Cytos Biotechnology is to slash its workforce by 80% and put all in-house development programs that are not related to lead, Phase II-stage allergic diseases Immunodrug™ candidate CY003-QbG10 on hold, as part of desperate measures to keep solvent. Its clinical-stage smoking cessation and Alzheimer disease candidates that are partnered with Novartis and preclinical allergic diseases vaccine candidate, which is partnered with Pfizer, will not be affected.
Although the plan will reduce cash burn over coming months, Cytos has an outstanding convertible bond of nominal CHF 41.1 million, which is due on February 20, 2012, and the firm projects its financing gap could still be as high as CHF 17 million by then. It is consequently evaluating options on how to avoid a default on the convertible bond, including the potential for a bond restructuring.
The workforce reduction will cut Cytos’ headcount from 82 to just 10 employees. “It was a very difficult decision for us to put research programs on hold and to lay off most of our colleagues,” notes Thomas Hecht, M.D., Cytos board chairman and executive chairman.
“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.”
CYT003-QbG10 is an allergen-independent immunotherapy that has completed Phase II trials for the treatment of allergic asthma and allergic rhinitis. The drug comprises the virus-like particle Qb, containing the immunostimulatory sequence G10.
Cytos claims G10 acts to stimulate TLR9 in dendritic cells and induce the production of immune mediators that balance allergic immune responses and also activates TLR9 on mast cells, which further downregulates the allergic response.
Immunodrug candidates that have now been put on hold include the Phase II-stage product CYT006-AngQb for the treatment of hypertension and CYT013-ILQb, which was in Phase I trials for the treatment of type II diabetes.
The unaffected programs partnered with Novartis include NIC002 for smoking cessation and CAD106 for Alzheimer disease therapy. Cytos’ collaboration with Pfizer is centered on development of the preclinical-stage allergic diseases vaccine candidate VLP-IgE, although the firms have additional Immunodrug collaborations in place for both human and animal health applications.