An accumulation of products in preclinical development has forced Burlingame, Calif.-based Valentis Inc. to scale back its work force by about 42 percent.
Valentis said it will suspend clinical programs in oncology in order to lower its cash burn rate from $9 million per quarter to about $5 million per quarter in the next six months. As of Sept. 30, the company had $28 million in cash and equivalents.
The company intends to reach the lower burn rate by shutting down its facility in The Woodlands, Texas, by the middle of the year, and cutting 45 of 108 jobs across the company. Preclinical positions will be eliminated. Valentis gained the facility in Texas through the 1999 merger of Megabios Corp, of Burlingame, and GeneMedicine Inc., of The Woodlands, an entity later named Valentis.
Alain Rolland, senior vice president, preclinical research and development, and head of the center in Texas, and Bennet Weintraub, chief financial officer and vice president of finance, are among those leaving Valentis in this restructuring.
“This is happening because we have more products backed up in preclinical [development] than we can begin to afford to develop,” Benjamin McGraw, Valentis’ chairman, president and CEO, told BioWorld Today. “The sad part of this whole thing is that the Woodlands group has been incredibly productive creating products, but we have to build capitalization before we can afford to develop. That’s the story you’ve heard 10 million times in biotech.”
From here, Valentis’ development efforts will focus on its del-1 GeneMedicine product for peripheral arterial disease and ischemic heart disease. Del-1, an angiogenic gene, is in Phase I/II trials.
“We’ll focus on the del-1 gene because of the enormous market potential and more importantly, the strong preclinical data and clinical data on other antigens that have been developed by us and other people,” McGraw said.
Aside from cutting positions this year, Valentis has other issues to deal with, such as the future of its collaboration with Basel, Switzerland-based Roche Holdings Ltd. The companies are developing the synthetic lipid delivery of interleukin-2, a Roche-owned, FDA-approved anticancer agent, as an immunotherapy for head and neck tumors.
But results of an 80-patient Phase IIb trial released in early December were poor. (See BioWorld Today, Dec. 4, 2001.)
McGraw said Roche hasn’t decided whether it will stop the IL-2 program or switch to a different indication.
He continued by saying the job cuts have nothing to do with the uncertain future of IL-2 GeneMedicine. “If IL-2 had been positive in Phase II and Roche had carried it to Phase III, then we would have had a much higher capitalization and been able to raise more money. That would have allowed us to keep more preclinical programs going.”
Valentis raised $13.8 million in late December through the sale of 6.1 million shares to San Francisco-based Wells Fargo Van Kasper at $2.25 per share. (See BioWorld Today, Dec. 31, 2001.)
Despite that cash infusion, McGraw said, “When you push products forward in clinical development, it gets extremely expensive. What we think is more prudent for us to do is advance del-1 and build capitalization. We have quite a few other products we can still put in the clinic and after that, we can build the preclinical group back up. We are not eliminating preclinical, we are just taking it down to a small group.”
GeneSwitch is a functional genomics research tool, and OptiPEG is a family of technologies based on polymer modification using polyethylene glycol.
Valentis’ stock (NASDAQ:VLTS) dropped 57 cents Tuesday, or 16.8 percent, to close at $2.83.