On Thursday Onconova Therapeutics (ONTX) received a notice from Baxalta (BXLT) that it will be terminating a partnership deal for Onconova's rigosertib that was drafted back in 2012. When the deal was made Baxalta made an upfront payment to Onconova of $50 million, with the potential of an additional $515 million for European rights. 

This does not come at a good time for Onconova, which under consultation of Baxalta initiated a 225-patient trial back in December of 2015. The trial, known as the "INSPIRE" trial, recruited patients with high-risk Myelodysplastic Syndrome -- MDS. MDS occurs when the patient's bone marrow is unable to produce enough blood cells in the body. It is a rare-blood disorder, and there are not many treatments out there for this indication. Patients receive either a stimulating agent or blood transfusions just to stay alive. 

Onconova is not happy because they thought that Baxalta would help them carry the trial all the way to the end. The problem is that under the terms of the deal Baxalta will only be responsible for 50% of the costs, through August 30, which means Onconova will have to foot the rest of the bill. Baxalta stated that staying with the partnership  did "not align with Baxalta’s strategic priorities". Baxalta is expecting to be acquired by Shire (SHPG) in the summer, a deal valued at $32 billion. 

Onconova has been struggling to advance its drug, rigosertib, into late-stage trials. The drug had failed to improve patients with pancreatic cancer, and had failed to improve clinical outcome in patients with low-risk Myelodysplastic Syndrome. The partnership will come to a close in August when Onconova will obtain back European Rights for the drug at no cost.

Baxalta will also no longer be responsible for providing funds for the development of the drug in the clinic. Even though rigosertib failed a late-stage clinical trial with low-risk MDS patients, a subset of high-risk patients saw clinical benefit, the reason why the company chose to advance its drug for this indication. If Onconova is successful in this latest clinical trial, then it may help investors recoup years of losses since its IPO back in 2013.