Tonix Pharmaceuticals' Phase 2 Setback and Strategic Shift: A Path Forward for TNX-102 SL?

Investors in Tonix Pharmaceuticals (NASDAQ: TNP) faced a mixed bag of news following the release of Phase 2 trial results for its lead candidate, TNX-102 SL, in fibromyalgia-type Long COVID. While the trial failed its primary endpoint of reducing pain, secondary data revealed promising activity in addressing fatigue—a symptom central to Long COVID’s symptom cluster. This pivot underscores a critical strategic realignment for the company, but questions linger about execution risks and investor sentiment. Here’s what investors need to know.

Phase 2 Trial: Missed on Pain, But a Fatigue Silver Lining

The Phase 2 PREVAIL trial evaluated TNX-102 SL, a sublingual formulation of ketamine, in 63 patients with fibromyalgia-type Long COVID. The primary endpoint—reducing multi-site pain scores by week 14—was not met, with an effect size (ES) of just 0.08 versus a required threshold of 0.2. This failure likely drove short-term pressure on Tonix’s stock, which dropped ~15% on the news.

However, the trial’s secondary data provided a lifeline:
- Fatigue: The PROMIS Fatigue scale showed an ES of 0.5, a statistically significant improvement.
- Sleep Quality: ES of 0.32 on PROMIS Sleep Disturbance.
- Cognitive Function and Disability: ES of 0.21 and 0.26, respectively.
- Patient-Reported Outcomes: 34.4% of patients reported improvement on the PGIC scale vs. 16.1% for placebo.

While pain reduction was a disappointment, the fatigue data aligns with NIH priorities and the lived experience of Long COVID patients, where fatigue is a signature symptom (affecting ~94% of patients). This opens a path for redefining the program’s endpoints.

Strategic Shift: From Pain to Fatigue—Can This Work?

Tonix plans to pivot TNX-102 SL’s development by proposing PROMIS Fatigue as the new primary endpoint for future trials. This move makes sense given:
1. Regulatory Alignment: The FDA has acknowledged fatigue’s centrality to Long COVID, and NIH’s RECOVER initiative prioritizes this symptom.
2. Market Need: No approved therapies exist for fibromyalgia-type Long COVID, a subset representing 28–29% of Long COVID cases (per NIH data).
3. TNX-102 SL’s Track Record: The compound has prior success in fibromyalgia (where it reduced pain by 30–35% in earlier trials), suggesting cross-condition efficacy.

The next step is an FDA End-of-Phase 2 meeting (expected Q1 2024) to discuss the new endpoint strategy. If the FDA agrees, Tonix could advance to a registrational trial focused on fatigue, potentially unlocking a $500–1 billion addressable market for Long COVID treatments.

Risks and Considerations

1. Endpoint Shift Acceptance: The FDA may push back on redefining endpoints post-hoc, demanding stricter statistical rigor.
2. Competitor Landscape: Companies like Axsome Therapeutics (AXSM) and AstraZeneca are advancing therapies for Long COVID fatigue, raising competitive pressures.
3. Execution: Scaling TNX-102 SL production and designing a trial large enough to validate fatigue improvement will require capital and expertise.

Conclusion: A High-Risk, High-Reward Opportunity

Tonix’s Phase 2 trial marks a setback for its Long COVID program but also reveals a viable path forward. The fatigue data provides a credible basis to reposition TNX-102 SL, especially in a market with limited treatment options. Key catalysts ahead include the FDA meeting outcome and potential new trial design details.

Investors should weigh the risks:
- Downside: Failure to secure FDA agreement on endpoints or replicate fatigue improvements could sink the program.
- Upside: If successful, TNX-102 SL could command a $500 million+ annual revenue stream in Long COVID alone, with potential extensions into fibromyalgia and chronic fatigue syndrome.

With a market cap of ~$200 million and $50 million in cash (as of Q3 2023), Tonix has room to maneuver but remains dependent on equity raises or partnerships. For those willing to tolerate high volatility, the stock’s current valuation leaves room for upside if the FDA greenlights the fatigue-focused strategy.

In short: Stay tuned for the FDA’s response. This decision will determine whether Tonix’s pivot succeeds—or if the program remains sidelined.

Data as of November 2023. Past performance is not indicative of future results.