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TNXP: Enrollment Continues for Phase 3 Trial of TNX-102 SL in PTSD…

06/10/2019
By David Bautz, PhD

NASDAQ:TNXP

READ THE FULL TNXP RESEARCH REPORT

Business Update

Enrollment Continues in Phase 3 RECOVERY Trial

In March 2019, Tonix Pharmaceuticals Holding Corp. (NASDAQ:TNXP) announced the first patient has been enrolled in the RECOVERY Phase 3 study of TNX-102 SL in patients with posttraumatic stress disorder (PTSD). The RECOVERY trial is a randomized, double blind, placebo controlled study of TNX-102 SL over 12 weeks with the primary endpoint being the Week 4 change in CAPS-5 score from baseline between TNX-102 SL and placebo-treated patients. The Week 12 change in CAPS-5 score will be a key secondary endpoint.

In addition to the primary endpoint being at Week 4 instead of Week 12, the RECOVERY trial incorporates other important changes compared to the Phase 3 HONOR trial that we think helps to increase the likelihood for success, including:

1) Inclusion will be limited to individuals with PTSD who experienced their trauma within the past nine years, while the HONOR trial included individuals who experienced a trauma from 2001 or later. A retrospective analysis showed a treatment effect in patients treated within nine years of trauma, while treated patients who were > nine years from their trauma failed to separate from placebo.
2) The study will include both civilian and military PTSD patients, while the HONOR trial had limited inclusion to only those with military-related PTSD.
3) The total number of study subjects is anticipated to be approximately 250, compared to approximately 550 subjects that were to be enrolled in the HONOR trial.

Management has indicated that thus far enrollment is going well and we believe that will continue to be the case. We anticipate topline results in the first half of 2020.

Update on CRADA with USAMMDA

On April 19, 2019, Tonix announced the receipt of a notice of termination, effective April 29, 2019, in which the U.S. Army Medical Material Development Activity (USAMMDA) intended to terminate without cause the Collaborative Research and Development Agreement (CRADA) that initiated on Dec. 4, 2015 between Tonix and USAMMDA. The CRADA related to the development of TNX-102 SL for the treatment of PTSD.

The termination of the CRADA has no financial consequences for Tonix nor does it affect the ongoing RECOVERY trial in any way. The purpose of the CRADA was for the USAMMDA to assist Tonix in recruiting active duty military personnel from military treatment facilities (MTFs) into the Phase 2 AtEase and the Phase 3 HONOR clinical trials in military-related PTSD. It is important to note that no patients were recruited by USAMMDA into either of those trials.

Another potential reason that the CRADA was terminated could stem from the changes in oversight of MTFs that is occurring. The National Defense Authorization Act of 2017 required that the Defense Health Agency (DHA) assume command for all MTFs. Army MTFs were under a command shared with the U.S. Army Medical Research and Material Command (MRMC). The CRADA was signed with the intention of USAMMDA recruiting patients from MTFs. Since the MTFs are now under the control of DHA the CRADA became no longer relevant to potentially recruiting patients.

Fibromyalgia Program

On April 4, 2019, Tonix announced the expansion of the 5.6 mg TNX-102 SL program to include the treatment of fibromyalgia. The company received the FDA meeting minutes following a recent clinical guidance meeting which indicated the agency supports the advancement of TNX-102 SL as a centrally acting non-opioid analgesic for the management of fibromyalgia. Two positive Phase 3 trials will support the registration of 5.6 mg TNX-102 SL in fibromyalgia along with long-term safety exposure data from the PTSD program.

Tonix previously tested 2.8 mg TNX-102 SL in fibromyalgia in the Phase 3 AFFIRM trial, a 12-week, randomized, double blind, placebo controlled trial of 519 patients who were administered either 2.8 mg TNX-102 SL or placebo at bedtime in a 1:1 randomization. The trial did not achieve statistical significance in the primary efficacy endpoint of the proportion of patients who reported a 30% or greater decrease in pain from baseline (P=0.095). The pre-specified statistical method utilized for the primary efficacy analysis counted all patients who withdrew from the study as non-responders, even if the reason for leaving the study had nothing to do with efficacy or tolerability. Another standard statistical method that takes into account the reasons for discontinuation showed statistical significance in the 30% responder analysis (P=0.012). Additionally, the same pain data analyzed by mean pain, an FDA accepted pain endpoint, demonstrated significant separation from placebo by mixed model repeated measures (MMRM) analysis (P<0.001).

While the AFFIRM trial did not meet the primary efficacy endpoint, 2.8 mg TNX-102 SL did show statistically significant effects on two other key secondary endpoints, Patient Global Impression of Change (PGIC) and Fibromyalgia Impact Questionnaire-Revised (FIQ-R) function and symptom domain scores, which assess global improvement, a range of fibromyalgia symptoms, and functional improvement.

New approaches to treat fibromyalgia are needed, as approximately one-third of patients are on chronic opiates. Given that 2.8 mg TNX-102 SL showed clinical benefit in a number of different outcomes, we believe that increasing the dose to 5.6 mg is likely to provide evidence to support its approval in the management of fibromyalgia. The company will need to secure additional funding to advance the fibromyalgia program as well as finalize and submit a new Phase 3 protocol and statistical analysis plan for FDA acceptance.

Financial Update

On May 13, 2019, Tonix announced financial results for the first quarter of 2019. As expected, the company did not report any revenues for the first quarter of 2019. R&D expenses in the first quarter of 2019 were $3.9 million compared to $5.2 million for the first quarter of 2018. The decrease was primarily due to the pharmacokinetic bridging study of TNX-102 SL that was performed in the first quarter of 2018 partially offset by an increase in manufacturing costs due to TNX-601 formulation work. G&A expenses in the first quarter of 2019 were $2.4 million compared to $1.8 million in the first quarter of 2018. The increase was primarily due to increased investor relations costs and insurance expenses. Net loss for the first quarter of 2019 was $6.2 million, or $1.29 per share, compared to a net loss of $6.9 million, or $8.80 per share, in the first quarter of 2018.

Tonix exited the first quarter of 2019 with approximately $16.4 million in cash and cash equivalents, which we believe will be sufficient to fund operations through the end of 2019. As of May 9, 2019, the company had approximately 6.1 million shares outstanding and when factoring in warrants with strike prices of $3.50 the company has a fully diluted share count of approximately 11.0 million.

Conclusion

We’re glad to hear that enrollment is progressing nicely in the RECOVERY trial, and we believe that the changes incorporated into that trial increase the probability for success. In addition, we don’t see the termination of the CRADA as an issue that will affect the company or the RECOVERY trial. We look forward to evaluating the topline data in the first half of 2020. The fibromyalgia program for 5.6 mg TNX-102 SL is a nice complement to the PTSD program and could lead to a welcome treatment option for those patients. Our valuation remains at $10 per share.

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