Monday, April 4, 2011

RXII: Apthera Acquisition Puts RXi Pharmaceuticals in a New League

The early-stage RXi Pharmaceuticals pulled off what could become a surprising coup last week when it announced a merger with privately-held Apthera, Inc. for just 4.8 millions shares of RXII's common stock.

At the time of the announcement, the deal was worth just over seven million dollars, not including possible payments on future commercial and regulatory milestones.

With this deal, RXi acquires the Phase III-ready NeuVax, an immunotherapeutic treatment for breast cancer that is scheduled to be tested in a Phase III trial in 2012.

Given the market potential of successful cancer vaccines, RXi could have come up with a steal of a deal.

That said, cancer vaccines - although possibly the wave of the future for cancer treatment - are still highly speculative investments, given that the road to regulatory approval for these treatments are dotted with a long line of failures.

Given the success of Dendreon (DNDN), however, makes such speculative investments well worth the risk, especially while the likes of RXII are trading for a market cap of under thirty million.

In conjunction with the merger news, RXi named Mark Ahn as CEO while Apthera's CEO, Dr. Mark Schwartz, will assume the position of Executive Vice President and Chief Operating Officer.

The merged RXi will need cash to advance NeuVax through Phase III to market, so expect a cash-raise at some point.

Already a solid speculative pick, in my opinion, RXII has just positioned itself with even more potential upside.

Take advantage of any dips, if you like the risk/reward here.

Disclosure:  No Position.

From Weekly Stock Watch at VFC's NEW Stock House.

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1 comment:

  1. Vinny - What's your take on BMSN? It is trading at it's 52 week low of .02 on low volume for a while now. Very queit and seems like no interest - I can't even get on their website. Weren't they working on COPD? I know people who suffer from this horrible disease and a treatment would be great news for so many. Thanks and Lets Go Mets! Mark


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