Destiny swallows dilution to push microbiome project forward

The backend-loaded deal Destiny Pharma unveiled late Friday, with the US gastroenterology group Sebela, will probably disappoint some investors, but at least it should get the UK biotech’s microbiome project in front of regulators. Sebela is paying $1m up front for North America rights to NTCD-M3 for recurrent Clostridioides difficile infection (rCDI), with a further $19m of development milestones available. The US group will also fund a pivotal trial that should be sufficient for US and EU regulators, though with this not due to start until 2024 $550m in sales milestones remain a distant prospect. With a tiny £25m ($30m) market cap and cash running low, the UK biotech was not in a strong negotiating position; a condition of the Sebela deal requires it to raise £8m via a dilutive share placing to shore up its balance sheet. Still, rCDI is considered a huge unmet need, and Destiny could be the second oral option to market, albeit some while behind Seres, which hopes to launch later this year. Exactly how big this market might become remains an open question; should Seres beat expectations, perhaps Destiny's next deal, possibly for European rights, will be easier to swallow.