Biotechnology company ObsEva on Tuesday said it has sold rights to an experimental drug for preterm labor to Xoma Corp. in a deal that could be worth up to $113 million.
ObsEva had previously licensed the drug to Organon, but retained royalty and milestone payment rights. Tuesday’s sale, which includes an upfront payment of $15 million from Xoma, will help to extend ObsEva’s operating runway to more than one year from now.
Brian O’Callaghan, ObsEva’s CEO, said in a statement that the deal marks the end of a business reorganization that the company undertook in response to a difficult year.
In July, the women’s health company announced it would restructure its operations, including a plan to reduce its workforce. Two days later, ObsEva disclosed its chief scientific officer and head of R&D had resigned.
When the company reported earnings in August, it included a warning to investors that there was “substantial doubt” it could remain solvent over the next 12 months. And as a result of ObsEva’s declining market valuation, Nasdaq notified the company it was in danger of having its shares delisted from the exchange.
ObsEva later revealed the planned layoffs would affect 70% of its staff.
The sale of ebopiprant rights could help the company with its debt and ensure the lights stay on for longer. ObsEva said it will now focus resources on developing a drug called nolasiban, which is meant to help improve birth rates in people undergoing in vitro fertilization.
ObsEva is one of many biotechs that in recent months have had to look at other ways to extend its cash. Dozens of biotechs have laid off staff this year, while others have sold royalty rights or pursued alternative financing deals amid a weak market.
The industry’s downturn has persisted through 2022 despite some bright spots. Shares in the XBI, an exchange-traded fund that corresponds to a biotech index, is down 30% on the year.