Analyst Conference Summary

Opexa Therapeutics

conference date: March 15, 2015 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2015 (Q4, fourth quarter 2015)

Forward-looking statements

Overview: This is a clinical-stage development company has been vetted by a $3 million payment from Merck Serono for its potential multiple sclerosis therapy Tcelna.

Basic data (GAAP):

Revenue for 2015 was $2.6 million, d up from $1.3 million year earlier.

Net loss for 2015 was $12.0 million, improved from $15.0 million year-earlier.

Diluted EPS for 2015 were negative $2.05, up from negative $4.33 per share year-earlier.

No data specific to q4 were released.



Conference Highlights:

Aim is to restore the function of the immune system in patients with auto-immune diseases.

All patients (190) were enrolled in Abili-T Phase 2b trial, dosing was completed in February, and 97% of patient visits had been completed. Most are now in their second year of treatment. The secondary progressive multiple sclerosis tope line results should be available in Q4 this year.. The FDA granted Fast Track status to Tcelna for SPMS.

An IND submission to the FDA for permission to begin a clinical trial of OPX-212 for NMO (neuromyelitis optica) is expected, but has had problems with the manufacturing of individual peptides, causing a delay. In November 2015 preclinical animal data "showed a dose dependent and statistically significant reduction in pathogenic (AQP4) T-cells in a mouse model." Will not guess at timing, will report progress only when milestones are reached.

In March 2016 a restructuring was announced to conserve cash while waiting for the Tcelna results. This should extend the cash runway to Q1 2017.

Research and development expense was $10.0 million. General and administrative expense $4.3 million. Depreciation and amortization was $0.4 million. Leading to a GAAP operating loss of $12.1 million. Interest and other expense was negligible.

Cash and equivalents ended at $12.6 million. No long-term liabilities. Burn rate in 2015 was about $1.1 million per month.

Opexa believes its cash should last into Q1 2017. By then the top line results from the Phase 2b Tcelna multiple sclerosis trial should be available.

Believes the market opportunity for Tcelna is in the multiple billions. Should the data be positive Merck would likely exercise its worldwide option. Opexa would receive milestone payments plus 8% to 15% royalties.


Timeline on solving OPX-212 problems? We are pioneering this. Challenges come up. It is too early to guide to a timeline for a solution or the filing of an IND. We are still very enthusiastic about the program.

Japan plans for Tcelna? Japan is very progressive about cell therapy, with fast track granted from Phase 2 trials. That is why we kept the MS rights for Japan. We have had conversations about getting through the regulatory pathway, and with Japanese pharma companies.

Could approval be expedited if the Phase 2 trial data is positive enough? Merck would pay for a Phase 3 program. There could be expedited paths with the FDA and EMA. We already have fast track. If the data is compelling enough we could apply for breakthrough designation, but the discussion with the FDA would be tough. Even with good results we will need a Phase 3 study. Most MS therapies require 2 Phase 3 studies.

OPX-212 problem technical details? The FDA wanted a preclinical animal model to demonstrate activity, but at the time there was no animal model for NMO. But we devised an experiment with mice that satisfied the FDA. The results were terrific. The manufacturing problem is in the individual detection peptides and had to do with their hydrophobic nature. The animal model peptide was uniform, so we only needed one. In humans we need multiple peptides. As a membrane protein, it is hydrophobic, and manufacturing is difficult since it is not soluble in water. Automated synthesis programs are water based. So we needed a crafted product.

Is it possible the hurdle cannot be overcome? It is biotech, it is possible, but our plan is to drive the program forward.

Could the OPX-212 issue come up for other products? Not necessarily. We did not run into it in the MS program. It would depend on the specific peptides required. Also, now we know a lot more about solving this problem, should it come up again.

The individual investor who supplied $5 million to the NMO program is still supportive and more cash is available if milestones are achieved. Check the SEC filing.

Q1 expenses, restructuring charges? Around $350,000 each severance and retention. It is just due to the trial running down, it did not make sense to carry the employees.

Whole brain atropy as an endpoint in a pivotal trial? We discuss endpoints. Along with progression, it is important. It has been used in secondary progressive MS trials in the past. We think atrophy data will be predictive of disability progression rates. For the Phase 2 study the FDA was supportive of using whole brain atrophy as it is quantifiable.

Our relationship with Merck is very good, and they are enthusiastic about the Phase 3 trial. They gave us $3 million last year that was not owed us, just to get us motivated. The first milestone payment would be $25 million to exercise their option.

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is investment journalism, not financial advice.

Copyright 2016 William P. Meyers