Shares in Wilex AG gained as much as 42 percent during trading Friday on news of a strategic alliance with UCB SA, which is worth €10 million up front (US$13.5 million) and another possible €10 million in two near-term milestones.
Munich, Germany-based Wilex is taking on responsibility for developing the latter firm's preclinical oncology portfolio of five projects. In return, Brussels, Belgium-based UCB is acquiring around 1.8 million shares - or a 13.2 percent stake - in Wilex, and it retains the right to buy back any of the programs during clinical development.
In that scenario, Wilex would receive additional development milestones and royalties on eventual product sales. Should UCB not exercise its options, it would receive milestones and royalties from Wilex. The two companies also might opt to co-develop any of the projects. Further details were not disclosed.
"The terms have been agreed, and they're pre-defined," Wilex CEO Olaf Wilhelm said on a conference call with analysts.
The oncology portfolio includes two small molecules - a MEK inhibitor and a Phosphatidylinositol 3 (PI-3) kinase inhibitor and three early stage antibody programs. They originated in UCB's NewMedicines unit, an organization established in February 2008 to undertake drug discovery and early clinical development. UCB has decided to focus its internal development efforts on immunology and the central nervous system and to outsource oncology development to a cancer specialist.
For its part, Wilex lacked an in-house discovery capability and was looking for ways to broaden its pipeline. The deal offers other benefits as well. "With this strategic alliance, we also have access to UCB's broad antibody technology platform," Wilhelm said on the call.
Use of the cash is not restricted in any way. Wilex is free to spend it on its current clinical programs. The company expects to gain two milestones, worth €5 million each, around 12 months after the deal closes. Those will be triggered by the first investigational new drug filing arising out of the alliance and the commencement of the first Phase I trial, respectively.
The MEK inhibitor program is the most advanced, and its progress is most likely to trigger the additional payments. "If for any reason the MEK inhibitor doesn't make it - for toxicity reasons - those milestones are available for the next program," Wilhelm told BioWorld Today.
Wilex's stock (FRANKFURT:WL6) peaked at €4 on Friday, up €1.20 from the previous day's close, but shed most of those gains, to end the day at €3.25, up 16 percent. At that level, the company, which has two programs undergoing Phase III trials and a third at the Phase II stage, is valued at about €33.5 million. It reported €18.2 million in cash and equivalents on Aug. 31 and a net loss of €16.5 million for the first three quarters of its 2008 fiscal year, which ended Nov. 30.
"I quite like the deal. They've done quite well with this. You can view it as getting money to complete the Phase III on Rencarex," Robin Davison, an analyst at Edison Investment Research in London, told BioWorld Today. "It wasn't clear that they had enough money to get the data they need. In that respect, this deal works pretty well for them."
Rencarex, which is an antibody, targets carbonic anhydrase IX, an antigen that is expressed in more than 90 percent of all clear cell (conventional) renal cell carcinomas but which is not expressed in normal kidney tissue. It is undergoing an 850-patient Phase III trial, with a primary endpoint of disease-free survival.
Enrollment was completed last summer. The first interim analysis of efficacy requires 343 relapses, a threshold that could be reached by the second quarter of this year. "The problem they've been having is patients are living longer," Davison said. A total of 512 events are required for a full data analysis.
Partnering discussions for Rencarex are under way, Wilhelm said. It already partnered its other Phase III product, a cancer diagnostic called Redectane, with Louvain-la-Neuve, Belgium-based Ion Beam Applications SA. It also aims to secure a deal for its third pipeline project, Mesupron, a first-in-class inhibitor of the urokinase-type Plasminogen Activator system, which plays a role in tumor growth, invasion and metastasis. A Phase II trial in pancreatic cancer will read out later this year. A second Phase II trial, in breast cancer, is ongoing.