With Dimerix's (DMX: $0.235) Phase III study in FSGS (kidney disease) fully recruited with the company's drug candidate DMX-200, the challenge for the company is to fund operations to the readout out point, likely to be Q2 2028.
At the end of June, the company had a proforma cash balance of $30 million, which includes $14 million received in July from a licensing deal with Everest Medicines for the Greater China region.
New Funding Facility
The latest funding facility secured will provide the company with up to $34 million in additional funds. This includes the $10 million loan facility arranged in July with the company's largest shareholder, and largely on the same terms. Initially Dimerix will draw down $17 million, with up to $17 million to be drawn down by the end of March next year. (However up to $50 million in total can be accessed during that period.)
Loan to be Paid Back Before Phase III Results
The company will pay a 10% compounded interest on funds, which are due to be repaid by 17 January 2028. This will be paid back before the readout of the FSGS Phase III studies from milestone payments from existing licenses, potentially from new licenses, and if needed from capital markets.
Latin America remains a large market opportunity for the company to license. The company was granted a composition-of-matter patent this week in Mexico, which is the 12th largest pharmaceutical market in the world and the second largest in Latin America.
CEO Nina Webster said that structuring the funding in this manner represents a substantially lower cost of capital than an equity raise at current prices.
The lenders also stand to receive twice the amount lent to the company from milestone payments if the FSGS results are positive. This is capped at 30% of any milestone payments that Dimerix receives from licensing deals for DMX-200. Webster said that in the US this is a very popular funding mechanism.
It is lower that the four-fold payback in the Opthea deal, and if the results are negative, there is no additional payback obligation.
Should Dimerix's lead drug candidate reach the market in all of the licensed regions, the company will receive $237 million (pre-launch) from existing partners, plus up to $1.56 billion in sales-based milestone payments, and royalties of between 10%-30% from net product sales.
In the June quarter, the company's cash outflow from operations was $10.4 million. There will be some fluctuation in the company's spend, with the winding down of patient treatment and monitoring in the FSGS study, but more costs from the DMX-652 study, and manufacturing costs. Webster emphasized that the DMX-652 study will only be treating patients for seven days.
Of the 333 patients enrolled in the Phase III FSGS study, 75 of the 81 patients who have completed treatment (in the active arm or placebo) have elected to move into the open label extension phase.
Dimerix is capitalized at $141 million.
Bioshares recommendation: Speculative Buy Class A
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