Strongbridge returns recently acquired asset to eke more months out of cash reserves

Strongbridge Biopharma ($SBBP) has returned the rights to Phase II acromegaly drug COR-004 just 10 months after acquiring the product. The transatlantic biotech offloaded the rare disease program as part of a pipeline prioritization intended to stretch its cash reserves beyond the end of the Phase III trial of its lead candidate, COR-003.

Strongbridge CEO Matthew Pauls

COR-004 was added to Strongbridge's pipeline in May, at which time the biotech presented the deal as part of the process of building a rare endocrine disease franchise. Since then, Strongbridge's plans have been affected by the end of the biotech IPO boom, forcing the company to rethink its spending activities. Having discussed the prospects of COR-004 with regulators, Strongbridge has decided it is the drug that will miss out. Consequently, Strongbridge has returned the rights to Antisense Therapeutics, the Australian biotech from which it bought the drug for $5 million (€4.5 million) upfront last year.

Following the pipeline rejig, Strongbridge, an Irish-American rare disease company formerly known as Cortendo, thinks it has enough money in the bank to see it through to the fourth quarter of 2017. Crucially, the cash is forecast to last until after the completion of a Phase III trial of its drug to treat endogenous Cushing's syndrome, something that was less certain prior to the adjustments. In November, Strongbridge was only committing to the vague timeframe of "into 2017" when talking about the length of its funding runway.

The need to eke extra months out of the cash reserves is a result of the difficulties Strongbridge faced when trying to raise money last year. Having pulled in private investment at the start of 2015, Strongbridge set its sights on adding a further $86 million in a Nasdaq IPO. However, by the time the company made it out of the gate in October, the market had soured, a downturn that contributed to Strongbridge raising just $25 million, $20 million of which came from existing investors. In response, Strongbridge slashed its funding plans for COR-003, a move it has now reversed.

Under the slimmed down post-IPO funding plan, Strongbridge intended to commit $5 million to the "continuation" of the Phase III trial of COR-003. But, with no other candidate offering as short a path to Phase III data, COR-003 is now once again a priority. Strongbridge had planned to spend $5 million on taking COR-004 to the cusp of a Phase II or III trial, depending on what regulators requested. Now, having received feedback from regulators, the money earmarked for COR-004 will be spent elsewhere.  

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