- Windtree Thera is up 57% on good Phase IIb results
- WINT needs capital to keep the program running
- So, when’s the capital raise, from whom and at what price?
Windtree Therapeutics (NASDAQ: WINT) stock is up 57% this morning on the back of news about a Phase 2 (or even Phase II) study on one of the company’s drug candidates. Given that WINT stock has lost 82% of its value in only the past 12 months this is, of course, a pleasing turnaround for investors. It doesn’t get them back to square, nothing like, but it is at least helpful. The big question will, of course, be whether this stock price rise at Windtree is maintained. And that depends upon certain technicalities of the capital structure here.
As to what Windtree does it’s a clinical-stage biopharmaceutical company. The aim is to devise treatments for acute cardiovascular disease with pulmonary as a secondary goal. They’ve a couple of drugs in Phase II trials, including istaroxime, in Phase IIb trials.
Just to clarify. This is not wholly accurate, but it’s a good way to think of things. Phase I tries to see if a drug will poison healthy people. Phase II works out whether it aids or cures sick people. Phase III then tests for side effects among large populations. So, in shorthand, we can think that Phase II trials are to find out whether it actually works.
Which is what has produced the bounce in the Windtree stock price. For their announcement: “Windtree Therapeutics, Inc. (NasdaqCM: WINT),…, today reported that the results of its positive Phase 2 istaroxime study in early cardiogenic shock were published in the European Journal of Heart Failure”. So, an announcement that it does in fact seem to have at least some use in curing people. That’s good.
While it’s important to look at Windtree as a pharma endeavour it’s absolutely vital to look at WINT as a corporate endeavour. There the message is more mixed. Looking at the last set of accounts filed we see cash costs of some $11 million (no need to be more accurate than this) per half year and also $11 million in cash. There’s no revenue, or none that makes any difference to those numbers. There’s an at the market stock sale scheme which brings in perhaps $1 million. Possibly $200k from interest etc on the cash pile. So, Windtree needs more capital and needs it pretty soon too.
It’s possible, just and about, that good Phase IIb results, like those announced, will get a major drug company interested enough to make a deal. These do happen, if they do they usually take the form of a cash payment now, plus future royalties, in return for some sort of distribution exclusivity. That would provide the cash to get through the next stage of testing. Or, if that’s not available – or terms are too harsh – then we might see a capital raise. The increased stock price from the announcement will help there of course.
This is why the net effect of these good clinical results is rather muted. Because the next issue is going to be a capital raise from somewhere, at some price.