Cytos on the point of getting out

Cytos Biotechnology AG (SIX: CYTN) today announced that the Phase 2b study of CYT003 in patients with moderate to severe allergic asthma did not achieve a statistically significant reduction of the Asthma Control Questionnaire (ACQ) score at week 12 in the target patient population compared to placebo. Patients on placebo and at all dose levels of CYT003 achieved a clinically relevant improvement in their asthma control measured by ACQ. Additional endpoints, including lung function also failed to show a statistically significant difference to placebo. The clinical study was planned to continue with a blinded observation period of 9 months. Considering the clear outcome, Cytos has determined to unblind and terminate the clinical study.

As a result of the failure to achieve the primary endpoint, the previously announced condition for the conversion of convertible loan notes has not been achieved, and the company therefore considers the prospects of raising new funding sufficient to continue as a going concern to be remote. Consequently, the company’s board of directors has instructed management to evaluate the options for an ordinary winding down of operations and liquidation of the company or a possible bankruptcy. In addition, the company has initiated the consultation process for a mass dismissal of all of the company’s 36 employees.

Dr. Christian Itin, Chairman and CEO of Cytos, commented: "We are very disappointed with the outcome of the Phase 2b study and would like to thank our patients and investigators for their support of the study. We would also like to thank our employees for their outstanding effort that was required to rebuild the company after the restructuring and mass dismissals in 2012. When developing the plans for winding down operations, we will seek to minimize adverse consequences for our employees and other stakeholders."

The cash balance of the company as of March 31^st, 2014 was CHF31 million. The company does not expect to be able to repay any convertible bonds which are all subordinated to other creditors. Likewise, the company also does not expect to be able to pay any liquidation dividend to shareholders.

Cytos was founded in 1995 as a spinoff from the Swiss Federal Institute of Technology (ETH) in Zurich. It is located in Schlieren (Zurich), Switzerland. The Company is listed according to the Main Standard on the SIX Swiss Exchange Ltd under the symbol CYTN.