Tempest Therapeutics Seeks Strategic Alternatives as Funding Dries Up for Phase 3 Liver Cancer Trial

Tempest Therapeutics, a California-based biotechnology company, announced on Wednesday that it is exploring strategic alternatives to advance its clinical-stage programs and maximize stockholder value. The company, which is preparing its liver cancer drug amezalpat for late-stage testing, has hired financial advisers to assist in the process.

Cash Crunch Prompts Search for Buyer or Partner

Tempest ended 2024 with just over $30 million in cash and equivalents, an amount insufficient to fully fund the planned Phase 3 trial for amezalpat. CEO Stephen Brady cited the unavailability of capital markets as a key factor in the company's decision to seek alternative funding sources.

"The capital markets have been unavailable for us to raise additional funds," Brady stated, highlighting the broader funding drought affecting the biotech sector. This financial constraint has led Tempest to consider options such as a potential sale or partnership to move forward with its promising clinical programs.

Amezalpat Shows Promise in Liver Cancer Treatment

Despite the financial challenges, Tempest's lead candidate, amezalpat, has demonstrated significant potential in the treatment of hepatocellular carcinoma. In a Phase 2 trial, when combined with Roche's Tecentriq and Avastin in the first-line setting, amezalpat reduced the risk of death by 35% compared to the two Roche drugs alone.

The trial also revealed that patients receiving the amezalpat combination lived a median of 21 months, compared to 15 months for those treated only with Tecentriq and Avastin. These promising results have led to the FDA granting amezalpat both fast-track designation and orphan drug status, potentially easing regulatory requirements for its development.

Industry-wide Funding Challenges

Tempest's situation reflects broader challenges in the biotech sector, where many companies are struggling to secure funding through traditional means such as initial public offerings and secondary share sales. The company's market capitalization, hovering around its cash holdings, has made secondary offerings an unlikely avenue for raising additional capital.

In response to these challenges, Tempest completed a one-for-13 share consolidation on Tuesday, just as global markets faced volatility due to geopolitical factors. The company's unique history, including its public debut through a reverse merger with University of Michigan spinout Millendo Therapeutics, has allowed it to navigate some of the volatility typically associated with young biotech firms in the stock market.

As Tempest continues its search for strategic alternatives, the company has not set a specific deadline for reaching a deal and plans to maintain confidentiality regarding its discussions until further disclosure is deemed necessary or appropriate.