National Editor

Sharpening its focus on cytomegalovirus and hepatitis C drugs, ViroPharma Inc. is letting go 70 percent of its work force in a restructuring that will leave the company with enough cash to keep going until at least the end of 2006.

"We were a research and development company; we want to become a development and commercial company," Michel de Rosen, ViroPharma's chairman and CEO, said during a conference call, adding that the decision to reduce staff was "in human terms, very painful."

He told BioWorld Today that the restructuring is "not at all a move of desperation. It's a move to build a more focused and more late-stage ViroPharma," that provides "value, flexibility, freedom and power to make more moves going forward."

Exton, Pa.-based ViroPharma's stock (NASDAQ:VPHM) fell 53 cents Tuesday, or 14.3 percent, to close at $3.17.

The personnel cutbacks will be finished by the middle of the year, and ViroPharma said about $9 million of costs related to the restructuring will be included in first-quarter operating results. Kori Beer, director of corporate communications, told BioWorld Today the staff cutbacks will amount to fewer than 50 employees.

ViroPharma ended 2003 with about $120 million in cash. Vincent Milano, chief financial officer, said the first-quarter charge will not be felt through cash alone. "It's a combination of cash and non-cash items like the write-off of assets and things of that nature," he said.

Among ViroPharma's changes: The company is closing its program in biodefense and stopping development of pleconaril for life-threatening diseases, although work will continue on an intranasal formulation of the drug for the common cold in an option agreement entered in November with Kenilworth, N.J.-based Schering-Plough Corp., as will an HCV program with Wyeth, of Madison, N.J. (See BioWorld Today, June 20, 2002.)

Pleconaril's history has been imperfect, and the latest news bore shades of 2002. In the summer of that year, Bridgewater, N.J.-based Aventis Pharmaceuticals Inc. and ViroPharma ended their deal to develop the oral version of the drug, then named Picovir, for the common cold - with ViroPharma disclosing plans at the same time to reduce the work force by 63 percent. In May, the FDA had said it would issue a nonapprovable letter for Picovir. (See BioWorld Today, May 13, 2002, and Aug. 2, 2002.)

Picovir's problems began in 2000 when Phase III data proved not statistically significant in viral respiratory infection in adults and viral meningitis in adults and children. In the spring of 2002, an FDA panel voted 15-0 against recommending approval. (See BioWorld Today, April 12, 2000, and March 20, 2002.)

In ending the Aventis deal, ViroPharma sold its sales force to Aventis for about $15.4 million. The 200-person team was included in the 63 percent staff reduction.

"In a way, we were moving back to R&D, and this time we're making nearly the opposite move," de Rosen said, putting the emphasis back on business development rather than research.

ViroPharma hopes to build on the Schering-Plough intranasal pleconaril deal, as well as the in-licensing last summer of the antiviral maribavir for cytomegalovirus (CMV), for which the firm paid $3.5 million up front to GlaxoSmithKline plc, of London (along with milestones and royalties), in exchange for exclusive worldwide rights for prevention and treatment of CMV infections due to congenital transmission and transplants, including those of solid organs and hematopoietic stem cells. (See BioWorld Today, Aug. 20, 2003.)

Phase I studies are expected to start this quarter with maribavir, with Phase II trials in the second quarter. The company aims to test the drug first in hematopoietic stem cell (bone marrow) transplants.

"We've had many encouraging discussions with treating physicians in this area," de Rosen said, and the doctors want a better safety profile in any new drug for CMV. "The safety profile [of maribavir], to date, looks clean," he added. ViroPharma also has rights to develop maribavir for HIV.

In HCV, too, ViroPharma and Wyeth are shooting for Phase I studies to start in the first quarter, with data in the fall. Wyeth "will pay most of the clinical research costs of the coming year, and we will work together to advance any potential HCV compound through our pipeline," de Rosen said.

Regarding the intranasal pleconaril, ViroPharma expects to have data from a series of clinical studies in mid-2004, which could lead to a full license agreement with Schering-Plough.

De Rosen said the intranasal formulation apparently gets significantly more drug to the infection site with less risk of systemic exposure, which was "an issue we had to deal with when advancing the oral form." If Schering-Plough goes ahead with a full licensing deal, ViroPharma would get $10 million and Schering-Plough would buy the existing drug inventory.

Meanwhile, early stage research has been curtailed, including discovery work and most internal preclinical development activities. ViroPharma will be looking for in-licensing opportunities, de Rosen said - preferably in the area of transplants or gastroenterology, though the company is listening to all comers.

"The idea is indeed to build a sales force [as the company did in the Aventis deal for oral pleconaril] but to do it only once we have the right product in our hands," he said. "We do not want to go into a primary-care arena. We want to go into a niche, specialty, hospital-type arena where we can have success with a limited sales force."