Rexahn Pharmaceuticals Inc. is going ahead with development of RX-3117 after Teva Pharmaceutical Industries Ltd. declined its option to continue with the cancer therapy, which proved orally bioavailable with no adverse events in a small, European Phase I trial.

Shares of Rexahn (NYSE:RNN) closed Wednesday at 40 cents, down 8 cents, or 16.7 percent.

Just last month, Jerusalem-based Teva submitted an investigational new drug (IND) application to the FDA for RX-3117, and the company had 45 days from the filing to decide whether it would exclusively license the candidate. Now that the deal with Teva is kaput, Rexahn, of Rockville, Md., will be finalizing the timeline for more Phase I experiments in the next three months, while shopping for a partner.

“We just got the call,” said CEO Peter Suzdak. “I don’t know that [Teva] seriously changed their therapeutic focus, but they’ve decided three major areas they’re going forward with, and oncology is not one of those areas.”

Rexahn is regrouping. “Our plan over the next 30 days or so is to bring everything back in-house, including the active IND,” Suzdak told BioWorld Today. “We think this is a very attractive asset. When we signed the deal with Teva back in 2009, [RX-3117] was a preclinical asset. The terms we got were good at that point, but since then, I think we’ve significantly de-risked the program. Any deal we get going forward will be a clinical-stage deal,” with likely more financial upside. “My guess is that there will be significant interest expressed” by other pharma firms for RX-3117, though talks with potential new suitors have not yet begun, Suzdak said.

After the successful exploratory Phase I in Europe, Teva increased its ownership in Rexahn – which has collected about $9 million under the agreement – to 6.3 percent, and more milestone payments were expected in the second half of this year, with the IND submission and start of another Phase I study. That’s down the drain now, except for the Phase I study, which Rexahn will continue on its own. An inhibitor of DNA and RNA synthesis, RX-3117 could be useful in solid tumors in the colon, lung, bladder and pancreas.

But there’s more in the Rexahn pipeline, and farther along. Archexin, an Akt1 protein kinase inhibitor, could enter Phase IIa trials this year for chemotherapy-resistant solid tumors and hematological malignancies. In a Phase IIb study against advanced pancreatic cancer, Archexin in combination with gemcitabine proved safe and well tolerated, with a preliminary signal of efficacy that included median survival of 9.1 months, compared to the historical survival data of 5.65 months. “We’re reviewing that to decide whether we want to conduct two trials or just do a single trial, at this point,” Suzdak said.

Earlier this month, Rexahn started patient dosing with Supinoxin, also known as RX-5902, in a Phase I trial designed to study safety and efficacy in patients with solid tumors. Supinoxin, an orally administered, first-in-class, small-molecule inhibitor of phosphorylated-p68 RNA helicase, “has a lot of great promise” and could be synergistic with existing therapies, Suzdak said. The first patient was dosed about a month ago. “Our goal would be to have all three of these compounds in clinical development by the end of this year,” he said.

Last November, Rexahn priced a public offering of about 19. 1 million shares of common stock and warrants exercisable for up to 10.5 million additional shares at 33 cents per fixed combination of shares and warrants for gross proceeds of about $6.3 million.

In July, the company disclosed commitments from a single health care-dedicated institutional investor to buy about $5.7 million in stock. “I do not anticipate raising additional capital this year,” Suzdak said.

The company has about $15 million in cash on hand. “We’re in the process of reviewing our operational plan,” he said, but the most recently quoted burn rate is about $900,000 per month.

Like Teva, Rexahn adjusted its strategy, but the move happened at the start of 2012 and involved a move toward, rather than away from oncology. The company is exploring options – including out-licensing, divesting or partnering – for its central nervous system candidates Serdaxin and Zoraxel. Phase IIb data have shown that Serdaxin, an extended-release formulation of clavulanic acid for major depressive disorder, was safe and well tolerated in the 330-patient experiment but did not show efficacy, a finding that may have been due to a stronger-than-expected placebo response.

Zoraxel is a centrally acting sexual dysfunction drug with a different mechanism of action from the phosphodiesterase type 5 (PDE-5) inhibitors on the market. In a proof-of-concept study, Rexahn found that the compound provided a consistent improvement in International Index of Erectile Function scores at the highest dose, 15 mg. About 30 percent of patients are refractory to PDE-5 inhibitors, and Rexahn is searching for a partner to fund more studies.