This is why I am still holding25 Feb 2019 06:50
Motif Bio (MTFB): a suitable case for treatment. Motif Bio’s management, led by Graham Lumsden, claimed that the drug iclaprim had shown great promise in killing specific infections, while minimising the growth of drug-resistant bacteria. Last month, broker Peel Hunt sent a note to investors praising Motif Bio’s “de-risked product” and “undervalued pipeline story” (groan). That statement now seems somewhat premature. On February 14, the company announced it had received a “complete response letter” from America’s Food and Drug Administration (FDA) in relation to its drug, which had passed two phase 3 trials. In effect, the FDA needs more information to allay its concerns over the risk of liver damage. It could demand further testing, which could take months. Shares crashed 88%, leaving investors including Invesco — which dumped 10% of its holdings — and HSBC nursing heavy losses. They closed on Friday at 7p, giving the Motif Bio a valuation of only £20.8m. The company remains optimistic, saying it will discuss paths towards approval with the FDA. However, investors should take note: it is not the first time iclaprim has been at the sharp end of the FDA. A decade ago it was in the hands of Arpida, a spin-off from Swiss pharma giant Roche. Arpida was forced to lay off most of its workforce after the FDA’s advisory panel denied iclaprim approval. A few years later, it was back — this time in the hands of Motif Bio, which raised $10m (£7.7m) from investors last May in expectation of approval. However, the FDA’s concerns over liver damage are a red flag — drugs have been pulled from the market for less.
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