Opexa Therapeutics, Inc. (NASDAQ:OPXA), a company developing a novel T-cell therapy for multiple sclerosis (MS), today reported financial results for the quarter ended June 30, 2009, and provided details on further developments.
Recent highlights include:
- Closing a Stem Cell agreement with Novartis for upfront and near term payments of $4 million (total potential deal valued at over $50 million);
- Regaining compliance and continued listing on the NASDAQ Capital Market;
- Closing a private placement of $1.3 million.
“Opexa continued to make steady progress during the second quarter and into the third, even in what continues to be a challenging economic environment,” stated Neil K. Warma, president and chief executive officer of Opexa. “In the first half of the quarter, we closed a private offering of convertible notes which generated approximately $1.3 million in gross proceeds and, as announced last week, we completed an agreement with Novartis related to our stem cell technology which generated an additional $4 million in upfront payments and expected near term revenue. The total potential transaction value from the stem cell deal is over $50 million when considering potential clinical and commercial milestone payments. Additionally, Opexa is eligible to receive royalty payments on net sales of any products resulting from the use of the technology and retains certain manufacturing rights.”
“We are very pleased with this outcome as the proceeds from these transactions have enabled us to further concentrate our efforts to advance our lead clinical therapy, Tovaxin®, through clinical development. We remain encouraged by the continued data analysis from the TERMS Phase IIb clinical study which demonstrates that, to date, Tovaxin appears to be one of the safest and most effective treatments for multiple sclerosis of any drug currently on the market or in development. Accordingly, our discussions with strategic partners are progressing and continue in parallel with our ongoing clinical development efforts with Tovaxin,” continued Mr. Warma.
“As we reported on August 10th, Opexa received notice from NASDAQ listing services confirming that the Company had regained compliance with the continued listing requirements and will remain listed on The NASDAQ Capital Market. This was a positive outcome for us demonstrating confidence in the underlying strength of the Company. In another sign of improved financial health, the going concern qualification has been removed from our quarterly Form 10-Q report as proceeds from the stem cell agreement and the private offering should, at current levels, provide sufficient cash resources through December 2010. Overall, we continue to make progress and remain committed to advancing Tovaxin through clinical development,” added Mr. Warma.
Second Quarter Financial Results
Opexa recorded no revenues for the three months ended June 30, 2009 or in the comparable prior-year period.
Research and development expense was approximately $0.4 million for the three months ended June 30, 2009, compared to approximately $2.3 million for the three months ended June 30, 2008. The decrease in expenses was primarily due to the completion of the Phase IIb clinical trial in August 2008, closing the extension trial, a reduction in staff and a decrease in non-cash stock compensation expense.
General and administrative expense was approximately $0.4 million for the three months ended June 30, 2009, as compared to approximately $1.3 million, for the three months ended June 30, 2008. The decrease in expenses is due to a decrease in non-cash stock compensation expense, overhead expenses, professional service fees, board compensation fees and a reduction in staff.
Opexa recognized a non-cash gain on derivative instruments of $74,206 for the three months ended June 30, 2009. This gain is a result of the net unrealized change in the fair value of our derivative instrument liabilities related to warrants associated with the August 2008 financing which qualified for treatment under EITF 07-5 and which accounting treatment was discontinued on June 1, 2009. Consequently, we will not incur further non-cash fair value gains or losses on derivatives associated with the August 2008 warrants and the remaining June 1, 2009 derivative liability was reclassified as additional paid in capital.
Opexa reported a net loss for the three months ended June 30, 2009, of approximately $0.9 million, or $0.07 per share (basic and diluted), compared with a net loss of approximately $3.6 million or $0.36 per share (basic and diluted), for the three months ended June 30, 2008. The decrease in net loss is primarily due to the reduction of costs associated with the Phase IIb clinical trial of Tovaxin that was completed in 2008 a reduction in staff and a decrease in non-cash stock compensation expense.
The Company had cash and cash equivalents of approximately $0.8 million as of June 30, 2009, compared with approximately $1.2 million as of December 31, 2008. The June 30, 2009 quarter-end cash balance does not include initial proceeds of $3 million for the transaction related to the Company’s stem cell technology completed subsequent to the end of the quarter.
Year-to-Date Financial Results
Opexa recorded no revenues in the six months ended June 30, 2009 or in the comparable prior-year period.
Research and development expense was approximately $1.2 million for the six months ended June 30, 2009, compared to approximately $4.7 million for the six months ended June 30, 2008. The decrease in expenses was primarily due to the completion of the Phase IIb clinical trial in August 2008, closing the extension trial, a reduction in staff and a decrease in non-cash stock compensation expense.
General and administrative expense was approximately $0.8 million for the six months ended June 30, 2009, as compared to approximately $2.0 million, for the six months ended June 30, 2008. The decrease in expenses is due to a decrease in non-cash stock compensation expense, overhead expenses, professional service fees, board compensation fees and a reduction in staff.
Opexa recognized a non-cash loss on derivative instruments of $366,774 for the six months ended June 30, 2009. This loss is a result of the net unrealized change in the fair value of our derivative instrument liabilities related to warrants associated with the August 2008 financing which qualified for treatment under EITF 07-5 and which accounting treatment was discontinued on June 1, 2009.
Opexa reported a net loss for the six months ended June 30, 2009, of approximately $2.5 million, or $0.20 per share (basic and diluted), compared with a net loss of approximately $6.7 million or $0.73 per share (basic and diluted), for the six months ended June 30, 2008. The decrease in net loss is primarily due to the reduction of costs associated with the Phase IIb clinical trial of Tovaxin that was completed in 2008, a reduction in staff and a decrease in non-cash stock compensation expense.
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