Drug company 4D Pharma is in administration after its lender suddenly pulled the plug on its support and demanded its money back.
The London-listed company, which does much of its research in Aberdeen, announced earlier today that trading of its shares was suspended pending a further announcement.
That announcement came at 6.22pm, with 4D Pharma revealing details of its financial woes.
It follows a deal last July that saw the firm secure a line of credit worth up to $30 million – about £24.4 million at today’s exchange rate – from Oxford Finance, which provides capital for healthcare and life sciences companies globally.
4D Pharma immediately drew down £10.2m of this to support drug research and development.
In this evening’s update to the London Stock Exchange, 4D Pharma said: “The board has been exploring opportunities to secure additional funding for the company in recent months.
“This has proved challenging but significant progress had been made, despite the very difficult prevailing market conditions.
“The board had made Oxford aware of this and discussed a potential funding alternative on the evening of June 23.
Immediate repayment demand
“On the morning of June 24, Oxford demanded immediate repayment of the outstanding loans made to the company, which currently total approximately US$13.86m (£11.3m), inclusive of accrued interest and associated fees.
“The company is not able to make that immediate repayment from its existing cash resources.
“With no immediate certainty of how that repayment could be made, the board requested that trading in the ordinary shares be immediately suspended pending clarification of the company’s financial position.”
4D Pharma added: “Subsequent to the suspension, the board was informed that Oxford had today instructed that the company be placed into administration, in accordance with the terms of the facility.
“Accordingly, James Clark and David Pike of Interpath Advisory have been appointed as joint administrators.”
Four wholly-owned subsidiaries – Aberdeen-based 4D Pharma Research, 4D Pharma Cork, 4D Pharma Leon SLU. and 4D Pharma Delaware Incorporated – are not in administration, the firm said, adding: “The board intends to work with the joint administrators on proposals to rescue the company as a going concern, albeit there can be no guarantee that this will be successful.”
More than 30 researchers are involved in the discovery and pre-clinical testing of drugs in 4D Pharma’s Aberdeen operation, at Foresterhill, although the group’s head office is in Leeds.
The company is focused on live biotherapeutics, a relatively new group of medicines that use bacteria in the human body – the microbiome – to tackle disease.