RegeneRx Biopharmaceuticals Inc (OTCMKTS: RGRX)
Recently, the CNA Finance team had an opportunity to speak with J.J Finkelstein, CEO of RegeneRx. Mr. Finkelstein has worked as an executive officer and consultant in the bioscience industry for the past 34 years, including serving from 1989 to 1996 as chief executive officer of Cryomedical Sciences, Inc., a publicly-traded medical device company. Prior to Cryomedical, he served as the CEO of RegeneRx from 1984-1989.
RGRX has been advancing upon an aggressive and potentially lucrative strategy lead by RGN-259 for dry eye syndrome. CNA Finance wanted to see just what was behind the action, so we went straight to the source. The following is a transcript of our interview:
Q: Describe the lead product at RGRX and where you are in the approval/commercialization process.
Our lead product is RGN-259, a sterile, preservative-free, eye drop developed for dry eye syndrome and other diseases and disorders of the cornea. RGN-259 represents a new approach to corneal healing and repair as it promotes cell migration, increases cell-to-cell contact and reduces apoptosis (cell death) and inflammation. We are conducting two phase 3 clinical trials through our U.S. joint venture, ReGenTree, LLC, one for the treatment of dry eye syndrome and the other for an “orphan” indication, neurotrophic keratitis (NK). Our goal is to complete both trials by the end of 2017. Our results will determine how we proceed with the regulatory process. It is likely that upon success, ReGenTree will either sell or license the asset to a major pharmaceutical company for commercialization in the U.S. in conjunction with the rights in Europe, which are still 100% owned by RegeneRx.
Q: How extensive is the patent protection around Tb4?
Patent protection is strong and we continue to submit patents around the world on our products. We have more than 75 total patents and patent applications within 14 patent families worldwide for Tb4, with expiries through 2031. Moreover, as an orphan drug, RGN-259 would benefit from 7 years of market exclusivity in the U.S. and 10 years in the EU.
Q: Your outsourced business model is an interesting approach, why did RGRX adopt this approach and what are the company's cash needs under it?
An outsourced business model fits our technology, product candidates and needs very well. Since we are developing various product candidates around thymosin beta 4, a naturally occurring molecule, and have significant intellectual property, we felt very comfortable using vendors to perform and manage various aspects of our business. This includes preclinical studies, assay development, management of clinical trials, product formulation and other required services necessary to clinically develop a pharmaceutical product. Moreover, due to the significant world-wide interest in our product candidates, we have engaged in material transfer agreements (MTAs) with leading academic and medical institutions around the world that are interested in conducting research with our products.
These services and relationships allow us to not have to create a large and expensive infrastructure and, therefore, utilize less capital and be more flexible with our activities and budget. Currently we are spending approximately $110,000 per month to operate and have spent under $30 million in total to advance our products into phase 3. Our joint venture will probably spend another $30 million in getting RGN-259 through phase 3 and an NDA. This is much less than is typically the case for a pharmaceutical product that is based on a new chemical entity.
Q: Won't this outsourced model constrain the company's revenue growth potential when you reach commercialization?
It shouldn’t affect our revenue growth potential upon commercialization as our strategy has always been to sell or license our products to big pharma for commercialization. While we currently own 42% of ReGenTree, in addition to a royalty on commercial sales, we have no financial obligation through the clinical and regulatory process. We believe this is a great deal for RegeneRx. Also, as part of our strategy, we have engaged in other partnerships to develop our products in Asia, Europe and the U.S. Multiple partners allow us to create multiple paths toward commercialization. Currently we have three active partnerships, all of which are focused on clinical development of RGN-259 and RGN-137.
Q: What's in the pipeline behind RGN - 259 eye drops?
We also have RGN-352, our injectable form of thymosin beta 4. It is being developed to treat systemic injuries, traumas, and disorders such as myocardial infarction, stroke, and peripheral neuropathy, helping repair or prevent tissue damage quickly after a damaging event. We are phase 2-ready with this product.
A third product is RGN-137, our dermal gel using thymosin beta 4 as the active ingredient. It is intended to be used to treat skin wounds, scarring and dermal disorders. We have conducted several early phase 2 clinical trials with promising results and our partner is moving forward with RGN-137 in the U.S. to treat a serious orphan disease, epidermolysis bullosa.
CNA Finance works hard to uncover the next gems of investment opportunity. Mr. Finkelstein does offer a compelling case to consider the purchase of RegeneRx stock as part of an emerging growth portfolio.
With three real shots on goal and two Phase 3 studies in progress, RGRX is a stock that is well positioned with both near and long term catalysts. The outsourced model allows the company to conserve capital, allowing for maximization of the opportunities that are unique to RGRX’s shareholders.
Although all investments come with associated risk, RGRX appears to be in a comfortable position moving forward. As always, though, perform your own due diligence before making any aggressive investment decisions.
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