Midatech Pharma is running out of money and says it needs an investor to come on board quickly if it is to rescue its lead drug for carcinoid cancer and acromegaly.
In a trading update, the U.K. biotech says it has “very limited cash to enable it to continue as a going concern” and needs to conclude talks urgently with an Asian investor looking at licensing its products if it is to stay afloat. Shares in the company were down almost 50% in the wake of the announcement.
There was some positive news for the company on that front, as the FDA has provided feedback on a regulatory path for Midatech’s lead product, MTD201—a polymer microsphere formulation of the somatostatin analog octreotide—which cleared a first-in-human phase 1 trial last year.
The FDA has indicated that a single-dose pharmacodynamic study in healthy volunteers wouldn’t be sufficient to support a filing for the drug, which means Midatech will have to carry out either a multidose study in healthy volunteers or a study in patients with acromegaly or neuroendocrine tumors. It thinks that it could be able to complete those studies in time for a planned filing in 2021.
Octreotide has been used for years to treat carcinoid tumors and acromegaly, but Midatech is trying to position MTD201 as a “better interchangeable alternative” to the Sandostatin LAR formulation of the drug sold by Novartis, which was on course to bring in around $1.5 billion in sales last year despite being on the market since the late 1990s.
The U.K. company says its “Q-Sphera” formulation offers a “smaller needle size, simpler and more reliable reconstitution and injection, reduced wastage and significantly lower manufacturing costs” and would address a market worth around $2 billion if approved.
Last December, Midatech said that it was in advanced discussions with the unnamed investor—described as a subsidiary of a large Asia-based pharmaceutical company—for a deal valued at around £8 million ($10.5 million). Earlier in the year, it sold a U.S. unit for $13 million, which after paying down debt swelled its coffers by around $4 million.
At the time, the company said that if the FDA asked for a multidose study in healthy volunteers, it would delay MTD201’s filing by around six months, while a study in patients would mean it would need to seek additional funding.
Midatech switched its attention to MTD201 after its earlier attempts to develop an oral insulin product with partner MonsolRx, based on a different delivery technology, ended in failure. The fallout from that made the company one of Jefferies’ 10 worst performing European biotechs by 2017 stock performance.
“We are pleased to receive clarity from the regulator on the development path for our lead product MTD201 and we are excited by the prospects of the MTD201 program, as well as the Q-Sphera platform,” said CEO Craig Cook, M.D., in the SEC filing. “With the feedback from the FDA now in hand, we are in a position to finalize the advancement plan for the program as we look to capture a share of the multibillion-dollar sustained-release treatment opportunities.”