ARYx Therapeutics will close shop after FDA delay scuttles financing

RIP: ARYx Therapeutics. The biotech ($ARYX) plans to close shop, pinning the blame on the FDA's inability to deliver guidance on a critical trial design on schedule, which prompted investors to bail on an offer to provide an extra injection of cash.

In a release, the Fremont, CA-based biotech, a 2004 Fierce 15 company, said regulators had indicated that they wouldn't be able to offer input on a late-stage study of naronapride--a GI drug--until July. The news prompted a consortium of old and new investors to tear up non-binding plans to provide additional money, forcing the company to start to shutter the business.

The liquidation of the business probably won't return any cash to stockholders. Most if not all of the money will be handed over to a group of secured creditors, which includes Lighthouse Capital Partners V and MPM Capital.

ARYx has been struggling to stay afloat for the past two years. Layoffs in late 2009 had eliminated many of the 73 workers on staff. By the end of last year, the biotech's remaining execs were laid off and hired on as consultants in a last-ditch effort to deliver a workable plan to move forward with its late-stage program.

- here's the Aryx release
- see the Reuters report

Special Report: The 2010 Biotech Graveyard