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READ THE FULL WIZP RESEARCH REPORT
On May 7, Wize Pharma, Inc. (OTC:WIZP) announced it completed patient treatment in its Phase IV study of L02A in Sjögren's. Data from this study will supplement results from the Company's Phase II study of L02A in CCH. Results from this study have been delayed by the pandemic. As a result, Wize now anticipates top-line results in 3Q20 compared with its previous timeline of 2Q20.
After signing a new product partnership in September with Copernicus, Wize Pharma, continued to expand its partnership portfolio in January acquiring a 20% share in Bonus BioGroup (BONS-TASE). Separately, the Company made significant progress towards strengthening its balance sheet.
In November, Wize eliminated $1.5 million in convertible loans by converting $760,000 into equity and the repayment of $760,000 the balance. In December, the Company raised an additional $500,000 with a PIPE. Finally, WIZP raised $7.5 million in a Series B preferred offering as part of the Bonus BioGroup transaction.
The agreement includes several components:
• WIZP issued $7.5 million in Series B preferred stock to a group of investors. The stock is non-voting and non-convertible.
• Wize Pharmaceuticals receives $16.4 million in Bonus BioGroup stock (c.113 million shares) in exchange for $7.4 million in cash and 37% of future revenues from L02A.
• WIZP and Series B holders split (20/80) economic upside from price appreciation of BONS shares until WIZP redeems the Series B offering.
• Wize must redeem the Series B shares by December 2020, or 60 days after Bonus BioGroup lists its shares to NASDAQ.
While complex, the transaction may provide material investment returns and diversification to WIZP shareholders relative to L02A on its own.
Bonus BioGroup specializes has developed an injectable, autologous live bone graft product to the repair of complex and severe bone deficiencies for which there are currently no adequate treatment options.
Ongoing Phase I/II clinical trials have demonstrated the safety and efficacy in the treatment of oral and maxillofacial as well as orthopedic bone defects, and suggest additional potential in the treatment of a variety of complex bone deficiencies.
We are raising our estimates for 2020-2021, primarily reflecting the reduction in interest expense resulting from the elimination of high-cost convertible debt. Our 2020 estimate goes from ($0.70) to ($0.27). For 2021, our estimate is now ($0.28) compared with ($0.94). However, we are reducing our valuation from $2.93 to $1.97. With WIZP paying 37% of L02A revenues to Bonus BioGroup as part of the strategic agreement, we expect that WIZP will now get a reduced royalty rate of 12% from a partner for the right to produce/sell L02A, compared with our previous estimate of 20%.
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Posted In: WIZP
