Shifting its focus to therapeutic vaccines, Cerus Corp. is cutting more than one-third of its work force primarily associated with its blood safety program.

The Concord, Calif.-based company's vaccine program, which it began two and a half years ago, is directed toward cancer and infectious disease. Its oncology application is based on a combination of its Listeria-based technology with specific cancer antigens to induce immune responses against malignant cells. Other technology at Cerus can be applied to vaccines against infectious disease.

"The potential that we see in the vaccine program is centered on the growing body of evidence that suggests that the immune system is a very powerful system that can be used in the fight against cancer," Cerus President and CEO Claes Glassell told BioWorld Today. "We have developed a proprietary, modified version of Listeria, through which we have been able to retain the immune-stimulating properties of Listeria, and we also have been able to dramatically reduce the toxicity of Listeria."

He noted that in animal models, the combination of Listeria with selected antigens has proved to be potent in fighting cancer.

Its vaccine research already has caught the eyes of a collaborative partner, MedImmune Inc., of Gaithersburg, Md., with which Cerus is working to develop a therapeutic vaccine targeting an antigen expressed in breast, prostate and colon cancers. In that deal, Cerus is providing its Listeria-based technology for use with MedImmune's EphA2 protein antigen.

Cerus also has access to mesothelin, an antigen expressed in pancreatic and ovarian tumors, through an exclusive license from the Johns Hopkins University in Baltimore. To assist further development, two Johns Hopkins researchers joined Cerus' scientific advisory board. The company also has a Small Business Innovation Research grant related to its research with mesothelin.

Cerus also is investigating the use of Listeria on its own as an adjuvant. As research moves forward in that program and the two partnered programs, Glassell said the company plans to file at least one investigational new drug application with the FDA by the end of next year.

"We think what sets our vaccine apart from others," he said, "is that we actually are able to induce both an innate and an adaptive response from the immune system, so we think we have a higher level of potency."

The company's vaccine research in infectious disease involves the use of what it calls KBMA (killed but metabolically active) bacteria to reap the benefits of bacterial metabolism without replication. The program, which remains unpartnered, has advanced into animal model studies.

But while its vaccine program expands, Cerus is lowering its overall research and development costs as it relates to the Intercept Blood System. The company is reducing its headcount by about 35 percent and lowering its annual cash burn rate to about $12 million to $15 million in the process. It previously projected an annual cash consumption of $30 million to $35 million. There will be a one-time restructuring expense of about $3 million in the second quarter.

But in spite of the cost cutting, Cerus isn't fully severing ties with Intercept, a program that has been beset with regulatory woes.

"I want to emphasize that we are not [abandoning Intercept]," Glassell said. "Some of the cost reductions were planned anyway, because they relate to activities that have been completed."

Most of the layoffs include Intercept-associated workers, but cuts also were felt among general and administrative staffers. Glassell said the company has about 70 remaining employees.

Designed to enhance blood supply safety by inactivating viruses, bacteria, other pathogens and white blood cells in blood components intended for transfusion, Intercept's development will be continued, to some measure, in partnership with Baxter Healthcare Corp. Cerus said it would continue technical support of its Deerfield, Ill.-based partner's commercial efforts for Intercept Platelets in Europe, where the product is approved, and also work with Baxter to pursue commercial partners outside of North America and Europe.

The company also said it would work with the FDA to advance the approval process for the platelet product in the U.S.

Cerus expects to continue development activities for the Intercept Plasma program at a reduced rate; Glassell called it the source of most of the company's spending in the past year. He added that Cerus no longer plans to file for European approval of the plasma product this year.

"But we are continuing some of the key activities, although at a slower pace," he added. "If our financial situation concerning Intercept were to improve, we would be able to step up those activities and do the filing in the future."

Cerus also will continue to evaluate its plasma program in the U.S., through discussions with the FDA, to determine its future. Selected research and development activities also will continue with the red blood cell program.

"There is still quite significant activity going on with Intercept," Glassell said. "We very much believe in it."

On Thursday, Cerus' shares (NASDAQ:CERS) fell 5 cents to close at $2.34.

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