Seeking Alpha

Tonix prices secondary at $15 each

  • Tonix Pharmaceuticals (TNXP) takes advantage of the recent moonshot in its stock, selling nearly 3M shares in a secondary priced at $15 each. The underwriters retain an option to buy another 434.8K shares. Assuming no exercise of the greenshoe option, Tonix expects net proceeds of about $40.7M.
  • Apparently already with enough cash to see through to the end of the Phase 2b/3 trial for TNX-102 SL for fibromyalgia, the new funds will be used to initiate a trial of the drug for PTSD, and start trials for TNX-201 for tension-type headache.
  • Shares off 4% premarket to $15.75
  • Press release
Comments (22)
  • wigit5
    , contributor
    Comments (4119) | Send Message
     
    $GOOG is showing it at 16.25 premarket and actually it just updated to 16.48
    24 Jan, 08:36 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    I truly don't understand why its up to almost $17 in premarket. You just split your future profits with new share holders by 2/5ths. I think this is pre-market exuberance that will again settle somewhere near the new issuance price. i can't see how it works any other way.
    24 Jan, 08:41 AM Reply Like
  • wigit5
    , contributor
    Comments (4119) | Send Message
     
    Could just be anticipation for the new drug they will use the money on.
    24 Jan, 08:42 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    I know that TNXP has a great chance of succeeding but it is still a speculative stock. Seems unrealistic.
    24 Jan, 08:46 AM Reply Like
  • Nottrunner
    , contributor
    Comments (11) | Send Message
     
    Not if you have done some detailed DD. Perceived risk can be mitigated by good DD. I'll take my chances that the dilution will pay for itself 10 fold.
    24 Jan, 09:09 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    That is not the point Nottrunner. It is simply psychological. I don't think people an trade much higher than the new issuance price knowing that the current price of the equity is being sold at $15. It is actually just insanity. I believe it comes down as we can see it already doing so in premarket.
    24 Jan, 09:12 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    i rebuy at 14.50. Otherwise I wait until the shares hit the market and drive it down by increased availability. You are talking a 40% increase. This current tight ownership is going to loosen up a bit. This happens to all products when they become less scarce.
    24 Jan, 09:15 AM Reply Like
  • buyandhold???
    , contributor
    Comments (907) | Send Message
     
    also now sell side coverage will come from institutions who will be covering the stock bc they were in on the offering.
    24 Jan, 09:42 AM Reply Like
  • buyandhold???
    , contributor
    Comments (907) | Send Message
     
    seth you're missing the point bc now instead of having potentially 1 drug that does $1b in sales, they have begun work on 2 other indications which could lead this to being a once in a lifetime, buy a few shares and retire stock if all drugs are approved and its worth $10b

     

    There's a reason shares are rising....people love the management and are confident they are the right people to do this

     

    shareholders are now invested in 3 drugs not 1....this is spectacular news for longs
    24 Jan, 09:42 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    Actually buyandhold I don't think I am. You aren't mentioning the downside which is with double the potential but you have introduced double the risk. I would actually prefer the company not double down. Crank out a marketable drug, and the pursue the next one while funding the second project based on the profits from the first project. Issue a bunch more shares after you've had a true success. Again this is another pharma counting its eggs before they hatch. I am not saying it won't pay off, but again not only are you diluting the shares, but you are doubling the risk. It was already a speculative play, and now it is a speculative play with double risk. This is basically the one thing that is wrong with our society. Debt leveraging. Who knows how many people that own the stock right now are buying on the margin.
    24 Jan, 11:26 AM Reply Like
  • Garrett Wankel
    , contributor
    Comments (15) | Send Message
     
    Concerning TNX-102 SL, the risk has only been marginally increased. Tonix is using this very drug for two indications (FM & PTSD), and in case you missed Jason's article from yesterday...linked at bottom...FM and PTSD patients share very similar symptom profiles. Similar enough that they're using the same reformulation of CBP to treat both patient populations! So if TNX-102 SL makes it through the clinical trials, which Michael provided ample evidence pointing to yes...second link at bottom...theoretically, they would only need to reach a desired efficacy level in order to pass through PTSD trials.

     

    I like this double down performed by the management. I suppose initiating it months in advance from the Phase 2b/3 results would cause discomfort for some, but making the offering at $15 as opposed to $25 or $30 gives a chance for people to scoop up more while the stock is still massively undervalued. I'm not going to doubt this management team and this public offering only reinforces my thesis.

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...
    24 Jan, 01:35 PM Reply Like
  • whosez
    , contributor
    Comments (108) | Send Message
     
    It's smart of them to both fund the PTSD trials and increase the float enough to support institutional buyers. They needed to make more shares available for that purpose, and I agree with Garrett- better now than later. $15 is the new floor for the stock, and if the trials are successful, the dilution will hardly matter.
    24 Jan, 07:53 PM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    At any rate, regardless of how you feel. Once the new shares hit the market I believe we will end up closer to $15 which is much more typical an outcome in this scenario.
    24 Jan, 12:27 PM Reply Like
  • jonanne
    , contributor
    Comments (61) | Send Message
     
    Just as a point of interest the actual dilution is about 1/4 as there are warrants out that are certain to be exercised if the company is successful. As far as I'm concerned they can do it again down the road to buy a detail rep sales force and for working capital to market these drugs themselves unless a major comes up with a clearly superior offer, which while management's stated prior preference, I have serious question as to whether full value will be realized that way. They have talked about the Celgene contingency (I.e. to not sell into inadequate offer).
    26 Jan, 03:55 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    $15 bucks. I was pretty certain we would see these levels. I thought maybe a day sooner. Fundamentals don't matter and market psychology rules. The issuance price tells you the stock is $15 so down it will go until it at least hits $15, but I wouldn't be surprised to see more.
    27 Jan, 10:03 AM Reply Like
  • wigit5
    , contributor
    Comments (4119) | Send Message
     
    good call seth under 15$, have any further info on the stock near future or you just making a call basis the 2ndary?
    27 Jan, 11:57 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    Purely an observation based on dilution that I have watched unfold countless times if the dilution is large enough. I have no other prospects on the stock itself. I would expect ownership to remain tight with this one though. Unlike PVCT, TNXP has a much better chance to succeed, and many of the shareholders even the early profiteers are still very bullish on TNXP. Many of the early holders have taken "some" profit to mitigate risk, but a lot of them still hold a large amount of the original positions. You have got to give it to the TNXP longs. They really firmly believe in this drug, and shorts have been hard pressed to shake them off of the positions. Also again the drug is already approved for short term use, and phase 2 appears to have gone very well. I believe the only thing that can derail it at this point is extremely negative side effects from long term. I think that risk is minimal.
    27 Jan, 12:08 PM Reply Like
  • wigit5
    , contributor
    Comments (4119) | Send Message
     
    appreciate the comments sethlemay
    27 Jan, 12:19 PM Reply Like
  • toosmarttofail
    , contributor
    Comments (585) | Send Message
     
    Rising-star biotechs that drop on dilution tend to be excellent investments, especially a few months out.

     

    Look for this to hold 15 for a month or three, then BOOM.
    29 Jan, 02:15 AM Reply Like
  • sethlemay
    , contributor
    Comments (198) | Send Message
     
    I agree somewhat, but I don't think it "holds" 15 at all. I think it will gyrate up and down wildly as the itchy palmed traders start having trouble waiting for October for the next trial results. Up until now holders have seen a steady appreciation. That won't be the case now, and day traders will get involved and make things worse. I think this will lead to a lot of ups and downs anywhere from 15 to 20-21. i've heard of some price targets in the $25 range, but I don't think it gets anywhere close to that without big efficacy data coming down the pike. I don't think I see it falling far under 15 again (which is probably the bottom barring a complete catastrophe down the road), but anything can happen. I think even as tight as ownership is if the market as a whole takes a 10% pull back as many suggest I think even TNXP holders will be tempted to liquidate investments to get ahead of the curve, and all bets are off. In that case it seems likely this thing could go down to lower support levels below 15 which would be great if you are holding cash because there would be lots of value at those levels.

     

    I believe if you can stomach increased volatility then this stock still has some gains to make before October, but the ride will be a more bumpy than the past 2-3 months. After October I really have no clue, but of course FDA approval shoots this way higher.
    29 Jan, 04:15 AM Reply Like
  • toosmarttofail
    , contributor
    Comments (585) | Send Message
     
    I am ultra-long ACTC. I figure TNXP is going to surpass $21, it's just a question of when. When people say "October" the market often says "may." News is manipulated by humans; charts are not. The chart on this is simple: long-term blockbuster, possibly like REGN, which means almost any all-time high will be surpassed. Knowing this, I'd say buy at 15, buy more at 13, buy even more if you get 10 or 8, then let the profits sweep in when it passes 21, maybe selling a little at 26, if you must, but why sell a champion?

     

    I liked this one at 9, 11, 17, and 21, so I still like it at 14. The science won't change bsaed on public perception.
    1 Feb, 09:05 AM Reply Like
  • Garrett Wankel
    , contributor
    Comments (15) | Send Message
     
    Seth,

     

    With resistance at $21, I agree that from here until October, we will see the price bounce between $15 - $20, as the new stock offering gives day traders an easier field to play on. I'm long TNXP, and this is a "money I forgot about" type of investment, and the new offering only supports my long position. Regardless of a projected market correction, which IMHO will be more flat than volatile, my money here isn't for 9 months down the road, but 12+ months.

     

    However, I would not be surprised to see the stock price top $25 or $30 from here until October, because even without a release of "positive-looking" data, any coverage initiated on TNXP would suggest it making it through its latest Phase 2b/3 trial...given CBP's safety record.
    29 Jan, 05:05 AM Reply Like
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