More so than companies in any other industry biopharmaceutical companies know that it can take several years before their moment of opportunity ever arrives and the window to capitalize on that opportunity can close quick and once shut it may never open again. For Opexa Therapeutics, Inc. (NASDAQ: OPXA), a biopharmaceutical company concentrating on the development of patient-specific cellular therapies for the treatment of autoimmune diseases, their chance for success received a significant boost on Tuesday after FDA granted its multiple sclerosis drug Tovaxin fast-track designation for the treatment of patients with Secondary Progressive Multiple Sclerosis (SPMS).
Timing of the FDA decision couldn’t have been better as shares of OPXA had sunk to a low of 1.02 on Monday, just 0.01 ahead of their 52-week low, only to surge a day later and hit a high of 1.53 before closing the day at 1.37 with trading volume surpassing the 2.3 million mark, more than 20x their 50-day and 200-day averages.
With shares currently trading in the 1.40 -1.44 range OPXA is now comfortably ahead of their 50-day moving average of 1.18 but still trails their 200-day moving average of 1.58. As significant as the FDA’s fast track designation is investors have remained cautious when it comes to OPXA and their caution is rooted in what they know, not what might happen.
Again, biopharmaceutical companies can take years to research and develop a drug, submit that drug for clinical trials, complete those studies, and ultimately learn that the FDA rejected their application. Not only is this a dramatic setback for their ultimate goal of FDA approval, it can be an incredibly expensive endeavor. In the case of OPXA, a company that has been around for nearly a decade and has yet to generate any revenue, failure to get Tovaxin approved could be a deathblow.
Certainly Tuesday’s news was a positive step for OPXA but as every investor that has followed biopharmaceutical companies knows, fast track designation does not guarantee FDA approval. What the fast-track designation is intended to do is “facilitate the development and expedite the review of drugs intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs.”
This is where shareholders who believe in OPXA see value and the company points this out in their most recent press release noting, “SPMS is characterized by a steady accrual of irreversible disability, despite, in some cases, reversible relapses, remissions, or clinical plateau. Only one product is currently approved in the United States specifically for the indication of SPMS. Opexa believes that a significant unmet medical need exists for the safe and effective treatment of SPMS.”
According to the National Multiple Sclerosis Society approximately 400,000 Americans have MS and every week about 200 people are diagnosed. World-wide, MS affects about 2.5 million. People with MS can typically experience one of four disease courses, each of which might be mild, moderate, or severe and Tovaxin is being developed to address SPMS, which in many cases follows a period of Relapsing-Remitting MS (RRMS). During the SPMS course the disease, according to the NMSS, “worsens more steadily, with or without occasional flare-ups, minor recoveries (remissions), or plateaus.” The NMSS has also said “Of the 85% of people who are initially diagnosed with relapsing-remitting MS (RRMS), most will eventually transition to SPMS.”
With no proven effective treatment option available for SPMS there is an obvious opportunity for OPXA and as the company has stated “We have treated numerous patients with Secondary Progressive MS in previous clinical trials. The data appears encouraging and safety is superb, as it has been for all Tovaxin clinical trials, and the unmet need remains significant. Consequently, this disease area remains a high priority for Opexa.”
The company is now planning to initiate a Phase IIb clinical trial with Tovaxin in SPMS and with their recent fast-track designation OPXA will be entitled to more frequent interactions and dialogue with the FDA. Another benefit of that fast-track designation, as pointed out by OPXA, “the review time of a priority product is almost half that of a standard review. Additionally, as per the FDA, Fast Track priority review products are more likely to be approved on the first review cycle than those without the designation.”
For the skeptics this is all “putting the cart before the horse” as OPXA will be in desperate need of securing “the necessary resources” to advance their studies. With no revenue coming in the company will need to secure financing. While Neil K. Warma, President and CEO of OPXA, revealed in the company’s most recent quarterly filing “As of September 30, 2011, our cash and cash equivalents totaled approximately $8.6 million and our current monthly burn rate was approximately $450,000. At the current burn rate, we should have sufficient capital to support our operations at their current level through 2012” that burn rate will almost certainly be accelerated with new clinical trials.
Of course small biopharmaceutical companies that are addressing unmet medical needs are always attractive to Big Pharma companies either through joint venture or as a buyout so many investors are not that concerned about the financial uncertainty hanging over OPXA at the moment. The biggest concern is efficacy of Tovaxin and if OPXA can back their claims then those shareholders who built a strong position when shares were low could make a nice return.