By Randall Osborne

CytoTherapeutics Inc. said it will cut staff by 20 percent and refocus on its pain-control program and others, as a result of the planned end to its drug-delivery collaboration with Genentech Inc. related to Neurturin, a homologue of glial cell line-derived neurotrophic factor to treat Parkinson's disease.

"It's their money and it's their molecule," said Elizabeth Razee, spokeswoman for CytoTherapeutics, of Lincoln, R.I.

"Based on the data they've seen from us, they believe the molecule is not optimized by this delivery," Razee said. "In part it's due to the idiosyncratic features of the molecule, and their expectations."

The number of employees to be laid off has not been determined.

"It's more financially based than broken down into full and part-time employees," she said. The company has between 110 and 120 full-time employees.

Neurturin promotes nerve cell growth and protects certain nerve cells against damage. Entering the partnership in 1996, South San Francisco-based Genentech said it would invest up to $50 million in CytoTherapeutics. (See BioWorld Today, Dec. 2, 1996, p. 1.)

Although the collaboration with Genentech for Parkinson's disease is ending, agreements relating to Huntington's disease and amyotrophic lateral sclerosis, or Lou Gehrig's disease, remain in effect. But those aren't going anywhere immediately.

Genentech has asked CytoTherapeutics to redeem a portion of the shares acquired by Genentech as part of the Neurturin deal for about $4 million. The deal provided for redemption under certain circumstances, and CytoTherapeutics is reviewing the merit and amount of the request.

Meanwhile, the company is moving ahead with its pain-control program. CytoTherapeutics' pain-control capsule implant for cancer patients contains bovine adrenal cells that secrete naturally occurring analgesics such as catecholamines and opioid peptides. It is implanted in the intrathecal space in the lumbar region.

On the pain-control capsule's development, the company is collaborating with Astra AB, of Sodertalje, Sweden.

Earlier this year, after the capsule broke in three trial patients, CytoTherapeutics modified it. (See BioWorld Today, Jan. 20, 1998, p. 1.)

"We added a clip and changed the method of suturing," Razee said. The company asked the FDA several weeks ago for permission to resume tests.

"I'm not certain what form it will take, as to whether it's cancer patients or neuropathic patients," she said, adding that CytoTherapeutics expects to resume patient enrollment in Phase IIb trials by the end of June.

CytoTherapeutics also is conducting research in ophthalmics and stem cell treatments, and is seeking partners. The company's stock (NASDAQ:CTII) closed Wednesday at $1.875, down $0.156.

"We don't want to go to the equity markets at that price, and we don't want to run out of money, either," Razee said. "That means make a deal."

As of March 31, CytoTherapeutics had $24 million in cash and marketable securities, with a net loss for the quarter of $3.5 million.