Motif Bio seeks last-gasp financing as cash crunch hits

Motif Bio (LON:MTFB) has warned that it lacks the money to continue operations. The antibiotic player is resuming its once-thwarted attempt to list on Nasdaq and considering rescheduling what it owes its CRO Covance in an attempt to keep going until it posts Phase III data next year.

London-based Motif Bio had expected to bankroll the final months of the trial using $35 million from a Nasdaq IPO. That plan took a blow in August when it hit pause on its IPO in the face of a frosty reception on Wall Street.

Motif Bio has now revealed the fallout from the IPO setback. As of October 31, its liabilities exceed its cash by $4 million. The upshot is Motif Bio either needs to secure additional financing or persuade Covance to hold off on seeking payment for work done on the Phase III trial. If neither of these things happen, Motif Bio will lack the means to keep going.

Publicly, Motif Bio is presenting this scenario as unlikely. The directors claim to be confident that money will arrive, either through public markets, private investment or a partnership. Motif Bio has worked on these opportunities throughout most of 2016. The biotech began the year by appointing an investment bank to drum up interest in a Nasdaq IPO, only to hedge its bets two months later by bringing an M&A specialist on board to look for buyers of the ex-U.S. rights to iclaprim.

With neither the IPO nor partnership strategies paying off yet, Motif Bio has tweaked its plans. H.C. Wainwright has signed up to act as underwriter and bookrunning manager on the Nasdaq IPO. And Motif Bio has initiated plans to offload shares in Europe. If none of the pitches for money pay off, the directors of Motif Bio “believe” it will be possible to reschedule the CRO payments.

Nothing is certain at this stage, though.

“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,” Motif Bio said in a statement.

As that statement hints at, Motif Bio is entering talks with potential investors and partners with a weak hand. Everyone now knows the company’s cash concerns and can potentially exploit them to land more favorable deal terms.

Motif Bio expects to have data from the Phase III trial in the second quarter of next year. The late twist is in keeping with the stuttering development history of iclaprim. Now-defunct biotech Arpida filed for FDA approval of iclaprim in 2008, but was slapped down by an advisory committee. The work undertaken by Motif Bio is intended to allay FDA concerns about the original dataset. 

Shares of Motif Bio fell 15% following news of the cash crunch.