Cash-strapped Vion files for bankruptcy

Faced with an FDA demand to mount a new clinical trial for its late-stage cancer therapy, Vion Pharmaceuticals says it doesn't have the money to comply and has been forced to file for Chapter 11 bankruptcy protection. In a release, the New Haven, CT-based biotech says its experimental drug assets are on the sales block, and the company may have to liquidate.

"We believe the Chapter 11 process will allow us to maximize the value of the company's assets and, if necessary, to conduct an orderly winding up or liquidation of the company," says Vion CEO Alan Kessman. Vion listed less than $20 million in assets and debts of $60 million. The developer's remaining investors bailed on the news, driving down the company's battered share price by 45 percent, dropping to 33 cents a share.

Vion's troubles reached a crisis point a few days ago when the FDA wouldn't approve Onrigin without a "randomized study or studies to define the efficacy and safety of Onrigin in the patient population proposed for the indication." But Kessman also says that if Vion can't continue the work, another developer should. "We believe that Onrigin, Triapine and our other preclinical assets should continue to be developed, if not by us then by others, as patients with cancer need additional treatment options as they face this devastating disease."

- here's Vion's press release
- here's the story from Bloomberg

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