By Randall Osborne

With a gene therapy for cystic fibrosis (CF) in Phase II trials, Targeted Genetics Corp. is restructuring, mainly by reducing its work force by more than one-fourth, to conserve resources and push its three lead products toward the marketplace.

The employee cutback of 24 leaves 66 workers, and 51 of those are assigned to research and development.

"We've not cut the meat or the muscle from the company," said H. Stewart Parker, president and CEO of Seattle-based Targeted Genetics. "It's hard, but people understand why it had to be done."

The main goal was to cut the company's $15.5 million annual burn rate, Parker said. Laying off the workers and modifying some research collaborations will knock down the burn rate by several million dollars, she added.

As of Sept. 30, 1997, Targeted Genetics had $9.18 million in cash, with a net loss of $2.78 million for the third quarter of the year. In documents filed with the Securities and Exchange Commission, the company said it had enough cash to operate until April of this year.

David Schubert, director of communications for the company, said the restructuring gives Targeted Genetics enough cash to operate longer into 1998, but not into the next year.

"We don't have a particular issue about being able to raise more money," Schubert said. "This is as bleak as it's going to get."

The company's Phase II product is tgAAV-CFTR, designed to correct the genetic defects responsible for cystic fibrosis. AAV stands for adeno-associated viral vectors and CFTR refers to the cystic fibrosis transmembrane conductance regulator. The treatment involves transferring to lung cells the gene encoding CFTR, which is missing or mutated in cystic fibrosis sufferers. (See BioWorld Today, Nov. 28, 1995, p. 1.)

A vector is required to transmit healthy genetic material into cells. Adenovirus, which causes the common cold, may inflame respiratory tissues. AAV is called "associated" with AV because it can't replicate unless AV is present. AAV is one of many parvoviruses; some of these cause disease, but AAV does not. Thus, more healthy genes may be absorbed.

Last June, Targeted Genetics and the Medical College of Ohio, in Toledo, were granted a broad patent covering technology to manufacture adeno-associated viral (AAV) vectors. (See BioWorld Today, June 3, 1997, p. 1.)

Preliminary data from Phase I trials of tgDCC-E1A, the company's gene therapy product for cancer, will be presented next month at the 89th Annual Meeting of the American Association for Cancer Research.

Also in Phase I trials are cytotoxic lymphocytes, a cellular therapy for infectious diseases and cancer.

The cutbacks are "not based on any perceived or known weaknesses in any of the trials," Schubert said.

Targeted Genetics' stock (NASDAQ:TGEN) closed Friday at $1.25, down $0.625. *