A company that had hoped to be the first to bring an artificial liver device to the U.S. market has suspended its operations. Arbios Systems (Waltham, Massachusetts) said the move is a way to conserve cash while it seeks financing or some relationship to fund clinical trials for its Sepet liver assist device.

Arbios said it is focusing its day-to-day operations exclusively on obtaining financing or consummating what it termed a "strategic transaction." All of the company's employees were released, except for Shawn Cain, president/CEO, and CFO Scott Hayashi. Cain and Hayashi will continue to provide services to Arbios as part-time consultants on a month-to-month basis while they seek funding and "strategic alternatives."

The company said it also plans to keep quiet about any developments with respect to these goals unless its board has approved a transaction.

If a transaction is not consummated, or near consummation, by the end of the month, Arbios said it would consider other options, including liquidation.

Arbios said it needs to either raise more money or enter into a relationship in order to fund the completion of clinical trials for Sepet, its out-of-body liver assist device for blood purification of acutely ill patients suffering from chronic liver disease.

"We have spent the past several months seeking financing and strategic opportunities to maintain the momentum we have achieved towards the clinical validation and market approval of Sepet," Cain said in a company statement. "Unfortunately, despite our recent accomplishments, in the current financial environment, we have not been able to obtain any funding."

The device is intended as a bridge-to-transplant for patients waiting for a new liver – a list that is more than 17,000 names long. Sepet is a sterile, disposable cartridge containing microporous hollow fibers with permeability characteristics. When a patient's blood is passed through these fibers, blood plasma components of specific molecular weights are expressed through the micropores, thereby cleansing the blood of harmful impurities (hepatic failure toxins as well as various mediators of inflammation and inhibitors of liver regeneration).

Those substances would otherwise progressively accumulate in the patient's bloodstream during liver failure, causing hypotension, increasing risk of sepsis development and accelerating damage to the liver, lungs and other organs, including the brain and kidneys, and suppressing the function and regeneration of the liver. Sepet is designed for use with standard blood dialysis systems available in hospital intensive-care units.

In May Arbios reported FDA approval of an investigational device exemption (IDE) to begin the pivotal clinical trial for Sepet (Medical Device Daily, May 19, 2008). At that time, Cain said the trial was expected to support the company's filing for approval of the device in the U.S. and marketing efforts in the U.S. and Europe. He also said the design of the trial was expected to enhance physician acceptance of the device as a "much needed tool in sustaining patients through acute life threatening episodes of liver failure, a market which we believe exceeds a billion dollars annually."

Prior to that, the company received conditional approval for an IDE to begin the trial while it responded to FDA's conditions and request for additional information, more specifically, endpoints of the trial (MDD, Feb. 26, 2008).

Arbios noted other recent accomplishments, including:

Completing and reporting positive safety results from its Phase I clinical study. In addition, signs of clinical efficacy were observed with 79% of the patients meeting the primary endpoint of a two-grade improvement in hepatic encephalopathy, with an average of only two treatments.

Establishing exclusive manufacturing agreements, allowing commercial scale production and economics.

Securing the required European approvals to begin the first segment of the Sepet pivotal trial in Rostock, Germany.

Starting to work towards approval to market Sepet in the European Union.

"We remain confident in the benefits that Sepet may offer patients with chronic liver disease," said John Vierling, MD, chairman of Arbios and professor of medicine and surgery and chief of hepatology at the Baylor College of Medicine (Houston). "Hepatic encephalopathy represents one of the most frequent complications of cirrhosis necessitating hospitalization, and Sepet's rapid time to a sustained two-stage improvement of hepatic encephalopathy observed in the Sepet Phase I FDA trial exceeded our expectations, providing us with much hope for the clinical success of Sepet's pivotal trial."

"Unfortunately, unless in the near future we are able obtain additional operating funds, or unless we are able to otherwise enter into a strategic transaction, Arbios will not realize a return on its investment in this company's important and valuable assets and technologies."

Last year Arbios closed a private financing resulting in gross proceeds of $4.8 million, consisting of the issuance and sale of common stock and warrants to buy its common stock (MDD, April 24, 2007).

Because the demand for a liver transplant far exceeds the supply of donor livers, companies like Arbios and Vital Therapies (VTI; San Diego) are trying to develop an artificial liver to serve as a bridge to transplant. Last year VTI reported that pivotal human trials with its ELAD (Extracorporeal Liver Assist Device) in Beijing were getting promising results for acute liver failure (MDD, Sept. 13, 2007).

In 2006 Arbios reported data from the first five patients treated with its Sepet device in its feasibility trial. The results, though preliminary, showed potential for keeping patients with chronic liver disease alive long enough to receive a transplant (MDD, Nov. 2, 2006).