Antibiotic developer Motif Bio (MTFB:AIM) is feeling decidedly sickly. Its shares slump 14.3% to 45p on a warning it will need more funding or an amendment to the timing of costs for a drug trial to continue trading.
Motif Bio is a biopharmaceutical company researching and developing antibiotics designed to treat serious and life-threatening infections in hospitalised patients caused by multi-drug resistant bacteria.
Main product candidate, iclaprim, is being developed to treat acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP), bacterias that have built up resistance to most antibiotics, making them potential killers.
RUNNING OUT OF MONEY
The catalyst for today’s sell-off is a worrying cash crunch flagged by Motif Bio, currently working on listing American Depositary Shares (ADSs) and warrants (ADS warrants) on NASDAQ and raising money through a European shares and warrants placement.
The £57m cap is enrolling and dosing patients in two global Phase 3 clinical trials (Revive 1 and Revive 2) with an intravenous formulation of iclaprim, for the treatment of ABSSSI.
Today, it warns that higher-than-expected enrolment in the REVIVE trial has put a serious strain on its cash resources, so much so that ‘the group’s liabilities are expected to exceed cash resources by approximately US$4m’ as of today’s date.
URGENT NEED FOR CASH
Motif Bio warns it will ‘require near term additional funding or agreement on the rescheduling of trial costs with its contract research organisation in order to continue operations.’
The board is confident the company will be able to secure sufficient additional financing ‘through public markets, private financing and partnering opportunities’.
Invesco Asset Management is apparently willing to purchase US$8.6m of ADS and ADS warrants as part of the fundraising.
Motif Bio also seeks to calm nerves by arguing that even without additional funding, it would be able to reschedule its liabilities.
‘However there can be no certainty that additional capital will be available to the group on a timely basis, on favorable terms, or if at all or that the company’s liabilities could be rescheduled,’ cautions Motif Bio, news that leaves investors nursing heavy losses.
GROWTH OPPORTUNITY
While the cash crisis is alarming, Motif Bio does have a healthy growth opportunity ahead of it. Several major world bodies have repeatedly indicated that antibiotic resistance now poses a threat to modern medicine.
For instance, Jim O’Neill, chairman of the UK’s Review on Antimicrobial Resistance (RAMR), estimates that if the problem of antibiotic resistance is not urgently addressed, the world could face ten million lives lost every year and up to $100trn in lost productivity by 2050.