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Issue: April 9, 2012 All rights reserved! ceocfointerviews.comCEOCFO Magazine - The Most Powerful Name In Corporate News and InformationTonix Pharmaceuticals Holding Corp. is Focused on Developing Innovative Drugs that Address Central Nervous System (CNS) Conditions Lead Program Targets Fibromyalgia Syndrome, which Affects 5 Million Patients in the US Alone Healthcare nies Validus and Fontus Pharmaceu- science and medicine to search for CNS Treatments ticals Inc., which acquired and market potential therapeutic solutions among (TNXP-OTCBB) Equetro® (carbamazepine – Ex- known pharmaceutical agents. Tonix tended Release), Marplan® (isocar- is developing new formulations that Tonix Pharmaceuticals boxazid) and Rocaltrol® (calcitriol). have been optimized for new thera- Holding Corp. Equetro is the only carbamazepine peutic uses. product approved by the FDA to treat 509 Madison Avenue, Suite 306 bipolar disorder. Dr. Lederman also Tonix’s lead product candidate, TNX- New York, NY 10022 co-founded Vela Pharmaceuticals, to 102, is a new formulation of cycloben- Phone: 212-980-9155 develop innovative drugs to treat dis- zaprine in clinical development for the Website: www.tonixpharma.com orders of the central nervous system, management of fibromyalgia syn- or CNS. drome, or FM. FM is a CNS condition characterized by diffuse muscu- A member of the faculty of Columbia loskeletal pain, increased pain sensi- University’s College of Physicians and tivity, fatigue and disturbed sleep. Surgeons since 1985, Dr. Lederman maintains an appointment as Associ- Tonix’s other leading product candi- ate Professor. His basic and clinical date, TNX-105, is a formulation of research has resulted in numerous cyclobenzaprine to treat symptoms of scientific articles and issued patents post-traumatic stress disorder, or for drug development technologies. PTSD. PTSD is a psychiatric disorder that begins in the aftermath of trau- Dr. Lederman’s fundamental research matic experiences. Sleep distur- on the CD40-Ligand (CD154) eluci- bances, including nightmares and in- dated the molecular basis of T cell somnia, are core features of PTSD. helper function and led to the devel- PTSD shares several features with opment of therapeutic candidates for FM and some patients suffer from autoimmune diseases and organ both PTSD and FM. transplant rejection in collaboration with Biogen-IDEC and CellTech/UCB. Interview conducted by: Lynn Fosse, Senior Editor Dr. Seth Lederman, M.D. Company Profile: CEOCFO Magazine Co-Founder, Chairman, Tonix Pharmaceuticals Holding Corp. President and CEO is a specialty pharmaceutical com- CEOCFO: Dr. Lederman, what led to pany focused on developing innova- the formation of Tonix?BIO: tive prescription pharmaceutical prod- Dr. Lederman: Tonix was founded toSeth Lederman is a physician, scien- ucts for CNS conditions. Tonix’s core develop innovative prescription medi-tist, and specialty pharmaceuticals technology improves the quality of cations that address disorders of theentrepreneur. Prior to founding sleep in patients with chronic pain central nervous system, or CNS. OurTONIX, from 2007-2008 Dr. Leder- syndromes. Tonix’s lead products are lead program targets fibromyalgiaman co-founded and was a managing designed to be fundamental advances syndrome, which is a pain syndromepartner of Konanda Pharma Partners, in sleep hygiene and pain manage- that originates from a disorder of theLLC and Konanda Pharma Fund I, ment and to be safer and more effec- CNS. Fibromyalgia affects about 5LP. Through Konanda, he co-founded tive than currently available treat- million patients in the United States.and served as director and chairman ments. Tonix’s products are the resultof its wholly-owned operating compa- of a program to harvest advances in CEOCFO: Why the decision to look at 1

CNS disorders and fibromyalgia in ing the molecule on the surface of treatments for HIV came more com-particular, what is the unmet need Helper T cells that is the basis for passion for patients because physi-that Tonix understands? Helper Function. cians regained the natural satisfactionDr. Lederman: My co-founder, Dr. of having their hard work pay off withDonald Landry, and I believe that The work on Helper Function became healthier patients. Fibromyalgia pa-CNS disorders are some of the most the second chapter of my career be- tients have been frustrating to man-important problems confronting our cause it opened the door for my team age in ways that remind me of thesociety. We focus on the relationship and others to characterize Helper early days of treating AIDS patients.between poor sleep and chronic pain. function. This work not only increased Fibromyalgia patients don’t die, butPeople with chronic pain struggle to our understanding of how the immune they don’t get better. When betterget restful sleep. People who cannot system works, but also led to impor- treatments are available for fi-sleep develop pain syndromes that tant potential therapeutics for auto- bromyalgia, I believe physicians willoriginate in their brains. Poor sleep, immune diseases, which are still in regain satisfaction from having theirthis type of chronic pain, and the development. work pay off with healthier patients.combination of poor sleep and chronic When doctors learn how to treat fi-pain are directly or indirectly the most In the third and current chapter of my bromyalgia symptoms in a meaningfulintractable health care problems in career, I started applying the physi- way, I hope it will lead to a virtuousthe United States. Humans are not cian problem-solving tools to develop cycle in which patients will be treatedequipped to function with the amount therapeutics to new areas. I am drawn with more sympathy, compassion andand type of sleep that modern life in to decipher CNS problems by their dignity.the US provides. Many peo- We are unraveling the connection between CEOCFO: What new ideasple have recognized that wehave become a nation of chronic pain and disordered sleep in the hope does Tonix offer as far asinsomniacs. The widespread that it will lead to fundamental improvements in treating fibromyalgia?use of hypnotic sleep drugs treating fibromyalgia and other pain syn- Dr. Lederman: We are un-is a symptom of these socie- dromes. Many people are aware that there is a raveling the connection be-tal problems. The chronic tween chronic pain and dis- connection between chronic pain and disor-use of the available sleep ordered sleep in the hope dered sleep just from common experiences. that it will lead to fundamen-drugs do not satisfy theircraving for restful sleep. But medical science has been slow to be able tal improvements in treating to connect chronic pain and poor sleep. Some- fibromyalgia and other painCEOCFO: Will you explain times an effective medicine is the best way to syndromes. Many peopleyour background to us, the convince the scientific community. Tonix is de- are aware that there is amedical, science, entrepre- connection between chronic veloping a medicine that improves the qualityneurial, and how those pain and disordered sleep of sleep because we believe that improving just from common experi-things tie into Tonix and yourmission at the company? sleep quality, will decrease the pain and other ences. But medical scienceDr. Lederman: I’m a physi- symptoms in fibromyalgia. has been slow to be able tocian and a problem solver. I - Dr. Seth Lederman, M.D. connect chronic pain andtrained in internal medicine poor sleep. Sometimes an complexity and by the enormous suf-and rheumatology at Columbia Uni- fering of patients. Fibromyalgia was a effective medicine is the best way toversity, became a faculty member, compelling problem and one that convince the scientific community.and ran a basic science laboratory. challenged me directly since I de- Tonix is developing a medicine thatWhen I started my career in research, voted about 11 years to practicing improves the quality of sleep becausethe biggest problem was AIDS. At that and teaching rheumatology at Colum- we believe that improving sleep qual-time, the HIV virus that causes AIDS bia. Even though fibromyalgia syn- ity, will decrease the pain and otherhad not been discovered yet. In the drome is a pain disorder that origi- symptoms in fibromyalgia.first chapter of my career, I devoted nates as a disorder in the CNS, tradi-myself to studying AIDS with the goal tionally rheumatologists cared for fi- CEOCFO: What is the scientific con-of inventing treatments or preventive bromyalgia patients. Given my per- nection?vaccines. In the very first paper that sonal experiences caring for fi- Dr. Lederman: The connection be-described AIDS, Dr. Andrew Saxon bromyalgia patients, the syndrome tween chronic pain and poor sleep isand his team explained the syndrome was a natural challenge for me as a just being unraveled. One of theof AIDS by the loss of “Helper” T drug developer. I should also mention breakthroughs involves our lead com-cells. Since AIDS was my calling, I another connection between AIDS pound, and was just published in thebegan a quest to understand how and fibromyalgia. When I started work December 2011 issue of the JournalHelper T cells were lost and to under- in AIDS, caring for these patients was of Rheumatology. The lead authorstand “Helper Function”. While I made frustrating because they all died no and principal investigator of the studysome contributions to understanding matter how well we managed their is Dr. Harvey Moldofsky. The paperhow HIV enters Helper T cells, my opportunistic infections. With better shows that bedtime treatment with anbiggest accomplishment was identify- early version of our lead product im- 2

proves the quality of sleep in fi- to a recognition by the FDA that fi- they want to try something else.bromyalgia patients. This treatment bromyalgia was a syndrome that Overall, now that some medicationsalso improves the pain and other could be effectively treated. The sec- are FDA-approved, I am optimisticsymptoms of fibromyalgia. Finally, the ond class of medications is repre- that more science will be applied topaper also shows a signature of dis- sented by Cymbalta, which was pre- the area and better therapies will beordered sleep in the brainwaves of viously approved as an antidepres- developed. We believe we are part ofpatients while they are sleeping. Put- sant. The sponsor of that product Eli that evolution, if not the leader.ting it all together, the paper shows Lilly has shown that there is a connec-that our bedtime medicine enters the tion between depressed mood and CEOCFO: Tonix does have a signifi-brain, decreases a certain kind of pain. Our product will be the first cant pipeline; would you tell us aboutsleep pathology, makes sleep more member of a new class of medica- some of the other products?restful and improves the pain and tions that improve the quality of sleep. Dr. Lederman: Our second most ad-symptoms of fibromyalgia. So we believe that after pain drugs vanced product in development is a and depression drugs, sleep quality treatment for post-traumatic stressCEOCFO: Where is Tonix in the de- drugs will be the third class of medi- disorder, or PTSD. PTSD is classifiedvelopment process? cations approved for fibromyalgia. It an anxiety disorder and is not a painDr. Lederman: We are working now is hard to develop a model of to esti- syndrome like fibromyalgia. We be-on an improved formulation of our mate that market. We retained a con- lieve that the same treatment para-product. The new formulation of our sulting firm and they concluded that digm of improving the sleep qualityproduct is designed to be taken by about 150 million tablets of off-label might be important for treating PTSDpatients at bedtime, improve the qual- drugs are used for fibromyalgia that patients. Doctors and PTSD patientsity of their sleep and result in as little could be replaced by sleep quality have known for a long time that PTSDhangover as possible. drugs. These 150 million tablets are patients have poor sleep quality. For approved as muscle relaxants and example, PTSD patients suffer fromCEOCFO: Have there been other they do not have FDA approval for nightmares, which is a symptom ofstudies or other people looking at the fibromyalgia. If our product wins FDA poor and non-restorative sleep. Weconnection between sleep or is this approval and is able to replace 100% think that improving sleep quality ofsomething that Tonix has figured out of these tablets, it would result in PTSD patients might also result inthat others have not? sales of about $900 million annually. some benefit for them in other symp-Dr. Lederman: The signature of non- However, we believe an effective toms. Although fibromyalgia is a painrestorative sleep was identified by medicine in the sleep quality category disorder and PTSD is an anxiety dis-other scientists and has been the sub- for fibromyalgia would expand the order, some thought leaders believeject of two or three papers by Profes- market and not just replace off-label that there may be an overlap betweensors Terzano and Parrino and their muscle relaxants. the two conditions. For example,colleagues in Parma, Italy and con- many chronic PTSD patients becomenected to fibromyalgia by Professors CEOCFO: It is my impression, just addicted to prescription pain-killersSergi and Rizzi in Milan. The signa- anecdotally, that nothing is really very called opiates, which indicates theseture of disordered sleep is called the effective yet for fibromyalgia; is that patients are experiencing a form ofCyclic Alternating Pattern or CAP. We still the general feeling? pain. In addition, a number of pa-are building on their groundbreaking Dr. Lederman: We hope that the tients suffer from both fibromyalgiawork. We believe our contributions situation is changing. Certainly, a and PTSD. So it may be that ourare important because our lead prod- number of fibromyalgia patients re- treatment paradigm will target thatuct can decrease the pathological spond to Lyrica; a number of fi- group of PTSD patients who haveCAP signals, improve the quality of bromyalgia patients respond to Cym- concomitant fibromyalgia. Or it maysleep, and improve the symptoms of balta; and a number of fibromyalgia turn out that our technology wouldfibromyalgia. patients respond to certain off-label have benefit for a broader group of medications. Certainly, the FDA ap- PTSD patients.CEOCFO: What is the market poten- proved medications have been showntial in treating fibromyalgia? to make a difference enough to sat- We also have a program in treatingDr. Lederman: The market in the US isfy the rigorous criteria of the FDA at migraine, which is another pain syn-for prescription drugs for fibromyalgia least in a group of patients. However, drome that originates as a CNS disor-is over $1 billion and growing at about as doctors and drug-developers we der. Our migraine program is modern-20% a year. There are three distinct think we can do a lot better. The exist- izing a drug that has been widely usedsegments in the market that are rep- ing medications obviously have not by migraine sufferers in the US forresented by different classes of medi- solved the problem, and most patients more than 50 years, but needs mod-cations. The first product that was remain unsatisfied. A large number of ern manufacturing and clinical studiesFDA approved was Lyrica. Lyrica patients move from one medication to to bring it up to contemporary FDArepresents the first class of drugs that another. Patients sometimes get a standards.target the pain in fibromyalgia. Lyrica benefit from one medication for ais a very important medication in the while, but then feel that the beneficial Finally, we have a program to treathistory of fibromyalgia, because it led effect has been lost. That is when alcoholism and alcohol dependence. 3

Although alcoholism is not classified regulatory experts who have followed evolve so that bipolar patients getas a pain disorder or a sleep disorder, me to several subsequent start-up access to Equetro, because no ge-most alcoholics themselves believe companies. Whatever successes I neric can give bipolar patients thethey suffer from both a form of pain have had in specialty pharmaceuticals assurance that they would get thedisorder and a sleep disorder. Al- has come from working together with benefit of taking an FDA approvedthough alcoholism is complex. Most remarkable teams of professionals. It product. We believe that Tonix’sphysicians focus on the addictive has been even more exhilarating to cyclobenzaprine product for fi-element, get frustrated by the lack of work on several different projects with bromyalgia will have much less sub-any effective therapy, or get angry at some of the same people. More than stitution by generic cyclobenzaprinethe way alcoholics destroy relation- anything else, drug development and because of the distinctive advantagesships, families and businesses. How- entrepreneurship is a social enterprise of Tonix’s formulation.ever, our program focuses on the idea and you depend on the energy, pas-that alcoholics often use alcohol to try sion, expertise and cooperative ef- CEOCFO: What is the financial pic-to manage some kind of pain and to forts of smart and gifted people. ture for Tonix Pharmaceuticals Hold-help themselves sleep. Although al- ing today?coholics are delusional, and they may My second notable repurposing com- Dr. Lederman: We have decided tocomplain about poor sleep and pany was Targent Pharmaceuticals become a public company in order tochronic pain to justify their drinking, which developed drugs for cancer. increase the possible ways to financewe believe trying to help them fits One of Targent’s drugs was pure- our drug development activities. De-with our mission of unraveling con- isomer levofolinic acid which involved veloping prescription drugs is capitalnections between chronic pain and some repurposing. We sold Targent intensive and involves a significantsleep disorders. Our program targets to Spectrum Pharmaceuticals which amount of risk. Being public, we makethe phase of alcoholism, called “early now sells levo-folinic acid under the it possible for a number of differentrecovery.” That is the period after an trade name Fusilev®. Fusilev was types of investors to participate inalcohol dependent person has under- FDA approved last year for the treat- funding our programs. The financinggone successful detox, but is at high ment of colorectal cancer, which is environment is improving in the USrisk of going back to drinking again, obviously an important problem in the for public companies like ours. Wewhich is called recidivism. We are US. Treating colorectal cancer is a think that the top quality companiesworking to develop drugs that will de- new purpose, since Fusilev was al- will continue to be attractive to inves-crease recidivism during early recov- ready approved for use in treating a tors, particularly those who take prideery. A common excuse that alcoholics rare form of blood cancer that mostly in participating as investors in the de-blame for falling off the wagon is their affects children. velopment of new medications.belief that drinking will help themsleep. My third notable repurposing com- CEOCFO: Final thoughts, why does pany was Validus that markets a Tonix stand out as a potential invest-CEOCFO: Would you tell us about product called Equetro®, which is the ment?your entrepreneurial background, and only FDA approved carbamazepine Dr. Lederman: We think it is uniquehow does it help you know where to for bipolar disorder. Carbamazepine for a company of our size and marketfocus with so much potential at was initially developed for treating cap to have a lead product in clinicalTonix? epilepsy and was marketed as Tegre- development that addresses a poten-Dr. Lederman: Vela Pharmaceuticals tol®. The Equetro brand of car- tial market of 5 million patients in thewas the first of three successive com- bamazepine is a very important US. We believe that our product forpanies that I’ve founded which have medication for bipolar disorder, but fibromyalgia will be covered by strongbeen based on “repurposing”. Repur- unfortunately the vast majority of pa- patents for a period of time that willposing is a way of making new drugs tients feel compelled by the econom- reward the risk our investors havethat are reformulations of older drugs. ics of their health insurance plans to taken. Most importantly, we think thatAt Vela we tried repurposing to de- take generic carbamazepine products. we are going to make a big impact invelop novel treatments for depres- These generics are copies of Tegre- the care of fibromyalgia patients.sion, social anxiety, anorexia nervosa tol, which was never FDA approved Other companies of our size typicallyand other important CNS disorders. for bipolar disorder. Therefore, one of focus on orphan diseases or smallerOne of the repurposing projects at the important goals of Validus was to indications, so we think it is distinctiveVela was low-dose cyclobenzaprine at improve the care of bipolar patients that we have such big ambitions, butbedtime for fibromyalgia, which has by getting them access to FDA- also we have the team and the tech-now become Tonix’s lead program. approved Equetro. That goal trans- nology that make our goals realisticVela was also very important in my lates into the challenge of getting and attainable.development as an entrepreneur, be- Equetro reimbursed by insurancecause it introduced me to a network of plans. Hopefully the incentives in theclinical development experts and healthcare reimbursement system will 4

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