Could Metabasis Therapeutics be the next OPXA? Print E-mail
By Andrew Greenbull   
Sunday, 04 October 2009 03:00

When Swiss drugmaker Novartis (NYSE:NVS) agreed to acquire Opexa Theraputics (NASDAQ:OPXA) stem cell technology I embarked on a search to find the next candidate.

Let’s rewind for a moment to August 2009 when Novartis, for $3 million and an additional $1 million technology transfer fee, took charge of all research, development and commercialization activities of Opexa’s technology. The deal could be worth a total of $50 million for the Woodlands, TX based company through additional milestone payments and future royalties. Not bad for a biopharmaceutical business that was sporting a mere $5 million market cap at the time.

Could Metabasis Therapeutics, Inc (NASDAQ:MBRX) be the next OPXA? Maybe.

First, my research on Metabasis:

MRBX has extensive expertise in liver diseases and in the pathways and proteins residing in the liver that are involved in certain metabolic diseases. The company has two proprietary discovery platforms, HepDirect® and NuMimetic™, which the company has used to develop the current product candidates and which are expected to be used to expand the product pipeline in the future.

HepDirect: Pradefovir, MB07133 and MB07811 use HepDirect technology, as do several research programs. In addition to MBRX’s internal programs, the company has worked with Merck and Idenix to discover treatments for hepatitis C by seeking to develop liver-target compounds they have designated. MBRX may also seek to leverage this technology with other companies.

NuMimetic technology: MBRX has developed a library of unique molecules, known as nucleotide mimetics, and have used this library to discover compounds that the company believes have the potential to treat metabolic diseases. MBRX used NuMimetic technology to discover CS-917 and MB07803, and the company is also using it in certain of their advanced research programs including the AMPK discovery project which is being conducted with Merck.

These two technologies alone are attractive enough for an acquisition not to mention the rest of MBRX’s robust pipeline.

Can Metabasis develop these technologies on their own? Perhaps. But do they have the resources to get it done? According to their latest quarterly report that was released in August, probably not. The report states that all research and development activities of MBRX were discontinued for the purpose of preserving cash.

Based on the current operating plan, after considering the impact of these recent transactions, together with the cash available at June 30, 2009, MBRX’s working capital will fund the current operating plan through December 2009.

So, who might be a potential suitor?

MBRX currently maintains a Research Collaboration and License Agreement with Roche. The Company’s HepDirect™ liver-targeted technology is applied to proprietary Roche compounds to develop second-generation nucleoside analog drug candidates for treating hepatitis C virus. The Company will be eligible to receive up to $191.0 million in additional payments upon achievement of predetermined preclinical and clinical development events as well as regulatory and commercialization events.

MBRX already received a non-refundable upfront payment of $10.0 million from Roche in August 2008.

If not Roche, there are a host of other potential buyers. The 7th Annual Pharmaceutical-Biotech Partnering Conference will be held this week (Oct 5-7th). MBRX will attend this conference and I expect the company to demonstrate its leading technologies and product candidates to other attendees such as Merck, GSK, Eli Lilly, Novartis, Abbott Laboratories and so forth.

So, will MBRX be the next OPXA? According to my research, the chances are good.

Disclosure: Long MBRX

(Story Edited by Mark Rich)

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