BioWorld International Correspondent

MUNICH, Germany - IsoTis SA is restructuring its research and development programs to cut costs and reduce the use of capital by almost 50 percent.

The company is canceling development of VivescOs, an autologous bone program, and is stopping commercialization of CellActive Cartilage in Spain and EpiDex in Switzerland. Those cuts are in addition to four programs that were terminated as part of the company's merger with Modex in late 2002. (See BioWorld International, Dec, 25, 2002.)

IsoTis, of Lausanne, Switzerland, expects the restructuring to save €13 million, reducing the company's use of capital from approximately €27 million in 2002. The company will focus on a product for recalcitrant leg skin ulcers that is currently in Phase II testing, and on OsSaturaBCP, a bone substitute similar to VivescOs that the company says has a better profile. In further product changes, IsoTis will also pursue two cartilage repair programs, PolyActive BCP and VivesCart. It also will replace CellActive Skin, developed by IsoTis before the merger, with AcuDress, which was developed by Modex. Finally, it aims to improve distribution of SynPlug, an orthopedic device often used in hip surgery.

The restructuring was expected to lead to the loss of approximately 48 jobs, roughly one-third of the merged company's staff. The company is required by Dutch and Swiss law to consult with work councils in both locations about the layoffs, and the company cited these legal requirements in declining further comment.

Jacques Essinger, IsoTis' CEO, said that the restructuring will allow the company to reach profitability with the €80 million capital that it has on hand. "These were promises made during the merger process," he added.

Marcel Wijma, an analyst with Oyens & Van Eeghen in the Netherlands, told BioWorld International, "This was a negative surprise because they are reducing two-thirds of their current R&D. The new business strategy that is expected in February will look toward external growth. What surprised me the most was that they were stopping the bone program, which was advanced and was a leader in the field."

The company's stock has, however, gained on the news, rising from €0.69 per share to trade at €0.90.