Wednesday, February 13, 2008

Tapestry Pharma Comes Undone

Tapestry Pharmaceuticals (NASDAQ: TPPH) is plummeting today down some 80% at the market open, a recent 8K filing with the SEC details the unfortunate preparation for bankruptcy filing due to an inability to finance continuing operations. A sad day and a black eye for the Colorado life science ecosystem indeed.

Following are some of the most recent details submitted to the Securities and Exchange Commission:

On February 10, 2008, our Board of Directors authorized a reduction in our operations. On February 11, 2008, we eliminated 22 positions (65% of our work force). The only positions for employees to be retained consist of our Chief Executive Officer (Leonard Shaykin), Chief Operating Officer (Martin Batt); Senior Vice President and Chief Financial Officer (Gordon Link); Chief Medical Officer; Vice President, Product Development; and seven other positions, three of which will be working part time. We also expect to terminate our existing facility leases.

We have ongoing clinical trials that will be continued to the extent practicable in order to retain the value of our clinical trial data and intellectual property. The amount required to continue these trials will be dependent upon the time required to secure financing or sell our assets if we are able to do either. We also anticipate that certain costs will be incurred to support and protect our intellectual property.

Over the past year, we have pursued without success a variety of possible transactions to finance our operations through the sale of securities or to establish a strategic alliance, or, in the absence of such financing, to sell the Company, all with a goal to continue development of TPI 287, which we continue to believe has promise as an effective and safe cancer therapy, and to maximize the value of stockholders’ investment in the Company.
As of February 8, 2008, we had approximately $100,000 of cash and cash equivalents and had accounts payable and accrued liabilities (including unpaid severance costs and unpaid accrued vacation but excluding lease termination costs) of approximately $6.5 million. No severance benefits are being paid currently to any employees. The Company has taken the following steps:

  • Retained bankruptcy counsel and initiated steps to file for bankruptcy protection under Chapter 11 of the Bankruptcy Code.
  • Reduced it workforce from 34 to 12 persons.
  • Attempted to sell its investment in ChromaDex, Inc., a privately held supplier of phytochemical reference standards for the nutraceutical, dietary supplement and functional food industries of which we are a shareholder.
  • Taken other steps to reduce expenses, including closing down facilities that are no longer needed based upon our reduced level of operations.
  • Determined that no additional sites for clinical trials for TPI 287 will be initiated and that patients who are not yet screened will not be put on study.
  • Determined to continue efforts to sell or finance the Company or to sell or license our intellectual property.
We believe that the Company has very few options now other than filing for bankruptcy and attempting to reorganize or to sell our assets in a bankruptcy proceeding. In such a circumstance, holders of our common stock may receive nothing for their shares.

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