Scimitar Equity Blog

Opexa Therapeutics develops of patient-specific cellular therapies for the treatment of autoimmune diseases. Reiterating  from our 12/2/09 post – According to the National Multiple Sclerosis Society, MS affects approximately 2.5 M individuals worldwide. Industry experts estimated the global sales of MS therapeutics at approximately $6 B.

• No one knows exactly how many people have MS,
• It is believed that there are currently about 250,000 to 350,000 people in the United States who have been diagnosed with MS; this estimate suggests that approximately 200 new cases are diagnosed each week,

The securities in the offering include 2,550,000 shares of OPXA common stock and warrants to purchase up to 1,275,000 shares of common stock, which securities are being offered in “units” at a price of $2.00 per unit:

• Each unit consists of one share of  common stock, a 5 year Series A warrant to purchase 0.35 of an additional share of  common stock, and a 1 year Series B warrant to purchase 0.15 of an additional share of  common stock,
• The warrants have an exercise price of $2.55 per share and are exercisable commencing 6 months and 1 day after closing.

Bottom Line: OPXA needs the net offering proceeds for general corporate purposes, furthering clinical development of Tovaxin®, other working capital and operational purposes. However …

• On 12/10/09, OPXA issued a press release with respect to the pricing of its offer and sale of the Units declaring it  effective (by the SEC) on 11/23/09 and is expected to close on or about 12/14/09,
• Should OPXA have – waited – as news of the impending offering hit the street,
• Statistics indicate that OPXA was $0.11 in 12/08 and rose when the stem cell sector – was rising with the stock vaulted to $5.66 in 9/09 before falling off the cliff,
• The stock then appreciated in 11/27/ 09 to $1.99, up again on 12/2/09 to $3.19 but then fell to $1.94 on 12/11/09; 1 day after the release,
• OPXA had determined that certain anti-dilution adjustment provisions contained in a previous Series F Warrants  issued in 8/08 were triggered by the  sale of units on 4/14/09 and 5/14/09 consisting of 10% Convertible Notes in the aggregate principal amount of $1,302,000, convertible into shares of common stock at $0.50 per share and  Series G Warrants exercisable at $0.75 per share,
• But, pursuant to adjustment provisions, the aggregate number of shares of common stock issuable upon exercise of the Series F Warrants increased from 2,003,874 shares to 2,331,304 shares, and the exercise price of the Series F Warrants was reduced from $1.78 per share to $1.53 per share,
• The potential of the — dilution factors — is the concern,
• Can Rodman&Renshaw (R&R) maintain a strong pricing pre and post the offering,
• OPXA is also tied to the vagaries of the “Stem Cell” sector which have been (each) subject to roller coaster price swings over the past year,
• Favor seems to be back with many trials, IND’s, the NIH loosening of regulation and interim results being announced,
• This – END OF THE YEAR – market is fickle; I like OPXA (see post on 12/2/09,
• My next question is OPXA rushing it - but — R&R – does deliver … but at what cost?
• Timing could have been better or maybe a Register Direct Offering (RDO) should have been considered earlier…