Neurogen Corp., a pioneering member of Connecticut's small but lively biotech industry, has hired an adviser to help sell the company or its assets and has laid off half of its already shriveled workforce, the company said Tuesday.
To save cash, Neurogen — which in 22 years never brought a drug to market or made a profit — has also stopped enrolling new patients in the Phase 2 trials of its most advanced drug, aplindore, for Parkinson's disease and restless legs syndrome.
The disclosures coincided with the Branford company's first-quarter earnings report, which included a net loss of $10.8 million, or 16 cents a share, and zero revenue. Neurogen reported cash and marketable securities of $25.4 million at the end of March, with liabilities of $11.2 million.
By the start of this year, the company's total net losses had reached $322 million.
Neurogen portrayed itself as a victim of stalled capital markets, and Chief Executive Stephen R. Davis predicted that many U.S. biotech companies would fail in the year ahead for the same reason.
"It will be a very difficult year for the biotech industry," he said in an interview.
CuraGen, another pioneering Connecticut drug development company, has been exploring a sale since at least February.
"There's increased shopping by big pharma for biotecchs," said Paul Pescatello, president of CURE, the state's biotech industry group. "There's also a waiting game going on to see what the lowest price is."
Pescatello said he was unaware of any acquisitions of Connecticut biotechs this year.
Neurogen is talking with potential buyers, but Davis declined to name any.
Neurogen's major assets include aplindore and adipiplon, an insomnia drug that was set aside after Phase 2 trials because of unwanted side effects. The company also owns land and buildings in Branford.
Neurogen originally intended to develop drugs for major pharmaceutical companies in exchange for royalties. Eventually it began developing drugs it would bring to market. Less than two years ago, it had nearly 150 employees.
Without a drug on the market and dependent on investment capital for funding its development operations, Neurogen ran into serious trouble last year, as capital grew scarce. By Tuesday, it was down to 13 employees, with further reductions on the way, Davis said. About half the remaining personnel are scientists; the rest are business managers.
Neurogen's stock price fell 8 cents Tuesday, closing at 21 cents. Friday's close at 30.9 cents was a six-month high.
"It's never a happy thing when a company has to pare down as much as Neurogen has," said Pescatello. "It would be more disturbing if you didn't see new things coming up."
He cited New Haven-based Kolltan Pharmaceuticals, a Yale University spinoff that is developing cancer drugs and this year raised $35 million in Series A preferred stock financing.
"People aren't lining up to invest without any strings attached," Pescatello said, "but good research is finding funding."Copyright © 2015, Los Angeles Times