BioWorld International Correspondent
Active Biotech AB is cutting its work force by more than half and pulling out of drug discovery in order to conserve its cash and focus its resources on its portfolio of development projects.
The Lund, Sweden-based firm is eliminating 98 of 176 positions. It said it expects the move to yield savings of about SEK100 million (US$13.5 million) by 2005.
"We don't see any restructuring costs hitting the P&L," President and CEO Sven Andréasson told BioWorld International.
Active Biotech's spending peaked last year at SEK323 million, he said. By next year, it will be down to SEK200 million, with 2004 somewhere "between the two." The company finished 2003 with SEK227.6 million in cash and equivalents, but it anticipates additional income from a number of sources in the short term.
Its lead drug, laquinimod (SAIK-MS), an oral treatment for multiple sclerosis, is slated to enter Phase III trials shortly, and discussions with potential partners are ongoing. The company aims to conclude an out-licensing agreement before the Phase III study commences. It disclosed data from a preliminary analysis of the Phase II study in September and is due to present final data at the annual meeting of the American Academy of Neurology in San Francisco.
Active Biotech's second source of anticipated income is PowderJect Pharmaceuticals, now part of Emeryville, Calif.-based Chiron Corp., which purchased the vaccines business in 2001. The sale agreement includes a provision for a milestone payment of between $5 million and $10 million, depending on when PowderJect gains European marketing approval for a travelers' diarrhea vaccine, Dukoral, which was part of the transaction. Should the product gain approval in March, Active Biotech would receive about $9 million.
However, the deal is clouded by an arbitration claim PowderJect lodged in June, which asserts the original sale agreement was flawed. Although Active Biotech has stated from the outset that it believes the claim to be without merit, its maximum theoretical exposure would amount to $20 million. Andréasson said the matter should be resolved this year.
In addition to laquinimod, Active Biotech has two other projects in clinical development. An oral prostate cancer drug candidate, TASQ, has completed a Phase I trial at Johns Hopkins University Hospital in Baltimore, while a non-small-cell lung cancer treatment, TTS CD3, is undergoing a Phase I study at centers in the U.S. and Norway. A fourth drug candidate, ABR215757, is due to commence a Phase I trial in the first half of this year for treatment of systemic lupus erythematosus.
The company has two preclinical projects in autoimmune disease and inflammation, but is not planning to progress them at the moment. It is continuing one preclinical project, an effort to identify the target on which laquinimod acts.
Active Biotech netted SEK216.7 million, after transaction costs, in a discounted rights issue last year. It has no immediate plans to return to the market.
"I think if you do that, you should definitely do it on the back of some good news," Andréasson said.