Follow Us GraphicFacebook IconTwitter IconLinkedIn Icon
Search Graphic

Expert Financial Analysis and Reporting

Windtree Therapeutics: Discussion of Licensing Deal with Lee’s Pharmaceutical and Two Imminent Key Clinical Events (WINT, Buy, $0.90)


This report discusses a new licensing deal with Lee’s Pharmaceutical and alerts investors to two upcoming catalysts for the stock. In July, the critical results from the phase 2b trial of Aerosurf will be published. Before then in June, results from the phase 2a trial in babies of the 26 to 28 weeks will be announced; these results are less critical to the future of the Company. If the phase 2b results are disappointing, the Company will likely go bankrupt. For my current investment view on WINT, I would refer you to this report.

Licensing Deal with Lee’s Pharmaceutical

Windtree held a conference call on June 13 to discuss a licensing agreement with Lee’s Pharmaceutical (a Hong Kong based company) to develop Aerosurf and Surfaxin LS in China and some surrounding territories. This was a well thought out decision by management as Windtree does not have the resources to develop the products in these territoryies on its own and yet China is a market that has enormous potential. There are over 16 million babies born annually as compared to 4 million in the US; additionally, there are 1 million premature births and 500,000 develop RDS. Lee’s is a drug development company that has a focus on neonatology. It has over 250 sales reps and markets to 5000 hospitals in China. Management mentioned that there were several Chinese companies competing with Lee’s for this license.

Lee’s will be responsible for all activities related to development, regulatory approval and commercialization of Aerosurf, Surfaxin LS and any related products. It will fund almost all the phase 3 costs (assuming it goes forward) in China, adding to the worldwide data base with almost no cost to Windtree. The path to regulatory approval should track alongside the path in the US as should the timing of a commercial launch. Importantly, this deal will not interfere with the potential for partnering or licensing in the US, European and Latin American territories. If the phase 2 b trial is successful, Windtree will examine strategies for these territories that provide funds for phase 3 development while maintaining maximum ownership to the Aerosurf and Surfaxin LS assets. There are a large number of possibilities including an outright sales of the Company.

The immediate cash inflow from the deal is minimal. Lee’s invested$2 million in the February equity offering and will provide another $1 million at this point. This will fund about one month of burn so that the Company will have a small amount of cash past the disclosure of topline results in the phase 2 b trial in July. Windtree may also receive up to $37.5 million in pre-commercial and commercial milestones. It was not disclosed what events would trigger a payment or how large that payment might be. Upon commercialization Windtree will receive tiered royalties based on a percent of net sales for each product. These will be on a country by country basis and range from high single to low-to-mid double digit percentages.

During the conference call, management provided estimates on the current size of the animal surfactant market. It believes that current worldwide sales of animal surfactants is $400 million. It believes that Aerosurf can replace some of current use and also expand the number of babies who receive surfactant. It puts the worldwide market potential of Aerosurf at $800 million to $1 billion. This estimate seems very low to me.

Two Important Near term Catalysts are Imminent.

The company has two important milestones upcoming.  Later in June, it will release topline results from the second portion of the phase 2a trial of Aerosurf that deals with younger babies of 26 to 28 weeks gestational age. It will be important to understand how these results compare to already reported results for babies of 29 to 34 weeks gestational age. You can refer to this link for more details.

The second and absolutely critical event is the reporting of topline results from the phase 2b trial. I asked what the company would consider to be very good results and the answer was a 20% to 30% reduction in nCPAP failures. We will all be laser focused on this number. This estimate is based on a survey of 278 neonatologists. There potentially will also be important information on the effect of repeat dosing and other key variables that will help in the design of the phase 3 trial.




Tagged as , , , + Categorized as Company Reports, LinkedIn


  1. Another great article on Windtree Larry. Considering the results have not come out yet. This partnership shows a great vote of confidence on Lee’s part. I can’t wait to see what other partnerships emerge after results comes out.

  2. “2b or not 2b that is the question…” Sorry , I just lost control for a moment there.


You must be logged in, or you must subscribe to post a comment.