By Frances Bishopp

With the future of its lead product, Myloral, in jeopardy after disappointing Phase III trial results, AutoImmune Inc. has downsized its work force from 74 to 51 full-time employees, with all of the discontinued positions directly related to the Myloral program.

The Lexington, Mass., company also reported a 46 increase in net loss for the first quarter of 1997 compared with the same period a year ago. AutoImmune reported losing $7.6 million, or $0.47 per share, for the three months ending March 31, 1997, compared with $4.1 million, or $0.25 per share, last year.

The loss, Michael Rogers, vice president, CFO and treasurer of AutoImmune, told BioWorld Today, can be attributed primarily to a jump in research and development spending. In the first quarter of 1997 the company spent $7.5 million compared with $4.3 million in the same period of 1996. The increase reflected expanded clinical development spending for both Myloral in Phase III trials and its ongoing Phase II trials of Colloral for rheumatoid arthritis.

AutoImmune's stock (NASDAQ:AIMM) closed Friday at $4, up $0.563.

The 500-patient, two-year Myloral study, designed to demonstrate a significant reduction in neurologic attack rates in patients suffering from multiple sclerosis, showed substantial reductions of comparable magnitude in both active and placebo groups.

The high placebo rate, Robert Bishop, president and CEO of AutoImmune, said was "unprecedented" and the highest the company had seen so far.

Progression of disability associated with multiple sclerosis was examined in the trial as a secondary endpoint and there was no difference between active and placebo in the rate of disease progression.

Myloral is an oral, solid-dosage formulation of purified cerebroprotein-lipid complex from bovine brains. Colloral, which is AutoImmune's next closest product to market, is a liquid oral formulation of Type II collagen, which is a major component of articular cartilage in joints.

AutoImmune has developed both products with no collaborative partners.

Rogers said the company is still waiting for some analysis due next month from the Myloral Phase III trial, which centers on magnetic resonance imaging data, a secondary endpoint in the trial. The future of Myloral, Rogers said, will hinge to some degree on these results because further development of Myloral has been put on hold.

"If we see some difference between the drug and placebo, then we will have to sit down and try to make an assessment of what that means to us and how significant it is," Rogers said.

The downsizing focused entirely on staff related to Myloral, Rogers said. The move will reduce overall expenses to insure the company has enough capital to complete clinical development of Colloral, which Rogers said will go into Phase III trials by the end of the third quarter, if Phase II results, to be reported this month, are positive.

"Also our expenses should fall commensurate with losing one of our two lead products," Rogers added.

"We had two swings at the ball with Myloral and Colloral. It's very disappointing that Myloral was unsuccessful, but we are fortunate that we have another product right behind it," Rogers said. "All of our Colloral trials thus far have shown positive results."

AutoImmune, as of March 31, 1997, had $43.4 million in cash. *