Echo Therapeutics, Inc., a medical device company best known for developing the Symphony® CGM (Continuous Glucose Monitoring) System has updated us with its activities, one of which involves losing 33% of the staff.
We’ve followed Echo Therapeutics for a while now, as it endeavours to progress its clever wireless, needle-free glucose monitoring system to market, starting with CE marking. Most recently however the company issued a statement saying it was parting with its then incumbent CEO Patrick Mooney. Find that piece here.
And now, in an attempt to update all its current activities the company has issued another press release. It starts with the news that its pivotal CE mark study is almost complete and will yield top line results during Q4, one quarter behind the original schedule. The company is blaming slower than expected initial enrollment in the trial and other issues inherent in clinical studies conducted in hospital critical care units for the delay.
Echo’s statement then says they will have a technical file submitted for CE marking in the same quarter and on approval will make a decision about whether to launch the product in Europe. One key driver for that decision will be whether they should wait until product enhancements identified during the clinical trial can be incorporated. Instinct suggests they should, but the fact that the company is sending out the signal that it’s burning money at an unsustainable rate might have a bearing on the decision.
That signal is reinforced by the announcement of radical restructuring and cost reduction measures under the stewardship of the new (interim) CEO. Echo’s statement says it will reduce burn rate by 35-40%, not least by reducing its staffing by 33%.
While it’s certainly true that companies have peaks and troughs in demand for human resource as they go through the developmental and pre-marketing phases, 33% sounds pretty dramatic.
In the midst of all this they’re still looking for a new CEO and need to properly engage with FDA to work out their route to US approval, which will itself require the usual (expensive) US study next year.
So why the “reassuring” press release? Well, it seems that Echo’s biggest shareholder (20%), Platinum Montaur, has got fed up with the management of the company and issued its own pretty direct advice at the end of August. That advice more than hinted at the need for change and the instigation of measures to repair the company’s 95% share price fall over the past two years. Find that release here.
“It’s important to recognize this shift as part of a continuing effort to focus our efforts and resources on our short-term corporate objectives in order to drive future shareholder value. I strongly believe in our management team’s ability to execute on our plan to better position the Company to realize its long-term potential,” said interim CEO Robert Doman. “We highly value all of our employees and deeply regret having to make these workforce reductions. However, these reductions were essential to better align ongoing expenses with our short-term objectives and position Echo for future growth.”
Source: Echo Therapeutics, Inc., PR Newswire