Opexa 2011 net loss increases to $5,968,448

Feb 27 2012

Opexa Therapeutics, Inc. (NASDAQ:OPXA), a biotechnology company developing a novel T-cell therapy for multiple sclerosis (MS), today reported financial results for the year ended December 31, 2011 and provided an overview of corporate developments during the last year.

“2011 was a very productive year for Opexa as we remained clearly focused on the preparations for our next clinical trial with Tovaxin”

2011 highlights include:

• Clinical and Regulatory
  • Granted Fast Track designation by the U.S. Food and Drug Administration (FDA) for Tovaxin® for the treatment of patients with Secondary Progressive Multiple Sclerosis (SPMS);
  • Published the results of the Company's prior Phase IIb TERMS clinical trial of Tovaxin in a leading peer-reviewed publication, Multiple Sclerosis Journal;
  • Executed strategic agreements with the American Red Cross and the Blood Group Alliance, Inc. to streamline blood procurement for future clinical trials; and
  • Met with Health Canada's Biologics and Genetics Therapies Directorate as part of the process to secure approval for Opexa to conduct a portion of future clinical development in Canada.
• Operational
  • Optimized the manufacturing process through the implementation of a functionally closed system and single cycle cGMP process;
  • Advanced overall clinical plans for Tovaxin and clearly defined the study protocol for the planned Phase IIb clinical trial in SPMS;
  • Increased employee headcount thereby strengthening our overall cell therapy expertise in preparation for the planned clinical trial in SPMS; and
  • Designed and implemented a proprietary Web-based system to manage patient and product flow throughout future clinical studies.
• Financial
  • Closed a financing of $8.5 million in gross proceeds through an underwritten public offering in February 2011.

"2011 was a very productive year for Opexa as we remained clearly focused on the preparations for our next clinical trial with Tovaxin," commented Neil K. Warma, President and Chief Executive Officer of Opexa. "We made a firm decision, based on numerous conversations with key MS opinion leaders, clinicians, pharmaceutical companies, and the FDA to target Secondary Progressive MS. We remain on track to initiate the Phase IIb clinical trial in SPMS within a period of several months subject to securing the necessary resources. We are most pleased with our recruiting efforts as we have been able to hire numerous experts in cell therapy in the areas of manufacturing, quality assurance, quality control and R&D. It is our belief that Tovaxin could be the therapy of choice for many MS patients; and if we are able to demonstrate success, especially in SPMS patients, we will change the course of how MS is treated and will have built significant value in the company."

"We ended the year with approximately $7.1 million in cash and cash equivalents. Our monthly cash burn during 2011 was approximately $470,000. As we prepare for and proceed toward the initiation of a Phase IIb clinical study in North America, we expect substantial increases in our monthly cash burn. Moving forward, in order to initiate the trial we will need to secure additional financing either through a potential partnership or additional capital raise, and this will be an important focus for us over the coming months," commented Mr. Warma.

Year Ended December 31, 2011 Financial Results

Opexa reported no commercial revenues in the year ended December 31, 2011 or in the comparable prior-year period.

Research and development expenses were $3,340,038 for 2011, compared with $2,584,734 for 2010. The increase in expenses was primarily due to an increase in personnel, an increase in development fees, an increase in facilities costs and the initiation of key experiments in preparation for our next clinical trial, and was partially offset by a decrease in the engagement of consultants and a decrease in stock compensation expense. The increase in expenses compared to the prior year was also due in part to a one-time $244,479 credit received from the Internal Revenue Service during 2010 for the Qualifying Therapeutic Discovery Grant for qualifying 2009 research and development expenses.

General and administrative expenses for 2011 were $2,406,269 compared with $2,216,043 for 2010. The increase in expense is due to an increase in business development costs, an increase in investor relations outreach, an increase in stock compensation expense and an increase in facilities costs, and was partially offset by a reduction in professional service fees.

Depreciation and amortization expenses for 2011 were $210,252 compared with $168,843 for 2010. The increase in expense is due to an increase in depreciation for facility build out 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 acquired during 2011.

Interest expense was $3,135 for 2011, compared with $500,648 for 2010. The decrease in interest expense was primarily related to the non-cash amortization of the remaining discount and deferred financing fees in connection with the June 23, 2010 conversion to common stock of $1,250,000 in principal amount of convertible promissory notes.

Opexa reported a net loss for the year ended December 31, 2011 of $5,968,448, or $0.26 per share, compared with a net loss for the year ended December 31, 2010 of $5,469,067, or $0.32 per share. The increase in net loss is primarily due to the increases in research and development, general and administrative, and depreciation expenses, and was partially offset by a decrease in interest expense.

Cash and cash equivalents were $7,109,215 as of December 31, 2011 compared to $3,812,535 as of December 31, 2010.