By Mary Welch

Unable to raise sufficient equity capital, Ophidian Pharmaceuticals Inc. suspended laboratory, product development and related company operations, and will focus on marketing its intellectual property and manufacturing assets.

As a result, 18 employees left the company, leaving six full-time employees.

The company's stock (NASDAQ:OPHD) took a dive, closing Friday at $1, down 75 cents, or 43 percent.

"The company doesn't have the resources to carry on as an integrated discovery and development organization," said Douglas Stafford, the company's president and CEO. "Yet we believe there still is value in our assets. The organization is now focused on doing that - finding a merger partner, development partner, or one or more purchasers of our assets. There have been expressions of interest on a variety of our assets."

The fickle investment scene was a large factor in the Madison, Wis.-based company's troubles, Stafford said.

"In a general sense, that's right," he said. "We needed to have Phase II results on our lead drug to attract more significant capital and we were not able to bridge that gap. As management, we were always assessing our cash burn and where it may lead us. Our burn rate was between $250,000 and $300,000 a month. We realized we had to make decisions to get value for our assets."

Ophidian's lead drug is OPHD001, an avian polyclonal antibody for the treatment of Clostridium difficile-associated disease (CDAD). The antibody selectively targets C. difficile toxins in the colon, rather than the intestine's normal microbes or C. difficile itself. These toxins play an essential role in the organism's disease mechanism.

OPHD001 had completed two Phase I trials but enrollment in the Phase II trial was slower than anticipated.

"Enrollment started late last summer and we had hoped to have interim results by the beginning of this year," Stafford said. "We were to enroll 160 patients but enrollment went slowly. The trial is now suspended."

OPHD001 was the lead compound in a development deal worth up to $12.4 million with Eli Lilly & Co., of Indianapolis. (See BioWorld Today, June 6, 1996, p. 1.)

The company, founded in 1989, suffered a setback when Lilly returned all rights to Ophidian in September 1998. According to Ophidian, Lilly thought the patient population was too small. "We knew there wasn't anything wrong [with the science], so we didn't mind Lilly's actions at all," Donald Nevins, the company's chief financial officer, later told BioWorld Today. The company, in fact, proceeded to take OPHD001 into Phase II trials on its own. (See BioWorld Today, June 25, 1999, p. 1.)

In addition to its intellectual assets, Ophidian has a 4,870-square-foot manufacturing facility.

Earlier this month, the company reported financial results for its second fiscal quarter, which ended March 31. It reported revenues of $1.3 million and a net loss of $392,000. The company had $3.4 million in cash, which it said would last for about five months from March 31.