On February 14, 2024 Sonnet BioTherapeutics Holdings, Inc. (NASDAQ:SONN) ("Sonnet" or the "Company"), a clinical-stage biopharmaceutical company developing targeted immunotherapeutic drugs for cancer, reported its financial results for the three months ended December 31, 2023 and provided a business update (Press release, Sonnet BioTherapeutics, FEB 14, 2024, View Source [SID1234640100]).

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"This last quarter set the stage for an exciting year across Sonnet’s pipeline, highlighted by the progress of the combination study of SON-1010 and atezolizumab in platinum-resistant ovarian cancer (PROC), where we continue to expect safety data during the first half of 2024." commented Pankaj Mohan, Ph.D., Founder and CEO. "Additionally, enrollment of the Phase 1b portion of the SON-080 study in patients with CIPN is now finished. We believe this trial will yield important safety data that could help position the asset for a potential partnering opportunity in this indication, as well as in diabetic peripheral neuropathy (DPN), both indications of high unmet medical need. On the operations side, we continue the work to optimize our cash usage and runway, including leveraging tax credits. From the sale of the New Jersey NOLs, we expect to receive net proceeds of $4.3 million, after deducting expected fees, during February 2024. Pending the completion of this sale, we believe it will extend the funding of our projected operations into the third calendar quarter of 2024. Taken together, we are pleased with the progress of our clinical programs and look forward to updating the market on our continued progress over the balance of 2024."

Fiscal Year 2024 First Quarter and Recent Corporate Updates

Sonnet provided the following corporate updates:

● On October 17, 2023, announced that interim data from the SB101 clinical trial of the company’s proprietary Fully Human Albumin Binding (FHAB) candidate, SON-1010 (IL12- FHAB), would be presented by Dr. Sant Chawla, a key opinion leader in the field of sarcoma research, at the Connective Tissue Oncology Society Annual Meeting 2023, held November 1-4, 2023, in Dublin, Ireland.
● On October 25, 2023, announced the pricing of an underwritten public offering of 2,843,750 shares of common stock (or pre-funded warrants to purchase shares of common stock in lieu of shares of common stock) and investor warrants to purchase up to an aggregate of 5,687,500 shares of common stock. Each share of common stock (or pre-funded warrant in lieu thereof) was sold together with two investor warrants at a combined offering price of $1.60, for total gross proceeds of approximately $4.55 million (final net proceeds were $3.9 million), before underwriting discounts and commissions and offering expenses payable by Sonnet.

● On December 21, 2023, announced the publication of extensive preclinical data on SON-1210 in Frontiers in Immunology. SON-1210, Sonnet’s lead proprietary bifunctional compound, combines the company’s FHAB construct with a novel single-chain Interleukin 12 (IL-12) and fully human Interleukin 15 (IL-15). The paper, entitled "SON-1210 – a novel bifunctional IL-12 / IL-15 fusion protein that improves cytokine half-life, targets tumors, and enhances therapeutic efficacy", demonstrated the robust binding affinity of SON-1210 to albumin and the anticipated in vitro activity and tumor model efficacy that might be expected from the body of research on native IL-12 and IL-15. In the B16F10 melanoma model, a single dose resulted in a marked reduction of tumor growth that was concomitant with increased IFNγ and augmented immune cell numbers and activity in the tumor microenvironment. Repeat doses in non-human primates displayed excellent safety and tolerability and were similarly accompanied by increased IFNγ levels.
● In December 2023, Sonnet received preliminary approval of its application to sell up to $4.8 million of its New Jersey state net operating losses (NOLs) through the Technology Business Tax Certificate Transfer Program. On January 24, 2024, the Company executed an agreement pursuant to the program whereby a buyer has agreed to purchase, and the Company agreed to sell, such NOLs. Sonnet expects to receive net proceeds of $4.3 million, after deducting expected fees, during February 2024. Pending the completion of the sale of the New Jersey NOLs, Sonnet believes it will extend the funding of its projected operations into the third calendar quarter of 2024.
● Also during December 2023, Sonnet received a $0.8 million net cash refund from the research and development tax incentive program in Australia.
● Safety was recently reviewed for the 2nd dose-escalation cohort in the SB221 Phase 1b combination study (NCT05756907) in patients with platinum-resistant ovarian cancer (PROC) and enrollment has begun in the 3rd cohort. Enrollment continues in the final dose-escalation cohort with SON-1010 monotherapy in SB101 (NCT05352750) cancer patients. Safety updates for both studies are expected during the first half of 2024.
● Enrollment has finished in the Phase 1b safety portion of the SB211 study of SON-080 (NCT05435742) in patients with persistent CIPN. A safety update from this trial is expected during the first quarter of 2024.
● Regarding the agreement with Janssen, the parties have completed two combination studies in a prostate tumor model. A review of the resulting data remains ongoing.

"As our pipeline continues to advance, we remain focused on areas for further operating expense reductions." said Jay Cross, CFO. "Furthermore, we are diligently working to expand on our business development accomplishments, in an otherwise highly competitive environment."

FY 2024 First Quarter Ended December 31, 2023, Financial Results

● As of December 31, 2023, Sonnet had $3.0 million cash on hand and no debt.
● Research and development expenses were $0.6 million for the three months ended December 31, 2023, compared to $3.7 million for the three months ended December 31, 2022. The decrease of $3.1 million was primarily due to the cancellation of accrued but unpaid bonuses that had been awarded for fiscal years 2022 and 2023 in the amount of $1.0 million, as well as due to cost saving initiatives, as we are managing expenses for liquidity purposes and are tightening our focus on the research and development projects we have assessed to have the greatest near-term potential. In addition to transitioning product development activities to cost advantaged locations such as India and Australia, we have reduced expenditures on tertiary programs and suspended antiviral development related to SON-1010.
● General and administrative expenses were $0.7 million for the three months ended December 31, 2023, compared to $1.9 million for the three months ended December 31, 2022. The decrease of $1.3 million relates primarily to the cancellation of accrued but unpaid bonuses that had been awarded for fiscal years 2022 and 2023 in the amount of $0.9 million, and due to cost saving initiatives, as we are managing expenses for liquidity purposes.