Rexahn Pharmaceuticals Inc (NYSEMKT:RNN): Buy On The Dip

When we last covered Rexahn Pharmaceuticals Inc (NYSEMKT:RNN) as part of this piece, the company was just about to carry out a reverse split and sentiment had weakened somewhat in anticipation of the event. We have covered this one on numerous occasions in the past and – across our spate of coverage – we have maintained a distinctly bullish bias. Newer readers can catch up here.In short, we've long been a fan of the science that underpins the company's development program (and it's various pipeline assets) and we've for a long time felt that this pipeline serves up the potential for too many catalysts for Rexahn remain as is. In other words, if our interpretation of the science is correct (and we think it is) then at least some of the catalysts that the company has slated for 2017 and 2018 will hit press as positive. When they do, the company will revalue to the upside.That's been our stance, and we've just had some validation to that end.Rexahn put out data from its phase IIa study of RX-3117 in bladder cancer at ASCO this weekend just gone and, as far as the numbers go, it's exactly what we'd hoped for.Subsequent to the news, management has announced an offering (we suspect to take advantage of the strength we've seen post data, and we can't blame them) and the company has taken a hit on the offering news.While this is the natural market response to what amounts to a dilutive raise, we feel the company is oversold on the news and that the current price basically ignores the successful trial data we got a few days ago. In turn, we think that the current price represents an opportunity to get in at a discount ahead of a return to the upside momentum and, just as importantly, ahead of a few major near-term catalysts that could (and should) compound the upside action.So what did the data show?Well, as mentioned, it's a phase IIa in bladder cancer. Importantly, these are patients that have essentially run out of options. They are nonresponsive (or no longer responsive) to standard of care therapies and – without a clinical trial asset like the one Rexahn is developing – would have no options outside of palliative care and an expected survival of between two and three months.This data refers to the first stage of the phase IIa study, in which 10 patients from the above-mentioned population were dosed with RX-3117. As per the presentation, two of ten patients treated with RX-3117 exhibited progression-free survival of greater than 6 months and one of these patients is continuing in the study with stable disease at 175 days.In order to carry through into the second stage of the study, an endpoint of two patients 3117 exhibited progression-free survival of at least 4 months needed to be met. This endpoint was met and the second stage will go forward as planned.No dose-limiting toxicity was reached (again, very important as this is rare for a cancer drug) and the most common side effects were mild nausea, vomiting diarrhea, and fatigue.Sure, it would have been nice for more patients to register progression-free of more than 6 months, but there's still plenty of room for that (half of the patients have stable disease for greater than 56 days and three of the twelve remain in the study with prolonged stable disease) and we've got to consider the severity of this stage of this cancer when evaluating response.Basically, it's not quite a home run, but it's a conservative triple.Yet, as mentioned, the company is down on the news of the raise. Over the next few months, we'll see data from a phase IIa in breast cancer (set for third quarter) and a phase IIa renal cell carcinoma study (set for mid-2017) in Supinoxin and Archexin respectively. We'll also see phase IIa data from a trial investigating the asset we've discussed above, 3117, in a pancreatic cancer treatment (third quarter).The recent news suggests the latter of these, at least, has a great chance of hitting press as positive, while data from early stage investigations of the two former suggest equally positive expectations.The raise-driven selloff is out of the way and the capital should fully fund through completion of the company's current ongoing programs.It really is tough to see this one going anyway but up on currently available information.We will be updating our subscribers as soon as we know more. For the latest updates on RNN, sign up below!Disclosure: We have no position in RNN and have not been compensated for this article.