By Kim Coghill

Washington Editor

Expecting an uphill battle in the quest to get IntraDose to market, Matrix Pharmaceutical Inc. said Wednesday it will restructure and begin focusing on its next drug candidate, tezacitabine.

The company said it will lay off 34 employees, or 40 percent of its work force. In another step to save money, the company said it will sell its San Diego-based manufacturing facility, Matrix Contract Division (MCS).

Hence forth, the company will place much of its hopes in tezacitabine, a chemotherapy drug in Phase II trials. Tezacitabine has performed well in preclinical and Phase I trials among patients with a variety of cancers, Bill Martin, director of corporate communications and investor relations for Fremont, Calif.-based Matrix, told BioWorld Today. Matrix also is seeking partnerships for development and marketing of tezacitabine.

The restructuring plan, expected to cost about $1 million, is a direct result of Matrix¿s failure to win recommended approval of IntraDose from the FDA¿s Oncologic Drugs Advisory Committee (ODAC). In a unanimous vote last month, ODAC said Matrix¿s data on IntraDose Injectable Gel failed to prove that the cancer drug was safe and effective. And in a 9-to-3 vote, with one member abstaining, the panel said the response rate of patients in the trials was not beneficial. (See BioWorld Today, Sept. 11, 2001.)

IntraDose (cisplatin/epinephrine) was developed to treat patients with head and neck cancer who have few, if any, remaining treatment options.

¿Although the FDA has not made a final decision on IntraDose, we believe it is an uphill battle to get approval of IntraDose for head and neck cancer at this time,¿ Martin said. ¿Does that mean never? No. We were working on the assumption that we would be bringing the product to the market in the U.S. in early 2002, but that does not appear likely.¿

Martin went on to say that the manufacturing facility¿s charge was to make IntraDose. ¿We don¿t have that need at this time,¿ he said. ¿But we want to ensure that the facility can thrive and we want to help¿ find another owner.

MCS is an automated, fully validated, state-of-the-art facility that provides preclinical, clinical and commercial product manufacturing as well as packaging and support services, the company said.

Although IntraDose faced problems in the U.S., all is not lost, Martin said. The company has started the regulatory approval process for the gel in Europe.

¿We expect to file in the fourth quarter,¿ Martin said. ¿In the U.S., we will meet with the FDA and try to address any steps that we can take to get approval, but we must be responsible and that¿s why we¿ve made other decisions.¿

This is not the first time Matrix has had to make personnel cutbacks. Back in 1997, the company cut 66 of its 183 employees following failure of AccuSite, a genital warts drug. At that point Matrix said it was restructuring and returning to a cancer drug development company. (See BioWorld Today, Oct. 2, 1997.)

According to a prepared statement, Matrix expects its third-quarter earnings report to show about $33 million in cash, cash equivalents and marketable securities and about $11 million in remaining debt, mostly related to the San Diego facility. The restructuring is designed to reduce the overall monthly burn rate to about $1.4 million, assuming the sale of the manufacturing division.

Matrix¿s stock (NASDAQ:MATX) gained 2 cents Wednesday to close at 69 cents.

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