Cytos Biotechnology announces strategic and organizational changes with the aim of preserving value around its lead product

Cytos Biotechnology Ltd announces strategic and organizational changes with the aim of preserving value around its lead product and to address the up-coming maturity of the Convertible Bond

Cytos Biotechnology Ltd's Board of Directors has unanimously approved the full implementation of measures to significantly reduce costs, to address the up-coming maturity of the Convertible Bond due in February 2012 and to focus on its key asset CYT003-QbG10.

To this end, the Board of Directors has approved a comprehensive set of measures reducing all activities not related to CYT003-QbG10. Key elements of the action plan include:

- putting all research and product development programs other than CYT003-QbG10 on hold and, subject to the outcome of the consultation with the workforce, to reduce the workforce as quickly as possible from 82 to around 10 employees
- adjust the size of the Board of Directors and the Executive Board to the needs of a smaller company.

Also, Dr. Wolfgang Renner has resigned as CEO and member of the Board of Directors but will continue to provide his expertise. Dr. Thomas Hecht, Chairman of the Board, will act as executive chairman.

The above measures will reduce the burn rate over the coming months. Taking into consideration the outstanding Convertible Bond of nominal CHF 41.1 million which is due on February 20, 2012, the financing gap could be still as high as CHF 17 million by then.

Schlieren (Zurich), Switzerland, August 17, 2011 - Cytos Biotechnology Ltd (SIX:"CYTN"; the "Company") today announced strategic and organizational changes with the aim of preserving value around its unlicensed lead candidate CYT003-QbG10, which has been shown in three phase II studies to be safe and efficacious for the treatment of allergic asthma and allergic rhinitis.

Following a review of its strategic options and the outcome of negotiations to date, the Board of Directors has come to the conclusion that in the current difficult financing environment, research and development programs which are at an earlier stage can for the time being no longer be adequately funded and shall therefore be put on hold. As a result of this decision, Cytos Biotechnology Ltd plans to reduce its work force by more than 80% and will enter into consultation with its employees. The size of the Executive Board and the Board of Directors will be adjusted to the needs of a smaller company.

The partnered programs with Novartis and Pfizer and payments related to these programs are not affected by this decision. The aim of the new strategy is to maximize the value of CYT003-QbG10 and to pursue all possible options.

Concurrently, the Company is also evaluating options on how to avoid a default on the Convertible Bond due by February 20, 2012 (the "Convertible Bond") including but not limited to a Convertible Bond restructuring. The approximate financing gap by February 20, 2012 could be as high as CHF 17 million.

The primary goal of the corporate and the Convertible Bond restructuring is geared towards keeping the Company as going concern. However, the substantial efforts undertaken by the Company in the last months have shown that refinancing the Company to assure the solvency until revenues reach a level to sustain positive cash flows is, in particular in the currently difficult financing environment for small Biotech companies, a very challenging task.

The Board of Directors has accepted Dr. Wolfgang Renner's resignation as member of the Board of Directors and CEO and unanimously appointed Dr. Thomas Hecht, Chairman of the Board of Directors, as executive chairman.

Dr. Thomas Hecht, Chairman of the Board of Directors of Cytos Biotechnology Ltd commented: "It was a very difficult decision for us to put research programs on hold and to lay off most of our colleagues who have contributed so greatly in the past to our Company. I would like to thank the team of Cytos Biotechnology and Wolfgang for their strong commitment and contributions.

However, in the current capital market environment and in the light of the pending repayment of the Convertible Bond it is impossible for a small biotech company without sustainable product revenues to continue developing new innovative medicines, in spite of pressing unmet medical needs."

About Cytos Biotechnology

Cytos Biotechnology Ltd is a Swiss public biotechnology company that specializes in the discovery, development and commercialization of a new class of biopharmaceutical products - the ImmunodrugsTM. ImmunodrugsTM are intended for use in the treatment and prevention of common chronic diseases, which afflict millions of people worldwide. ImmunodrugsTM are designed to instruct the patient's immune system to produce desired therapeutic antibody or T cell responses that modulate chronic disease processes. Taking advantage of the high flexibility of its ImmunodrugTM platform, Cytos Biotechnology has built a diversified pipeline of ImmunodrugTM candidates in various disease areas, of which five are currently in clinical development. The ImmunodrugTM candidates are developed both in-house and together with Novartis, Pfizer and Pfizer Animal Health. Founded in 1995 as a spinoff from the Swiss Federal Institute of Technology (ETH) in Zurich, the Company is located in Schlieren (Zurich). Currently, the Company has 82 employees. Cytos Biotechnology Ltd is listed on the main segment at the SIX Swiss Exchange (SIX:CYTN).