Washington Editor

Nventa Biopharmaceuticals Corp. said it is cutting its work force by 60 percent, from 13 employees to five, under a restructuring plan intended to reduce its cash burn by 30 percent.

The San Diego-based firm, which reported cash and cash equivalents of $5.9 million as of Oct. 1 - $2.5 million after accounting for liabilities - said it also is seeking merger and acquisition opportunities to strengthen its pipeline and finances.

CEO Gregory McKee attributed the firm's present financial predicament to the economic crisis currently befalling the U.S. and the rest of the globe.

"It has potentially shut down the ability for most small companies, including ours, to raise money," he told BioWorld Today. "It is absolutely the direct impact of the lack of ability for biotechnology companies right now to raise funds."

McKee said Nventa has been trying to raise cash since last spring to fund Phase II trials of its lead product HspE7, an investigational therapeutic intended to treat precancerous and cancerous lesions caused by the human papillomavirus (HPV).

The firm recently completed a Phase Ib trial, which showed the HPV product was safe and provided data to support HspE7's immunologic activity.

Based on the positive Phase Ib results, McKee said his firm has received approval from the FDA to conduct a multicenter, randomized, double-blind placebo-controlled Phase II study evaluating HspE7 as a potential treatment for high-grade cervical dysplasia (CIN 2/3).

The agency currently is reviewing the protocol for a second Phase II study of HspE7 in low-grade cervical dysplasia (CIN 1), McKee added.

"I was very optimistic we would be able to raise money for our Phase II program," he said, noting that the company has had 40 clinical sites in place since July 1 ready to enroll patients.

Nventa entered discussions last spring with some potential U.S. and Canadian investors and banks to raise the funds needed for its Phase II program, McKee said.

"That didn't work out," he lamented. The company then continued its struggle through the summer to find funding opportunities. "That also didn't work," he declared.

And now, he said, the "untenable" climate has made it nearly impossible for the company and other small biotechs to raise cash.

"The only hurdle for us right now is capital," McKee maintained. "Everything else is completely ready to go. But we cannot do any of these trials until we have the funding."

McKee asserted that even with the current credit crisis, "there's a lot of capital around for biotechs."

But, he said, most investors are "holding onto all of their cash."

"I don't see a lot of deals happening," McKee said, adding that "virtually, no companies are raising money, and haven't now for about nine months."

The media has been reporting nearly daily for the past several weeks that health care is one of the safest sectors for jobs during the economic crisis "because people are always going to need treatment," but, McKee said, the firms developing drug therapies are being squeezed at both ends.

He described the situation as a "candy wrapper problem" because the drugmakers are being twisted at both ends.

First, he said, the FDA has been slow to act on drug and study applications, and in many recent cases, has required firms to conduct more clinical trials or analyses before the agency will make an approval decision, which McKee said is not only time-consuming, but can be "extremely expensive" for drug developers.

And now companies are facing the inability to raise funds because of the current economic environment.

"This has had a dramatic impact on all companies, and it has had a very harsh impact on smaller companies like ours," McKee declared.

"Our company, as well as a lot of others, have a lot of great technology that need to be developed," McKee said. But, he said, without the funding to advance development, those products may never reach the patients for whom they are intended to help.

McKee said his firm is aggressively pursuing potential collaborations for HspE7.

"We've been in several discussions" with both biotech firms and big pharma, he said.

In addition, the company has been in discussions for partnering its Toll-like receptor 3 agonist, known as Poly-ICR, through material transfer agreements with U.S. vaccine developers, which McKee said could provide Nventa with near-term revenue.

The company has been investigating Poly-ICR as a treatment for genital warts and actinic keratosis, a premalignant condition of the skin.

Nventa, which was founded in the early 1990s, has had a history of restructuring.

The company, which changed its name from Stressgen Biotechnologies Corp. in 2006, originally was based in British Columbia and had three offices at one stage, including an office in Pennsylvania.

In April 2005, the firm sold its bioreagents business for $8 million and reduced its work force by nearly half, from 77 to 39 employees. The company six months later again slashed jobs, leaving the firm with 27 employees. (See BioWorld Today, April 15, 2005, and April 29, 2005.)

Nventa then reformed and changed its name in June 2006.

"We completely rebuilt," McKee said.

Nventa, despite having only five employees left now, can move forward with its Phase II trials "if we raise the funds," he insisted.

But, McKee said, "it's a very difficult situation."