V.I. Technologies has hit a rather significant speed bump on its road to develop its blood technology product, Inactine.

V.I. Technologies, also called Vitex, is the developer of the Inactine Pathogen Reduction System for red blood cells, and late Monday it reported that it will halt additional enrollments in its Phase III trial of patients being transfused with blood treated with the Inactine system. The stoppage comes at the recommendation from a Data Safety Monitoring Committee, which examined data following Part A of the study before the company was to proceed to Part B to complete it.

The news hammered the company's stock (NASDAQ:VITX) Tuesday, dropping it $1.50, or 66.7 percent, to close at just 75 cents a share.

In a conference call, John Barr, president and CEO of Vitex, said that the "specific concern [of the DSMC] was antibody responses in patients receiving Inactine-treated red blood cells and associated clinical assessments in the participants," which numbered about 70. He added that there have been no reports of serious adverse events in the study.

"We were informed of this mid-day Monday and are disappointed," Barr said. "We had not seen any evidence of these issues in preclinical studies or in Phase I or Phase II clinical studies."

He said that the company's main priority now is to do its own analysis of the data, "and assess how best to proceed." Meanwhile, he said the company would be having ongoing dialogue with the FDA.

The two next most pressing goals outlined by Barr are the pursuit of additional funding and "to cut our burn rate while this [study] evaluation is going on," he said. Without such actions, he projected that the company had only enough cash to support operations through "mid-December - it's essential we raise new financing."

While there will be a halt in the Phase III chronic study, Barr said that the company is continuing with its other Phase III trial, the use of the Inactine Pathogen Reduction System for red cells used in cardiac surgery, called the Surgical Study. He said the company would continue to enroll patients into that trial, projected to include about 200. He added: "We continue to believe that the surgical study could be completed in the second half of next year."

The DSMC did not have the responsibility to look at the results in that study, which is being monitored by standard trial oversight methods, said Bernadette Alford, executive vice president, development and clinical affairs.

The antibodies had been found in "a few patients," all treated at one site, Alford said, while declining to provide a specific number. She added that appearance of the antibodies seemed associated with multiple transfusions of the Inactine-treated blood over a period of months.

The patients in the study have sickle-cell disease and are transfusion dependent, with Alford describing those as "a complicated group of patients" with complex serological circumstances, thus making the analysis of the serological changes observed equally complicated. "We'll look at this in the same unblinded fashion that [the DSMC] did to ascertain what it means," she said.

Besides causing a significant delay in the regulatory pathway, the trial halt will slow negotiations with future development and distribution partners, Barr said. The company currently has other partnership deals with Pall, Haemonetics and Amersham Biosciences, and Barr said that he sees no problem with those agreements "in the short term - we have things ongoing with them and will continue to work with them."

As to the company's financial difficulties, he said that Watertown, Mass.-based Vitex has engaged an investment banking firm to seek new financing. Meanwhile, he said there was no specific target for burn rate reduction but said moves would be made quickly.

Meanwhile, the company also just issued its third-quarter report showing a loss of $6.7 million, or 26 cents a share, compared to a net loss of $6 million, or 26 cents a share, for the year-ago quarter. The current quarterly loss included a non-cash charge of $1.4 million to write off the company's investment in a second red-cell-processing laboratory that no longer is considered essential to its plans.

For the nine-month period ended Sept. 27, the company reported a net loss of $19.6 million in comparison with a net loss of $15.4 million in the year-ago nine-month period. At that time, the company had cash and restricted balances of $5.5 million.