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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-03-13 · 768 added, 848 removed, 69 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.”.

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

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 fully-integrated

biopharmaceutical company focused on developing and commercializing therapeutics to treat and prevent human disease and alleviate suffering.

Our near-term priority is

to submit a New Drug Application (“NDA”) to the U.S.

Food and Drug Administration (“FDA”) for Tonmya TM *

(also known as TNX-102 SL, cyclobenzaprine HCl sublingual tablet) for the management of fibromyalgia (“FM”).

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

is a non-opioid analgesic designed for long-term bedtime use and has completed two positive Phase 3 studies.

Tonix announced the positive

results of the second Phase 3 study in December of 2023.

Tonmya treatment resulted in highly statistically significant improvement in

the primary endpoint of pain reduction (p=0.00005) and statistical significance in all six of the key secondary endpoints.

well tolerated.

Systemic adverse events were similar between Tonmya and placebo.

No serious adverse events were reported.

The FDA conditionally

accepted Tonmya as the trade name for TNX-102 SL for the management of fibromyalgia in January 2024.

We have scheduled a type B pre-NDA

meeting with the FDA in the first half of 2024, plan to submit an NDA for the approval of Tonmya in the second half of 2024 and expect

an FDA decision on the NDA in the second half of 2025.

We are preparing for a commercial launch of Tonmya conditional on FDA approval.

Tonmya is a proprietary sublingual

tablet formulation of cyclobenzaprine (“CBP”) designed for bedtime administration.

In December 2020, we reported positive

results from the Phase 3 RELIEF study of Tonmya 5.6 mg for the management of FM.

In July 2021, we had disappointing results from a second

Phase 3 study, RALLY.

In December 2023, we reported positive results from the third Phase 3 RESILIENT study, which met its pre-specified

endpoint by significantly reducing daily pain compared to placebo in patients with fibromyalgia.

In preparation for the launch

of Tonmya, we have built a team of professionals to market and distribute our products.

Our commercial portfolio consists of two FDA-approved

prescription products for the treatment of migraine which were acquired from Upsher-Smith Laboratories (“Upsher Smith”) in June 2023:

Zembrace ® SymTouch ® (sumatriptan injection) 3 mg and Tosymra ® (sumatriptan nasal spray) 10

Zembrace SymTouch and Tosymra are both indicated for the treatment of acute migraine with or without aura in adults.

Zembrace SymTouch

is the only branded sumatriptan autoinjector professionally promoted in the United States and is designed for ease of use and favorable

tolerability with a low 3 mg dose.

Tosymra is a novel intranasal sumatriptan product formulated with a permeation enhancer that provides

rapid and efficient absorption of sumatriptan.

Tosymra was approved on the basis of bioequivalence to subcutaneous ( s.c.

) sumatriptan.

Our commercial team is engaged in marketing and distributing our products, and also engaged in planning the launch of Tonmya.

In addition to Tonmya and

our marketed products, we have a pipeline of products in development that include therapeutics and vaccines which are based on 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.

Our pipeline has been generated from internal discovery, as well as licenses, acquisitions and collaborations with academic

institutions and non-profit organizations.

Our portfolio is focused on

central nervous system, or CNS, disorders, but also consists of rare disease, immunology, and infectious disease product candidates.

CNS portfolio includes small molecules and biologics to treat pain, neurologic, psychiatric and addiction conditions.

Our immunology portfolio

includes TNX-1500*, a biologic to address organ transplant rejection and autoimmune diseases.

Finally, our infectious disease portfolio

includes a vaccine in development to prevent smallpox and mpox (formerly known as monkeypox), TNX-801*.

TNX-801 also serves as the live

virus vaccine platform or recombinant pox vaccine (“RPV”) platform for vaccines to protect against other infectious diseases,

including TNX-1800* and TNX-1850* for COVID-19.

In addition to fibromyalgia,

TNX-102 SL* is being developed as a potential treatment for a type of Long COVID, the symptoms of which overlap with fibromyalgia, that

we term fibromyalgia-type Long COVID.

TNX-102 SL has completed a Phase 2 proof-of-concept study.

Long COVID also known as PASC, (post-acute

sequelae of SARS-CoV-2 infection) is a chronic post-acute COVID-19 condition.

We initiated enrollment in the Phase 2 PREVAIL study, in

August 2022, and topline results were reported in September 2023.

The study did not meet the primary endpoint of change in mean pain from

baseline but did show activity in improving fatigue, a hallmark symptom of Long COVID.

TNX-102 SL also is being developed also as a treatment for acute stress reaction

(“ASR”) and to prevent acute stress disorder (“ASD”) and posttraumatic stress disorder (“PTSD”) under an investigator-initiated

Investigational New Drug Application (“IND”) in partnership with the University of North Carolina (“UNC”) Institute

for Trauma Recovery.

The Phase 2 OASIS study at UNC is supported by the U.S.

Department of Defense (“DoD”).

We expect enrollment

in the OASIS study to begin in the second quarter of 2024.

The UNC-led OASIS study will build upon the existing AURORA initiative, a major

national research initiative to improve the understanding, prevention, and recovery of individuals who have experienced a traumatic event.

In addition, TNX-102 SL has active INDs for PTSD, agitation in Alzheimer’s

disease (“AAD”), and alcohol use disorder (“AUD”).

TNX-102 SL for AAD has been granted Fast Track designation

We are not currently actively studying TNX-102 SL in PTSD, AAD or AUD.

Another CNS candidate in development is TNX-1300* (double-mutant cocaine esterase)

which is in Phase 2 for the treatment of cocaine intoxication.

TNX-1300 has been granted Breakthrough Therapy designation by the 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 who received intravenous cocaine.

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 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

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

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, 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.

enrollment in a potentially pivotal Phase 2 study of TNX-1300 in emergency rooms in the second quarter of 2024.

Our rare disease

portfolio includes TNX-2900* (intranasal potentiated oxytocin) for Prader-Willi syndrome (“PWS”), a genetic disorder characterized by

complex symptoms.

The formulation technology for TNX-2900 was acquired from Trigemina, Inc.

and licensed from Stanford University in

The potentiated formulation includes magnesium, which has been shown in animal studies to potentiate binding of oxytocin to

the oxytocin receptor.

The therapeutic technology was licensed from Inserm, the French National Institute of Health and Medical

TNX-2900 was granted Orphan-Drug Designation by the FDA in the second half of 2023 and the IND was cleared by the FDA in

the fourth quarter of 2023 and Rare Pediatric Disease Designation was granted in March 2024.

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 PWS genes.

We are developing a different intranasal oxytocin product, TNX-1900* (intranasal

potentiated oxytocin with magnesium) for several CNS disorders through investigator-initiated studies.

TNX-1900 is in development through

investigator-initiated studies for the treatment of BED, adolescent obesity, social anxiety disorder (“SAD”), and bone health

in pediatric autism.

We received IND clearance from the FDA in the fourth quarter of 2021 to study TNX-1900 in chronic migraine and we

initiated the Phase 2 PREVENTION study for the prevention of migraine headaches in chronic migraineurs in the first quarter of 2023.

results from the study, reported in December 2023, showed that TNX-1900 did not meet the primary endpoint as measured by a reduction from

28-day run-in baseline in the mean number of migraine headache days during the last 28 days of the treatment phase.

PREVENTION was a small

proof-of-concept study with 88 patients enrolled across three arms (TNX-1900 30 IU QD, TNX-1900 30 IU BID, and placebo), and was not powered

to result in a statistically significant outcome.

In the trial, TNX-1900 was generally well-tolerated with no treatment-emergent serious

or severe adverse events.

We have discontinued development of TNX-1900 in chronic migraine.

Our lead candidate in the immunology pipeline is TNX-1500, an Fc-modified humanized

mAb, directed against CD40-ligand (CD40L, also known as CD154).

TNX-1500 was engineered to modulate binding to Fc receptors.

is being developed as a prophylaxis against organ transplant rejection as well as to treat autoimmune conditions.

The IND was cleared

and a Phase 1 study of TNX-1500 in healthy volunteers was initiated in the second quarter of 2023 and completed the clinical phase in

the first quarter of 2024.

TNX-1500 is being studied in combination with other immunosuppressive agents in allogeneic and xenogeneic organ

transplants in non-human primates at Massachusetts General Hospital, a teaching hospital of Harvard Medical School (“MGH”).

In experiments at MGH, 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.

Results from 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.

results from this collaboration were published in the peer-reviewed journal, American Journal of Transplantation in 2023.

TNX-1500 also is being studied in combination with other immunosuppressive agents

in xenogeneic organ transplants in non-human primates at MGH.

In some of these studies, genetically engineered (GE) pigs in baboon transplants

were treated with cold perfused ischemia minimization and a novel costimulation-based immunosuppressive regimen including TNX-1500.

results of these preclinical studies were encouraging and demonstrated the potential of genetically engineered pig hearts in the context

of a clinically applicable regimen.

The multi-GE pigs were provided by eGenesis and Revivicor.

Revivicor is a subsidiary of United Therapeutics.

Some results from the collaboration with MGH and eGenesis were published in the peer-reviewed journal, Nature in 2023.

March of 2024, MGH announced the first GE pig kidney transplant into a living recipient supported in part by the pre-clinical work with

TNX-1500 therapy was not used in the human transplant recipient.

Our immunology pipeline also includes TNX-1700*, a recombinant Trefoil Factor Family

2 (“rTFF2”) fusion protein that was licensed from Columbia University in 2019.

TNX-1700 consists of TFF2 fused to human serum

albumin (HAS) 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.

We presented data that show a murine version of TNX-1700 consisting

of a fusion protein with murine serum albumin 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 model and the CT26.wt mouse models of colorectal cancer.

Our infectious disease portfolio includes vaccines based on our live virus vaccine

or RPV platform.

Live virus 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.

Mpox has become endemic in the U.S.

since it spread in the U.S.

and other countries

outside of Africa, mostly in populations of men who have sex with men.

Non-human primates vaccinated with TNX-801 were protected from

mpox in studies reported in the first quarter of 2020.

These data were published in the peer-reviewed journal Vaccines in 2023.

In October 2023, at the World Vaccine Congress - Europe, we reported that the TNX-801 vaccine was shown to be greater than 10 to 1,000

fold more attenuated than older vaccinia-based smallpox vaccines in both human primary cell lines and immunocompromised mice.

has been posted on BioRxiv, which is not peer-reviewed.

TNX-801 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-1800 is a live virus vaccine on the

RPV platform that expresses the SARS-CoV-2 spike protein from the ancestral Wuhan strain, which has shown encouraging results in non-human

In the third quarter of 2023, TNX-1800 was selected by the National Institute of Allergy and Infectious Diseases, a part of

the National Institutes of Health, to be included in their Project NextGen initiative, an initiative to advance a pipeline of new, innovative

vaccines and therapeutics for COVID-19.

The COVID-19 vaccines approved for use 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.

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.

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 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.

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.

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.

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

These data were published in the peer-reviewed journal Vaccines in 2023.

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.

Tonix has three pre-clinical research

and development programs developing broad spectrum antivirals.

The DoD announced in December 2022 a plan to move beyond a ‘one bug,

one drug’ approach and are seeking broad-spectrum drugs since it may be hard to predict which or how many viruses may be deployed

on the battlefield.

TNX-3900* are broad-spectrum small molecule oral antivirals which inhibit essential cathepsins required by viruses

such as coronaviruses and filoviruses to infect cells.

TNX-4200* are orally available CD45 antagonists in preclinical development.

believe that partial inhibition of CD45 will provide optimal antiviral protection while requiring lower plasma drug concentrations and

a lower dose, and therefore will have a higher safety window.

Tonix plans to leverage previous research on phosphatase inhibitors, specifically

compounds that target CD45, to optimize lead compounds for therapeutic intervention of biothreat agents.

TNX-4000* are viral glycan-targeted

engineered biologics.

These antivirals are currently in preclinical development.

Relating to our development programs, we own and operate the Research and

Development Center (“RDC”) in Frederick, Maryland consisting of one building totaling approximately 48,000 square feet.

RDC conducts research on CNS, immunology, and infectious disease candidates.

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

some components designated BSL-3.

We also own and operate an Advanced Development Center (ADC) located in the New Bedford business park

in Dartmouth, Massachusetts.

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 have engaged CBRE, an international real estate brokerage

firm, to find a strategic partner for, or buyer of, ADC.

*Tonix’s product development

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

We 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

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.

We anticipate that our results

of operations will fluctuate for the foreseeable future due to several factors, such as the sale of our commercialized assets, 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.

Since the acquisition of Zembrace and Tosymra on June 30, 2023, we are now reporting

product revenue and related costs.

year Ended December 31, 2023 Compared to Fiscal year Ended December 31, 2022

1 unchanged sentence

ended December 31,

COSTS AND EXPENSES:

AND EXPENSES:

and development

and administrative

Total operating expenses

Operating loss

Total operating

Company recognized revenue beginning in the year ended December 31, 2023, as a result of the acquisition of two marketed products.

See discussion at Note 12 to our financial statements appearing in this Annual Report on Form 10-K.

Revenue recognized for the

year ended December 31, 2023 was $7.8 million.

Company’s net product revenues are summarized below:

Ended December 31,

product revenues

The Company recognized cost of sales beginning in the year ended December 31, 2023 as a result of the

acquisition of Zembrace and Tosymra from Upsher Smith.

See discussion at Note 12 to our financial statements appearing in this Annual Report on Form 10-K.

Cost of sales

recognized for the year ended December 31, 2023, was $4.7 million.

and Development Expenses .

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, 2022, and 2021.

Research and development expenses for the fiscal year ended December 31, 2023, were $86.7

million, an increase of $4.8 million, or 6%, from $81.9 million for the fiscal year ended December 31, 2022.

This increase is

predominately due to increased employee-related expenses of $4.3 million, predominately related to new hires at the RDC and ADC,

lab supplies of $1.6 million, and office-related expenses of $3.5 million related to our new facilities offset by a decrease in

regulatory expenses of $1.0 million and a decrease in non-clinical expenses of $4.7 million.

In August 2022, we received a Cooperative

Agreement grant from the National Institute on Drug Abuse (“NIDA”), part of the National Institutes of Health, to

support the development of its TNX-1300 product candidate for the treatment of cocaine intoxication.

During the year ended December

31, 2023, we recorded $2.9 million in funding as a reduction of related research and development expenses.

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

years ended December 31, 2023, and 2022.

(in thousands)

Research and development expenses:

Direct expenses – TNX - 102 SL

Direct expenses – TNX

Direct expenses – TNX - 601 ER

Direct expenses – TNX - 1800

3 unchanged sentences

Direct expenses – TNX - 1900

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, 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.

Internal staffing,

overhead and other

Total research

& development

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

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

Included in “Internal Staffing,

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

regulatory and legal.

General and Administrative

General and administrative expenses for the fiscal year ended December 31, 2023, were $34.8 million, an increase

of $4.6 million, or 15%, from $30.2 million incurred in the fiscal year ended December 31, 2022.

The increase is primarily due to an increase

in sales and marketing of $1.8 million, and transition services agreement fees payable to Upsher Smith of $1.5 million, and office-related expenses

of $1.0 million.

As a result of the foregoing, the net loss for the year ended December 31, 2023, was $116.7 million, compared to

a net loss of $110.2 million for the year ended December 31, 2022.

February 13, 2023, we exercised an option to obtain an exclusive license from Columbia University (“Columbia”) for

the development of a portfolio of 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.

As of December 31, 2023, other than the upfront fee, no payments have been accrued

or paid in relation to this agreement.

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.

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.

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 of December 31, 2023, 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 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.

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.

We are obligated to use Commercially

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

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,

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

obesity (the “Katana Assets”).

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

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

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

Agreement”), dated December 22, 2020.

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

Because the Katana intellectual property was acquired prior to FDA approval, the cash consideration totaling $0.7 million, was expensed

as research and development costs since there is no alternative future use and the acquired intellectual property does not constitute

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

certain patents related to the Katana Assets.

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

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

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

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

The license agreement also provides

for single-digit royalties and contingent milestone payments.

As of December 31, 2023, other than the upfront fee, no 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

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.

Purchase Agreements

On June 23, 2023, we entered into an asset

purchase agreement with Upsher Smith for the acquisition of certain assets related to Zembrace SymTouch (sumatriptan injection) 3 mg (“Zembrace”)

and Tosymra (sumatriptan nasal spray) 10 mg (“Tosymra”) products (such businesses collectively, the “Business”)

and certain inventory related to the Business for an aggregate purchase price of approximately $26.5 million, including certain deferred

payments (such transaction, the “USL Acquisition”).

The transaction closed on June 30, 2023.

Additionally, in connection with the acquisition

from Upsher Smith, we and Upsher Smith entered into a transition services agreement pursuant to which Upsher Smith agreed to provide certain

transition services to us for base fees equal to $100,000 per month for the first six months, and $150,000 per month for the seventh through

ninth months, plus additional monthly fees for each service category totaling up to $150,000 per month.

We have signed an amendment to

the transitional services agreement with Upsher Smith so that Upsher Smith will continue to provide administrative services.

As the assets acquired from Upsher Smith

met the definition of a business under the current accounting guidance, the total purchase price was allocated to the acquired inventory

and other tangible assets, and the developed technology intangible assets related to Zembrace and Tosymra based on their estimated fair

values on the acquisition date.

The excess of the purchase price over the fair value of the acquired assets was recorded as goodwill.

We have assumed certain obligations of Upsher Smith, including the payment of quarterly

earn-out payments on annual net sales from the Business in the U.S.

for Tosymra, 4% for net sales of $0 to $30 million, 7%

of net sales of $30 to $75 million;

9% for net sales of $75 to $100 million;

12% for net sales of $100 to $150 million;

and 15% for net

sales greater than $150 million.

Earn-out payments with respect to Tosymra are payable until the expiration or termination of the product’s

Orange Book listed patent(s) with respect to the United States or, outside the United States, the expiration of the last valid claim covering

the product in the relevant country of the territory.

For Zembrace, earn-out payments on annual net sales in the U.S.

are 3% for net sales

of $0 to $30 million, 6% of net sales of $30 to $75 million;

12% for net sales of $75 to $100 million;

16% for net sales of greater than

$100 million.

Such earn-out payments are payable until July 19, 2025.

Upon the entry of a generic version of the relevant product, the

applicable earn-out rates will be reduced by 90% percent for Zembrace, and by 66.7% percent for Tosymra.

addition, we have assumed the obligation to pay an additional 3% royalty on net sales of Tosymra, plus an additional 3% if a patent

containing certain claims related to Tosymra issues in the U.S., for 15 years from the first commercial sale of Tosymra in the

applicable country or for as long as the manufacture, use or sale of Tosymra in such country is covered by a valid claim of a

licensed patent, and up to $15 million per Tosymra product on the achievement of sales milestones.

February 2, 2023, we entered into an asset purchase agreement (the “Healion Purchase Agreement”) with Healion

Bio Inc., pursuant to which we acquired all the pre-clinical infectious disease assets of

Healion for $1.2 million.

Because the Healion intellectual property was acquired prior to FDA approval, the $1.2 million

cash 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.

and Capital Resources

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

Net cash used in investing activities

Net cash provided by financing activities

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,

of December 31, 2023, we had working capital of $28.9 million, comprised primarily of cash and cash equivalents of $24.9 million

inventory of $13.6 million, and prepaid expenses and other of $9.2 million, offset by $3.8 million of accounts payable, $12.5

million of accrued expenses and other current liabilities, $2.4 million of term loan payable, short term and $0.3 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 clinical programs, and the acquisition of Zembrace and Tosymra.

following table provides a summary of operating, investing, and financing cash flows for the years ended December 31, 2023, and

2022, respectively (in thousands):

cash used in operating activities

cash used in investing activities

cash provided by financing activities

the years ended December 31, 2023, and 2022, we used approximately $102.0 million and $98.1 million of cash in operating activities,

respectively, which represents cash outlays for research and development and general and administrative expenses in such periods.

The increase in cash outlays principally resulted from an increase in research and development and general and administrative

used by investing activities for the year ended December 31, 2023, was approximately $29.1 million related to the purchase of

Zembrace and Tosymra assets and property and equipment.

Cash used in investing activities for the year ended December 31, 2022, was $48.1 million,

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.

A significant portion of capital expenditure in 2022 is related to the build-out of the

the year ended December 31, 2023, net proceeds from financing activities were $36.5 million, primarily related to the sale of

common stock and warrants;

and debt raised which was offset by repurchase of common stock.

For the year ended December 31, 2022, net proceeds

from financing activities were $87.8 million, predominately from the sale of our common stock.

believe that our cash resources at December 31, 2023 and the proceeds that we raised from equity offerings in the first quarter

of 2024, will meet our operating and capital expenditure requirements into the second quarter of 2024, 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 must obtain additional funding through public or private financing or collaborative arrangements with strategic partners

to increase the funds available to fund operations.

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

some of our research and development activities, or other operations and potentially delay product development to provide sufficient

funds to continue our operations.

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

goals would be adversely affected and we may be forced to cease operations.

Liquidity Requirements

1 unchanged sentence

We expect to incur increasing research and development expenses, including

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

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.

expenses related to additional clinical trials and the build out 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.

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.

January 1, 2023, the Company has repurchased 2,512,044

of its shares of common stock outstanding under a $12.5 million share purchase program at

prices ranging from $2.75 to $8.61 per share for a gross aggregate cost of approximately

$12.5 million.

In addition, we incurred expenses of $0.3 million.

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.

January 1, 2023, the Company has repurchased 160,000 of its shares of common stock

outstanding under the new share repurchase program at $7.12 per share for a gross aggregate cost of $1.1 million.

December 8, 2023, we executed a Loan and Guaranty Agreement (the “Loan Agreement”) to issue a 36-month term loan (the

“Term Loan”) in the principal amount of $11.0 million with a maturity date of December 8, 2026 (the “Maturity

The Term Loan was funded with an original issue discount of 9% of the principal amount of the Term Loan, or $1.0

million, which is being amortized over the term of the debt as an adjustment to the effective interest rate on the outstanding

under the Term Loan bear interest at a fluctuating rate equal to the greater of (i) the prime rate as defined in the Loan Agreement

plus 3.5% and (ii) 12%.

Interest is payable monthly in arrears commencing in December 2023.

In connection with the Term Loan,

we deposited into a reserve account $1.8 million to be used exclusively to fund interest payments related to the Term Loan.

deposit is reflected as prepaid and other current assets on the consolidated balance sheet.

on March 8, 2024 and continuing monthly through the Maturity Date, the outstanding principal will be due and payable in monthly

installments of $0.2 million, with the final remaining balance of unpaid principal and interest due and payable on the Maturity

In addition, we must pay a monthly collateral monitoring charge equal to 0.23% of the outstanding principal amount of the

term loan as of the date of payment.

We incurred $1.1 million in issuance costs, which is being amortized over the term of

the debt as an adjustment to the effective interest rate on the outstanding borrowings.

Loan Agreement provides for voluntary prepayments of the Term Loan, in whole or in part, subject to a prepayment premium.

Loan Agreement contains customary affirmative and negative covenants by us, which among other things, will require us to provide

certain financial reports to the lenders, to maintain a deposit account to fund interest payments, and limit the ability of us

to incur or guarantee additional indebtedness, pay dividends or make other equity distributions, sell assets, engage in certain

transactions, and effect a consolidation or merger.

Our obligations under the Loan Agreement may be accelerated upon customary

events of default, including non-payment of principal, interest, fees and other amounts, covenant default, insolvency, material

judgements, inaccuracy of representations and warranties, invalidity of guarantees.

The Term Loan is secured by first priority

security interests in our R&D Center in Frederick, Maryland, the Advanced Development Center in North Dartmouth, Massachusetts,

and substantially all of the relevant deposit accounts.

of December 31, 2023, the carrying amount of the Term Loan approximated its fair value as the contractual interest rate for the

Term Loan was representative of the then market interest rate.

April 2024 Financing

March 28, 2024, we sold 10,766,666 shares of common stock, pre-funded warrants to purchase up to 3,900,000 shares of common stock, and

accompanying Series E warrants to purchase up to 14,666,666 shares of common stock with an exercise price of $0.33 per share and expiring

five and a half years from date of issuance in a public offering, which closed on April 1, 2024.

The offering price per share of common

stock was $0.30, accompanying warrants was $0.33, and the offering price per share of pre-funded warrants was $0.2999.

We incurred offering

expenses of approximately $0.5 million, including placement agent fees of approximately $0.3 million.

We received net proceeds of approximately

$3.9 million, after deducting the underwriting discount and other offering expenses.

Additionally, we entered into warrant amendments with certain holders of its Common

The exercise price of each Existing Warrant will be amended to $0.33 upon approval by the Company’s stockholders of a

proposal to allow the Existing Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635, or as otherwise provided in

the Amendment if stockholder approval is not obtained by October 1, 2024.

Upon stockholder approval, the termination date for Common Warrants

to purchase up to an aggregate of 6,950,000 shares will be amended to April 1, 2029;

the termination date for Series A Warrants to purchase

up to an aggregate of approximately 8,900,000 shares will be April 1, 2029;

the termination date for Series B Warrants to purchase up

to an aggregate of approximately 8,900,000 shares will be April 1, 2029;

the termination date for Series C Warrants to purchase up to

an aggregate of approximately 34,823,928 shares will be the earlier of (i) April 1, 2026 and (ii) 10 trading days following notice by

the Company to the Series C Warrant holder of the Company’s public announcement of the FDA’s acknowledgement and acceptance

of our NDA relating to TNX-102 SL in patients with Fibromyalgia;

the termination date for Series D Warrants to purchase up to an aggregate

of approximately 34,823,928 shares will be April 1, 2029.

The other terms of the Existing Warrants will remain unchanged.

If stockholder

approval is not obtained on or by October 1, 2024, then the Company has agreed to automatically amend the exercise price of the Existing

Warrants to the Minimum Price (as defined in Nasdaq Listing Rule 5635(d)) of the Common Stock on October 1, 2024 if and only if the Minimum

Price is below the then current exercise price.

2023 Financing

December 20, 2023, we issued (i) 25,343,242 shares of our common stock, (ii) pre-funded warrants (the “Pre-Funded Warrants”)

to purchase up to 28,710,812 shares of common stock and (iii) Series C warrants to purchase up to 81,081,081 shares of common

stock (the “Series C Warrants”), and (iv) Series D warrants to purchase up to 81,081,081 shares of common stock (the

“Series D Warrants” and, together with the Series C Warrants, the “Common Warrants”) in a registered direct

The securities were sold in fixed combinations as units.

The offering price per share of common stock and accompanying

Common Warrants was $0.555, and the offering price per Pre-Funded Warrant and accompanying Common Warrants was $0.5549.

closed on December 22, 2023, generating gross proceeds of approximately $30.0 million, before deducting offering expenses of $2.3

million payable by us.

Pre-Funded Warrants have an exercise price of $0.0001 per share, are immediately exercisable subject to certain ownership limitations,

and can be exercised at any time until exercised in full.

The Series C Warrants have an exercise price of $0.555 per share, and

are exercisable on the later of approval by the Company’s stockholders of (i) a proposal to approve the filing of an amendment

to the Company’s Articles of Incorporation, increasing the number of authorized shares of common stock from 160,000,000

to 1,000,000,000 and (ii) a proposal to allow the Warrants to become exercisable in accordance with Nasdaq Listing Rule 5635 (the

later of such events, the “Approval Date”) and will expire on the later of (a) 10 trading days following the Approval

Date and (b) the earlier of (x) the two year anniversary of the Approval Date and (y) 10 trading days following the public announcement

of the FDA’s acknowledgement and acceptance of the NDA relating to TNX-102 SL in patients with fibromyalgia.

D Warrants have an exercise price of $0.85 per share and are exercisable beginning on the Approval Date through the five-year

anniversary of the Approval Date.

2023 Financing

September 28, 2023, we sold 4,050,000 shares of common stock;

pre-funded warrants to purchase up to 4,950,000 shares of common

stock, and accompanying common warrants to purchase up to 9,000,000 shares of common stock with an exercise price of $0.50 per

share and expiring one year from date of issuance, and common warrants to purchase up to 9,000,000 shares of common stock with

an exercise price of $0.50 per share and expiring five years from date of issuance in a public offering which closed on October

The offering price per share of common stock and accompanying common warrant was $0.50, and the offering price per share

of pre-funded warrant and accompanying common warrant was $0.4999.

incurred other offering expenses of approximately $0.5 million, including a placement agent discount.

We received net proceeds

of approximately $4.0 million, after deducting the underwriting discount and other offering expenses.

2023 Financing

July 27, 2023, we sold securities consisting of 2,530,000 shares of common stock;

pre-funded warrants to purchase up to 4,470,000

shares of common stock and common warrants to purchase up to 7,000,000 shares of common stock in a public offering that closed

on August 1, 2023.

The offering price per share of common stock and accompanying common warrant was $1.00, and the offering price

per pre-funded warrant and accompanying common warrant was $0.9999.

incurred offering expenses of approximately $0.7 million, including placement agent fees of approximately $0.5 million.

net proceeds of approximately $6.3 million, after deducting the underwriting discount and other offering expenses.

Redeemable Preferred stock

October 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.

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 $6.25

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.

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

institutional investors in a private placement.

The Preferred Stock 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.

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 $25.00

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 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

with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $50,000,000 of our common stock (subject to

certain limitations) from time to time.

We filed a registration statement to register for resale the shares that have been or

may be issued to Lincoln Park under the 2022 Purchase Agreement.

issued 100,000 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, 2023, we sold 0.1 million shares of common stock under the 2022 Purchase Agreement, for net proceeds

of approximately $0.4 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.

During the year ended December 31, 2022, we sold 0.2 million shares of common stock under

the 2022 Purchase Agreement for net proceeds of approximately $0.5 million.

Lincoln Park Transaction

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

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

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 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 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.

2021 Financing

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

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

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

with Lincoln Park, pursuant to which 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.

We filed a registration statement to register for resale the shares that have been

or may be issued to Lincoln Park under the 2021 Purchase Agreement.

issued 14,546 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock

under the 2021 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 0.5 million shares of common stock under the 2021 Purchase Agreement for net proceeds

of approximately $8.7 million.

No sales occurred in 2023, and we may not sell any additional shares under the 2021 Purchase Agreement.

At-the-Market

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net proceeds of approximately $3.0 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 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 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.

During the year ended December 31, 2022, we sold approximately 9.1 million shares

of common stock under the Sales Agreement, for net proceeds of approximately $85.3 million.

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”).

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

Amended and Restated 2020 Stock Incentive Plan

(“Amended and Restated 2020 Plan”).

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) restricted stock units, (5) other stock-based awards, and (6) cash-based

The Amended and Restated 2020 Plan initially provided for the issuance of up to 50,000 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 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.

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

Additionally, the expiration period of grants under the Amended and Restated 2020 Plan may not be more than ten years.

As of December 31, 2023, 1,071,599 options were 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 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.

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 method.

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

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 fair value of options granted during the year ended December 31, 2023, was $3.99 per share.

The weighted average

fair value of options granted during the year ended December 31, 2022, was $32.81 per share.

compensation expense relating to options granted of $9.3 million, of which $6.4 million and $2.9 million, related to General and

Administration and Research and Development, respectively was recognized for the year ended December 31, 2023.

Stock-based 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.

of December 31, 2023, the Company had approximately $6.1 million of total unrecognized compensation cost related to non-vested

awards granted under the Plans, which the Company expects to recognize over a weighted average period of 1.70 years.

Stock Purchase Plan

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

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

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

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

2022 Employee Stock Purchase Plan (the “2022

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.

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.

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.

ESPP”), which was replaced by the Tonix Pharmaceuticals Holdings Corp.

2023 Employee Stock Purchase Plan (the “2023

ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by the Company’s stockholders

on May 5, 2023.

2023 ESPP allows eligible employees to purchase up to an aggregate of 800,000 shares of the Company’s common stock.

Under the 2023 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 the Company’s common stock

at the end of the offering period.

Each offering period under the 2023 ESPP is for six months, which can be modified from time-to-time.

Subject to limitations, each participant will be permitted to purchase a number of shares determined by dividing the employee’s

accumulated payroll deductions for the offering period by the applicable purchase price, which is equal to 85 percent of

the fair market value of our common stock at the beginning or end of each offering period, whichever is less.

A participant must

designate in his or her enrollment package the percentage (if any) of compensation to be deducted during that offering period

for the purchase of stock under the 2023 ESPP, subject to the statutory limit under the Code.

As of December 31, 2023, 800,000

shares were available for future sales under the 2023 ESPP.

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

the year ended December 31, 2023 and 2022, $34,000 and $46,000, respectively, was expensed.

In January 2022, 646 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, 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.

In January 2023, 14,999 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.

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.

As of December 31, 2023,

approximately $44,000 of employee payroll deductions have accumulated and have been recorded in accrued expenses.

2024, 66,359 shares that were purchased as of December 31, 2023, under the 2022 ESPP, were issued.

Accordingly, during the first

quarter of 2024, approximately $24,000 of employee payroll deductions accumulated at December 31, 2023, related to acquiring such

shares, was transferred from accrued expenses to additional paid in capital.

The remaining $20,000 was returned to the employees.

2 unchanged sentences

$23.2 million at December 31, 2023 for future work to be performed.

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

of December 31, 2023, future minimum lease payments are as follows (in thousands):

Ending December 31,

Accounting Policies and Estimates

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.

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.

Combinations.

We apply the acquisition method of accounting for business combinations.

Under the acquisition method, the acquiring

entity recognizes all of the identifiable assets acquired and liabilities assumed at their acquisition date fair values.

our best estimates and assumptions to estimate the fair values of these tangible and intangible assets.

Any excess of the purchase

price over amounts allocated to the assets acquired is recorded as goodwill.

The acquired intangible assets are amortized using

the straight-line method over the estimated useful lives of the respective assets.

Goodwill is reviewed for impairment on an annual

basis, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired.

Our gross product revenues are subject to a variety of deductions, which generally are estimated and recorded in

the same period that the revenues are recognized.

Such variable consideration represents chargebacks, rebates, prompt pay and

other sales discounts, and product returns.

These deductions represent estimates of the related obligations and, as such, knowledge

and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period.

recognizing revenue following the completion of the USL Acquisition, beginning July 1, 2023, and required variable consideration

estimates are currently primarily based on the acquired products historical results.

Adjustments to these estimates to reflect

actual results or updated expectations will be assessed each period.

If any of our ratios, factors, assessments, experiences,

or judgments are not indicative or accurate estimates of our future experience, our results could be materially affected.

potential of our estimates to vary differs by program, product, type of customer and geographic location.

In addition, estimates

associated with U.S.

Medicare and Medicaid governmental rebate programs are at risk for material adjustment because of the extensive

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.

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.

We outsource certain of our research and development efforts and expense the related costs as incurred, including

the cost of manufacturing product for testing, licensing fees and costs associated with planning and conducting clinical trials.

The value ascribed to patents and other intellectual property acquired was expensed as research and development costs, as it related

to particular research and development projects and had no alternative future uses.

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

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.

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.

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.

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.

financing costs.

Deferred financing costs represent the cost of obtaining financing arrangements and are amortized over the term

of the related debt agreement using the effective interest method.

Deferred financing costs related to term debt arrangements

are reflected as a direct reduction of the related debt liability on the consolidated balance sheet.

Amortization of deferred

financing costs is included in interest expense on the consolidated statements of operations.

issue discount.

Certain term debt issued by the Company provides the debt holder with an original issue discount.

Original issue

discounts are reflected as a direct reduction of the related debt liability on the consolidated balance sheets and are amortized

over the term of the related debt agreement using the effective interest method.

Amortization of original issue discounts are

included in interest expense on the consolidated statements of operations.

Instruments and Warrant Liabilities.

The Company evaluates all of its financial instruments, including issued warrants to purchase

common stock under ASC 815 – Derivatives and Hedging, to determine if such instruments are derivatives or contain features

that qualify as embedded derivatives.

For derivative financial instruments that are accounted for as liabilities, the derivative

instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value

reported in the consolidated statements of operations.

The Company uses the Black-Scholes option pricing model to value the derivative

instruments at inception and subsequent valuation dates, which is adjusted for instrument-specific terms as applicable.

time to time, certain equity-linked instruments may be classified as derivative liabilities due to the Company having insufficient

authorized shares to fully settle the equity-linked financial instruments in shares.

In such a case, the Company has adopted a

sequencing approach under ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity to determine the classification

of its contracts at issuance and at each subsequent reporting date.

If reclassification of contracts between equity and assets

or liabilities is necessary, the Company first allocates remaining authorized shares to equity on the basis of the earliest issuance

date of potentially dilutive instruments, with the earliest issuance date receiving the first allocation of shares.

of identical issuance dates, shares are then allocated to equity beginning with instruments with the latest maturity date first.

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

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.

Adopted Accounting Pronouncements

August 2020, the Financial Accounting Standards Board (“FASB” issued Accounting Standards Update (“ASU”)

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,

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

The ASU also 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.

The adoption of ASU 2020-06 did not impact the Company’s

financial position, results of operations or cash flows.

June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments .

The main objective

of ASU 2016-13 is to provide financial statement users with more decision-useful information about an entity’s expected credit

losses on financial instruments and other commitments to extend credit at each reporting date.

To achieve this objective, the

amendments in this update replace the incurred loss impairment methodology currently used today with a methodology that reflects

expected credit losses and requires consideration of a broader range of reasonable and supportable information to develop credit

loss estimates.

ASU 2016-13 will be effective for us for fiscal years beginning after December 15, 2022, including interim

periods within those fiscal years, using a modified retrospective approach.

Early adoption is permitted.

We adopted ASU 2016-13 and

related updates as of January 1, 2023.

The adoption of ASU 2016-13 did not impact the Company’s financial position,

results of operations or cash flows.

2 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis