Bioblast's hope of a cash booster turns out to be a damp squib

Company has said it needs new funding to complete the next stage of clinical testing for its only drug candidate

Israel's Bioblast Pharma has abandoned plans for a securities offering, blaming what it called "adverse market conditions" for the decision.

The move comes as the biotech is struggling to meet the criteria for continued listing on the Nasdaq—namely that it maintains at least $10 million in stockholders' equity—and as the clock ticks towards an April 20 deadline to set that straight.

The Tel Aviv-based developer of orphan disease treatments has struggled with investor sentiment since its initial public offering in 2014, which raised $35 million and valued the company at around $156 million. Since then, its share price has declined steadily from a peak of well above $8 to its current level of around 60 cents, losing three fourths of its value in the last 12 months.

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News of the financing disappointment comes as Bioblast is trying to muster enthusiasm for its only product asset—a high-dose intravenous formulation of the disaccharide trehalose—which is in development for two serious but rare degenerative conditions: oculopharyngeal muscular dystrophy (OPMD) and spinocerebellar ataxia type 3 (SCA3).

Two phase 2a trials of trehalose have revealed some activity for the drug in the two conditions but failed to provide convincing evidence of efficacy, with the drug stabilizing symptoms rather than showing an improvement.  Shares more than doubled shortly after the company reported its OPMD trial last year, but the overall downward trajectory of the stock suggests the company and its prize asset isn't generating much enthusiasm with investors.

Bioblast said in February that its plans for 2017 center on starting a phase 2b trial of trehalose in OPMD, as well as start testing the drug in other potential indications, but there was no mention of taking it forward for SCA3. Now, it is pledging to provide a business update "in the near future" to go through its plans in more detail, including financing plans.

The biotech incurred a net loss of $16 million in 2016, according to its latest annual report filed with the Securities & Exchange Commission (SEC), ending the year with a little under $10 million in cash. At the time it said it had operating funds to last "at least until the end of the second fiscal quarter of 2017," but that it would need another cash injection to fund its planned phase 2b trial through to completion.

Meantime, there has also been some notable movement recently on Bioblast's board of directors. One of the company's founders—biomed investor Udi Gilboa who served as the company's chief financial officer—resigned in January along with independent financial consultant Gili Cohen.