LONDON The axe has fallen at Cortecs plc, which said it is laying off 75 of 270 staff members, scaling back research collaborations and closing its London headquarters and New York offices in a move intended to cut the burn rate from #17 million (US$28.1 million) to less than #10 million.
Acting CEO Phil Gould told BioWorld International the company is ¿trying to focus behind our lead projects and support projects, and [is] restructuring to reflect that. The level of infrastructure was not appropriate to the stage of development of the business.¿ Gould said his intention is also to close the office in Perth, Australia. The company will now be based at its existing research site in Deeside, near Chester, Cheshire.
Gould took control at Cortecs, which focuses on drug delivery, in December 1998, when the company said an internal review found two of the three lead programs were not as advanced as previously stated. He replaced Michael Flynn, who had become acting CEO in June 1998, in place of founding CEO Glen Travers, who left over disagreements on the commercialization strategy.
On Dec. 9 of last year, Cortecs said it was calling in PA Consulting Group to carry out a commercial and technical review of its programs. Last week, Cortecs said it had received the preliminary findings. ¿PA¿s opinion is that the three lead therapeutic products are at the stages of technical development indicated by the company in its statement on Dec. 1, 1998,¿ Cortecs said.
In its statement, Cortecs said new clinical trials would be necessary in some countries, including North America, before it would be possible to register the company¿s lead product, Macritonin, which is oral calcitonin for the treatment of postmenopausal osteoporosis. Dose levels required could threaten the drug¿s profitability, Cortecs said, adding there will be a delay in Phase II trials of Pseudostat for the treatment of chronic bronchitis. Development of Macrulin, an oral insulin in Phase I trials, is progressing as previously described.
PA is proceeding with a commercial evaluation of the programs, and will set a series of critical decision points for each of them. Gould said the PA report was carried out for the benefit of both shareholders and the new management. ¿It was a red-flag review which has raised issues, but none of them were new to the management or not released before,¿ he said.
Gould said the layoffs cover a broad range of staff within the company. ¿While they were largely involved in infrastructure support to the offices, some staff were connected with early-stage research, and other staff were supporting late development,¿ he said.
Gould said he is now reviewing the commercialization strategy. The previous policy was to find marketing partners after Phase III trials. ¿Probably in the future we will have a more varied approach, and will aim to partner earlier,¿ he said.
In particular, Cortecs will not proceed with U.S. Phase III trials of Macritonin until the company has a partner. Although the compound has been submitted for marketing approval in seven European countries, registration is in doubt because the filing was made on the basis of biochemical markers of reduced bone loss, rather than fracture data. Bone-fracture data and further investigation of higher doses will be required for U.S. registration, and submission of a new drug application is not expected before 2004.
Shares in the company hit a low of 8.5 pence in December. They then rose to 31 pence this month, but fell back to end last week at 26 pence. As of Dec. 1, 1998, the company had #16.4 million in cash. n