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  • The Tonning Salon

    We got several questions about the Tonix (TNXP) filings from yesterday, which we noted were not dilutive, just administrative. We talked with one of our experienced and knowledgeable brethren about the filings, and he had this to say:

    Both Post-Effective Amendments today were to register warrants under Form S-3, the first to register the warrants from the IPO, the second to register the warrants from the accredited investor and PIPE deals in the pink sheet days. The effect is that Leland won't have to do an 8K each time unregistered shares are issued pursuant to warrant exercise equal to 5% of outstanding common, because the shares will already be exercised. Most of the $4.25 warrants are held by the insiders, Technology Partners and Broadfin and at least as to the first two aren't going to be exercised soon and even if they were they could have been exercised under the Form S-1 registrations. The rest of the warrants are at $12, $20 and $25 and are not expiring anytime soon, so they are unlikely to be exercised. The only warrants that expired were the $8.00s and only Technology Partners was able to exercise when the stock price justified it because they bought later and even they were constrained by the beneficial ownership limitation. Probably just a formality, one of the many things they've done lately to dot "i"s and cross "t"s, but its remotely possible something is up.

    In comparing to the original registrations the remarkable thing is how many individual accredited investors, family trusts and the like, bought into the early offerings in relatively small quantities and while some have sold some shares, most are still completely in. It looks like management and Dawson sold to a lot of friends and family and that typically is an expression of confidence on both sides.

    I've been thinking about Technology Partners having gone all in in this deal and I think they have come to the 95% certainty that you did. I think they keyed into the open-label continuation enrollment. Unlikely that significant patient numbers would have agreed to participate if the side-effects were troublesome or if they didn't perceive benefit. Plus the secondary itself removed a huge amount of risk from this deal. I think it's a pretty good bet the deal was agreed to by Technology Partners and the company with or without Roth as an intermediary..

    Disclosure: I am long TNXP.

    Tags: TNXP
    Apr 10 8:00 PM | Link | Comment!
  • Adamis Family Values

    We mistakenly said that Advair comes off patent in 2016 in our email and last blog post, in fact Advair came off patent in 2010 - it is the Advair-delivering Diskus inhaler which comes off patent in early 2016, and which Adamis Dry Powder Inhaler is poised to compete:

    The Food and Drug Administration yesterday revised guidelines for competitors to get copies on the market, saying long, expensive human tests aren't required to show drugs work the same as Advair. Advair, an inhaled medicine for asthma and chronic obstructive pulmonary disorder, is the world's third-best selling drug with revenue of 5.05 billion pounds ($7.95 billion) last year and accounts for about 20 percent of Glaxo's annual sales.

    Disclosure: I am long ADMP.

    Tags: ADMP
    Apr 09 4:34 PM | Link | 5 Comments
  • The Adamis Family

    Email to be added to my free newsletter, sent this out yesterday morning:

    Hey guys,

    I wanted to give you a heads up that I am working on an in-depth article on Adamis Pharmaceuticals (OTCQB:ADMP).

    Adamis is similar to Tonix in that they just raised funds/reverse split/uplisted to Nasdaq, and also did a reverse merger to go public so they never had an IPO (or the accompanying fanfare). Like Tonix they are also bringing their products along the 505(b)(2) path to approval.

    Some key points:

    1) Epinephrine PFS - Adamis should announce an NDA for their first product this quarter, an epinephrine pre-filled syringe, which has an excellent chance to be approved in early 2015.

    This product will compete with the epi-pen, which is sold in packs of two for almost $400, and goes bad after about a year. The market in the US is almost $1 billion, and one nice thing about this is that Adamis intends to bring it to market by themselves, targeting hospitals and institutions with about 10 of their own salespeople (rather than primary care physicians with an army sales people), as a lower cost alternative to the epi-pen.

    Doctors and nurses are not squeamish, and the epi-pen was designed for people that don't like to see the needle. We think a lower cost alternative could take a lot of market share, and the syringes are not complex or expensive to make. This can generate revenues starting next year, and has an excellent chance for approval in that epinephrine is already approved and this is not a new formulation. Even if Adamis only gets a small share of the market it would represent a lot of revenue.

    2) APC-5000 - Adamis acquired the rights to a 3M Dry Powder Inhaler to compete as a branded generic alternative to the Advair Diskus device in asthma and chronic obstructive pulmonary disease (COPD). This DPI technology is superior to the current Advair device, and Advair comes off patent in early 2016. How is business for Advair? It's doing $8 billion in annual global sales, $4 billion in the US. Again this is low risk in that the drug is already approved, the inhaler just needs to perform, and 3M's products have one of the best records in inhaler approvals.

    APC-5000 is the big upside for Adamis, and could ultimately surpass a billion in annual revenue. This one screams for a partner - the market is vast and a superior product could take a lot of share. Adamis will run its first trial this year, and is targeting 2016-17 for approval.

    3) A deep pipeline - Adamis also has APC-1000, an inhaled oral steroid, to compete as a low cost alternative with QVAR. QVAR does $1 billion in annual sales in asthma and COPD, and comes off patent next July. Adamis will run a phase 3 trial in the second half of this year, and should apply for approval next year. Again this is not a new formulation so the approval risk is very low.

    They also have APC-3000, a gas-propelled nasal treatment for allergic rhinitis to compete with unpleasant liquid treatments, which could be up for approval by 2017.

    Additionally they have four cancer vaccine technologies that seem to be on the back burner for now, but represent an interesting call option - the patents were funded with $18 million in federal grants and were thought enough of to be litigated over in court.

    4) Value - 27 institutions recently funded Adamis at $5.95 per share, including reputable Sabby and Special Situations, the recent biotech pullback really pulled Adamis down and it is currently trading at a discount to that funding.

    Fully diluted Adamis has 14 million shares. If we use MAP Pharma as a comparison (got bought out last year, did an early partnership for development) and value Adamis at 2X peak revenues (assuming approvals, which are likely), then the share price can go much higher. A quarter billion in sales is hardly out of the question, and a $500 million market cap means $35.71 per share, and that could just be the beginning, especially in the Advair market.

    The two analysts that have initiated coverage have a $15 price target:

    Attached you can find the latest investor presentation, and here is the latest quarterly report:

    Please do your due diligence on this one if you like it, I like it but there are no guarantees,

    All the best,


    Disclosure: I am long ADMP.

    Tags: ADMP
    Apr 09 3:01 PM | Link | 22 Comments
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