What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-18 compared with 2024-04-01 · 403 added, 529 removed, 308 unchanged (75% of the section changed)

14 unchanged sentences

“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 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

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.

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 a fully-integrated biopharmaceutical company focused on transforming

therapies for pain management and vaccines for public health challenges.

Our development portfolio is focused on central nervous system

(CNS) disorders.

Our priority is to advance TNX-102 SL, a product candidate for the management of fibromyalgia, for which an NDA was submitted

based on two statistically significant Phase 3 studies for the management of fibromyalgia and for which a PDUFA (Prescription Drug User

Fee act) goal date of August 15, 2025 has been assigned for a decision on marketing authorization.

The FDA has also granted Fast Track

designation to TNX-102 SL for the management of fibromyalgia.

TNX-102 SL is also being developed to treat acute stress reaction and acute

stress disorder under a Physician-Initiated IND at the University of North Carolina in the OASIS study funded by the U.S.

Department of

Defense (DoD).

Tonix’s CNS portfolio includes TNX-1300 (cocaine esterase), a biologic in Phase 2 development designed to treat cocaine

intoxication that has FDA Breakthrough Therapy designation, and its development is supported by a grant from the National Institute on

Tonix’s immunology development portfolio consists of biologics to address organ transplant rejection, autoimmunity and

cancer, including TNX-1500, which is an Fc-modified humanized monoclonal antibody targeting CD40-ligand (CD40L or CD154) being developed

for the prevention of allograft rejection and for the treatment of autoimmune diseases.

Tonix also has product candidates in development

in infectious disease, including a vaccine for mpox, TNX-801.

We recently announced a contract with the U.S.

DoD’s Defense Threat

Reduction Agency (DTRA) for up to $34 million over five years to develop TNX-4200, small molecule broad-spectrum antiviral agents targeting

CD45 for the prevention or treatment of infections to improve the medical readiness of military personnel in biological threat environments.

We own and operate a state-of-the art infectious disease research facility in Frederick, Maryland.

Tonix Medicines, our commercial subsidiary,

markets Zembrace® SymTouch® (sumatriptan injection) 3 mg and Tosymra® (sumatriptan nasal spray) 10 mg for the treatment of

acute migraine with or without aura in adults.

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

SymTouch and Tosymra are registered trademarks of Tonix Medicines.

All other marks are the property of their respective owners.

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.

complement our management team with a network of scientific, clinical, and regulatory advisors that includes recognized experts

in their respective fields.

of Operations

We anticipate that our results

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

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, 2024 Compared to Fiscal year Ended December 31, 2023

following table sets forth our operating expenses for the fiscal years ended December 31, 2024 and 2023 (in thousands):

ended December 31,

AND EXPENSES:

and development

and administrative

Total operating

Year ended December 31,

Product revenue, net

COSTS AND EXPENSES:

Cost of sales

Research and development

Selling, general and administrative

Asset impairment charges

Total operating expenses

Operating loss

Gain on change in fair value of warrant liabilities

Other (expense) income, net

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

1 unchanged sentence

Revenue recognized for the

year ended December 31, 2023 was $7.8 million.

year ended December 31, 2024 and 2023 was $10.1 and $7.8 million, respectively.

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.

Year Ended December 31,

Zembrace Symtouch

Total 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 Laboratories (“Upsher Smith”).

See discussion at Note 11 to our financial

statements appearing in this Annual Report on Form 10-K.

Cost of goods sold during the year ended December 31, 2024, was $7.8

million, including write-downs related to Tosymra and Zembrace finished goods inventory of approximately $1.5 million based on an

assessment of inventory on hand and projected sales prior to the respective expiration dates.

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, 2024, were $40.0

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.

million, a decrease of $46.7 million, or 54%, from $86.7 million for the fiscal year ended December 31, 2023.

This decrease is

predominately due to decreased clinical expenses of $18.8 million, non-clinical expenses of $10.5 million, manufacturing expenses

of $3.1 million as a result of fewer trials in the clinic and pipeline prioritization period over period, employee-related expenses

of $7.1 and lab supplies of $4.1 million due to a reduction in expenditures, predominately as a result of the decommission of the ADC and reduction in force earlier in 2024.

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, 2024 and 2023, we recorded $1.6 and $2.9 million, respectively 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, 2024, and 2023.

(in thousands)

Research and development expenses:

Direct expenses – TNX

Direct expenses – TNX - 1800

Direct expenses – TNX - 102 SL

Direct expenses – TNX - 1800

Direct expenses – TNX - 601 ER

Direct expenses – TNX - 801

2 unchanged sentences

Direct expenses – Other programs

Internal staffing,

overhead and other

Total research

& development

Internal staffing, overhead and other

Total research & development

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

3 unchanged sentences

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.

General and Administrative Expenses .

Selling, General and administrative expenses for the fiscal year ended December

31, 2024, were $40.1 million, an increase of $5.3 million, or 15%, from $34.8 million incurred in the fiscal year ended December 31,

The increase is primarily due to an increase in financial reporting expenses of $1.2 million, related to the special

shareholder meetings in 2024, an increase in sales and marketing of $1.2 million, an increase in professional fees of $2.7 million,

an increase in depreciation of property and equipment of $0.4 million and an increase in fees and permits of $0.4 million, related

to licenses obtained to sell the migraine products, offset by a decrease in employee-related costs of $1.0 million, due to fewer employees.

impairment charges .

We recognized a non-cash impairment charge of $48.8 million related to property and equipment, a non-cash

impairment of $1.0 million related to goodwill, and a non-cash impairment charge of $9.2 million related to intangible assets,

which is reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024.

impairment of the Tosymra and Zembrace inventory, intangibles and goodwill was driven by our delayed investment in the sales personnel

required to drive growth in the business as we are focusing our cash resources to further our efforts to bring TNX-102 SL through

the approval process and to market.

However, we believe that the benefits and long-term value proposition of the 2023 acquisition

of Tosymra and Zembrace remain, in that we now have the infrastructure to be ready to manufacture and sell TNX-102 SL under an

expedited timeline pending FDA approval for which we expect an FDA decision in 2025.

As a result of the foregoing, the net loss for the year ended December 31, 2024, was $130.0 million, compared to

7 unchanged sentences

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, 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 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.

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”).

June 23, 2023, we entered into an asset purchase agreement with Upsher Smith for the acquisition of certain assets related to

Zembrace and Tosymra (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;

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 manage certain government rebates, and Upsher Smith will be reimbursed by us at cost for any rebates

they pay on our behalf.

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.

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

and 15% for net sales greater than $150 million.

Royalty payments with respect to Tosymra are payable until the expiration or termination of the product’s Orange Book listed

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

product in the relevant country of the territory.

For Zembrace, royalty payments on annual net sales in the U.S.

are 3% for net

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

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

16% for net sales 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.

16% for net sales

of greater than $100 million.

Such royalty payments are payable until July 19, 2025.

Upon the entry of a generic version of the

relevant product, the applicable royalty rates will be reduced by 90% 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

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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.

February 2, 2023, we entered into an asset 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, 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.

As of December 31, 2024, we had working capital of $100.7 million, comprised

primarily of cash and cash equivalents of $98.8 million, accounts receivable, net of $3.7 million, inventory of $8.4 million, and prepaid

expenses and other of $8.1 million, offset by $4.5 million of accounts payable, $10.7 million of accrued expenses and other current liabilities,

$2.8 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.

following table provides a summary of operating, investing, and financing cash flows for the years ended December 31, 2024, and

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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 in 2022 is related to the build-out of the

The decrease in cash outlays principally resulted from a decrease in research and development expense.

used by investing activities for the year ended December 31, 2024, was approximately $0.1 million related to the purchase of property

and equipment.

Cash 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.

the year ended December 31, 2024, net proceeds from financing activities were $134.9 million, primarily related to the sale of

common stock and warrants.

For the year ended December 31, 2023, net proceeds from financing activities were $36.5 million, predominately

from the sale of our 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, 2024 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.

of 2025, will meet our operating and capital expenditure requirements into the first quarter of 2026, but not beyond.

continue to face significant challenges and uncertainties and, as a result, our available capital resources may be consumed more

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seek to develop or commercialize independently.

Repurchase Program

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

At-the-Market Offering

July 30, 2024, we entered into a Sales Agreement with AGP pursuant to which we may issue and sell, from time to time, shares of

our common stock having an aggregate offering price of up to $250.0 million in the ATM.

AGP will act as sales agent and will be

paid a 3% commission on each sale under the Sales Agreement.

Our common stock will be sold at prevailing market prices at the

time of the sale, and, as a result, prices will vary.

During the year ended December 31, 2024, we sold approximately 4.2 million

shares of common stock under the Sales Agreement, for net proceeds of approximately $128.4 million.

Subsequent to December 31,

2024, we sold 2.3 million shares of common stock under the Sales Agreement, for net proceeds of approximately $46.3 million.

2024 Financing

July 9, 2024, we entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which

we sold 33,936 shares of common stock and pre-funded warrants to purchase up to 37,032 shares of common stock.

The offering price

per share of common stock was $57.00, and the offering price per share of pre-funded warrant was $56.99.

offering closed on July 10, 2024.

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

of approximately $0.3 million.

We received net proceeds of approximately $3.5 million, after deducting the underwriting discount

and other offering expenses.

2024 Financings

June 12, 2024, we entered into a securities purchase agreement with certain investors, pursuant to which we sold 11,995 shares

of common stock and pre-funded warrants to purchase up to 25,682 shares of common stock.

The offering price per share of common

stock was $106.50, and the offering price per share of pre-funded warrant was $106.40.

The offering closed on June 13, 2024.

We incurred offering expenses of

approximately $0.6 million, including placement agent fees of approximately $0.3 million.

We received net proceeds of approximately $3.4

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

June 27, 2024, we entered into a securities purchase agreement with certain institutional and retail investors, pursuant to which

we sold 28,339 shares of common stock and pre-funded warrants to purchase up to 42,282 shares of common stock.

The offering price

per share of common stock was $57.00, and the offering price per share of pre-funded warrant was $56.99.

The offering closed on June 28, 2024.

We incurred offering expenses of

approximately $0.6 million, including placement agent fees of approximately $0.3 million.

We received net proceeds of approximately $3.4

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

2024 Financing

March 28, 2024, we entered into an agreement to sell 3,365 shares of common stock, pre-funded warrants to purchase up to 1,219

shares of common stock, and accompanying Series E warrants to purchase up to 4,584 shares of common stock with an exercise price

of $1,056.00 per share and expiring five and a half years from date of issuance in a public offering, which closed on April 1,

The offering price per share of common stock was $960.00 and the offering price per share of pre-funded warrants was $959.68.

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

net proceeds of approximately $3.9 million, after deducting the underwriting discount and other offering expenses.

Additionally,

with the closing of the financing on April 1, 2024, we entered into warrant amendments (collectively, the “Warrant Amendments”)

with certain holders of our common warrants (referred to herein as the “Existing Warrants”).

We agreed to amend the

exercise price of each Existing Warrant to $1,056.00 upon approval by our stockholders of a proposal to allow the Existing Warrants

to become exercisable in accordance with Nasdaq Listing Rule 5635 or, if stockholder approval is not obtained by October 1, 2024,

we agreed to automatically amend the exercise price of the Existing Warrants to the Minimum Price (as defined in Nasdaq Listing

Rule 5635(d)) of our common stock on October 1, 2024 if and only if the Minimum Price is below the then current exercise price.

Upon stockholder approval on May 22, 2024, the termination date for the warrants issued August 2023 (the “August Warrants”)

to purchase up to an aggregate of 2,172 shares was amended to April 1, 2029;

the termination date for Series A Warrants to purchase

up to an aggregate of approximately 2,782 shares is April 1, 2029;

the termination date for Series B Warrants to purchase up to

an aggregate of approximately 2,782 shares is April 1, 2025;

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

of approximately 10,884 shares is the earlier of (i) April 1, 2026 and (ii) 10 trading days following notice by we to the Series

C Warrant holder of our 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 10,884

shares is April 1, 2029.

The other terms of the Existing Warrants will remain unchanged.

On May 22, 2024, at the annual meeting

of stockholders, our stockholders approved the proposal to amend the exercise prices of the Existing Warrants to $1,056.00 per

share and extend the expiration dates.

2023 Financing

December 20, 2023, we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional

investors, pursuant to which we sold and issued (i) 7,920 shares of our common stock, (ii) pre-funded warrants (the “Pre-Funded

Warrants”) to purchase up to 8,973 shares of common stock and (iii) Series C warrants to purchase up to 25,338 shares of

common stock (the “Series C Warrants”), and (iv) Series D warrants to purchase up to 25,338 shares of common stock

(the “Series D Warrants” and, together with the Series C Warrants, the “Common Warrants”).

The securities

sold in the offering were sold in fixed combinations as units.

The offering price per share of common stock and accompanying Common

Warrants was $1,776.00, and the offering price per Pre-Funded Warrant and accompanying Common Warrants was $1,775.68.

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

million payable by us.

At the closing of the offering, 2,034 Pre-Funded Warrants were immediately exercised into shares of common

stock for nominal proceeds.

The Pre-Funded Warrants have an exercise price of $0.32 per share,

were immediately exercisable subject to certain ownership limitations, and can be exercised at any time until exercised in full.

C Warrants have an exercise price of $1,776.00 per share, and were exercisable on the later of approval by our stockholders of (i) a proposal

to approve the filing of an amendment to our 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 initially expired 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

Food and Drug Administration’s (“FDA”) acknowledgement and acceptance of the New Drug Application (“NDA”)

relating to the Company’s TNX-102 SL product candidate in patients with fibromyalgia.

The Series D Warrants have an exercise price

of $2,720.00 per share and were exercisable beginning on the Approval Date through the five-year anniversary of the Approval Date.

Upon the closing of the offering, we determined that certain of the Common

Warrants did not meet the criteria for equity classification due to the lack of sufficient authorized and unissued shares to settle the

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, whereby shares are allocated

based on the earliest issuance date of potentially dilutive instruments, with the earliest issuance date receiving the first allocation

In the event of identical issuance dates, shares are then allocated beginning with instruments with the latest maturity date

Pursuant to this sequencing approach, we determined that the authorized shares were sufficient to settle all remaining Pre-Funded

Warrants and 15,917 Series D Warrants and were therefore classified in equity.

The remaining 9,422 Series D Warrants and the Series C

Warrants associated with the deficit shares were initially classified as liabilities at fair value and presented within non-current liabilities

on the consolidated balance sheet as of December 31, 2023.

$30.0 million in gross proceeds received by us were first allocated to the Series C Warrants and the liability-classified Series

D Warrants at their respective fair values, and the residual proceeds were allocated between the shares of common stock, the Pre-Funded

Warrants, and the equity-classified Series D Warrants on a relative fair value basis.

The issuance costs were allocated between

the equity and liability-classified instruments on a relative fair value basis, resulting in issuance costs of $1.4 million recognized

as a discount to the equity-classified instruments, and $0.9 million allocated to the liability-classified instruments and immediately

expensed within Selling, general and administrative expense on the consolidated statements of operations.

January 25, 2024, the date our stockholders approved the proposal to file an amendment to the Company’s Articles of Incorporation

to increase the number of authorized shares of common stock from 160,000,000 to 1,000,000,000, the liability-classified Series

D Warrants and the Series C Warrants were adjusted to fair value and reclassified to equity.

2023 Financing

On September 28, 2023, we

sold 1,266 shares of common stock;

pre-funded warrants to purchase up to 1,549 shares of common stock, and accompanying Series A warrants

to purchase up to 2,813 shares of common stock with an exercise price of $1,600.00 per share and expiring five years from date of issuance,

and Series B warrants to purchase up to 2,813 shares of common stock with an exercise price of $1,600.00 per share and expiring one year

from date of issuance in a public offering, which closed on October 3, 2023.

The offering price per share of common stock and accompanying

warrants was $1,600.00, and the offering price per share of pre-funded warrant and accompanying warrants was $1,599.68.

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

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

2023 Financing

July 27, 2023, we sold 791 shares of common stock;

pre-funded warrants to purchase up to 1,399 shares of common stock and accompanying

common warrants to purchase up to 2,188 shares of common stock with an exercise price of $3,200.00 per share in a public offering

that closed on August 1, 2023.

The offering price per share of common stock and accompanying common warrant was $3,200.00, and

the offering price per share of pre-funded warrant and accompanying common warrant was $3,199.68.

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.

At-the-Market Offerings

April 8, 2020, we entered into a sales agreement with AGP pursuant to which we may issue and sell shares of our common stock having an

aggregate offering price of up to $320.0 million in at-the-market offerings (“ATM”) sales at prevailing market prices at

the time of the sale, and, as a result, prices will vary.

AGP receives a 3% commission on each ATM sale under the Sales Agreement.

the year ended December 31, 2023, we sold approximately 322 shares of common stock under the Sales Agreement, for net proceeds of approximately

$3.0 million.

Repurchase Program

September 2024, the Board of Directors approved a 2024 share repurchase program pursuant

to which we may repurchase up to $10.0 million in value of our outstanding common stock from time to time on the open

market and in privately negotiated transactions subject to market conditions, share price and other factors.

repurchases occurred during the year ended December 31, 2024.

Subsequent to December 31, 2024,

we repurchased 250,000 of shares of our common stock outstanding under the 2024 share repurchase at prices ranging from $9.98

to $14.33 per share for a gross aggregate cost of approximately $3.0 million.

the first quarter of 2023, we repurchased 786 of our shares of common stock outstanding under the 2022 share repurchase program

for $12.5 million at prices ranging from $8,800.00 to $27,552.00 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.

January 2023, the Board of Directors approved a 2023 share repurchase program pursuant

to which we may repurchase up to an additional $12.5 million in value of our outstanding common stock from time to time

on the open market and in privately negotiated transactions subject to market conditions, share price and other factors.

the first quarter of 2023, we repurchased 50 of our shares of common stock outstanding

under the new 2023 share repurchase program at $22,784 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

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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 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 $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

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.

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

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

April 8, 2020, we entered into a sales agreement (the “Sales Agreement”) with AGP pursuant to which we may issue and

sell, from time to time, shares of our common stock having an aggregate offering price of up to $320.0 million in at-the-market

offerings (“ATM”) sales.

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

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

During the year ended December 31, 2023, we sold approximately 1.0 million shares of common stock under the Sales Agreement, for

net proceeds of approximately $3.0 million.

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.

the first quarter of 2025, we paid $9.6 million as a result of a pay-off of the above-mentioned loan.

The pay-off amount paid

by us in connection with the termination of the Loan Agreement was pursuant to a pay-off letter and includes a prepayment fee

of $1.0 million in accordance with the terms and provisions of the Loan Agreement.

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

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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.

As of December 31, 2024, no 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

27 unchanged sentences

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

2022 Employee Stock Purchase Plan (the “2022

2022 Employee Stock Purchase Plan.

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.

ESPP”, and together with the 2022 ESPP, the “ESPP Plans”), which was approved by our stockholders on May 5,

2023 ESPP allows eligible employees to purchase up to an aggregate of 250 shares of our common stock.

Under the 2023

ESPP, on the first day of each offering period, each 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 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.

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, 2024, 159 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.

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

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, 2023,

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

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

2024, 21 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.

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.

June 30, 2024, approximately $33,000 of employee payroll deductions had accumulated and had been recorded in accrued expenses.

July 2024, 70 shares that were purchased as of June 30, 2024, under the 2022 ESPP, were issued.

Accordingly, during the third

quarter of 2024, approximately $4,000 of employee payroll deductions accumulated at June 30, 2024, related to acquiring such shares,

was transferred from accrued expenses to additional paid in capital.

The remaining $29,000 was returned to the employees.

and Development Contracts

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

impairment charges.

We test certain assets for impairment, including goodwill, indefinite-lived intangibles, long-lived assets

and amortizing intangibles.

Goodwill is reviewed for impairment by comparing the carrying value of a reporting unit to its fair

value on an annual basis as of June 30, or more frequently if events or changes in circumstances indicate that the carrying amount

of goodwill may be impaired.

We evaluate long-lived assets for impairment, including property and equipment and finite-lived intangibles

assets whenever events or changes in circumstances indicate that their net book value may not be recoverable.

When such factors

and circumstances exist, we compare the projected undiscounted future cash flows associated with the related asset or group of

assets over their estimated useful lives against their respective carrying amount.

Impairment, if any, is based on the excess

of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those

assets and is recorded in the period in which the determination is made.

We completed the required annual impairment test for goodwill as of

June 30, 2024, primarily using an income approach or discounted cash flow analysis.

Additionally, due to a sustained decline in revenues

and continued delays in building out the sales team for our commercialized products, we also tested the commercialized products asset

group for recoverability as of June 30, 2024, and determined that the carrying value was not recoverable and therefore estimated the fair

value of the asset group using a discounted cash flow analysis.

The significant assumptions used in the discounted cash flow model included

revenue growth, long-term growth rate, and discounts rate.

The impairment assessments resulted in full non-cash impairment of $965,000

of goodwill and $9.2 million, consisting of $6.2 million and $3.0 million for the Zembrace and Tosymra developed technology, intangible

assets, which are reflected in asset impairment charges in the consolidated statements of operations for the year ended December 31, 2024.

During the second quarter

of 2024, we identified certain triggering events related to the ADC and the decommissioning of the ADC.

The Company determined that the

carrying value of the ADC was not recoverable and that the carrying value exceeded its fair value.

We engaged independent appraisers to

value the building and land, using sales comparison and income capitalization approaches, and the related equipment using a indirect cost

approach and market approach.

The assessments resulted in a non-cash impairment charge of $48.8 million, which is reflected in asset impairment

charges in the consolidated statements of operations for the year ended December 31, 2024.

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

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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.

classification of derivative instruments is reassessed at each reporting date.

If the classification changes as a result of events

during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification.

is no limit on the number of times a contract may be reclassified.

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

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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

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.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”)

issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures,

which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment

Effective January 1, 2024, the Company adopted the new standard on a retrospective basis for annual periods, and interim periods

beginning for the first quarter of 2025.

The Company does not believe the impact of the new guidance and related codification improvements

had a material impact to its financial position, results of operations and cash flows.

Recently Issued Accounting Pronouncements

December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires disaggregated information

about our effective tax rate reconciliation as well as information on income taxes paid.

The guidance will first be effective

in our annual disclosures for the year ending December 31, 2025, and should be applied on a prospective basis with the option

to apply retrospectively.

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.

The Company is in the process of assessing the impact of ASU 2023-09 on

our disclosures.

March 2024, the SEC adopted new rules relating to the disclosure of a range of climate-change-related physical and transition

risks, data, and opportunities.

The adopted rule contains several new disclosure obligations, including, (i) disclosure on how

the board of directors and management oversee climate-related risks and certain climate-related governance items, (ii) disclosure

of information related to a registrant’s climate-related targets, goals, and/or transition plans, and (iii) disclosure on

whether and how climate-related events and transition activities impact line items above a threshold amount on a registrant’s

consolidate financial statements, including the impact of the financial estimates and the assumptions used.

This new rule will

first be effective in the Company’s disclosures for the year ending December 31, 2027.

The Company is in the process of

assessing the impact on our consolidated financial statements and disclosures.

November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures, to improve transparency in financial reporting by requiring entities to present more detailed information about

the nature of expenses included within the Income Statement.

The guidance will first be effective for annual reporting periods

beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is in the process of assessing the impact of ASU 2024-03 on our disclosures.

7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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What changed 10-K

Item 7. Management’s Discussion and Analysis