Opexa Therapeutics (NASDAQ: OPXA) shares rose 160 percent yesterday on 297 times average volume after the company announced an agreement with Merck Serono, a division of Merck and Co Inc. (NYSE: MRK). OPXA, a Woodlands, Texas biopharmaceutical company entered into the deal seeking help from Merck for the development and marketing of a drug called Tcelna. Tcelna is a potential T-call therapy for patients suffering from multiple sclerosis. Opexa is currently in Phase IIb clinical trials with patients suffering from Secondary Progressive MS. Potential revenues for Opexa from the option and license agreement with Merck could total over $225 million based upon the success of Tcelna. The five million dollar upfront payment that Opexa received in the deal from Merck will help the company advance its Phase IIb study of Tcelna. If the study is successful, Merck has the option to pick up development costs going forward.
At the end of January Opexa announced the closing of a private offering of unsecured convertible promissory notes and warrants to purchase shares of common stock for proceeds of $650,000. The company says it will use the proceeds use proceeds to continue its Phase IIb clinical study of Tcelna. New investors and existing shareholders, as well as company board members, were involved in the private offering. The notes will mature on January 23, 2014 and accrue interest at the rate of 12 percent annually. Interest is payable in cash quarterly and will begin on March 31, 2013.The notes can be changed into common stock at the option of the investors at a price of approximately $1.30, subject to certain limitations.
There are so few drugs on the market that treat MS effectively that Tcelna is taken as a serious option and as a result the FDA has sanctioned fast-track approval of the drug pending the outcome of the studies. Opexa certainly believes that it will be viable as is evinced by its partnership with Merck Serono and the private offering last month to help finance the Phase IIb study.
Currently Opexa has a market cap of $16.87 million and is selling for $2.92 per share. The company's shares had jumped to over $4 after the announcement of the deal with Merck, but have settled down considerably. The stock seems volatile right now as investors and momentum junkies have reacted to the news and are able to drive prices. But, if the studies prove viable, Opexa may be a good option for your portfolio if you don't mind the risk involved with choosing such a volatile option and the wait for the outcome of the Phase IIb study.