The vultures are circling Aravive. Still reeling from a phase 3 flop, the cash-strapped biotech has “several weeks” to find a partner or funding—and is laying off 70% of its staff to preserve the little money it has left.
Aravive was in a precarious position going into the recent readout from its phase 3 ovarian cancer trial. Down to $35.9 million at the end of March, the biotech previously warned investors that it would need to raise money to keep going. The phase 3 failure complicated that task and led Aravive to issue an even stronger warning to investors about the prospects of the company going to the wall.
“[Aravive] is currently exploring various strategic alternatives, including strategic partners and financing opportunities. If the company does not raise capital or successfully engage a strategic partner in the next several weeks, it will be forced to cease operations, liquidate assets and possibly seek bankruptcy protection or engage in a similar process,” the biotech wrote in its second-quarter financial filing.
Aravive needs people with deep pockets to decide the failed phase 3 drug candidate, the decoy protein batiraxcept, warrants more investment. The biotech has estimated it will need up to $100 million to run a phase 3 trial of the candidate in clear cell renal cell carcinoma, a type of kidney cancer, plus up to an additional $50 million for a midphase trial in renal cancer.
The filing also warns that Aravive may lose the right to develop batiraxcept, its only candidate. The biotech picked the asset up from Stanford University in a deal that gives its partner the power to end the license if it is not “diligently developing and commercializing batiraxcept.” Having ended all trials, and lacking the cash for more studies, Aravive warned investors of the risk of Stanford terminating the deal.
Aravive has cut its workforce to the bone to buy time to land a deal. Late last week, the board agreed to reduce its head count by around 70%. Aravive ended last year with 23 full-time employees, suggesting that only a handful of staffers will remain after the cuts. Scott Dove, Ph.D., Aravive’s chief operating officer, is among the employees leaving the company.