Cytos Biotechnology said today it has begun consultations for a mass dismissal of its entire 36-person workforce and is exploring options for winding down operations, including bankruptcy and liquidation, after terminating a Phase IIb trial for its lead drug that missed several endpoints.
The asthma treatment CYT003 failed to meet its primary endpoint in a study of patients with moderate to severe allergic asthma by not achieving a statistically significant reduction of scores on the Asthma Control Questionnaire (ACQ) score at week 12 in the target patient population compared to placebo. CYT003 also failed to show a statistically significant difference to placebo in lung function and other additional endpoints.
By missing its primary endpoint, Cytos said it was unable to convert its convertible loan notes—“and the company therefore considers the prospects of raising new funding sufficient to continue as a going concern to be remote,” hence the evaluation of winding down operations, the company said in a statement.
“When developing the plans for winding down operations, we will seek to minimize adverse consequences for our employees and other stakeholders,” added Cytos chairman and CEO Christian Itin, Ph.D.
Despite a cash balance as of March 31 of CHF 31 million ($35.2 million), Cytos said it did not expect to be able to repay any convertible bonds, all of which are subordinated to other creditors, and did not expect to be able to pay any liquidation dividend to shareholders.
Because of the trial’s clear failure, Cytos said, it unblinded the clinical study rather than continue the planned nine-month period of blinded observation, and terminated the trial. Results of the Phase IIb study will be presented at the American Thoracic Society meeting, to be held May 16–21 in San Diego.
Headquartered in Schlieren, Switzerland, Cytos is a 1995 spinout of the Swiss Federal Institute of Technology that launched research collaborations with Novartis and Pfizer, but also struggled to commercialize CYT003 and other drug candidates. The Novartis partnership, focused on developing a nicotine addiction vaccine, ended in January 2013.
In 2011, it axed 72 of its 82 employees and halted all four clinical programs unrelated to CYT003, while its founder and CEO Wolfgang Renner resigned. Last year, however, Cytos reported the 63-patient Phase IIa portion of its trial for CYT003 for allergic asthma met all endpoints, including asthma control determined by ACQ, lung function objectively assessed by spirometry (FEV1), day and night-time asthma symptoms, and use of relief medication.