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Opexa Reports Third Quarter Financial Results
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... standing corporate goal. In addition, we treated the first multiple sclerosis patient with Tovaxin in our Phase IIb trial. The data ...
Opexa Reports Third Quarter Financial Results
THE WOODLANDS, Texas--(BUSINESS WIRE)--Opexa Therapeutics, Inc. (NASDAQ:OPXA), a company involved in the development and commercialization of cell therapies, today reported financial results for the three and nine months ended September 30, 2006. Highlights of the third quarter of 2006 and recent weeks include:
- Commenced Phase IIb Multiple Sclerosis trial for Tovaxin™; first patient dosed
- Reported positive data from Phase I/II Tovaxin trial -- patients exhibited a relapse rate reduction of more than 90%
- Listed on NASDAQ Global Market
- Initiated animal studies to test whether the Company’s proprietary adult human monocyte-derived pancreatic-like islet clusters are effective therapy for the diabetes mellitus indication.
David McWilliams, chief executive officer, stated, “We have achieved several crucial milestones during this quarter that greatly enhanced both our investor profile and our clinical program. We made our NASDAQ debut in September, which was a long-standing corporate goal. In addition, we treated the first multiple sclerosis patient with Tovaxin in our Phase IIb trial. The data we reported from our Phase I/II trial were outstanding and we hope to replicate the impressive reduction in relapse rate in our Phase IIb trial. We expect to announce results from this trial in the first half of 2008.”
Third Quarter Financial Results
Opexa reported no revenues for the three months ended September 30, 2006 or in the comparable prior-year period. General and administrative expenses in the third quarter of 2006 were $1,430,507, compared with $2,324,228 in the third quarter of 2005. The decrease is due primarily to the decrease in non-cash stock-based compensation expense in the 2006 period. On January 1, 2006 Opexa adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including stock options and restricted stock based on estimated fair values. The Company elected to adopt the modified prospective transition method as provided by SFAS 123R and, accordingly, prior-year results have not been restated.
Research and development expenses were $2,113,878 in the 2006 third quarter, compared with $622,311 in the 2005 third quarter. The increase primarily was related to the initiation of the Phase IIb clinical trial, and a higher allocation of facilities and overhead costs to research and development due to increased development activities.
Interest expense was $278 in the third quarter of 2006, compared with $1,385,234 in the prior year. Interest expense in the 2005 quarter was due to notes payable that were then outstanding, which subsequently were converted into equity in June 2005, resulting in acceleration of the amortization of the discount related to the notes.
Interest income was $259,141 in the third quarter of 2006, compared with $31,565 in the prior year. The increase was due to the investment of the cash proceeds from the April 2006 offering in cash equivalent investments.
The Company recognized a gain on derivative instruments of $2,418,078 in the quarter. This gain was a result of the net unrealized (non-cash) change in the fair value of derivative instrument liabilities related to certain warrants.
Opexa reported a net loss for the third quarter of 2006 of $1,331,557, or $0.20 per share, compared with a net loss for the third quarter of 2005 of $4,726,848 or $2.31 per share. The decrease in net loss primarily was due to the decrease in non-cash stock-based compensation expense and interest expense and the gain on derivative instruments.
The Company had cash and cash equivalents of $17,327,320 as of September 30, 2006, compared with $2,560,666 as of December 31, 2005. In April 2006 the Company raised approximately $23.0 million in gross proceeds through a private placement of units to institutional and other accredited investors.
Year-to-Date Financial Results
Opexa reported no revenues in the nine months ended September 30, 2006 or in the comparable prior-year period. General and administrative expenses for the first nine months of 2006 were $5,676,221, compared with $5,789,973 for the first nine months of 2005. The decrease is due primarily to the decrease in non-cash stock-based compensation expense in the 2006 period.
Research and development expenses were $4,407,240 for the first nine months of 2006, compared with $1,877,787 for the first nine months of 2005. The increase primarily was related to the initiation of the Phase IIb clinical trial, and a higher allocation of facilities and overhead costs to research and development due to increased development activities.
Interest expense was $891 for the first nine months of 2006, compared with $7,323,573 for the first nine months of 2005. Interest expense in the 2005 period was due to notes payable that were then outstanding, which subsequently were converted into equity in June 2005 resulting in acceleration of the amortization of the discount related to the notes.
Interest income was $477,547 for the first nine months of 2006, compared with $50,474 for the first nine months of 2005. The increase was due to the investment of the cash proceeds from the April 2006 offering in cash equivalent investments.
Opexa reported a net loss for the first nine months of 2006 of $11,777,735, or $2.38 per share, compared with a net loss for the first nine months of 2005 of $16,221,894, or $11.61 per share. The decrease in net loss primarily is due to the decrease in non-cash stock-based compensation expense and interest expense and the gain on derivative instruments.
About Opexa Therapeutics
Opexa Therapeutics develops and commercializes cell therapies to treat autoimmune diseases such as MS, rheumatoid arthritis, and diabetes. The Company is focused on autologous cellular therapy applications of its proprietary T-cell and stem cell therapies. The Company’s lead product, Tovaxin™, a T-cell therapy for multiple sclerosis is in Phase IIb trials. The Company holds the exclusive worldwide license for adult multipotent stem cells derived from mononuclear cells of peripheral blood. The technology allows large quantities of monocyte derived stem cells to be produced efficiently for use in autologous therapy, thus circumventing the threat of rejection. The Company is in preclinical development for type 1 diabetes. For more information, visit the Opexa Therapeutics website at www.opexatherapeutics.com.
Safe Harbor Statement
This press release contains "forward-looking statements," including statements about Opexa Therapeutics' growth and future operating results, discovery and development of products, strategic alliances and intellectual property, as well as other matters that are not historical facts or information. These forward-looking statements are based on management's current assumptions and expectations and involve risks, uncertainties and other important factors, specifically including those relating to Opexa Therapeutics' ability to obtain additional funding, develop its stem cell technologies, achieve its operational objectives, and obtain patent protection for its discoveries, that may cause Opexa Therapeutics' actual results to be materially different from any future results expressed or implied by such forward-looking statements. Opexa Therapeutics undertakes no obligation to update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.
(Tables to follow)
| OPEXA THERAPEUTICS, INC. | ||||
| (a development stage company) | ||||
| (formerly PharmaFrontiers Corp.) | ||||
| CONSOLIDATED BALANCE SHEETS | ||||
| (unaudited)(unaudited) | ||||
| | ||||
| September 30, | December 31, | |||
| 2006 | 2005 | |||
| Assets | ||||
| | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ 17,327,320 | $ 2,560,666 | ||
| Other current assets | 519,221 | 182,524 | ||
| Total current assets | 17,846,541 | 2,743,190 | ||
| | ||||
| Intangible assets, net of $3,121,293 and $1,888,891 of accumulated amortization | 25,135,478 | 26,130,441 | ||
| Property & equipment, net of $343,635 and $256,082 of accumulated depreciation | 1,281,446 | 479,996 | ||
| Other assets | - | 388,210 | ||
| Total assets | $ 44,263,465 | $ 29,741,837 | ||
| | ||||
| Liabilities and Stockholders' Equity | ||||
| | ||||
| Current liabilities: | ||||
| Accounts payable | $ 1,070,577 | $ 689,467 | ||
| Stock payable | 112,440 | - | ||
| Accrued expenses | 202,890 | 240,309 | ||
| Note payable | 1,500,000 | 1,500,000 | ||
| Derivative liability | 7,621,785 | 6,761,655 | ||
| Total current liabilities | 10,507,692 | 9,191,431 | ||
| | ||||
| Commitments and contingencies | - | - | ||
| | ||||
| Stockholders' equity: | ||||
| Convertible preferred stock, no par value, 10,000,000 shares authorized, none issued and outstanding | - | - | ||
| Common stock, $0.50 par value, 100,000,000 shares authorized, 6,696,784 and 2,061,955 shares issued and outstanding | 3,348,351 | 1,030,977 | ||
| Additional paid in capital | 62,449,180 | 39,783,452 | ||
| Deficit accumulated during the development stage | (32,041,758) | (20,264,023) | ||
| Total stockholders' equity | 33,755,773 | 20,550,406 | ||
| Total liabilities and stockholders' equity | $ 44,263,465 | $ 29,741,837 | ||
| OPEXA THERAPEUTICS, INC. | ||||||||||
| (a development stage company) | ||||||||||
| (formerly PharmaFrontiers Corp.) | ||||||||||
| CONSOLIDATED STATEMENTS OF EXPENSES | ||||||||||
| Three and Nine Months ended September 30, 2006 and 2005 and the | ||||||||||
| Period from January 22, 2003 (Inception) to September 30, 2006 | ||||||||||
| (unaudited) | ||||||||||
| | ||||||||||
| Three Months | Three Months | Nine Months | Nine Months | Inception | ||||||
| Ended | Ended | Ended | Ended | through | ||||||
| September 30, | September 30, | September 30, | September 30, | September 30, | ||||||
| 2006 | 2005 | 2006 | 2005 | 2006 | ||||||
| General and administrative | $ 1,430,507 | $ 2,324,228 | $ 5,676,221 | $ 5,789,973 | $ 6,879,734 | |||||
| Depreciation and amortization | 462,098 | 438,598 | 1,354,873 | 1,302,642 | 3,354,901 | |||||
| Research and development | 2,113,878 | 622,311 | 4,407,240 | 1,877,787 | 16,765,127 | |||||
| Loss on disposal of assets | 2,015 | - | 2,377 | - | 482,309 | |||||
| Operating loss | (4,008,498) | (3,385,137) |
| (11,440,711) | (8,970,402) | (27,482,071) | ||||
| | ||||||||||
| Interest income | 259,141 | 31,565 | 477,547 | 50,474 | 565,469 | |||||
| Other income | - | 11,958 | 46,450 | 21,903 | 77,003 | |||||
| Gain (loss) on derivative liability | 2,418,078 | - | (860,130) | - | 3,036,711 | |||||
| Interest expense | (278) | (1,385,234) | (891) | (7,323,573) | (8,238,870) | |||||
| Other expense | - | - | - | (296) | - | |||||
| Net loss | $ (1,331,557) | $ (4,726,848) | $ (11,777,735) | $ (16,221,894) | $ (32,041,758) | |||||
| | ||||||||||
| Basic and diluted loss per share | $ (0.20) | $ (2.31) | $ (2.38) | $ (11.61) | N/A | |||||
| | ||||||||||
| Weighted average shares outstanding | 6,696,784 | 2,048,283 | 4,950,862 | 1,397,332 | N/A | |||||
Opexa Therapeutics, Inc., The Woodlands
Lynne Hohlfeld, 281-719-3421
lhohlfeld@opexatherapeutics.com
or
Investor Relations Contacts:
Lippert/Heilshorn & Associates
Kim Sutton Golodetz, 212-838-3777
kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
bvoss@lhai.com
Bush opposes Democrats' plan for negotiating Medicare D
WASHINGTON
In an interview, Michael O. Leavitt, the secretary of health and human services, said he saw no prospect of compromise on the issue.
Federal price negotiations would unravel the whole structure of the Medicare drug benefit, which relies on competing private plans, Mr. Leavitt said.
Dozens of plans are available in every state. They charge different premiums and co-payments and cover different drugs. The 2003 Medicare law explicitly prohibits the federal government from negotiating drug prices or establishing a list of preferred drugs
.
Representative Nancy Pelosi, the California Democrat who is in line to become the House speaker, has said the House will take up legislation to repeal that ban in its first 100 hours under Democratic control. Senate Democrats have expressed a similar desire. The eight Democrats newly elected to the Senate all say Medicare should have the power to negotiate with drug makers.
“The government negotiates big discounts for the prices of drugs for our veterans,” said Senator-elect Amy Klobuchar of Minnesota. “But the drug companies got Congress to make it illegal to negotiate for lower prices under Medicare.”
Secretary Leavitt said he did not want the power to negotiate drug prices. “I don’t believe I can do a better job than an efficient market,” he said.
“We are seeing large-scale negotiations with drug manufacturers, but they are conducted by private drug plans, not by the government,” Mr. Leavitt said. “A robust marketplace with a lot of competitors has driven down prices. It’s the magic of the market. To assume that the government, in our genius, could improve on this belies the reality of a complex task.”
If a bill allowing negotiations got through Congress, it could face a presidential veto, depending on its details. Appearing on “Fox News Sunday,” Dan Bartlett, counselor to the president, said competing private plans had already brought down costs more than government price controls would have.
Democrats have not specified exactly how Medicare would negotiate with drug companies.
Senator Richard J. Durbin of Illinois, the assistant Democratic leader, has introduced a bill that instructs the secretary of health and human services to offer and operate one or more Medicare drug plans, in addition to those already available. The bill requires the secretary to negotiate prices with the manufacturers of drugs covered by the government-run plans. Ms. Pelosi is a co-sponsor of a similar bill.
At a news conference last week, President Bush said he wanted to work with the new Democratic majority in Congress. “I believe on a lot of issues we can find common ground,” he said.
In December 2005, just before leaving office, Mr. Leavitt’s predecessor, Tommy G. Thompson, said he wished Congress had given him the authority to negotiate prices for Medicare beneficiaries, as he negotiated discounts on antibiotics during the anthrax scare of 2001.
Health plans and pharmacy benefit managers use many tools to drive down drug prices. In effect, “you play one manufacturer off against another,” said James R. Lang, former president of Anthem Prescription Management, which administered drug benefits for five million people.
Insurers obtain discounts in return for increasing the use of a particular drug, and they can get bigger discounts by threatening to shift patients to a similar product made by a competing drug company, Mr. Lang said.
The approach that Mr. Leavitt described as unacceptable is already used in other government programs. Under federal law, drug makers must provide a discount, or rebate, equal to at least 15 percent of the average manufacturer price for most brand-name drugs covered by Medicaid, the program for low-income people. Federal law also guarantees discounts for the Department of Veterans Affairs, which negotiates with drug makers to secure discounts on top of those guaranteed by law.
Mr. Leavitt said the veterans program was not a good model for Medicare. The V.A., he said, has its own drug-distribution system and its own pharmacies and limits drug choices more than Medicare does.
Drug companies and some economists worry that if the government offered its own Medicare drug plan, it might insist on the “best price” offered to any private-sector purchaser of a particular medication. Medicare officials could then try to negotiate deeper discounts. But to do so, a government-run Medicare plan would probably have to establish its own list of preferred drugs, known as a formulary.
“For this to work,” Mr. Lang said, “the government would have to take over price negotiations. It would have to take over formularies. You can’t do one without the other. Drug manufacturers won’t give up something for nothing. They will want a preferred position on the Medicare formulary — some way to increase the market share for their products.”
Democrats said they were not seeking price controls or a uniform list of preferred drugs. “This is just good old-fashioned free market economics,” Mr. Durbin said. “If one buys in bulk, the price goes down.”
One potential obstacle to swift action is that some lawmakers, including Democrats, may want to hold hearings. Senator Max Baucus, the Montana Democrat poised to become chairman of the Finance Committee, voted in March against a proposal authorizing Medica
posted by Bill at 7:57 PM
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