Punchline: There is about $1.00 per share of cash after the Roche APA, plus up to ~ $0.15 per share of future payments from Roche vs. stock price < $0.62 WITHOUT CONSIDERING THE VALUE OF VICINEUM.
Two SESN 8-Ks today contained this key information:
1a. They disclosed clarifying information regarding discussions with FDA. Now they can disclose these items to potential partners and let them select a path forward.
1b. They are suspending development. If there is a timely partnering/sale event, the new partner/owner can decide the path forward. There could be a reduction in workforce and related cost, but the two 8-Ks might be part of clarifying the field for final bids on the company.
1c. “As of June 30, 2022, the Company had $161.2 million in cash and cash equivalents, no outstanding debt and fewer than 0.2 million outstanding warrants.”
2a. They announced the APA for the legacy drug EBI-031.
2b. “The Asset Purchase Agreement includes a $40 million payment to Sesen Bio upon execution of the Asset Purchase Agreement, and an additional $30 million payment to Sesen Bio that is conditioned upon Roche’s initiation of a Phase 3 clinical trial with EBI-031 for a defined indication prior to December 31, 2026.”
VALUE:
a. So there was cash of $161.2 million plus $40 million, or cash (before July cash burn) of ~ $201.2 million or about $1.00 per share.
b. There is the potential for an additional $30 million payment from Roche (up to $0.15 per share by 2026).
c. Vicineum Out-licenses & market opportunities:
i. Qilu license for China, Hong Kong, Macau and Taiwan (“Greater China”) $20 million in tech transfer and regulatory payments still available + 12% royalties ($0.10 per share plus royalties still available) - upfront payment of $12 million (previously received) and is eligible to receive up to an additional $23 million in technology transfer and regulatory milestone payments (of which ~$3 million was received). Upon commercialization in Greater China, Sesen is also entitled to receive royalties on net sales in Greater China.
The Investigational New Drug application for Vicineum submitted by Qilu to the Center for Drug Evaluation of the NMPA was accepted for review in January 2021 and approved in March 2021, resulting in a $3 million milestone payment from Qilu, the first milestone payment out of the $23 million in potential milestone payments. The Company recorded $2.8 million (net of VAT) as license revenue during the three-month period ended March 31, 2021. The Company received the payment in 2021.
In June 2021, the Qilu License Agreement was recognized by Shandong Province, Bureau of Science and Technology as a "Technology Transfer". An agreement that is designated as a Technology Transfer shall be entitled to a tax incentive of VAT recovery. As such, the Company recorded $0.9 million of revenue during the three months ended June 30, 2021 for additional purchase price resulting from Qilu's obligation to pay Sesen an amount equal to its recovery of VAT. The Company will not be subject to VAT on future potential milestone payments from Qilu.
ii. US
iii. Europe
iv. MENA
v. ...EIP Eczacibasi Ilaç Pazarlama A.S., (“EIP”) pursuant to which it granted EIP an exclusive license to register and commercialize Vicineum for the treatment of BCG-unresponsive NMIBC in Turkey and Northern Cyprus (the “EIP License Agreement"). Under the terms of the EIP License Agreement, the Company is entitled to receive an upfront payment of $1.5 million. The Company and EIP have amended the license agreement to defer EIP's payment of the upfront payment to coincide with the potential FDA approval of Vicineum. The Company is eligible to receive additional regulatory and commercial milestone payments of $2.0 million and is also entitled to receive a 30% royalty on net sales in Turkey and Northern Cyprus.
iv. ROW
Offsets to value above:
Options for 15.7 million shares at a weighted avg price of $1.93 for 2021 and prior are out there plus 1.1 million shares granted in 1Q'22 at wtd avg of $0.71.
Payments under in-license agreements: one-time and royalty payments are triggered upon certain development milestones and commercial sales (see the SEC filings).
