Sharon di Stefano

About the Author Sharon di Stefano

Sharon di Stefano has spent 20 years as an analyst, beginning her career at Smith Barney, Harris Upham & Co. specializing in medical devices, pharmaceuticals, healthcare information technology, and biopharmacology. Ms. di Stefano had also served as Senior Venture Officer for the Edison Innovation Fund, implemented through the New Jersey Economic Development Authority that provided funding for early-stage life sciences companies. Industry experience includes laboratory research for Johns Hopkins Hospital and the Department of Defense. Ms. di Stefano received a Masters of Science degree, in Business, from Johns Hopkins University in 1986, and a Bachelor of Arts from the University of Delaware in 1984 with a minor in biology.

Rexahn Pharmaceuticals, Inc. (RNN) From A Bullish Perspective

When a tumor-targeted therapy company advances in clinical trials, pay attention. Rexahn Pharmaceuticals (NYSEMKT:RNN) should be closely watched. Main immunotherapy drug RX-3117 indicated for pancreatic cancer in patients who have lost medical options enrolls for Phase II with 40 patients not responding to standard chemotherapy and radiation, and far beyond surgery. RX-3117 may be their only hope.

RX-3117, an oral drug granted FDA support under its coveted Orphan Drug status is designed to strike DNA mutations at its biological source to prevent cancer. Studies showed positive results when presented at the American Society of Clinical Oncology in June with not only safety data but a strong clinical reassurance of working against tumors by essentially killing malignant tissue. Patients had no pancreatic cancer progression in nearly one year and still remain healthy. This group of clinical trial subjects had already been extensively treated by all anticancer regimens available to oncologists, to no gain.

Rexahn’s moment of potential triumph is upon us. The company presented efficacy results at a headliner cancer event – the 2016 European Society for Medical Oncology (ESMO). Phase II started enrollment. These upcoming trials bring in the sickest patients and can give further proof that RX-3117 works. Scientists and investors will take notice.

In its Phase II for RX-3117, Rexahn’s heavy lifting has already been done. Dosage of RX-3117 is established. Safety profile is recorded with the FDA. Of previous patients, 40% showed good response after only 60 days. Ten clinical sites are on board. This should not be a long or expensive study.

Pancreatic cancer is deadly and presents too late because it is a subtle disease. No symptoms exist until stomach pain and unexplained weight loss which means metastasis has occurred; surgery is not an option at this stage. When metastasized, one-year survival is 28% and a scant 7% at five years. Standard therapy involves intravenous chemotherapy and radiation. Patients often die within three months. Rexahn’s therapy can stop this progression.

RX-3117’s sole mechanism of action is to target malignancy while leaving normal cells unharmed, much to the contrast of chemotherapy given intravenously with collateral tissue damage causing hair loss, vomiting and diarrhea. In its upcoming Phase II trial, RX-3117 will be given orally five times per week for three weeks with one week deemed a drug holiday. If the initial 10 patients chosen based on extent of disease respond well, more will be enrolled, a sizable study for its phased level.

As competition, Genentech came up with a monoclonal antibody approved for pancreatic cancer, but problems occur with lung, liver, kidney and blood clotting. For patients still suffering after treatment, options narrow with average survival as low as three months. Costs of treating pancreatic cancer are stiff: without health insurance, out-of-pocket expense can reach $96,000 per year.

RX-3117 will be, if pancreatic data pans out in Phase II, the next-in-line drug to reach FDA approval and an historic moment for targeted cancer therapy. That, and conclusive talks with a pharma partner who was not mentioned in my recent conversation with CEO Dr. Peter Suzdak for clear reasons, lend lots of upside. I have no reason to think this can’t happen. Human efficacy results have been good – displayed with confidence evident in Dr. Suzdak’s demeanor. Rexahn is in a perfect position to change cancer medicine.

Technical analysts see chart activity signaling selling pressure ending soon, with better days ahead, based on any stock falling intraday but closing near opening price – a positive trading development. Consensus earnings estimates for Rexahn, despite continued net loss typical in a pre-revenue biotech, have not been lowered. Coupled with Rexahn’s unusually large trading volume since September 30 th, someone’s watching.

Financial results for 2Q16 (ended June 30) were as expected – EPS of ($0.01) versus ($0.02) that declined from the comparable quarter last year due to lesser research and development expense and lower drug manufacturing costs. General and administrative costs grew, though conservatively. Cash stood at $19.4 million and does not include a $6 million infusion closed late last month, enough to bring the company throughout 2017.

Traditional risks to investing in biotechnology companies apply: trading may be light, newsflow slight, and share price manipulation, unfortunately inevitable with smaller public companies. Larger studies may not show the same results of smaller ones. More specifically, Rexahn’s largest institutional shareholder investment fund Sabby Management with $700 million under control, a 4.3% ownership of Rexahn outstanding shares and a portfolio 97% devoted to pharmaceutical and biotechnology, was cited last year for certain SEC violations involving short sale rules. Rexahn was not involved in investigation, but a black mark on Sabby’s record should be noted and long-term investors should at least be aware.

Share prices have declined since last year, leaving investors to question how Rexahn could still raise $6 million. My conclusion is belief institutional parties are convinced of Rexahns’ compounds’ therapeutic value, and those not involved in the stock should see an opportunity.

Management is competent and trials well-thought out, bearing progress since I began watching them three years ago. Tumor shrinkage is RX-3117’s goal, resulting in progression-free survival. Past and future trial results should lead to a bright immunology future for Rexahn and bring new meaning to best-in-class anticancer drugs, a much needed answer to today’s question of how to survive with quality of life.

Disclosure: I am long RNN.

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