LONDON (Alliance News) - Shares in Motif Bio PLC plunged on Monday as its subsidiary, Motif Biosciences Inc signed an amendment agreement with lender Hercules Capital Inc over a loan agreement in November 2017.
The new agreement requires Motif Biosciences to repay some of the loan and means Motif Bio will need to raise equity.
Shares in the antibiotics-focused biopharmaceutical company dropped 27% to 7.43 pence on Monday.
Under the amendment, Motif Biosciences will immediately repay USD7 million, and make a further repayment of USD500,000 within 90 days.
Motif Bio said it had agreed to the amendment to avoid any action by Hercules based on any position the lender may take that the company is in default.
Following the repayment, Motif Bio itself will have USD3 million in cash and USD7.7 million of debt drawn from the Hercules loan facility.
The company said it will now need to manage its funds "aggressively" and raise capital in the near term.
In November 2017, Motif Bio secured a USD20 million debt facility from Hercules to fund pre-commercialisation activities for the US launch of iclaprim in 2019.
In addition, Motif Bio is looking to set up a meeting with the US Food & Drug Administration after it rejected the company's new drug application for iclaprim on Thursday last week.
Iclaprim is a proposed treatment for acute bacterial skin and skin structure infections.
Motif Bio noted that the FDA normally grants a meeting within 30 to 45 days. However, there is no guarantee of the date of a meeting, nor that Motif Bio will have sufficient funds to allow it to reach this date.
"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," it said.