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  • Email On Tonix 37 comments
    Aug 17, 2014 2:53 PM | about stocks: TNXP

    We received a well-researched email so we sent one back:

    Thank you for your thoughtful message,

    I think $1 billion is a conservative estimate, $2 billion peak sales in FM looks there for the taking. I think the FM market is special RE: (1) very few such widespread diseases that all of a sudden come on the market (2) such motivated high treatment-seeking patient population (currently average almost 3 meds) (3) non-restorative sleep is pervasive.

    The NIH says 5 million Americans adults with FM, the best published estimates by Dr Clauw (possibly leading authority on FM, lead author on 1st 2 studies listed on NIH's site and also running BESTFIT) are 2-8%. So 5 looks low, a 2012 study says 2.4 million receiving treatment. If it is just $6 / day in revenue, less than 1/5 of those already being treated gives $1 billion. 2/5 gives more than $2 billion, and the market is growing at double digits. Like Dr. Lederman said on Thursday the only approved sleep quality treatment will likely be tried by most FM patients, and the large internet survey showed that more than half have already tried oral CBP off-label (most reported it helpful). (Update: one other point to make here is one that Dr. Lederman made last week - there are other SNRI drugs like cymbalta that theoretically might also work in FM, but cymbalta gets the sales because it is the researched and approved drug).

    The PTSD market is also special, the NIH says more than 8 million American adults have it each year, the only 2 approved treatments come with a black box warning, non-restorative sleep is again pervasive, treatments are lacking and like in FM patients take opiates and sedatives that are not shown to help and are now a problem. The Department of Defense has a big problem and they know it. $6 a day from 1/5 of 8 million comes to $3.5 billion. That may sound high but the only approved meds have a suicide warning, the off label options are not grand and/or risky, the only approved restorative sleep med should be widely prescribed and do quite well.

    I think data will be very good for a number of reasons that I've gotten into in the past, I think they have a good chance to not just get a really good p value in pain, but show statistically significant improvement in at least 2 other symptoms as well (they already did in depression and tenderness) - but the data does not even have to be blow-away. Cymbalta is the best selling med and it did not get statistically significant improvement in pain in one of its phase 3 primary endpoints, it was still approved on improvement in pain, and this was before the FDA recognized FM as a disease for special regulatory consideration.

    Methods:

    This was a phase-III, randomized, double-blind, placebo-controlled, parallel-group study assessing the efficacy and safety of duloxetine.

    Results:

    There were no significant differences between treatment groups on the co-primary efficacy outcome measures, change in the Brief Pain Inventory (NYSE:BPI) average pain severity from baseline to endpoint (P = 0.053) and the Patient's Global Impressions of Improvement (PGI-I) at endpoint (P = 0.073). Duloxetine-treated patients improved significantly more than placebo-treated patients on the Fibromyalgia Impact Questionnaire pain score, BPI least pain score and average interference score, Clinical Global Impressions of Severity scale, area under the curve of pain relief, Multidimensional Fatigue Inventory mental fatigue dimension, Beck Depression Inventory-II total score, and 36-item Short Form Health Survey mental component summary and mental health score. Nausea was the most common treatment-emergent adverse event in the duloxetine group. Overall discontinuation rates were similar between groups.

    Conclusions:

    Although duloxetine 60/120 mg/day failed to demonstrate significant improvement over placebo on the co-primary outcome measures, in this supportive study, duloxetine demonstrated significant improvement compared with placebo on numerous secondary measures.

    And then the management is not just impressive, but so well-suited for exactly what they are doing - Dr Lederman has years of treating FM patients in addition to his executive background, the board has the JAZZ co-founder that ran sodium oxybate FM trials, the CMO's PTSD resume might be second to none, both the CEO and CFO are biotech patent authors and holders, the reach of the board is unbelievable, and then they got perhaps the very best person to develop their tension headache drug in Dr. Kellerman. (Update: while on this topic we should note the background of executives and directors in re-formulating and re-purposing central nervous system drugs, in Dr. Mario's case he sold a reformulation of an ADD drug for $11 billion).

    Tension headache again is a huge market with no good treatments - all the prescriptions contain a barbiturate and one has an opiate, not only are these treatments risky and banned in some places but they can lead to a really terrible and almost untreatable headache condition.

    I think whether they stay solo, get bought, or (most likely to me) some hybrid they will be valued at at least $1 billion with good data one way or another.

    All the best to you,

    Joe

    Disclosure: The author is long TNXP.

    Stocks: TNXP
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Comments (37)
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  • JKenser
    , contributor
    Comments (401) | Send Message
     
    Thanks as always Joe!!
    17 Aug, 03:30 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome Mister Kenser, thank *you* for the year-ago email you sent me on Tonix.
    17 Aug, 03:35 PM Reply Like
  • I Heart Joe
    , contributor
    Comments (15) | Send Message
     
    Joe, could you expand on what "50/50" economics would mean in a partnership under one of these sales scenarios?
    17 Aug, 04:48 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » ANYTHING for I Heart Joe.

     

    Using Map as an example it would mean they would be valued at about 2X sales before approval ($144). Here were Map and Allergan's terms (Map's product used a device (inhaler), though the drug did well in trials the device manufacturing site did not pass muster and they had to resubmit their New Drug Application to the FDA, they then entered this agreement at around the price where they were after the FDA told them they needed no further testing):

     

    http://bit.ly/1puwBLG

     

    "Under the terms of the Agreements, Allergan will make a $60 million up-front payment to MAP and up to $97 million in additional payments upon MAP meeting certain development and regulatory milestones. MAP will be responsible for obtaining approval of the NDA from the FDA. *Generally, the parties will equally share in the profits* from sales of the Product generated from its commercialization to headache specialist physicians in the Territory."
    17 Aug, 05:00 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » That 2X sales number comes from how the market valued Map on the deal, but using the profit sharing we can get to the same place a different way and apply the numbers to Tonix:

     

    Map sold out for about $1 billion to Allergan without FDA approval, Allergn's CEO said he forecast $500 million in peak sales for Levadex, so from that we can extrapolate that profits should add up to more than 2X revenues in the life of a womens/pain/CNS/reform... drug (otherwise Allergan would not buy).

     

    So if Tonix is forecast to have $1 billion in peak FM sales that would roughly mean a forecast of more than twice that in lifetime profits, or $2 billion current value and $144.
    17 Aug, 05:16 PM Reply Like
  • I Heart Joe
    , contributor
    Comments (15) | Send Message
     
    There you go, lowballing us again! :) If the total FM and PTSD patient base is 16M, achieving a 17% penetration is 2.75M pills daily, or 1B annually. I know we're guessing on price and cost, but at a $6 price point, even $4 cost leaves "our" half of the profit at $1B annually, or a nice $20 per share quarterly dividend.
    If 17% is too optimistic, chalk it up to 'off-label' usage. I know I want a few for when I have 'one of those nights'.
    I can see the DOD handing 100 of these to every trooper that steps off a plane coming home. What would be the downside? Money? Ha!
    17 Aug, 07:21 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are right I Heart Joe, with a 15 multiple you have $1,111 per share and 7% annual return - or $20 quarterly dividends. Nice work.
    17 Aug, 07:57 PM Reply Like
  • hatvani
    , contributor
    Comments (122) | Send Message
     
    Joe, I think comprehending $100 from the current levels is good enough. A lot of good things have to happen for a 600% appreciation. $1,000 PS might be a bit too ambitious, at least from my mind. I'm long with a good number of shares from below $9, so I'm not complaining.
    18 Aug, 02:47 AM Reply Like
  • sheldond
    , contributor
    Comments (1131) | Send Message
     
    The best part is doing nothing and watching the days go by as the pressure builds. Partnership would be most probable I agree. The countdown continues. You have to like the timeframe here. September is when this will get good.
    Thanks guys.
    D
    17 Aug, 05:11 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome and thank you D. I really don't know which alternative to root for, 3 good options.
    17 Aug, 05:19 PM Reply Like
  • tkswett
    , contributor
    Comments (16) | Send Message
     
    Joe...perhaps you could clarify for me...if Tonix does a 50/50 deal...at 2x sales....is that just on the FM treatment in the US?
    What about PTSD and Tension headaches? Thanks as always!
    17 Aug, 07:16 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome tkswett, yes it is.
    17 Aug, 07:21 PM Reply Like
  • Hillbilly Stock Star
    , contributor
    Comments (737) | Send Message
     
    FM at 5M maybe low as it crosses age groups imo. Young people to elderly.
    17 Aug, 07:32 PM Reply Like
  • DeeMmm
    , contributor
    Comments (42) | Send Message
     
    I think the biggest question is can Joe keep up the momentum of an article or update every 2 days until any major news comes! :) I've held my convictions in this one due to those articles. I'm actually getting a little TNXP overload since it is first thing i check everyday, all day, and before i go to bed. Whatcha got next Joe? I'm driving myself crazy with this one.

     

    Thanks for your many efforts though in all seriousness Joe!
    17 Aug, 07:39 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome Carpe DeeMmm, thank you.
    17 Aug, 07:53 PM Reply Like
  • michabreakstone
    , contributor
    Comments (4) | Send Message
     
    Thank you Joe as always for insightful analysis. I have two questions, being a less-than-seasoned-inv...

     

    1. Any insight into the 10% shifts on Friday with volume double the average?

     

    2. Do you expect a scenario with major buildup towards results followed by a big sell-off before results are published? As a result would you recommend investing full allocated amount now or waiting till the end of September to invest?

     

    Thank you!
    17 Aug, 08:07 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome Micha,

     

    1) Have a look at IWM, small caps took a big beating right at that time, I think some stop losses in the 13s got cleaned out, when others noticed the dip they bought.

     

    2) I just don't know how to game it other than I think it will be permanently much more valuable after results.
    17 Aug, 08:22 PM Reply Like
  • michabreakstone
    , contributor
    Comments (4) | Send Message
     
    Thank you!!!
    17 Aug, 11:12 PM Reply Like
  • 683
    , contributor
    Comments (50) | Send Message
     
    Quietly watching and adding. Thank you so much Joe.
    God bless.
    17 Aug, 09:17 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome 683, same to you.
    17 Aug, 09:32 PM Reply Like
  • libouban
    , contributor
    Comments (97) | Send Message
     
    Joe,
    I'm really impressed by how you keep working on TNXP, week in, week out, fine tuning our understanding behind the drug, the market, the company. You are the best author I read on SA. Many, many thanks for sharing your work.
    Best regards,
    Libouban
    18 Aug, 12:56 AM Reply Like
  • Doewap
    , contributor
    Comments (869) | Send Message
     
    I am a private investor and I approve this message.
    18 Aug, 07:40 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » You are most welcome, a sincere thank you.
    18 Aug, 07:55 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (711) | Send Message
     
    Read 10q, still unsure if warrants can be bought on open market? If so, symbol?

     

    Thanks
    18 Aug, 08:54 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » I did not realize that is what you were asking SaltyDog62, I thought you wanted the numbers. No warrants are not available to the public.
    18 Aug, 09:19 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (711) | Send Message
     
    Ok thanks. That is too bad tho
    18 Aug, 09:24 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » There are call options..
    18 Aug, 09:26 AM Reply Like
  • SaltyDog62
    , contributor
    Comments (711) | Send Message
     
    Recommendations?
    18 Aug, 09:34 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » The Decembers seem to give plenty of breathing room with results expected near the beginning of October.

     

    There are March calls too which have an outside chance of capturing an FDA notification of no final phase 3 needed.

     

    Out of the money is going to best the bang for the buck - $15, $17.50, or $20 strike price.

     

    They are not very liquid though, you may want to name a price and see if anyone takes it rather than pay the ask - the spread between the bids and asks is wide.
    18 Aug, 09:43 AM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » Actually since the August calls expired on Friday there are now October calls, that is cutting it close but they are new as of today..
    18 Aug, 01:21 PM Reply Like
  • Doewap
    , contributor
    Comments (869) | Send Message
     
    Joe, probably you have written about this before but how do you see the timing from the FDA; if the BESTFIT results are positive, when could the FDA give that signal that Tonix may submit their NDA?
    18 Aug, 02:14 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » It was about 6 months after top line data that the FDA told Map no final phase 3 was needed, so that would be my guess, although the 2012 PDUFA changes made the FDA a little speedier so it could be a little quicker if it happens..
    18 Aug, 02:23 PM Reply Like
  • Doewap
    , contributor
    Comments (869) | Send Message
     
    Thank you, Joe!
    18 Aug, 03:25 PM Reply Like
  • petethepanzer
    , contributor
    Comments (1042) | Send Message
     
    "I can see the DOD handing 100 of these to every trooper that steps off a plane coming home. What would be the downside? Money? Ha!"

     

    ...this is why the PTSD might be the main value driver imo

     

    fb trial drives it 3x then we see it drive another 3x from ptsd positive topline

     

    also joe would you say the october calls are liquid enough to actually chance buying
    18 Aug, 03:03 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » I agree I think they will do very well in military and non-military PTSD, but don't discount FM - it is a very expensive problem and a big burden on the social/insurance system, costs per patient estimates range upwards of $10,000 - $20,000 a year, and 10-30% of all doctor's visits are for symptoms that resemble those of fibromyalgia, and nonrestorative sleep is a pervasive part of the problem:

     

    http://bit.ly/1BuyT2J
    18 Aug, 03:19 PM Reply Like
  • petethepanzer
    , contributor
    Comments (1042) | Send Message
     
    i dont discount it but also dont obsess about fb...their both behemoth indications both great

     

    i actually like the ptsd one more since it has NO drug not even off label which means the market will go nuts on data
    18 Aug, 05:13 PM Reply Like
  • Joe Springer
    , contributor
    Comments (2303) | Send Message
     
    Author’s reply » FM patients are about as in need as you get, 3 approved treatments to PTSD's 2 and they both use opiates and sedatives off label, they both have a big need.
    18 Aug, 05:39 PM Reply Like
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