Nearly three months after Genaera Corp. said it planned to divest noncore assets, the company halted ongoing Phase II programs in cystic fibrosis and prostate cancer to conserve cash for its early stage obesity drug, trodusquemine.

"We're executing upon the plan we announced in April," said Jennifer Bilotti, vice president of communications for the Plymouth Meeting, Pa.-based firm, which cut about 30 percent of its work force in April and said it would look to sell or out-license its noncore assets, which include Lomucin for cystic fibrosis and squalamine lactate for prostate cancer.

Genaera is ending prematurely a Phase II study of Lomucin in cystic fibrosis, citing clinical futility, meaning the trial "was not powered to provide statistical significance," Bilotti said. That program was funded in part by Cystic Fibrosis Foundation Therapeutics Inc., which agreed to pay Genaera a final milestone of $100,000 and will not require the company to refund any portion of the award previously received.

But the company hopes to leverage the program in an out-licensing deal following the receipt of the Phase II data, which are expected in the fourth quarter. Lomucin (talniflumate) is designed to target the protein hCLCA1, which is overexpressed in the lungs of patients with cystic fibrosis, chronic obstructive pulmonary disease and asthma.

Genaera remains confident that hCLCA1 is a promising target for respiratory disease, though President and CEO Jack Armstrong predicts that data from the Phase II study will show only "limited effect," on the disease. Development of backup compounds, he added, likely will yield much greater efficacy, and that's work that a potential licensee could do.

Genaera has been in restructuring mode since the beginning of the year when it told investors it was dropping Evizon, a late-stage squalamine lactate program in wet age-related macular degeneration, after determining that the product would not be able to compete with South San Francisco-based Genentech Inc.'s successful AMD drug Lucentis (ranibizumab). "When Evizon failed, that took the wind out of our sails," Armstrong said, prompting the company to relegate squalamine lactate, which it also had in development for cancer, to a noncore asset. (See BioWorld Today, April 12, 2007.)

In a study sponsored and funded by the Department of Defense, squalamine lactate was being investigated in prostate cancer. But that trial stalled after the sponsor relocated. Since "it would cost us money to resupply the drugs," Genaera decided its money would be better spent elsewhere and discontinued that study. Like Lomucin, the squalamine program is available for out-licensing as well. Genaera also plans to divest a third product, Locilex (pexiganan acetate), a topical antibiotic for diabetic foot ulcers.

By discontinuing the Lomucin and prostate cancer programs, Genaera now can "focus all resources on our core assets," Bilotti told BioWorld Today, which includes the company's new internal lead program, trodusquemine (MSI-1436), an analogue of Evizon aimed at selectively inhibiting protein tyrosine phosphatase 1B (PTP1B) to treat obesity and Type II diabetes.

Armstrong said "hopes are very high" that trodusquemine will be able to treat both of those indications, which would "give us the ability to treat a couple of pretty substantial markets."

Trodusquemine is designed to act "both centrally and peripherally," he said, meaning it not only results in appetite suppression and causes fat to burn out of the body, but also induces insulin sensitivity. Genaera reported promising preclinical data last month at the American Diabetes Association meeting in Chicago showing that the drug induced significantly greater weight loss in mice on a high-fat diet vs. lower-fat diets and also reduced plasma insulin and plasma leptin.

Genaera has started its first Phase I trial with trodusquemine and anticipates additional Phase I studies, including one involving obese diabetics.

The company, which expects to report its second quarter results in early August, had a net loss of $4.2 million, or 4 cents per share, for the first quarter. As of March 31, Genaera had cash, cash equivalents and short-term investments totaling $29.7 million. Bilotti said existing cash should be sufficient to fund the company through 2008 and to advance trodusquemine into Phase II, though the company might consider partnership opportunities at that point.

Besides its trodusquemine program, Genaera also remains focused on its anti-interlukin-9 candidate, MEDI-528, which is in Phase II testing in asthma. That program was licensed in 2001 to Gaithersburg, Md.-based MedImmune Inc., now part of London-based AstraZeneca plc, in a potential $65 million-plus deal. MedImmune is picking up the cost for the drug's development, and Genaera would receive its next milestone payment upon the start of Phase III studies.

Shares of Genaera (NASDAQ:GENR) closed at $2.86 Thursday, down 6 cents.