Rexahn Pharmaceuticals Inc (NYSEMKT:RNN) Might Be Cheap On The Dip

Rexahn Pharmaceuticals Inc (NYSEMKT:RNN) just announced an $8 million registered direct offering (RDO) and the company has taken a hit on the news.As things stand, Rexahn goes for $2.16 a share, down close to 30% on the most recent preannouncement swing high at $3.05 recorded on October 11. RNN Daily ChartNobody likes dilution and this sort of response is pretty standard for a company that has just announced an issue, especially when the units associated with the issue are being offered at a discount to open market rate.With that said, however, if the capital raised is put to good use (and we define good use here as allowing the company to get to a near-term catalyst) then the dips that happen subsequent to an equity issue announcement can be great opportunities to pick up stock cheap ahead of a rebalancing.We think that might be the case here.The company has stated that the proceeds are going to be put towards the funding of clinical development programs for RX-3117, Supinoxin (RX-5902) and Archexin. These latter two drugs, and more specifically, the programs that underpin them, have the potential to induce some upside revaluation long term for Rexahn. However, the one that we're really looking at right now (and the one that we think is going to determine whether or not the capital raise was worth it for shareholders) is RX-3117.For those not familiar with the drug, RX-3117 is currently under development as a potential treatment for cancer patients and, specifically, patients with pancreatic cancer and advanced and metastatic bladder cancer.These are two incredibly tough cancers to treat and in this instance, the patients that make up the trial population are very late stage and, outside of RX-3117, would be offered palliative care at best. With RX-3117, Rexahn is trying to offer these patients an alternative and, potentially, something a little more rewarding than the four or five rounds of failed treatment they have already had to endure.So what are the catalysts we are looking for?There is an ongoing phase 2a study in pancreatic cancer for which preliminary data was presented at the European Society of Medical Oncology (ESMO) Congress in October 2016. This data looked strong at the time and the company has spent the 12 months subsequent to the presentation building on the dataset with a view to replicating the strength come topline. The trial is in two stages, with the first stage complete and the second stage underway. An initial data readout from this second stage is due to hit press during the fourth quarter of this year, meaning we could see the numbers any day now and certainly within the next 10 weeks or so.If the numbers are representative of efficacy (and there is a good chance that they will be, given the strength of the initial stage one readout), Rexahn will quickly recover the 30% or so that it's lost over the last few days.The bladder cancer program is at a similar stage, with a phase 2a trial underway and, again, in its second stage, nearing completion. We probably won't see data from this one before the end of the year, but early 2018 isn't out of the question and, just as with the other trial, there is some early-stage data already in place pointing towards a favorable outcome.To sum all this up, then, Rexahn just raised cash that should allow it to make it to at least two major near-term catalysts (the fourth-quarter pancreatic cancer readout and the early 2018 readout from the bladder cancer trial) and, assuming the data is positive, each catalyst has the potential to bring about a recovery, and more, from current prices.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on RNN, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in RNN and have not been compensated for this article.