Motif Bio Plc (LON:MTFB, NASDAQ:MTFB) said it will manage its cash aggressively after announcing plans to immediately repay a US$7mln tranche of a loan it has taken out.
It also signalled it will have to quickly raise funds after being left with US$3mln in cash following the payment to Hercules Capital. It still owes US$7.7mln to Hercules.
Motif will have to make a further US$500,000 repayment in 90 days, or by May 18, depending on whether it is able to raise at least US$2mln.
In a statement released Monday, the company said there will be a three-month interest-only period on the remaining loan, and that Hercules has waived any prepayment charges.
As a result, future interest and amortisation payments will be substantially lower than before, it added.
“Though the company remains in compliance with the terms of its loan agreement, it has agreed to this amendment in order to avoid unilateral action by Hercules based upon any position that Hercules may take that the company is in default,” Motif added.
The loan repayment follows the decision by the US Food & Drug Administration not to grant regulatory clearance to the company’s next-generation antibiotic, iclaprim.
Motif is seeking talks with the FDA, which has said additional data would be required “to further evaluate the risk for liver toxicity” before granting approval.
It is currently consulting with internal and external experts to prepare the information required by the drug regulator.
Once requested, it normally takes between a month and six weeks before a meeting with FDA officials takes place.
“However, there can be no guarantee as to the date of a meeting with the FDA and no certainty that the funds available to the company, without an additional capital raise, will enable it to reach this date,” Motif warned.
“The company is currently assessing the options available to it to raise sufficient capital to provide cash runway to enable it to meet the FDA and discuss options to advance iclaprim towards approval.”