Opexa reports net loss of $1.30 million for third quarter 2011

Nov 5 2011

Opexa Therapeutics, Inc. (NASDAQ:OPXA), a company developing Tovaxin®, a novel T-cell therapy for multiple sclerosis (MS), today reported financial results for the quarter ended September 30, 2011 and provided an overview of recent corporate developments.

Recent highlights include:

• Electing Gail J. Maderis, a seasoned pharmaceutical executive with a strong track record of leading biopharma companies through the clinical development stage, to Opexa's Board of Directors, thereby strengthening the Company's oversight to execute on its key strategic initiatives;
• Appointing Mark Freedman, M.D., a leading worldwide expert in MS, to Opexa's highly esteemed Scientific Advisory Board; and
• Advancing the clinical plans for Tovaxin and defining a clinical trial protocol for Secondary Progressive MS.

"Much progress was made in further advancing our plans and discussions in the area of Secondary Progressive MS," commented Neil K. Warma, President and Chief Executive Officer of Opexa. "We know that this population of MS patients is greatly underserved with only one drug currently approved by the FDA specifically for Secondary Progressive MS. Our focus has been on further clarifying Tovaxin's potential in SPMS through discussions with key opinion leaders, patients and pharmaceutical companies. 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."

"To prepare for the next clinical trial with Tovaxin, we have remained on schedule with respect to the implementation of manufacturing and clinical priorities. Hiring of key staff has proceeded according to plan and we have appointed very strong individuals in the areas of Manufacturing, Quality Control and Quality Assurance. I am very pleased with this progress."

"In addition to augmenting our staff with excellent individuals, we have significantly strengthened our Scientific Advisory Board through the appointment of Dr. Mark Freedman, M.D. and our Board of Directors with the appointment of Gail Maderis. Dr. Freedman is one of the world's leading experts in MS and will be invaluable as we move into the next clinical trial with Tovaxin. Ms. Maderis spent years as a senior pharmaceutical executive previously at Genzyme and also developed strong expertise in the industry as a biotech entrepreneur and CEO and brings a wealth of experience to the Board. We are grateful for their support and guidance."

"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," continued Mr. Warma. "At the current burn rate, we should have sufficient capital to support our operations at their current level through 2012. Moving forward, we expect to maintain our focus on implementing operational steps in anticipation of continuing the clinical study of Tovaxin and working to secure the necessary resources to support such a study."

Third Quarter Financial Results

Opexa reported no commercial revenues in the three and nine months ended September 30, 2011 or in the comparable prior-year periods.

Research and development expenses were $654,772 and $2,194,141 for the three and nine months ended September 30, 2011, respectively, compared with $625,282 and $2,193,919 for the three and nine months ended September 30, 2010, respectively. The increase for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 was due to increased staff associated with development activities and an increase in associated laboratory costs and supplies, and was partially offset by a decrease in the engagement of consultants.

General and administrative expenses for the three and nine months ended September 30, 2011 were $584,794 and $1,737,686, respectively, compared with $626,697 and $1,706,546 for the three and nine months ended September 30, 2010, respectively. The decrease for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 was due to a decrease in compensation expense, and was partially offset by an increase in business development expenses. The increase for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 was due to an increase in costs related to business development expenses, increased investor relations outreach costs and an increase in stock compensation expense, and was partially offset by a decrease in legal costs.

Depreciation and amortization expense for the three and nine months ended September 30, 2011 was $56,888 and $157,254, respectively, compared with $37,647 and $136,022 for the three and nine months ended September 30, 2010, respectively. The increase was due to an increase in depreciation for facility buildout costs incurred during 2011, an increase in depreciation for laboratory and manufacturing equipment acquired during 2011 and an increase in depreciation for information technology equipment to replace and upgrade obsolete equipment.

Interest expense for the three and nine months ended September 30, 2011 was $638 and $2,643, respectively, compared with $2,004 and $499,200 for the three and nine months ended September 30, 2010, respectively. The decrease in expense for the nine months ended September 30, 2011 compared to the nine months ended September 30, 2010 was primarily related to the amortized interest incurred during the first half of 2010 and the amortization of the remaining discount and deferred financing fees in conjunction with the June 23, 2010 conversion of the 10% Convertible Promissory Notes.

Opexa reported a net loss for the three months ended September 30, 2011 of $1.30 million, or ($0.06) per share, and a net loss for the nine months ended September 30, 2011 of $4.09 million, or ($0.18) per share. For the same three month and nine month periods ending September 30, 2010, Opexa reported a net loss of $1.29 million, or ($0.07) per share, and $4.53 million, or ($0.27) per share, respectively.

Cash and cash equivalents were $8,639,856 as of September 30, 2011 compared to $4,733,445 as of September 30, 2010.