Wilex Rencarex Phase III Result And FDA Response To ODAC

Wilex reported €13.9m revenues in 2012 from the Rencarex deal with Prometheus as revenue recognition accelerated after ARISER trial did not meet its endpoint; €10.1m will be recognised in FY13. The main value in 2013 lies in partnering Mesupron. This is essential to progress the project. Redectane for kidney cancer imaging should enter a second US Phase III in Q2. The Heidelberg Pharma subsidiary offers novel chemistry links between antibodies and therapeutic payloads and is expected to grow its FY12 revenues of €1.9m in FY13. Wilex is funded into 2014 before any deal payments. Year-end cash was €23.7m; cash use in FY13 may be €18m.

0BStatistically Significant, Small Subgroup With Data Q2
Analysis of the ARISER 864 patient Phase III data has shown a disease-free survival (DFS) advantage in patients with a high score of the Carbonic Anhydrase IX antigen (CAIX), the target of the Rencarex antibody. The score is based on the number of CAIX expressing cells multiplied by the number of CAIX antigens per cell. Management has stated that the subgroup is large and that the effect is significant. The data will be presented in Q2 at a major US conference and released to investors. If economic, a further Phase III may be required.

1B2012 Financial Position
Wilex’s FY12 revenues comprised €13.9m of Prometheus income, mostly deferred payments but some reimbursed expenses and including €1.13m recognised due to the ARISER failure. In 2013, the remaining €10.1m will be recognised as the trial concludes. Other revenues were €4m. Overall expenses were €26.7m; some redundancies have been made. The FY11 €10.6m debt to shareholders was reduced by €7.8m (inc interest); net FY12 equity raised (less the debt repayment) was €25.7m.

2BValuation: Cash And Value Need A 2013 Mesupron Deal
The indicative value of Wilex is provisionally in the €1.20-1.50/share range using a 50% probability of a Mesupron deal. A deal with an upfront of at least €15m might take Wilex through FY14 and boost Wilex’s value into the €2.00-2.50/share range. Failure to achieve a Mesupron deal soon would affect the value significantly. There are earlier-stage pipeline products like WX-554 and 037; UCB has options to co-develop both as it was the originator, which might affect ascribed value. Although the new Rencarex analysis sounds interesting, it is not currently possible to assess the potential market or the cost and time of any route to market since the data will not be disclosed until May 2013.

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