A week after reporting a second Phase III miss with its Amoxicillin Pulsys product in strep throat, Advancis Pharmaceutical Corp. is cutting about a third of its staff to reduce cash burn.

The Germantown, Md.-based company is eliminating a total of 33 jobs, including six positions that recently were vacated due to resignations, leaving 54 employees. For the most part, those cuts came across the board, and they included six of the firm's corporate officers.

"On the commercial manufacturing side, the reduction might have been a little more concentrated," said Bob Bannon, senior director of investor relations for Advancis, adding that the senior vice president of technical operations, Joseph Rogus, was one of the top positions cut during the restructuring process.

The other corporate officers were Barry Hafkin, senior vice president and chief scientific officer; Colin Rowlings, senior vice president of pharmaceutical research and development; Donald Anderson, vice president of discovery; James Bruno, vice president of sales; and Robert Guttendorf, vice president of pharmacology and biopharmaceutics.

Each officer received a severance package, including the continuation of their salaries for 24 months, which make up the total restructuring charges of about $3.3 million, to be recorded as a third-quarter expense.

Restructuring efforts are expected to result in an annual net savings of $4.1 million.

As of June 30, the company had cash, cash equivalents and marketable securities of about $40 million. How long that money lasts "will be highly dependent on our strategy moving forward," Bannon told BioWorld Today, adding that no decisions would be made until after a shareholder meeting later this month.

Shares of Advancis (NASDAQ:AVNC) closed unchanged Friday at $1.45.

The cost-cutting move was not unexpected. Advancis said last month it would have to reduce expenses following disappointing data in its two Phase III trials of Amoxicillin Pulsys, the company's first product created using its Pulsys delivery system. Pulsys is based on the concept that bacteria are killed more efficiently by antibiotics delivered once daily and released in staccato bursts.

Results of a pivotal trial evaluating 775-mg Amoxicillin Pulsys tablets in adult and adolescent patients with pharyngitis/tonsillitis due to Group A streptococcal infections for seven-day treatment period failed to meet the required 85 percent bacterial eradication rate set by the FDA. The drug also failed to show statistical non-inferiority to a 10-day treatment of 25 mg of penicillin administered four times per day. When that news was released June 15, Advancis' stock lost nearly 60 percent, closing at $2.03. (See BioWorld Today, June 16, 2005.)

Late last month, the company reported top-line data from its Phase III study evaluating Amoxicillin Pulsys in pediatric patients, who received either 475 mg or 775 mg, depending on their ages, in a once-daily sprinkle formulation for a seven-day period, compared to an oral suspension of 10 mg per kilogram of penicillin VK dosed four times per day. While Advancis had hoped the drug would fare better in pediatric patients - more drug was being administered per pound, and the tasteless granules sprinkled on food appeared to encourage compliance - throat cultures taken at the end of the trial showed an overall bacterial eradication of 65.3 percent, lower than the 76.6 percent recorded in the earlier adult trial. The penicillin-treated arms reported eradication of 68 percent in the pediatric trial and 88.5 percent in the adult trial. (See BioWorld Today, July 25, 2005.)

Over the next few weeks, "we'll be looking at the full data," Bannon said, "and deciding whether to proceed with additional Amoxicillin Pulsys Phase III trials, and what those trials might look like."

Amoxicillin Pulsys is being developed in a deal with New York-based Par Pharmaceutical Companies Inc. that calls for Par to cover the late-stage trial costs in exchange for a joint marketing agreement with a 50-50 profit split.

Bannon said the companies were in the process of discussing the future of Amoxicillin Pulsys. Par, which is scheduled to make a third-quarter payment to Advancis, could terminate the agreement or seek a restructured collaboration.

Decisions regarding the Amoxicillin Pulsys program also might affect the future of other Pulsys-based products. Advancis has other antibiotics in preclinical development, including a Pulsys version of Augmentin, a combination of amoxicillin and potassium clavulanate. The company also has planned to introduce a Pulsys formulation of Keflex, an antibiotic acquired from Indianapolis-based Eli Lilly and Co.

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