Looking to climb out from under some recent dark clouds, Incara Pharmaceuticals Corp. said its wholly owned subsidiary, Incara Cell Technologies Inc., agreed to sell substantially all of the assets and certain related liabilities of its liver cell and liver stem cell program to Vesta Therapeutics Inc.

While terms were not disclosed, Incara said the agreement allows it to maintain an ongoing financial interest in the program without having to fund clinical trials. At the same time, Incara is narrowing its focus solely to its catalytic antioxidant program.

"We think that both programs are very good, but today's financial environment is tough," said W. Bennett Love, Incara's vice president of corporate planning and communications. "The catalytic antioxidant program is more along the lines of what traditional pharmaceutical companies are more comfortable partnering with. From that perspective, it makes more sense [to continue that program] for a small company like us."

Incara has synthesized small molecules with catalytic antioxidant properties. They are being developed as treatments for protection from damage occurring in cancer radiation therapy and stroke and for protection of cells in transplantation. Incara also is exploring the protective effects of its catalytic antioxidants in pulmonary diseases and as agents to reduce the toxicity arising from total body exposure to radiation.

Specifically, one Incara compound has reduced the extent and duration of severe radiation-induced mucositis in a preclinical model. Its AEOL 10113 candidate significantly protected the normal lung tissue of rats against damage caused by radiation, Incara said. Both AEOL 10113 and its related compound, AEOL 10150, also have shown some degree of antitumor activity in the absence of radiation therapy in rat models of breast and skin cancers.

"We're in preclinical development and we're talking with some of the pharmaceutical companies about directions we would go in clinical trials," Love said, specifying the cancer radiation indication.

But Incara did not address any partnership deals, meaning the 25-person company must work internally to keep its head above water. It said in August it was considering various alternatives to keep the company afloat, and the sale of the liver program appeared to be a step in that direction for the Research Triangle Park, N.C.-based firm. It reported a loss of about $9.5 million for the nine months that ended June 30, and reported about $1.3 million in cash and marketable securities.

Last month, Incara was delisted from the Nasdaq National Market and began trading on the Over-the-Counter Bulletin Board. Earlier in the month, the company said a Phase II/III trial of deligoparin (formerly called OP2000) in ulcerative colitis failed to meet its primary or secondary endpoints. The ultra-low-weight heparin product was being developed by Incara Development Ltd., which is jointly owned by Incara and Dublin, Ireland-based Elan Corp. plc.

Given the product's unsuccessful development and Elan's shrinking presence in the venture, Incara gained little value from deligoparin.

"The clinical results did not justify moving that compound forward," Love said. "I don't know if the [joint venture] has been dissolved officially, but it's unlikely that it will go forward."

In August, Incara said it stopped the trial short of the originally planned 270 patients due to limited financial resources and an uncertain commitment from Elan. At the time, Incara said it would focus on its catalytic antioxidant and liver cell transplantation programs. (See BioWorld Today, Aug. 27, 2002.)

But strained to continue both development initiatives, Incara opted for the divestiture to reduce overall operating expenses. Love said that while the move would not involve layoffs, Incara's liver program employees would transfer to Vesta. A portfolio company of regenerative medicine investor Toucan Capital Corp., of Bethesda, Md., Vesta is developing therapies to repair and regenerate liver and other major organs.

Incara's stock (OTCBB:INCR) rose 2 cents Tuesday, or 25 percent, to close at 10 cents.