Swiss biotech Cytos has scraped together $40 million to advance its pipeline of immunotherapies, giving itself much-needed capital after a cash crunch last summer forced the company to ax most of its staff. And now the biotech has the funds to propel its lead drug CYT003 into a Phase IIb trial for allergic asthma.
VenBio led the new financing, which includes equity, debt and warrants, and was joined by a syndicate of backers that includes biotech giant Amgen ($AMGN) and the investment firms Abingworth and Aisling Capital. The deal includes CHF 23.75 million in equity and CHF 13.25 million in convertible notes, and the transaction wraps up the restructuring of debt that the company announced last year, according to its release. Amgen and the rest of the syndicate will own a 54% stake in Cytos at the close of the deal, with an even greater stake in the offing if notes are converted and warrants exercised.
Cytos and its investors in the new financing deal have agreed to bring new blood to the company's board of directors, including Arthur Krieg, CEO of RaNA Therapeutics, John Berriman, deputy chairman of Algeta, Kurt von Emster and Paul Brooke of venBio, as well as Joe Anderson of Abingworth. Thoref Spickschen, who was elected vice chairman in 2010, won't be running for reelection to the board, according to the company's release.
The financing and terms of the deal are expected to be up for approval at the company's next annual shareholder meeting.
Asked why shareholders should approve the financing deal, Cytos CFO Harry Welten, said, "… what is the alternative to financing this? Why do you think we laid off 72 out of 82 people last August? Because we didn't succeed in securing a licensing deal with substantial amounts of money."
The transaction will provide plenty of financial support to fund the company through the Phase IIb trial for CYT003 in allergic asthma and beyond, Welten said. The company has 15 full-time employees, he noted.
"Amgen recognizes there is significant unmet medical need for the treatment of asthma and we are pleased to support the ongoing development of CYT003, a novel immunotherapy based treatment approach which has already generated promising data in a number of earlier clinical studies," Sean Harper, Amgen's executive vice president of R&D, said in a statement.
Indeed, if CYT003 turns out to be a winner in the blockbuster market for allergy meds, the syndicate will make out like bandits with their bet on Cytos.
- here's the release