Cytos Biotechnology built a staff of 82, partnered with two Big Pharma companies and pushed a promising therapeutic vaccine well into Phase II. But today the 16-year-old Swiss developer is scrambling to survive a cash crunch. With a bond payment looming in early 2012, Cytos says it has laid off all but a skeleton staff of 10 which will be responsible for circling the wagons around the company's lead program and shuttering four clinical programs.
Citing the "current difficult financing environment," Cytos says it is slamming the brakes on all R&D work not associated with CYT003-QbG10, which has proved promising for allergic rhinitis and allergic asthma in three Phase II studies. Its CEO, Dr. Wolfgang Renner, has resigned. And the biotech says it will explore all options as it stares down a big deadline. Cytos shares swiftly plunged 43% on the news.
"The above measures will reduce the burn rate over the coming months," says Cytos in its release. "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."
"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," says Thomas Hecht, the chairman of the board. "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."
Founded 16 years ago as a spinoff of the Swiss Federal Institute of Technology, Cytos established its reputation on Immunodrugs, a class of therapies designed to spur an antibody or T cell response to a chronic condition. Cytos reports that it has 5 programs in the clinic.
- here's the Cytos release
- here's the Bloomberg story