Just months after Entero Therapeutics completed the merger that brought in its new lead candidate, the debt inherited from the deal is creeping up on the company.
Entero abruptly disclosed on Wednesday that the company has “approved the termination of all non-essential Company employees and determined to vacate its Boca Raton office.” The gastroenterology company has also paused “any non-essential research and development activities.” As a result, the employment of CEO James Sapirstein and president Jack Syage will also be terminated, although Sapirstein will stay on as a consultant.
James SapirsteinSapirstein told Endpoints News in early June that the company had 16 staffers and six full-time consultants.
The company will explore “all possibilities to maximize value” for shareholders, whether through raising capital, restructuring its indebtedness or other strategic alternatives, according to a filing.
Formerly known as First Wave BioPharma, the company changed its name after merging with ImmunogenX in March. It then made latiglutenase — ImmunogenX’s experimental therapy for celiac disease — its main focus, with plans to move into Phase 3.
As recently as July 31, Entero told investors that it’s “in the strongest position for near-term success” after completing a small financing, consolidating its operations and requesting meetings with the FDA.
But two days later, it was served a notice from ImmunogenX creditors demanding immediate payment of loans due to certain “events of default” happening. According to the notice, Entero owed close to $7 million at that time — excluding interests and fees that it would continue to accrue.
Latiglutenase, an oral, enzyme-based treatment, is designed to “destroy gluten,” as Sapirstein previously described so that patients can enjoy their meals without worrying about the bloating, vomiting and nausea they otherwise would experience.
Entero hinted at the time of the ImmunogenX deal that it’s in talks with a global drugmaker for a partnership and with undisclosed investors for fundraising. The investor base has been “retail-oriented,” Sapirstein said back in June, but he was hopeful that the positive news and, later, positive Phase 3 data would change the outlook. But the deal was delayed due to a debate among investors, he said.
The company’s shares $ENTO fell almost 20% premarket Thursday, bringing the market cap down to $1.5 million.