Proneuron fires most staff
Market sources: “The company is in trouble.” Company sources: “This is a natural development.”
Gali Weinreb and Gitit Pincas 14 Mar 06 18:21
Sources inform ''Globes'' that Proneuron Biotechnologies Ltd., which is developing treatments of spinal cord injuries using stem cells, has fired most of its 35 employees. Three managers and four pre-clinical trial employees, seven employees altogether, will stay on. The reason for the lay-offs are not entirely clear.
Market sources claim that Proneuron is in financial difficulties that threaten its existence, while sources close to the company are trying be reassuring, saying that it is active in a number of fields, and recently closed a large financing round from private investors. These sources said Proneuron faced no problems of liquidity.
One source close to the company told “Globes” today, “The company is in a dialogue with external entities about one of these fields. The company has reached the stage at which it is logical to lay off employees, because things in biotechnology take a long time, and there is no reason to keep these employees until the results of the move are clear.”
On the basis of this information, it seems that Proneuron has reached an impasse in its Phase II clinical trials for testing the effectiveness of its treatment. In view of the fact that only pre-clinical employees are staying on, it seems that the company has decided to take a step back, and improve or change its product, or else focus on different ones. The company reportedly believes in its technology, and is trying to preserve the cash raised to date in order to resume clinical trials later.
Dr. Adrian Harel founded Proneuron in 1996 on the basis of research by Prof. Michal Schwartz of the Weizmann Institute of Science. Schwartz discovered that central nervous system disorders could be treated using cells from the patient’s immune system. A healthy body suppresses its immune system in the central nervous system (the spinal cord and brain) in order to avoid inflammations that could do more harm than good. Proneuron’s products try to use the body’s immune system to treat the spinal cord.
Proneuron’s flagship product, ProCord, is in Phase II clinical trials. The company has two other products under development: Cop-1 neuroprotective vaccine, and PN277 immune modulator. The company is collaborating with Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) to develop Cop-1, an ingredient in Teva’s multiple sclerosis drug, Copaxone. Prof. Schwartz found that Cop-1 can improve the effectiveness of the immune system in the central nervous system.
PN277 is a molecule that improves the natural defenses of cells in the central nervous system against degenerative diseases. Proneurone is seeking partners to develop this molecule.
To date $40 million dollars have been invested in the company. The major investors are Tamir Fishman Venture Capital (TASE: TFVC), Hudson Investment Group (HIG), Israel Infinity Venture Capital, Pitango Venture Capital, Giza Venture Capital, and Teva, which invested in the company in return for shares and future distribution rights. Some of Proneuron’s clinical studies are being conducted in Teva’s laboratories.
Published by Globes [online], Israel business news - www.globes.co.il - on March 14, 2006
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