(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)
In a stealthy clinical move, Rexahn Pharmaceuticals (NYSEMKT:RNN) has taken a brand new chemical entity from imagination to breakthrough laboratory bench-top testing, with strong indications in a variety of cancers that will be tackled with a targeted approach, diminishing chemotherapy's devastating effect on the body. RX-21101, a re-engineered form of the popular but flawed Taxotere, will be investigated alongside a team of oncology researchers at the University of Maryland using a new drug delivery platform to bring cancer-fighting agents directly to the site of the tumor.
Direct-targeted cancer therapy is gaining significant ground as a new age of medicine. Last April, Baylor College reported in the Journal of Clinical Oncology that certain breast cancer patients may benefit from treatments that attack those specific cancer cells, avoiding the toxic effects of systemic chemotherapy that also destroys normal cells, not only leaving patients very ill, but sometimes causing resistance in the tumor cells meant to die. In June, researchers at Massachusetts General Hospital released two reports examining targeted therapies for uncontrollable lung cancer based on massive Phase III studies by scientists across the globe, a first of its kind.
The draw of targeted cancer therapy is not only to grab maximum benefit from anti-cancer drugs, but also to reduce the terrible physical effects of chemotherapy that has traditionally been delivered in a shotgun approach, killing the good cells along with the bad. In November 2010, Rexahn published its first results on the quinoxalinyl compounds it created, showing that it kills colorectal cancer cells that had become resistant to Taxol (paclitaxel), made famous by Bristol-Myers Squibb (NYSE:BMY) in the 1990s. Taxol was considered a breakthrough drug to treat lung, breast, ovarian, and head and neck cancers but carried controversy over the environmental impact of harvesting the tree bark needed to synthesize the compound, estimated at one point to possibly cause the destruction of 360,000 trees annually to treat all US cancer cases for which Taxol was indicated. Rexahn's research also shows a strong potential to work with other chemotherapy agents to enhance their efficacy while minimizing adverse side effects due to the lower amounts needed.
In the recent past, Rexahn has garnered patent approvals for RX-21101 in Japan, Europe, Australia, China, and Mexico, in addition to the US, giving it a tremendous opportunity for a greatly expanded preclinical pipeline that includes ground-breaking cancer treatments for colon, breast, kidney, prostate, head and neck, ovary, pancreas, non-small cell lung, brain, and melanoma. Not since Celgene Corp. (NASDAQ:CELG) redesigned thalidomide has one company reached so many potential indications from a single platform.
I like the fact that Rexahn will be working with University researchers on the RX-21101 project. Not only are budgets generally more liberal, but there's usually less ego than that which is found with pharmaceutical partners that can delay clinical results. The drug delivery platform to be used will comprise a nano-sized polymer encapsulating Rexahn's compound (redesigned docetaxel, or Taxotere) and several different chemotherapy agents for targeted delivery to the tumor site, significantly reducing the amount of free-floating toxic agent for less side effects and, because of delivery directly to the tumor, an increase in the amount of agent there. In prior studies, Rexahn was able to show higher efficacy with less side effects when compared to intravenously-given docetaxel.
Taxotere, marketed exclusively by Sanofi (NYSE:SNY) before its patent expiration in 2010, was a sort of second-generation Taxol that did not cause the same ecological destruction, and has been widely used to treat cancers of the breast, ovaries, prostate and lung. The branded pharmaceutical, besieged by generics, is now seeing significant sales declines in the high double digits Timing would therefore be good for Rexahn to offer oncologists a new, improved version of a drug they have come to trust for its results. Even better, Rexahn's polymer encapsulated version should prove to overcome the downside of Taxotere's severe side effects (nausea, neutropenia, anemia, hair loss) that have caused as much as a 28% drop-out rate in some clinical trials that compare it to an alternative.
Successfully entering new phases of clinical development are probably the biggest risk to any biotech firm, Rexahn included, with each event heavily anticipated by investors and the company's stock rising accordingly, or often enough falling heavily in disappointment. The most watched are regulatory actions. In this regard, Rexahn offers a huge risk mitigator -- several days ago its long-time partner Teva Pharmaceuticals (NASDAQ:TEVA) helped it past a major milestone with an FDA submission of an Investigational New Drug (IND) application for RX-3117, a small molecule that acts on DNA synthesis to disrupt cancer's metabolism. Teva has been supporting Rexahn since 2009 to broaden the scope of RX-3117 with development in solid tumors and blood cancers, and owns 5.7% of Rexahn's outstanding shares. I anticipate a Phase I trial will commence in the US in the second half of this year, in solid tumors, triggering additional milestone payments to Rexahn that, along with a recent $6.6 million raise, should take the company comfortably along its clinical and regulatory path.
Targeted cancer therapies come with risk. For almost two decades, Delcath Systems (NASDAQ:DCTH) has attempted to treat hepatocellular carcinoma with a Rube Goldberg-like contraption to isolate the liver for perfusion with cancer-fighting drugs. In theory -- shutting down a major organ from the body's circulatory system for half an hour -- sounds frightening and best left to cardiac surgeons. In practice, the surgery is something like hemodialysis except not with the exchange of bad blood for good blood, but with a hazardous chemotherapy compound that infuses the liver before being returned to the patient. Delcath is being charged by numerous law firms for non-disclosure of the substantial risks in the procedure, including toxicity and death. I believe that Delcath's delisting is imminent. Rexahn, by contrast and similar to the types of research cited above, targets biochemical pathways in the body, not individual organs, thereby eliminating a good deal of risk.
With these recent encouraging developments, Rexahn is in a good position to capitalize on not one, but as many as 10 cancer indications with a therapy that should prove exciting to oncologists that are constantly looking for ways to improve their patients' quality of life. The potential revenues to Rexahn are almost endless -- worldwide, over one million women each year learn they have breast cancer and undergo costly treatment; the global pancreatic cancer drug market has been forecast to be $1.2 billion within the next two years; BBC Research recently reported that preventing and treating prostate cancer costs $26 billion worldwide; and 28% of all cancer deaths come from carcinoma of the lungs. The other indications also come associated with big numbers. With these kinds of figures, buying Rexahn at its current price is truly a steal, since I believe that this creates a platform potentially worth billions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.