Opexa Therapeutics A Significant Growth Opportunity For Both Short Term Traders And Long Term Investors Print E-mail
By Scott Matusow @scottmatusow   
Tuesday, 26 March 2013 07:11

As regenerative medicine continues to slowly bridge the gap between its future promise and the scientific reality of today, companies in the space are positioning themselves to benefit from the world's technological advances. Today, regenerative medicine is becoming a reality while companies, researchers, patients, and investors alike also face ethical and religious questions to be answered. Important steps along those lines figure to be taken next month, as the Vatican prepares for its Second International Vatican Adult Stem Cell Conference: Regenerative Medicine — A Fundamental Shift in Science & Culture, taking place from within The Vatican, April 11-13.

The event is part of a five-year collaboration between The Stem for Life Foundation, NeoStem (NBS), and The Vatican's Pontifical Council for Culture. The goals of conference are to:

  • Foster an open dialogue amongst researchers, physicians, philanthropists, faith leaders and policy-makers in order to help identify clear, unmet medical needs throughout the world that can be addressed through the development of cellular therapies that will reduce human suffering.
  • Expand global awareness of the here-and-now opportunities of adult stem cell therapies, reducing misperceptions surrounding the field of cellular research.
  • Lay the groundwork for a collaborative network of scientists, educators and patrons.

Companies present for the conference include a number of well-known names in regenerative treatment, such as Celgene (NASDAQ: CELG), Osiris (NASDAQ: OSIR), NeoStem , and Athersys (NASDAQ: ATHX). Also to be featured at the conference is Opexa Therapeutics (NASDAQ: OPXA), and their T-cell immunotherapy, Tcelna, which is in development for secondary progressive multiple sclerosis (SPMS). 

Shares of Opexa look poised to breakout higher for several reasons including a new partnership agreement with Merck Serono, a recent large institutional share purchase, and other new developments. Let’s delve into Opexa’s short and long term prospects.

Opexa is focused on the development of patient-specific cellular therapies for the treatment of autoimmune diseases. Currently, the company’s leading product candidate, Tcelna, is in phase 2b of a clinical trial focused on addressing the large multiple sclerosis (MS) patient population.

According to the company’s website,

Tcelna is a personalized therapy that is specifically tailored to each patient's disease profile. Tcelna is manufactured using ImmPath, Opexa's proprietary method for the production of a patient-specific T-cell immunotherapy, which encompasses the collection of blood from the MS patient, isolation of peripheral blood mononuclear cells, generation of an autologous pool of myelin-reactive T-cells (MRTCs) raised against selected peptides from myelin basic protein (MBP), myelin oligodendrocyte glycoprotein (MOG) and proteolipid protein (PLP), and the return of these expanded, irradiated T-cells back to the patient. Opexa believes the potential combination of efficacy, superior safety, excellent tolerability and administration may position Tcelna as the MS treatment of choice as compared to existing therapeutics.


In MS patients, the faulty immune system is not able to prevent the attack of a small sub-population of myelin reactive T-cells (MRTCs). Opexa’s strategy is to identify which specific antigens within each individual patient may be targeted by the immune response, and to inject a large therapeutic bolus of attenuated MRTCs back into the patient. The Tcelna consists of attenuated antigen specific Myelin Reactive T-cells, and the injection is meant to educate the body’s immune system to recognize the similar MRTCs as “foreign” and destroy them.

T-cell therapy is certainly getting a lot of attention lately. The potential impact is not lost on big pharma. In February, Opexa announced the execution of an agreement with Merck Serono, a division of Merck, for the development and commercialization of Tcelna: 

Under the terms of the agreement, Opexa will receive an upfront payment of $5 million for granting an option to Merck Serono for the exclusive license of the Tcelna (imilecleucel-T) program for the treatment of MS. The option may be exercised prior to or upon completion of Opexa’s ongoing Phase IIb clinical trial in patients with SPMS. Upon exercising this licensing option, Merck Serono would pay an upfront license fee of either $25 million or $15 million (depending upon whether certain conditions are met), and in return receive worldwide development and commercial rights to Tcelna (imilecleucel-T) in MS, excluding Japan. After exercising the option Merck Serono would be wholly responsible for funding clinical development, subject to Opexa’s co-funding option, as well as regulatory and commercialization activities for the MS program. Additional financial considerations of the agreement include development and commercial milestone payments to Opexa of up to $195 million and a tiered royalty rate from the high single digits to the mid-teens based on net sales payable to Opexa. The potential payments to Opexa could, therefore, total $225 million excluding royalty payments.

The terms of the agreement are encouraging to investors on a number of fronts. Of particular note is that Merck Serono would not only pay Opexa a licensing fee of $15m-$25m along with potentially $225 million plus royalties, but would also fund all additional clinical development, regulatory, and commercialization costs. I also find it interesting that the rights to Japan were withheld from the terms of the otherwise worldwide agreement. It is possible that a separate agreement for Japan will be announced in the near future and act as a catalyst. 

  • Cash Position and Institutional Ownership

A Feb 11, 2011 filing reveals a very interesting new 9.6% stake in Opexa taken by Sabby Management LLC. Sabby is a very savvy healthcare related investment group.  Their position combined with the Merck Serono agreement, represents a couple of confidently placed large investments in a company with Opexa’s small market capitalization of only 17M. Cash on hand is always a concern with small developmental biotech companies, but the recent $3.25M private placement and the upfront fee of $5.0M received from Merck Serono has helped temper that concern for Opexa. With a current monthly burn rate of only $885K, the cash position has been shored up considerably. The potential of a $15M to $25M fee from Merck Serono coming at the conclusion of the current phase 2b trial along with Merck Serono shouldering the burden of additional clinical development of Tcelna for MS, goes a long way in clearing up the cash worry for current Opexa shareholders.  

·       Conclusion

Trading shares of small float biotech companies is certainly not a risk-averse endeavor, and the proper risk/reward allocation is a crucial component to any successful portfolio. Having said that, the developmental biotech space is where investors can find returns similar to Sarepta Therapeutics (NASDAQ: SRPT).  Sarepta traded under $3.00 a year ago as it worked through a phase II trial for eteplirsen, indicated for the treatment of Duchenne Muscular Dystrophy (DMD). It now trades now at over $32 a share while the company expects to hear from the FDA on accelerated approval for eteplirsen soon.

It is my opinion that Opexa Therapeutics presents both a high probability swing trade as well as considerable upside potential for the long term investor. The company is due to release its quarterly 10K Wednesday morning at 7:30. With only 8.5M shares outstanding, and an undervalued market cap of only 17.3M, a positive news announcement could send shares of Opexa surging quite a bit higher.

Long: OPXA



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