Hemosol Inc. said Monday it has notified nearly all 152 of its employees that they will be laid off in two months, unless the company is able to enter into a merger agreement or find additional financial resources.
The Toronto-based company also said it will close enrollment in the Phase II cardiac bypass grafting trial of its lead product, the oxygen therapeutic Hemolink (hemoglobin raffimer), at 152 patients rather than the planned 180 in order to perform a full safety and efficacy analysis.
"We are hoping during this interim period that we will find the financial resources to continue on and retain a good number of those people in a restructured company," Lee Hartwell, Hemosol's chief financial officer and vice president of corporate development, told BioWorld Today.
Hemosol's stock (NASDAQ:HMSL) fell 10 cents Monday, or 19.2 percent, to close at 42 cents.
Hartwell said the company has had an "active program" and has been in discussions with various entities for potential mergers or to sell assets.
"Obviously, this trial halt has made that more difficult," he said. However, he said he continues to expect the company to find sufficient financial resources to continue as a restructured company. One consideration for any company looking to invest is Hemosol's $55 million manufacturing plant completed late last year, he said.
The troubled company first laid off 35 percent of its work force in June, with 125 employees remaining. However, since then it had built the staff back up to 152 workers.
"This is a way for us to move forward here, to close the trial out properly but to give people ample time" to determine what's best for them in light of the company's present circumstances, he said.
At year-end, Hemosol had about C$17 million (US$11.5 million) in cash, and was expecting to burn about C$3 million a month in 2003, the company said last month.
Hemosol reported in mid-March that it would suspend the trial based on the recommendation of a Data Safety Monitoring Board. The DSMB recommendation was based on an observation of an "imbalance" in the incidence of "certain adverse events" between the Hemolink and control groups in the trial. Although the DSMB had recently cleared the trial to continue following the third and final interim safety review, its ongoing review of data indicated there may be the potential for an increase in certain cardiac events in the Hemolink group.
The decision was announced after the market closed on a Thursday, and the following day, Hemosol's stock dropped 63 percent, or $1.33, to close at 72 cents.
At the same time, Hemosol voluntarily suspended enrollment in its Phase II study involving the use of Hemolink in patients undergoing orthopedic surgery (HLK 210).
Now, Hemosol's decision is to close out the CABG trial altogether. "We decided it would take too long to get it resumed, and we would not be able to have [data] in quick enough time to share with parties such as [the FDA]," Hartwell said.
The company will be reviewing the data in the CABG trial for the next 60 days, at which time the data will be unblinded, he said.
The plan is to resume the orthopedic trial once the company has convinced the FDA that the product is, in fact, safe, Hartwell said.
In early 2002, Hemosol was notified by Health Canada that the agency would not approve its Hemolink submission, causing the company to have to refile its NDS when the agency asked for additional data on the product.
In addition to Hemolink, Hemosol is developing other oxygen therapeutics, a hemoglobin-based drug delivery platform and a cell therapy focused on the treatment of cancer.