Tonix Pharmaceuticals Holding Corp. (TNXP) Earnings Call Transcript & Summary

Thank you. Good morning and welcome to Tonics Pharmaceutical's second quarter 2026 financial results and business update conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a question and answer session. As a reminder, this call is being recorded. I would like to turn the call over to Deborah Elson, Head of Investor Relations at Tonics Pharmaceuticals. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate you joining us today to discuss Tonics Pharmaceutical's second quarter 2026 financial results and operational highlights. Before we begin, I would like to remind everyone of the disclaimers on slide two that any statements made on today's call are not the same as those made on the previous call. that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks are described more fully in our filing with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2025, and our subsequent periodic reports. Tonex undertakes no obligation to update or revise any forward statements, except as required by law. Joining me on today's call are Dr. Seth Letterman, Chief Executive Officer, Thomas Inglese, Executive Vice President of Commercial Operations, and Bradley Singer, Chief Financial Officer. With that, I will turn the call over to Seth.

Thank you, Deborah, and good morning, everyone. We're pleased to welcome you to Tonics' earnings call. Today we're reporting second quarter financial results and operational highlights that reflect strong execution in both our commercial business and advancing our development pipeline. We are focused on improving the care for patients with debilitating conditions or preventing illness before it happens. We believe each of the commercial products and the development candidates target major unmet medical needs. As you can see on slide two, the launch of Tonmaya is progressing well, supported by growing sales, improvement across launch metrics, and patient access wins. Tonmiah was invented, developed, tested, and launched in-house by the Tonics team. Tonmiah is the first medicine for the treatment of fibromyalgia in adults approved by the FDA in over 15 years. within 10 million adults in the U.S. suffer from fibromyalgia. We are initially targeting nearly 3 million patients who are currently diagnosed and treated. The second quarter of 2026 was the second full quarter of TANMAYA sales. believe our second quarter and cumulative launch performance underscored Tanmaya's compelling value proposition and differentiated profile. Historically, fibromyalgia patients and their healthcare providers, or HCPs, have been dissatisfied with limited treatment options. we are pleased to offer Tonmaya as an effective and generally well-tolerated treatment option. Tonmiah is a non-opioid analgesic that improves fibromyalgia pain, the core symptom of the disease. Tonmia is a once-daily medicine taken at bedtime and indicated for long-term use by fibromyalgia patients. Commercially, Tonics has 100% share of voice as the only branded and marketed product for fibromyalgia. We are set to improve the lives of patients and simultaneously creating long-term value for shareholders. In the second quarter of 2026, we achieved approximately $11 million in net sales for Tonmayo, representing 197% quarter-over-quarter growth. That is approximately triple the net sales of of the first quarter. Additionally, we saw increases across other key metrics. We attribute these results to the patient and prescriber recognition of the value of Tonmaya and to our strategic focus and execution. We also had early wins in managed access. We do not believe these wins contributed significantly to Tonmaya sales in Q2. However, we are beginning to see their effects in Q3. Currently, TANMAYA coverage across commercial, managed Medicare, and Medicaid channels represents approximately 136 million covered lives, or 43% of the approximately 314 million covered lives in the United States. On January 1, 2027, when our managed Medicare GPO coverage agreement becomes effective, Tonmaya coverage will represent approximately 145 million covered lives or approximately 46% of the covered lives. in the United States. We believe this broad coverage lays the foundation for growth in patient access and net sales for the rest of the year and beyond. His coverage led us to activate our planned Salesforce expansion, which will be fully implemented by September. Tom will dive deeper into the field dynamics and expectations for the rest of the year. As we execute on our commercial lodge, we are also strategically advancing certain development stage programs. Tonics' pipeline includes a carefully selected group of therapeutic and preventative development stage candidates. targeting large therapeutic or preventative areas of unmet need. Each of these agents are potentially first in class or best in class. In 2026, we have focused our resources primarily on TNX-102SL, which is sublingual cyclobenzaprine sublingual. tablets, which is a potential new indication for TANMAYA for the treatment of major depressive disorder, or MDD. and TNX4800, a long-acting monoclonal antibody for the prevention of Lyme disease. In the second quarter and early third quarter, we made substantial headway on both programs. For TNX-102SL and MDD, we randomized the first patient in the second quarter. For TNX-4800 and Lyme disease prevention, we held a constructive... type C FDA meeting and receive positive final minutes on our planned adaptive phase 2 study which we expect to begin enrolling in the first quarter of 2027. I will now turn the call over to Tom Inglese, EVP Commercial Operations, to discuss the Ton Mile launch. Tom? Thank you.

Thank you, Seth, and good morning, everyone. Today, I will review our second quarter sales performance for Tenmaya, and then I will cover our launch strategy. We are pleased to offer Tenmaya as a treatment to adult fibromyalgia patients. Looking at slide four, we are encouraged to see net sales of $11 million for TenMaya in the second quarter, representing 197% quarter-over-quarter growth or nearly triple the first quarter. There are a few contributing factors to note. we are seeing proactive patient and prescriber hand raisers interested in Tamiya, and we're gaining traction with our HCP target list. Second, gross to net in both Q1 and Q2 have been driven by a favorable mix between the retail and specialty distribution channels and lower copay buy downs related to stronger than expected prior authorization approvals. We've historically shared that we expect fluctuations quarter over quarter, as is common early in commercial launches. We expect continued fluctuations for gross to net in both Q3 and Q4. Now, we'll look at our key performance indicators for Tamiya. In the second quarter, we saw positive trends across prescriptions, new patient starts, and refills. Prescriptions for the quarter totaled 12,592, increasing 100% quarter over quarter. New patient prescriptions increased 36% quarter over quarter and refills increased 207% quarter over quarter. We continue to see increases in the number of prescriptions per patient, which we attribute to the benefits and tolerability of TURMAYA and our patient support program. We will now walk you through our strategy regarding market access, sales, and marketing on slide five. First, we've already reached major market access coverage milestones, which we believe speaks to the value of Tamiya. We signed commercial pay agreements with two leading GPOs. These agreements, which went into effect on May 1st and June 1st, 2026, cover 52 million lives. We also signed a major managed Medicare agreement, which will cover approximately 9 million Medicare lives beginning January 1st, 2027. TANMAYA is also available under Medicaid in most states. We expect downstream pull-through from these agreements to begin to materialize in the third and fourth quarters of 2026. Our strategy has been to secure market access as early as possible so that the availability of insurance reimbursement could match patient demand. As our team brings these coverage agreements online, we expect patient access to become more robust. We have seen favorable rates of prior authorization submissions and approvals across commercial payers and Medicare and strong usage of our copay assistance and savings programs in the commercial population. All together, we expect these trends to serve as the catalyst to unlock the next stages of the launch, which is sales and targeting. We've been planning to expand our sales force after securing coverage. Following the access wins, we are adding 50 sales reps who will be in the field by September. This expansion will enable us to increase our presence in previously uncovered geographies and increase our breadth and depth in existing dense geographies. By September, our field force will be roughly 150 reps, primarily engaged through our contract partner. Each of these contract reps is exclusively dedicated to Tamiya and do not support any other company or product. Over time, we expect to bring high-performing reps in-house to Tonics. The entire Salesforce management team has recently been brought in-house at Tonics. We are committed to quality and consistency of tactical execution. As a reminder, we are initially targeting the 25,000 HCPs who write approximately 70% of the fibromyalgia treatment prescriptions. We continue to focus on engaging priority HCPs and supporting prescribing for appropriate patients consistent with approved labeling. We are hearing supportive feedback from prescribers that Tenmaya is a welcome new treatment option for their patients. Moving to marketing, our efforts have focused on an unbranded digital disease awareness campaign called Move Fibro Forward. ETC social advertising, influencer programs, and peer-to-peer KOL speaker programs. Highlights in Q2 include programs such as our KOL Speaker Bureau, a Reddit Ask Me Anything program, influencer ads, and a digital HCP webcast. Looking ahead, we are excited to further advance the launch of TenMaya. I will now turn the call back to Seth to discuss medical affairs. Seth?.

Thank you, Tom. Medical affairs is making headway. with KOL engagements and education through conference symposia and data presentations. A key focus of our efforts has been on raising awareness among HCPs for the current fibromyalgia diagnostic criteria that state fibromyalgia is not a diagnosis of exclusion. The outdated conception that fibromyalgia was a diagnosis of exclusion created a barrier to diagnosis for two reasons. First, a diagnosis of exclusion was an unreasonable standard because no amount of lab tests or imaging can prove a negative. Second, the medical community now recognizes that fibromyalgia commonly occurs in the context of other conditions, including long COVID, chronic Lyme, systemic lupus, rheumatoid arthritis, and cancer. This means that these other diagnoses should not exclude the diagnosis of fibromyalgia. We believe broader understanding of the current diagnostic criteria could meaningfully grow the addressable fibromyalgia of patient population and help patients get diagnosed and treated earlier in the course of their condition. It currently takes on average over six years for patients to be diagnosed with fibromyalgia. Moving on from medical affairs, I now want to update you on the pipeline. We are advancing our development pipeline. Today, I will focus on TNX-102SL and TNX-4800. Moving to slide six, TNX102SL for the treatment of MDD could potentially serve as a label expansion for Tonmai. In June, we randomized the first patient in Horizon, a potentially pivotal Phase II study evaluating TNX102SL as first-line monotherapy in adults with MDD. We are targeting the enrollment of approximately 360 patients in the U.S. Eligible participants must be 18 years of age or older, currently experiencing a moderate to severe major depressive episode. Participants are being randomized to receive TNX102SL 5.6 milligrams taken sublingually at bedtime or matching placebo. The primary endpoint of the study is the change from baseline in Madras total score at week six. Secondary endpoints include global impression scores, anxiety ratings, and measures of sleep quality. We are evaluating TNX102SL for MDD based on initial signals observed in previous tonics phase 2 and 3 studies in which TNX102SL nominally improved depression symptoms in fibromyalgia patients and PTSD patients. TNX-102-SL was designed to target the disturbed sleep in fibromyalgia. If TNX-102-SL has effects on depression, then we believe targeting sleep would be a novel mechanism. use of SSRIs and SNRIs for depression are frequently associated with treatment emergent insomnia. Another TANMAYA label extension is acute stress disorder and acute stress reaction. An investigator-initiated phase two study called OASIS is enrolling at the University of North Carolina, funded by a United States Department of Defense grant to University of North Carolina. Carolina, and for which we expect to report top line data in mid-2027. Now, I'll move to slide 7 to discuss TNX4800, our long-acting monoclonal antibody for the treatment of Lyme disease. for the prevention of Lyme disease. Positive FDA meeting minutes demonstrate alignment on the key elements of our adaptive phase two study design and support study start in the first quarter of 2027. Currently, no FDA-approved vaccines or prophylactics for Lyme disease are available. We believe TNX4800 could potentially change the prevention paradigm. It targets the outer surface protein A or OSP A on the Lyme causing Borrelia bacteria. One type of Borrelia, Borrelia burgdorferi, causes 99.9% of Lyme disease cases in the United States. TNX4800 is designed to act in the midgut of the Borrelia-infected deer tick. If someone is treated with TNX4800 before getting bitten by the tick, then the tick s**** 4800 containing blood into its midgut. TNX4800 either kills or blocks the maturation of Borrelia burgdorferi in the midgut of infected deer ticks while they are s****** the victim's blood. This mechanism blocks transmission and infection. OSP-A is a validated target for antibodies. TNX4800 is engineered for an extended half-life to provide a longer duration of protection after dosing relative to standard monoclonals. As a monoclonal antibody, we believe TNX4800 has important advantages over vaccines, namely that it provides protection within two days after one dose, compared to a prior vaccine or a vaccine in development that takes three or four separate immunizations over at least six days. months to provide protection. Also, TNX4800 does not require a host immune response like vaccines. That means it doesn't depend on the host's immune system, which is known to be less active in older people and people with certain conditions. After reporting Phase I data earlier this year and meeting with the FDA in early Q3, we now have a clear view of our planned Phase II study. Pending FDA agreement on the final study protocol, we plan to conduct a randomized, placebo-controlled, adaptive field study. We expect to enroll approximately 3,300 adult participants. These volunteers, age 18 and older, will be recruited from from Lyme endemic areas in the US and selected for their engagement and activities that increased their risk of deer tick bites. We expect this to be a two-season study and expect to enroll the majority of participants in 2028. attack rate is lower than planned, enrollment could potentially extend into 2029. The primary efficacy endpoint will be Lyme disease prevention through six months after the first dose, and a key secondary efficacy endpoint will be prevention through three months. Although it is a phase two study, we believe it has the potential to demonstrate efficacy. The primary safety objective will be to evaluate the safety and tolerability of TNX4800 over a 52-week period after dosing. Participants in the planned adaptive phase 2 field study will be randomized one-to-one to receive either placebo or TNX4800 dosing. 450 milligrams sub-Q in the spring, and another dose approximately three months later. Our focus in 2026 has been on manufacturing investigational product for TNX-4800, which is on track for delivery to study sites in the first quarter of 2027. With that, I will turn the call over to Bradley Sanger, our Chief Financial Officer, to review our financial results. Bradley.

Thank you, Seth. And good morning, everyone. On slide eight, I will review financial results for the second quarter ended June 30th, 2026. Net product revenue for the second quarter of 2026 was approximately $13.5 million, which consists of approximately $11 million from Tonmaya and $2.5 million from Zembrace, Simtouch and Tesimra, which are our migraine products. This compares to $2 million for the same period in 2025, which consisted only of Zembrate and Tesimbra. Tonmai was approved last August and launched in November, and the second quarter of 2026 was Tonmai's second full quarter of sales after launch. cost 0.7 million compared to 3.3 million for the same period in 2025. The decrease in the cost of sales was predominantly driven by a change in product mix and a rise of migraine products in 2025. Research and development expenses were approximately $19.4 million compared to $10.8 million for the same period in 2025. The increase was preliminary driven by higher manufacturing and clinical expenses reflecting pipeline prioritization along with increased employee-related costs from higher headcount. Selling, general, and administrative expenses were approximately $36 million, compared to $16.2 million for the same period in 2025. The increase was primarily driven by sales and marketing investment behind the launch of Tonmeyer and our migraine products, together with higher employer-related and professional expenses. Turning to the balance sheet, we ended the quarter with approximately $176.2 million in cash and cash equivalents as of June 30, 2026, compared to approximately $207.6 million as of December 31, 2025. We expect our cash resources as of June 30th, 2026, together with net proceeds from equity offerings subsequent to June 30th, 2026, to fund our planned operating and capital expenditure requirements in the early second quarter of 2027. With that, I will turn the call back to Seth for closing remarks. Seth?.

Thank you, Bradley. We'll move to slide nine. In the second quarter, we delivered progress on the launch of Tonmaya and on the development of two of our mid-stage clinical development programs, TNX102SL for the treatment of MDD and TNX4800 to prevent Lyme disease in the United States. We entered the second half of 2026 with meaningful momentum. strategic priorities are clear. Deliver on the promise of Tonmayo, advance the development of our mid-stage clinical programs, and drive sustainable growth to create value for all shareholders. Patients remain at the forefront of our work and our team is dedicated to supporting them. For TANMAYA, we remain focused on driving growth across net sales and KPIs, working to secure patient access and deploying our expanded sales force. For TNX-102SL, we will continue to execute on the enrollment of the potentially pivotal Phase 2 study in MSI. For TNX4800, we are manufacturing the investigational product in 2026 to begin the adaptive phase two field study in preventing Lyme disease in the first quarter of 2027. With that, we will now open the call for questions. Operator?.

Operator? Thank you. If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. Our first question comes from Stacy Koo with TD Cowan. Your line is open.

Hey, good morning. Congratulations on a great quarter and thanks so much for taking our questions. We do have a few. First one is for Tom and Seth. Given that Tamiya Launch is going pretty well, can you talk about your current learnings and what strategies you're using to drive patient adoption in fibromyalgia? What has been the early clinical feedback on Tamiya's efficacy in the early durability signals, giving encouraging refill dynamics? That's the first on Tamiya. And then as we look to 4800 and Lyme, it's been great to get the FDA interaction minutes. So first, can you discuss in more detail detail why you believe the majority of infections will be collected in the first season. Maybe discuss how you're identifying the right sites. And then second, do you believe the phase two has the potential to be pivotal in Lyme given the patient study size of around 3,300? Thanks so much. And then actually before I let you go, I want to thank you for your answer the question. Just some really quick quarterly clarifications for Tamiya. One, what growth to net range would you expect for Q3 and Q4 given the favorable mix we saw in Q2? And kind of the same question, but what kind of inventory nuances we should consider for Q2? Thanks so much.

Thank you very much, Stacy. So there are three parts to your question. Let me, Tom, would you please address the question about Tom Maia's launch and the clinical feedback? Yes, absolutely.

Thanks very much. Yes, so the early feedback we have received from HCPs is that Tamiya is, you know, like I said, a welcome addition, a new product into the space. There hasn't been anything for 15 years, The durability thus far has been very good. We have seen, as you mentioned, a high rate of refills. I really attribute that to, you know, the effectiveness of the product and the tolerability of the product especially. So the feedback has been positive. We're going to continue, obviously, to target over time with our Salesforce, those key writers, as I mentioned. And we're excited for the additional reps because we can increase our breadth and depth. So all in all, signs have been very positive and the durability and refill signals have been positive as well.

Great. Thank you, Tom. And Stacey, to follow up on your question about Lyme, First of all, now that we have the final FDA minutes, we've gone back to the CROs in the process of bid defense and the rest of it. And we're actively working on identifying sites and characteristics of people at risk for deer ticks and Lyme disease. With respect to your question about whether we think it could provide evidence of efficacy, we have stated that in a press release and in our comments today. And we do believe that this phase two study can provide evidence of efficacy, and if positive, could be a pivotal study supporting approval of the product. The study will be conducted as a potential registrational study. The key question will be whether we accumulate enough events, which is mostly driven by a Lyme disease cases in the placebo group in our observation period. So now let me turn the third part over about the quarterly –.

gross to net back to Tom. It's quarterly gross to net and also that inventory of on Maya to Tom. Great. Thanks again. Yes. So, you know, as we mentioned, we don't disclose specifics about our gross to net. What I can say is that we've seen a good, as I mentioned earlier, we've seen the gross net positive being impacted by our mix in our channel. The prior approval submissions and approval rates have been strong as well. And we obviously have new coverage that's coming online. So, you know, I would anticipate a gross net in the range similar to what we've seen, you know, in Q1 and Q2. In terms of inventory, I'm assuming we're talking about the inventory at the wholesalers. We track that, and we have seen a consistent growth. days on hand as demand has increased. So there's been really no incremental inventory build at our wholesaler and distributor partners. So I think that was probably where you were going with the inventory question. So thank you for that.

Thank you so much. Stacey, are there follow-up questions? No, I think we're all set. Thank you so much. Thank you.

Thank you. Our next question comes from Tiago Foss with Raymond James. Your line is open.

Great. Thanks for the good question and congrats on the progress. I have one for Tamaya, one for the 800. I'm for the 800 just to hone in on the... simple size into your comment related to infection rates on the placebo arm. If you look at the older studies, you see a slightly higher rate. We've seen a surprisingly low rate of infections in Valor. So can I just talk about that dynamic as we're thinking about both powering of the study and also the site selection in Richmond to ensure that you can accrue enough events. And also I just wanted to understand a little bit better how to characterize the access and ease of access of the policies that are in place relative to step edits, how cumbersome is the paperwork, how is that kind of evolving over time?.