Assistant Managing Editor

A day after the National Bureau of Economic Research declared the last 12 months an official recession, the restructuring parade for biotech continues, as firms try to stretch their limited capital as far as possible.

Feeling the financial pressure, South San Francisco-based Titan Pharmaceuticals Inc. is slashing its work force by 40 percent and said it expects further reductions "in the next several weeks."

Titan ended the third quarter with a $12.2 million in cash, enough money to carry the firm through January 2009, and executives warned at the time that the firm would have to employ strategic alternatives, including the possible sale of assets or the discontinuation of development programs, if unable to secure additional funding by year-end.

For Titan, 2008 has brought a series of ups and downs. The firm's shares lost nearly half their value in July after its Parkinson's disease candidate Spheramine disappointed investors in a Phase IIb trial in patients with moderate to advanced forms of the disease. Later that month, partner Vanda Pharmaceuticals Inc., of Rockville, Md., got a not-approvable letter for schizophrenia drug iloperidone, knocking Titan's shares again and overshadowing positive Phase III data of Probuphine, an implant aimed at controlling opioid drug addiction. (See BioWorld Today, July 3, 2008, and July 29, 2008.)

The company will focus its remaining staff and resources on finding a partner or licensee for its Probuphine program. The firm also is expected to scale back clinical and manufacturing activities and has contracted with JSB Partners LLC to help find a partner or buyer for Probuphine.

Designed as a small implant that's inserted beneath the skin, Probuphine is designed to curb addiction to prescription painkillers, including methadone and oxycodone, by delivering a continuous, controlled dose of buprenorphine. Results from a Phase III study of 163 patients showed that those implanted with Titan's product had a higher percentage of opioid-free urine samples compared to those on placebo.

Shares of Titan (AMEX:TTP) lost 1 cent, or 14 percent, Tuesday to close at 6 cents.

Targeted Genetics Trims Payroll, Refocuses

Only a few weeks after the resignation of longtime CEO H. Stewart Parker, Targeted Genetics Corp. is making additional cost-cutting moves to preserve funding for pipeline priorities in ocular and neurological diseases.

The Seattle-based firm is reducing its payroll costs by 25 percent. Those cuts include a reduction of seven employees and salary deferrals or reductions to half-time status for the seven most senior company executives, in addition to the previous resignations of Parker and the company's former chief scientific officer, Barrie J. Carter.

Following the cuts, the company has 56 full-time employees.

Targeted Genetics, which reported a net loss of $2.7 million, or 13 cents per share, for the third quarter, had about $9.2 million in cash as of Sept. 30. The company said that money would last into the first quarter of next year, while it worked to pursue capital from several potential sources, including licensing or selling technology, signing additional collaborations, selling stock or raising money through debt transactions.

In the meantime, the company intends to rally its efforts around AAV-RPE65, a gene therapy candidate emerging from its adeno-associated virus (AAV) platform, in severe retinal dystrophies, such as Leber's congenital amaurosis. Earlier this year, Targeted Genetics reported promising data showing that AAV-RPE65 improved the vision of some patients with the inherited degenerative eye disease. (See BioWorld Today, April 29, 2008.)

The firm also will focus on preclinical candidates in Huntington's disease and amyotrophic lateral sclerosis.

An inflammatory arthritis program, tgAAC94, likely will be on hold until the company has signed a partner that has resources to advance it into Phase II trials and beyond. A Phase I/II trial of tgAAC94 last year was halted temporarily following the death of a study participant, though the FDA permitted the study to resume a few months later after it was determined that the treatment and death did not appear to be linked. (See BioWorld Today, July 30, 2007, and Nov. 27, 2007.)

TgAAC94 uses an AAV vector to deliver the gene encoding a soluble form of the receptor for tumor necrosis factor-alpha, a well known arthritis target.

Targeted Genetics' stock (NASDAQ:TGEN) rose 6 cents or 27.3 percent, Tuesday to close at 28 cents.

InSite Cutting Staff by 35 Percent

Ophthalmology-focused firm InSite Vision Inc. said it expects to reduce annual operating expenses by about $2 million by decreasing its work force by 35 percent.

That reduction is expected to allow the Alameda, Calif.-based firm to extend its cash runway and allow it to focus on growing its approved AzaSite product and advancing its pipeline and technology platform.

AzaSite (azithromycin ophthalmic solution) is marketed by partner Inspire Pharmaceuticals Inc., of Durham, N.C., for bacterial conjunctivitis. InSite recorded royalty revenue from AzaSite sales of $944,000 in the third quarter.

In development, the firm has ISV-502, a topical combination of an antibiotic and corticosteroid, which just finished dosing in the first of two pivotal studies in lid margin disease.

That product uses the DuraSite sustained delivery system, and InSite also is exploring new products based on the DuraSite technology.

The company, which had about $45.7 million in cash as of Sept. 30, expects a one-time expense of about $450,000 associated with the staff reduction, to be incurred in the fourth quarter.

Shares of InSite (AMEX:ISV) closed Tuesday at 33 cents, up 1 cent.

Enzon Scratches Spin-off Plans

While not announcing any layoffs at this time, Bridgewater, N.J.-based Enzon Pharmaceuticals Inc. had to rethink its previous spinout strategy that would have moved its biotech assets, including its pegylation technology and Locked Nucleic Acid technology, into a new publicly traded firm.

In May, Enzon said would spin out those biotech assets, expecting to capitalize the new company with about $150 million in cash to fund research and development efforts. Enzon's specialty pharmaceutical business would continue to operate under the original company and would include marketed products Abelcet, Adagen, DepoCyt and Oncaspar. By splitting up those two operations, the R&D costs associated with the biotech business would be eliminated from Enzon's balance sheet. (See BioWorld Today, May 8, 2008.)

But citing "current external market conditions," Enzon has opted not to split up its business and said it would continue to focus on the "fundamentals" of the company.

Shares of Enzon (NASDAQ:ENZN) fell 14 cents Tuesday to close at $4.59.

Published  December 3, 2008