Sweden's Karo Bio says that the company plans to spin off its preclinical work into a new biotech company, leaving it better able to advance its late-stage program for their lead drug. The developer signaled plans to cut costs ahead of the spinoff, triggering discussions with labor groups about prospective budget cuts.
"Most of Karo Bio's operations that are currently conducted at the Huddinge campus are preclinical research and development along with several projects," the company noted in its release today. "Before these operations are transferred into a separate subsidiary, a cost efficiency program will be implemented. In order to do so, Karo Bio immediately initiates negotiations with labor unions about organizational changes. An independent management will be appointed in the subsidiary ahead of the spin-off."
"We want to create two attractive companies with clear objectives and the right resources. In the stock market, Karo Bio is today synonymous with eprotirome which overshadows our other operations. Through the spin-off, we want to create increased value for shareholders and protect their interests," says Per Bengtsson, who was named acting CEO last May and formally given the job just yesterday. "The name Karo Bio is a strong brand name in the field of nuclear receptors, both in academic and industrial circles. It makes sense from a business perspective that this name follows the pre-clinical activities."
- here's the press release