REXAHN PHARMACEUTICALS, INC. (RNN) SPO
|Company Name||REXAHN PHARMACEUTICALS, INC.|
|Company Address||15245 SHADY GROVE ROAD, SUITE 455
ROCKVILLE, MD 20850
|CEO||Chang H. Ahn|
|Employees (as of 3/16/2012)||15|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Exchange||American Stock Exchange|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||1/9/2013|
We estimate that the net proceeds from the sale of the 19,130,435 units offered by this prospectus supplement, after deducting underwriting fees and expenses, will be approximately $5.7 million, assuming that we sell the maximum number of units we are offering pursuant to this prospectus supplement. If the underwriters exercise their over-allotment option in full, we estimate that our net proceeds will be approximately $6.6 million. Because there is no minimum offering amount required as a condition to the closing of this offering, the actual number of units sold, underwriting fees and proceeds to us are not presently determinable and may be substantially less than the maximum amount set forth above. We believe the net proceeds from this offering will bring us in compliance with the listing standards for NYSE MKT. We intend to use the net proceeds of this offering for further development of our lead clinical program, including the funding of Rexahn’s Phase II clinical study program of Archexin, the Phase I clinical trial of RX-5902 and other general corporate purposes. We cannot estimate precisely the allocation of the net proceeds from this offering. The amounts and timing of the expenditures may vary significantly, depending on numerous factors, including the progress of our clinical trials and other development efforts, as well as the amount of cash used in our operations. Accordingly, our management will have broad discretion in the application of the net proceeds of this offering. We reserve the right to change the use of proceeds as a result of certain contingencies such as competitive developments, opportunities to acquire technologies or products and other factors. Pending the uses described above, we plan to invest the net proceeds of this offering in short- and medium-term, interest bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.
We will compete against fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, such as Keryx Biopharmaceuticals, Genta Incorporated and Imclone Systems Incorporated, as well as academic institutions, government agencies and other public and private research organizations. In addition, many of these competitors, either alone or together with their collaborative partners, operate larger research and development programs or have substantially greater financial resources than we do, as well as more experience in: • developing drugs; • undertaking pre-clinical testing and human clinical trials; • obtaining FDA and other regulatory approvals of drugs; • formulating and manufacturing drugs; and • launching, marketing and selling drugs. Large pharmaceutical companies such as Bristol-Myers Squibb, Eli-Lilly, Novartis, Pfizer and Glaxo-SmithKline currently sell both generic and proprietary compounds for the treatment of cancer, depression and erectile dysfunction. In addition, companies pursuing different but related fields represent substantial competition. Many of these organizations have substantially greater capital resources, larger research and development staff and facilities, longer drug development history in obtaining regulatory approvals and greater manufacturing and marketing capabilities than we do. These organizations also compete with us to attract qualified personnel, parties for acquisitions, joint ventures or other collaborations.
We are a development stage biopharmaceutical company focusing on the development of novel cures for cancer to patients worldwide. Our mission is to discover and develop new medicines for diseases that plague patients with no effective cures, in particular high mortality cancers. Our pipeline
features one drug candidate in Phase II clinical trials this year, two candidates that may enter Phase I clinical trials next year, and several other drug candidates in pre-clinical development. Our strategy is to continue building a significant product pipeline of innovative medicines that we will commercialize alone or with pharmaceutical partners. In addition, we have two CNS candidates, Serdaxin and Zoraxel, that are in clinical stages and we are exploring options for further development. We currently have three clinical stage drug candidates for cancer: Archexin®, RX-3117, and RX-5902, and two clinical stage drug candidates for CNS, Serdaxin® and Zoraxel TM. Archexin® Archexin is a 20 nucleotide single stranded DNA anti-sense molecule, which is a first-in-class inhibitor of the protein kinase Akt. Akt plays critical roles in cancer cell proliferation, survival, angiogenesis, metastasis, and drug resistance. Archexin received “orphan drug” designation from the U.S. Food and Drug Administration, or FDA, for five cancer indications (renal cell carcinoma, or RCC, glioblastoma, ovarian cancer, stomach cancer and pancreatic cancer). The FDA orphan drug program provides seven years of marketing exclusivity after approval and tax incentives for clinical research. In August, 2012, we announced top line results of our Phase IIa clinical trial. The open label 2-stage study was designed to assess the safety and efficacy of Archexin in combination with gemcitabine. Stage 1 was the dose finding portion and Stage 2 was the dose expansion portion using the dose identified in Stage 1 to be administered with gemcitabine. The study enrolled 31 subjects aged 18-65 with metastatic pancreatic cancer at nine centers in the United States and India. The primary endpoint was overall survival following four cycles of therapy with a six month follow-up. For those evaluable patients, the study demonstrated that treatment with Archexin in combination with gemcitabine provided a median survival rate of 9.1 months compared to the historical survival data of 5.65 months for standard single agent gemcitabine therapy. The most frequent reported adverse events were constipation, nausea, abdominal pain and pyrexia, regardless of relatedness. Rexahn is evaluating options for advancing Archexin, including entering into a Phase IIb trial beginning in the first quarter of 2013. We own one issued U.S. patent for Archexin. The costs incurred for the Phase I clinical trial was approximately $1,500,000. As of September 30, 2012, we have spent approximately $6,420,000 for the development of Archexin. The trial was completed in the third quarter of 2012, and we estimate that we have approximately an additional $120,000 of costs yet to be billed by vendors for this trial. RX-3117 On September 21, 2009, we closed on a securities purchase agreement, or the purchase agreement, with Teva Pharmaceutical Industries Limited, or Teva, for the development of our novel anti-cancer compound, RX-3117. RX-3117 is a small molecule, new chemical entity nucleoside compound that has an anti-metabolite mechanism of action, and has therapeutic potential in a broad range of cancers including colon, lung, and pancreatic cancer. The investment by TEVA is restricted to supporting the research and development program for the development of RX-3117. We will be eligible to receive royalties on net sales of RX-3117 worldwide. This compound entered into an exploratory Phase I clinical study during the first quarter of 2012. The primary objective of the study was to determine oral bioavailability of RX-3117 in humans. On August 6, 2012, we released the results that the study demonstrated the oral bioavailability of RX-3117 in humans when delivered orally to patients, and there were no adverse events reported in the study. We estimate that the costs of the exploratory Phase I clinical study were approximately $550,000. On November 27, 2012, we agreed with Teva that it will exercise the option to purchase $750,000 of our common stock at 120% of closing market share price on or around December 7, 2012, one day prior to the expected closing date. This will constitute the third and final closing agreed to in the purchase agreement for the purpose of supporting the research and development program for the compound RX-3117. The shares of our common stock to be purchased by Teva pursuant to the purchase agreement will be issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, afforded by Section 4(2) thereof, as a transaction to an accredited investor not involving a public offering. Pursuant to the purchase agreement, we granted Teva certain piggyback registration rights with respect to the shares of our common stock it purchases pursuant to the purchase agreement, which Teva may exercise in the future. On November 27, 2012, we also entered into a second amendment, or the Second Amendment, to the Research and Exclusive License Option Agreement, dated June 26, 2009, as amended, or the RELO Agreement, with Teva. Pursuant to the terms of the Second Amendment, Teva has agreed (i) to provide us with an additional $926,000 of research funding in our development of RX-3117 and (ii) to conduct additional research and development work for RX-3117 on our behalf pursuant to the terms of a second amendment to the Services Agreement, dated February 4, 2010, as amended. The Second Amendment also gives Teva the right to file the investigational new drug, or the IND, application for RX-3117 with the U.S. Food and Drug Administration, as well as any other regulatory filings required before or associated with the IND filing. RX-5902 RX-5902 is a first-in-class small molecule that inhibits the phosphorylated p68 RNA helicase, a protein that plays a key role in cancer growth, progression, and metastasis. In July, 2012, we submitted an Investigational New Drug Application to the FDA for RX-5902. RX-5902 will likely enter Phase I clinical trials during the first half of 2013. We estimate the costs of the Phase I clinical study to be approximately $1,100,000. On November 21, 2012, we were issued a United States patent (No. 8,314,100), titled “1-[6,7-substituted alkoxyquinoxalinyl) aminocarbonyl]-4-(hetero) arylpiperazine derivatives”, which covers our quinoxalinyl-piperazine compounds, the process for the preparation of such compounds and their pharmaceutical composition. The patent includes RX-5902. Serdaxin R (RX-10100) Serdaxin is an extended release formulation of clavulanic acid, which is an ingredient present in antibiotics approved by the FDA. We developed Serdaxin for the treatment of depression and neurodegenerative disorders. From January to September, 2011, we conducted a randomized, double-blind, placebo-controlled study compared two doses of Serdaxin, 0.5 mg and 5 mg, to placebo over an 8-week treatment period for major depressive disorder, or MDD, patients. On November 4, 2011, we released results that the study showed Serdaxin did not demonstrate efficacy compared to a placebo group as measured by the Montgomery-Asberg Depression Rating Scale, or MADRS. All groups showed an approximate 14 point improvement in the protocol defined primary endpoint of MADRS, and had a substantial number of patients who demonstrated a meaningful clinical improvement from baseline. The study showed that Serdaxin was safe and well tolerated. At this point, we have not made any determinations of Serdaxin’s future paths and have not allocated resources to the further development of Serdaxin for treatment for MDD. Through September 30, 2012, the pre-clinical and clinical costs incurred for development of Serdaxin to date have been approximately $9,750,000. We do not anticipate additional costs for the Phase IIb trial. As we are currently evaluating Serdaxin’s future paths, we have not allocated additional resources to Serdaxin at this time. We are looking for partners who can fund the further development, license the products or cooperate for commercialization. Zoraxel TM (RX-10100) Zoraxel is an immediate release formulation of clavulanic acid, the same active ingredient found in our product candidate Serdaxin. The Phase IIa proof of concept, completed with positive results, was a randomized, double blind, placebo controlled and dose ranging (5 mg, 10 mg, 15 mg) study of 39 erectile dysfunction patients (ages of 18 to 65) treated with Zoraxel. The Phase IIb study is designed to assess Zoraxel’s efficacy in approximately 150 male subjects, ages 18 to 70, with ED. The double blind, randomized, placebo-controlled, 12-week study will include IIEF as the primary endpoint following treatment with Zoraxel at 25 and 50 mg doses. However, given the recently reported results of the Serdaxin Phase IIb clinical trial and that Zoraxel and Serdaxin share a common ingredient, we are currently evaluating how to proceed with the Phase IIb study for Zoraxel. Through September 30, 2012, the costs incurred for development of Zoraxel to date have been approximately $1,245,000. We currently estimate that these Phase IIb studies would require approximately $2,300,000 throughout the remainder of 2012 and 2013, but we have not allocated additional resources to the development of Zoraxel at this time. We are looking for partners who can fund the further development, license the products or cooperate for commercialization. ----- Our principal executive offices are located at 15245 Shady Grove Road, Suite 455, Rockville, Maryland 20850 and our telephone number is (240) 268-5300. Our website address is www.rexahn.com.
|Company Counsel||Patton Boggs LLP|
|Lead Underwriter||Burrill LLC|
|Lead Underwriter||Maxim Group, LLC|
|Transfer Agent||Olde Monmouth Stock Transfer Company Incorporated.|
|Transfer Agent||Olde Monmouth Stock Transfer Company, Inc|
|Underwriter Counsel||Ellenoff Grossman & Schole LLP|