Zacks Small Cap Research – TNXP: High Interest in Tonmya Seen in Initial Findings from Market Opportunity Analysis… – Technologist

By David Bautz, PhD

NASDAQ:TNXP

READ THE FULL TNXP RESEARCH REPORT

Business Update

Tonmya™ NDA Filing on Track for 2H24 Submission

Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP) will be filing a new drug application (NDA) for TNX-102 SL (conditionally accepted trade name Tonmya™) for the treatment of fibromyalgia (FM) in the second half of 2024. In support of this, the company recently conducted two meetings with the FDA:

• On June 20, 2024, Tonix announced the receipt of the formal minutes from a pre-NDA Type B Chemistry, Manufacturing, and Controls (CMC) meeting in which the company believes it is in alignment with the FDA on key topics, including proposed drug substance and drug product commercial specifications, shelf life assignment, manufacturing, and commercial drug packaging.

• On July 8, 2024, Tonix announced the receipt of the formal minutes from a pre-NDA meeting regarding the proposed data package. At the meeting the company and the FDA agreed that the proposed data package is sufficient to support NDA submission.

Recently, Tonix announced key findings from the initial phase of the market opportunity analysis conducted by EVERSANA. Overall, the analysis found a high level of interest in Tonmya among physicians who treat fibromyalgia patients that included a substantial dissatisfaction rate with the currently FDA approved therapies of fibromyalgia.

Some additional key findings from the survey include:

• There is a high level of off-label prescribing for FM patients, as shown in the following graph. What is particularly surprising is the high level of opioids still being prescribed and the highest prescribed drug being off-label gabapentin. The survey also showed that 85% of patients fail first-line therapy and that 79% of FM patients are on multiple therapies.

• Approximately 50% of U.S. FM patients are on Medicare. The EVERSANA analysis of a claims database of 2.2 million patients showed that 1.2 million claims were submitted through Medicare. The following graph shows the insurance distribution for the claims database. The fact that 50% of FM patients are on Medicare is particularly important because starting in 2025 the maximum annual out-of-pocket costs for Medicare Part D will be $2,000 (replacing the existing Coverage Gap Discount Program) and will offer enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly installment payments instead of all at once. We believe this will give Tonix considerable pricing power when establishing a list price for Tonmya.

Multiple Presentations at ASCP Annual Meeting

On June 3, 2024, Tonix announced the presentation of new data from the Phase 3 RESILIENT trial of TNX-102 SL at the American Society of Clinical Psychopharmacology (ASCP) Annual Meeting. A copy of the presentation can be found here. The presented data suggests that TNX-102 SL may improve depressive symptoms. Upon enrollment in the RESILIENT trial, approximately 47% of participants experienced depression within the past six months and approximately 25% of the intent-to-treat population had experienced a lifetime major depressive episode. Depressive symptoms during the RESILIENT trial were studied using the Beck Depression Inventory-II (BDI-II). The baseline mean (standard deviation) BDI-II score for placebo was 10.0 (6.72) and TNX-102 SL 9.6 (6.32). The BDI-II score separated at Week 2 with a nominal p-value of <0.01. By Week 14, the total BDI-II score in the TNX-102 SL group improved over placebo with a nominal p-value of 0.005 and an effect size of 0.27. The improvement in depression is intriguing since the participants entered the trial with a mean score of 10, which is indicative of mild depression. It has been difficult to show efficacy for traditional antidepressants in mild depression and thus many antidepressants were studied in moderate or severely depressed patients and the benefit of those drugs for patients with mild depression have been inferred.

Tonix also presented two posters at the ASCP Annual Meeting regarding the Phase 2 study of TNX-102 SL in fibromyalgia-like Long Covid and the Phase 2 OASIS trial of TNX-102 SL in treating Acute Stress Disorder (ASD) after motor vehicle collision:

Effect of Bedtime Sublingual Cyclobenzaprine (TNX-102 SL) on Pain, Sleep, Fatigue, and Cognition in Fibromyalgia-Type Long COVID: Results of a Double-Blind Randomized Proof-of-Concept Phase 2 Study (Harris et al., 2024)

This was a Phase 2, multicenter, randomized placebo controlled, 14-week proof-of-concept trial at 19 sites in the U.S. Trial participants had Long Covid with multi-site pain defined as pain in at least 4 out of 7 body regions along with a confirmed history of SARS-CoV-2 infection at least three months prior to enrollment. A total of 63 patients were randomized 1:1 to either TNX-102 SL 2.8 mg for two weeks, followed by 5.6 mg for 12 weeks (n=32) or to matching placebo for 14 weeks (n=31). The primary endpoint was the change from baseline in weekly average of daily diary worst Long Covid numerical rating scale (NRS) pain scores. Results showed that the trial did not meet the primary endpoint of multi-site pain reduction at Week 14, however TNX-102 SL showed a robust effect size of 0.5 in improving fatigue and showed consistent activity in secondary measures of sleep quality (ES=0.23), cognitive function (ES=0.21), and Patient Global Impression of Change. These results provide additional evidence of TNX-102 SL’s ability to positively impact symptoms seen in chronic pain indications.

Optimizing Acute Stress Reaction (ASR) Interventions with TNX-102 SL* (Sublingual Cyclobenzaprine HCl) – The OASIS Trial: Sustaining Civilian Performance Post-Trauma by Reduction of ASR and Prevention of ASD/PTSD (Hsu et al., 2024).

This poster provided an overview of the investigator-initiated Phase 2 clinical trial of TNX-102 SL in reducing the severity of acute stress reaction (ASR) and the frequency of acute stress disorder (ASD) and posttraumatic stress disorder (PTSD) in civilians after a motor vehicle collision (MVC). A total of 180 participants who present to the emergency department (ED) within 24 hours of an MVC will be enrolled in a 1:1 manner to two weeks of treatment at bedtime with either 5.6 mg TNX-102 SL or placebo. The primary outcome measure is the acute stress disorder scale assessed at 7 and 21 days post-MVC. Safety assessments will be conducted up to 12 weeks after drug administration.

Department of Defense Contract Worth up to $34 Million

On July 1, 2024, Tonix announced it was awarded an Other Transaction Agreement (OTA) with a potential for up to $34 million over five years by the Defense Threat Reduction Agency (DTRA), an agency within the U.S. Department of Defense (DoD). The purpose of the contract is to develop small molecule broad-spectrum antiviral compounds for the treatment or prevention of infections in order to improve military readiness in biological threat environments. This is in line with the agencies increased focus on a “one drug, multiple bugs” approach as opposed to the traditional “one drug, one bug” approach to antivirals (DoD).

The contract will focus on Tonix’s TNX-4200 program, which is aimed at developing an orally available CD45 antagonist. CD45 is a transmembrane protein tyrosine phosphatase that is expressed on most hematopoietic cells, including T lymphocytes, where it is involved in T cell activation. Prior research has shown that decreased levels of CD45 enhance antiviral (Panchal et al., 2009) and antibacterial (Panchal et al., 2009) response in animals.

As opposed to targeting the pathogen itself, a CD45 inhibitor would work to enhance the body’s immune response. Examples of these type of drugs for other indications include Keytruda® and Opdivo® in cancer, Humira® and Enbrel® in autoimmunity, and Intron A® and Pegasys® in viral diseases. Each of those compounds augment the immune response to either decrease it, in the case of autoimmunity, or increase it, in the case of cancer and viral infection. A host-targeted CD45 inhibitor would represent a new class of “broad spectrum, host targeted” therapeutics.

The Director of Infectious Disease Research at Tonix is Sina Bavari, PhD, who formerly served as head of science at the United States Army Medical Research Institute of Infectious Diseases (USAMRIID). The references listed above show that while at USAMRIID, Dr. Bavari’s research group found that a small decrease in the expression or function of CD45 offered protection from viral or bacterial pathogens. Thus, we believe Dr. Bavari is the ideal person to be leading the anti-CD45 program.

Financial Update

On May 13, 2024, Tonix announced financial results for the first quarter of 2024. Net product revenues for the first quarter of 2024 were approximately $2.5 million and the cost of sales was $1.7 million.

R&D expenses for the first quarter of 2024 were $12.9 million, compared to $26.5 million for the first quarter of 2023. The decrease was primarily due to decreased clinical, non-clinical, and manufacturing expenses. G&A expenses for the first quarter of 2024 were $9.3 million, compared to $7.4 million for the first quarter of 2023. The increase was primarily due to sales and marketing and the transition services expenses associated with the company’s recently acquired marketed products partially offset by a decrease in financial reporting expenses.

As of March 31, 2024, Tonix had approximately $7.0 million in cash and cash equivalents. Subsequently, the company has raised approximately $12 million in gross proceeds in three separate $4 million public offerings. Tonix announced a 1-for-32 reverse stock split in June 2024, and after taking the recent financings and reverse split into effect we estimate there are currently approximately 21.2 million shares outstanding.

Conclusion

Tonix has reiterated its guidance for filing the NDA for Tonmya in the second half of 2024 and remains on track following the two recent meetings with the FDA. The initial findings from the market opportunity analysis by EVERSANA are very encouraging and suggest the potential for a successful launch for Tonmya. We have made multiple adjustments to our model following the 1-for-32 reverse stock split, the three $4 million financings, and anticipated future dilution. Our valuation now stands at $8.00 per share.

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