Shares of OvaScience Inc (NASDAQ:OVAS) tumbled Thursday midday after the beleaguered biotech focused on fertility treatment options for women entered into an all-stock reverse merger agreement with privately-held Michigan-based Millendo Therapeutics Inc.
After shareholder approval, the combined entity will operate as Millendo Therapeutics and trade on the tech-laden Nasdaq under the ticker symbol MLND. Millendo’s current shareholders will own 80% of the new business, while Ovascience shareholders will own the rest.
Unhappy investors sent OvaScience shares reeling 13.3% to US$0.78. Legal eagles like Levi & Korsinsky tapped into investor discontent saying they would probe whether OvaScience’s sale to Millendo was fair to shareholders.
The combined company will be led by Millendo Therapeutics CEO Julia Owens and will be headquartered at Ann Arbor.
An investor syndicate has committed to ploughing US$30mln into the combine. The funding will advance Millendo’s drugs to treat rare endocrine diseases. The biotech's lead assets include livoletide (AZP-531), which targets Prader-Willi syndrome, a condition that can cause an insatiable desire to eat and cause life-threatening obesity.
The second candidate, nevanimibe (ATR-101) is in Phase 2 trials for two conditions related to the overproduction of steroids by the adrenal cortex. The combined company will have at least US$70mln in its kitty.
“Following an extensive and thorough review of strategic alternatives, we believe that this merger with Millendo is the best path forward and has the potential to deliver significant and immediate value to OvaScience shareholders,” said OvaScience CEO Christopher Kroeger.
A company statement did not clarify what would become of OvaScience’s fertility assets, including its early-stage OvaPrime treatment to restore a woman's egg production and help with poor ovarian response. It also offered OvaTure and OvaXon for the prevention of inherited diseases.
“The merger agreement is an attempt to save a company that once was worth more than US$1bn. The wheels began coming off the company two years ago,” commented industry magazine BioSpace.
The trade magazine said that in December 2016, the company’s former CEO resigned and about 30% of employees were retrenched as the biotech struggled to sell its fertility treatment products. Last year, the job cuts deepened with OvaScience shedding 50% of its remaining employees.
Contact Uttara Choudhury at [email protected]