RGRX – penny stock with approaching financial deadline

Very seldom does a penny stock interest us, but we are intrigued by the potential now offered by RGRX.  Regenerx Biopharmaceutical is an early developer of applications for synthetic Thymosin Beta-4, a natural occurring peptide.

RGRX  acquired the rights to this novel peptide from the National Institute of Health (NIH) in 1999. This intellectual property for Thymosin Beta 4 (Tβ4) allowed the company to direct its focus on tissue protection and repair in multiple disease indications.

According to the company’s website:

” RegeneRx Biopharmaceuticals, Inc. is a clinical-stage drug development company focused on tissue protection, repair and regeneration with an extensive portfolio of product candidates for first-in-class therapeutic peptides.

RegeneRx’s management team is focused on moving three distinct Tβ4-based drug candidates through clinical trials: RGN-137, RGN-259 and RGN-352. RegeneRx also holds over 60 issued patents or filed patent applications worldwide in order to enable and protect multiple indications and applications for its product candidates.

In addition to Tβ4, RegeneRx is developing Tβ4 peptide fragments for cosmeceutical applications, separate and distinct from the pharmaceutical peptide and formulations. RegeneRx intends to pursue strategic business relationships to develop these smaller peptides for the cosmeceutical market. “

The company has completed Phase 2 trials for RGN 259 eye drops, and for RGN 137, a topical ointment for E Bulosa.   RGN 352, an injectable for Multiple Sclerosis, and

RGN 457. an inhalation for Cystic Fibrosis and Bronchiectasis, are both in Phase 1 trials.

In March of this year the company announced that it has received a Notice of Allowance from the U.S. Patent and Trademark Office claiming compositions and methods for treating, preventing, inhibiting, reducing, or repairing tissue deterioration, injury or damage due to heart failure using Thymosin beta 4 (Tβ4), its isoforms and fragments, derivatives and analogs. The patent is projected to expire in July 2026. The Company holds similar patents issued recently in the US, EU and China.

As a development company, Regenerx has burned up capital while producing little or no revenue.  Consequently it has had to seek deep-pocket investors to continue operations which are aimed at developing, and then licensing its intellectual property.  Fortunately it has made contact with Sigma-Tau, a closely-held Italian company owned by the Cavazza family.  Sigma-Tau has been very successful financing other small biopharmaceuticals: SCLN, ENZN, SNGX, and QCOR.

Currently, Sigma Tau Finanziaria SPA owns 49.24%, and Officers and Directors control another 6% of the 31 million shares outstanding.  According to blogs and message boards, there could be as many as 3 million shares sold short – – – (FINRA numbers do not coincide with the SEC, probably because of market-maker discrepancies.)

However, this short holding could be a boon to share price if or when good news is announced by RGRX.  And that could come soon.

On May 13, the company issued a letter to shareholders

(read it here: http://www.regenerx.com/pdf/Letter-to-Shareholders_5-13-2013_Final.pdf )

In it they explained the need to raise $2 million, to carry on with their strategy to complete trials, license products, and pursue more patents.  The key paragraph however, was this:

It is important to note that we will need a portion of the projected capital before the end of the second quarter of 2013. If we are unable to raise any additional capital within this timeframe, as reported in our public filings, we will be forced to further reduce or cease operations, go dormant, sell some or all of our assets, or possibly face bankruptcy.

That deadline is fast approaching.  The question for any investor or trader is whether Sigma-Tau will allow RGRX to go bankrupt, or whether they will once more step in with a capital infusion.  It should be noted that in case of a bankruptcy, the primary patent on which Regenerx’s IP portfolio is built will revert back to NIH, and would not be available in the disposition of remaining assets by a bankruptcy court.

It is pure speculation to believe that S-T will once again come riding to the rescue.

But at a share price of just 6 to 8 cents, and a financial deadline fast approaching, RGRX could be a winner for the brave of heart.

This entry was posted in Stock Analysis. Bookmark the permalink.