By Mary Welch

Less than a week after AltaRex Corp. received word that Purdue Pharma LP would not exercise its option on a $100 million deal to develop AltaRex's OvaRex MAb and BrevaRex MAb products, the company laid off about a quarter of its staff as part of a move to reduce its burn rate by 50 percent.

"When we got our notice from Purdue, we immediately focused on three steps for our future," said Edward Fitzgerald, the company's senior vice president and chief financial officer. "Step one was to reduce the burn. It was a difficult decision but a necessary one. We continue to believe that we must focus and do one thing at a time. OvaRex is our best opportunity to bring the most value and money into the company considering the time and money factors."

The company has 24 employees following the release of 15 people. In addition, it suspended its product development activities (except for OvaRex) and will not lease laboratory facilities in Waltham. The company also will continue with its plans to close its laboratory operations in Edmonton, Alberta.

"Cutting our burn rate was the one option that we had the most control over," he said. "When we have news about our other two steps - raising money and signing a new partner - we'll let people know."

With the reduction and other efforts, the company has enough money to operate through mid-2000, Fitzgerald said.

Earlier this month AltaRex received word that Purdue would not exercise its option to develop the company's two lead products. Purdue pledged more than $100 million to AltaRex in research and development funds over the next three years, as well as milestones. Purdue also made a $3.4 million purchase of AltaRex's common stock. (See BioWorld Today, Oct. 18, 1999, p. 1; and May 14, 1999, p. 1.)

Fitzgerald said he has heard no further explanation why Norwalk-Conn.-based Purdue walked away from the deal. "When we first received notice, there was no explanation," he said. "There still is nothing. It's hard to explain to people but we don't know. I firmly believe that it was a business decision on Purdue's part rather than news coming out of the clinical trials or product development."

AltaRex's products are based on a proprietary platform technology, Anti-idiotype Induction Therapy, which the company believes enhances the ability of the immune system to produce a highly effective anti-tumor response.

OvaRex MAb is currently in two potentially pivotal Phase IIb trials and two open-label Phase II studies in late-stage ovarian cancer patients who have completed first-line treatment.

BrevaRex MAb is in Phase I trials for several cancers, but the first indication would have been multiple myeloma had the development not been suspended, Fitzgerald said.

AltaRex's stock (TSE:AXO) closed Friday at C25 cents, down C13 cents