BioWorld International Correspondent

LONDON - Xenova Group plc plans to outsource the development of its biologics programs to produce an annual cost saving of £2 million and extend its existing £20 million (US$31.8 million) cash resources until the middle of 2004.

Up to 40 staff members will leave the company, most of them former employees of Cantab Pharmaceuticals plc, which Xenova acquired in April 2001.

CEO David Oxlade told BioWorld International, "[Discovery] research continues in-house and manufacturing remains in-house; it is the bits in the middle that will be sourced externally."

Xenova always has run its small-molecule development "on a virtual basis, not with a whole raft of in-house people, and for seven years it has run well," Oxlade noted. Cantab had the opposite strategy, doing everything in-house. "To some extent this was appropriate essentially because biologics is more difficult to contract out. But in the last year since we acquired them the biologics [programs] have made progress and we can now run them at arms length."

Oxlade said this was not a defensive move to save money, nor would it harm Xenova's ability to feed its pipeline. "We think this will make the company better. The question is, would you do this if you had more money? The answer is yes."

The move will reduce operating costs and give Xenova, based in Slough, more flexibility to scale resources according to need. "We have a bulge of products going through development and by using external suppliers we can smooth this out," Oxlade said.

Some employees who are leaving will be joining external contractors and will continue to work on the same projects.

Oxlade said the pilot and early clinical-phase manufacturing plant are to be retained because there are no suitable external suppliers. "[There is] no doubt, biologics manufacturing is in short supply. We get regular requests for our plant to be used if there is any spare capacity."

Xenova also announced two further projects, a search for small-molecule inhibitors of HIF-1 alpha (hypoxia inducible factor) for treating cancer, and a vaccine against meningitis B, which have gone into preclinical development.