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WIZP: Wize Pharma - results on track in 2Q19

By Elizabeth Senko, CFA

OTC:WIZP

READ THE FULL WIZP RESEARCH REPORT

Wize Pharma, Inc. (WIZP) is a clinical-stage company focused on developing an in-licensed product, for the treatment of dry eye syndrome (DES) and related conditions including Sjögren’s syndrome and conjunctivochalasis (CCH). LO2A is approved and marketed by its inventor in several European nations, with over 1.5 million packages sold in 2018. Wize has the rights to develop LO2A for the US, China, Israel and the option to license the rights for additional markets, including those where LO2A is currently sold. On April 29, Wize released full results for its phase II trial of LO2A in patients with moderate-to-severe CCH. The trial met its primary endpoint of diminishing objective parameters of corneal damage with a strong trend towards statistical significance in a key clinical measure. Wize is also conducting a phase IV study of LO2A in patients with Sjögren’s Syndrome. The Company intends to submit these studies to the US FDA in order to discuss the clinical approval pathway. We expect progress towards US FDA approval will be the primary catalyst for share price improvement during the next two years.

On August 15, WIZP posted second quarter results in line with expectations. The Company posted a loss of $1.8 million, compared with a loss of $0.8 million in the year earlier period. Most of the difference stemmed from increased interest expense, which totaled $0.7 million in the quarter, compared with interest income of $0.4 million in the year-earlier period.

R&D spend rose to $0.2 million in the quarter from $0.1 million a year ago. Lower minimum payments under its LO2A license obligation to Resdevco (the patent holder) were offset by higher spending for additional trial work in preparation for a pre-IND meeting with the US FDA sometime in early 2020. General and administrative expense increased to $0.5 million from $0.3 million in the year-earlier period driven primarily by higher stock compensation, marketing and investor relations expense. Net financial income increased to $0.74 million versus $0.41 million in Q118 due to higher amortization of premiums related to convertible loans. Cash used in operating activities increased to $0.7 million, compared with $0.5 million primarily from the $0.77 million in amortization of premiums related to the Company’s convertible loan. All in, the Company remains in its expected burn rate of $150,000-200,000 per month.

We are reducing our estimates for 2019-2023 to reflect somewhat higher interest expense. Our 2019 estimate goes from of ($0.43) to ($0.49) with reductions of $0.03 to $0.06 for 2020-2023. We are maintaining our valuation target of $2.93 per share.

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