When you see that a stock has dropped by more than 50% on news, you know that it is not a good day for the company and its shareholders. When it happens in a speculative biotech or biohealth player, some investors wonder if that may mark the end of the company.

Tonix Pharmaceuticals Holding Corp. (NASDAQ: TNXP) was the disaster of the day on Tuesday after the company announced that it will stop development of its fibromyalgia treatment after it failed in a late-stage trial. While the drop might signal the beginning of the end here, there also might still be some hope for Tonix.

The company did confirm that it will shift the focus of its TNX-102 SL toward patients suffering from post-traumatic stress disorder (PTSD). This represents a huge opportunity if successful, but investors need to understand that the prospects for upside hopes that were offered up even last month just became drastically reduced.

Fibromyalgia is a chronic disorder that causes musculoskeletal pain, as well as fatigue and sleep disturbances. It has no current cure and the current treatments target symptoms.

Quite simply, Tonix showed that the drug candidate did not meet its primary pain reduction target by 30% or more over a 12-week period. What is interesting is that this drug candidate has shown a stronger effect on PTSD patients versus its efficacy in treating fibromyalgia. Management has even concluded that it might be able to secure a breakthrough therapy status.

Now comes the question of whether Tonix has the ability and the pocketbook to reach this new focus. As of June 30, Tonix’s balance sheet had cash (including its cash equivalents) of $31.25 million, down from $43 million back at the end of 2015. Fortunately it had no long-term debt, but class action suits and a focal shift may act to eat that cash balance. It seems evident that the company will need more funding, and the market cap is down to $24.1 million after the massive drop in its share price.

Tonix previously noted that it may begin a late-stage study for PTSD in the first quarter of 2017. This remains a large risk, but there have effectively not been new treatments for PTSD for a decade and a half.

Having the breakthrough therapy status will speed up an FDA review process because the FDA gives incentives and opportunity for new treatments targeting serious life threatening medical conditions better than existing treatments.

As far as why Tonix may still have its chips on the table, PTSD is a serious condition. Most of us think of it impacting current or former military people. The Nebraska Department of Veterans Affairs said the following:

An estimated 7.8% of Americans will experience PTSD at some point in their lives, with women (10.4%) twice as likely as men (5%) to develop PTSD. About 3.6% of U.S. adults aged 18 to 54 (5.2 million people) have PTSD during the course of a given year.

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Before investors get excited about any past analyst calls, they better understand that those expectations from recent weeks likely will have to be tempered handily. Tonix had very few analysts following it, but the consensus analyst target was $7.50 before this news. Recent calls from the past few weeks were as follows:

• Back in August Cantor Fitzgerald said it was expecting positive Phase 3 fibromyalgia data, and the firm had kept its Buy rating and $5.00 price target at that time.
• Oppenheimer also had an Outperform rating and $10 target price in August.
• Tonix had a Buy rating and $7.50 price target from Roth Capital Partners in August.

Tonix shares were down 58% at $0.92 shortly before the close of trading on Tuesday, and its new 52-week range is $0.92 to $7.95. This micro-cap stock had also traded a whopping 8.3 million shares with almost 15 minutes until the closing bell, more than 18 times normal trading volume.

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