Only two months after a ruthless restructuring saw the company cut staff by 70% and focus much of its remaining resources on preterm labor treatment ebopiprant, ObsEva is now selling off that potential therapy as well.
The upfront payment of $15 million from Xoma that ObsEva will receive for the rights to ebopiprant should be enough to halt debt proceedings in court and perhaps prevent the Swiss biotech from dropping off the Nasdaq, the company explained in a release Nov. 22.
The rights sale to Xoma will include licensing agreements that ObsEva has already made for the drug with Organon and Merck KGaA, but ObsEva could still receive up to $98 million in biobucks if ebopiprant is a regulatory and commercial success.
“With the receipt of the upfront payment, we expect to have more than a year of cash runway and an enhanced strategic position, and we intend to turn the company’s resources towards nolasiban, a novel, oral oxytocin receptor antagonist being developed to improve clinical pregnancy and live birth rates in women undergoing in vitro fertilization, while also evaluating strategic options to maximize shareholder value,” CEO Brian O’Callaghan said in the release.
The sale is the latest attempt by ObsEva to keep the ship afloat after it was knocked off course in July when the FDA said its highly touted uterine fibroid candidate linzagolix wasn’t fit for an on-time approval. In response, the company announced a 70% reduction in workforce in September, with the remaining staff focused on ebopiprant and nolasiban.
The news of the restructuring sent ObsEva’s shares tumbling, leading Nasdaq to notify the company that a continued share price below $1 meant it would be delisted from the stock exchange. While the biotech’s shares did rise 80% in premarket trading this morning, this only brought them up to 29 cents apiece.
Still, ObsEva said in the release that it expects proceeds from the sale to improve the company’s chances of regaining compliance with Nasdaq’s requirement as well as allow it to inform the Swiss court that the company is no longer in serious debt.