It’s a rare management team that’s willing to admit it’s time to throw in the towel before all investors’ money is lost. But executives at AutoImmune Inc. have done just that.
The Pasadena company has been trying to commercialize treatments for autoimmune and inflammatory diseases for 21 years. The board announced last week that it had finally pulled the plug.
“We’ve reached the point where it’s appropriate to send the money back to the shareholders,” said Chief Executive Bob Bishop, who joined AutoImmune in 1992. “Biotechnology is a high-risk game. I knew that going in, and we gave it our best effort.”
The company, which went public in 1993, once had promise, but has been trading for pennies on the Pink Sheets.
Its experimental products are based on intellectual property from Harvard University researchers, but about a decade ago some therapies failed to live up to expectations in midstage clinical trials, prompting Bishop to cut much of the company’s staff.
Since 2000, the company has been more or less “virtual,” with Bishop and his finance director working part time from their homes. The death knell came when late-stage clinical trials on dirucotide, a drug to treat multiple sclerosis, failed to show results in summer 2009. The drug was licensed to BioMS
Medical Corp., an Edmonton, Alberta,
Bishop said AutoImmune already sold some of its technology and will continue to look for buyers for the rest.
“In the end I feel good that we consistently tried to do what’s best for shareholders,” he said.
Date to Boost Care
Pending federal regulations that will encourage doctors and hospitals to invest in electronic medical records could boost the business of an L.A. information technology company.
Zynx Health sells databases that doctors can use with their electronic records to help determine the best care for patients. The databases give quicker access to the latest scientific literature and best practice guidelines.
“(Record) systems by themselves don’t improve care,” said Greg Dorn, chief operating officer of Zynx, a subsidiary of Hearst Corp.
The ability to show that an electronic record system is improving care will be important when the U.S. Centers for Medicare & Medicare Services dole out rewards from the federal stimulus package to providers.
The American Recovery and Reinvestment Act of 2009 includes incentives for health care providers to install electronic record systems. But recipients have to meet what are called “meaningful use” guidelines. That means the record systems need to clearly help doctors take better care of patients.
There’s a carrot-and-stick approach to
the program. Federal reimbursements for physician practices could reach tens of thousands of dollars, and millions of dollars for hospitals.
But the government eventually will cut Medicare-Medi-Cal payments to practitioners that don’t have acceptable systems installed by 2015. The final regulations could be approved as early as April.
Zynx has been working with more than 1,000 hospitals and more than 5,000 physicians on integrating their systems with the separately operated record systems.
Catholic Healthcare West, a San Francisco hospital chain with four hospitals in Los Angeles County, became a Zynx client long before the stimulus program was proposed, but welcomes the prospect of getting some reimbursement for its investment.
Dr. Chris Johnson, the chain’s clinical knowledge engineer, said CHW liked the idea that it could integrate a best practices software into its existing record system.
“What we asked initially was how can we speed up the delivery of the best available medical knowledge into (our hospitals),” he said.
Response Genetics Inc., an L.A. biotech, announced last week that it raised $4 million from new and existing investors through a private placement of about 3 million shares of stock.
The investors, including some funds managed by Lansdowne Partners LP in the United Kingdom, paid $1.31 per share in the placement that closed March 8, representing a 9 cent premium over that day’s closing price. Shares were up to $1.81 by March 11.
The company, which develops and sells molecular diagnostic tests for cancer, has about 15 million shares outstanding and a market cap of nearly $27 million.
Earlier this year, Response Genetics expanded its sales force by 50 percent to 15 people to capitalize on growing demand for its ResponseDX genetic test panels. The tests help physicians determine whether a patient’s genes make him or her more likely to benefit from certain chemotherapy drugs.
Staff reporter Deborah Crowe can be reached at firstname.lastname@example.org or at (323) 549-5225, ext. 232.
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