Scimitar Equity Blog

Opexa Therapeutics develops of patient-specific cellular therapies for the treatment of autoimmune diseases. OPXA is developing Tovaxin®, an individualized cellular immunotherapy treatment in Phase IIb clinical development for multiple sclerosis (MS). Tovaxin®  is derived from T-cells isolated from peripheral blood, expanded ex vivo, and reintroduced into the patients via subcutaneous injections triggering a potent immune response against specific subsets of autoreactive T-cells known to attack myelin, believed to be a primary cause of MS attacks and nervous system damage.

Follow-up from our OPXA posts 12/2 and12/13/09 and our 9/16/09 Rise of Registered Direct Offerings (RDO) posts…

Market Opportunity: Reiterating, 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.

Financing: The RDO closed with several institutional investors placed 2,550,000 units with each unit consisting of one share of Opexa common stock, a 5 year Series A warrant to purchase 0.35 of an additional share of OPXA’s common stock, and a 1 year Series B warrant to purchase 0.15 of an additional share of Opexa common stock. The price of the securities sold was $2.00 per unit, for an aggregate purchase price of $5.1 M. Pursuant to a securities purchase agreement between OPXA and the investors in this offering: the warrants are exercisable at $2.55 per share and are first exercisable on June 15, 2010. The Series A Warrants expire on 6/15/15 and the Series B Warrants expire on 6/15/11,

Bottom Line: OPXA believes that Tovaxin works selectively on the myelin autoreactive T-cells by harnessing the body’s natural immune defense system and feedback mechanisms to deplete these T-cells and induce favorable immune regulatory responses by rebalancing the immune system. Tovaxin is manufactured by taking the MRTCs from the blood, expanding them to a therapeutic dose ex-vivo, and attenuating them with gamma irradiation to prevent DNA replication. These attenuated MRTCs are then injected subcutaneously into the body in large quantities. The body recognizes specific T-cell receptor molecules of these MRTCs as foreign and mounts an immune response reaction against them, not only destroying the injected attenuated MRTCs, but also the circulating, myelin autoreactive T-cells carrying the peptide-specific T-cell receptor molecules. In addition, T-cell activation molecules on the surface of the activated MRTCs used as vaccine induced favorable immune regulatory responses which promote anti-inflammatory responses.

• This financing increases the cash position to approximately $9 M,
• Trials do not come cheaply, OPXA will need to raise more money or partner,
• Competitors in the current treatment of and in the development of treatments for MS include Biogen-Idec, Elan, Merck-Serono, Sanofi-Aventis, Teva, and Bayer/Schering AG,
• Competitors in the development of stem cell therapies could include Aastrom Biosciences, Geron, Gamida-Cell Ltd, Stem Cells Cellerant Therapeutics and Osiris Therapeutics,
• Current MS disease modifying drugs on the market help patients live longer, (hopefully) comfortible and generally work by modulation or suppression of the immune system,
• Therapies for MS are dominated by 3 forms of interferon that require frequent subcutaneous or intramuscular injections (Avonex®, Betaseron® and Rebif®).
• Copaxone® is an immunomodulator that is administered daily. Novantrone® (mitoxanthrone) is an immunosuppressive drug that can only be given four times per year with a lifetime limit of 8 to 12 doses,
• But, Copaxone® causes significant injection site reactions; while Novantrone® causes infections, bone marrow suppression, nausea, hair thinning, bladder infections, and mouth sores. These drugs must be administered daily to weekly. Tysabri®, a selective adhesion molecule inhibitor (an alpha 4 integrin antagonist), represents another class of MS drugs that works by preventing immune system cells from crossing the BBB and from moving into the central nervous system (CNS).  Tysabri® requires a once per month infusion and has been reintroduced to the market after being originally withdrawn in 2005 based on safety concerns over several patient deaths due to a virally mediated brain inflammation,
• All current therapies only claim to slow the progression of MS and present significant patient compliance challenges because of the dosing schedule, limited decrease in relapse rate and side effects profile. The interferon formulations produce severe flu-like symptoms, injection site reactions, infection and neutralizing antibodies (ranging from 5% to 45%) that limit the efficacy of treatment,
• The Tovaxin therapy uses an individual’s own cells. The only directly identifiable side effect, observed thus far, is injection site reaction in a small percentage of the patients. These reactions are minor and generally clear within 24 hours,
• OPXA closed at $1.79 with a market cap of $23.11 M,
• The new year (FY10) should bring appreciation; but, still a HOLD.