Circling the drain, Macrocure looks to buy its way out of trouble

Circling the drain


Macrocure ($MCUR) has outlined plans to use its cash reserves to buy into a business or technology that can supersede its own stalled clinical development program. The regenerative medicine player is considering the action after a pair of Phase III failures left it with more than $25 million (€22 million) in cash and no internal pipeline prospects.

Petah Tikva, Israel-based Macrocure is looking to acquire, merge with or invest in another company or technology, the firm revealed in a 20-F filing with the SEC. Macrocure, still relatively flush from its Nasdaq IPO, had $26.6 million in cash as of the start of March, a sum that is too small to bankroll an attempt to revive its failed lead candidate, CureXcell. And, while Macrocure still thinks the underlying technology has value, it accepts the chances of investors or lenders coughing up the cash it needs to test this idea are slim.

In response to the situation, Macrocure is looking to plough what is left of its IPO haul into another company or technology, an approach it acknowledges is fraught with difficulties.

“A large number of established and well-financed entities ... are active in mergers and acquisitions of companies that may be desirable target candidates for us,” Macrocure wrote in its 20-F. “We have significantly less financial resources, technical expertise and managerial capabilities than many of these entities.” The gap in skills and resources could hamstring Macrocure’s attempts to buy its way out of trouble.

The need to find a new program in which to invest was given added impetus last week when Nasdaq gave Macrocure until October 4 to bring its stock price back up above $1 for 10 consecutive days. In the days following the Nasdaq notice, Macrocure has rallied somewhat but at the time of writing it last closed above $1 a share in March. The company last strung together 10 such $1-a-share closes in January.

At its current share price, Macrocure has a market capitalization of less than $17 million, well below the amount it possessed in cash and short-term investments as of the start of March.

- read the 20-F