza virus.

The efficacy of co-expression of the CD40-ligand,

also known as CD154, to stimulate T cell immunity will also be tested.

Attenuated bovine parainfluenza virus has previously been

shown to be an effective antigen delivery vector in humans.

Previous work by others has shown that attenuated BPI3V is tolerated

and immunogenic in non-human primates and human infants and children.

We believe the vector is well suited for mucosal immunization

using a nasal atomizer, and can also be delivered parenterally.

TNX-2300 is in the preclinical stage of development.

TNX-3600* and TNX-3800*

are mAbs directed against SARS-CoV-2 which are in development as potential therapeutic or preventative agents for COVID-19.

the unpredictable trajectory of the SARS-CoV-2 virus and new variants, we seek to contribute a broad set of anti-SARS-CoV-2 mAbs,

that can be scaled up quickly and potentially combined with other mAbs.

We envision the future of mAb therapy for COVID-19 to be

cocktails of mAbs with specificity to variants of concern.

TNX-3600 refers to a series of fully human mAbs generated by human-human hybridomas from COVID-19 convalescent volunteers.

We are collaborating with Columbia University to produce these fully

human mAbs to SARS-CoV-2 spike proteins from variants such as delta, omicron and XBB1.5 and to other viral targets.

TNX-3800 refers

to three humanized murine mAbs which we licensed exclusively in December 2022 from Curia Global, Inc.

for the treatment or

prophylaxis of SARS-CoV-2 infection.

The initial focus is to develop COVID-19 therapeutic mAbs.

Tonix plans to seek indications similar to current EUA

therapeutic mAbs for treating individuals with mild-to-moderate COVID-19 who are at high risk for progression to severe disease.

mAbs may also be used in combination therapy with other COVID-19 therapeutic mAbs.

Combination therapies with other anti-SARS-CoV-2 mAbs

may reduce the emergence of resistant viral strains.

Given the unpredictable trajectory of the SARS-CoV-2 virus and new variants, we

seek to contribute to a broad set of mAbs from a variety of patients, that can be scaled up quickly and potentially combined with other

We envision the future of mAb therapy for COVID-19 to be cocktails of mAbs with specificity to variants of concern.

is in the preclinical stage of development.

Tonix intends to study inhibition of SARS-CoV-2 variants in tissue culture and initiate animal

studies in the first half of 2022.

Tonix also is collaborating with

Columbia University to better understand immune responses to SARS-CoV-2 in healthy individuals who have recovered from COVID-19, which

is expected to provide a foundation for tailoring therapeutics to appropriate individuals using precision medicine.

is a COVID-19 mRNA vaccine candidate employing a zinc nanoparticle (ZNP) formulation.

In collaboration with Kansas State University, Tonix

is developing this ZNP technology as a potential replacement for the lipid nanoparticle (LNP) technology used in current mRNA vaccines.

ZNP technology potentially allows for improved stability which facilitates shipping and storage and addresses the limitations in current

mRNA vaccines which require ultra-cold storage and shipping.

We plan to seek indications similar

to previously EUA-approved therapeutic mAbs for treating individuals with mild-to-moderate COVID-19 who are at high risk for

progression to severe disease or for prophylaxis in individuals with compromised immune systems who are at high risk for severe COVID-19 disease.

None of the previously EUA-approved therapeutic or preventative mAbs are still available, because each

has become obsolete since the SARS-CoV-2 virus has mutated to evade their binding.

TNX-3600 and TNX-3800 mAbs may also be used in

combination therapy with other COVID-19 therapeutic mAbs.

Combination therapies with other anti-SARS-CoV-2 mAbs may reduce the

emergence of resistant viral strains.

TNX-3600 and TNX-3800 are in the preclinical stage of development.

TNX-3700* is a COVID-19

mRNA vaccine candidate employing a zinc nanoparticle (ZNP) formulation.

In collaboration with Kansas State University, we are developing

this ZNP technology as a potential replacement for the lipid nanoparticle (LNP) technology used in current mRNA vaccines.

ZNP technology

potentially allows for improved stability which facilitates shipping and storage and addresses the limitations in current mRNA

vaccines which require ultra-cold storage and shipping.

This current requirement limits the use of mRNA vaccines in less developed

We plan to seek initial indications as a booster, similar to the current FDA approved mRNA vaccines.

Tonix intends to conduct

research with Kansas State University on ZNP SARS-CoV-2 spike based vaccines in tissue culture and animals in the first half of 2022.

is an in vivo diagnostic skin test we are developing to measure SARS-CoV-2 exposure and T cell immunity.

T cell immunity is more

durable than antibody immunity, since serum antibodies wane between six months and one year after vaccination.

TNX-2100 is a potential

test to measure delayed-type hypersensitivity (DTH) response to SARS-CoV-2.

The DTH response for other pathogens, notably tuberculosis,

can serve as an in vivo measure of functional T cell immunity.

TNX-2100 is comprised of GMP peptides designed to mimic SARS-CoV-2

proteins and stimulate SARS-CoV-2 specific T cells.

We initiated a first-in-human, dose-finding clinical study in the first quarter of

2022 and expect study results in the first half of 2022.

Our immunology pipeline also includes

TNX-1700 is a recombinant modified form of Trefoil Family Factor 2, or rTFF2, that was licensed from Columbia University in

TNX-1700 is a biologic being developed to treat gastric and colorectal cancers by an immune-oncology mechanism and is in the preclinical

stage of development.

Our biodefense pipeline includes

TNX-701*, an undisclosed small molecule technology being developed to prevent deleterious effects of radiation exposure which has the

potential to be used as a medical countermeasure to improve biodefense.

TNX-701 is in the preclinical stage of development.

our CNS pipeline includes TNX-1600*, an inhibitor of the reuptake of neurotransmitters serotonin, norepinephrine and dopamine, or a triple

reuptake inhibitor.

TNX-1600 was licensed from Wayne State University in 2019 and is being developed as a treatment for PTSD, depression

and attention-deficit/hyperactivity disorder, or ADHD.

We plan to seek initial indications as a booster, similar to the current FDA approved mRNA vaccines for COVID-19.

intend to conduct research with Kansas State University on ZNP SARS-CoV-2 spike based vaccines in tissue culture and animals in

the first half of 2023.

TNX-3700 is in the preclinical stage of development.

to our COVID-19 and other infectious disease development programs, we are developing the resources necessary to enable internal research,

development and manufacturing capabilities necessary to meet the goal of producing new vaccine candidates within 100 days of recognition

and new diagnostics within weeks of obtaining sequence information.

As articulated in the American Pandemic Preparedness Plan, or AP3,

released by the U.S.

Office of Science and Technology Policy, this 100-day goal for vaccines is a key component of preparedness for future

We intend to establish the infrastructure necessary to support the pandemic preparedness goals established in the AP3, specifically

with respect to our RPV vaccine and skin test platforms and potentially to other vaccine, diagnostic and therapeutic platforms.

This infrastructure

consists of (i) our infectious disease R&D Center, or “RDC”, (ii) our Advanced Development Center, or ADC, and (iii) our

Commercial Manufacturing Center, or CMC.

We acquired the infectious disease RDC in Frederick, Maryland consisting of two buildings totaling

approximately 48,000 square feet.

The acquisition closed in October 2021 and was operational at closing, but as of December 31, 2021,

the facility was not ready for its intended use.

It is our intention to have the facility ready for use in the first half of 2022.

RDC facility will focus on our development of vaccines and antiviral drugs against SARS-CoV-2, its variants, and other infectious diseases.

The RDC facility is currently biosafety level 2 (BSL-2), but we intend to upgrade components to BSL-3.

We are in the process of a substantial

renovation of the ADC located in the New Bedford business park in Dartmouth, Massachusetts.

This facility is intended to accelerate development

and clinical scale manufacturing of live-virus vaccines to support Phase 1 and Phase 2 clinical trials.

It is currently under construction

and will be an approximately 45,000 square foot BSL-2 facility once completed.

It is expected to be partially operational in the first

half of 2022.

We also plan to build the CMC in Hamilton, Montana, where we purchased approximately 44 acres of land.

The CMC will focus

on developing and manufacturing commercial scale live-virus vaccines and is also intended to be BSL-2.

Site enabling work is expected

to be initiated for the CMC in 2022.

Together, we expect these facilities may qualify the RPV vaccine and skin test platforms for

programs that are designed to carry out the goals of AP3.

of Tonix’s product candidates are investigational new drugs or biologics and have not been approved for any indication.

Relating to our COVID-19 and other infectious disease development programs,

we are developing the resources necessary to enable internal research, development and manufacturing capabilities necessary to meet the

goal of producing new vaccine candidates within 100 days of recognition within weeks of obtaining sequence information of a novel pathogen.

We seek to be a leader in the movement to re-build domestic U.S.

research, development and manufacturing capabilities.

Because this movement

follows a protracted period when domestic research, development and manufacturing were moved out of the U.S., or “off-shore”

by other companies to save on labor and other costs, the movement to reverse that trend has been described as “on-shoring”

or “re-domestication”.

The COVID-19 pandemic taught that national borders may close during a health emergency.

domestic capabilities are essential for the health security of the U.S., which has also been described as pandemic preparedness and biodefense.

As articulated in the American Pandemic Preparedness Plan, or AP3, released by the U.S.

Office of Science and Technology Policy, this

100-day goal for vaccines is a key component of preparedness for future pandemics.

We believe we have established the infrastructure necessary

to support the pandemic preparedness goals established in the AP3, specifically with respect to our RPV vaccine and potentially to other

vaccine and therapeutic platforms.

This infrastructure consists of (i) our R&D Center, or “RDC”, (ii) our Advanced Development

Center, or ADC, and (iii) our Commercial Manufacturing Center, or CMC.

We acquired the RDC in Frederick, Maryland consisting of one building

totaling approximately 48,000 square feet.

The acquisition closed in October 2021 and the facility is operational.

The RDC facility focuses

on our development of vaccines and antiviral drugs against SARS-CoV-2, its variants, and other infectious diseases.

The RDC also conducts

research on central nervous system and immunology drugs.

The RDC facility is mostly biosafety level 2 (BSL-2), with some components designated

We completed the substantial renovation of the ADC located in the New Bedford business park in Dartmouth, Massachusetts, which

became operational as of the fourth quarter 2022.

This approximately 45,000 square foot BSL-2 facility is intended to accelerate development

and clinical scale manufacturing of live-virus vaccines and biologics to support clinical trials.

We also plan to build the CMC in Hamilton,

Montana, where we purchased approximately 44 acres of land and have built a field office to manage construction of the facility.

will focus on developing and manufacturing commercial scale live-virus vaccines and biologics and is also intended to be BSL-2.

Site enabling

work is expected to be initiated for the CMC in 2023.

Together, we expect these facilities may qualify the RPV vaccine platform for programs

that are designed to carry out the goals of AP3.

of our product candidates are investigational new drugs or biologics and have not been approved for any indication.

are led by a management team with significant industry experience in drug development.

We complement our management team with a network

of scientific, clinical, and regulatory advisors that includes recognized experts in their respective fields.

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.

Fiscal year Ended December 31, 2021 Compared

to Fiscal year Ended December 31, 2020

The following table sets forth our operating expenses

for the fiscal years ended December 31, 2021 and 2020 (in thousands):

Year ended December 31,

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.

year Ended December 31, 2022 Compared to Fiscal year Ended December 31, 2021

following table sets forth our operating expenses for the fiscal years ended December 31, 2022 and 2021 (in thousands):

ended December 31,

COSTS AND EXPENSES:

Research and development

General and administrative

and development

and administrative

Total operating expenses

Operating loss

Interest income, net

and Development Expenses .

Research and development expenses for the fiscal year ended December 31, 2021 were $68.8

million, an increase of $32.6 million, or 90%, from $36.2 million for the fiscal year ended December 31, 2020.

This increase is

predominately due to increased non-clinical expenses of $14.0 million, manufacturing expenses of $10.9 million, employee-related

expenses of $5.3 million and regulatory/legal expenses of $1.9 million, offset by a decrease in clinical expenses of $0.7 million.

Research and development expenses for the fiscal year ended December 31, 2022, were $81.9 million,

an increase of $13.1 million, or 19%, from $68.8 million for the fiscal year ended December 31, 2021.

This increase is predominately due

to increased employee-related expenses of $9.0 million, predominately related to new hires at the RDC and ADC, lab supplies of $3.3 million, and office-related expenses of $1.4 million related

to our new facilities offset by a decrease in regulatory expenses of $0.4 million and a decrease in market research expenses of $0.3 million.

We expect research and development expenses to increase during 2023 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

years ended December 31, 2021, and 2020.

and development expenses:

expenses – TNX - 102 SL

expenses – TNX - 1800

expenses – TNX – 601 CR

expenses – TNX - 1300

expenses – TNX - 1500

expenses – TNX - 1900

expenses – TNX - 2100

expenses – TNX - 3500

expenses – Other programs

staffing, overhead and other

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.

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

ended December 31, 2022, and 2021.

Research and development expenses:

Direct expenses – TNX - 102 SL

Direct expenses – TNX - 1800

Direct expenses – TNX - 601 ER

Direct expenses – TNX - 801

Direct expenses – TNX - 1300

Direct expenses – TNX - 1500

Direct expenses – TNX - 1900

Direct expenses – TNX - 2100

Direct expenses – TNX - 3500

Direct expenses – Other programs

Internal staffing, overhead and

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

and Administrative Expenses .

General and administrative expenses for the fiscal year ended December 31, 2021 were

$23.5 million, an increase of $9.1 million, or 63%, from $14.4 million incurred in the fiscal year ended December 31, 2020.

increase is primarily due to employee-related expenses of $4.9 million, an increase in legal fees of $0.7 million due to increased

patent prosecution costs, an increase in investor relations/public relations expenses of $0.6 million, an increase in financial

reporting expenses of $1.2 million, and an increase in insurance premiums of $0.4 million.

As a result of the foregoing, the net loss for the year ended December 31, 2021 was $92.3 million, compared to a

net loss of $50.5 million for the year ended December 31, 2020.

April 14, 2021, we entered into an exclusive License Agreement (the “OyaGen License Agreement”) with OyaGen, Inc.

(“OyaGen”), pursuant to which OyaGen granted to 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 Agreement.

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 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 our shareholders in accordance with management’s recommendations.

The shares were valued at $3.0 million,

which was recorded as research and development expense.

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

General and administrative expenses for the fiscal year ended December

31, 2022 were $30.2 million, an increase of $6.7 million, or 29%, from $23.5 million incurred in the fiscal year ended December 31, 2021.

The increase is primarily due to employee-related expenses of $4.3 million, of which $2.4 million relates to stock-based compensation,

an increase in legal fees of $0.1 million due to increased patent prosecution costs, an increase in software/technology expenses of $0.5

million, an increase in financial reporting expenses of $1.1 million, and an increase in travel-related of $0.4 million.

As a result of the foregoing, the net loss for the year ended December 31, 2022 was $110.2 million, compared to a net

loss of $92.3 million for the year ended December 31, 2021.

February 13, 2023, we exercised an option to obtain an exclusive license from Columbia for the development of a portfolio of both fully

human and murine mAbs for the treatment or prophylaxis of SARS-CoV-2 infection, including our TNX-3600 and TNX-4100 product candidates,

respectively.

The licensed mAbs were developed as part of a research collaboration and option agreement between us and Columbia.

December 12, 2022, we entered into an exclusive license agreement with Curia for the development of three humanized murine mAbs for the

treatment or prophylaxis of SARS-CoV-2 infection.

We believe that the licensing of these mAbs strengthens our pipeline of next-generation

therapeutics to treat COVID-19, which is caused by SARS-CoV-2.

As consideration for entering into the License Agreement, we paid a license

fee of approximately $0.4 million to Curia.

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

As of December 31, 2022, other than the upfront fee, no payments have been accrued or paid in relation to this agreement.

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.

of December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement

February 11, 2021, we announced that we have 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 licensing agreement has been negotiated

and signed by Inserm Transfert, the private subsidiary of Inserm, on behalf of Inserm.

co-exclusive license allows us to expand our intranasal potentiated oxytocin development program to a new indication.

covering the technology are expected to provide market exclusivity for the co-licensees in the U.S.

and Europe through 2031, which

exclusivity could be extended after marketing authorization by a Supplemental Protection Certificate in Europe or a Patent Term

Extension in the U.S., independent of other Tonix-held patents covering the formulation and oxytocin potentiation technologies

for intranasal administration.

of December 31, 2021, 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 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.

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.

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 December 31, 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 Agreement.

As 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.

No milestone payments were accrued or paid in relation to this agreement.

July 2022, we notified OyaGen of our intent to terminate the License Agreement, and the agreement was terminated effective September

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 December 31, 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,

the “Technology”) related to a double-mutant cocaine esterase, and to develop and commercialize products thereunder

(each, a “Product”).

Pursuant to the terms of the License Agreement, Columbia has reserved for itself and the Institutions

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

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”), as subsequently amended, 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”).

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

are obligated 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.

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 December 31, 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, the “Technology”)

related to a double-mutant cocaine esterase, and to develop and commercialize products thereunder (each, a “Product”).

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

academic research and educational purposes.

paid a six-digit license fee to Columbia as consideration for entering into the License Agreement.

1 unchanged sentence

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.

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.

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 December 31, 2021, no milestone payments have been accrued or paid in relation to this agreement.

are obligated 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%.

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 December 31, 2022, no milestone

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

Purchase Agreements

February 2, 2023, we entered into an asset purchase agreement (the “Asset

Purchase Agreement”) with Healion Bio Inc., pursuant to which we acquired all the pre-clinical

infectious disease assets of Healion, including its portfolio of next-generation antiviral technology assets.

Healion’s drug portfolio

includes a class of broad-spectrum small molecule oral antiviral drug candidates with a novel host-directed mechanism of action, including

TNX-3900, formerly known as HB-121.

As consideration for entering into the Asset Purchase Agreement, we paid $1.2 million to Healion.

Because the Healion intellectual property was acquired prior to FDA approval, the cash consideration totaling $1.2 million, is expected

to be expensed as research and development costs since there is no alternative future use and the acquired intellectual property does

not constitute a business.

December 22, 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Katana Pharmaceuticals,

1 unchanged sentence

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.

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.

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

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

1 unchanged sentence

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 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.

of December 31, 2021, 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

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.

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 Stanford.

of December 31, 2021, 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 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.

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 December 31, 2021, 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.

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

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 December 31, 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, 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.

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.

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.

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.

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 December 31, 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 Pharma,

(“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”).

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 subsequently amended.

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.

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 December 31, 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 million.

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%.

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

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 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 December 31, 2021, no milestone payments have

been accrued or paid in relation to this agreement.

contains provisions relating to termination, indemnification, confidentiality and other customary matters for an agreement of this kind.

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

and Capital Resources

of December 31, 2021, we had working capital of $167.3 million, comprised primarily of cash and cash equivalents of $178.7 million

and prepaid expenses and other of $10.4 million, offset by $13.3 million of accounts payable, $7.9 million of accrued expenses

and other current liabilities and $0.5 million of lease liabilities, short term.

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 years ended December 31, 2021, and 2020, respectively (in thousands):

of December 31, 2022, we had working capital of $112.6 million, comprised primarily of cash and cash equivalents of $120.2 million and

prepaid expenses and other of $10.5 million, offset by $8.1 million of accounts payable, $9.7 million of accrued expenses and other current

liabilities and $0.4 million of lease liabilities, short term.

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.

following table provides a summary of operating, investing and financing cash flows for the years ended December 31, 2022, and 2021, respectively

(in thousands):

Net cash used in operating activities

1 unchanged sentence

Net cash provided by financing activities

years ended December 31, 2021 and 2020, we used approximately $75.6 million and $48.6 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 general and administrative

For the year ended December 31, 2021 and 2020, net proceeds from financing activities were $212.5 million and $123.1

million, respectively, predominately from the sale of our common stock and exercise of warrants.

used by investing activities for the years ended December 31, 2021 and 2020 was approximately $35.3 million and $8.6 million,

respectively, related to the purchase of property and equipment.

For the year ended December 31, 2021 and 2020, net proceeds from financing

activities were $212.5 million and $123.1 million, respectively, predominately from the sale of our common stock and exercise of warrants.

believe that our cash resources at December 31, 2021 and the proceeds that we raised from equity offerings in the first quarter

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

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

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.

the years ended December 31, 2022 and 2021, we used approximately $98.1 million and $75.6 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 general and administrative activities.

used by investing activities for the years ended December 31, 2022 and 2021 was approximately $48.1 million and $35.3 million, respectively,

related to the purchase of property and equipment.

A significant portion of capital expenditure relates to the build-out of the RDC and ADC.

the years ended December 31, 2022 and 2021, net proceeds from financing activities were $87.8 million and $212.5 million, respectively,

predominately from the sale of our common stock.

We believe that our cash

resources at December 31, 2022 and the proceeds that we raised from equity offerings in the first quarter of 2023, net of amounts paid

to repurchase shares in the first quarter of 2023, will meet our operating and capital expenditure requirements into the fourth quarter

of 2023, but not beyond.

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-K.

We believe 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.

Liquidity Requirements

2 unchanged sentences

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

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

future capital requirements will depend on a number of factors, including the progress of our research and development of product

candidates, the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining,

defending and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability

of financing and our success in developing markets for our product candidates.

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

future capital requirements will depend on a number of factors, including the progress of our research and development of product candidates,

the timing and outcome of regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing

patent claims and other intellectual property rights, the status of competitive products, the availability of financing and our success

in developing markets for our product candidates.

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.

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.

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.

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.

Repurchase Program

Since January 1, 2023, the Company

has repurchased 15,700,269 of its shares of common stock outstanding under a $12.5 million

share purchase program at prices ranging from $0.44 to $1.38 per share for a gross aggregate cost of approximately $12.5 million.

In January 2023, the Board of Directors

approved a new share repurchase program pursuant to which the Company may repurchase up to an additional $12.5

million in value of its 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.

Since January 1, 2023, the Company has

repurchased 1,000,000 of its shares of common stock outstanding under the new share repurchase

program at $1.14 per share for a gross aggregate cost of $1.1 million.

Convertible Redeemable Preferred stock

26, 2022, we issued 1,400,000 shares of Series A Preferred Stock and 100,000 shares of Series B Preferred Stock to certain institutional

investors in a private placement.

The Preferred Stock had an aggregate stated value of $15,000,000.

Each share of the Preferred Stock

had a purchase price of $9.50, representing an original issue discount (“OID”) of 5% of the stated value.

The shares of the

preferred stock were convertible into shares of our common stock, upon the occurrence of certain events, at a conversion price of $1.00

per share, at the option of the holder, and at our option upon 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 in the event of the conversion of the preferred stock.

The $14.3 million in gross proceeds of the offering were

held in an escrow account, along with an additional $1.5 million deposited by the Company to cover the aggregate OID as well as the additional

amount that would have been necessary to fund the 105% redemption price until the expiration of the redemption period for the Preferred

outstanding shares of the Series A Convertible Redeemable Preferred Stock and Series B Convertible Redeemable Preferred Stock were redeemed

in December 2022 at 105% of the $10.00 stated value of the Preferred Stock, or $15.8 million in the aggregate.

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 had an aggregate stated value of $30,000,000.

Each share of the Preferred Stock

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

The shares of the preferred stock were convertible into

shares of our common stock, upon the occurrence of certain events, at a conversion price of $4.00 per share, at the option of the holder,

and at our option upon 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 in the event of

the conversion of the preferred stock.

The $28.5 million in gross proceeds of the offering were 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 have been necessary

to fund the 105% redemption price until the expiration of the redemption period for the Preferred Stock.

All outstanding shares of the

Series A Convertible Redeemable Preferred Stock and Series B Convertible Redeemable Preferred Stock were redeemed in August 2022 at 105%

of the $10.00 stated value of the Preferred Stock, or $31.5 million in the aggregate.

Lincoln Park Transaction

August 16, 2022, we entered into a purchase agreement (the “2022 Purchase Agreement”) and a registration rights agreement

(the “2022 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the

terms of the 2022 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $50,000,000 of our common stock (subject to certain

limitations) from time to time during the term of the 2022 Purchase Agreement.

Pursuant to the terms of the 2022 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 2022 Purchase Agreement.

to the terms of the 2022 Purchase Agreement, at the time we signed the 2022 Purchase Agreement and the 2022 Registration Rights Agreement,

we issued 625,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock under

the 2022 Purchase Agreement.

The commitment shares were valued at $1,000,000 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 2022 Purchase Agreement.

the year ended December 31, 2022, we sold 1.0 million shares of common stock under the 2022 Purchase Agreement, for net proceeds of approximately

$0.5 million.

Subsequent to December 31, 2022, the Company sold 0.6 million shares of common stock under the Purchase Agreement

with Lincoln Park for net proceeds of approximately $0.4 million.

Agreement with Lincoln Park

December 3, 2021, we entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration

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

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.

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 to be raised under the Purchase Agreement with Lincoln

shares were sold during the year ended December 31, 2021, under the Purchase agreement with Lincoln Park.

Subsequent to December

31, 2021, we have sold 22.0 million shares of common stock under the Purchase Agreement with Lincoln Park, for net proceeds of

approximately $4.5 million.

December 3, 2021, we entered into a purchase agreement (the “Purchase Agreement with Lincoln Park”) and a registration rights

agreement (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 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.

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 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.

the year ended December 31, 2022, we sold 2.9 million shares of common stock under the Purchase Agreement with Lincoln Park, for net proceeds

of approximately $8.7 million.

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 2.9 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 2.9 million 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.

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.

Pursuant to the terms of the 2021 Purchase Agreement,

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 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

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”).

Pursuant 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 1,280,000 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 year ended December 31, 2021, we sold an aggregate of approximately 64.5 million shares of common stock under the 2021 Purchase

Agreement, for gross proceeds of approximately $41.3 million.

applicable rules of the NASDAQ Global Market, we could not issue or sell more than 19.99% of the shares of its common stock outstanding

immediately prior to the execution of the 2021 Purchase Agreement (approximately 64.5 million shares) to Lincoln Park under the

2021 Purchase Agreement without stockholder approval, unless the average price of all applicable sales of its common stock to

Lincoln Park under the 2021 Purchase Agreement equals or exceeds a threshold amount.

As we have issued approximately 64.5 million

shares to Lincoln Park, during the year end December 31, 2021, under the 2021 Purchase Agreement at less than the threshold amount,

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 year ended December 31, 2021, we sold an aggregate of approximately 2.0 million shares of common stock under the 2021 Purchase Agreement,

for gross proceeds of approximately $41.3 million.

During the year ended December 31, 2022, no shares of common stock were sold under

the 2021 Purchase Agreement.

applicable rules of the NASDAQ Global Market, we could not issue or sell more than 19.99% of the shares of our common stock outstanding

immediately prior to the execution of the 2021 Purchase Agreement (approximately 2.0 million shares) to Lincoln Park under the 2021 Purchase

Agreement without stockholder approval, unless the average price of all applicable sales of our common stock to Lincoln Park under the

2021 Purchase Agreement equals or exceeds a threshold amount.

we have issued approximately 2.0 million shares to Lincoln Park under the 2021 Purchase Agreement, at less than the threshold amount,

we will not sell any additional shares under the 2021 Purchase Agreement without shareholder approval.

2021 Financing

February 8, 2021, we entered into a securities purchase agreement 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.

The public offering price for each share of

common stock was $1.20.

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.

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.

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

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.

We received net proceeds of approximately $65.0 million, after

deducting the fees and other offering expenses.

2021 Financing

January 11, 2021, we entered into a securities purchase agreement with certain institutional investors relating to the issuance

and sale of 50,000,000 shares of its common stock in a registered direct public offering (“the January 2021 Financing”),

with AGP as placement agent.

January 11, 2021, we entered into a securities purchase agreement with certain institutional investors relating to the issuance and sale

of 1.6 million shares of its common stock in a registered direct public offering (“the January 2021 Financing”), with AGP

as placement agent.

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

The January 2021 Financing closed

on January 13, 2021.

The January 2021 Financing closed on January

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.

The Company received net proceeds of approximately $36.9 million, after deducting

the fees and other offering expenses.

We incurred other offering expenses of

approximately $0.3 million.

The Company received net proceeds of approximately $36.9 million, after deducting the fees and other offering

At-the-Market

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offerings (“ATM”) sales.

On the same day, we filed a prospectus supplement under a shelf registration relating to

the Sales Agreement.

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

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

year ended December 31, 2021, we sold approximately 110.2 million shares of common stock under the Sales Agreement, for net proceeds

of approximately $69.3 million.

Subsequent to December 31, 2021, we sold 15.6 million shares of common stock under the Sales Agreement,

for net proceeds of approximately $4.3 million.

Lincoln Park Transaction

September 3, 2020, we entered into a purchase agreement (the “2020 Purchase Agreement”) and a registration rights

agreement (the “2020 Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”).

Pursuant to the terms of the 2020 Purchase Agreement, Lincoln Park has agreed to purchase from us up to $30,000,000 of our common

stock (subject to certain limitations) from time to time during the term of the 2020 Purchase Agreement.

Pursuant to the terms

of the 2020 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 2020 Purchase Agreement.

to the terms of the 2020 Purchase Agreement, we issued 600,000 shares of common stock to Lincoln Park as consideration for its

commitment to purchase shares of our common stock under the 2020 Purchase Agreement.

The commitment shares were valued at $498,000

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 2020 Purchase Agreement.

the year ended December 31, 2020, we sold an aggregate of approximately 25.4 million shares of common stock under the 2020 Purchase

Agreement, for gross proceeds of approximately $14.6 million.

applicable rules of the NASDAQ Global Market, we could not issue or sell more than 19.99% of the shares of our common stock outstanding

immediately prior to the execution of the 2020 Purchase Agreement (approximately 26 million shares) to Lincoln Park under the

2020 Purchase Agreement without stockholder approval, unless the average price of all applicable sales of our common stock to

Lincoln Park under the 2020 Purchase Agreement equals or exceeds a threshold amount.

As we have issued approximately 26 million

shares to Lincoln Park, during the year end December 31, 2020, under the 2020 Purchase Agreement at less than the threshold amount,

we will not sell any additional shares under the 2020 Purchase Agreement without shareholder approval.

2020 Financing

July 13, 2020, we entered into an underwriting agreement with AGP, relating to the issuance and sale of 20,940,000 shares of common

stock, in a registered direct public offering (“the July 2020 Financing”).

The public offering price for each share

of common stock was $0.50.

The July 2020 Financing closed on July 15, 2020.

AGP purchased the shares at a seven percent discount,

for an aggregate discount of $0.7 million.

We incurred other offering expenses of approximately $0.1 million.

We received net

proceeds of approximately $9.6 million, after deducting the underwriting discount and other offering expenses.

2020 Financing

February 28, 2020, we entered into an underwriting agreement with AGP, relating to the issuance and sale of 14,550,000 shares

of our common stock, in a registered direct public offering (“the March 2020 Financing”).

The public offering price

for each share of common stock was $1.10.

The March 2020 Financing closed on March 3, 2020.

AGP purchased the shares at a seven-percent

discount to the then current public price, for an aggregate discount of $1.1 million.

We incurred other offering expenses of approximately

$0.1 million.

We received net proceeds of approximately $14.8 million, after deducting the underwriting discount and other offering

2020 Financing

February 7, 2020, we entered into an underwriting agreement with AGP pursuant to which we sold securities consisting of 3,837,000

Class A Units at a public offering price of $0.57 per unit, with each unit consisting of one share of common stock and one warrant

to purchase one share of common stock, and 5,313 Class B Units at a public offering price of $1,000 per unit, with each unit consisting

of one share of Series B Convertible Preferred Stock, with a conversion price of $0.57 per share, convertible into 1,754.386 shares

of common stock and warrants to purchase 1,754.386 shares of our common stock (“the February 2020 Financing”).

warrants have an exercise price of $0.57, are immediately exercisable and expire five years from the date of issuance.

February 2020 Financing closed on February 11, 2020.

AGP purchased the Class A and Class B Units at a seven-percent discount to

the public offering price, for an aggregate discount of approximately $0.5 million.

We incurred other offering expenses of approximately

$0.5 million.

We received net proceeds of approximately $6.5 million, after deducting the underwriting discount and other offering

allocating proceeds to the warrants issued with the Series B Convertible Preferred Stock, the effective conversion price of the

Series B Convertible Preferred stock was determined to be less than the fair value of the underlying common stock at the date

of commitment, resulting in a beneficial conversion feature (“BCF”) at that date.

Since the Series B Preferred Stock

has no stated maturity or redemption date and is immediately convertible at the option of the holder, the discount created by

the BCF of $1.3 million, based on intrinsic value, was charged to additional paid in capital as a non-cash “deemed dividend”

and included in net loss to common stockholders.

the first quarter of 2020, all 5,313 shares of Series B Convertible Preferred Stock were converted into common stock.

February and March 2020, 10.8 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57,

were exercised for proceeds of approximately $6.2 million.

August 2020, 2.2 million of the warrants issued in the February 2020 Financing, with an exercise price of $0.57, were exercised

for proceeds of approximately $1.3 million.

2019 Financing

November 14, 2019, we sold securities consisting of 547,420 Class A Units at a public offering price of $1.94 per unit, with each

unit consisting of one share of common stock, one warrant to purchase one share of common stock (“primary warrant”)

and one-half of one warrant to purchase one half of one share common stock (“common warrant”), and 7,938 Class B Units

at a public offering price of $1,000 per unit, with each unit consisting of one share of Series A Convertible Preferred Stock,

with a conversion price of $1.94 per share, convertible into 515.464 shares of common stock, primary warrants to purchase 515.464

shares of common stock, and common warrants to purchase 257.732 shares of our common stock.

The primary warrants have an exercise

price of $1.94, are immediately exercisable and expire five years from the date of issuance.

The common warrants had an exercise

price of $1.94 and expired 12 months from the date of issuance.

The common warrants were exercisable on a cashless basis

at the option of the holder on the earlier of 30 days from issuance and the date by which an aggregate of $9.0 million of our

securities were traded.

the February 2020 Financing, warrants that were issued as part of the November 2019 Financing were repriced at $0.57.

of the issuance of common stock in February 2020 for less than the November 2019 warrant exercise price, a repricing of the warrants

issued in the November 2019 Financing was triggered.

We recognized a one-time non-cash “deemed dividend” of $0.5 million,

representing the increase in the fair value of the warrants.

The “deemed dividend” was charged to additional paid

in capital and included in net loss to stockholders.

During February and March 2020, 2.3 million of the warrants issued in the

November 2019 Financing, with an exercise price of $0.57, were exercised for proceeds of approximately $1.3 million.

Lincoln Park Transaction

August 20, 2019, we entered into a purchase agreement (the “2019 Purchase Agreement”) and a registration rights agreement

(the “2019 Registration Rights Agreement”) with Lincoln Park.

Pursuant to the terms of the 2019 Purchase Agreement,

Lincoln Park has agreed to purchase from us up to $15,000,000 of our common stock (subject to certain limitations) from time to

time during the term of the 2019 Purchase Agreement.

Pursuant to the terms of the 2019 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 2019 Purchase Agreement.

to the terms of the 2019 Purchase Agreement, we issued 35,529 shares of common stock to Lincoln Park as consideration for its

commitment to purchase shares of our common stock under the 2019 Purchase Agreement.

The commitment shares were valued at $200,000

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 2019 Purchase Agreement.

a result of receiving stockholder approval on January 16, 2020, we may sell more than 19.9% of its common stock outstanding pursuant

to the 2019 Purchase Agreement without violating Nasdaq Marketplace Rules, including Rule 5635(d), requiring shareholder

approval for the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable

for common stock) at a price less than the greater of book or market value.

the year ended December 31, 2020, we sold an aggregate of approximately 464,471 shares of common stock under the 2019

Purchase Agreement, for gross proceeds of approximately $0.3 million.

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

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 year ended December 31, 2022, we sold approximately 56.4 million shares of common stock under the Sales Agreement, for

net proceeds of approximately $85.3 million.

During the year ended December 31, 2021, we sold approximately 3.5 million shares of

common stock under the Sales Agreement, for net proceeds of approximately $69.3 million.

Subsequent to December 31, 2022, we sold

2.1 million shares of common stock under the Sales Agreement, for net proceeds of approximately $1.4 million.

Stock Compensation

May 3, 2019, our stockholders approved the Tonix Pharmaceuticals Holding Corp.

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

The 2019 Plan provided for the issuance of up to 140,000 shares of common stock.

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.

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

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 Plan (as defined below), no further grants may be made

under the 2020 Plan.

The 2020 Plan provided for the issuance of up to 18,750 shares of our common

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

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

Amended and Restated 2020 Stock Incentive Plan

(“Amended and Restated 2020 Plan”), and together with the 2020 Plan and the 2019 Plan, the “Plans”).

the terms of the Amended and Restated 2020 Plan, we may issue (1) stock options (incentive and nonstatutory), (2) restricted stock,

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

The Amended and Restated 2020 Plan initially provided

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).

In addition, the Amended and Restated 2020 Plan contains an “evergreen provision” providing for an annual increase

in the number of shares of our common stock available for issuance under the Amended and Restated 2020 Plan on January 1 of each

year for a period of ten years, commencing on January 1, 2021 and ending on (and including) January 1, 2030, in an amount equal

to 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, and (y) the total number of shares of common stock reserved under the Amended and Restated 2020

Plan on December 31st of such preceding calendar year (including shares subject to outstanding awards, issued pursuant to awards

or available for future awards).

The Board of Directors determines the exercise price, vesting and expiration period of the grants

under the Amended and Restated 2020 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 absence of such

quoted market price, by the Board of Directors in good faith.

Additionally, the expiration period of grants under the Amended

and Restated 2020 Plan may not be more than ten years.

As of December 31, 2021, 16,085,796 shares were available for future grants

under the Amended and Restated 2020 Plan.

As of March 11, 2022, there are 32,939,410 shares

available for future grants under the Amended and Restated 2020 Plan.

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.

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.

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.

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

weighted average grant date fair value of options granted during the years ended December 31, 2021 and 2020, was $1.06 and $0.66

per share, respectively.

compensation expense relating to options granted of $7.9 million, of which $5.5 million and $2.4 million, related to General and

Administration and Research and Development, respectively was recognized for the year ended December 31, 2021.

compensation expense relating to options granted of $2.9 million, of which $2.0 million and $0.9 million, related to General and

Administration and Research and Development, respectively was recognized for the year ended December 31, 2020.

of December 31, 2021, we had approximately $14.2 million of unrecognized compensation cost related to non-vested awards granted

under the Plans, which we expect to recognize over a weighted average period of 1.91 years.

Amended and Restated 2020 Stock Incentive Plan (“Amended

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

Under the terms of the Amended and Restated 2020 Plan, we may issue (1)

stock options (incentive and nonstatutory), (2) restricted stock, (3) stock appreciation rights (“SARs”), (4) RSUs, (5) other

stock-based awards, and (6) cash-based awards.

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).

In addition, the Amended and Restated 2020

Plan contains an “evergreen provision” providing for an annual increase in the number of shares of our common stock available

for issuance under the Amended and Restated 2020 Plan on January 1 of each year for a period of ten years, commencing on January 1, 2021

and ending on (and including) January 1, 2030, in an amount equal to the difference between (x) twenty percent (20%) of the total number

of shares of common stock outstanding on December 31 st of the preceding calendar year, and (y) the total number of shares of

common stock reserved under the Amended and Restated 2020 Plan on December 31 st of such preceding calendar year (including

shares subject to outstanding awards, issued pursuant to awards or available for future awards).

The Board of Directors determines the

exercise price, vesting and expiration period of the grants under the Amended and Restated 2020 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 absence of such quoted market price, by the Board of Directors in good faith.

Additionally, the expiration period of grants

under the Amended and Restated 2020 Plan may not be more than ten years.

As of December 31, 2022, 627,735 shares were available for future

grants under the Amended and Restated 2020 Plan.

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 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 1/36 th each month thereafter for 24 months and expire ten years

from the date of grant.

In addition, the Company issues options to directors which vest over a one-year period.

The Company also issues

premium options to executive officers which have an exercise price greater than the grant date fair value and has 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

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.

weighted average grant date fair value of options granted during the years ended December 31, 2022 and 2021, was $5.25 and $33.78 per

share, respectively.

compensation expense relating to options granted of $10.9 million, of which $7.9 million and $3.0 million, related to General and Administration

and Research and Development, respectively was recognized for the year ended December 31, 2022.

Stock-based compensation expense

relating to options granted of $7.9 million, of which $5.5 million and $2.4 million, related to General and Administration and Research

and Development, respectively was recognized for the year ended December 31, 2021.

of December 31, 2022, we have approximately $11.6 million of unrecognized compensation cost related to non-vested awards granted under

the Plans, which we expect to recognize over a weighted average period of 1.73 years.

Stock Purchase Plan

May 3, 2019, our stockholders approved the Tonix Pharmaceuticals Holdings Corp.

2019 Employee Stock Purchase Plan (the “2019

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 Plan.

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.

2020 Employee Stock Purchase

Plan (the “2020 ESPP”).

2020 Employee Stock Purchase Plan (the “2020

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”)).

2022 ESPP allows eligible employees to purchase up to an aggregate of 93,750 shares of our common stock.

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

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 December 31, 2021, 7 shares were available

for future sales under the 2020 ESPP.

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

As of December 31, 2022, 9 shares were available for future sales under the 2022 ESPP.

2022 and 2020 ESPP are considered compensatory plans with the related compensation cost expensed over the six-month offering period.

For the year ended December 31, 2021, and 2020, $89,000 and $23,000, respectively, was expensed.

In January 2020, 1,578 shares

that were purchased as of December 31, 2019, under the 2019 ESPP, were issued.

Accordingly, during the first quarter of 2020,

approximately $2,000 of employee payroll deductions accumulated at December 31, 2019, related to acquiring such shares, was transferred

from accrued expenses to additional paid in capital.

The remaining $7,000 was returned to the employees.

As of December 31, 2020,

approximately $32,000 of employee payroll deductions have accumulated and have been recorded in accrued expenses.

In January 2021,

54,447 shares that were purchased as of December 31, 2020, under the 2020 ESPP, were issued.

Accordingly, during the first quarter

of 2021, approximately $28,000 of employee payroll deductions accumulated at December 31, 2020, related to acquiring such shares,

was transferred from accrued expenses to additional paid in capital.

the year ended December 31, 2022 and 2021, $46,000 and $89,000, respectively were expensed.

In January 2021, 1,703 shares that were purchased

as of December 31, 2020, under the 2020 ESPP, were issued.

Accordingly, during the first quarter of 2021, approximately $28,000 of employee

payroll deductions accumulated at December 31, 2020, related to acquiring such shares, was transferred from accrued expenses to additional

paid in capital.

The remaining $4,000 was returned to the employees.

2021, 116,505 shares that were purchased as of June 30, 2021, under the 2020 ESPP, were issued.

Accordingly, during July 2021,

approximately $68,000 of employee payroll deductions accumulated at June 30, 2021, related to acquiring such shares, was transferred

from accrued expenses to additional paid in capital.

In January 2022, 4,033 shares that were purchased as of December

31, 2021, under the 2020 ESPP, were issued.

Accordingly, during the first quarter of 2022, approximately $40,000 of employee payroll deductions

accumulated at December 31, 2021, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital.

The remaining $30,000 was returned to the employees.

In January 2022, 129,041

shares that were purchased as of December 31, 2021, under the 2020 ESPP, were issued.

Accordingly, during the first quarter of

2022, approximately $40,000 of employee payroll deductions accumulated at December 31, 2021, related to acquiring such shares,

was transferred from accrued expenses to additional paid in capital.

As of December 31, 2022, approximately $43,000 of employee payroll deductions have

accumulated and have been recorded in accrued expenses.

In January 2023, 93,741 shares that were purchased as of December 31, 2022,

under the 2022 ESPP, were issued.

Accordingly, during the first quarter of 2023, approximately $29,000 of employee payroll deductions

accumulated at December 31, 2022, related to acquiring such shares, was transferred from accrued expenses to additional paid in capital.

The remaining $14,000 was returned to the employees.

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million at December 31, 2022 for future work to be performed.

have entered into a construction contract with outstanding commitments aggregating approximately $30.1 million at December 31,

2021 for future work to be performed.

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 2022.

minimum lease payments under operating leases were as follows (in thousands):

have entered into a construction contract with outstanding commitments aggregating approximately $2.0 million at December 31, 2022 for

future work to be performed.

December 31, 2022, future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows

(in thousands):

Year Ending December 31,

Included interest

Accounting Policies and Estimates

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

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.

believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation

of our consolidated financial statements.

discussion and analysis of our financial condition and results of operations are based on our condensed 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 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.

believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our

consolidated financial statements.

and Development.

We outsource 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.

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.

We outsource 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.

estimate our 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.

trial accruals and prepaid assets are dependent upon the timely and accurate reporting of contract research organizations and

other third-party vendors.

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

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.

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.

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.

for sale of Class B Units in February 2020 including beneficial conversion feature.

In connection with the February 2020 underwritten

offering, we issued warrants to purchase our common stock and convertible preferred stock.

To account for the transaction, we

calculated the relative fair value of each instrument issued in the financing.

We also determined if a beneficial conversion feature

A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment

A conversion feature is in the money if its conversion price is less than the current fair value of the share.

of measuring a beneficial conversion feature, the effective conversion price should be based on the proceeds allocated to the

convertible instrument.

determined the fair value of the warrants, using the Black Scholes method, for the February 2020 warrants.

Estimates and assumptions

impacting the fair value measurement include the number of shares for which the warrants are exercisable, remaining contractual

term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying

common shares.

We estimate expected share volatility based on our historical volatility for a term equal to the contractual term

of the warrants adjusted for a discount that a market participant would have taken when pricing the instrument.

The risk-free

interest rate is determined by reference to the U.S.

Treasury yield curve for time periods approximately equal to the remaining

contractual term of the warrants.

We estimated a 0% expected dividend yield based on the fact that we have never paid or declared

dividends and do not intend to do so in the foreseeable future.

In general, the assumptions used in calculating the fair value

of the warrant represent management’s best estimates, but the estimates involve inherent uncertainties and the application

of management judgment.

We determine the fair value of the convertible preferred stock utilizing the price of the common stock

on the commitment date.

We then allocated the relative fair value between the preferred shares and the warrants.

Since the effective

conversion price of the Preferred Stock is less than the fair value of the underlying common stock at the date of commitment,

there is a beneficial conversion feature at the commitment date.

Since the Preferred Stock has no stated maturity or redemption

date and is immediately convertible at the option of the holder, the discount created by the beneficial conversion feature was

charged to additional paid in capital as a “deemed dividend” and impacted earnings per share, reflected as an increase

to loss to common stockholders.

than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements

or liabilities, guarantee contracts, retain or contingent interests in transferred assets or any obligation arising out of a material

variable interest in an unconsolidated entity.

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.

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 or lapse.

than contractual obligations incurred in the normal course of business, we do not have any off-balance sheet financing arrangements or

liabilities, guarantee contracts, retain or contingent interests in transferred assets or any obligation arising out of a material variable

interest in an unconsolidated entity.

Issued Accounting Pronouncements

In August 2020, the FASB issued

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts

in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ,

which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and

it also simplifies the diluted earnings per share calculation in certain areas.

We adopted ASU 2020-06 on January 1, 2023, under the modified

retrospective method of transition.

We do not anticipate the adoption of ASU 2020-06 to impact the Company’s financial position,

results of operations or cash flows.

7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-K

Item 7. Management’s Discussion and Analysis