Deathwatch update

La Jolla Pharmaceuticals recently announced its plans to liquidate assets. Its lupus drug Riquent failed to show efficacy in Phase III studies in February, and the company failed to find any additional financing.

TorreyPines Therapeutics will be shutting its doors and liquidating its assets, which include ionotropic glutamate receptor antagonist, tezampanel. The FDA had approved a Phase III study for tezampanel in acute migraine but required a QT/QTc study in parallel with the first Phase III pivotal trial. Unfortunately, TorreyPines was unable to secure a partner to help develop tezampanel before running out of money.

DiObex, which had a low-dose glucagon for diabetes entering Phase II, was also forced to shut down and sell its assets after investors decided that the valuation from new investors was too low.

Other life science companies that have struggled to find financing include: Nanogen, Isolagen, Oscient Pharmaceuticals, Luna Innovations, Biopure, and Epix Pharmaceuticals. Check out the WSJ's "Turning Out the Lights" series of posts for other venture-backed company shutdowns.

Deathwatch

Just to see how tough it is for biopharmaceuticals companies trying to obtain financing, I put together a list of firms that have released some negative press in the past few months. The list is by no means comprehensive, considering that private companies are not obligated to report their financing situation.

Genaera Corporation, Isolagen Inc., Torrey Pines Therapeutics, Evotec AG, La Jolla Pharmaceuticals, Trubion Pharmaceuticals, Northstar Neuroscience, Targeted Genetics, Cardiace Science, Telik, Oscient Pharmaceuticals, Advanced Life Sciences, DeCode Genetics, Anesiva, and DiObix.

Update: Sorry for any confusion. I didn't mean to imply that any of the companies listed above would go bankrupt. I was just pointing out that many companies need to conserve cash given the current financing environment.

DiObex Shuts Down and Sells Assets

About a month ago, I wrote a post about potential opportunities to pick up assets from distressed companies. Last week, DiObex announced that it failed to raise additional capital and was effectively shutting down. The company was financed previously by venture firms including Domain Associates, Inventages Venture Capital, Pequot Ventures, and Sofinnova Ventures. The board has now decided to sell the company's assets, mainly diabetes drug (DIO-901) entering Phase II, to recoup invested capital. Although the diabetes market is huge, getting regulatory approval for a diabetes drug can be difficult, time-consuming, and expensive. Recent safety concerns with diabetes drugs, e.g. Avandia, has made the FDA very cautious, and long-term safety is always an issue since most diabetes drugs are taken chronically. This might be an opportunity for a large pharmaceutical company, e.g. Lilly or Novo Nordisk, to pick up an asset on the cheap. Unfortunately, I don't believe this will be the last we hear about companies having to sell their assets this year.