Israel's troubled Bioblast seeks partners, merger

Several months after abandoning plans for a securities offering, Israel’s Bioblast Pharma has asked JSB-Partners to help it seek out a partner or a merger to help lift it out of its troubles.

In April, it blamed “adverse market conditions” for the decision to cull its offering plans, but came as the biotech has been struggling to meet the criteria for continued listing on the Nasdaq—namely that it maintains at least $10 million in stockholders' equity.

As of yesterday, its market cap was a minuscule $7 million, trading at just 46 cents a share.

The Tel Aviv-based developer of orphan disease treatments has struggled with investor sentiment ever since its IPO 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 above $8.

Bioblast has in recent months been 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 it needs help to do this, and this week, the biotech said it has asked the life science advisory firm JSB-Partners to “assist the company in executing its business development objectives that include selecting potential development and commercial partners for its investigational proprietary IV form of trehalose 90 mg/mL solution (trehalose).”

This could include finding a new partner, or even a merger with another company, it says.

It adds that a phase 2b trial in OPMD patients “is ready to initiate,” and said it has “received confirmation” from Health Canada that “enables the commencement” of a phase 2b double-blind, placebo-controlled clinical trial of trehalose in patients with OPMD.

“Such a trial is designed to enroll up to 48 patients at three sites in Canada,” it said in an update. “The study protocol provides for patients to be randomized in a 1:1 ratio to receive either trehalose or placebo for a period of 24 weeks, following a four-week screening period and then for all patients to continue to receive trehalose for an additional 24-week period in an open label extension period.”

The biotech incurred a net loss of $16 million in 2016, according to its its annual report filed with the 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; hence the need for a life sci adviser.

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.