Destiny goes private after failing to find partner for anti-infection drug

Destiny Pharma has encountered difficulties in its quest to find a partner to advance its nasal infection prevention drug, XF-73, into phase 3 clinical trials. This challenge has forced the British biotech company to consider going private in an effort to avoid liquidation.

Destiny Pharma was one of the few biotech companies to list on the AIM exchange in London in recent years, raising £15.3 million ($19.8 million at the time) through its initial public offering in 2017. The Brighton-based company's goal was to use the raised funds to support a phase 2b trial of XF-73, a nasal medication aimed at preventing staphylococcal infections following surgery.

The phase 2b trial, which concluded in 2021, demonstrated that XF-73 Nasal—a synthetic dicationic porphyrin drug known as exeporfinium chloride—achieved a more than 99% reduction in nasal bacterial load compared to a placebo, successfully meeting the primary endpoint of the study.

Despite these promising results, Destiny Pharma has been unable to secure a partner to advance XF-73 to phase 3 development. Financial constraints have led the company to believe that its best chance of obtaining the necessary equity infusion is to revert to being a private entity. Nigel Rudd, chair of Destiny's board of directors, expressed this sentiment in a release on July 15, stating that the only viable option for creating future shareholder value is to seek capital as a private company. Rudd further warned that without taking this route, liquidation is the most probable alternative.

Entering 2024 with £6.4 million ($8.3 million) in cash and equivalents, Destiny Pharma had previously informed investors in April that despite engaging with multiple potential partners and receiving favorable feedback on XF-73 Nasal, the company had not succeeded in securing a licensing partner. One significant hurdle for potential partners was the anticipated cost of the phase 3 trial, coupled with a general perception that antibiotics possess limited commercial potential. In response, Destiny pledged to revise the trial design to reduce clinical costs by half, thereby enhancing the appeal of XF-73.

Despite the diligent efforts of CEO Chris Tovey, who joined Destiny from Jazz Pharmaceuticals in September 2023, to actively pursue a licensing deal, no partnership has materialized. Tovey expressed his disappointment in a recent release, noting that although discussions with potential partners continue, the lack of a definitive deal and the company's diminishing cash reserves necessitate a strategic shift to ensure the continued progress of XF-73.

Like many biotechnology firms, Destiny Pharma has faced challenges in the public markets in recent years. The company's stock, which was trading well above one pound in 2021, has since declined. Even with a brief rally towards the end of 2023, the stock now hovers at just two pence per share. Destiny will present its proposal to delist from the AIM exchange to shareholders at a forthcoming meeting later in July.