Cash-starved NephroGenex is pausing studies on its diabetic nephropathy treatment as the company repositions itself as a possible target for companies that want a public stock listing and a drug in late-stage clinical trials.
Raleigh, NC-based NephroGenex (NASDAQ: NRX) said Wednesday that its board of directors has decided to pursue a corporate restructuring that could end up in a reverse merger—an acquisition by a privately held company that uses the deal as a way to take itself public without going through the conventional initial public offering process. NephroGenex said that its board decided on this new course “in light of the remaining trial costs, the company’s cash balance, and the condition of the capital markets.”
NephroGenex’s announcement comes a day before the company’s scheduled conference call to discuss fourth quarter and full year financial results. That call has been canceled. NephroGenex has hired healthcare merchant bank MTS Health Partners to help the company evaluate its options, including a possible reverse merger.
NephroGenex had taken its diabetic nephropathy drug, a pill it calls Pyridorin, into Phase 3 trials in 2014 studying the compound as a potential treatment for diabetic nephropathy, a complication of diabetes. The condition can damage the kidneys and lead to end-stage renal failure. NephroGenex says its drug works by blocking the formation of chemical compounds that contribute to kidney damage. In addition to the pill form of the drug, NephroGenex has received the FDA’s OK to start human testing of an intravenous form of the drug that the company intended to study as a treatment for acute kidney injury.
There are no FDA-approved treatments for diabetic nephropathy, though a number of companies are pursuing treatments for the condition. Research Triangle Park, NC-based Vascular Pharmaceuticals, for example, is in mid-stage clinical trials with its own diabetic nephropathy drug.
Despite advancing into late-stage trials, NephroGenex has had difficulty raising the cash to fund them. Last year, NephroGenex drew up plans to raise up to $30 million, only to pare back that target to just $7.5 million as the company tried to find the right price to entice investors. In January, the company went on a “road show,” touting to investors the potential of its drug candidates. But the company’s pitch apparently did not spark enough investor interest.
NephroGenex said that as of Feb. 23, it had paid off its approximately $6.3 million term loan, leaving the company with approximately $11.5 million in cash, cash equivalents, and short-term investments.
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