SyStemix Inc., is trimming its work force by about 28employees and putting some research projects on hold toreduce annual expenses by as much as $12 million and tofocus resources on clinical trials of its hematopoietic stemcell isolation technology.

Wendy Hitchcock, chief financial officer of SyStemix,said the restructuring was spurred by the success of thePalo Alto, Calif., company's first clinical trial usingautologous stem cell transplants to reconstitute thechemotherapy-destroyed bone marrow of multiplemyeloma patents.

"We're doing this from a position of strength," saidHitchcock, adding that the internal changes andanticipated new collaborations next year will supportexpansion of the company's clinical development plansover the next two to four years. "It's painful and thesepeople are very valuable to us," she said. "It's not easy.The projects are valuable too and were going very well."

The employee reductions will trim the 282-person workforce by 10 percent. Although some projects will bedeferred or streamlined, the company's research into genediscovery and gene therapy for use with the stem celltechnology will continue as a priority, Hitchcock said.

The cost savings efforts are designed to cut SyStemix's1996 burn rate by 20 to 25 percent _ a reduction ofbetween $9.6 million and $12 million from a 1995 burnrate of $48 million. The company has $71.6 million incash.

Switzerland-based Sandoz AG, which owns about 70percent of SyStemix, supported the restructuring,Hitchcock said.

Reducing expenses, she added, also will strengthen thecompany's position in pursuing partnerships and seekingnew financing next year.

In SyStemix's first study of its stem cell technology,interim data demonstrated the autologous transplants canengraft in myeloma patients within "clinically relevanttime intervals." That achievement, Hitchcock said, wascrucial because SyStemix proved its hematopoietic stemcell transplants began reconstituting the patient'schemotherapy-destroyed bone marrow fast enough so thatback-up measures were not needed.

Additional data from the 20-patient Phase I/II study willbe released early next month at an American Society ofHematology conference in Seattle.

SyStemix's technology differs from other stem cellisolation approaches in that it targets an early,substantially pure population of hematopoietic stem cellscalled CD34(+)Thy(+)Lin(-), which are a subset of CD34cells. The CD34ThyLin cells are responsible for renewingall blood and immune system cells.

The CD34 progenitor cell population is a more commontarget of stem cell isolation techniques, but SyStemix saidautologous transplants from that larger pool contain avariety of cells, some of which are not self-renewing andwhich may be disease cells.

SyStemix said its technology is designed to generate adisease-free autologous transplant containing more than90 percent CD34ThyLin stem cells. The isolation of theearly stem cells, Hitchcock added, also should makeallogeneic transplants more feasible.

Among the new clinical trials planned for next year is onein which allogeneic transplants of CD34ThyLin cellswould be given to unborn children to correct geneticdiseases. The procedure would involve using a relateddonor _ such as the child's father or a sibling _ whodoes not have the targeted genetic defect. The celltransplant would be injected into the fetus.

By using pure, early stage stem cells, Hitchcock said,only a small dose is needed, reducing the risk ofspontaneous abortion and transplant rejection from graft-vs.-host disease.

SyStemix expects to submit an investigational new drug(IND) application with the FDA by the end of this yearfor the in utero studies. Possible targets for the therapyare severe combined immunodeficiency, chronicgranulomatous disease and thalassemia.

The company also plans to file an IND in 1996 forclinical trials of a gene therapy against HIV. The idea isto transduce CD34ThyLin cells with a gene that resistsHIV so that T cells will be protected against the virus.

SyStemix's stock (NASDAQ:STMX) closed Wednesdayat $15.75, up 75 cents. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.