(Alliance News) - Motif Bio PLC on Monday proposed an amendment to a loan agreement with Hercules Capital Inc and a corporate restructuring which will see it become a cash shell.
Subject to shareholder approval, Hercules will be granted "perfected security interest in all of the intellectual property of Motif BioSciences Inc", Motif's US subsidiary and owner of its assets related to listeria-fighting drug iclaprim.
The lender will also "relinquish the loan guarantee from Motif Bio and relieve it of any future obligations to Hercules".
Motif added that it plans a capital raise and explained that "Hercules will receive a warrant for an additional 20% of Motif Bio's post capital raise outstanding ordinary shares at an exercise price of 5 pence (subject to adjustment)".
Shares in Motif Bio closed 29% lower at 0.60 pence each in London on Tuesday.
If the proposed restructuring is completed, Motif Bio will be a cash shell, leaving it with six months to find a suitable reverse acquisition target or face cancellation from trading on London's AIM.
Turning to its interim results, the company reported a narrowed first half loss on revaluation gains and a sharp fall in expenses.
In the six months to June 30, Motif Bio posted a pretax loss of USD6.2 million, compared with USD7.8 million in the first half of 2018.
The company reported USD5.6 million in revaluation gains, up 29% year-on-year from USD4.4 million.
Total expenses, which includes research & development and administrative costs, more than halved to USD4.8 million from USD11.0 million.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2019 Alliance News Limited. All Rights Reserved.