Innate forced to trim research after cash shortfall

Auckland bio-tech company Innate Therapeutics has been forced to restructure and narrow its research focus after it failed to gain enough financial support from local and international investors.

The company, known as Virionyx until April this year, tried to raise $3 million to help prop up its business and continue a trial for its MIS416 drug to treat people with multiple sclerosis.

A week before the October 30 closing date Innate chief executive Simon Wilkinson wrote to its 1700 New Zealand shareholders warning that if the money was not raised the board did not believe the company would be able to continue as a "going concern" and would have to consider receivership, liquidation or voluntary administration.

Yesterday Wilkinson said the capital raising had been unsuccessful but the letter had sparked enough commitment from existing shareholders for the business to continue but in a much reduced capacity. The company was now looking at reducing staff members from the present 13 and would cut its operations from two sites to one. It would also limit its trial to the one drug.

Wilkinson said it would re-pitch the business in a letter to shareholders this month with the hope of raising $2.5 million by the cut-off date of December 30.

He said the new offer would be made on much more generous terms to reflect the challenge of raising money in the current environment.

It's not the first time the company has struggled financially - in 2004 it nearly folded after a lack of funding.

Wilkinson said it was always a struggle to raise money in the bio-technology sector because it was seen as high-risk and the global financial crisis had made it even tougher.

If the company could raise the money, phase II trials of its MS treatment would go ahead in March and if successful the company would look to raise more money internationally.