Telesta Therapeutics Inc. (PNK: BNHLF) was a biotechnology firm focused on the licensing and acquisition of transformational therapeutics to treat serious diseases including cancer, immune disorders, and rare diseases, among others. However, it was acquired by Liminal BioSciences Inc. (LMNL) in 2016.
Telesta was struggling to become profitable before the deal. Just ahead of the merger, it announced its plans to limit its workforce to 15 full-time employees, as compared to 32 in June 2016, and 50 in March 2016. It also terminated its European rights contract with Ipsen for bladder cancer therapy. Moreover, it took several initiatives back then to limit its operational expenses. In its last quarterly report as an independent firm, Telesta reported a loss of $1.6 million, narrower than a loss of $3.3 million in the comparable period of the prior year.
Liminal acquired all shares of Telesta for 14 cents per share, which represented a premium of more than 50 percent from its stock’s trading price at that time. The acquisition, which closed in November 2016, gave it access to a 150,000 sq. ft. facility in Ontario.
Speaking on the acquisition, Liminal CEO stated back then, “We welcome Telesta's shareholders decision to participate to Liminal’s growth as they will benefit from our ability to further leverage Telesta's assets.”
Liminal BioSciences Overview
Liminal is a biopharmaceutical company engaged in bio-separations, development of small molecule drugs, and plasma-derived therapeutics. It is currently developing its lead candidate, called fezagepras, to treat liver, kidney, and respiratory disorders.
Moreover, the company is also working on its plasma-based candidate Ryplazim to treat symptoms related to congenital plasminogen deficiency (C-PLGD), which is a rare disorder that can damage organ functions if left untreated. Ryplazim has already received the Rare Pediatric Disease Designation by the U.S. Food and Drug Administration (FDA) for the treatment of C-PLGD.
Liminal currently faces many challenges and its long-term success depends on several factors. For instance, it consistently needs funding for its research and development activities. It may not be able to develop a product in case of funds shortage.
Moreover, the company has not been able to turn a profit so far since its inception. Its ability to become profitable largely depends on market conditions and overall business performance. However, it is still in the process of developing its product candidates for different diseases and has yet to gain regulatory approval for the commercialization of those products.
Liminal can also face setbacks in the clinical trials for its lead products that can severely hurt its business. Even if it successfully managed to get regulatory approval for its products, the company could experience pricing pressure from rival products.
The company is collaborating with several partners in the development process of its products. Hence, any negative development in a relationship with its partners could potentially harm its growth.
Additionally, Liminal’s share price has stayed volatile in recent years. The volatility factor is both rewarding and risky for shareholders. Moreover, if key shareholders decide to sell their stakes in the company, it could result in a sharp decline in the price of its common stock.
Recent Financial Performance
Liminal last month announced its financial results for the third quarter. The company reported a net loss of $23.3 million for the three-month period ended September 30, narrower than a loss of $29.6 million in the comparable period of 2019. Revenue for the quarter came in at $0.6 million, down from $0.8 million in the year-ago quarter.
Speaking on the results, CFO Murielle Lortie said in a statement, “Our continued active managing of R&D and other expenses has contributed to the reduction of net loss from continuing operations for the third quarter of 2020 by approximately 20% compared to the same quarter of 2019.”
Research and development costs in the quarter were $12.4 million, down 31 percent on a year-over-year basis. The significant decline in R&D costs was mainly attributed to a drop in manufacturing costs for Ryplazim. Comparatively, finance costs slightly moved up in the quarter to $2.2 million, as compared to $1.7 million in the same period last year.
The total long-term debt at the end of the third quarter stood at $40.4 million, out of which the company needs to pay back $38 million in 2024.