Benzinga | Aug 24, 2021 10:12AM EDT

TNXP: Multiple COVID Programs and Building Domestic Vaccine Research Infrastructure

By David Bautz, PhD

NASDAQ:TNXP

READ THE FULL TNXP RESEARCH REPORT

Business Update

COVID-19 Pipeline Update

Tonix Pharmaceutical Holdings Corp. (NASDAQ:TNXP) has multiple programs targeting the current COVID-19 pandemic and is expanding its R&D and manufacturing facilities to be able to work with greater efficiency in developing vaccines and other agents to battle COVID-19, variants of interest, and additional infectious diseases.

TNX-1800: This is a live virus vaccine that utilizes the company's horsepox virus vector (TNX-800). It is designed to be a single dose COVID-19 vaccine to elicit T cell immunity targeting the Spike (S) protein of the virus. A Phase 1 clinical trial in humans is anticipated to start in the first half of 2022, pending IND clearance and availability of cGMP material. The company previously reported positive efficacy data from a preclinical study in non-human primates that were vaccinated with TNX-1800 and then challenged with SARS-CoV-2. The results showed that TNX-1800 induced protection against infection in both the upper and lower airways, suggesting it may prevent forward transmission of the disease, something that the current COVID-19 vaccines do not appear to do.

TNX-2100: This is a diagnostic skin test as a means to test for a delayed-type hypersensitivity (DTH) reaction to SARS-CoV-2, the virus that causes COVID-19. It is modeled after the tuberculosis (TB) skin test (Tubersol(r), Aplisol(r), or the generic Mantoux test) that can determine if an individual has been exposed to the bacteria that causes tuberculosis, Mycobacterium tuberculosis. TNX-2100 is comprised of three different mixtures (TNX-2110, -2120, -2130) of synthetic peptides that correspond to different proteins of SARS-CoV-2. TNX-2110 represents multiple proteins from SARS-CoV-2, TNX-2120 represents only the spike protein of SARS-CoV-2, and TNX-2130 is representative of several proteins but not the spike protein. All three tests will be administered during the same procedure by application to three separate areas on the forearm in a similar manner to the TB skin test. They are designed for multiple potential applications: 1) As a biomarker for cellular immunity and protective immunity to SARS-CoV-2; 2) a method for stratifying participants in a COVID-19 vaccine trial by immune status; 3) an endpoint in COVID-19 vaccine trials; and 4) a biomarker of durability of vaccine protection. We anticipate a first-in-human clinical study to initiate in the fourth quarter of 2021.

TNX-102 SL: In June 2021, Tonix announced a plan to develop TNX-102 SL as a treatment for Long COVID Syndrome, officially known as Post-Acute Sequelae of COVID-19 (PASC). The company anticipates receiving the meeting minutes from the FDA in the third quarter of 2021, with the design of a Phase 2 trial predicated on the feedback from the FDA. The company will provide an update on this program following receipt of the meeting minutes.

TNX-3500: TNX-3500 (sangivamycin, formerly OYA1) is an antiviral compound being developed for the treatment of COVID-19 and possibly other viral diseases. Sangivamycin is a natural product that was originally isolated from Streptomyces rimosus and studied in the 1960's by the National Cancer Institute (NCI) as a potential cancer therapeutic. Due to lack of efficacy the drug did not advance as an anti-cancer therapy but it did show good safety and tolerability in those trials.

A recent study identified sangivamycin as an inhibitor of Ebola virus replication, and surprisingly it also inhibited the replication of Marburg virus, Lassa virus, cowpox virus, and vaccinia virus (Bennett et al., 2020). OyaGen followed up these results with a collaborative research project with the National Institutes of Allergy and Infectious Diseases Integrated Research Facility (NIAID-IRF) to study the effect of sangivamycin on the replication of SARS-CoV-2. Unpublished results show that the compound has strong dose-dependent antiviral activity against SARS-CoV-2 and was approximately 65 times more potent than remdesivir (Veklury(r)). In addition, combination treatment with sangivamycin and remdesivir show additive activity against SARS-CoV-2.

Tonix is currently conducting multiple preclinical studies to test the safety and efficacy of sangivamycin as a treatment for COVID-19 and we anticipate an update on this program later this year.

Over the past year, Tonix has vastly expanded its R&D and manufacturing facilities to include both basic research facilities all the way up to commercial scale manufacturing.

In July 2021, Tonix announced an agreement to purchase an infectious disease research facility in Frederick, MD. This facility is being acquired from Southern Research, which is collaborating with Tonix on development of TNX-1800 and TNX-801. Tonix is set to take ownership of the facility on October 1, 2021 and it should be operational shortly thereafter.

In August 2021, Tonix announced a groundbreaking ceremony for the company's 45,000 square foot clinical scale manufacturing facility in the New Bedford Business Park in Massachusetts. Once completed, the facility will house Tonix's Advanced Development Center (ADC) for R&D and analytical activities along with the ability to produce clinical trial quality vaccines. The facility should be operational in the first half of 2022.

In June 2021, Tonix announced plans were advancing to construct a commercial-scale manufacturing facility in Hamilton, MT. Tonix entered into a public/private sector collaboration between Ravalli County and the company to bring high-tech bioscience jobs to the Bitterroot Valley.

One of the major issues that became readily apparent during the COVID-19 pandemic is the lack of U.S. domestic vaccine development and manufacturing capabilities. The facilities purchased by Tonix will help to ensure that sufficient resources are available domestically to develop vaccines for various infectious agents. In addition, the U.S. government is likely going to have a sustained interest in pandemic preparedness, which these facilities could also be utilized for.

Multiple CNS Clinical Trials to Initiate 2H21; RALLY Trial Topline Results in 4Q21

Tonix has established a robust pipeline of clinical stage assets focused on the treatment of central nervous system (CNS) and immunological diseases. In addition, the company continues to have a strong balance sheet, with $165.7 million in cash and cash equivalents reported as of June 30, 2021, along with no debt, no preferred shares, and a very limited number of warrants.

In regards to the CNS portfolio, Tonix is planning to initiate three clinical trials during the second half of 2021:

TNX-102 SL: The company will be initiating a Phase 3 trial of TNX-102 SL for the treatment of posttraumatic stress disorder (PTSD) in the fourth quarter of 2021. The trial will be enrolling police officers and is taking place in Kenya.

TNX-1300: The company will be initiating a Phase 2 clinical trial of TNX-1300 for the treatment of cocaine overdose in the third quarter of 2021. TNX-1300 is a recombinant enzyme derived from the cocE gene of a Rhodococcus species that utilizes cocaine as a sole source of carbon and nitrogen (Bresler et al., 2000). Results from a previous Phase 2 clinical trial showed that the recombinant CocE enzyme (then called RBP-8000, now TNX-1300) rapidly degraded plasma cocaine levels in volunteer cocaine users and was safe and well tolerated.

TNX-1900: The company will be initiating a Phase 2 clinical trial of TNX-1900 for the treatment of chronic migraine in the fourth quarter of 2021. A previous single dose, placebo controlled, double blind Phase 2 study that included 40 chronic migraine patients that were currently experiencing a migraine showed that at four hours post dose 64% of those administered intranasal oxytocin (then called TI-001) reported a reduction in pain by two categories (severe, moderate, mild, none) compared to only 27% of patients who received placebo. It should be noted that those results were obtained with a formulation that did not contain magnesium, which TNX-1900 contains. Preclinical studies indicate that magnesium enhances the analgesic activity of oxytocin mediated by the oxytocin receptor.

In July 2021, Tonix announced that the RALLY trial, the second Phase 3 clinical trial of TNX-102 SL 5.6 mg for the treatment of fibromyalgia, stopped enrolling patients following a pre-planned interim analysis by the Independent Data Monitoring Committee (IDMC). Based on interim analysis results of the first 50% of patients (n=337), the IDMC recommended stopping the trial for futility as TNX-102 SL 5.6 mg was unlikely to demonstrate a statistically significant improvement in the primary endpoint. The company remains blinded to the data and is allowing participants already enrolled in the study to complete the trial and will then evaluate the full data set before deciding on next steps for the program. Topline results are expected in the fourth quarter of 2021.

Financial Update

On August 9, 2021, Tonix announced financial results for the second quarter of 2021. As expected, the company did not report any revenues for the second quarter of 2021. Net loss available to common shareholders for the second quarter of 2021 was $23.6 million, or $0.07 per share, compared to a net loss available to common shareholders of $14.2 million, or $0.23 per share, for the second quarter of 2020. The weighted average common shares outstanding for the second quarter of 2021 were approximately 331.3 million compared to approximately 62.4 million in the second quarter of 2020.

R&D expenses for the second quarter of 2021 were $18.1 million, compared to $10.6 million for the second quarter of 2020. The increase was primarily due to increased non-clinical expenses, manufacturing expenses, employee-related expenses, and regulatory/legal expenses. G&A expenses for the second quarter of 2021 were $5.4 million, compared to $3.6 million for the second quarter of 2020. The increase was primarily due to increased employee-related expenses, increased investor relations expenses, increased financial reporting expenses, and increased insurance premiums.

As of June 30, 2021, Tonix had approximately $165.7 million in cash and cash equivalents. As of August 9, 2021, Tonix had approximately 357.5 million common shares outstanding and, when factoring in stock options and reasonably priced warrants, a fully diluted share count of approximately 382.6 million.

Conclusion

We're glad to see Tonix is continuing to advance its pipeline with four clinical trials planned to initiate in the second half of 2021. The news that the RALLY trial is not likely to hit the primary endpoint was disappointing, however trial failures in CNS indications are not uncommon. We will be interested to see what the company decides to do with the fibromyalgia program once the topline data from the RALLY trial is announced, which we expect in the fourth quarter of 2021, keeping in mind that the company has completed one successful Phase 3 trial in fibromyalgia. Given the uncertainty surrounding TNX-102 SL in fibromyalgia we have decreased its probability of approval in that indication to 25%, which coupled with the increase in shares outstanding has decreased our valuation to $3.00 per share.

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