Wilex ODAC: Rights Issue And Private Placement

The July ODAC meeting voted 16:0 (plus a statistical abstention) that an imaging test for clear cell renal carcinoma would be clinically useful. Wilex meets the FDA in September to discuss a Phase III imaging trial design for Redactane. In August, Wilex AG (WL6.DE) undertook a €23.9m equity issue.

This enables repayment of the €7.5m dievini loan plus €0.27m interest as equity and generates €16.1m cash. Following the $17.5m cash in July for Rencarex US rights plus undisclosed milestones, Wilex seems funded well into 2014 on a yearly cash use of €20-24m. Phase III Rencarex data is due Q4.

Discussing the principle, not the product
The Oncology Drugs Advisory Committee (ODAC) met on 25 July to decide if a hypothetical imaging agent to identify clear-cell renal cell carcinoma (ccRCC, about 85% of cases) would “speak for itself” and be clinically relevant given that all tumours >3cm are removed anyway. Redectane was not discussed but its images were used to illustrate the hypothetical agent.

On the basis that the putative agent discriminated between ccRCC and other renal masses, the vote was 16:0 (the statistician abstained) in favour. Renal biospy was seen as unreliable, not a gold standard and less used clinically so imaging could be a good alternative. A confirmatory Phase III for Redactane is needed but its design needs discussion with the FDA. A meeting is scheduled for September but agreement may be some months off.

Cash boost
Wilex’s annual cash need after sales income and costs is estimated at €20-24m. Before July 2012, Wilex raised about €23.2m via an equity issue of €9.8m and $17.5m (€13.4m) from Prometheus as part-payment for the Rencarex US rights. The rights issue and private placement completed on 24 August adds 6,460,544 new shares issued at €3.70 (€23.9m). This is at a 4.1% discount to the average end of July price.

As part of the issue, the dievini Hopp BioTech loan of €7.5m plus interest of €0.27m will be settled in equity. This leaves net €16.1m in new cash. Our estimate pre-rights was of year-end cash of €6.7m. This leaves the UCB loan of €2.5m and about €23m cash at the year end. With ongoing revenues and possible Rencarex milestones ($2.5m plus undisclosed amounts), Wilex is funded well into 2014.

Valuation: Priced in data
Our indicative valuation for Wilex is €207m, or €6.55/share. The value of some technologies (like ADC) is not included but could be significant. A Mesupron deal, with a significant fee, is expected in 2013 after good trend data was seen in both the pancreatic and breast cancer studies.

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