Opexa Slims Down Ahead Of Key MS Data
This article was originally published in Scrip
With results from its long-awaited multiple sclerosis trial expected before the end of the year, Opexa Therapeutics is prepping for business after the big event, but the move seems like a bad omen of things to come.
The Texas biotech announced March 3 that it would be cutting its workforce by 30% --about a dozen employees – including its chief financial officer, as part of company-wide restructuring. The move will cost the company about $325,000 in severance expenses during the first quarter. It also expects to pay out another $333,000 in payments associated with a retention plan, according to a filing with the Securities and Exchange Commission. Employees that stay with the company through February 2017 will be eligible for bonus pay.
CEO Neil Warma has taken over the CFO role, as well as the roles of principal financial officer and principal accounting officer – both of which were held by previous CFO Karthik Radhakrishnan.
The company has tapped the market several times in order to continue funding the trial. It's most recent public offering was in April 2015 when it netted $12.8m. It also held two offerings in 2013, bringing in $18m and $7.5m, respectively.
The staff cuts will allow Opexa to extend its cash runway through the first quarter of 2017. This will be the make-or-break moment for the biotech. The company has hung all of its hopes on Tcelna, a T-cell vaccine that is currently being tested in secondary-progressive multiple sclerosis (SPMS) patients.
The Abili-T trial, which was launched in 2012 and dosed its last patient in late-February, is expected to read out in the fourth quarter of 2016. The trial includes 190 patients with the debilitating autoimmune disease. Patients received five injections a year of either the therapy or a placebo.
"We have aligned the restructuring to coincide with the reduction of activities associated with nearing completion of the Abili-T trial. The restructuring should enable us to extend our current cash into the first quarter of 2017, providing us with additional runway beyond the expected Q4 2016 release of top-line data," said Warma.
Opexa inked a worldwide license agreement with Merck Serono in February 2013. The German drugmaker has the option to license the product at the end of the Abili-T trial. Merck Serono has already paid Opexa about $8m in funds to move the Phase IIb trial forward and the biotech was required to provide its big pharma partner with a pre-Phase III plan when the agreement was amended in March 2015.
Should Merck Serono take its option for the drug, Opexa will be free of the R&D costs for the drug and will not be responsible for the costs associated with commercialization. The cuts to staff could mean the company thinks Abili-T and Merck's option are a sure thing. Or maybe not.
While Tcelna is a unique therapy, it doesn't come without its share of problems. The therapy, previously called Tovaxin, failed in another Phase IIb trial in 2008 in patients with the relapsing-remitting (RRMS) form of the disease. Opexa contends that there was an imbalance in disease burden of the two study arms with sicker patients being assigned to the therapy arm instead of the placebo group. The company is also quick to point out that Tovaxin (Tcelna) did improvement the secondary endpoint of annualized relapse rates and that the therapy was found to be safe for patients.
Opexa is betting that the change in patient population and some tweaks to the study design will result in a positive outcome this time around. RRMS is the most common form of the disease that results in attacks followed by periods of recovery – about 85% of patients have this form, according to the MS Society. There are plenty of treatments on the market for this disease stage, but they only work to slow the progression of the disease, not prevent or improve it. On the other hand, SPMS usually follows a RRMS diagnosis. This stage of the disease is characterized by a progressive worsening of symptoms and there are currently no treatment options, although some of the available therapies are approved for use if patients continue to have relapses. Aegis Capital analyst Robert LeBoyer estimates the SPMS market to be worth $8-10bn for any companies that can finally crack it.
"SPMS remains an area of critical unmet medical need and the completion of the Abili-T study is an important step in the development of what we believe could be the first safe and effective treatment for this disease. We achieved an important milestone last week, having administered the final dose to the last patient in the Abili-T trial, and to date we have completed approximately 97% of all patient visits," said Warma.
Tcelna is an autologous cell therapy in which patients cells are removed and expanded ex vivo. The attenuated cells are then put back into the patient via subcutaneous injection. The therapy is meant to prompt an immune response that helps protect the myelin sheath from degradation.