Staff Writer

Financially troubled Advanced Life Science Holdings Inc., of Chicago, has suspended operations and terminated its staff.

CEO Michael T. Flavin said in a statement that the company did not have enough cash to fund operations, and is considering strategic alternatives including a bankruptcy filing. Shares (OTC BB:ADLS) were down 14 cents, or 68.3 percent, to 7 cents at close Friday.

The company, which ended 2010 with only $200,000 in cash after burning $6.4 million that year, began 2011 by cutting costs, reducing salaries, extending the due date of a loan and initiating a 1-for-30 reverse stock split as it searched for potential partners or buyers who could cover the cost of a Phase III trial of lead candidate antibiotic Restanza (cethromycin) for the treatment of community-acquired bacterial pneumonia (CABP) under an FDA special protocol assessment (SPA) agreed to in August 2010.

Restanza is a once-a-day oral antibiotic in development for the treatment of respiratory tract infections including CABP and biodefense pathogens including anthrax, plague and tularemia.

In August 2010, Advanced Life Sciences decided to conduct a first-of-its-kind superiority study comparing its Restanza against azithromycin in treating CABP.

The decision followed years of debate over the acceptable margins and endpoints for noninferiority trials of antibiotics. The study was to be an 800-patient Phase III efficacy trial of Restanza 300 mg under a SPA with the FDA. (See BioWorld Today, Aug. 11, 2010.)

But the trial didn't get far. By Jan. 3 Advanced Life Sciences announced that it was evaluating alternatives, including a possible sale of the company, to raise the financial resources required to conduct the registration program for Restanza.

"While we have taken steps to improve the financial standing of our company, we believe that a potential strategic transaction, partnership or acquisition will be in the best interest of all our shareholders," Flavin said in a statement at that time.

The company also In January reached an agreement with the Leaders Bank to amend the terms of a loan, waived existing defaults and moved the due date for about $2.1 million in principal payments and additional interest payments. As part of the loan amendment, Advanced Life Sciences said it cut operating costs with a companywide salary reduction program and other cost-reduction activities.

The situation continued to deteriorate. When the company announced its 2010 fourth-quarter and full-year results on March 24, it noted in its 2011 financial guidance that the company was in default on its outstanding credit facility with Leaders Bank, which could accelerate the loan repayment and cause the company to file for bankruptcy protection.

Advanced Life Sciences had been battling since mid-2009 when a negative advisory panel vote was followed by a complete response letter on Restanza.

The FDA Anti-Infective Drugs Advisory Committee in June 2009 came down on Restanza's side in terms of safety, but experts raised questions about the efficacy, and the panel voted 11 to 3 the data failed to demonstrate sufficiently that Restanza is an effective treatment for mild to moderate CABP. Investors sent shares down 62 percent. Two months later the FDA unsurprisingly issued a complete response letter asking for additional clinical data for Restanza. (See BioWorld Today, June 3, 2009, and Aug. 3, 2009.)

The decisions made it tough for Advanced Life Sciences to find partners.

In the U.S., big pharma has shied away from the antibiotic space, which has proved a regulatory minefield over the past few years as the FDA has shifted requirements from noninferiority data to superiority data. Most of the confusion has been in the area of complicated skin and skin structure infections.

The agency in March 2009 issued new draft guidance documents for noninferiority trials in CABP – the first new guidelines issued in more than a decade – which left many companies unsure of their path forward for development of their products.

Flavin later noted that Advanced Life Sciences' results were held to that new standard, despite the fact that the company's trials were set up and initiated in 2005 under prior guidance from the FDA.