Rexahn CEO's Business-Driven Cancer Model Print E-mail
By Sharon di Stefano   
Monday, 05 August 2013 21:59

Management of Rexahn Pharmaceuticals (NYSEMKT: RNN) gave a series of investor presentations in New York recently, where I had the opportunity for an insightful chat with CEO Peter Suzdak, Ph.D about the pipeline, strategies, and delivering shareholder value. Dr. Suzdak's high-level positions at established institutions like Novo Nordisk A/S (NYSE: NVO) and Guilford Pharmaceuticals, as well as his involvement in start-ups like Cardioxyl Pharmaceuticals and Artesian Therapeutics have given him a different philosophy about how to approach cancer. Competition can be pervasive and resources easily strained without a focused business strategy. He views cancer research as avenues of capital deployment choices and Rexahn's pipeline as a mutual fund of sorts, where different mechanisms of action diversify risk and create news flow for real shareholder value. As an additional benefit to reduce risk, part of Rexahn's business uses biomarker technology to spot appropriate patients for its therapy, thereby reducing clinical trial screening and cost.

In his discussion of 2013 target events, Dr. Suzdak emphasized plans for Archexin, Rexahn's lead Akt-1 inhibitor, which is already showing good results in disrupting cancer cell growth. Two Phase II studies are being designed; one in solid tumors and one in blood malignancies. Running them simultaneously will give Rexahn the opportunity to see which produces the best clinical results and help decide where to best devote resources. In addition, potentially positive results would double the amount of news coming from the trials.

Dr. Suzdak believes the Archexin trial in solid tumors should see the quickest enrollment because there is less competition for patients. Results could come as early as the fourth quarter of next year. Plans are to enlist only patients who express the Akt pathway, making the trial more precise and improve the chances of patient response. The types of cancer to be studied has not been disclosed but last year Rexahn completed a 31-patient trial in advanced pancreatic cancer with Archexin in combination with Gemzar (gemcitabine) that showed safety with median survival of 9.1 months versus 5.6 months with Gemzar alone. Rexahn has FDA Orphan Drug status in renal, stomach and brain cancer, so one of these may also be likely.

Akt inhibitors in cancer are a hot but underexplored area and competition is limited to Merck & Co.'s (NYSE: MRK) work in endometrial, prostate, breast, gastric, and head and neck disease with 50 Phase II trials ongoing -- clearly considered by Merck to be a valuable area of investigation.

Rexahn's partnership with Teva (NYSE: TEVA) continues on solid ground as well, highlighted with the filing of an Investigational New Drug (IND) application with the FDA last month for a Phase I using RX-3117 in solid tumors. Preclinical studies had shown RX-3117, a small molecule acting on a distinctive DNA synthesis to disrupt the metabolism of cancer, to be successful in stopping tumor growth in the pancreas, lung, colon and kidney, and a Phase I done in Europe last August showed the compound to work orally with no adverse effects.

I believe Rexahn is more important to Teva than investors realize. Faced with severe competition from other generic companies and a swollen and unconcentrated pipeline culminating from years of acquisitions, incoming CEO Jeremy Levin promised investors a new focus with a cut of $2 billion in expenses over the next five years, including the spend of research dollars in only a handful of oncology programs. Put in this light, Teva's commitment to Rexahn is valuable as a way to increase Teva's branded presence by outsourcing research and development with milestone payment support. Teva's investment in Rexahn so far has resulted in ownership of almost 6% of the company, and while the total milestone contribution is not disclosed, I understand at least $4 million could be received by the end of the year. It is also possible that Teva will bring in outside collaborators on RX-3117, an even greater pledge to boosting its oncology platform.

In other company news, RX-5902, Rexahn's compound affecting cell growth and division, has been given a brand name, Supinoxin, and Phase I dose-escalating studies are expected to begin in the third quarter of this year to determine how much Supinoxin to give for best results and lowest toxicity. Bench testing had shown that Supinoxin inhibited the spread of cancer in 18 human cancer cell lines including colon, pancreas, breast, stomach and ovarian. In later animal studies it demonstrated anti-tumor activity and increased survival in renal, pancreatic and ovarian cancer, and in melanoma. There was also a strong clinical suggestion that Supinoxin was effective in cancers that had previously been shown to resist common chemotherapies like gemcitabine and docetaxel.

As Rexahn progresses, risks to be aware of, besides clinical and regulatory ones, are whether Teva continues its relationship with Rexahn. I mention this because of the new CEO's vow to cut costs, as noted above. However, given that Teva delivered 38% topline growth in its oncology line in the last quarter, the strongest in its history, and that it has put in place a favorable royalty agreement with Rexahn, chances are good the relationship will stay intact, as it has since 2009.

Rexahn's compounds have a potential application to at least 10 different kinds of cancer and even the one with the lowest incidence -- ovarian -- is expected to reach a global market size of $1.6 billion by 2016. The overall cancer market, at an estimated $47.7 billion, is one of the fastest-growing in the pharmaceutical world. In light of this, Rexahn's market cap of $64 million is a small fraction of what its drugs are worth if development is successful, and a smart way to invest in this exploding industry where innovation is badly needed and always welcome.


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