Wanted to share some thoughts on Tonix' recently filed S-3:
Going all the way back to the September 2013 Rodman Conference the CEO said that "plan A" is to get a big pharma partner after BESTFIT, and if they can't get the deal that they want then he said they'll do the "Celgene Contingency"
"What calendar time would you be considering a partnership?" "So we expect to have the data, we're guiding second half of 2014, we expect to have everyone tee'd up to look at the data as soon as we have it, and then figure out who we are going to work with quickly after that. So everything takes longer than you hope, but I would think that by first quarter 2015 we would either have a partner or pursue this go it alone strategy. We refer to the go it alone strategy internally as the Celgene contingency, because Celgene repeatedly got low balled, and just decided they could raise money on their own and do just as good a job."
They are blinded to the data, the study is wrapping up now, took place in 17 locations, and they will get the results in approximately 6-8 weeks.
So they are looking for the best deal while weighing the go it alone strategy.
The S-3 for $150 million is not at all binding, and by itself is not a capital raise, or dilution. It gives them the right to pursue the go it alone strategy.
They had to file it at some time, filing it sooner and having the option open to not take a bad offer makes complete sense.
They get results circa 6-8 weeks. The only other S-3 Tonix ever filed was filed 2 months before a raise.
Also the CEO owns about 5% of Tonix and has never sold a share. Insiders own more than 20% and have never sold a share.
The capital raises from the previous S-3 were 100% private placement, not selling on the open market, that $50 million previously raised is about 35% of the company or so. That's very large institutional ownership, just recently acquired, and "intimately" in private placements.
So there is a strategic reason for the S-3, and it seems likely this is in the interest of shareholders.
Anything else? The S-3 provided background on their approach with TNX-102 SL, and details on the FM market:
As many products used for the treatment of FM are approved and marketed for other conditions, sales of these products related specifically to FM can only be estimated. Based on information obtained from publicly available sources, we believe U.S. sales of prescription drugs specifically for the treatment of FM totaled approximately $1.5 billion in 2012, and we believe this segment had grown at a compounded annual growth rate of approximately 14% between 2007 and 2012. Based on information obtained from publicly available sources, we believe 2012 sales of Cymbalta, Lyrica, and Savella in FM were approximately $600 million, $475 million, and $100 million, respectively. Cymbalta lost its U.S. patent exclusivity in December 2013.
Despite the availability and use of a variety of pharmacologic and non-pharmacologic interventions, FM remains a significant unmet medical need. Many patients fail to adequately respond to the approved medications, or discontinue therapy due to poor tolerability. Prescription pain and sleep medications are frequently prescribed for symptomatic relief, despite the lack of evidence that such medications provide a meaningful or durable therapeutic effect. An important goal of FM treatment is to reduce the use of opiate analgesics as well as of benzodiazepine and non-benzodiazepine sedative-hypnotic medications by FM patients. Since CBP has no recognized addictive potential, we believe that TNX-102 SL, if approved, could reduce the exposure of FM patients to medications that have not been shown to be effective in treating FM and are associated with significant safety risks.
Disclosure: The author is long TNXP.