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"Develop, Sell and Partner " Opexa Therapeutics (NASDAQ: OPXA)

Opexa Therapeutics, Inc. is develops of patient-specific cellular therapies for the treatment of autoimmune diseases.

Market Opportunity: The name Multiple Sclerosis (NYSE:MS) simply refers to the buildup of scar tissue in the brain and spinal cord. An unpredictable disease of the central nervous system, multiple sclerosis can range from being relatively benign to somewhat disabling to devastating as communication between the brain and other parts of the body is disrupted. With MS, this scarring or – “sclerosis” – happens in multiple locations inside the central nervous system.  As the myelin sheath becomes damaged, the electric signals have a harder time getting though or become blocked entirely. As the damage progresses, this leads to the various symptoms of MS. Most people experience their first MS symptoms between the ages of 20 and 40. Although scientists have documented cases of MS in young children and elderly adults, symptoms rarely begin before age 15 or after age 60.

  • Multiple sclerosis is the result of a person’s own T-cells attacking the myelin sheath that coats the nerve cells of the central nervous system. In patients with MS, it is believed that activated T-cells (myelin reactive T-cells) infiltrate the central nervous system and trigger the attack on the myelin sheath leading to de-myelization, while also inducing a damaging general pro-inflammatory immune response. Ultimately, the nerve fiber axons become damaged and cause impulse transmissions to diffuse into the tissue, resulting in the symptoms and disability associated with the disease,
  • No one knows exactly how many people have MS. It is believed that there are currently about 250,000 to 350,000 people in the United States who have been diagnosed with MS; this estimate suggests that approximately 200 new cases are diagnosed each week,
  • According to the National Multiple Sclerosis Society, MS affects approximately 2.5 M individuals worldwide. Industry experts estimated the global sales of MS therapeutics at approximately $6 B.

Focus: OPXA’s leading therapy, Tovaxin, is in Phase IIb clinical trial for MS. Tovaxin is derived from T-cells isolated from peripheral blood, expanded ex vivo, and reintroduced into the patients via subcutaneous injections. This process triggers a potent immune response against specific subsets of auto-reactive T-cells known to attack – myelin, believed to be a primary cause of MS attacks and nervous system damage.

  • Tovaxin, an individualized T-cell therapeutic vaccine was exclusively licensed from Baylor College of Medicine,
  • Tovaxin consists of attenuated patient-specific myelin reactive T-cells (MRTCs) against peptides from one or more of the primary proteins on the surface of the myelin sheath (myelin basic protein (MBP), proteolipid protein (PLP) and myelin oligodendrocyte glycoprotein (MOG)). Patient-specific MRTCs are expanded in culture with specific peptides identified by our proprietary test of the patient’s peripheral blood. The cells are then attenuated by gamma irradiation, and returned to the patient as a subcutaneous injection.


Regulatory Status: Although further testing is necessary, results from the initial human trials appear to indicate that attenuated T-cells cause an immune response directed at the auto-reactive T-cells in the patient’s body – resulting in a reduction in the level of harmful T-cells. OPXA completed an FDA cleared Phase IIb clinical trial of Tovaxin which enrolled 150-patients. The study was a Phase IIb multi-center, randomized, double blind, placebo-controlled trial in 150 patients with Relapsing-Remitting Multiple Sclerosis or high risk Clinically Isolated Syndrome (NYSE:CIS):

  • Annualized relapse rate (NYSE:ARR) for Tovaxin treated patients was 0.214 as compared to 0.339 for placebo-treated patients, which represented a 37% decrease in ARR for Tovaxin as compared to placebo in the general population,
  • For patients who had more active disease as indicated by an ARR > 1 in the year prior to the study, Tovaxin demonstrated a 55% reduction in ARR as compared to placebo; and an 87% reduction in relapse rate was observed in Tovaxin patients in this population compared to placebo during the 24 week period following the administration of the full course of treatment,
  • Patients who had an ARR>1 at entry demonstrated a statistically significant improvement in disability score as measured by the Expanded Disability Status Scale (EDSS) (p =0.045) for patients treated with Tovaxin as compared to those receiving placebo (The EDSS is a score and measure of disability ranging from 0-10). In addition 28.1% of the Tovaxin patients showed an improvement in EDSS of at least 1 point,
  • Patients who had an ARR>1 at entry and were treated with Tovaxin experienced an 88% reduction in brain atrophy and a 59% reduction in absolute T-2 lesion volume as compared to placebo,
  • Tovaxin was -  safe and well tolerated – with – no serious adverse events related to treatment with a common adverse event – injection site irritation,
  • More than 83% of the Tovaxin-treated group remained – relapse free – at 1 year and the annualized relapse rate after treatment decreased to 0.20. The post- analysis which represents 86% of the total patient population in the study was conducted to evaluate Tovaxin treatment among study patients with the same baseline disease activity that is – targeted for inclusion in the forthcoming Phase IIb study. Along with a marked reduction in relapses, 73% of the Tovaxin-treated patients with ARR1 showed stabilization or improvement in MS disability, including 16.5% with a sustained improvement in the EDSS of at least 1 full point,
  • On an MRI, the Tovaxin-treated group also demonstrated a reduction in – brain atrophy and fewer inflammatory brain lesions,

Financial: Q3/09, R&D expense was approximately $0.5 M and G&A expense was approximately $666 K while recognizing a gain on the sale of assets of $3 M. The gain is attributable to the sale of the stem cell technology program to Novartis (NYSE:NVS) for an upfront payment of $3 M. Opexa recognized other income of $0.5 million for Q3/09 attributable to the completion of the initial $0.5 M technology transfer fee milestone and pursuant to the terms of the stem cell technology acquisition agreement with NVS.  OPXA reported net income for Q3/09 of approximately $2.2 M, or $0.18 per basic share and $0.14 per diluted share.

  • On 11/12/09, OPXA filed Articles of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Texas to reduce the par value of its common stock from $0.50 per share to $0.01 per share; the previous Bylaw provision(s) did not provide for uncertificated shares (this amendment brings the Bylaws in compliance with the NASDAQ Stock Market requirement that all listed securities be eligible for a direct registration system, such as the direct registration system administered by The Depository Trust Company),
  • Opexa recognized a non-cash loss on derivative instruments of $366,774 for the nine months ended September 30, 2009 (this loss is a result of the net unrealized <non-cash> change in the fair value of derivative instrument liabilities related to warrants associated with the 8/08 financing which had been accounted for),
  • OPXA reported a net loss for the 9 months ended 9/30/09, of approximately $0.3 M, or $0.02 per share (basic and diluted),
  • Receipt of approximately $1.2 M in additional cash from warrant exercises before and after quarter end.

Bottom Line: OPXA entered into an exclusive agreement (8/6/09) with NVS for the further development of its novel stem cell technology which generated preliminary data showing the potential to generate monocyte derived islet cells from peripheral blood mononuclear cells (was in early preclinical development). NVS acquired the stem cell technology and will have full responsibility for funding and further R&D and commercialization activities. OPXA has received $3.5 M from NVS of which $3 M was attributable to an upfront cash payment and $0.5 M resulted from the completion of the 1st of 2 technology transfer milestones and will receive an additional $0.5 M technology transfer fee upon the completion of the 2nd technology transfer milestone which is anticipated to occur within the next 6 months and eligible to receive certain clinical and commercial milestone payments as well as royalty payments from the sale of any products resulting from the use of the technology.  OPXA retains an option on certain manufacturing rights:

  • Tovaxin is a personalized – vaccine – based on a patient’s individual immunologic profile. Detailed immunology data analysis from the trial indicated that Tovaxin can successfully induce changes in T-cell reactivity to all 3 targeted myelin antigens implicated in the autoimmune attacks causing neurologic damage in MS,
  • The proprietary T-cell technology intellectual property and a comprehensive sample database may also enable discovery of novel bio-markers and other relevant peptides to be used to treat MS patients,
  • Corporate Governance Quotient as of 11/6/09 is better than  71.6% of Pharmaceuticals, Biotechnology & Life Sciences companies,
  • Current burn rate is approximately $250 K per month ( it has sufficient liquidity to support its operations through 12/10 – it should be easy for them to raise money),
  • OPXA trades at $2.10 (52 week range of $0.10 to $6.93) with a market cap of $27.11 M, an enterprise value of $23.57 M with 12.91M shares outstanding, a 9.44 M share float, a short interest ratio of 2.3 but, only $4 M in cash,
  • Insiders hold 25.75% shares  (a very GOOD sign) with 4.5% owned by institutions,
  • Institutional investors include: Bogle Investment Mngt, Stark Offshore Mngt, Dimensional Fund Advisors, Geode Capital, Wells Fargo, MYCIO Wealth Advisors and Chronim Investments,
  • OPXA has been – one – of the biggest losers over the last months (was down after a deal with NVS sent shares soaring in August); however, as the share price has been going down so have market conditions – depreciating all stem cell stocks,
  • A partnership for Tovaxin is the KEY for share appreciation as trading volumes and news declined but, insiders have been buying,
  • I would make this a “BUY” on the potential as vaccines are the new interest to Pharma!