A skeleton staff hustled between vacated offices and labs at Aureon Biosciences Inc. in Yonkers in the week after the 10-year-old company suddenly closed operations and laid off 95 employees.
No one there, though, would talk publicly about the reasons for a shutdown that stunned employees and forced U.S. Sen. Kirsten Gillibrand”™s staff to move her Oct. 7 press conference ”“ promoting a federal bill to spur investment in high-tech, innovative companies like Aureon ”“ from Aureon”™s shuttered headquarters to another Westchester company.
The future of Aureon”™s proprietary technology and commercial products for physicians treating prostate cancer patients also was unclear in the wake of the company”™s Oct. 5 notice to state officials that it had ceased operations one day earlier.
The company closing at 28 Wells Ave., a former Otis Elevator Co. factory building in the i.park Hudson complex, came only three months after Aureon announced it had doubled its leased space to 28,000 square feet. Opening in Yonkers in 2002, the biotech pioneer in the last two years had grown from 30 employees to a peak of more than 100 employees. Economic development officials and business leaders in recent years routinely pointed to Aureon as a model for the biotech industry”™s promising future in Westchester County and the Hudson Valley region.
Charles DiComo, Aureon”™s corporate compliance officer who has often been the public face and enthusiastic voice of the region”™s growing biotech industry, declined to comment on the company”™s fate.
A spokesman for New Leaf Venture Partners in Manhattan, one of Aureon”™s venture-capital investors, said New Leaf had no immediate comment on the closing.
Michael Oates, president and CEO of the Hudson Valley Economic Development Corp. in New Windsor, on whose board DiComo serves, said financial decisions by Aureon”™s three major investors forced the closing.
Securities and Exchange Commission records show those investors are New Leaf Venture Partners, Pfizer Strategic Investments Group in New York City and Atlas Venture in Cambridge, Mass. The three firms in 2010 gave Aureon an additional $7 million in venture equity financing.
A spokesman at Atlas Venture did not respond to a request for comment.
In a 2008 interview with the Business Journal, a former CEO at Aureon said the company was started with a $23 million venture-capital investment. Three years ago, when Aureon began marketing its Prostate Px test, the company already had spent about $40 million in development costs, the CEO said.
In a Sept. 29 filing with the SEC, Aureon reported the private company had sold approximately $16.8 million of debt securities in a $17.1 million offering that began in October 2010.
Among Aureon”™s three major investors, “The decision was made for reasons unclear to pull the funding from the company and put the company”™s intellectual property up for sale,” Oates said. “It absolutely comes as a shock to us and frankly to a great deal of the (Aureon) employees as well.”
“It was broken to the company likely the day they made the decision,” Oates said of Aureon”™s investors. “It was clearly very sudden. They were stunned. There was no period of time to transition.”
The surprise closing came just two days before a federal health care advisory group made national news headlines when it recommended that a blood test widely used to screen males for prostate cancer no longer be used because it does not significantly reduce deaths from the disease and often results in unnecessary and harmful treatments.
The U.S. Preventive Services Task Force in its review gave the prostate-specific antigen test a “D” grade, discouraging its use because there is “moderate or high certainty that the service has no net benefit or that the harms outweigh the benefits.”
That federal recommendation could significantly reduce demand for the oft-ordered PSA test from both physicians and patients. That outcome could in turn reduce the number of prostate-cancer diagnoses and surgeries for which Aureon”™s products provide personalized prognoses.
Nathan Tinker, executive director of the New York Biotechnology Association in Stony Brook, said he has heard no speculation that Aureon investors were swayed by the test-busting federal report to withdraw their funding. That scenario is not likely, said Tinker, noting the investors”™ decision came before the task force officially released its draft recommendation.
However, the debate within the health care field over the efficacy of PSA testing dates to at least 2008, the task force report indicates.
“It”™s unfortunate,” Tinker said of the Aureon closing, “but I don”™t think it”™s as bad as it could be. If this had happened five years ago, it would have been devastating to the regional biotech industry.”
The region has seen the growth of a viable biotech industry cluster, Tinker said, led by companies such as Regeneron Pharmaceuticals Inc. in Greenburgh and Acorda Therapeutics Inc. in Hawthorne, which in 2012 will relocate and expand its workforce at the Ardsley Park life science campus in Greenburgh.
For out-of-work Aureon employees, “There are places for these people to move to,” Tinker said.
Noting biotech”™s “explosive growth” in the region, Oates too said employment prospects are not grim for Aureon workers. His nonprofit agency in Orange County spearheads NY BioHud Valley, a one-year-old marketing initiative by private-sector and government partners to build a cluster of biotech and pharmaceutical companies in the talent-rich region.
“I think the science they”™ve developed at Aureon will be very valuable to other companies, as will their employees,” he said.
