Embattled device company Echo Therapeutics, Inc. believes that its current liquidity is insufficient to fund its needs beyond September 30, 2014, so has suspended operations in the hope of finding a way out of its financial troubles. Trouble is, that’s next Tuesday.
Echo Therapeutics has been striving to get its promising Symphony® CGM non-invasive, wireless, continuous glucose monitoring system to market, but a combination of factors has mitigated against it. Now it looks like the company is close to the end of the road as it resorts to a suspension of operations including product development, research, manufacturing and clinical programs and operations, all of which will go some small way towards conserving Echo’s liquidity and capital resources.
These actions follow a strategic review of Echo’s current financial position, funding alternatives, and projected product development costs and timelines and comes on the back of an earlier effort to conserve liquidity and capital resources as recently as August when Echo reduced overhead costs, cut capital expenses and reduced its workforce.
According to a press release, issued a mere six days before the end of September, any resumption of operations would be dependent on Echo being able to secure additional third-party funding. Perhaps unsurprisingly, given the proximity of that date, the company is issuing no assurances that it will be able to secure funding that will be sufficient to keep things going beyond the looming deadline.
In the press release Echo has not been able to resist a dig at its 20% shareholder, Platinum Management which has been looking like a thorn in Echo’s side for over twelve months. It suggests that lawsuits filed or threatened by Platinum and its affiliates and the “continuing campaign by Platinum to damage Echo, its prospects and its relationships with its vendors and employees, have caused, and are expected to continue to cause, a significant liquidity strain on Echo”.
So they you have it. Without some very last minute solution it’s questionable whether Echo Therapeutics will see the middle of next week.
“We deeply regret the necessity of today’s decision, but we do not have the financial resources to support our continued operations. Reducing our workforce of dedicated employees and ceasing active development of Symphony are among the most difficult decisions we have made,” said Charles Bernhardt, Echo’s Interim Chief Financial Officer.
“Our directors and management team have devoted substantial time and effort to identifying and reviewing potential opportunities to provide funding for Echo’s operations; however, that process did not yield a credible and sufficient financing transaction. Despite public statements by Platinum Management (NY) LLC and the other members of its investor group that Platinum or its affiliates would be willing to fund Echo’s operations, and despite weeks of negotiations with Platinum over the terms of financing transaction, Platinum has not provided Echo with any credible proposal that would have allowed us to fund our operations and to bring Symphony’s development to a meaningful milestone. Additionally, the failure by Medical Technologies Innovation Asia (MTIA) to provide Echo with the funding contemplated by its December 2013 Stock Purchase Agreement with Echo has resulted in MTIA’s material breach of the agreement. Accordingly, Echo doesn’t expect MTIA to fulfill its prior funding commitment.”
Source: Echo Therapeutics, Inc.