PhaseBio plans to file Chapter 11 bankruptcy and sell off its bentracimab assets under a stalking horse arrangement with an unnamed “large pharmaceutical company.”
PhaseBio plans to file Chapter 11 bankruptcy and sell off its bentracimab assets under a “stalking horse: arrangement with an unnamed large pharmaceutical company, the company announced Monday.
Bentracimab is being developed to reverse the anti-clotting effects of ticagrelor, more commonly known as AstraZeneca’s Brilinta.
Under a stalking horse arrangement, a buyer acts as the stalking horse bidder and agrees to set a minimum floor bid for the assets. Potential buyers can bid on the assets but must exceed the minimum bid. If no one does, the stalking horse bidder acquires the assets.
In this case, the unidentified company has agreed to pay PhaseBio $40 million in cash and another $60 million for hitting certain regulatory milestones related to bentracimab.
“The Board and management team have thoroughly assessed all of our strategic options and believe that this structured process represents the best possible solution for PhaseBio, taking into account our financial needs and the challenges we have encountered while trying to negotiate a path forward with SFJ Pharmaceuticals,” stated Jonathan Mow, CEO of PhaseBio in a press release.
BioSpace reached out to PhaseBio for further comment and was referred to the press release.
PhaseBio and SFJ - a Tumultuous History
In January 2020, PhaseBio announced a financing and co-development collaboration with SFJ in support of bentracimab.
Under the terms of the deal, SFJ agreed to fund up to $120 million in support of the drug’s development and take on a central role in clinical development and regulatory activities outside the United States. SFJ would fund up to $90 million in development expenses through the end of 2021 and up to another $30 million based on various clinical milestones.
In a September filing, PhaseBio reported SFJ had informed the company it would need to return the rights to bentracimab.
“SFJ has elected to cause the Company’s business related to bentracimab to be transferred to SFJ as a result of the Company’s failure to remedy its Going Concern Condition within the Going Concern Cure Period,” PhaseBio wrote in the SEC filing.
SFJ expected PhaseBio to transfer the rights to the drug within 10 days.
The two companies have been negotiating since early 2022 over the potential transfer of bentracimab program assets to SFJ. However, they were unable to reach a deal. SFJ then withdrew from the negotiations and informed PhaseBio about the transfer the day after the Going Concern Period expired.
SFJ is a private equity-backed firm specializing in co-development deals. It would, theoretically, have the capabilities necessary to move bentracimab through the FDA approval process, but this would depend upon the FDA’s willingness to go along with PhaseBio’s plans to include Phase III data from only 25 to 30 patients with uncontrolled bleeds in the submission.
Analysts note this was likely going to be a lengthy legal battle between PhaseBio and SFJ. With less than $8 million in operating funds, PhaseBio appeared to lack the resources to continue operations, let alone pay for a protracted legal battle.
In a statement e-mailed to BioSpace, Paula Chirhart, managing director, public affairs at The Blackstone Group, an investor in SFJ, provided a statement on the company’s behalf.
“PhaseBio management and its board of directors, with assistance of sophisticated legal counsel, knowingly entered into a legally binding contractual agreement that PhaseBio has now breached,” the statement reads. “The contractual agreement clearly lays out SFJ’s rights to the program in the event of a breach, which SFJ will seek to enforce to the fullest extent under the agreement and the law.”
In May, PhaseBio reported a successful pre-Biologics License Application (BLA) meeting with the FDA over a potential regulatory submission for bentracimab. At that time, it indicated plans to submit a BLA in the fourth quarter of this year.
