With its lead antibiotic under a cloud, Cempra asks Morgan Stanley for help with a strategic review
With its stock price beaten down by successive setbacks for its lead antibiotic, Cempra has brought in Morgan Stanley to help advise its execs as they review strategic options for a company with more cash than confidence in its future.
At the end of last year, Chapel Hill, NC-based Cempra had $231 million in cash, which is significantly more than its current market cap. Two days before the end of the year the biotech was also handed a rejection for its lead antibiotic solithromycin after regulators concluded — to no one’s surprise — that the company would need to run a safety study before they could reconsider offering marketing approval to an antibiotic tied to clear signs of liver toxicity.
Their stock tanked after investors concluded that the tainted product would have a long way to go before it ever earns cash. That sentiment remained largely unchanged even after a promising Phase III matchup of its oral antibiotic fusidic acid against an old standby. And the biotech slashed its staff after recording a Phase III failure for the lead program and a move to retreat in the clinic.
Cempra has a market cap of $188 million.
From the statement:
The company has not set a timetable for this process. No decision has been made as to whether the company will engage in a transaction or transactions and there can be no assurance that the review of strategic business options will result in any transaction, or the terms or timing of any potential transaction.
Just don’t expect any word from the company until something concrete comes out of the review.