New perspectives on well-followed biotech stocks are greatly appreciated. That’s what we get here from Managing Director and Senior Biotechnology Analyst Christopher S. James M.D. of Brinson Patrick Securities. Something else that’s treasured is discovering a brand-new biotech stock that no other analyst is covering. In this interview with The Life Sciences Report, James ushers readers to the head of the line to look at a new and exciting name with an extraordinary technology and phenomenal prospects for growth.
The Life Sciences Report: Chris, you are a sellside analyst today, but you were trained as a neurosurgeon at Weill Cornell Medical College and Memorial Sloan Kettering Cancer Center, correct?
Chris James: That is correct. Neurosurgery has a rigorous seven-year residency obligation; the first year is a general surgery internship.
TLSR: With your background, I can’t help but think you’d be interested in the exciting new areas in medicine—specifically the stem cell space—where we might see real progress in reversing traumatic, ischemic, hemorrhagic or neurodegenerative disease, whether acute or chronic. Most of the companies in this space are small- and micro-cap, and could easily fit into your current growth-focused universe. The absence of any of these stocks in your coverage seems to stand out, given your specific expertise. Why haven’t you picked up any stem cell companies?
CJ: Let me step back for a moment in answering that question. Since joining Brinson Patrick I have launched coverage on seven companies beginning in late March 2014. My current focus is on small- to mid-cap life sciences companies with strong growth potential. My plan is to rapidly ramp up coverage. A part of that ramping effort will include some of the more interesting types of therapies you’ve mentioned.
My background runs deep in the area of cell therapy and regenerative medicine. At Weill Cornell Medical College I was focused on general neurosurgery, and we did a significant amount of work taking care of very sick patients with both brain and spinal cord injuries. That included a ton of operating experience in some of the conditions you just mentioned, including very serious brain tumors. I’ve also done a lot of research in the area of actual cell transplantation, which is what got me into my neurosurgical residency. Back when I was a medical student at Yale, my thesis was on remyelination of the central nervous system (CNS) after transplantation of olfactory-ensheathing bulb cells into traumatic spinal cord lesions. So I definitely have that background, and am looking into picking up interesting companies in that space.
TLSR: Chris, could we talk about some companies in your coverage? Go ahead and pick one to start.
CJ: Let’s start with Opexa Therapeutics Inc. (OPXA:NASDAQ). This is a very interesting company that is pursuing a novel personalized T-cell approach for a specific type of multiple sclerosis (MS) called secondary progressive MS (SPMS).
There are about 500,000–550,000 (500–550K) patients in North America with MS, and about 85% of those patients are initially diagnosed with relapsing-remitting MS (RRMS). About 50% of those patients progress to SPMS. Opexa’s lead candidate is a therapeutic vaccine approach. We are all familiar with a virus being attenuated and injected back into a patient to mount a tailored and specific immune response. Opexa’s lead drug candidate, Tcelna (imilecleucel-T), is created using attenuated T cells, not viruses, harvested from a MS patient’s own blood. The cells are expanded ex vivo and irradiated to keep them from proliferating, and they are reintroduced via a subcutaneous injection to trigger a therapeutic immune response. The proposed schedule is to treat patients with a new five-dose series of Tcelna each year, based on the patient’s evolving immune profile. The idea is to lessen the activity of specific myelin-reactive T cells that attack the myelin sheath. Tcelna is now in a Phase 2b trial called Abili-T. The primary endpoint is reduction in whole brain atrophy.
TLSR: The market seems to hate this company, and I’m not sure I understand why. You model a peak sales potential for the MS class of $18 billion ($18B) globally by 2019. There are 213K SPMS patients in the U.S. alone, and the company has a $42 million ($42M) market cap. Some of the companies in your coverage have doubled, tripled and quadrupled over the past 52 weeks, but Opexa is down 8% during that same period. Its relative strength is very weak.
CJ: I see what you’re getting at, but I wouldn’t say the market hates this company. I would point out two factors that may have affected the valuation. Prior to our initiation of coverage in March, there were no other analysts covering the stock. Our coverage should help to increase the visibility going forward. The fact that the top-line data readout is fairly far in the future—in mid-2016—is probably the biggest issue with investors who are near-term catalyst-driven.