* Opexa to get upfront payment of $3 mln
* Says payment meets cash needs “well into next year”
* Says in active discussions for partnership of Tovaxin
* Shares soar 500 pct (Recasts; adds company comments, updates share movement)
By Jennifer Robin Raj
BANGALORE, Aug 7 (Reuters) - Opexa Therapeutics Inc OPXA.O said Swiss drugmaker Novartis NOVN.VX acquired its preclinical-stage stem cell technology, resolving the tiny biopharmaceutical company’s near-term liquidity needs and triggering a six-fold rise in its shares.
“The payment will certainly contribute positively and that certainly covers our cash needs and our cash burn well into next year,” Opexa Chief Executive Neil Warma told Reuters.
In May, the company raised $1.3 million in a private placement of secured convertible notes and warrants, saying proceeds from the financing should provide additional working capital into September.
However, Opexa might consider further financing.
“There’s a possibility that (financing) might occur but we haven’t thought about it specifically yet. But we will certainly look at our options going forward,” CEO Warma said.
As of March 31, the company had cash and cash equivalents of about $0.4 million.
With the sale of its stem cell technology, the company said it would focus its attention on Tovaxin, which is in a mid-stage trial for treatment of multiple sclerosis (MS).
The company has been in active discussions with “a broad range of leading companies in neurology and MS” over the past several months for partnership of Tovaxin, Warma said.
Under the agreement with Novartis, Opexa will receive an upfront cash payment of $3 million, plus an additional $1 million as a technology transfer fee to be paid over the course of a six month period.
Total payments to Opexa, including the upfront payment, the technology transfer fee and development and commercial milestone payments could exceed $50 million not including royalties.
Opexa said it is also eligible to receive royalty payments from the sale of any products resulting from the use of the technology and retains an option on certain manufacturing rights.
Opexa also said it assigned the license agreement it had entered into with the University of Chicago, to Novartis.
Opexa shares, which closed at 47 cents Thursday, were trading at $2.39 Friday morning on Nasdaq. They had touched a high of $2.85 earlier in the session. (Editing by Jarshad Kakkrakandy and Aradhana Aravindan)