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Email On Tonix

|Includes:Tonix Pharmaceuticals Holding Corp. (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