October 29, 2012
Tonix Pharmaceuticals (TNXP): A Low-Risk Biotech with Near-term Catalysts
Fibromyalgia afflicts approximately one in 50 Americans and is the second most common ailment affecting the musculoskeletal system, but the disease has no cure, and the three FDA-approved treatments leave many patients unsatisfied. Although the existing approved and off-label drugs are a $1.4 B US market, they only address some symptoms and not the underlying causes.
Tonix Pharmaceuticals Holdings Corp (OTCQB: TNXP) aims to change all of that with its TNX-102 SL treatment. By targeting restorative sleep in a safe and effective way, the company hopes to fundamentally advance sleep hygiene and pain management in these patients. And given the large market size, the company is also worth a look for early stage biotech investors that are active in the fibromyalgia space, like Jazz Pharmaceuticals Inc. (NASDAQ: JAZZ) and Forest Laboratories Inc. (NYSE: FRX).
Low Risk Clinical Program
Tonix Pharmaceuticals has based its central nervous system (CNS) clinical programs on anecdotal observations made by physicians who prescribe drugs for off-label use. By testing these existing active pharmaceutical ingredients for new uses, the company hopes to develop important drugs with a shorter time to approval and less risk, since the safety profiles are already well established. In fact, the company’s TNX-102 SL is a novel formulation of cyclobenzaprine, which is already an active ingredient in two U.S. FDA-approved muscle relaxants.
In a recent 10-Q, the company indicated that two efficacy studies and a safety exposure study could be enough to bring TNX-102 SL to the market. The first study is expected to begin during Q1 2013 and completed by Q4 2013. And based on those results, the firm plans on a second 6-month pivotal study that should be done with the data analyzed by Q4 2015.
Near-term Catalysts
Tonix Pharmaceuticals has numerous near-term catalysts that could make the stock attractive for early stage biotech investors. After releasing the abstract from its latest study in late September, the company will present the actual data underlying the abstract at the American College of Rheumatology meeting being held November 10-14, 2012 in Washington D.C.
The company’s clinical trials could also provide a key boost for investors. In Q1 2013, the company plans to begin dosing patients in its clinical trial, but Q4 2013 will be the real catalyst when the results of the first trial are announced. This is also the time that the firm may seek a strategic partnership to assist in funding and launching its drug commercially.
Finally, the company may also seek to up-list to a National Exchange such as NYSE MKT or NASDAQ. Since the firm went public through a reverse merger, they must wait until their 10-K is filed on March 31, 2012, when they can then begin the up-listing process, which is expected to take several weeks. Any up-listing would help expose the stock to institutional investors that are sometimes forbidden from investing in OTC listed securities.
Investment Opportunity
Tonix Pharmaceuticals presents a potentially compelling opportunity for early stage biotech investors. With market capitalization of just $24 million, the company may be trading at a fraction of its potential valuation. Meanwhile, its low-risk clinical programs and many near-term catalysts set it apart from many other micro cap or small cap biotech opportunities.
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