West Coast Editor

Vaccine specialist Avant Immunotherapeutics Inc. expects that cutting about a third of its work force, while backing away from biodefense contracts and putting no more cash into the CETi and TP-10 programs, will trim costs as much as 18 percent over the next two years.

Wall Street, though, wasn't much pleased, and the firm's shares (NASDAQ:AVAN) closed Monday at $1.33, down 9 cents or 6.3 percent, after trading as low as $1.31, as investors mulled the news.

"I thought the feeling was that we were running a little fat, and people would be pleased [by the cutbacks], but they don't seem to like it," said Una Ryan, president and CEO of Needham, Mass.-based Avant, who acknowledged the firm was "doing too many things." Larger funds were viewing the changes more favorably than Avant's many, smaller backers, she noted.

The company's Rotarix for preventing gastroenteritis caused by rotavirus in children won approval in Europe earlier this year, and the deal with partner GlaxoSmithKline plc provided a $40 million milestone payment upon launch of Rotarix.

London-based GSK is expected to file for approval of Rotarix in the U.S. soon. "It won't now, I think, get approved this year," Ryan said, since GSK - which first targeted a filing in the first half of 2007 - likely won't submit the paperwork until mid-year.

Avant licensed the Rotarix technology in 1995 from Cincinnati Children's Hospital Medical Center and owes CCH a license fee of 30 percent on net royalties from GSK. In 2005, Paul Royalty Fund bought an interest in Avant's Rotarix royalties for $61 million.

At the time of the European clearance for Rotarix, Avant said its complement inhibitor TP10 had failed in a Phase II trial, and the firm planned to try TP10 in males undergoing cardiac bypass surgery if a partner could be found.

Avant is exploring "the full range of possibilities" with TP10, Ryan said Monday. "Partnering it for cardiac surgery is not as interesting as for transplants and age-related macular degeneration. We thought, at first, that the most advanced indication [cardiac bypass] would be the most attractive," but talks have shown otherwise. The compound might work against the dry as well as wet form of AMD, she said, and would-be partners are talking about using it in transplants, too.

CETi, Avant's anti-cholesterol vaccine, also has gone as far as Phase II trials. A study with CETi in 2003 brought mixed results, so Avant reformulated the vaccine and still is looking for a partner. (See BioWorld Today, Feb. 28, 2006.)

"That one is very difficult," Ryan told BioWorld Today. The drug's allure faded after New York-based Pfizer Inc.'s Phase III experience with torcetrapib, the cholesterol drug intended to help with the pharma giant's loss of market share for the blockbuster Lipitor (atorvastatin). Pfizer quit developing torcetrapib in December, after finding that death rates went up in the 15,000-patient trial.

Torcetrapib's fizzle "queered the pitch, as you'd say in cricket," Ryan noted, and she is "not nearly as hopeful" for CETi as before. "There's concern about the regulatory pathway, the size of the trials" necessary to win clearance, she said.

Biodefense has provided Avant with cash, too. Efforts in that space yielded about $9.3 million through the end of last year in payments under federal agreements related to vaccines for anthrax and plague. Stopping the work "will even mean returning some money to the government," Ryan said, but how much wasn't clear.

"Some of it's not even put on contract yet, so it's not a huge amount," she said. Having the research off the books will add to savings. From 2002 through 2006, biodefense efforts cost Avant about $10.9 million.

The company's St. Louis-based research facility - where the biodefense work was done - will be closed later this year, and research activities will move to the Needham, Mass. headquarters.

Avant will continue to work with existing partners. The firm signed a deal last summer for animal vaccines with Pfizer, a relationship that began in 2000 with Avant's $18 million buyout of Megan Health Inc., of St. Louis, after which Pfizer licensed Megan's technology from Avant. (See BioWorld Today, Nov. 22, 2000.)

Last August, the International Vaccine Institute got a $21 million grant from the Bill & Melinda Gates Foundation for a cholera vaccine initiative, which will include conducting further trials of Avant's CholeraGarde, including Phase II and Phase III trials in Bangladesh and India starting this year.

Avant had planned its own Phase III study to support U.S. and European marketing approval for use in travelers and military personnel, but noted in its 2006 annual report that the limited market for a cholera vaccine would not justify the cost of Phase III trials. The company said it would focus only on the fully funded opportunity for CholeraGarde, which frees up resources for Ty800 and ETEC programs, and a new influenza vaccine push.

"The next one out of the chute is Ty800," Ryan said. The oral typhoid fever vaccine is undergoing a Phase I/II trial with the National Institute of Allergy and Infectious Diseases, which paid for making the vaccine to finish the tests.

Enrollment finished in the third quarter of last year, and results are due during the first half of this year.

Avant has a preclinical vaccine against enterotoxigenic E. coli (ETEC), Shigella, Salmonella paratyphi and Campylobacter. A Phase I trial is expected in the second half of this year, with a long-term goal of making a combination "super-enteric" vaccine that contains CholeraGarde and Ty800 along with vaccines against S. paratyphi and ETEC, "and possibly dysentery, though I'm not sure that's necessary," for the travelers' market, Ryan said.

In February, Avant entered a deal with Select Vaccines Ltd., of Melbourne, Australia, to use the latter's virus-like particles as a platform technology for development of viral vaccines.

"We'll do influenza first, and then pick two other viral diseases," Ryan said, adding that the flu effort includes the potentially pandemic avian strain.

At the end of last year, Avant had about $40.9 million in cash and cash equivalents, compared to about $23.4 million at the end of 2005.