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Opexa Therapeutics Inc (NASDAQ:OPXA) Is A Buyout Target; But Not For Its Pipeline

Opexa Therapeutics Inc (NASDAQ:OPXA) Is A Buyout Target; But Not For Its Pipeline
Written by
Chris Sandburg
Published on
January 16, 2017
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Opexa Therapeutics Inc (NASDAQ:OPXA) ran up towards the end of last week on a spike in volume, despite a lack of any clear catalysts. The company has been something of a dead entity for the last couple of months, having put out data from its lead multiple sclerosis asset at the beginning of the third quarter that showed that the drug is basically useless. Restructuring has followed, and the future – as far as anything concrete – is pretty uncertain.We have seen this before, however, and while it is speculative, we can pretty much say with some degree of certainty what is going to happen to Opexa. So, as as we head into the remainder of the first quarter and beyond into early to mid-2017, here's our take.First, before we get into what is likely to happen going forward, let's jump back a bit and round up what's happened so far.As mentioned, the company was developing a multiple sclerosis asset, and it is called Tcelna. It's a T-cell immunotherapy drug, meaning – as with pretty much any asset in this class – it has drawn quite a lot of speculative investor attention over the last few years. The primary indication for these types of therapy, however, has been immuno oncology. This one is a little different. In patients that have multiple sclerosis, T cells attack what is called the myelin sheath. The myelin sheath is a protective layer that surrounds neurons, and without it, these neurons essentially short-circuit. Tcelna was designed to create a class of T cells that attack the T cells that are responsible for attacking the myelin sheath.That was the theory, at least. As things turned out, it doesn't do this hypothesized mechanism of action any real justice. The company put out topline data from the study late October, and the drug failed to hit its primary endpoints. It was specifically targeting a type of multiple sclerosis called secondary progressive multiple sclerosis, and the trial was a phase 2b study. As per the data, Tcelna did not meet its primary endpoint of reduction in brain volume change (atrophy), nor did it meet the secondary endpoint of reduction of the rate of sustained disease progression. In other words, the drug's no good.Subsequent to the failure announcement, Opexa announced that it was implementing an approximately 40% reduction to the its then-current workforce in order to reduce operating expenses and conserve cash resources. The chief development officer stood down, as did a major board member.So, the question now is, what's next?As will have many of our readers, we've seen this sort of thing many times before. Opexa has a pretty solid suite of patents, but with the failure of Tcelna, it doesn't really have much of a pipeline to speak of. With the stepping down of executives, and the reduction in work force, our prediction is that the company is dressing itself up for buyout. Not a buyout in the sense that the acquirer will take over the company's assets and further their development, but a buyout in the sense that the acquirer will only be interested in Opexa for its ticker.2016, especially the latter half, was not a great time for biotechnology IPOs. Companies struggled to raise cash, and as such, many looked for alternative routes to market. One such alternative route, is to acquire a defunct entity, and basically reverse merge into its ticker. For us, this is most likely route forward for Opexa. It's not necessarily a bad thing for shareholders. Chances are said holders will pick up a cash injection, and in all likelihood, a portion of the acquiring entity. Exactly who will take over the company, and what it will mean long-term for Opexa operationally, is, of course anyone's guess.We will be updating our subscribers as soon as we know more. For the latest updates on OPXA, sign up below!Disclosure: We have no position in OPXA and have not been compensated for this article.

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