Tonix Pharmaceuticals Holding Corp (NASDAQ: TNXP) is headed for the top yet again in the market this morning as investors show their support for the company’s plans to develop a COVID-19 skin test and the fact that the company now has plenty of money to move forward with that development. Here’s what’s going on:
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- Tonix Pharmaceuticals Is Working to Produce a COVID-19 Skin Test
- Management Commentary
- Funding Is in Place to Move Forward
- Risks to Consider Before Buying TNXP Stock
- Final Thoughts
Tonix Pharmaceuticals Is Working to Produce a COVID-19 Skin Test
Recently, Tonix Pharmaceuticals announced that it received a written response from the United States Food and Drug Administration (FDA) to a Type B pre-investigational new drug meeting package. The package described the company’s technology and plans to develop TNX-2100, a diagnostic skin test for SARS-CoV-2, the virus that causes COVID-19.
In the release, TNXP said that TNX-2100 is designed to measure T cell immunity to the virus using three different mixtures of synthetic peptides. These peptides are designed to represent different protein components of the virus.
The three tests that make up TNX-2100 will be administered as part of the same procedure on the forearm. Responses are expected to be highly accurate and available within 48 hours.
In a statement, Seth Lederman, M.D., President and CEO at TNXP, had the following to offer:
We believe TNX-2100 has the potential to measure T cell immunity to CoV-2 and therefore serve as an aid to COVID-19 diagnosis to support patient care, public health surveillance and vaccine trials.
Our proposed skin test has the potential to serve as: 1) a biomarker for cellular immunity and protective immunity; 2) a method to stratify participants in COVID-19 vaccine trials by immune status; 3) an endpoint in COVID-19 vaccine trials, and 4) a biomarker of durability of vaccine protection.
Funding Is in Place to Move Forward
Not only is the news positive from the FDA, TNXP also has the funding it needs to move forward with the development of the COVID-19 skin test. In an announcement yesterday, the company said it entered into a securities purchase agreement with institutional investors.
Through the agreement, TNXP will raise around $70 million through the sale of 58,333,334 shares of common stock at a price of $1.20 per share.
While common stock offerings generally lead to declines, investors understand the need for funding here as Tonix Pharmaceuticals is working to develop a new COVID-19 test. In fact, the funding announcement actually led to gains in the value of the stock.
Risks to Consider Before Buying TNXP Stock
If you’re considering an investment in TNXP stock, or any other stock for that matter, it’s important to consider the risks before diving in. When it comes to Tonix Pharmaceuticals, some of the most significant risks to consider include:
- Penny Stock. TNXP is a penny stock. As a penny stock, it is known to experience heavy levels of volatility, making entrance and exit decisions more difficult and allowing the potential for significant short term losses. Moreover, the company’s business model hasn’t reached profitability and is not yet proven, making it a highly speculative bet.
- Clinical Stages. Tonix Pharmaceuticals is a clinical-stage biotechnology company. This means that the company has no drugs on the market as of yet, so it is not generating revenue. As a result, it must rely on the money it has in the bank. If it’s unable to do so, the company may look to raise more funds from public markets, leading to even more dilution of existing shareholder value.
- COVID-19. It seems like every company in the biotech space is looking for a way to enter the COVID-19 market, much of which is smoke and mirrors. While TNXP does seem to have something valuable with its skin test for the virus, if all goes well and the virus is eradicated relatively soon, there won’t be time to make money from the sale of these tests, adding to the risk associated with the investment.
While the hype around Tonix Pharmaceuticals at the moment has to do with its development of a COVID-19 skin test, I believe the real value in the company lies in its late-stage studies in fibromyalgia and PTSD, with TNX-102 SL being the real value here. Not to mention the drug’s potential ability to treat patients with Alzheimer’s disease and alcohol use disorder are the icing on the cake.
Sure, the COVID-19 vaccines and testing goals are exciting, but these are all in preclinical stages. While all the focus is on these assets, investors are ignoring the true value associated with assets that could hit the market relatively soon considering their late stages of study.
Nonetheless, no matter what excites you about the stock, TNXP looks like it could become a massive opportunity.