Market reacts badly to news that Intercytex will cut staff levels by 50%; not start new projects
Regenerative skin specialists Intercytex Group plc announced a restructuring plan that will seek to cut staff numbers in half and not start any new project so that it can reduce cash burn.
The company said that despite positive progress on all projects, with the financial markets in their current state, it will shortly start a "30-day consultation period" with employee representatives proposing a reduction in headcount at facilities in Manchester UK and Boston, USA of around 50% from the current level of 76 employees.
The staff cuts will extend cash resources to fund operations until around the end of 2009, the company said. The measures are expected to be implemented from March 2009.
The market took a dim view of the news, marking down its share price by almost 30% this morning. The Group is now worth around £15.5m.
The company said the recent completion of the Phase III trial of its lead product for the treatment of chronic wounds, Cyzact, has resulted in a need for significantly fewer employees. The results of the trial are expected towards the end of the current quarter.
The Board said it has also taken the view that it is inappropriate to start new projects in the present climate.
Good progress continues to be made on all products, the Cambridge-based firm said.
"The commercialisation of Vavelta in the UK for aesthetic uses is generating significant excitement. Completion of the Phase II trial of ICX-TRC for hair regeneration continues to be expected at the end of this quarter and good progress has been made on developing ICX-SKN for the treatment of burns helped with funding from the US Armed Forces Institute of Regenerative Medicine."
"In addition, the recent acquisition of Axordia has now been fully integrated and provides an exciting entry into the area of treatments for blindness and the dramatically expanding opportunities for stem cell therapies."
