Echo suspends operations, development and research to conserve capital

Company has insufficient liquidity to operate beyond end of September

By Devika Patel

Knoxville, Tenn., Sept. 23 – Echo Therapeutics, Inc. believes its current liquidity is insufficient to fund the company’s needs beyond Sept. 30, possibly earlier.

According to a press release, the company has now suspended its product development, research, manufacturing and clinical programs and operations to conserve liquidity and capital resources. In August, in an earlier effort to conserve its liquidity and capital, Echo reduced overhead costs, cut capital expenses and reduced its workforce.

Echo said it needs to secure additional third-party funding in order to resume its operations, otherwise it may be required to file for protection under the U.S. Bankruptcy Code.

“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,” interim chief financial officer Charles Bernhardt said in a press release. “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 to provide Echo with the funding contemplated by its December 2013 Stock Purchase Agreement with Echo has resulted in Medical Technologies Innovation Asia’s material breach of the agreement. Accordingly, Echo doesn't expect Medical Technologies Innovation Asia to fulfill its prior funding commitment.”

Franklin, Mass.-based Echo Therapeutics is a dual platform-enabled specialty therapeutics and diagnostics company.

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