Date: Nov 07, 2002 Author: Don Mecoy Source: NewsOK.com (
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Two straight mild flu seasons and an inability to raise money have driven ZymeTx Inc., an Oklahoma City company that makes a flu detection test, into bankruptcy.
The company filed for Chapter 11 protection from creditors on Tuesday in Oklahoma City. Norman Proulx, ZymeTx president and chief executive, said the company has obtained interim financing that will allow the firm to continue operations during the upcoming flu season.
But another mild year for flu could spell the end for ZymeTx, Proulx said.
"I think that is correct. If the flu comes in very tepid... it would reduce the options that we're going to try to make available to us," Proulx said. "If we have a really crackerjack flu season, it will be interesting. We'll be able to sit down and start thinking about the legitimacy of potential for continuation - or not."
The company has lost money every year since it was founded in 1994. Its only product is ZstatFlu, a test capable of detecting influenza A and B. The test, administered using a throat swab, renders a diagnosis in a doctor's office within 20 minutes.
"The last two flu seasons were among the weakest ever recorded in the United States and prevented us from generating sufficient revenues to address our debt and sustain operations," Proulx said.
"The prolonged investor uncertainty in the biotechnology industry made it difficult for us to raise capital in the equity markets the last two years."
Proulx said the company owes unsecured creditors about $800,000, and is indebted to secured creditors for roughly $3 million.
ZymeTx lost $6.4 million in the quarter that ended Dec. 31, the last quarter for which the company filed an earnings report with the Securities and Exchange Commission.
The company was removed from the Nasdaq exchange last year after its stock price fell below $1 for an extended period.
In recent months, ZymeTx shares plummeted and were sold via the Pink Sheets, a daily publication for penny stocks that are not required to meet minimum standards.
After selling for up to 78 cents a share a year ago, ZymeTx shares traded this week at less than a penny, an all-time low.
Proulx said that although the company's future is uncertain, the technology behind the flu test remains valuable. The company may seek to sell that asset, he said.
"We have enough time to take a look and do the right thing for as many stakeholders as possible within the frame of seeing what this year's flu season will bring us," he said.
The flu season historically runs from October through March, and it will be clear whether this year's strain is active within a few months, Proulx said.
"My sense is the latest you'll have an outstanding knowledge is by the end of February; we'll probably have a pretty good indication by the end of January," he said.
Bob Rader, vice president of Capital West Securities that assisted ZymeTx with its initial underwriting, said he was disappointed that the company was forced to seek bankruptcy protection.
"It just makes me sad they spent all that time and effort to get FDA (U.S. Food and Drug Administration) approval and then not be able to get any product out the door," Rader said.
Proulx said the company has an ample stock of the diagnostic tests to meet customer orders this year.
Meanwhile, the company's Internet-based National Flu Surveillance Network remains intact and Proulx said he expects more doctors than ever to participate in the service, which quickly tracks the progress of flu across the United States.
Two ZymeTx scientists will continue their research and development work with $1 million in grants received by the company, Proulx said.
The company has shed about 20 of its 28 employees in the last few years.
Proulx said it isn't clear if the debt-laden company can emerge from bankruptcy.
"If you can tell me how bad the flu is going to be this year, I'll give you a straight answer to that," he said.
CONTRIBUTING: Staff writer Bryan Dean BIOG: NAME: UPD:
Archive ID: 1052703
