Flailing Transcept will liquidate if it can't find a buyer by Q2

It's looking like the end of the line for Transcept Pharmaceuticals ($TSPT): The troubled biotech, long in search of a buyout offer, will be forced to liquidate if it doesn't find a benefactor before the second quarter of next year, the company said.

A month removed from slashing 43% of its staff, Transcept now plans to part ways with its COO and another long-serving board member by year's end, boosting its annual savings to $1.2 million as the company strives to slim down and gussy itself up for a would-be buyer. If that doesn't work out by April, however, Transcept plans to cut the cord and start liquidating.

All this comes just three months after Transcept emphatically turned down a $4-a-share buyout offer from hedge fund vet Martin Shkreli's Retrophin, adopting a poison pill plan that would dilute the holdings of any shareholder who crossed the 5% threshold. The deal would be just a 14% premium over Transcept's current $66.3 million market value, but some shareholders might prefer it over liquidation. That said, it's unclear whether Retrophin's offer is still on the table, and neither biotech responded to a request for comment Thursday morning.

In the meantime, Transcept intends to keep hammering away on the acute migraine treatment TO-2070, planning to carry the drug through preclinical safety studies with hopes of developing an asset that will woo a buyer. Transcept also has the FDA-approved Intermezzo in its back pocket, but the insomnia drug never managed to scratch out a place of its own in the crowded sleep market, and commercial partner Purdue has largely backed away from the pill.

The optimist case for Transcept is a bet that the company can reclaim exclusive rights to Intermezzo and whip up some positive results for TO-2070, a drug it licensed from Japan's Shin Nippon Biomedical Laboratories for $1 million up front. Lead shareholder Roumell Asset Management said in a letter to the company's board that Transcept could be worth as much as $7 a share if it plays its cards right.

That seems a little far-fetched at this point, but it's not impossible, and Transcept has about four months to get its act together.

- read the statement