Rexahn Pharmaceuticals continues to scream "buy" Print E-mail
By M.E.Garza   
Monday, 21 June 2010 13:15
The latest analyst report by Goldman Small-Cap Research lists four reasons why the stock price of this small-cap biotech should be higher and we couldn't agree more. Shares of Rexahn Pharmaceuticals, Inc. (AMEX: RNN) continue to be a"buy," especially at current prices.
Recently, the company hired Fred Frank as a consultant to the company. Anyone who knows about Mr. Frank will tell you that this is a tell that the company is getting close to final negotiations for licensing of either or both of their Phase IIb drugs, Zoraxel™ (sexual disfunction) and Serdaxin® (for depression).

Mr. Frank is probably the most well known major pharma banker over the last 25 yrs. The fact that he is working with Rexahn is also significant because he rarely works for pharma companies of their size. Sources tell us that Mr. Frank was compelled to do this deal because both drugs have tremendous breakthrough potential and "each has blockbuster written all over them."

Interestingly, the company has publicly stated that they were actively engaged with at least six different large pharmaceutical companies the last time we heard from them at their Nasdaq Market Site press conference. Since then, biotech investors have seen shares drop down to the current levels- still at nearly double the price it was when BioMedReports recommended the stock to it's subscribers. At that time a few months ago, RNN was mostly an undiscovered biotech trading at $.70 levels. Now many analysts believe that Mr. Frank's ability to negotiate with some of top pharma CEOs has increased the odds of a substantial licensing deal for the two drugs and that the deal should be announced sometime between now and year end.  

Wall Street believes the potential deal to be nearly $1 billion and to be made up of milestone payments and double digit royalties with at least $50 million upfront.

Company officials have said they expect the deal to be valued at 3 to 4 times the value of the current deal they have with Teva Pharmaceutical Industries for an experimental cancer-fighting compound; RX-3117, a small molecule, new chemical entity nucleoside compound being developed by Rexahn for treating a broad range of cancers.

That drug was only in the pre-clinical stages when it was licensed by Teva, but the data was compelling enough to cause Teva to invest nearly $4 million in Rexahn (at 20 percent over market), pay for all development costs and to take on $200 million in milestone payments thus far. The Zoraxel™ and Serdaxin® drugs are substantially further along in development (Phase IIb versus preclinical).  Teva is also expected to pay a $4 million milestone payment when RX-3117 moves into Phase I in the coming months (company officials expect that event to take place during the last quarter of this year).  

Also making headlines recently, Boehringer's "female Viagra" drug Flibanserin was voted down by an FDA advisory panel because it “failed to demonstrate a statistically significant improvement” in sexual desire in two trials. Flibanserin, an oral treatment that was originally developed as an antidepressant, affects levels of serotonin and other chemicals in the brain, but reviewers were concerned about Flibanserin's side-effects. Meanwhile, RNN's Zoraxel™ acts in a similar fashion, and could fill a key a role the underserved female sexual disfunction market- plus it has not shown significant side effects. The fact that Flibanserin seemed to work only by increasing serotonin alone can be seen as proof  that Zoraxel™ is on right track here because it simultaneously increases dopamine levels as well.

In addition, Boehringer's drug had to be taken 30 days before sexual activity while Rexahn's drug needs only to be ingested 30 minutes before sexual activity.

The attention the Boehringer drug has received has heightened interest from Pfizer, Bristol-Myers Squibb and Eli Lilly & Co as to the potential market size of the drug and it has more clearly shown the industry what the FDA expects. RNN's Zoraxel™ seems to more clearly "fit the bill" and insiders and analysts are both hopeful that these companies are now more primed to push a deal.

Once again, it appears RNN is undervalued and poised to rise.

Note to subscribers: This report will be widely released to readers on various news wires and on BioMedReport's  front page later this afternoon.

Disclosure: LONG RNN




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