By Charles Craig

Alteon Inc. reduced its work force by 18 percent and discontinued some early stage research projects in a reorganization of its drug development priorities.

Lay-offs of 14 of the Ramsey, N.J.-based company's 74 employees and reassignment of six staffers to other projects occurred a week ago.

Kenneth Moch, Alteon's chief financial officer, told BioWorld Today on Thursday the staff reductions were part of the company's 1997 strategic business plan designed to refocus some resources.

Drug development programs discontinued, Moch said, were early stage and were never discussed publicly by the company.

The adjustments, Moch added, do not reflect any change in direction of Alteon and were not made because of a cash shortage. He said the company ended 1996 with $30 million in cash.

However, Moch said Alteon's typical cash burn rate of about $1 million a month has increased significantly to support late-stage clinical trials of its lead product, pimagedine, after corporate partner, Hoechst Marion Roussel, ended their collaboration in June 1996.

"The clinical trials," Moch said, "have added $1.6 million a month [to the burn rate.]"

Alteon worked with Marion Merrell Dow for five years on the pimagedine program prior to Hoechst's 1995 acquisition of the Kansas City, Mo., pharmaceutical firm. The Alteon alliance was one of several Marion Merrell biotechnology collaborations discontinued by Hoechst following the takeover.

Pimagedine is in four clinical trials, two of which are Phase III studies for treatment of diabetic kidney disease.

In December 1996, Alteon was forced to amend the protocol of the Phase III study of pimagedine for Type II diabetes when some older patients receiving the higher of two doses suffered flu-like symptoms and cardiovascular events. Those patients were shifted to the group receiving a low dose of the drug.

The other Phase III trial of pimagedine is being conducted in patients with Type I diabetes. Both studies are ongoing.

Pimagedine is designed to inhibit advanced glycosylation end-products (AGE), whose accumulation can result in damage to organs, blood vessels and nerves. Over production of AGEs is linked to elevated glucose levels, such as those found in diabetics.

The Phase III studies are designed to evaluate pimagedine's effectiveness in preventing progression of diabetic complications.

Moch said Alteon expects to have data by the end of the first quarter of 1997 from a Phase II trial of pimagedine for lowering cholesterol levels in Type II diabetics.

Findings from another Phase II trial of the drug for treatment of diabetes-related end-stage renal disease are expected by mid-year.

Alteon's stock (NASDAQ:ALTN) closed Thursday at $5.375, down $0.125. *