ITEM 1 - BUSINESS
This Annual Report
on Form 10-K (including the section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations)
contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such
as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates” and similar expressions or variations of such words are intended to identify forward-looking statements,
but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report
on Form 10-K. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking
statements in this Annual Report on Form 10-K reflect the good faith judgment of our Management, such statements can only be based
on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties
and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking
statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those
specifically addressed under the heading “Risks Factors” below, as well as those discussed elsewhere in this Annual
Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of
the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”).
You can read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC
20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, including us.
We undertake no obligation
to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date
of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout
the entirety of this annual Report, which attempt to advise interested parties of the risks and factors that may affect our business,
financial condition, results of operations and prospects.
Tonix Pharmaceuticals
®
,
TONMYA
®
, Protectic™, Angstro-Technology™ and other trademarks and intellectual property of ours appearing
in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend
our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such
companies, or any relationship with any of these companies.
TNX-102
SL (cyclobenzaprine HCl sublingual tablets)
for posttraumatic stress disorder, or PTSD, is
an investigational new drug and has not been approved for any indication.
Business Overview
Tonix Pharmaceuticals
Holding Corp., together with its subsidiaries (collectively “we,” “our,” “us,” “Tonix”
or the “Company”), is a clinical-stage pharmaceutical company dedicated to the development of innovative pharmaceutical
products to address public health challenges. Our most advanced drug development program is focused on delivering an efficacious
and safe long-term treatment for PTSD. PTSD is characterized by chronic disability, inadequate treatment options, high utilization
of healthcare services, and significant economic burden. We have assembled a management team with significant industry experience
to lead the development of our product candidates. We complement our management team with a network of scientific, clinical, and
regulatory advisors that includes recognized experts in the fields of PTSD and other central nervous system disorders. In September
2016, we discontinued our fibromyalgia program in order to fully focus our resources on our PTSD program.
Our lead product candidate,
TNX-102 SL, a proprietary low-dose cyclobenzaprine sublingual tablet, designed for bedtime administration, is in Phase 3 development
as a potential treatment for PTSD. Our development pipeline includes: TNX-601 (tianeptine oxalate), a separate pre-IND (Investigational
New Drug) candidate designed for daytime administration for the treatment of PTSD and cognitive dysfunction associated with steroid
use; TNX-801, a potential smallpox-preventing vaccine based on a live synthetic version of horsepox virus, or HPXV; TNX-301 an
IND candidate for the treatment of alcohol use disorders, or AUD; and TNX-701, a biodefense development program for protection
from radiation injury. We hold worldwide development and commercialization rights to all of our product candidates.
TNX-102 SL – Posttraumatic
Stress Disorder Program
TNX-102 SL is a small,
rapidly disintegrating tablet containing cyclobenzaprine, or CBP, for sublingual administration and transmucosal absorption. TNX-102
SL has a proprietary, Protectic™ protective eutectic formulation of cyclobenzaprine that allows for rapid systemic exposure
and increased bioavailability through the transmucosal delivery. We are developing TNX-102 SL for the management of PTSD under
an IND cleared by the U.S. Food and Drug Administration, or FDA, in June 2014.
An estimated 8.6 million
adults in the U.S. suffer from PTSD, a chronic disorder that is characterized by hyperarousal, avoidance, emotional numbing, and
sleep disturbances. People with PTSD suffer significant impairment in their functioning, including occupational activities and
social relations, and are at elevated risk for impulsive, violent behaviors toward others and themselves, including suicide. Many
patients fail to adequately respond to the medications approved for PTSD. Antidepressants, sedative-hypnotics and antipsychotics
not approved for PTSD are commonly prescribed despite generally weak evidence in support of their use. Antianxiety drugs, also
called anxiolytics, are not approved for PTSD, but are commonly prescribed despite the recommendations against their use by many
experts. Anxiolytics are comprised of benzodiazepine and non-benzodiazepine drugs, which carry risks of tolerance and addiction
and are also associated with potential serious side-effects, such as retrograde amnesia.
Our Strategy
Our objective is to
develop and commercialize our product candidates. The principal components of our strategy are to:
|
•
|
Develop TNX-102 SL for PTSD
. We currently are
focusing on the development of TNX-102 SL for PTSD. Our broader development strategy is to leverage the patentable formulation
to explore the clinical potential of TNX-102 SL in multiple other central nervous system disorders that are underserved by
currently available medications and represent large unmet medical needs;
|
|
•
|
Maximize the commercial potential of TNX-102 SL
.
We plan to commercialize TNX-102 SL for PTSD, either on our own or through collaboration with partners. We believe TNX-102
SL can be marketed to U.S. physicians either by an internal sales force that we will build or by a contract sales organization,
which we would engage. An alternative strategy would be to enter into partnership agreements with drug companies that already
have significant marketing capabilities in the same, or similar, therapeutic areas. If we determine that such a strategy would
be more favorable than developing our own sales capabilities, we would seek to enter into collaborations with pharmaceutical
or biotechnology companies for the commercialization of TNX-102 SL;
|
|
•
|
Pursue a broad intellectual property strategy to protect
our product candidates
. We are pursuing a broad patent strategy for our product candidates, and we endeavor to generate
new patent applications as supported by our innovations and conceptions as well as to advance their prosecution. In the case
of TNX-102 SL, we own patents and patent applications protecting its composition-of-matter, certain methods of its use, its
formulation, and its pharmacokinetic properties. We recently received a Notice of Allowance from the U.S. Patent and Trademark
Office, or PTO, for patent claims the will protect the pharmaceutical eutectic composition of TNX-102 SL until 2034. We plan
to opportunistically apply for new patents to protect TNX-102 SL and our other product candidates;
|
|
•
|
Provide value propositions to merit market demand and
reimbursement for our product candidates
. We are designing the development programs for our product candidates to
demonstrate their value propositions to patients, prescribers, and third-party payors. In the case of TNX-102 SL, we have
been engaged in market research and commercial assessment activities, the results of which we may use to inform future commercial
strategy. We plan to continue these activities in tandem with our clinical development of TNX-102 SL and to conduct similar
work in relation to our other product candidates as they advance in their development; and
|
|
•
|
Pursue additional indications and commercial opportunities
for our product candidates
. We will seek to maximize the value of TNX-102 SL, and our other product candidates by
pursuing other indications and commercial opportunities for such candidates. For example, we own rights related to the development
and commercialization of CBP for fibromyalgia, generalized anxiety disorder, depression, and fatigue related to disordered
sleep.
|
Disease and Market Overview
Our product candidates
address disorders that are not well served by currently available therapies and represent large potential commercial market opportunities.
Background information on the disorders and related commercial markets that may be addressed by our clinical-stage product candidates
is set forth below.
Posttraumatic Stress Disorder
PTSD is a chronic
syndrome that may develop after a person is exposed to one or more traumatic events, such as warfare, sexual assault, serious
injury, or threat of imminent death. The core symptom clusters of PTSD are avoidance, emotional numbing, hyperarousal, and intrusion,
where the triggering event is commonly re-experienced by the individual through intrusive, recurrent recollections, flashbacks,
and nightmares. People with PTSD suffer significant impairment in their daily functioning, including occupational activities and
social relations, and are at elevated risk for impulsive violent behaviors toward others and themselves, including suicide. Of
those who experience significant trauma, approximately 20% of women and 8% of men develop PTSD. According to the U.S. Department
of Veterans Affairs, the prevalence rate of PTSD in the military population is higher than that among civilians. As of 2015, there
were approximately 638,000 veterans receiving treatment for PTSD in the Veterans Health Administration, or VHA. Based on March
2015 VHA data, more than 19% of military veterans involved in recent conflicts were seen at VHA facilities for potential or provisional
PTSD.
The medications currently
approved by the FDA for the treatment of PTSD show little evidence of a treatment effect in men, lack evidence of efficacy in
those for whom the traumatic event was combat-related, and carry suicidality warnings. Sleep disturbances are central features
of PTSD and are predictive of disease severity, depression, substance abuse, and suicidal ideation, yet are resistant to the approved
medications and present a difficult therapeutic challenge. Current PTSD treatments include off-label use of anxiolytics, sedative-hypnotics,
and antipsychotics, many of which lack reliable evidence of efficacy, and have significant safety liabilities and dependence risk.
TNX-102 SL
Overview
TNX-102 SL is a proprietary
sublingual tablet formulation of CBP that efficiently delivers CBP across the oral mucosal membrane into the systemic circulation.
We are developing TNX-102 SL for PTSD. We own all rights to TNX-102 SL in all geographies, and we bear no obligations to third-parties
for any future development or commercialization. Excipients used in TNX-102 SL are approved for pharmaceutical use. Some of the
excipients were specially selected to promote a local oral environment that facilitates mucosal absorption of CBP.
The current TNX-102
SL sublingual tablets contain 2.8 mg of CBP. For the treatment of PTSD, 5.6 mg of TNX-102 SL, comprised of two TNX-102 SL 2.8
mg tablets administered simultaneously at bedtime, is in Phase 3 development. We selected this dose with the goal of providing
a balance of efficacy, safety, and tolerability that would be acceptable as a first-line therapy and for long-term use, and in
patient populations characterized by burdensome symptoms and sensitivity to medications.
TNX-102 SL is a serotonin
2A and alpha-1 adrenergic receptor antagonist as well as an inhibitor of serotonin and norepinephrine reuptake, and we refer to
it as a Serotonin and Norepinephrine receptor Antagonist and Reuptake Inhibitor, or SNARI. In PTSD, both paroxetine and sertraline
are believed to exert their clinical benefit primarily by blocking serotonin reuptake. As such, TNX-102 SL acts upon cellular
receptors that play important roles in the treatment of PTSD, including the transporters that mediate serotonin and norepinephrine
reuptake. In addition, TNX-102 SL also acts upon other receptors in the central nervous system not targeted by products approved
for PTSD, including the serotonin 2A, alpha-1 adrenergic and histamine H-1 receptors.
CBP is the active
ingredient of two products that are approved in the U.S. for the treatment of muscle spasm: FLEXERIL
®
(oral immediate-release
tablet, 5 mg and 10 mg dosage forms) and AMRIX
®
(oral extended-release capsule, 15 mg and 30 mg dosage forms).
The FLEXERIL brand of cyclobenzaprine immediate-release tablet has been discontinued since May 2013. There are numerous generic
versions of cyclobenzaprine immediate-release tablets on the market. CBP-containing products are not indicated for the treatment
of PTSD. CBP-containing products are approved for short term use (two to three weeks) only as an adjunct to rest and physical
therapy for relief of muscle spasm associated with acute, painful musculoskeletal conditions. Immediate-release, or IR, CBP tablets
are recommended for three times per day dosing, which results in relatively stable blood levels of CBP after several days of treatment.
Extended-release CBP capsules taken once a day mimic, and flatten, the pharmacokinetic profile of three times per day immediate-release
CBP tablets.
We designed TNX-102
SL to be administered once-daily at bedtime and intended for long-term dosing regimen. We believe the selected dose of TNX-102
SL and its pharmacokinetic profile will enable it to achieve a desirable balance of efficacy, safety, and tolerability in PTSD.
Our Phase 1 comparative trials showed that, on a dose-adjusted basis, TNX-102 SL results in faster systemic absorption and significantly
higher plasma levels of CBP in the first hour following sublingual administration relative to oral immediate-release CBP tablets.
In clinical studies, TNX-102 SL 2.8 mg and TNX-102 SL 5.6 mg were generally well-tolerated, with no serious adverse events reported
in these studies. Some subjects experienced transient numbness of the tongue after TNX-102 SL administration.
We expect that any
applications we submit to the FDA for approval of TNX-102 SL will be submitted under Section 505(b)(2) of the Federal Food, Drug,
and Cosmetic Act, or FDCA, for product candidates containing an active ingredient that is similar or identical to an already approved
product. In general, the development timeline for a 505(b)(2) New Drug Application, or NDA, is shorter and less expensive than
an NDA developed under Section 505(b)(1), which is for new chemical entities, or NCEs, that have never been approved in the United
States. Currently, we are pursuing the development of TNX-102 SL for PTSD, for which TNX-102 SL is in Phase 3 development. We
believe that TNX-102 SL has the potential to provide clinical benefit to this and possibly other CNS indications that are underserved
by currently marketed products.
On March 10, 2017,
we received a notice of allowance for the US patent application No. 14/214,433 “Eutectic Formulations of Cyclobenzaprine
Hydrochloride and Amitriptyline Hydrochloride”, which includes compositions of cyclobenzaprine HCl and methods of manufacturing
the eutectic. The allowed claims will protect the pharmaceutical composition, since it is based on the eutectic. The allowed claims
will also protect the method of manufacturing the eutectic. Eutectic tablets containing cyclobenzaprine HCl and mannitol eutectic
have good pharmaceutical stability and manufacturability. A solid eutectic is a form of matter in which two solid crystals co-penetrate
each other, such that the inter-molecular space between the units of one crystal lattice are occupied by the other crystal’s
lattice. The distance between the molecular units is not changed. A Notice of Allowance signifies that we will be entitled to
receive patent protection until 2034 in the U.S. for the allowed claims when the patent is issued.
TNX-102 SL – PTSD Program
We are developing
TNX-102 SL for the treatment of PTSD under an effective IND application.
Clinical Development Plan
Phase 2 AtEase Study
In the first quarter
of 2015, we commenced a randomized, double-blind, placebo-controlled, 12-week Phase 2 study of TNX-102 SL in patients with military-related
PTSD, which we refer to as the AtEase study. We reported topline results from the AtEase study in May 2016. In the AtEase study,
patients were randomized in a 2:1:2 ratio to TNX-102 SL 2.8 mg, TNX-102 SL 5.6 mg, or placebo sublingual tablets at bedtime daily
for 12 weeks. This study was conducted at 24 U.S. centers and enrolled 231 patients in the modified intent-to-treat population.
The primary objective of the AtEase study was to evaluate the potential clinical benefit of using TNX-102 SL to treat military-related
PTSD at a dose of 2.8 mg or 5.6 mg. The primary efficacy endpoint was the 12-week mean change from baseline in the severity of
PTSD symptoms as measured by the Clinician-Administered PTSD Scale for the Diagnostic and Statistical Manual-5, or CAPS-5, between
those treated with TNX-102 SL and those receiving placebo. The CAPS-5 scale is a standardized structured clinician interview and
is considered the gold standard in clinical research and regulatory approval for measuring the symptom severity of PTSD.
AtEase was adequately
designed to evaluate whether a 2.8 mg dose would be efficacious, which would have provided an opportunity for this study to be
used as one of the two pivotal efficacy studies required to support approval of TNX-102 SL for the treatment of PTSD. Although
the 2.8 mg dose trended in the direction of a therapeutic effect, it did not reach statistical significance on the primary endpoint.
The 5.6 mg dose had a therapeutic effect as assessed by the CAPS-5 scale, which was statistically significant by Mixed-effect
Model Repeated Measures, or MMRM, with Multiple Imputation, or MI, analysis (p-value = 0.031), even though this arm of the study,
by design, included only approximately half the number of patients of the 2.8 mg and placebo arms. TNX-102 SL 5.6 mg demonstrated
a dose-effect on multiple efficacy and safety measurements in the AtEase study.
In the AtEase study,
TNX-102 SL was well tolerated and the patient retention rate was 73% on placebo, 79% on TNX-102 SL 2.8 mg and 84% on TNX-102 SL
5.6 mg. Four distinct serious adverse events, or SAEs, were reported in the study; three were in the placebo group, and one (proctitis/peri-rectal
abscess) in the TNX-102 SL arm, which was determined to be unrelated to TNX-102 SL. The most common non-dose related adverse events
were mild and transient local administration site conditions and of these oral hypoaesthesia, or numbness, was the most frequent
and occurred in 39% of patients treated with the 2.8 mg dose and 36% of the patients treated with the 5.6 mg dose, compared to
2% of the patients receiving placebo. Oral paresthesia, or tingling, occurred in 16% of patients treated with the 2.8 mg dose
and 4% of patients treated with the 5.6 mg dose, compared to 3% of the patients receiving placebo. Glossodynia, or a burning or
stinging sensation in the mouth, occurred in 3% of patients treated with the 2.8 mg dose and 6% of patients treated with the 5.6
mg dose, compared to 1% of patients receiving placebo. Systemic adverse events that were potentially dose-related and occurred
in greater than or equal to 5% of patients treated with the 5.6 mg dose or placebo included: somnolence in 16% versus 6% of the
patients receiving placebo; dry mouth in 16% versus 11% of the patients receiving placebo; headache in 12% versus 4% of the patients
receiving placebo; insomnia in 6% versus 9% of the patients receiving placebo; sedation in 12% versus 1% of the patients receiving
placebo; upper respiratory tract infection in 4% versus 5% of the patients receiving placebo; abnormal dreams in 2% versus 5%
of the patients receiving placebo; and weight increase in 2% versus 5% of the patients receiving placebo. For the patients treated
with the 2.8 mg dose, the incidence of the most common systemic adverse events reported above were less frequent than patients
treated with the 5.6 mg dose with the exception of insomnia, which was 8%.
Open-label Extension Study for AtEase
Patients who completed
the AtEase study were eligible to enroll into a three-month open-label extension study with TNX-102 SL 2.8 mg. We conducted this
open-label extension study to obtain additional safety information from patients in the AtEase Study. The clinical phase of this
open-label extension study is complete. TNX-102 SL 2.8 mg was well tolerated for up to six months of treatment and no new safety
signals were revealed in this open-label extension study.
Ongoing Phase 3 Study
We
have commenced a randomized, double-blind placebo-controlled Phase 3 study of TNX-102 SL in approximately 550 patients with military-related
PTSD in the first quarter of 2017. This first Phase 3 study, the “HONOR study,” is an adaptive design study based
on the results of the Phase 2 AtEase study. The study design is very similar to the Phase 2 AtEase study
,
except
there will be one planned interim analysis and the involvement of an independent data monitoring committee, or IDMC, to review
unblinded interim analysis results. The IDMC will make a recommendation to continue as planned, to continue but increase the number
of recruited patients or to stop for success. In addition, there will be one active dose (5.6 mg administered as 2 x 2.8 mg tablets)
and the entrance criterion is CAPS-5 ≥ 33 in this Phase 3 study.
The interim analysis
will be conducted when approximately 50% (approximately 250 – 300 patients) of the initially planned patient enrollment
is evaluable for efficacy. We received FDA acceptance of the Phase 3 HONOR study design in January of 2017. The HONOR study involves
approximately 35 U.S. centers. As in the case of the AtEase study, the primary efficacy endpoint of the HONOR study is the 12-week
mean change from baseline in the severity of PTSD symptoms as measured by the CAPS-5 scale between those treated with TNX-102
SL 5.6 mg and those receiving placebo.
Prospective Phase 3 Study
A second, randomized,
double-blind placebo-controlled Phase 3 study of TNX-102 SL in approximately 550 predominantly civilian PTSD patients will follow.
We expect this study to be conducted at approximately 35 U.S. centers. As in the case of the HONOR and AtEase studies, the primary
efficacy endpoint of this second Phase 3 study will be the 12-week mean change from baseline in the severity of PTSD symptoms
as measured by the CAPS-5 scale between those treated with TNX-102 SL 5.6 mg and those receiving placebo.
Long-Term Safety Exposure Study
for TNX-102 SL 5.6 mg
We plan to conduct
the registration-required open-label extension studies of TNX-102 SL 5.6 mg in patients who complete either the HONOR study or
the predominantly civilian PTSD Phase 3 study. The goal of the open-label extension studies is to obtain adequate 6- and 12-month
safety exposure data from the maximum therapeutic dose to support the registration of TNX-102 SL for the treatment of PTSD, a
chronic psychiatric condition.
Regulatory Update
Subsequent to reporting the Phase 2 AtEase study topline result, we held an End-of-Phase 2/Pre-Phase 3 meeting
with the FDA in early August 2016 to discuss the Phase 3 program required to support the registration of TNX-102 SL 5.6 mg for
the treatment of PTSD and the remaining data package for the NDA filing. Based on this meeting discussion and the official FDA
meeting minutes, we expect that positive results from two adequate, well-controlled Phase 3 efficacy and safety studies and long-term
(six- and 12-month) safety exposure studies would provide sufficient evidence of efficacy and safety to support the clinical approval
of TNX-102 SL 5.6 mg for the treatment of PTSD.
As described
below, the first Phase 3 study will be in patients with military-related PTSD and the second Phase 3 study will study predominately
civilian PTSD patients.
We held an End-of-Phase
2 Chemistry, Manufacturing and Controls, or CMC, meeting with the FDA in February 2016 to discuss the quality data requirement
for an NDA submission for TNX-102 SL. In general, our proposed NDA CMC plan for TNX-102 SL was acceptable to the FDA and can be
applied to the PTSD NDA.
In December 2016,
the FDA granted Breakthrough Therapy designation to TNX-102 SL for the treatment of PTSD. The Breakthrough Therapy designation
request was based on the preliminary clinical evidence of TNX 102-SL on military-related PTSD in the AtEase study.
Breakthrough
Therapy designation is intended to expedite the development and review of drugs for serious or life-threatening conditions. The
benefits of Breakthrough Therapy designation include the eligibility for priority review of the NDA within six months instead
of 10 months and rolling submission of portions of the NDA, in addition to an organizational commitment involving FDA's senior
managers contributing significant guidance. The FDA is committing to provide us timely advice and interactive communications related
to the design and efficient execution of our drug development program.
In
March 2017, we held the Initial Cross-Disciplinary Breakthrough Therapy Type B meeting with the FDA to discuss the
opportunity to accelerate the development and submission of the TNX-102 SL NDA for the treatment of PTSD.
Based
on our discussions with the FDA and the FDA official meeting minutes, a single-study NDA approval could be possible based on
topline data from the ongoing HONOR study. Additionally, due to the lack of evidence of potential abuse in clinical studies
of TNX-102 SL, the FDA agreed that studies in assessing abuse potential of TNX-102 SL are not required to support the TNX-102
SL NDA.
Other NDA Requirements
An Agreed Initial
Pediatric Study Plan, or Agreed iPSP, is required for the initial NDA submission. We submitted an Agreed iPSP in the first quarter
of 2017, which incorporated the FDA comments received on our Initial Pediatric Study Plan submitted in the third quarter of 2016.
A Final Pediatric Study Plan requirement will be determined at the time of the NDA approval.
Based on our
discussions with the FDA and the FDA official meeting minutes, we will not have to conduct special populations (geriatric and
renal/hepatic impaired), drug-drug interaction or cardiovascular safety studies to support the NDA filing. Due to the
well-established safety profile of CBP at much higher doses than we proposed for PTSD and the long-term safety data (up to 15
months) on TNX-102 SL 2.8 mg in a prior fibromyalgia program, the FDA has not requested a risk management plan or medication
guide for this product. Similarly, no drug abuse and dependence study is required for this NDA.
Phase 1 Bioequivalence, Bridging
PK, Food-Effect and Dose-Proportionality Studies
Completed Bioequivalence Study
We completed a Phase
1 bioequivalence study that compared the pharmacokinetic profiles of single-dose of TNX-102 SL 2.8 mg tablets manufactured at
two facilities: (i) the facility used to produce TNX-102 SL 2.8 mg tablets for the Phase 2 AtEase study; and (ii) the facility
used to produce TNX-102 SL 2.8.mg tablets for our clinical studies required to support the PTSD NDA submission and the to-be-marketed
product. This bioequivalence study demonstrated that the TNX-102 SL 2.8 mg tablets manufactured at these two facilities were bioequivalent,
supporting the use of the AtEase study to support the Phase 3 studies.
Planned Multi-dose Bridging PK Study
We intend to seek
FDA marketing approval for TNX-102 SL pursuant to Section 505(b)(2) of the FDCA using AMRIX extended-release capsules (30 mg)
as our reference listed drug, or RLD. As agreed upon by the FDA, we plan to study TNX-102 SL 5.6 mg (two 2.8 mg tablets) in comparison
to AMRIX 30 mg extended-release capsules in a multiple-dose bridging PK study to provide a systemic exposure bridge. If the exposures
of TNX-102 SL (2 x 2.8 mg tablets) are less than the RLD maximum approved dose (30 mg) for the initial dose and at steady state,
the results of this study will provide the necessary systemic exposure bridge of TNX-102 SL 5.6.mg to AMRIX 30 mg extended-release
capsules and the approval of TNX-102 SL for PTSD can rely on the safety findings (clinical and nonclinical) of the currently approved
cyclobenzaprine drug products.
Food Effect and Dose-proportionality
Studies
To support the TNX-102
SL product registration, a randomized, open-label, 2-way crossover, food-effect, comparative bioavailability study of TNX-102
SL following a single dose in healthy subjects under fasting and fed conditions and a randomized, open-label, 2-way crossover,
dose-proportionality, comparative bioavailability study of TNX-102 SL following a single dose in healthy subjects under fasting
conditions will be completed for the TNX-102 SL NDA submission.
TNX-102 SL Nonclinical Development
The FDA has accepted
our proposed nonclinical data package to support our PTSD NDA filing. In October 2016, we completed the six-month repeated-dose
toxicology study of TNX-102 in rats and a nine-month repeated-dose toxicology study in dogs required for the NDA filing and to
support Phase 3 clinical studies outside the U.S., if necessary. These chronic toxicity studies were requested by the FDA to augment
the nonclinical information in the AMRIX approved prescribing information, or labeling, which is necessary to support the TNX-102
SL labeling for long-term use. Based on the prescribing information of AMRIX and the post-marketing surveillance information,
there is no evidence of abuse for cyclobenzaprine. As a result, the FDA has advised that we will not have to assess the abuse
potential of TNX-102 SL to support the TNX-102 SL 505(b)(2) NDA submission for the treatment of PTSD.
Manufacturing
The TNX-102 SL drug
product was manufactured in a small-scale current Good Manufacturing Practice, or cGMP, facility that is licensed to manufacture
clinical trial materials, but not equipped for large-scale commercial production. For the HONOR study, the predominantly civilian
PTSD Phase 3 study and for the commercial product, we have engaged a commercial cGMP facility that is capable of manufacturing
the registration batches to support the NDA. The product’s comparability is supported by the bioequivalence results of the
single-dose pharmacokinetic study.
Additional Product Candidates
We also have a pipeline
of other drug and biologic candidates, including two pre-IND candidates, TNX-601 for PTSD and TNX-801, a biologic vaccine product
for the prevention of smallpox, as well as an IND candidate, TNX-301, a potential treatment for AUD.
TNX-601
TNX-601 is a novel
oral formulation of tianeptine oxalate in the pre-IND stage of development for the treatment for PTSD. Currently there is no tianeptine-containing
product approved in the U.S., but tianeptine sodium (amorphous) has been marketed in Europe, Asia, and Latin America for the treatment
of depression since 1987. It is effective in various depressive states and also improves depression-associated anxiety and somatic
complaints. We have discovered a novel oxalate salt and polymorph, which we believe may provide improved stability, consistency,
and manufacturability relative to the known forms of tianeptine. Like cyclobenzaprine, tianeptine shares structural similarities
with classic tricyclic antidepressants, but it has unique pharmacological and neurochemical properties. Tianeptine modulates the
glutamatergic system indirectly and reverses the neuroplastic changes that are observed during periods of stress and corticosteroid
use. It is a weak mu-opioid receptor (MOR) agonist, but does not have significant affinity for other known neurotransmitter receptors.
Due to its use in Europe, Asia, and Latin America for several decades, tianeptine has an established safety profile. In addition
to being used to treat depression, several published studies support the potential of tianeptine as a potentially effective and
safe therapy for patients with PTSD. Leveraging our development expertise in PTSD, TNX-601 is being developed for daytime usage
as a first-line monotherapy for PTSD. Tianeptine’s reported pro-cognitive and anxiolytic effects as well as its ability
to attenuate the neuropathological effects of excessive stress responses suggest that it may be used to treat PTSD by a different
mechanism of action than TNX-102 SL.
On April 19, 2016,
we were issued US patent 9,314,469 B2 “Method for treating neurocognitive dysfunction,” which includes using tianeptine
for cognitive dysfunction associated with corticosteroid use. We intend to develop TNX-601 under Section 505(b)(1) of the FDCA
as a potential treatment for PTSD and cognitive dysfunction associated with corticosteroid use. Pharmaceutical development work
on TNX-601 has been initiated.
TNX-801
TNX-801 is a novel
potential smallpox-preventing vaccine based on a live synthetic version of HPXV grown in cell culture. TNX-801 was synthesized
by Professor David Evans and Dr. Ryan Noyce at the University of Alberta, Canada in collaboration with us. HPXV has protective
vaccine activity in mice, using a model of lethal vaccinia infection. Vaccine manufacturing activities have been initiated to
support further nonclinical testing of TNX-801. We are developing TNX-801 as a potential smallpox-preventing vaccine for widespread
immunization and for the U.S. strategic national stockpile. Though it shares structural characteristics with vaccinia-based vaccines,
TNX-801 has unique virulence properties that we believe may suggest lower toxicity and potential safety advantages over existing
vaccinia-based vaccines, which have been associated with adverse side effects such as myopericarditis.
We intend to develop
TNX-801 under 21 CFR 601 Subpart H, pursuant to which the FDA may grant marketing approval for a biological product for which
safety has been established in humans and for which the requirements for efficacy are met based on adequate and well-controlled
animal studies, where human studies are not ethical or feasible. This approval pathway has been described as the “Animal
Rule”. In the 1970s, vaccination against smallpox was discontinued in the U.S.; however, smallpox remains a material threat
to national security. We recently filed a patent on the novel virus vaccine. In addition, 12 years of non-patent based exclusivity
is expected under the Patient Protection and Affordable Care Act. Following the recent passage of the 21st Century Cures Act,
we believe TNX-801 qualifies as a medical countermeasure, and therefore should be eligible for a Priority Review Voucher upon
FDA approval. We are currently working to develop a vaccine that meets cGMP quality to support an IND.
TNX-301
TNX-301 is a fixed-dose
combination drug product, or CDP, containing two FDA-approved drugs, disulfiram and selegiline. We intend to develop TNX-301 CDP
under Section 505(b)(2) of the FDCA as a potential treatment for AUD, and we have commenced development work on TNX-301 formulations.
A pre-IND meeting was held in February 2016 to discuss the clinical development program of TNX-301 for AUD. At that meeting, the
FDA advised us of the nonclinical studies required for this CDP IND application to support the initiation of the first-in-man
study with TNX-301. IND planning activities are underway.
TNX-701
In addition, we own
rights to intellectual property on a biodefense technology relating to the development of protective agents against radiation
exposure, which we refer to as TNX-701. We have begun nonclinical research and development on TNX-701. Similar to the regulatory
pathway intended for TNX-801, we plan to develop TNX-701 under 21 CFR 601 Subpart H, or the “Animal Rule”. We expect
significant reduction in development costs and risks compared to the development of other NCEs or new biologic candidates.
Competition
Our industry is highly
competitive and subject to rapid and significant technological change. Our potential competitors include large pharmaceutical
and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and
research institutions. We believe that key competitive factors that will affect the development and commercial success of our
product candidates are efficacy, safety, tolerability, reliability, price and reimbursement level. Many of our potential competitors,
including many of the organizations named below, have substantially greater financial, technical and human resources than we do
and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory
approvals of products and the commercialization of those products. Accordingly, our competitors may be more successful than we
may be in obtaining FDA approval for drugs and achieving widespread market acceptance. Our competitors’ drugs may be more
effective, or more effectively marketed and sold, than any drug we may commercialize and may render our product candidates obsolete
or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. We anticipate
that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available.
Further, the development of new treatment methods for the conditions we are targeting could render our drugs non-competitive or
obsolete.
The markets for medicines
to treat PTSD and other CNS conditions are well developed and populated with established drugs marketed by large and small pharmaceutical,
biotechnology and generic drug companies. GlaxoSmithKline (Paxil
®
) and Pfizer (Zoloft
®
) market FDA-approved
drugs for PTSD. Paxil and Zoloft lost their U.S. patent exclusivities in 2003 and 2006, respectively.
Certain other companies and institutions are known to be developing prescription medications for PTSD, including
Bionomics (BNC-201), Otsuka/Lundbeck (Rexulti
®
[brexpiprazole]), Uniformed Services University of the Health Sciences
(riluzole) and the Multidisciplinary Association of Psychedelic Studies (
methylenedioxymethamphetamine
[MDMA]). BNC-201 is in Phase 2 for civilian PTSD and is an allosteric modulator of the
alpha
7 nicotinic acetylcholine receptor.
Rexulti is in Phase 2 for PTSD and is an atypical antipsychotic. Riluzole is in a Phase 2 trial for active duty military members
and veterans with PTSD and is a blocker of certain sodium channels and a modulator of the glutamatergic system. MDMA is Phase 3
ready for PTSD and is a Drug Enforcement Administration, or DEA, schedule 1 hallucinogen that is being studied for drug-assisted
psychotherapy. Brainsway Ltd., a medical device company, is currently recruiting patients for a pivotal Phase 3 trial using a deep
transcranial magnetic stimulation device. A number of other companies have or may be developing prescription medications for PTSD,
including Actavis, Johnson and Johnson, Marinus Pharmaceuticals, Merck, and Pfizer. Medications that are used off-label for the
treatment of PTSD include: anti-depressants, such as nefazodone and trazodone; the antihistamine cyproheptadine; and certain atypical
antipsychotics, such as olanzapine and risperidone. Additionally, a number of companies are working on vaccines/treatments for
smallpox, including Bavarian Nordic, SIGA and Chimerix. Bavarian Nordic is developing Modified Virus Ankara, or MVA, which is a
vaccine. SIGA is developing Arestvy
®
(tecovirimat), which is an antiviral. Chimerix is developing brincidofovir
(CMX001), which is an antiviral.
Intellectual Property
We believe that we have an extensive patent portfolio and substantial know-how relating to TNX-102 SL and
our other product candidates. Our patent portfolio, described more fully below, includes claims directed to TNX-102 SL compositions
and methods of use.
As of March 31, 2017, the patents
we are either the owner of record of or own the contractual right to include three issued U.S. patents and 16 issued non-U.S. patents.
We are actively pursuing an additional 15 U.S. patent applications, of which four are provisional and 11 are non-provisional, one
international patent application, and 71 non-U.S./non-international patent applications.
We strive to protect
the proprietary technology that we believe is important to our business, including our proprietary technology platform, our product
candidates, and our processes. We seek patent protection in the United States and internationally for our products, their methods
of use and processes of manufacture, and any other technology to which we have rights, where available and when appropriate. We
also rely on trade secrets that may be important to the development of our business.
Our success will depend
on 1) the ability to obtain and maintain patent and other proprietary rights in commercially important technology, inventions
and know-how related to our business, 2) the validity and enforceability of our patents, 3) the continued confidentiality of our
trade secrets, and 4) our ability to operate without infringing the valid and enforceable patents and proprietary rights of third
parties. We also rely on continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary
position.
We cannot be certain
that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications
we may own or license in the future, nor can we be certain that any of our existing patents or any patents we may own or license
in the future will be useful in protecting our technology. For this and more comprehensive risks related to our intellectual property,
please see “Risk Factors — Risks Relating to Our Intellectual Property.”
The term of individual
patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we
file, the patent term is 20 years from the date of filing the first non-provisional priority application. In the United States,
a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the
PTO in granting a patent, or may be shortened if a patent is terminally disclaimed over another patent.
The term of a U.S.
patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration
as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Amendments permit a patent
term extension of up to five years beyond the statutory 20-year term of the patent for the approved product if the active ingredient
has not been previously approved in the U.S. The length of the patent term extension is related to the length of time the drug
is under regulatory review. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from
the date of product approval and only one patent applicable to an approved drug may be extended. Similar provisions are available
in Europe and some other foreign jurisdictions to extend the term of a patent that covers an approved drug. When possible, depending
upon the length of clinical trials and other factors involved in the filing of a new drug application, or NDA, we expect to apply
for patent term extensions for patents covering our product candidates and their methods of use.
The patent portfolios
for our proprietary technology platform and our three most advanced product candidates as of March 31, 2017 are summarized below.
TNX-102 SL — CNS
Our patent portfolio
for TNX-102 SL includes patent applications directed to compositions of matter of CBP, formulations containing CBP, and methods
for treating CNS conditions utilizing these compositions and formulations. U.S. Patent No. 9,474,728 is expected to expire in
2031, excluding any patent term extensions.
Certain eutectic
compositions were discovered by development partners and are termed the “Eutectic Technology.” The patent portfolio
for TNX-102 SL relating to the Eutectic Technology includes patent applications directed to eutectic compositions containing CBP,
eutectic CBP formulations, methods for treating PTSD and other CNS conditions utilizing eutectic CBP compositions and formulations,
and methods of manufacturing eutectic CBP compositions. The Eutectic Technology patent portfolio includes U.S. patent applications,
such as U.S. Patent Application No. 14/214,433. If U.S. and non-U.S. patents claiming priority from those applications issue,
those patents would expire in 2034 or 2035, excluding any patent term adjustments or extensions.
On March 10, 2017,
we received a notice of allowance from the PTO for the US patent No. 14/214,433 “Eutectic Formulations of Cyclobenzaprine
Hydrochloride and Amitriptyline Hydrochloride,” which includes compositions of cyclobenzaprine HCl and methods of manufacturing
the eutectic. The allowed claims will protect the pharmaceutical composition since it is based on the eutectic. The allowed claims
will also protect the method of manufacturing the eutectic. Eutectic tablets containing cyclobenzaprine HCl and mannitol eutectic
have good pharmaceutical stability and manufacturability. A solid eutectic is a form of matter in which two solid crystals co-penetrate
each other, such that the inter-molecular space between the units of one crystal lattice are occupied by the other crystal lattice.
The distance between the molecular units is not changed.
The unique pharmacokinetic
profile of TNX-102 SL was discovered by Tonix and its development partners and is termed the “PK Technology.” The
patent portfolio for TNX-102 SL relating to the PK Technology includes patent applications directed to compositions of matter
of CBP, formulations containing CBP, and methods for treating PTSD and other CNS conditions utilizing these compositions and formulations.
The PK Technology patent portfolio includes U.S. Patent Application No. 13/918,692. If U.S. and non-U.S. patents claiming priority
from those applications issue, those patents would expire in 2033, excluding any patent term adjustments or extensions.
TNX-601 — PTSD
Our patent portfolio
for tianeptine oxalate includes U.S. provisional Patent Application No. 62/439,533. It includes claims directed to composition,
including pharmaceutical compositions, and methods of use.
TNX-801 — Live HPXV Vaccine for Prevention of Smallpox
We own the rights
to develop a potential biodefense technology, TNX-801, a live HPXV that is a new vaccine candidate against smallpox. We have patent
applications directed to synthetic chimeric poxviruses and methods of using these poxviruses to protect individuals against smallpox.
These applications include U.S. provisional Patent Application Nos. 62/416,577 and 62/434,794. We also own the rights to develop
some different vaccine candidates against smallpox. With respect to this smallpox vaccine candidate, we own U.S. non-provisional
Patent Application No. 14,207,727 and related intellectual property rights. The smallpox vaccine technologies relate to proprietary
forms of live HPXV and vaccinia vaccines which may be safer than ACAM2000, the only currently available replication competent,
live vaccinia vaccine to protect against smallpox disease. We believe that this technology, after further development, may be
of interest to biodefense agencies in the U.S. and other countries.
TNX-301 — Alcohol
Use Disorders
Our patent portfolio
for disulfiram and selegiline combinations includes patents and patent applications. It includes claims directed to disulfiram
and selegiline, pharmaceutical compositions containing disulfiram and selegiline, disulfiram and selegiline formulations, methods
of treating AUD, and methods of modulating alcohol abuse and dependence. It includes issued U.S. Patent Nos. 8,093,300 and 8,481,599.
The patent expiring last is expected to expire in 2024, excluding any patent term extensions.
TNX-701 — Radioprotection Biodefense Technology
We own the rights
to develop a potential biodefense technology, which is a potential radioprotective therapy. For protection of intellectual property,
we have not disclosed the identity of the new development candidate.
Trade Secrets
In addition to patents,
we rely on trade secrets and know-how to develop and maintain our competitive position. For example, significant aspects of our
proprietary technology platform are based on unpatented trade secrets and know-how. Trade secrets and know-how can be difficult
to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention
assignment agreements with our employees, consultants, scientific advisors, contractors, and commercial partners. These agreements
are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership
of technologies that are developed through a relationship with a third party. We also seek to preserve the integrity and confidentiality
of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information
technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures
may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known
or be independently discovered by competitors. To the extent that our contractors use intellectual property owned by others in
their work for us, disputes may arise as to rights in related or resulting inventions and know-how.
Issued Patents
Our current patents
owned include:
Sublingual Cyclobenzaprine/Amitriptyline
Patent No.
|
|
Title
|
|
Country / Region
|
|
Expiration
Date
|
631144
|
|
Compositions and Methods for Transmucosal Absorption
|
|
New Zealand
|
|
June 14, 2033
|
Depression Treatment
Patent No.
|
|
Title
|
|
Country / Region
|
|
Expiration
Date
|
2012225548
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
Australia
|
|
March 6, 2032
|
614725
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
New Zealand
|
|
March 6, 2032
|
Neurocognitive Dysfunction Treatment
Patent No.
|
|
Title
|
|
Country / Region
|
|
Expiration
Date
|
9,314,469
|
|
Method for Treating Neurocognitive Dysfunction
|
|
U.S.A.
|
|
September 24, 2030
|
AUD Treatment
Patent No.
|
|
Title
|
|
Country
/ Region
|
|
Expiration
Date
|
8,093,300
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
U.S.A.
|
|
May 23, 2024
|
8,481,599
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
U.S.A.
|
|
Nov. 4, 2022
|
2002354017
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
Australia
|
|
Nov. 4, 2022
|
2463987
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
Canada
|
|
Nov. 4, 2022
|
1441708
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
Austria, Belgium, Denmark, France, Germany, Luxembourg, Monaco,
Portugal, Switzerland, U.K.
|
|
Nov. 4, 2022
|
532583
|
|
Compositions and Methods for Increasing Compliance with Therapies
Using Aldehyde Dehydrogenase Inhibitors and Treating Alcoholism
|
|
New Zealand
|
|
Nov. 4, 2022
|
Pending Patent Applications
Our current pending
patent applications are as follows:
Cyclobenzaprine/Amitriptyline Eutectics
Application No.
|
|
Title
|
|
Country / Region
|
14/214,433
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
U.S.A.
|
15/459,093
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
U.S.A.
|
14/776,624
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
U.S.A.
|
15/511,287
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
U.S.A.
|
2014233277
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Australia
|
BR112015022095-9
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Brazil
|
112017005231-8
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Brazil
|
2,904,812
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Canada
|
Not Yet Assigned
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Canada
|
201480024011.1
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
China
|
Not Yet Assigned
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
China
|
14762323.5
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Europe
|
16106690.2
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Hong Kong
|
P-00 2015 06570
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Indonesia
|
241353
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Israel
|
251218
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Israel
|
3392/KOLNP/2015
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
India
|
2016-503239
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Japan
|
Not Yet Assigned
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Japan
|
MX/a/2015/012622
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Mexico
|
Not Yet Assigned
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Mexico
|
PI 2015703142
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Malaysia
|
PI 2017700889
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Malaysia
|
631152
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
New Zealand
|
730061
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
New Zealand
|
730379
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
New Zealand
|
517381123
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Saudi Arabia
|
515361124
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Saudi Arabia
|
11201507124X
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Singapore
|
11201701995P
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
Singapore
|
2015/07443
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
South Africa
|
2017/01637
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
South Africa
|
103109816
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Taiwan
|
2014-000391
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride and Amitriptyline
Hydrochloride
|
|
Venezuela
|
PCT/US2015/051068
|
|
Eutectic Formulations of Cyclobenzaprine Hydrochloride
|
|
PCT
|
Sublingual Cyclobenzaprine/Amitriptyline
Application No.
|
|
Title
|
|
Country / Region
|
13/918,692
|
|
Compositions and Methods for Transmucosal Absorption
|
|
U.S.A.
|
P20130102101
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Argentina
|
2013274003
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Australia
|
BR112014031394-6
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Brazil
|
2,876,902
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Canada
|
201380039522.6
|
|
Compositions and Methods for Transmucosal Absorption
|
|
China
|
13804115.7
|
|
Compositions and Methods for Transmucosal Absorption
|
|
European Patent Office
|
2013/24661
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Gulf Cooperation Council
|
1515110186.6
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Hong Kong
|
P-00 2015 00202
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Indonesia
|
236268
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Israel
|
139/KOLNP/2015
|
|
Compositions and Methods for Transmucosal Absorption
|
|
India
|
2015-517469
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Japan
|
MX/a/2014/015436
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Mexico
|
PI 2014703784
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Malaysia
|
726488
|
|
Compositions and Methods for Transmucosal Absorption
|
|
New Zealand
|
10201605407T
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Singapore
|
102121267
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Taiwan
|
2013-000737
|
|
Compositions and Methods for Transmucosal Absorption
|
|
Venezuela
|
2015/00288
|
|
Compositions and Methods for Transmucosal Absorption
|
|
South Africa
|
PTSD Treatment
Application No.
|
|
Title
|
|
Country / Region
|
12/948,828
|
|
Methods and Compositions for Treating Symptoms Associated with
Post-Traumatic Stress Disorder Using Cyclobenzaprine
|
|
U.S.A.
|
10831895.7
|
|
Methods and Compositions for Treating Symptoms Associated with
Post-Traumatic Stress Disorder Using Cyclobenzaprine
|
|
European Patent Office
|
13103530.6
|
|
Methods and Compositions for Treating Symptoms Associated with
Post-Traumatic Stress Disorder Using Cyclobenzaprine
|
|
Hong Kong
|
Sleep Disorder Treatment
Application No.
|
|
Title
|
|
Country / Region
|
15/266,035
|
|
Methods and Compositions for Treating Fatigue Associated with
Disordered Sleep Using Very Low Dose Cyclobenzaprine
|
|
U.S.A.
|
Esreboxetine for Fibromyalgia
Application No.
|
|
Title
|
|
Country / Region
|
62/430,864
|
|
Salts and Polymorphs of Esreboxetine for the treatment of Fibromyalgia
|
|
U.S.A.
|
Tianeptine for PTSD
Application No.
|
|
Title
|
|
Country / Region
|
62/439,533
|
|
Tianeptine Oxalate Salts and Polymorphs
|
|
U.S.A.
|
Novel Smallpox Vaccines
Application No.
|
|
Title
|
|
Country / Region
|
14/207,727
|
|
Novel Smallpox Vaccines
|
|
U.S.A.
|
Synthetic Chimeric Poxviruses
Application No.
|
|
Title
|
|
Country / Region
|
62/416,577
|
|
Synthetic Chimeric Poxviruses
|
|
U.S.A.
|
62/434,794
|
|
Synthetic Chimeric Poxviruses
|
|
U.S.A.
|
Depression Treatment
Application No.
|
|
Title
|
|
Country / Region
|
13/412,571
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
U.S.A.
|
2016222412
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
Australia
|
2,829,200
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
Canada
|
12755254.5
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
European Patent Office
|
2013-557811
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
Japan
|
2016-7041
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
Japan
|
714294
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
New Zealand
|
730065
|
|
Methods and Compositions for Treating Depression Using Cyclobenzaprine
|
|
New Zealand
|
Cocaine Addiction Treatment
Application No.
|
|
Title
|
|
Country / Region
|
13/820,338
|
|
Treatment for Cocaine Addiction
|
|
U.S.A.
|
2809966
|
|
Treatment for Cocaine Addiction
|
|
Canada
|
2011314358
|
|
Treatment for Cocaine Addiction
|
|
Australia
|
2611440
|
|
Treatment for Cocaine Addiction
|
|
Austria, Belgium, Portugal, Denmark, Switzerland, European Patent
Office
|
2013-527062
|
|
Treatment for Cocaine Addiction
|
|
Japan
|
10-2013-7008187
|
|
Treatment for Cocaine Addiction
|
|
Republic of Korea
|
13114135.2
|
|
Treatment for Cocaine Addiction
|
|
Hong Kong
|
Neurocognitive Dysfunction Treatment
Application No.
|
|
Title
|
|
Country / Region
|
15/064,196
|
|
Method for Treating Neurocognitive Dysfunction
|
|
U.S.A.
|
09743321.2
|
|
Method for Treating Neurodegenerative Dysfunction
|
|
European Patent Office
|
2723688
|
|
Method for Treating Neurodegenerative Dysfunction
|
|
Canada
|
Trademarks and Service Marks
We seek trademark
and service mark protection in the United States and outside of the United States where available and when appropriate. We are
the owner of the following U.S. federally registered marks: TONIX PHARMACEUTICALS (Reg. No. 4656463, issued December 16, 2014)
and TONMYA (Reg. No. 4868328, issued December 8, 2015).
We are the owner of
the following marks for which applications for U.S. federal registration are currently pending: FYMRALIN (Serial No. 86/516046,
filed January 27, 2015), MODALTIN (Serial No. 86/631228, filed May 15, 2015), RAPONTIS (Serial No. 86/631236, filed May 15, 2015),
IMADAZIO (Serial No. 86/631242, filed May 15, 2015), PROTECTIC (Serial No. 86/636119, filed May 20, 2015), TONIX PHARMACEUTICALS
(Serial No. 86/400401, filed September 19, 2014)
and
ANGSTRO-TECHNOLOGY (Serial No. 86/713402, filed August 3, 2015).
Research and Development
We have approximately
10 employees dedicated to research and development. We anticipate that our research and development expenditures will decrease
as we focus our efforts on our late-stage clinical development of TNX-102 SL for PTSD. We need to raise additional capital to
fund our development plans and there is no certainty that we will be successful in continuing to attract new investments. Our
research and development operations are located in New York, NY, San Diego, CA, Dublin, Ireland and Montreal, Canada. We have
used, and expect to continue to use, third parties to conduct our nonclinical and clinical studies.
Manufacturing
We have contracted
with third-party cGMP-compliant contract manufacturing organizations, or CMOs, for the manufacture of TNX-102 SL drug substances
and drug products for investigational purposes, including nonclinical and clinical testing. For TNX-102 SL, we have engaged a
cGMP facility for manufacturing of to-be-marketed product for Phase 3 clinical and commercial. Our manufacturing operations are
managed and controlled in Dublin, Ireland.
All of our small molecules
drug candidates are synthesized using industry standard processes, and our drug products are formulated using commercially available
pharmaceutical grade excipients.
Our smallpox-preventing
vaccine candidate is a biologic uses live form of HPXV. Both the drug substance (horsepox virus and the cell bank) and the drug
product (vaccine) will be manufactured by contract cGMP-compliant facilities capable of manufacturing for nonclinical/clinical
testing and licensed product.
Government Regulations
The FDA and other
federal, state, local and foreign regulatory agencies impose substantial requirements upon the clinical development, approval,
labeling, manufacture, marketing and distribution of drug products. These agencies regulate, among other things, research and
development activities and the testing, approval, manufacture, quality control, safety, effectiveness, labeling, storage, record
keeping, advertising and promotion of our product candidates. The regulatory approval process is generally lengthy and expensive,
with no guarantee of a positive result. Moreover, failure to comply with applicable FDA or other requirements may result in civil
or criminal penalties, recall or seizure of products, injunctive relief including partial or total suspension of production, or
withdrawal of a product from the market.
The FDA regulates,
among other things, the research, manufacture, promotion and distribution of drugs in the United States under the FDCA and other
statutes and implementing regulations. The process required by the FDA before prescription drug product candidates may be marketed
in the United States generally involves the following:
|
•
|
completion of extensive nonclinical laboratory tests, animal
studies and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice regulations;
|
|
•
|
submission to the FDA of an IND, which must become effective
before human clinical trials may begin;
|
|
•
|
performance of adequate and well-controlled human clinical trials
in accordance with the FDA’s regulations, including Good Clinical Practices, to establish the safety and efficacy of
the product candidate for each proposed indication;
|
|
•
|
submission to the FDA of an NDA for drug products, or a Biologic
License Application, or BLA, for biologic products;
|
|
•
|
satisfactory completion of an FDA preapproval inspection of
the manufacturing facilities at which the product is produced to assess compliance with cGMP regulations; and
|
|
•
|
FDA review and approval of the NDA or BLA prior to any commercial
marketing, sale or shipment of the drug.
|
The testing and approval
process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product
candidates will be granted on a timely basis, if at all.
Nonclinical tests
include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals
and other animal studies. The results of nonclinical tests, together with manufacturing information and analytical data, are submitted
as part of an IND to the FDA. Some nonclinical testing may continue even after an IND is submitted. The IND also includes one
or more protocols for the initial clinical trial or trials and an investigator’s brochure. An IND automatically becomes
effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions relating
to the proposed clinical trials as outlined in the IND and places the clinical trial on a clinical hold. In such cases, the IND
sponsor and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin. Clinical trial holds
also may be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory requirements.
An independent institutional review board, or IRB, at each of the clinical centers proposing to conduct the clinical trial must
review and approve the plan for any clinical trial before it commences at that center. An IRB considers, among other things, whether
the risks to individuals participating in the trials are minimized and are reasonable in relation to anticipated benefits. The
IRB also approves the consent form signed by the trial participants and must monitor the study until completed.
Clinical Trials
Clinical trials involve
the administration of the product candidate to human subjects under the supervision of qualified medical investigators according
to approved protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria, and
the parameters to be used to monitor participant safety. Each protocol for a U.S. study is submitted to the FDA as part of the
IND.
Human clinical trials
are typically conducted in three sequential phases, but the phases may overlap, or be combined.
|
•
|
Phase 1 clinical trials typically involve the initial introduction
of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate is typically tested
for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
|
|
•
|
Phase 2 clinical trials are generally conducted in a limited
patient population to gather evidence about the efficacy of the product candidate for specific, targeted indications; to determine
dosage tolerance and optimal dosage; and to identify possible adverse effects and safety risks. Phase 2 clinical trials, in
particular Phase 2b trials, can be undertaken to evaluate clinical efficacy and to test for safety in an expanded patient
population at geographically dispersed clinical trial sites.
|
|
•
|
Phase 3 clinical trials are undertaken to evaluate clinical
efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites. The size
of Phase 3 clinical trials depends upon clinical and statistical considerations for the product candidate and disease. Phase
3 clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate
basis for product labeling.
|
Post-approval clinical
trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial approval. These clinical trials are used
to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term
safety follow-up.
Clinical testing must
satisfy extensive FDA regulations. Reports detailing the results of the clinical trials must be submitted at least annually to
the FDA and safety reports must be submitted for serious and unexpected adverse events. Success in early-stage clinical trials
does not assure success in later-stage clinical trials. The FDA, an IRB or we may suspend a clinical trial at any time on various
grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.
New Drug Applications
Assuming successful
completion of the required clinical trials, the results of product development, nonclinical studies and clinical trials are submitted
to the FDA as part of an NDA. An NDA also must contain extensive manufacturing information, as well as proposed labeling for the
finished product. An NDA applicant must develop information about the chemistry and physical characteristics of the drug and finalize
a process for manufacturing the product in accordance with cGMP. The manufacturing process must be capable of consistently producing
quality product within specifications approved by the FDA. The manufacturer must develop methods for testing the quality, purity
and potency of the final product. In addition, appropriate packaging must be selected and tested and stability studies must be
conducted to demonstrate that the product does not undergo unacceptable deterioration over its shelf life. Prior to approval,
the FDA will conduct an inspection of the manufacturing facilities to assess compliance with cGMP.
The FDA reviews all
NDAs submitted before it accepts them for filing. The FDA may request additional information rather than accept an NDA for filing.
In this event, the NDA must be resubmitted with the additional information and is subject to review before the FDA accepts it
for filing. After an application is filed, the FDA may refer the NDA to an advisory committee for review, evaluation and recommendation
as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an
advisory committee, but it considers them carefully when making decisions. The FDA may deny approval of an NDA if the applicable
regulatory criteria are not satisfied. Data obtained from clinical trials are not always conclusive and the FDA may interpret
data differently than we interpret the same data. The FDA may issue a complete response letter, which may require additional clinical
or other data or impose other conditions that must be met in order to secure final approval of the NDA. If a product receives
regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may
otherwise be limited, which could restrict the commercial value of the product. In addition, the FDA may require us to conduct
Phase 4 testing which involves clinical trials designed to further assess a drug’s safety and effectiveness after NDA approval,
and may require surveillance programs to monitor the safety of approved products which have been commercialized. Once issued,
the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety or efficacy questions are raised
after the product reaches the market.
Section 505(b) NDAs
There are two types
of NDAs: the Section 505(b)(1) NDA, or full NDA, and the Section 505(b)(2) NDA. We intend to file Section 505(b)(2) NDAs for TNX-102
SL for PTSD, and for certain other products, that might, if accepted by the FDA, save time and expense in the development and
testing of our product candidates. We may need to file a Section 505(b)(1) NDA for certain other products in the future. A full
NDA is submitted under Section 505(b)(1) of the FDCA, and must contain full reports of investigations conducted by the applicant
to demonstrate the safety and effectiveness of the drug. A Section 505(b)(2) NDA may be submitted for a drug for which one or
more of the investigations relied upon by the applicant was not conducted by or for the applicant and for which the applicant
has no right of reference from the person by or for whom the investigations were conducted. A Section 505(b)(2) NDA may be submitted
based in whole or in part on published literature or on the FDA’s finding of safety and efficacy of one or more previously
approved drugs, which are known as reference drugs. Thus, the filing of a Section 505(b)(2) NDA may result in approval of a drug
based on fewer clinical or nonclinical studies than would be required under a full NDA. The number and size of studies that need
to be conducted by the sponsor depends on the amount and quality of data pertaining to the reference drug that are publicly available,
and on the similarity of and differences between the applicant’s drug and the reference drug. In some cases, extensive,
time-consuming, and costly clinical and nonclinical studies may still be required for approval of a Section 505(b)(2) NDA.
Our drug approval
strategy for our new formulations of approved chemical entities is to submit Section 505(b)(2) NDAs to the FDA. As such, we plan
to submit an NDA under Section 505(b)(2) for TNX-102 SL for PTSD. The FDA may not agree that this product candidate is approvable
for PTSD as a Section 505(b)(2) NDA. If the FDA determines that a Section 505(b)(2) NDA is not appropriate and that a full NDA
is required for TNX-102 SL, the time and financial resources required to obtain FDA approval for TNX-102 SL could substantially
and materially increase, and TNX-102 SL might be less likely to be approved. If the FDA requires a full NDA for TNX-102 SL, or
requires more extensive testing and development for some other reason, our ability to compete with alternative products that arrive
on the market more quickly than our product candidates would be adversely impacted. If CBP-containing products are withdrawn from
the market by the FDA for any reason, we may not be able to reference such products to support our anticipated TNX-102 SL 505(b)(2)
NDA, and we may be required to follow the requirements of Section 505(b)(1).
Patent Protections
An applicant submitting
a Section 505(b)(2) NDA must certify to the FDA with respect to the patent status of the reference drug upon which the applicant
relies in support of approval of its drug. With respect to every patent listed in the FDA’s Orange Book, which is the FDA’s
list of approved drug products, as claiming the reference drug or an approved method of use of the reference drug, the Section
505(b)(2) applicant must certify that: (1) there is no patent information listed in the orange book for the reference drug; (2)
the listed patent has expired; (3) the listed patent has not expired, but will expire on a particular date; (4) the listed patent
is invalid or will not be infringed by the manufacture, use, or sale of the product in the Section 505(b)(2) NDA; or (5) if the
patent is a use patent, that the applicant does not seek approval for a use claimed by the patent. If the applicant files a certification
to the effect of clause (1), (2) or (5), FDA approval of the Section 505(b)(2) NDA may be made effective immediately upon successful
FDA review of the application, in the absence of marketing exclusivity delays, which are discussed below. If the applicant files
a certification to the effect of clause (3), the Section 505(b)(2) NDA approval may not be made effective until the expiration
of the relevant patent and the expiration of any marketing exclusivity delays.
If the Section 505(b)(2)
NDA applicant provides a certification to the effect of clause (4), referred to as a paragraph IV certification, the applicant
also must send notice of the certification to the patent owner and the holder of the NDA for the reference drug. The filing of
a patent infringement lawsuit within 45 days of the receipt of the notification may prevent the FDA from approving the Section
505(b)(2) NDA for 30 months from the date of the receipt of the notification unless the court determines that a longer or shorter
period is appropriate because either party to the action failed to reasonably cooperate in expediting the action. However, the
FDA may approve the Section 505(b)(2) NDA before the 30 months have expired if a court decides that the patent is invalid or not
infringed, or if a court enters a settlement order or consent decree stating the patent is invalid or not infringed.
Notwithstanding the
approval of many products by the FDA pursuant to Section 505(b)(2), over the last few years certain brand-name pharmaceutical
companies and others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of
Section 505(b)(2) is successfully challenged in court, the FDA may be required to change its interpretation of Section 505(b)(2)
which could delay or even prevent the FDA from approving any Section 505(b)(2) NDA that we submit. The pharmaceutical industry
is highly competitive, and it is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA
seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such
petitions can significantly delay, or even prevent, the approval of the new product. Moreover, even if the FDA ultimately denies
such a petition, the FDA may substantially delay approval while it considers and responds to the petition.
Marketing Exclusivity
Market exclusivity
provisions under the FDCA can delay the submission or the approval of Section 505(b)(2) NDAs, thereby delaying a Section 505(b)(2)
product from entering the market. The FDCA provides five-year marketing exclusivity to the first applicant to gain approval of
an NDA for an NCE, meaning that the FDA has not previously approved any other drug containing the same active moiety. This exclusivity
prohibits the submission of a Section 505(b)(2) NDA for any drug product containing the active ingredient during the five-year
exclusivity period. However, submission of a Section 505(b)(2) NDA that certifies that a listed patent is invalid, unenforceable,
or will not be infringed, as discussed above, is permitted after four years, but if a patent infringement lawsuit is brought within
45 days after such certification, FDA approval of the Section 505(b)(2) NDA may automatically be stayed until 7½ years
after the NCE approval date. The FDCA also provides three years of marketing exclusivity for the approval of new and supplemental
NDAs for product changes, including, among other things, new indications, dosage forms, routes of administration or strengths
of an existing drug, or for a new use, if new clinical investigations, other than bioavailability studies, that were conducted
or sponsored by the applicant are deemed by FDA to be essential to the approval of the application. Five-year and three-year exclusivity
will not delay the submission or approval of another full NDA; however, as discussed above, an applicant submitting a full NDA
under Section 505(b)(1) would be required to conduct or obtain a right of reference to all of the nonclinical and adequate and
well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Other types of exclusivity
in the United States include orphan drug exclusivity and pediatric exclusivity. The FDA may grant orphan drug designation to a
drug intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000
individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation
that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered
from sales in the United States for that drug. Seven-year orphan drug exclusivity is available to a product that has orphan drug
designation and that receives the first FDA approval for the indication for which the drug has such designation. Orphan drug exclusivity
prevents approval of another application for the same drug for the same orphan indication, for a period of seven years, regardless
of whether the application is a full NDA or a Section 505(b)(2) NDA, except in limited circumstances, such as a showing of clinical
superiority to the product with orphan exclusivity. Pediatric exclusivity, if granted, provides an additional six months to an
existing exclusivity or statutory delay in approval resulting from a patent certification. This six-month exclusivity, which runs
from the end of other exclusivity protection or patent delay, may be granted based on the voluntary completion of a pediatric
study in accordance with an FDA-issued “Written Request” for such a study.
Section 505(b)(2)
NDAs are similar to full NDAs filed under Section 505(b)(1) in that they are entitled to any of these forms of exclusivity if
they meet the qualifying criteria. They also are entitled to the patent protections described above, based on patents that are
listed in the FDA’s Orange Book in the same manner as patents claiming drugs and uses approved for NDAs submitted as full
NDAs.
Breakthrough Therapy Designation
On July 9, 2012, the
Food and Drug Administration Safety and Innovation Act, or FDASIA, was signed. FDASIA Section 902 provides for a new drug designation
–Breakthrough Therapy. A Breakthrough Therapy is a drug:
|
•
|
intended alone or in combination with one or more other drugs
to treat a serious or life threatening disease or condition; and
|
|
•
|
preliminary clinical evidence indicates that the drug may demonstrate
substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment
effects observed early in clinical development.
|
In December 2016,
the FDA granted Breakthrough Therapy designation to TNX-102 SL for the treatment of PTSD. The Breakthrough Therapy designation
request was submitted based on the preliminary clinical evidence of TNX 102-SL on military-related PTSD in the AtEase study.
Breakthrough
Therapy designation is intended to expedite the development and review of drugs for serious or life-threatening conditions. The
benefits of Breakthrough Therapy designation include the eligibility for priority review of the NDA within six months instead
of 10 months and rolling submission of portions of the NDA, in addition to an organizational commitment involving FDA's senior
managers contributing significant guidance. The FDA is committing to provide us timely advice and interactive communications related
to the design and efficient execution of our drug development program.
Material Threat Medical Countermeasures
In 2016, the 21st
Century Cures Act, or the Act, was signed into law to support ongoing biomedical innovation. One part of the Act, Section 3086,
is aimed at “Encouraging Treatments for Agents that Present a National Security Threat.” The Act created a new priority
review voucher program for “material threat medical countermeasures.” The Act defines such countermeasures as drugs
or vaccines intended to treat biological, chemical, radiological, or nuclear agents that present a national security threat or
to treat harm from a condition that may be caused by administering a drug or biological product against such an agent. The Department
of Homeland Security has identified 13 such threats, including anthrax, smallpox, Ebola/Marburg, tularemia, and botulism. A priority
review voucher can be applied to any other product; it shortens the FDA review timeline for a new application from 10 months to
6 months. The recipient of a priority review voucher may transfer it. We intend to seek a priority voucher for TNX-801 as a material
threat medical countermeasure.
Other Regulatory Requirements
Maintaining substantial
compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and
financial resources. Drug manufacturers are required to register their establishments with the FDA and certain state agencies,
and after approval, the FDA and these state agencies conduct periodic unannounced inspections to ensure continued compliance with
ongoing regulatory requirements, including cGMPs. In addition, after approval, some types of changes to the approved product,
such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval.
The FDA may require post-approval testing and surveillance programs to monitor safety and the effectiveness of approved products
that have been commercialized. Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing
regulation by the FDA, including:
|
•
|
record-keeping requirements;
|
|
•
|
reporting of adverse experiences with the drug;
|
|
•
|
providing the FDA with updated safety and efficacy information;
|
|
•
|
reporting on advertisements and promotional labeling;
|
|
•
|
drug sampling and distribution requirements; and
|
|
•
|
complying with electronic record and signature requirements.
|
In addition, the FDA
strictly regulates labeling, advertising, promotion and other types of information on products that are placed on the market.
There are numerous regulations and policies that govern various means for disseminating information to health-care professionals
as well as consumers, including to industry sponsored scientific and educational activities, information provided to the media
and information provided over the Internet. Drugs may be promoted only for the approved indications and in accordance with the
provisions of the approved label.
The FDA has very broad
enforcement authority and the failure to comply with applicable regulatory requirements can result in administrative or judicial
sanctions being imposed on us or on the manufacturers and distributors of our approved products, including warning letters, refusals
of government contracts, clinical holds, civil penalties, injunctions, restitution and disgorgement of profits, recall or seizure
of products, total or partial suspension of production or distribution, withdrawal of approvals, refusal to approve pending applications,
and criminal prosecution resulting in fines and incarceration. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject
to significant liability. In addition, even after regulatory approval is obtained, later discovery of previously unknown problems
with a product may result in restrictions on the product or even complete withdrawal of the product from the market.
The Impact of New Legislation and Amendments to Existing
Laws
The FDCA is
subject to routine legislative amendments with a broad range of downstream effects. In addition to new legislation, such as the
21st Century Cures Act in 2016, or the Food and Drug Administration Safety and Innovation Act in 2012, Congress introduces amendments
to reauthorize drug user fees and address emerging concerns every five years. We cannot predict the impact of these new legislative
acts and their implementing regulations on our business. The programs established or to be established under the legislation may
have adverse effects upon us, including increased regulation of our industry. Compliance with such regulation may increase our
costs and limit our ability to pursue business opportunities. In addition, the FDA’s regulations, policies and guidance
are often revised or reinterpreted by the agency or the courts in ways that may significantly affect our business and our products.
For example, the 21st Century Cures Act establishes a number of requirements, such as the public disclosure of information on
experimental treatments, which may be costly and take time to implement. Additionally, the current legislative authority for the
Prescription Drug User Fee Act expires in September 2017. The requirements and changes imposed by the legislation to reauthorize
the act may make it more difficult, and more costly, to obtain and maintain approval for new pharmaceutical products, or to produce,
market and distribute existing products. It is impossible to predict whether additional legislative changes will be enacted, or
FDA regulations, guidance or interpretations will change, or what the impact of such changes, if any, may be.
Employees
As of April 12,
2017, we had 18 full-time employees, of whom five hold M.D. or Ph.D. degrees. We have 10 employees dedicated to research and
development. Our research and development operations are located in New York, NY, San Diego, CA, Dublin, Ireland and
Montreal, Canada. We have used, and expect to continue to use, third parties to conduct our nonclinical and clinical studies
as well as part-time employees. None of our employees are represented by a collective bargaining agreement, and we believe
that our relations with our employees are good.
Corporate Information
Our principal executive
offices are located at 509 Madison Avenue, Suite 306, New York, New York 10022, and our telephone number is (212) 980-9155. Our
website addresses are www.tonixpharma.com, www.tonix.com, and www.krele.com. We do not incorporate the information on our websites
into this annual report, and you should not consider such information part of this annual report.
We were incorporated
on November 16, 2007 under the laws of the State of Nevada as Tamandare Explorations Inc. On October 11, 2011, we changed our
name to Tonix Pharmaceuticals Holding Corp.
Item 1A. Risk Factors
RISKS RELATED TO OUR BUSINESS
We have a history of operating losses
and expect to incur losses for the foreseeable future. We may never generate revenues or, if we are able to generate revenues,
achieve profitability.
We are focused on
product development, and we have not generated any revenues to date. We have incurred losses in each year of our operations, and
we expect to continue to incur operating losses for the foreseeable future. These operating losses have adversely affected and
are likely to continue to adversely affect our working capital, total assets and shareholders’ equity.
We and our prospects
should be examined in light of the risks and difficulties frequently encountered by new and early-stage companies in new and rapidly
evolving markets. These risks include, among other things, the speed at which we can scale up operations, our complete dependence
upon development of products that currently have no market acceptance, our ability to establish and expand our brand name, our
ability to expand our operations to meet the commercial demand of our clients, our development of and reliance on strategic and
customer relationships and our ability to minimize fraud and other security risks.
The process of developing
our products requires significant clinical, nonclinical and CMC development, laboratory testing and clinical studies. In addition,
commercialization of our product candidates will require that we obtain necessary regulatory approvals and establish sales, marketing
and manufacturing capabilities, either through internal hiring or through contractual relationships with others. We expect to
incur substantial losses for the foreseeable future as a result of anticipated increases in our research and development costs,
including costs associated with conducting preclinical and nonclinical testing and clinical studies, and regulatory compliance
activities.
Our ability to generate
revenues and achieve profitability will depend on numerous factors, including success in:
|
•
|
developing
and testing product candidates;
|
|
•
|
receiving
regulatory approvals;
|
|
•
|
commercializing
our products; and
|
|
•
|
establishing
a favorable competitive position.
|
Many of these factors
will depend on circumstances beyond our control. We cannot assure you that we will ever have a product approved by the FDA, that
we will bring any product to market or, if we are successful in doing so, that we will ever become profitable.
We expect to incur
substantial additional operating expenses over the next several years as our research, development, preclinical and nonclinical
testing, and clinical study activities increase. The amount of future losses and when, if ever, we will achieve profitability
are uncertain. We have no products that have generated any commercial revenue, do not expect to generate revenues from the commercial
sale of products in the near future, and might never generate revenues from the sale of products. Our ability to generate revenue
and achieve profitability will depend on, among other things, successful completion of the development of our product candidates;
obtaining necessary regulatory approvals from the FDA; establishing manufacturing, sales, and marketing arrangements with third
parties; and raising sufficient funds to finance our activities. We might not succeed at any of these undertakings. If we are
unsuccessful at some or all of these undertakings, our business, prospects, and results of operations may be materially adversely
affected.
We have a limited operating history
and we expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make
it difficult to predict our future performance.
We are a development-stage
biopharmaceutical company with a limited operating history. Our operations to date have been primarily limited to developing our
technology and undertaking preclinical and nonclinical testing and clinical studies of our clinical-stage product candidate, TNX-102
SL for PTSD. We have not yet obtained regulatory approvals for TNX-102 SL or any of our other product candidates. Consequently,
any predictions made about our future success or viability may not be as accurate as they could be if we had a longer operating
history or commercialized products. Our financial condition has varied significantly in the past and will continue to fluctuate
from quarter-to-quarter or year-to-year due to a variety of factors, many of which are beyond our control. Factors relating to
our business that may contribute to these fluctuations include other factors described elsewhere in this annual report and also
include:
|
•
|
our
ability to obtain additional funding to develop our product candidates;
|
|
•
|
delays
in the commencement, enrollment and timing of clinical studies;
|
|
•
|
the
success of our clinical studies through all phases of clinical development, including
studies of our most advanced product candidate TNX-102 SL for PTSD;
|
|
•
|
any
delays in regulatory review and approval of product candidates in clinical development;
|
|
•
|
our
ability to obtain and maintain regulatory approval for our product candidate TNX-102
SL for PTSD or any of our other product candidates in the United States and foreign jurisdictions;
|
|
•
|
potential
nonclinical toxicity and/or side effects of our product candidates that could delay or
prevent commercialization, limit the indications for any approved drug, require the establishment
of risk evaluation and mitigation strategies, or cause an approved drug to be taken off
the market;
|
|
•
|
our
dependence on third party CMOs to supply or manufacture our products;
|
|
•
|
our
dependence on third party contract research organizations, or CROs, to conduct our clinical
studies and nonclinical research;
|
|
•
|
our
ability to establish or maintain collaborations, licensing or other arrangements;
|
|
•
|
market
acceptance of our product candidates;
|
|
•
|
our
ability to establish and maintain an effective sales and marketing infrastructure, either
through the creation of a commercial infrastructure or through strategic collaborations;
|
|
•
|
competition
from existing products or new products that may emerge;
|
|
•
|
the
ability of patients or healthcare providers to obtain coverage of or sufficient reimbursement
for our products;
|
|
•
|
our
ability to leverage our proprietary technology platform to discover and develop additional
product candidates;
|
|
•
|
our
ability and our licensors’ abilities to successfully obtain, maintain, defend and
enforce intellectual property rights important to our business;
|
|
•
|
our
ability to attract and retain key personnel to manage our business effectively;
|
|
•
|
our
ability to build our finance infrastructure and improve our accounting systems and controls;
|
|
•
|
potential
product liability claims;
|
|
•
|
potential
liabilities associated with hazardous materials; and
|
|
•
|
our
ability to obtain and maintain adequate insurance policies.
|
Accordingly, the results
of any quarterly or annual periods should not be relied upon as indications of future operating performance.
We have no approved products on
the market and therefore do not expect to generate any revenues from product sales in the foreseeable future, if at all.
To date, we have no
approved product on the market and have generated no product revenues. We have funded our operations primarily from sales of our
securities. We have not received, and do not expect to receive for at least the next couple of years, if at all, any revenues
from the commercialization of our product candidates. To obtain revenues from sales of our product candidates, we must succeed,
either alone or with third parties, in developing, obtaining regulatory approval for, manufacturing and marketing drugs with commercial
potential. We may never succeed in these activities, and we may not generate sufficient revenues to continue our business operations
or achieve profitability.
We are largely dependent on the
success of our clinical-stage product candidate, TNX-102 SL for PTSD, and we cannot be certain that this product candidate will
receive regulatory approval or be successfully commercialized.
We currently have
no products for sale, and we cannot guarantee that we will ever have any drug products approved for sale. We and our product candidates
are subject to extensive regulation by the FDA and comparable regulatory authorities in other countries governing, among other
things, research, testing, clinical studies, manufacturing, labeling, promotion, selling, adverse event reporting and recordkeeping.
We are not permitted to market any of our product candidates in the United States until we receive approval of an NDA for a product
candidate from the FDA or the equivalent approval from a foreign regulatory authority. Obtaining FDA approval is a lengthy, expensive
and uncertain process. We currently have one product candidate, TNX-102 SL, in Phase 3 development for the treatment of PTSD,
and the success of our business currently depends on its successful development, approval and commercialization. Any projected
sales or future revenue predictions are predicated upon FDA approval and market acceptance of TNX-102 SL. If projected sales do
not materialize for any reason, it would have a material adverse effect on our business and our ability to continue operations.
TNX-102 SL has not
completed the clinical development process; therefore, we have not yet submitted an NDA or foreign equivalent or received marketing
approval for this product candidate anywhere in the world. The clinical development program for TNX-102 SL for PTSD may not lead
to commercial products for a number of reasons, including if we fail to obtain necessary approvals from the FDA or foreign regulatory
authorities because our clinical studies fail to demonstrate to their satisfaction that this product candidate is safe and effective
or a clinical program may be put on hold due to unexpected safety issues. We may also fail to obtain the necessary approvals if
we have inadequate financial or other resources to advance our product candidates through the clinical study process. Any failure
or delay in completing clinical studies or obtaining regulatory approvals for TNX-102 SL for PTSD in a timely manner would have
a material adverse impact on our business and our stock price.
We may use our financial and human
resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates
that may be more profitable or for which there is a greater likelihood of success.
Because we have limited
financial and human resources, we are currently focusing on the regulatory approval of TNX-102 SL for PTSD. As a result, we may
forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater
commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable
market opportunities. Our spending on existing and future product candidates for specific indications may not yield any commercially
viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate,
we may relinquish valuable rights to that product candidate through strategic alliance, licensing or other royalty arrangements
in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such
product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been
more advantageous to enter into a partnering arrangement.
We will need additional capital.
If additional capital is not available or is available at unattractive terms, we may be forced to delay, reduce the scope of or
eliminate our research and development programs, reduce our commercialization efforts or curtail our operations.
In order to develop
and bring our product candidates to market, we must commit substantial resources to costly and time-consuming research, preclinical
and nonclinical testing, clinical studies and marketing activities. We anticipate that our existing cash and cash equivalents
will enable us to maintain our current operations for at least the next 12 months. We anticipate using our cash and cash equivalents
to fund further research and development with respect to our lead product candidate. We will, however, need to raise additional
funding sooner if our business or operations change in a manner that consumes available resources more rapidly than we anticipate.
Our requirements for additional capital will depend on many factors, including:
|
•
|
successful
commercialization of our product candidates;
|
|
•
|
the
time and costs involved in obtaining regulatory approval for our product candidates;
|
|
•
|
costs
associated with protecting our intellectual property rights;
|
|
•
|
development
of marketing and sales capabilities;
|
|
•
|
payments
received under future collaborative agreements, if any; and
|
|
•
|
market
acceptance of our products.
|
To the extent we raise
additional capital through the sale of equity securities, the issuance of those securities could result in dilution to our shareholders.
In addition, if we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of
principal and interest on such indebtedness, thus limiting funds available for our business activities. If adequate funds are
not available, we may be required to delay, reduce the scope of or eliminate our research and development programs, reduce our
commercialization efforts or curtail our operations. In addition, we may be required to obtain funds through arrangements with
collaborative partners or others that may require us to relinquish rights to technologies, product candidates or products that
we would otherwise seek to develop or commercialize ourselves or license rights to technologies, product candidates or products
on terms that are less favorable to us than might otherwise be available.
We will require substantial
additional funds to support our research and development activities, and the anticipated costs of preclinical and nonclinical
testing and clinical studies, regulatory approvals and eventual commercialization. Such additional sources of financing may not
be available on favorable terms, if at all. If we do not succeed in raising additional funds on acceptable terms, we may be unable
to commence or complete clinical studies or obtain approval of any product candidates from the FDA and other regulatory authorities.
In addition, we could be forced to discontinue product development, forego sales and marketing efforts and forego attractive business
opportunities. Any additional sources of financing will likely involve the issuance of our equity securities, which will have
a dilutive effect on our shareholders.
There is no assurance
that we will be successful in raising the additional funds needed to fund our business plan. If we are not able to raise sufficient
capital in the near future, our continued operations will be in jeopardy and we may be forced to cease operations and sell or
otherwise transfer all or substantially all of our remaining assets.
We face intense competition in the
markets targeted by our product candidates. Many of our competitors have substantially greater resources than we do, and we expect
that all of our product candidates under development will face intense competition from existing or future drugs.
We expect that all
of our product candidates under development, if approved, will face intense competition from existing and future drugs marketed
by large companies. These competitors may successfully market products that compete with our products, successfully identify drug
candidates or develop products earlier than we do, or develop products that are more effective, have fewer side effects or cost
less than our products.
Additionally, if a
competitor receives FDA approval before we do for a drug that is similar to one of our product candidates, FDA approval for our
product candidate may be precluded or delayed due to periods of non-patent exclusivity and/or the listing with the FDA by the
competitor of patents covering its newly-approved drug product. Periods of non-patent exclusivity for new versions of existing
drugs such as our current product candidates can extend up to three and one-half years.
These competitive
factors could require us to conduct substantial new research and development activities to establish new product targets, which
would be costly and time consuming. These activities would adversely affect our ability to commercialize products and achieve
revenue and profits.
Competition and technological change
may make our product candidates and technologies less attractive or obsolete.
We compete with established
pharmaceutical and biotechnology companies that are pursuing other forms of treatment for the same indications we are pursuing
and that have greater financial and other resources. Other companies may succeed in developing products earlier than us, obtaining
FDA approval for products more rapidly, or developing products that are more effective than our product candidates. Research and
development by others may render our technology or product candidates obsolete or noncompetitive, or result in treatments or cures
superior to any therapy we develop. We face competition from companies that internally develop competing technology or acquire
competing technology from universities and other research institutions. As these companies develop their technologies, they may
develop competitive positions that may prevent, make futile, or limit our product commercialization efforts, which would result
in a decrease in the revenue we would be able to derive from the sale of any products.
There can be no assurance
that any of our product candidates will be accepted by the marketplace as readily as these or other competing treatments. Furthermore,
if our competitors' products are approved before ours, it could be more difficult for us to obtain approval from the FDA. Even
if our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance
that physicians and patients will accept our product(s) as a treatment of choice.
Furthermore, the pharmaceutical
research industry is diverse, complex, and rapidly changing. By its nature, the business risks associated therewith are numerous
and significant. The effects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us
from forecasting revenues or income with certainty or even confidence.
If we fail to protect our intellectual
property rights, our ability to pursue the development of our technologies and products would be negatively affected.
Our success will depend
in part on our ability to obtain patents and maintain adequate protection of our technologies and products. If we do not adequately
protect our intellectual property, competitors may be able to use our technologies to produce and market drugs using our technologies
and patents in direct competition with us and erode our competitive advantage. Some foreign countries lack rules and methods for
defending intellectual property rights and do not protect proprietary rights to the same extent as the United States. Many companies
have had difficulty protecting their proprietary rights in these foreign countries. We may not be able to prevent misappropriation
of our proprietary rights and intellectual property rights in these and other countries.
We have received,
and are currently seeking, patent protection for numerous compounds and methods of treating diseases. However, the patent process
is subject to numerous risks and uncertainties, and there can be no assurance that we will be successful in protecting our products
by obtaining and defending patents related to them. These risks and uncertainties include the following: patents that may be issued
or licensed may be challenged, invalidated, or circumvented, or otherwise may not provide us any competitive advantage; our competitors,
many of which have substantially greater resources than we and many of which have made significant investments in competing technologies,
may seek, or may already have obtained, patents that will limit, interfere with, or eliminate our ability to make, use, and sell
our potential products either in the United States or in international markets; there may be significant pressure on the United
States government and other international governmental bodies to limit the scope of patent protection both inside and outside
the United States for treatments that prove successful as a matter of public policy regarding worldwide health concerns; and countries
other than the United States may have less robust patent laws than those upheld by United States courts, allowing foreign competitors
the ability to exploit these laws to create, develop, and market competing products using our technologies and patents.
Moreover, any patents
issued to us may not provide us with meaningful protection, or others may challenge, circumvent or narrow our patents. Third parties
may also independently develop products similar to our products, duplicate our unpatented products or design around any patents
or propriety technologies on products we develop. Additionally, extensive time is required for development, testing and regulatory
review of a potential product. While extensions of patent term due to regulatory delays may be available, it is possible that,
before any of our product candidates can be commercialized, any related patent, even with an extension, may expire or remain in
force for only a short period following commercialization, thereby reducing any advantages to us of the patent.
In addition, the United
States Patent and Trademark Office, or USPTO, and patent offices in other jurisdictions have often required that patent applications
concerning pharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only the innovations
specifically exemplified in the patent application, thereby limiting the scope of protection against competitive challenges. Thus,
even if we or our licensors are able to obtain patents, the patents may be substantially narrower than anticipated.
Our success depends
on our patents and patent applications that may be licensed exclusively to us and other patents and patent applications to which
we may obtain assignment or licenses. We may not be aware, however, of all patents, published applications or published literature
that may affect our business either by blocking our ability to commercialize our product candidates, by preventing the patentability
of our product candidates to us or our licensors, or by covering the same or similar technologies. These patents, patent applications,
and published literature may limit the scope of our future patent claims or adversely affect our ability to market our product
candidates.
In addition to patents,
we rely on a combination of trade secrets, confidentiality, nondisclosure and other contractual provisions, and security measures
to protect our confidential and proprietary information. These measures may not adequately protect our trade secrets or other
proprietary information. If they do not adequately protect our rights, third parties could use our technology, and we could lose
any competitive advantage we may have. In addition, others may independently develop similar proprietary information or techniques
or otherwise gain access to our trade secrets, which could impair any competitive advantage we may have.
Patent protection
and other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial
risk that such protections will prove inadequate.
We may be involved in lawsuits to
protect or enforce our patents, which could be expensive and time consuming.
The pharmaceutical
industry has been characterized by extensive litigation regarding patents and other intellectual property rights, and companies
have employed intellectual property litigation to gain a competitive advantage. We may become subject to infringement claims or
litigation arising out of present and future patents and other proceedings of our competitors. The defense and prosecution of
intellectual property suits are costly and time-consuming to pursue, and their outcome is uncertain. Litigation may be necessary
to determine the enforceability, scope, and validity of the proprietary rights of others. An adverse determination in litigation
to which we may become a party could subject us to significant liabilities, require us to obtain licenses from third parties,
or restrict or prevent us from selling our products in certain markets. Although patent and intellectual property disputes might
be settled through licensing or similar arrangements, the costs associated with such arrangements may be substantial and could
include our paying large fixed payments and ongoing royalties. Furthermore, the necessary licenses may not be available on satisfactory
terms or at all.
Competitors may infringe
our patents, and we may file infringement claims to counter infringement or unauthorized use. Third parties may assert that our
patents are invalid and/or unenforceable in these proceedings. Such litigation can be expensive, particularly for a company of
our size, and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid
or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents
do not cover its technology. An adverse determination of any litigation or defense proceedings could put one or more of our patents
at risk of being invalidated or interpreted narrowly.
Third parties may
also assert that our patents are invalid in patent office administrative proceedings. These proceedings include oppositions in
the European Patent Office and
inter partes
review and post-grant review proceedings in the USPTO. The success rate of
these administrative challenges to patent validity in the United States is higher than it is for validity challenges in litigation.
Interference or derivation
proceedings brought before the USPTO may be necessary to determine priority of invention with respect to innovations disclosed
in our patents or patent applications. During these proceedings, it may be determined that we do not have priority of invention
for one or more aspects in our patents or patent applications and could result in the invalidation in part or whole of a patent
or could put a patent application at risk of not issuing. Even if successful, an interference or derivation proceeding may result
in substantial costs and distraction to our management.
Furthermore, because
of the substantial amount of discovery required in connection with intellectual property litigation or interference or derivation
proceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, there
could be public announcements of the results of hearings, motions or other interim proceedings or developments. If investors perceive
these results to be negative, the price of our common stock could be adversely affected.
There are no unresolved
communications, allegations, complaints or threats of litigation related to the possibility that our patents are invalid or unenforceable.
Any litigation or claims against us, whether or not merited, may result in substantial costs, place a significant strain on our
financial resources, divert the attention of management and harm our reputation. An adverse decision in litigation or administrative
proceedings could result in inadequate protection for our product candidates and/or reduce the value of any license agreements
we have with third parties.
If we infringe the rights of third
parties we could be prevented from selling products, forced to pay damages, and defend against litigation.
If our products, methods,
processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may
have to: obtain licenses, which may not be available on commercially reasonable terms, if at all; abandon an infringing product
candidate; redesign our products or processes to avoid infringement; stop using the subject matter claimed in the patents held
by others; pay damages; and/or defend litigation or administrative proceedings which may be costly whether we win or lose, and
which could result in a substantial diversion of our financial and management resources.
If preclinical and nonclinical testing
or clinical studies for our product candidates are unsuccessful or delayed, we will be unable to meet our anticipated development
and commercialization timelines.
We rely and expect
to continue to rely on third parties, including CROs and outside consultants, to conduct, supervise or monitor some or all aspects
of preclinical and nonclinical testing and clinical studies involving our product candidates. We have less control over the timing
and other aspects of these preclinical and nonclinical testing activities and clinical studies than if we performed the monitoring
and supervision entirely on our own. Third parties may not perform their responsibilities for our preclinical and nonclinical
testing and clinical studies on our anticipated schedule or, for clinical studies, consistent with a clinical study protocol.
Delays in preclinical and nonclinical testing, and clinical studies could significantly increase our product development costs
and delay product commercialization. In addition, many of the factors that may cause, or lead to, a delay in the clinical studies
may also ultimately lead to denial of regulatory approval of a product candidate.
The commencement of
clinical studies can be delayed for a variety of reasons, including delays in:
|
•
|
demonstrating
sufficient safety and efficacy to obtain regulatory approval to commence a clinical study;
|
|
•
|
reaching
agreement on acceptable terms with prospective CROs and study sites;
|
|
•
|
developing
a stable formulation of a product candidate;
|
|
•
|
manufacturing
sufficient quantities of a product candidate; and
|
|
•
|
obtaining
institutional review board approval to conduct a clinical study at a prospective site.
|
Once a clinical study
has begun, it may be delayed, suspended or terminated by us or the FDA or other regulatory authorities due to a number of factors,
including:
|
•
|
ongoing
discussions with the FDA or other regulatory authorities regarding the scope or design
of our clinical studies;
|
|
•
|
failure
to conduct clinical studies in accordance with regulatory requirements;
|
|
•
|
lower
than anticipated recruitment or retention rate of patients in clinical studies;
|
|
•
|
inspection
of the clinical study operations or study sites by the FDA or other regulatory authorities
resulting in the imposition of a clinical hold;
|
|
•
|
lack
of adequate funding to continue clinical studies;
|
|
•
|
negative
results of clinical studies;
|
|
•
|
investigational
drug product out-of-specification; or
|
|
•
|
nonclinical
or clinical safety observations, including adverse events and serious adverse events.
|
If clinical studies
are unsuccessful, and we are not able to obtain regulatory approvals for our product candidates under development, we will not
be able to commercialize these products, and therefore may not be able to generate sufficient revenues to support our business.
We rely on third parties to conduct,
supervise and monitor our clinical studies, and if those third parties perform in an unsatisfactory manner, it may harm our business.
We rely on CROs and
clinical study sites to ensure the proper and timely conduct of our clinical studies. While we have agreements governing their
activities, we will have limited influence over their actual performance. We will control only certain aspects of our CROs’
activities. Nevertheless, we will be responsible for ensuring that our clinical studies are conducted in accordance with the applicable
protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.
We and our CROs are
required to comply with the FDA’s current good clinical practices requirements, or cGCP, for conducting, recording and reporting
the results of clinical studies to assure that data and reported results are credible and accurate and that the rights, integrity
and confidentiality of clinical study participants are protected. The FDA enforces these cGCPs through periodic inspections of
study sponsors, principal investigators and clinical study sites. If we or our CROs fail to comply with applicable cGCPs, the
clinical data generated in our clinical studies may be deemed unreliable and the FDA may require us to perform additional clinical
studies before approving any marketing applications. Upon inspection, the FDA may determine that our clinical studies did not
comply with cGCPs. In addition, our clinical studies, including our ongoing Phase 3 HONOR study in military-related PTSD, will
require a sufficiently large number of test subjects to evaluate the effectiveness and safety of TNX-102 SL. Accordingly, if our
CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, our clinical studies may be delayed
or we may be required to repeat such clinical studies, which would delay the regulatory approval process.
Our CROs are not our
employees, and we are not able to control whether or not they devote sufficient time and resources to our clinical studies. These
CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting
clinical studies, or other drug development activities which could harm our competitive position. If our CROs do not successfully
carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical
data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or for any
other reasons, our clinical studies may be extended, delayed or terminated, and we may not be able to obtain regulatory approval
for, or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for
such product candidates would be harmed, our costs could increase, and our ability to generate revenues could be delayed.
We also rely on other
third parties to store and distribute drug products for our clinical studies. Any performance failure on the part of our distributors
could delay clinical development or marketing approval of our product candidates or commercialization of our products, if approved,
producing additional losses and depriving us of potential product revenue.
We have limited experience in completing
a Phase 3 clinical study and have never submitted an NDA before, and may be unable to do so for TNX-102 SL or other product candidates
we are developing.
We initiated a Phase
3 study in military-related PTSD in the first quarter of 2017. As this study is intended to provide efficacy and safety evidence
to support marketing approval by the FDA, it is considered a pivotal, confirmatory or registration, study. The conduct of pivotal
clinical studies and the submission of a successful NDA is a complicated process. Although members of our management team have
extensive industry experience, including in the development, clinical testing and commercialization of drug candidates, we have
conducted only one pivotal clinical study before (the AFFIRM study in fibromyalgia patients), have limited experience in preparing,
submitting and prosecuting regulatory filings, and have not submitted an NDA before. Consequently, we may be unable to successfully
and efficiently execute and complete this planned clinical study in a way that leads to NDA submission and approval of TNX-102
SL and other product candidates we are developing. We may require more time and incur greater costs than our competitors and may
not succeed in obtaining regulatory approvals of product candidates that we develop. Failure to commence or complete, or delays
in, our planned clinical studies would prevent or delay commercialization of TNX-102 SL and other product candidates we are developing.
Our product candidates may cause
serious adverse events or undesirable side effects which may delay or prevent marketing approval, or, if approval is received,
require them to be taken off the market, require them to include safety warnings or otherwise limit their sales.
Serious adverse events
or undesirable side effects from TNX-102 SL or any of our other product candidates could arise either during clinical development
or, if approved, after the approved product has been marketed. The results of future clinical studies, including TNX-102 SL, may
show that our product candidates cause serious adverse events or undesirable side effects, which could interrupt, delay or halt
clinical studies, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities.
If TNX-102 SL or any
of our other product candidates cause serious adverse events or undesirable side effects or suffer from quality control issues:
|
•
|
regulatory
authorities may impose a clinical hold or risk evaluation and mitigation strategies,
or REMS, which could result in substantial delays, significantly increase the cost of
development, and/or adversely impact our ability to continue development of the product;
|
|
•
|
regulatory
authorities may require the addition of statements, specific warnings, or contraindications
to the product label, or restrict the product’s indication to a smaller potential
treatment population;
|
|
•
|
we
may be required to change the way the product is administered or conduct additional clinical
studies;
|
|
•
|
we
may be required to implement a risk minimization action plan, which could result in substantial
cost increases and have a negative impact on our ability to commercialize the product;
|
|
•
|
we
may be required to limit the patients who can receive the product;
|
|
•
|
we
may be subject to limitations on how we promote the product;
|
|
•
|
we
may, voluntarily or involuntarily, initiate field alerts for product recall, which may
result in shortages;
|
|
•
|
sales
of the product may decrease significantly;
|
|
•
|
regulatory
authorities may require us to take our approved product off the market;
|
|
•
|
we
may be subject to litigation or product liability claims; and
|
|
•
|
our
reputation may suffer.
|
Any of these events
could prevent us from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization
costs and expenses, which in turn could delay or prevent us from generating significant revenues from the sale of our products.
If a competing drug
shows efficacy in military-related PTSD prior to the FDA approval of TNX-102 SL or if TNX-102 SL fails to confirm the results
of the AtEase Phase 2 study in showing activity in military-related PTSD in the Phase 3 HONOR study, then the FDA may rescind
the Breakthrough Therapy designation.
In December 2016,
the FDA granted TNX-102 SL for PSTD Breakthrough Therapy designation based on several factors, including that TNX-102 SL has the
potential to be an improvement over existing therapies for military-related PTSD. If another therapy is shown to be effective
in military-related PTSD before FDA approval of TNX-102 SL, then the FDA may rescind the designation. In addition, if TNX-102
SL fails to confirm the activity from the AtEase study in treating military-related PTSD, then the FDA may rescind the Breakthrough
Therapy designation.
Breakthrough Therapy designation
for TNX-102 SL may not lead to faster development or regulatory processes nor does it increase the likelihood that TNX-102 SL
will receive marketing approval for PTSD.
There is no guarantee
that the receipt of Breakthrough Therapy designation will result in a faster development, review or approval process for TNX-102
SL for PTSD or increase the likelihood that TNX-102 SL will be granted marketing approval for PTSD. Likewise, any future Breakthrough
Therapy designation for any other potential indication of TNX-102 SL neither guarantees a faster development process, review or
approval nor improves the likelihood of the granting of marketing approval by the FDA for any such potential indication of TNX-102
SL compared to drugs considered for approval under conventional FDA procedures. We may seek a Breakthrough Therapy designation
for other of our product candidates, but the FDA may not grant this status to any of our proposed product candidates.
If we are unable to file for approval
of TNX-102 SL under Section 505(b)(2) of the FDCA or if we are required to generate additional data related to safety and efficacy
in order to obtain approval under Section 505(b)(2), we may be unable to meet our anticipated development and commercialization
timelines.
Our current plans
for filing NDAs for our product candidates include efforts to minimize the data we will be required to generate in order to obtain
marketing approval for our product candidates and therefore reduce the development time. We held a pre-IND meeting with the FDA
in October 2012 to discuss the development of TNX-102 SL in PTSD. Following the results of the AtEase Study, we held an End-of-Phase
2/Pre-Phase 3 meeting with the FDA in August 2016 to discuss our most advanced development program, in which we are developing
TNX-102 SL for the treatment of PTSD. Although our interactions with the FDA have encouraged our efforts to continue to develop
TNX-102 SL for PTSD, there is no assurance that we will satisfy the FDA’s requirements for approval in this indication.
The timeline for filing and review of our NDA for TNX-102 SL for PTSD is based on our plan to submit this NDA under Section 505(b)(2)
of the FDCA, which would enable us to rely in part on data in the public domain or elsewhere. We have not yet filed an NDA under
Section 505(b)(2) for any of our product candidates. Depending on the data that may be required by the FDA for approval, some
of the data may be related to products already approved by the FDA. If the data relied upon is related to products already approved
by the FDA and covered by third-party patents we would be required to certify that we do not infringe the listed patents or that
such patents are invalid or unenforceable. As a result of the certification, the third-party would have 45 days from notification
of our certification to initiate an action against us. In the event that an action is brought in response to such a certification,
the approval of our NDA could be subject to a stay of up to 30 months or more while we defend against such a suit. Approval of
our product candidates under Section 505(b)(2) may therefore be delayed until patent exclusivity expires or until we successfully
challenge the applicability of those patents to our product candidates. Alternatively, we may elect to generate sufficient additional
clinical data so that we no longer rely on data which triggers a potential stay of the approval of our product candidates. Even
if no exclusivity periods apply to our applications under Section 505(b)(2), the FDA has broad discretion to require us to generate
additional data on the safety and efficacy of our product candidates to supplement third-party data on which we may be permitted
to rely. In either event, we could be required, before obtaining marketing approval for any of our product candidates, to conduct
substantial new research and development activities beyond those we currently plan to engage in order to obtain approval of our
product candidates. Such additional new research and development activities would be costly and time consuming.
We may not be able
to realize a shortened development timeline for TNX-102 SL for PTSD, and the FDA may not approve our NDA based on their review
of the submitted data. If CBP-containing products are withdrawn from the market by the FDA for any safety reason, we may not be
able to reference such products to support a 505(b)(2) NDA for TNX-102 SL, and we may need to fulfill the more extensive requirements
of Section 505(b)(1). If we are required to generate additional data to support approval, we may be unable to meet our anticipated
development and commercialization timelines, may be unable to generate the additional data at a reasonable cost, or at all, and
may be unable to obtain marketing approval of our lead product candidate.
We will need to expand our operations
and increase the size of our company, and we may experience difficulties in managing growth.
As we advance our
product candidates through preclinical and nonclinical testing and clinical studies, and develop new product candidates, we will
need to increase our product development, scientific, regulatory and compliance and administrative headcount to manage these programs.
In addition, to meet our obligations as a public company, we will need to increase our general and administrative capabilities.
Our management, personnel and systems currently in place may not be adequate to support this future growth. Our need to effectively
manage our operations, growth and various projects requires that we:
|
•
|
successfully
attract and recruit new employees with the expertise and experience we will require;
|
|
•
|
manage
our clinical programs effectively, which we anticipate being conducted at numerous clinical
sites;
|
|
•
|
develop
a marketing, distribution and sales infrastructure in addition to a post-marketing surveillance
program if we seek to market our products directly; and
|
|
•
|
continue
to improve our operational, manufacturing, quality assurance, financial and management
controls, reporting systems and procedures.
|
If we are unable to
successfully manage this growth and increased complexity of operations, our business may be adversely affected.
Our executive officers and other
key personnel are critical to our business, and our future success depends on our ability to retain them.
Our success depends
to a significant extent upon the continued services of Dr. Seth Lederman, our President and Chief Executive Officer and Dr. Gregory
M. Sullivan, our Chief Medical Officer. Dr. Lederman has overseen Tonix Pharmaceuticals, Inc., a wholly-owned subsidiary, since
inception and provides leadership for our growth and operations strategy as well as being an inventor on many of our patents.
Dr. Sullivan has served as our Chief Medical Officer since 2014 and directed the Phase 2 AtEase study and is directing the Phase
3 HONOR study. Loss of the services of Drs. Lederman or Sullivan would have a material adverse effect on our growth, revenues,
and prospective business. The loss of any of our key personnel, or the inability to attract and retain qualified personnel, may
significantly delay or prevent the achievement of our research, development or business objectives and could materially adversely
affect our business, financial condition and results of operations.
Any employment agreement
we enter into will not ensure the retention of the employee who is a party to the agreement. In addition, we have only limited
ability to prevent former employees from competing with us. Furthermore, our future success will also depend in part on the continued
service of our key scientific and management personnel and our ability to identify, hire, and retain additional personnel. We
experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the
development of our business. Moreover, competition for personnel with the scientific and technical skills that we seek is extremely
high and is likely to remain high. Because of this competition, our compensation costs may increase significantly.
If we are unable to hire additional
qualified personnel, our ability to grow our business may be harmed.
Over time we will
need to hire additional qualified personnel with expertise in drug development, product registration, clinical, preclinical and
nonclinical research, quality compliance, government regulation, formulation and manufacturing, financial matters and sales and
marketing. We compete for qualified individuals with numerous biopharmaceutical companies, universities and other research institutions.
Competition for such individuals is intense, and we cannot be certain that our search for such personnel will be successful. Attracting
and retaining qualified personnel will be critical to our success.
We rely on third parties to manufacture
the compounds used in our studies, and we intend to rely on them for the manufacture of any approved products for commercial sale.
If these third parties do not manufacture our product candidates in sufficient quantities and at an acceptable cost, clinical
development and commercialization of our product candidates could be delayed, prevented or impaired.
We have no manufacturing
facilities, and we have no experience in the clinical or commercial-scale manufacture of drugs or in designing drug manufacturing
processes. We intend to rely on CMOs to manufacture some or all of our product candidates in clinical studies and our products
that reach commercialization. Completion of our clinical studies and commercialization of our product candidates requires the
manufacture of a sufficient supply of our product candidates. We have contracted with outside sources to manufacture our development
compounds, including TNX-102 SL. If, for any reason, we become unable to rely on our current sources for the manufacture of our
product candidates, either for clinical studies or, at some future date, for commercial quantities, then we would need to identify
and contract with additional or replacement third-party manufacturers to manufacture compounds for nonclinical, preclinical, clinical,
and commercial purposes. Although we are in discussions with other manufacturers we have identified as potential alternative CMOs
of TNX-102 SL, we may not be successful in negotiating acceptable terms with any of them.
We believe that there
are a variety of manufacturers that we may be able to retain to produce these products. However, once we retain a manufacturing
source, if our manufacturers do not perform in a satisfactory manner, we may not be able to develop or commercialize potential
products as planned. Certain specialized manufacturers are expected to provide us with modified and unmodified pharmaceutical
compounds, including finished products, for use in our preclinical and nonclinical testing and clinical studies. Some of these
materials are available from only one supplier or vendor. Any interruption in or termination of service by such sole source suppliers
could result in a delay or interruption in manufacturing until we locate an alternative source of supply. Any delay or interruption
in manufacturing operations (or failure to locate a suitable replacement for such suppliers) could materially adversely affect
our business, prospects, or results of operations. We do not have any short-term or long-term manufacturing agreements with many
of these manufacturers. If we fail to contract for manufacturing on acceptable terms or if third-party manufacturers do not perform
as we expect, our development programs could be materially adversely affected. This may result in delays in filing for and receiving
FDA approval for one or more of our products. Any such delays could cause our prospects to suffer significantly.
Failure by our third-party manufacturers
to comply with the regulatory guidelines set forth by the FDA with respect to our product candidates could delay or prevent the
completion of clinical studies, the approval of any product candidates or the commercialization of our products.
Such third-party manufacturers
must be inspected by FDA for cGMP compliance before they can produce commercial product. We may be in competition with other companies
for access to these manufacturers' facilities and may be subject to delays in manufacture if the manufacturers give other clients
higher priority than they give to us. If we are unable to secure and maintain third-party manufacturing capacity, the development
and sales of our products and our financial performance may be materially affected.
Manufacturers are
obligated to operate in accordance with FDA-mandated requirements. A failure of any of our third-party manufacturers to establish
and follow cGMP requirements and to document their adherence to such practices may lead to significant delays in the availability
of material for clinical studies, may delay or prevent filing or approval of marketing applications for our products, and may
cause delays or interruptions in the availability of our products for commercial distribution following FDA approval. This could
result in higher costs to us or deprive us of potential product revenues.
Complying with cGMP
and non-U.S. regulatory requirements will require that we expend time, money, and effort in production, recordkeeping, and quality
control to assure that the product meets applicable specifications and other requirements. We, or our contracted manufacturing
facility, must also pass a pre-approval inspection prior to FDA approval. Failure to pass a pre-approval inspection may significantly
delay FDA approval of our products. If we fail to comply with these requirements, we would be subject to possible regulatory action
and may be limited in the jurisdictions in which we are permitted to sell our products. As a result, our business, financial condition,
and results of operations may be materially harmed.
Drug manufacturers
are subject to ongoing periodic unannounced inspections by the FDA, the DEA and corresponding state and foreign agencies to ensure
strict compliance with cGMP requirements and other requirements under Federal drug laws, other government regulations and corresponding
foreign standards. If we or our third-party manufacturers fail to comply with applicable regulations, sanctions could be imposed
on us, including fines, injunctions, civil penalties, failure by the government to grant marketing approval of drugs, delays,
suspension or withdrawal of approvals, seizures or recalls of product, operating restrictions and criminal prosecutions.
Corporate and academic collaborators
may take actions to delay, prevent, or undermine the success of our products.
Our operating and
financial strategy for the development, clinical testing, manufacture, and commercialization of drug candidates is heavily dependent
on our entering into collaborations with corporations, academic institutions, licensors, licensees, and other parties. Our current
strategy assumes that we will successfully establish these collaborations, or similar relationships; however, there can be no
assurance that we will be successful establishing such collaborations. Some of our existing collaborations are, and future collaborations
may be, terminable at the sole discretion of the collaborator. Replacement collaborators might not be available on attractive
terms, or at all. The activities of any collaborator will not be within our control and may not be within our power to influence.
There can be no assurance that any collaborator will perform its obligations to our satisfaction or at all, that we will derive
any revenue or profits from such collaborations, or that any collaborator will not compete with us. If any collaboration is not
pursued, we may require substantially greater capital to undertake development and marketing of our proposed products and may
not be able to develop and market such products effectively, if at all. In addition, a lack of development and marketing collaborations
may lead to significant delays in introducing proposed products into certain markets and/or reduced sales of proposed products
in such markets.
Data provided by collaborators and
others upon which we rely that has not been independently verified could turn out to be false, misleading, or incomplete.
We rely on third-party
vendors, scientists, and collaborators to provide us with significant data and other information related to our projects, clinical
studies, and our business. If such third parties provide inaccurate, misleading, or incomplete data, our business, prospects,
and results of operations could be materially adversely affected.
Our product candidates are novel
and still in development.
We are a clinical-stage
pharmaceutical company focused on the development of drug product candidates, all of which are still in development. Our drug
development methods may not lead to commercially viable drugs for any of several reasons. For example, we may fail to identify
appropriate targets or compounds, our drug candidates may fail to be safe and effective in clinical studies, or we may have inadequate
financial or other resources to pursue development efforts for our drug candidates. Our drug candidates will require significant
additional development, clinical studies, regulatory clearances and additional investment by us or our collaborators before they
can be commercialized.
Successful development of our products
is uncertain.
Our development of
current and future product candidates is subject to the risks of failure and delay inherent in the development of new pharmaceutical
products, including: delays in product development, clinical testing, or manufacturing; unplanned expenditures in product development,
clinical testing, or manufacturing; failure to receive regulatory approvals; emergence of superior or equivalent products; inability
to manufacture on its own, or through any others, product candidates on a commercial scale; and failure to achieve market acceptance.
Because of these risks,
our research and development efforts may not result in any commercially viable products. If a significant portion of these development
efforts are not successfully completed, required regulatory approvals are not obtained or any approved products are not commercially
successfully, our business, financial condition, and results of operations may be materially harmed.
Clinical studies required for our
product candidates are expensive and time-consuming, and their outcome is uncertain.
In order to obtain
FDA approval to market a new drug product, we must demonstrate proof of safety and effectiveness in humans. To meet these requirements,
we must conduct "adequate and well controlled" clinical studies. Conducting clinical studies is a lengthy, time-consuming,
and expensive process. The length of time may vary substantially according to the type, complexity, novelty, and intended use
of the product candidate, and often can be several years or more per study. Delays associated with products for which we are directly
conducting clinical studies may cause us to incur additional operating expenses. The commencement and rate of completion of clinical
studies may be delayed by many factors, including, for example: inability to manufacture sufficient quantities of stable and qualified
materials under cGMP, for use in clinical studies; slower than expected rates of patient recruitment; failure to recruit a sufficient
number of patients; modification of clinical study protocols; changes in regulatory requirements for clinical studies; the lack
of effectiveness during clinical studies; the emergence of unforeseen safety issues; delays, suspension, or termination of the
clinical studies due to the institutional review board responsible for overseeing the study at a particular study site; and government
or regulatory delays or "clinical holds" requiring suspension or termination of the studies.
The results from early
clinical studies are not necessarily predictive of results obtained in later clinical studies. Accordingly, even if we obtain
positive results from early clinical studies, we may not be able to confirm the results in future clinical studies. For example,
in our Phase 3 AFFIRM trial in fibromyalgia, we were not able replicate the results we received from our Phase 2b BESTFIT trial.
Clinical studies may not demonstrate sufficient safety and effectiveness to obtain the requisite regulatory approvals for product
candidates.
Our clinical studies
may be conducted in patients with CNS conditions, and in some cases, our product candidates are expected to be used in combination
with approved therapies that themselves have significant adverse event profiles. During the course of treatment, these patients
could suffer adverse medical events or die for reasons that may or may not be related to our product candidates. We cannot ensure
that safety issues will not arise with respect to our product candidates in clinical development.
The failure of clinical
studies to demonstrate safety and effectiveness for the desired indications could harm the development of that product candidate
and other product candidates. This failure could cause us to abandon a product candidate and could delay development of other
product candidates. Any delay in, or termination of, our clinical studies would delay the filing of our NDAs with the FDA and,
ultimately, our ability to commercialize our product candidates and generate product revenues. Any change in, or termination of,
our clinical studies could materially harm our business, financial condition, and results of operations.
We are subject to extensive and
costly government regulation.
Product candidates
employing our technology are subject to extensive and rigorous domestic government regulation including regulation by the FDA,
the Centers for Medicare and Medicaid Services, other divisions of the United States Department of Health and Human Services,
the United States Department of Justice, state and local governments, and their respective foreign equivalents. The FDA regulates
the research, development, preclinical and nonclinical testing and clinical studies, manufacture, safety, effectiveness, record-keeping,
reporting, labeling, storage, approval, advertising, promotion, sale, distribution, import, and export of biopharmaceutical products.
The FDA regulates small molecule chemical entities as drugs, subject to an NDA under the FDCA. The FDA applies the same standards
for biologics, requiring an IND application, followed by a BLA prior to licensure. Other products, such as vaccines, are also
regulated under the Public Health Service Act. FDA has conflated the standards for approval of NDAs and BLAs so that they require
the same types of information on safety, effectiveness, and chemistry, manufacturing and controls. If products employing our technologies
are marketed abroad, they will also be subject to extensive regulation by foreign governments, whether or not they have obtained
FDA approval for a given product and its uses. Such foreign regulation may be equally or more demanding than corresponding United
States regulation.
Government regulation
substantially increases the cost and risk of researching, developing, manufacturing, and selling our products. The regulatory
review and approval process, which includes preclinical and nonclinical testing and clinical studies of each product candidate,
is lengthy, expensive, and uncertain. We or our collaborators must obtain and maintain regulatory authorization to conduct clinical
studies. We or our collaborators must obtain regulatory approval for each product we intend to market, and the manufacturing facilities
used for the products must be inspected and meet legal requirements. Securing regulatory approval requires the submission of extensive
preclinical, nonclinical and clinical data and other supporting information for each proposed therapeutic indication in order
to establish the product's safety and efficacy, and in the case of biologics also potency and purity, for each intended use. The
development and approval process takes many years, requires substantial resources, and may never lead to the approval of a product.
Even if we are able
to obtain regulatory approval for a particular product, the approval may limit the indicated medical uses for the product, may
otherwise limit our ability to promote, sell, and distribute the product, may require that we conduct costly post-marketing surveillance,
and/or may require that we conduct ongoing post-marketing studies. Material changes to an approved product, such as, for example,
manufacturing changes or revised labeling, may require further regulatory review and approval. Once obtained, any approvals may
be withdrawn, including, for example, if there is a later discovery of previously unknown problems with the product, such as a
previously unknown safety issue.
If we, our collaborators,
or our contract manufacturers fail to comply with applicable regulatory requirements at any stage during the regulatory process,
such noncompliance could result in, among other things delays in the approval of applications or supplements to approved applications;
refusal of a regulatory authority, including the FDA, to review pending market approval applications or supplements to approved
applications; warning letters; fines; import and/or export restrictions; product recalls or seizures; injunctions; total or partial
suspension of production; civil penalties; withdrawals of previously approved marketing applications or licenses; recommendations
by the FDA or other regulatory authorities against governmental contracts; and/or criminal prosecutions.
We do not have, and may never obtain,
the regulatory approvals we need to market our product candidates.
Following completion
of clinical studies, the results are evaluated and, depending on the outcome, submitted to the FDA in the form of an NDA or BLA
in order to obtain FDA approval of the product and authorization to commence commercial marketing. In responding to an NDA, the
FDA may require additional testing or information, may require that the product labeling be modified, may impose post-approval
study and other commitments or reporting requirements or other restrictions on product distribution, or may deny the application.
The FDA has established performance goals for review of NDAs or BLAs: six months for priority applications and ten months for
standard applications. However, the FDA is not required to complete its review within these time periods. The timing of final
FDA review and action varies greatly, but can take years in some cases and may involve the input of an FDA advisory committee
of outside experts. Product sales in the United States may commence only when an NDA or BLA is approved.
To date, we have not
applied for or received the regulatory approvals required for the commercial sale of any of our products in the United States
or in any foreign jurisdiction. None of our product candidates have been determined to be safe and effective, and we have not
submitted an NDA or BLA to the FDA or an equivalent application to any foreign regulatory authorities for any of our product candidates.
It is possible that
none of our product candidates will be approved for marketing. Failure to obtain regulatory approvals, or delays in obtaining
regulatory approvals, may adversely affect the successful commercialization of any drugs or biologics that we or our partners
develop, may impose additional costs on us or our collaborators, may diminish any competitive advantages that we or our partners
may attain, and/or may adversely affect our receipt of revenues or royalties.
Our product candidates may face
competition sooner than expected.
We intend to seek
data exclusivity or market exclusivity for our product candidates provided under the FDCA and similar laws in other countries.
We believe that TNX-801 could qualify for 12 years of data exclusivity under the Biologics Price Competition and Innovation Act
of 2009, or BPCIA, which was enacted as part of the Patient Protection and Affordable Care Act. Under the BPCIA, an application
for a biosimilar product or BLA cannot be submitted to the FDA until four years, or if approved by the FDA, until 12 years, after
the original brand product identified as the reference product is approved under a BLA. The BPCIA provides an abbreviated pathway
for the approval of biosimilar and interchangeable biological products. The new abbreviated regulatory pathway establishes legal
authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable”
based on its similarity to an existing brand product. The new law is complex and is only beginning to be interpreted and implemented
by the FDA. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes could have a material
adverse effect on the future commercial prospects for any of our product candidates that are biologics. There is also a risk that
President Trump’s administration could repeal or amend the BPCIA to shorten this exclusivity period, potentially creating
the opportunity for biosimilar competition sooner than anticipated after the expiration of our patent protection. Although there
is no current discussion of repeal or modification of the BPCIA, the future remains uncertain. Moreover, the extent to which a
biosimilar, once approved, will be substituted for any reference product in a way that is similar to traditional generic substitution
for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still
developing.
Our product candidates
that are not, or are not considered, biologics that would qualify for exclusivity under the BPCIA may be eligible for market exclusivity
as drugs under the FDCA. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first
applicant to gain approval of an NDA for an NCE. A drug is an NCE if the FDA has not previously approved any other new drug containing
the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity
period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA, submitted by another
company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required
for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or
non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing
NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are
deemed by the FDA to be essential to the approval of the application, for example, for new indications, dosages, or strengths
of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinical investigations and
does not prohibit the FDA from approving ANDAs for drugs containing the original active agent.
Even if, as we expect,
our product candidates are considered to be reference products eligible for 12 years of exclusivity under the BPCIA or five years
of exclusivity under the FDCA, another company could market competing products if the FDA approves a full BLA or full NDA for
such product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to
demonstrate the safety, purity and potency of the products. Moreover, an amendment or repeal of the BPCIA could result in a shorter
exclusivity period for our product candidates, which could have a material adverse effect on our business.
Even if approved, our products will
be subject to extensive post-approval regulation.
Once a product is
approved, numerous post-approval requirements apply. Among other things, the holder of an approved NDA is subject to periodic
and other FDA monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of
the failure of a product to meet the specifications in the NDA. Application holders must submit new or supplemental applications
and obtain FDA approval for certain changes to the approved product, product labeling, or manufacturing process. Application holders
must also submit advertising and other promotional material to the FDA and report on ongoing clinical studies.
Depending on the circumstances,
failure to meet these post-approval requirements can result in criminal prosecution, fines, injunctions, recall or seizure of
products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, or refusal to allow
us to enter into supply contracts, including government contracts. In addition, even if we comply with FDA and other requirements,
new information regarding the safety or effectiveness of a product could lead the FDA to modify or withdraw product approval.
Even if we obtain regulatory approval
to market our product candidates, our product candidates may not be accepted by the market.
Even if the FDA approves
one or more of our product candidates, physicians and patients may not accept it or use it. Even if physicians and patients would
like to use our products, our products may not gain market acceptance among healthcare payors such as managed care formularies,
insurance companies or government programs such as Medicare or Medicaid. Acceptance and use of our products will depend upon a
number of factors including: perceptions by members of the health care community, including physicians, about the safety and effectiveness
of our drug or device product; cost-effectiveness of our product relative to competing products; availability of reimbursement
for our product from government or other healthcare payors; and effectiveness of marketing and distribution efforts by us and
our licensees and distributors, if any.
The degree of market
acceptance of any pharmaceutical product that we develop will depend on a number of factors, including:
|
•
|
the
safety and effectiveness of our products, including any significant potential side effects
(including drowsiness and dry mouth), as compared to alternative products or treatment
methods;
|
|
•
|
the
timing of market entry as compared to competitive products;
|
|
•
|
the
rate of adoption of our products by doctors and nurses;
|
|
•
|
product
labeling or product insert required by the FDA for each of our products;
|
|
•
|
reimbursement
policies of government and third-party payors;
|
|
•
|
effectiveness
of our sales, marketing and distribution capabilities and the effectiveness of such capabilities
of our collaborative partners, if any; and
|
|
•
|
unfavorable
publicity concerning our products or any similar products.
|
Our product candidates,
if successfully developed, will compete with a number of products manufactured and marketed by major pharmaceutical companies,
biotechnology companies and manufacturers of generic drugs. Our products may also compete with new products currently under development
by others. Physicians, patients, third-party payors and the medical community may not accept and utilize any of our product candidates.
If our products do not achieve market acceptance, we will not be able to generate significant revenues or become profitable.
Because we expect
sales of our current product candidates, if approved, to generate substantially all of our product revenues for the foreseeable
future, the failure of these products to find market acceptance would harm our business and could require us to seek additional
financing.
If we fail to establish marketing,
sales and distribution capabilities, or fail to enter into arrangements with third parties, we will not be able to create a market
for our product candidates.
Our strategy with
our product candidates is to control, directly or through contracted third parties, all or most aspects of the product development
process, including marketing, sales and distribution. Currently, we do not have any sales, marketing or distribution capabilities.
In order to generate sales of any product candidates that receive regulatory approval, we must either acquire or develop an internal
marketing and sales force with technical expertise and with supporting distribution capabilities or make arrangements with third
parties to perform these services for us. The acquisition or development of a sales and distribution infrastructure would require
substantial resources, which may divert the attention of our management and key personnel and defer our product development efforts.
To the extent that we enter into marketing and sales arrangements with other companies, our revenues will depend on the efforts
of others. These efforts may not be successful. If we fail to develop sales, marketing and distribution channels, or enter into
arrangements with third parties, we will experience delays in product sales and incur increased costs.
Sales of pharmaceutical
products largely depend on the reimbursement of patients' medical expenses by government health care programs and private health
insurers. Without the financial support of the government or third-party payors, the market for our products will be limited.
These third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.
Recent proposals to change the health care system in the United States have included measures that would limit or eliminate payments
for medical products and services or subject the pricing of medical treatment products to government control. Significant uncertainty
exists as to the reimbursement status of newly approved health care products. Third-party payors may not reimburse sales of our
products or enable our collaborators to sell them at profitable prices.
Our business strategy
might involve out-licensing product candidates to or collaborating with larger firms with experience in marketing and selling
pharmaceutical products. There can be no assurance that we will be able to successfully establish marketing, sales, or distribution
relationships; that such relationships, if established, will be successful; or that we will be successful in gaining market acceptance
for our products. To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our
product revenues will be lower than if we marketed and sold our products directly, and any revenues we receive will depend upon
the efforts of such third-parties. If we are unable to establish such third-party sales and marketing relationships, or choose
not to do so, we will have to establish and rely on our own in-house capabilities.
We, as a company,
have no experience in marketing or selling pharmaceutical products and currently have no sales, marketing, or distribution infrastructure.
To market any of our products directly, we would need to develop a marketing, sales, and distribution force that both has technical
expertise and the ability to support a distribution capability. The establishment of a marketing, sales, and distribution capability
would significantly increase our costs, possibly requiring substantial additional capital. In addition, there is intense competition
for proficient sales and marketing personnel, and we may not be able to attract individuals who have the qualifications necessary
to market, sell, and distribute our products. There can be no assurance that we will be able to establish internal marketing,
sales, or distribution capabilities. If we are unable to, or choose not to establish these capabilities, or if the capabilities
we establish are not sufficient to meet our needs, we will be required to establish collaborative marketing, sales, or distribution
relationships with third parties.
In the event that we are successful
in bringing any products to market, our revenues may be adversely affected if we fail to obtain acceptable prices or adequate
reimbursement for our products from third-party payors.
Our ability to commercialize
pharmaceutical products successfully may depend in part on the availability of reimbursement for our products from:
|
•
|
government
and health administration authorities;
|
|
•
|
private
health insurers; and
|
|
•
|
other
third party payors, including Medicare and Medicaid.
|
We cannot predict
the availability of reimbursement for health care products to be approved in the future. Third-party payors, including Medicare
and Medicaid, are challenging the prices charged for medical products and services. Government and other third-party payors increasingly
are limiting both coverage and the level of reimbursement for new drugs whether approved under Section 505(b)(1), 505(b)(2), or
505(j) of the FDCA, through direct payment mechanisms and through cost containment programs such as the Medicaid Drug Rebate Program.
Third-party insurance coverage may not be available to patients for any of our products.
The continuing efforts
of government and third-party payors to contain or reduce the costs of health care may limit our commercial opportunity. If government
and other third-party payors do not provide adequate coverage and reimbursement for any prescription product we bring to market,
doctors may not prescribe them or patients may ask to have their physicians prescribe competing drugs with more favorable reimbursement.
In some foreign markets, pricing and profitability of prescription pharmaceuticals are subject to government control. In the United
States, we expect that there will continue to be federal and state proposals for similar controls. In addition, we expect that
increasing emphasis on managed care in the United States will continue to put pressure on the pricing of pharmaceutical products.
Cost control initiatives could decrease the price that we receive for any products in the future. Further, cost control initiatives
could impair our ability to commercialize our products and our ability to earn revenues from this commercialization.
If we obtain approval to commercialize
any approved products outside of the United States, a variety of risks associated with international operations could materially
adversely affect our business.
If TNX-102 SL or any
of our other product candidates are approved for commercialization outside of the United States, we intend to enter into agreements
with third parties to market them on a worldwide basis or in more limited geographical regions. We expect that we will be subject
to additional risks related to entering into international business relationships, including:
|
•
|
different
regulatory requirements for drug approvals;
|
|
•
|
reduced
protection for intellectual property rights, including trade secret and patent rights;
|
|
•
|
unexpected
changes in tariffs, trade barriers and regulatory requirements;
|
|
•
|
economic
weakness, including inflation, or political instability in particular foreign economies
and markets;
|
|
•
|
compliance
with tax, employment, immigration and labor laws for employees living or traveling abroad;
|
|
•
|
foreign
taxes, including withholding of payroll taxes;
|
|
•
|
foreign
currency fluctuations, which could result in increased operating expenses and reduced
revenues, and other obligations incident to doing business in another country;
|
|
•
|
workforce
uncertainty in countries where labor unrest is more common than in the United States;
|
|
•
|
production
shortages resulting from any events affecting raw material supply or manufacturing capabilities
abroad;
|
|
•
|
business
interruptions resulting from geopolitical actions, including war and terrorism, or natural
disasters including earthquakes, hurricanes, floods and fires; and
|
|
•
|
difficulty
in importing and exporting clinical study materials and study samples.
|
We face the risk of product liability
claims and may not be able to obtain insurance.
Our business exposes
us to the risk of product liability claims that are inherent in the development of drugs. If the use of one or more of our or
our collaborators' drugs harms people, we may be subject to costly and damaging product liability claims brought against us by
clinical study participants, consumers, health care providers, pharmaceutical companies or others selling our products. Our inability
to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could
prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators. While we currently
carry clinical study insurance and product liability insurance, we cannot predict all of the possible harms or side effects that
may result and, therefore, the amount of insurance coverage we hold now or in the future may not be adequate to cover all liabilities
we might incur. We intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval
for our drug candidates in development, but we may be unable to obtain commercially reasonable product liability insurance for
any products approved for marketing. If we are unable to obtain insurance at an acceptable cost or otherwise protect against potential
product liability claims, we will be exposed to significant liabilities, which may materially and adversely affect our business
and financial position. If we are sued for any injury allegedly caused by our or our collaborators' products, our liability could
exceed our total assets and our ability to pay the liability. A product liability claim or series of claims brought against us
would decrease our cash and could cause our stock price to fall.
We use hazardous chemicals in our
business. Potential claims relating to improper handling, storage or disposal of these chemicals could affect us and be time consuming
and costly.
Our research and development
processes and/or those of our third party contractors may involve the controlled use of hazardous materials and chemicals. These
hazardous chemicals are reagents and solvents typically found in a chemistry laboratory. Our operations also produce hazardous
waste products. Federal, state and local laws and regulations govern the use, manufacture, storage, handling and disposal of hazardous
materials. While we attempt to comply with all environmental laws and regulations, including those relating to the outsourcing
of the disposal of all hazardous chemicals and waste products, we cannot eliminate the risk of contamination from or discharge
of hazardous materials and any resultant injury. In the event of such an accident, we could be held liable for any resulting damages
and any liability could materially adversely affect our business, financial condition and results of operations.
Compliance with environmental
laws and regulations may be expensive. Current or future environmental regulations may impair our research, development or production
efforts. We might have to pay civil damages in the event of an improper or unauthorized release of, or exposure of individuals
to, hazardous materials. We are not insured against these environmental risks.
If we enter into collaborations
with third parties, they might also work with hazardous materials in connection with our collaborations. We may agree to indemnify
our collaborators in some circumstances against damages and other liabilities arising out of development activities or products
produced in connection with these collaborations.
In addition, the federal,
state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive
materials and waste products may require us to incur substantial compliance costs that could materially adversely affect our business,
financial condition and results of operations.
Our insurance policies are expensive
and protect us only from some business risks, which will leave us exposed to significant uninsured liabilities.
We carry insurance
for most categories of risk that our business may encounter, however, we may not have adequate levels of coverage. We currently
maintain general liability, clinical study, property, workers’ compensation, products liability and directors’ and
officers’ insurance, along with an umbrella policy, which collectively costs approximately $600,000 per annum. We cannot
provide any assurances that we will be able to maintain existing insurance at current or adequate levels of coverage. Any significant
uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations.
If we retain collaborative partners
and our partners do not satisfy their obligations, we will be unable to develop our partnered product candidates.
In the event we enter
into any collaborative agreements, we may not have day-to-day control over the activities of our collaborative partners with respect
to any of these product candidates. Any collaborative partner may not fulfill its obligations under these agreements. If a collaborative
partner fails to fulfill its obligations under an agreement with us, we may be unable to assume the development of the products
covered by that agreement or enter into alternative arrangements with a third party. In addition, we may encounter delays in the
commercialization of the product candidate that is the subject of the agreement. Accordingly, our ability to receive any revenue
from the product candidates covered by these agreements will be dependent on the efforts of our collaborative partner. We could
also become involved in disputes with a collaborative partner, which could lead to delays in or termination of our development
and commercialization programs and time-consuming and expensive litigation or arbitration. In addition, any such dispute could
diminish our collaborators’ commitment to us and reduce the resources they devote to developing and commercializing our
products. Conflicts or disputes with our collaborators, and competition from them, could harm our relationships with our other
collaborators, restrict our ability to enter future collaboration agreements and delay the research, development or commercialization
of our product candidates. If any collaborative partner terminates or breaches its agreement, or otherwise fails to complete its
obligations in a timely manner, our chances of successfully developing or commercializing these product candidates would be materially
and adversely affected. We may not be able to enter into collaborative agreements with partners on terms favorable to us, or at
all. Our inability to enter into collaborative arrangements with collaborative partners, or our failure to maintain such arrangements,
would limit the number of product candidates that we could develop and ultimately, decrease our sources of any future revenues.
We may be unsuccessful in obtaining
a priority voucher for material threat medical countermeasures.
In 2016, the 21st
Century Cures Act, or the Act, was signed into law to support ongoing biomedical innovation. One part of the Act, Section 3086,
is aimed at “Encouraging Treatments for Agents that Present a National Security Threat.” The Act created a new priority
review voucher program for “material threat medical countermeasures.” The Act defines such countermeasures as drugs
or vaccines intended to treat biological, chemical, radiological, or nuclear agents that present a national security threat or
to treat harm from a condition that may be caused by administering a drug or biological product against such an agent. The Department
of Homeland Security has identified 13 such threats, including anthrax, smallpox, Ebola/Marburg, tularemia, and botulism. A priority
review voucher can be applied to any other product; it shortens the FDA review timeline for a new application from 10 months to
6 months. The recipient of a priority review voucher may transfer it.
We intend to seek
a priority voucher for TNX-801 as a material threat medical countermeasure. However, the structure of voucher programs limits
the number of medical countermeasures eligible for a priority review voucher. Further, the medical countermeasure must qualify
for priority review in order to be eligible and may not include any commercially approved indication. As such, the market for
the TNX-801 will be limited if we are successful in obtaining a priority voucher.
There may not be market interest
in TNX-801.
The government is
the only market for most medical countermeasures. This is because unlike other drugs and vaccines, these products are not sold
to doctors, hospitals, or pharmacies. The BioShield Special Reserve Fund, or SRF, has been the sole medical countermeasures market
for the last decade; a 10 year advance appropriation of $5.6 billion was available to procure successful candidate medical countermeasures.
The SRF expired in 2013 and all funds were used to add 12 new medical countermeasures to the national stockpile. Congress reauthorized
the SRF but adequate funding has not yet followed; the SRF is now appropriated annually and has not kept pace with the need for
purchasing products ready for stockpiling. Further, similar products are being developed by other companies, such as Bavarian
Nordic, which is developing MVA, which may compete with TNX-801. As such, even if TNX-801 were to receive FDA approval, the commercial
success of TNX-801 remains uncertain.
If technology developed for the
purposes of developing new medicines or vaccines can be applied to the creation or development of biological weapons, then our
technology may be considered “dual use” technology and be subject to limitations on public disclosure or export.
Together with the
University of Alberta, we are consulting with government authorities before publishing work that describes the synthesis of poxviruses,
including TNX-801. Our research collaboration is dedicated not only to creating tools that better protect public health but also
to safeguarding any information with broad, dual-use potential that could be inappropriately applied. “Dual use research”
is research conducted for legitimate purposes that generates knowledge, information, technologies, and/or products that can be
reasonably anticipated to provide knowledge, information, products, or technologies that could be directly misapplied to pose
a significant threat to public health, agricultural crops, or national security. Because variola, the agent that causes smallpox,
is a pox virus, the technology we created could be considered dual use and could be subject to export control, for example under
the Wassenaar Arrangement. Further, if federal authorities determine that our research is subject to institutional oversight,
we will need to implement a risk-management plan developed in collaboration with the institutional review entity. Failure to comply
with the plan may result in suspension, limitation, or termination of federal funding or loss of future federal funding opportunities
for any of our or the University of Alberta’s research.
We face risks in connection with
existing and future collaborations with respect to the development, manufacture, and commercialization of our product candidates.
We face a number of
risks in connection with our current collaborations, including the University of Alberta. Our collaboration agreements are subject
to termination under various circumstances. Our collaborators may change the focus of their development and commercialization
efforts or may have insufficient resources to effectively assist in the development of our products. Any future collaboration
agreements may have the effect of limiting the areas of research and development that we may pursue, either alone or in collaboration
with third parties. Further, disagreements with collaborators, including disagreements over proprietary rights, contract interpretation,
or the preferred course of development, might cause delays, might result in litigation or arbitration, or might result in termination
of the research, development or commercialization of our products. Any such disagreements would divert management attention and
resources and be time-consuming and costly.
We face risks in connection with
the production and storage of the TNX-801 vaccine.
The TNX-801 vaccine
candidate is a live form of HPXV. We have initiated vaccine-manufacturing activities to support further nonclinical testing of
TNX-801. While it is safer than existing smallpox-preventing vaccines, the production and storage of the synthesized HPXV virus
stock may carry risk of infection and harm to individuals. HPXV, an equine disease caused by a virus and characterized by eruptions
in the mouth and on the skin, is believed to be eradicated. No true HPXV outbreaks have been reported since 1976, at which time
the United States Department of Agriculture obtained the viral sample used for the sequence published in 2006 that allowed the
synthesis of TNX-801.
RISKS RELATED TO OUR STOCK
Sales of
additional shares of our common stock could cause the price of our common stock to decline.
Sales
of substantial amounts of our common stock in the public market, or the availability of such shares for sale, by us or others,
including the issuance of common stock upon exercise of outstanding options and warrants, could adversely affect the price of
our common stock. We and our directors and officers may sell shares into the market, which could adversely affect the market price
of shares of our common stock.
The market price for our common
stock may be volatile, and your investment in our common stock could decline in value.
The stock market in
general has experienced extreme price and volume fluctuations. The market prices of the securities of biotechnology and specialty
pharmaceutical companies, particularly companies like ours without product revenues and earnings, have been highly volatile and
may continue to be highly volatile in the future. This volatility has often been unrelated to the operating performance of particular
companies. The following factors, in addition to other risk factors described in this section, may have a significant impact on
the market price of our common stock:
|
•
|
announcements of technological
innovations or new products by us or our competitors;
|
|
•
|
announcement of FDA approval
or disapproval of our product candidates or other product-related actions;
|
|
•
|
developments involving
our discovery efforts and clinical studies;
|
|
•
|
developments or disputes
concerning patents or proprietary rights, including announcements of infringement, interference or other litigation against us
or our potential licensees;
|
|
•
|
developments involving
our efforts to commercialize our products, including developments impacting the timing of commercialization;
|
|
•
|
announcements concerning
our competitors, or the biotechnology, pharmaceutical or drug delivery industry in general;
|
|
•
|
public concerns as to
the safety or efficacy of our product candidates or our competitors’ products;
|
|
•
|
changes in government
regulation of the pharmaceutical or medical industry;
|
|
•
|
changes in the reimbursement
policies of third party insurance companies or government agencies;
|
|
•
|
actual or anticipated
fluctuations in our operating results;
|
|
•
|
changes in financial
estimates or recommendations by securities analysts;
|
|
•
|
developments involving
corporate collaborators, if any;
|
|
•
|
changes in accounting
principles; and
|
|
•
|
the loss of any of our
key scientific or management personnel.
|
In the past, securities
class action litigation has often been brought against companies that experience volatility in the market price of their securities.
Whether or not meritorious, litigation brought against us could result in substantial costs and a diversion of management’s
attention and resources, which could adversely affect our business, operating results and financial condition.
We do not anticipate paying dividends
on our common stock and, accordingly, shareholders must rely on stock appreciation for any return on their investment.
We have never declared
or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. The declaration of dividends
is subject to the discretion of our board of directors and will depend on various factors, including our operating results, financial
condition, future prospects and any other factors deemed relevant by our board of directors. You should not rely on an investment
in our company if you require dividend income from your investment in our company. The success of your investment will likely
depend entirely upon any future appreciation of the market price of our common stock, which is uncertain and unpredictable. There
is no guarantee that our common stock will appreciate in value.
We expect that our quarterly results
of operations will fluctuate, and this fluctuation could cause our stock price to decline.
Our quarterly operating
results are likely to fluctuate in the future. These fluctuations could cause our stock price to decline. The nature of our business
involves variable factors, such as the timing of the research, development and regulatory pathways of our product candidates,
which could cause our operating results to fluctuate.
Due to the possibility
of fluctuations in our revenues and expenses, we believe that quarter-to-quarter comparisons of our operating results are not
a good indication of our future performance.
The rights of the holders of common stock may be impaired
by the potential issuance of preferred stock.
Our articles of incorporation
give our board of directors the right to create new series of preferred stock. As a result, the board of directors may, without
stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could adversely
affect the voting power and equity interest of the holders of common stock. Preferred stock, which could be issued with the right
to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control. The
possible impact on takeover attempts could adversely affect the price of our common stock. Although we have no present intention
to issue any shares of preferred stock or to create a series of preferred stock, we may issue such shares in the future.
If we fail to comply with the rules under
the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if we discover material weaknesses and deficiencies
in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more
difficult.
If we fail to comply
with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material
weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly
and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual management assessments
of the effectiveness of our internal control over financial reporting. If material weaknesses or significant deficiencies are
discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure
that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for us to produce reliable financial
reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud,
our business and operating results could be harmed, investors could lose confidence in our reported financial information, and
the trading price of our common stock could drop significantly.
Because certain of our stockholders
control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder
approval.
As of April 13, 2017, our directors, executive officers and principal stockholders (those beneficially owning
in excess of 5%), and their respective affiliates, beneficially own approximately 11.7% of our outstanding shares of common stock.
As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders
for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets.
In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company.
Accordingly, this concentration of ownership might harm the market price of our common stock by:
|
•
|
delaying, deferring or
preventing a change in corporate control;
|
|
•
|
impeding a merger, consolidation,
takeover or other business combination involving us; or
|
|
•
|
discouraging a potential
acquirer from making a tender offer or otherwise attempting to obtain control of us.
|
If securities or industry analysts
do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely,
our stock price and trading volume could decline.
The trading market
for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our
business. Our research coverage by industry and financial analysts is currently limited. Even if our analyst coverage increases,
if one or more of the analysts who cover us downgrade our stock, our stock price would likely decline. If one or more of these
analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets,
which in turn could cause our stock price or trading volume to decline.