Rexahn's Replacement For Eli Lilly's Gemzar Enters New Clinical Trial

| About: Rexahn Pharmaceuticals (RNN)
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This is a cancer company moving fast. Rexahn Pharmaceuticals (NYSEMKT:RNN), owner of an important pipeline of chemotherapy alternatives, is about to start another phase of clinical trials into solid tumors in patients that had failed Gemzar, or gemcitabine, Eli Lilly's (NYSE:LLY) injectable that leads to resistance 25% of the time, producing a dismal prognosis.

After completing a successful investigative Phase I of its DNA synthesis inhibitor RX-3117 in Europe, where it was shown that a pill for cancer is possible, Rexahn moves toward the next step, the announcement of a continuation study. This will be done at multiple sites, in 30 patients, using a variety of doses to determine the right amount of RX-3117 to produce optimal anti-tumor effects. The trial is designed so that dosage can be adjusted after only one cycle of therapy, making for quick assessment of medicinal value. Diagnosis by CT or MRI scans will be done frequently to evaluate efficacy. The entire trial's duration is less than one month.

RX-3117 has to its name an Investigational New Drug (NYSE:IND) clearance with the FDA, filed only last July and already granted so that US trials can begin. The method of action is through downregulating an enzyme implicated in apotosis, or programmed tumor cell death and while RX-3117 shares some of the same biochemical properties as gemcitabine, its toxicity profile is not as onerous.

Rexahn, unlike Lilly, has a chance to better treat patients. As far back as 2007, Gemzar was shown to be a suboptimal therapy achieving a paltry 5.4% response rate in pancreatic cancer and prolonging progression-free survival by only a little over four months. The drug, still used in pancreatic, breast, lung, ovarian and bladder cancer, had gone generic several years ago and brings in less than $100 million annually to its original manufacturer. Oncologists employ gemcitabine because it offers something a little better than standard chemotherapy, but studies done as recent as six months ago question why the drug stops working, and why patient resistance allows tumors to ultimately win.

The market for anti-cancer treatment is predicted to be worth nearly $20 billion by 2018, putting RX-3117 in a potentially strong position to benefit in this large industry. Its tumor metabolic action has now been shown against 80 separate human cancer cell lines, including breast, lung, pancreatic, colon, renal, bladder, cervical, brain and ovarian.

Future clinical success besides, what impresses me about Rexahn is the commitment and follow-through on promises made to investors. In February 2013, almost 12 months ago, the company stated its intention to further RX-3117 along in additional studies, and its latest news represents a critical milestone not just for the research and development efforts but also for building trust.

Credibility for Rexahn came under scrutiny when its partner, Teva Pharmaceuticals Industries (NYSE:TEVA), decided to drop its option to license RX-3117. It quickly became clear, however, that reasons had nothing to do with the potential of the drug, but instead with internal decisions at Teva to realign its pipeline focus. Teva continues to be in a state of disarray - amid a widespread restructuring plan that included 5,000 layoffs the company recently announced the naming of a new CEO as strategy for the firm undergoes change. Analysts and investors already show skepticism for the new executive, citing his most significant achievement as the turnaround of a generic crop protection company.

Despite Rexahn's existing data, this new, larger trial could fail - a fate not uncommon among similar cancer therapy companies. Investor faith should lie in the high number of cancer cell lines in which RX-3117 has shown results, its early mouse models, and the preceding Phase I. To mitigate risk, Rexahn has a number of other promising drugs in its pipeline and $14.9 million in cash as of its latest quarter which does not include the recent funding of $5.3 million, giving a two-year runway, given the conservative burn rate.

Rexahn's market capitalization, at $77 million, belies its potential of introducing orally-delivered cancer therapies, with proven safety profiles, in a multi-billion dollar industry and represents a clear value at these prices. A new trial is about to start with RX-3117 that could prove its ability to overcome gemcitabine resistance and deliver to physicians and patients the answer to a long-standing clinical problem and devastating disease.

Disclosure: I am long RNN. 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.