Humanigen is running out of options. Talks over a reverse merger have collapsed and, with efforts to find another deal or raise funding failing, the biotech is considering filing for bankruptcy in the third quarter.
The New Jersey-based biotech has been on the ropes since its anti-human GM-CSF monoclonal antibody failed to improve outcomes in hospitalized COVID-19 patients last year. Humanigen was already reeling from the FDA’s rejection of its request for emergency use authorization and the stock has stayed firmly rooted in penny stock territory ever since the late-phase flop.
By the end of March, Humanigen was down to its last $3.1 million but a non-binding letter of intent with a private biopharma company presented an exit strategy. Humanigen was in exclusive negotiations over a stock-for-stock deal and seeking external financing in connection with the reverse merger.
That exit strategy now lies in tatters. Talks with the biopharma company have ended “without execution of a definitive agreement.” Humanigen has looked for another strategic or equity financing transaction without success, leaving it without a way out of its predicament.
Holding dwindling cash and lacking avenues for securing more, Humanigen is “exploring all restructuring options, which may include commencing a bankruptcy or other insolvency proceeding sometime in the third quarter of 2023.” The biotech is “evaluating term sheets” relating to the potential sales of assets in a bankruptcy proceeding that could “result in a complete or substantial loss of value” for shareholders.
Humanigen shared the update alongside news that three of its board members resigned with immediate effect last week. The resignations, which Humanigen said “were not the result of disagreements,” render the biotech noncompliant with Nasdaq listing requirements. Humanigen is also noncompliant with other requirements and, after seeing merger talks collapse, told Nasdaq it doesn’t expect to regain compliance.
Nasdaq plans to delist the stock from its Capital Market and suspend trading from Wednesday. Trading will switch to the OTC Pink Market, with Humanigen telling investors the delisting will harm its ability to raise money. Investors responded by sending shares in Humanigen down 72% to just five cents in pre-market trading.