Biotech Values

[DewDiligence]

VSGN is off 20% on this news.

http://www.reuters.com/article/marketsNews/idCAN1435322520080414

>>
Vasogen Shifts Focus, Slashes Staff 85%

Mon Apr 14, 2008 11:06am EDT

TORONTO (Reuters) - Vasogen Inc said on Monday that it would cut its staff by 85 percent and suspend funding of studies for its key Celacade heart failure treatment, as it shifts focus to a new area of drugs.

The company said the restructuring will cost about C$2.6 million in the second quarter, but would give it about two years worth of cash reserves.

Vasogen shares, which were halted prior to the announcement, dropped 19 Canadian cents, or 26 percent, to 54 Canadian cents, once trading resumed on the Toronto Stock Exchange.

Although the company said it mothballed funding plans for Celacade's Acclaim II study, it plans to continue to work with the U.S. Food and Drug Administration to finalize the design of the study and "will evaluate potential strategic alternatives to fund such a study." [Why can’t they just admit it’s over?]

The company said it would discontinue operational and financial support for European commercialization of Celacade and was exploring alternative strategies for the treatment. This follows a much lower than anticipated revenue forecast for the treatment from Grupo Ferrer, its European marketing partner.

In the meantime, Vasogen said it would shift focus to its VP series of drugs which mediate and regulate immunity and inflammation.

"We cannot financially justify maintaining our existing infrastructure in light of the regulatory challenges facing Acclaim II and the revenue forecast received from Ferrer," Chris Waddick, president and chief executive said in a statement.

"This has been a challenging process, but through the measures announced today we believe that we have a plan that allows us to conserve our financial resources, while executing a strategy focused on rebuilding shareholder value."

The company was dealt a blow last month after U.S. regulators raised concerns about the patient makeup of a study for Celacade.

Vasogen said the FDA disagreed with the use of its planned approach and expressed concern about whether it would be able to recruit a similar type of patient for its upcoming Acclaim II study as it had for the initial Acclaim study.

The company has retained a financial advisor to look at other strategic alternatives as well.
<<