Security details:
Symbol: TNXP
Share price: ~$1.11
Outstanding Shares: 15 million
Market Cap: $16.8 million
Recent News:
- February 26, 2020, Tonix Pharmaceuticals Announces Research Collaboration with Southern Research to Develop a Potential Vaccine to Protect Against New Coronavirus Disease 2019 (COVID-19) Based on Horsepox Virus (TNX-1800)
- February 11, 2020, Tonix Pharmaceuticals Announces Closing of $7.5 million Public Offering
- February 5, 2020, Tonix Pharmaceuticals Announces Outcome of Interim Analysis for Phase 3 RECOVERY Study of Tonmya® (TNX-102 SL) in PTSD
Introduction:
Today TNXP’s share price has a seen a more than two-fold increase and trading volume has been ridiculously high amounting to over six times the total number of outstanding shares. Like many other recent and dubious biotech tickers, TNXP’s current price run can be attributed to news relating to the latest Coronavirus, as the company announced today a research collaboration with Southern Research to develop a potential vaccine. As usual, we looked into it a found numerous red flags relating to the many institutional investors the company is involved with.
Company information:
Tonix Pharmaceuticals Holding Corp. describes itself as “a clinical-stage biopharmaceutical company focused on discovering and developing small molecules and biologics to treat psychiatric, pain and addiction conditions, to improve biodefense through potential medical counter-measures, to treat transplant rejection and to treat gastric and pancreatic cancers”.
All of its drug product candidates are still in development. Furthermore, its financials are pretty lousy. According to its latest 10Q for 2019 Q3, the company has $10 million in cash, $12 million in liabilities as well as no revenue and $7.8 million in quarterly losses. Dilution is also a serious concern. Despite implementing a 1-for-10 reverse split in November 2019, the number of outstanding shares increased from 328,689 on December 31, 2018 to 1,575,246 on September 30, 2019. Currently the number of outstanding shares stands over 15 million.
Institutional shareholders to worry about… many of them:
On February 7, 2020, CVI investments acquired 1.24 million TNXP shares of common stock ( 1 ). According to our Asgard database (a proprietary database and stock selection tool that identifies high-probability fraudulent/dubious companies based on several characteristics), CVI has been involved with other suspect tickers, such as BPTH, RKDA, TRNX and CODX among other. A quick look at the historical price action of these tickers will show the same trend; a very extended downward trend characterised by “spikes in volatility”. TRNX is one of the dodgiest ticker we took a look out when we started publishing our research, check out our very short article on it. We also wrote short report on CODX on January 28, 2020.
Another dubious institutional shareholder involved with TNXP is Iroquois Capital. According to an article published on August 16, 2018 by Teri Buhl ( 2 ), Richard K. Abbe, a co-founder of Iroquois Capital was accused of a fraudulent scheme to trick the founders of an airport spa business, XpresSpa, into a merger with a public Microcap company that resulted in a massive loss of their business investment. A federal judge in New York allowed a securities fraud case to go forward against Abbe and other company executives ( 3 ).
Yet another dubious institutional shareholder involved with TNXP is Lincoln Park Capital. In August 2019, TNXP and Lincoln Park entered into a purchase agreement for up to $15 million worth of common stock ( 4 ). Lincoln Park is one of the most infamous entities in the world of micro, nano and small cap companies, as it has been involved with many tickers featured in our short reports such as AVXL, BTCY and ONCY , all of which have gone on to experience significant share price declines since the publishing of our reports.
Another one of these companies is Biocept, Inc. On September 2018 Lincoln Park entered into a securities purchase agreement with it resulting in Lincoln Park having nearly 400,000 Biocept shares which were registered for sale on October 2019( 5 ). Biocept’s share price then proceeded to decline from $2.20 to under $0.80 on December 2018 only to then violently spike to more than $3.60 on January 2018 and crash again to less than $1.20 on February 2019.
Zosano Pharma Corp is yet another company that entered a securities purchase agreement with Lincoln Park. This agreement dates back to October 2017 and amounted $35 million ( 6 ). Zosano’s share price at the time was around $16, it currently trades at less than $1.50, seeing several spikes and crashes along the way. Other examples of dubious companies that have been involved with Lincoln Park includes BioLargo Inc and Genocea Biosciences among others.
In addition, Aegis Capital entered into an underwriting agreement with TNXP on July 16, 2019, which allowed it to obtain a fair number of shares at discounted price meaning that they only $0.48 per share ( 7 ).
Aegis is no stranger to SEC issues as they were subject to a cease and desist order in March, 2018 because it failed to file Suspicious Activity Reports (“SARs”) on hundreds of transactions when it knew, suspected, or had reason to suspect that the transactions involved the use of the broker-dealer to facilitate fraudulent activity or had no business or apparent lawful purpose. Many of the transactions involved red flags of potential market manipulation, including high trading volume in companies with little or no business activity during a time of simultaneous promotional activity ( 8 ).
Opinion
TNXP is a horrific investment. Its involvement with several dubious institutional shareholders (many of which have been in serious trouble with the SEC), lousy financials and obscene levels of dilution are big red flags. Stay away from this ticker unless you are an experienced short seller.
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- https://www.otcmarkets.com/filing/html?id=13920819&guid=JhiCU6FNp6ZA3th
- http://www.teribuhl.com/2018/08/16/iroquois-capitals-richard-abbe-sued-for-fraudulent-takeover-scheme-of-xpresspa/
- https://www.scribd.com/document/386354547/Securities-Fraud-Lawsuit-against-Richard-Abbe-of-Iroquois-Capital
- https://www.otcmarkets.com/filing/html?id=13730397&guid=ZViCUpqa-foYxth
- http://ir.biocept.com/node/10436/html
- http://ir.zosanopharma.com/news-releases/news-release-details/zosano-enters-common-stock-purchase-agreement-lincoln-park
- https://www.otcmarkets.com/filing/html?id=13730397&guid=ZViCUpqa-foYxth
- https://www.sec.gov/litigation/admin/2018/34-82956.pdf
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