Cortech Inc. on Wednesday announced its secondrestructuring of the year and with it the company said it isdiscontinuing development of its lead drug, Bradycor,until a partner is found.

Bradycor, a bradykinin antagonist, failed to reduce 28-daymortality in separate Phase II trials for sepsis. Results ofthe second trial, released in July, showed the drug alsowas unable to extend survival in a subgroup with Gram-negative infections.

After the first sepsis failure a year ago, the developmentfocus of Bradycor shifted to the treatment of traumaticbrain injury. That trial was put on hold in July, however,when the second sepsis trial showed increased mortalityin the drug group.

Further evaluation of those data concluded that theincreased mortality in the Bradycor group was not drugrelated, said Joseph Turner, Cortech's vice president,finance and administration. He said the decision not tocontinue the head trauma trial now is dictated byfinances.

Cortech, of Denver, said it had $27 million in cash andshort-term investments. It has about 17.7 million sharesoutstanding. Cortech's stock (NASDAQ:CRTQ) closed at$1.75 per share Wednesday, down 13 cents.

The company is laying off 44 full-time employees, or 33percent of the staff, reducing it to about 80 people. Thatmove is expected to reduce the burn rate from $5.4million per quarter to $1.2 million per quarter. Thecompany had as many as 207 employees before its firstrestructuring in March 1994.

"We'll look for the backing of a corporate partner toeither resume that [brain injury] trial or a modifiedversion of it," Turner said. "We do think it represents acommercially attractive development opportunity."

Cortech had just begun what was to be a 160-patientPhase II study of Bradycor for head trauma when it wasput on hold. A 140-patient Phase II trial of the drug formultiple trauma was nearing the halfway point when itwas stopped. Turner said an analysis of the multipletrauma data will be done.

Rachel Leheny, a biotechnology analyst with New York-based Hambrecht & Quist Inc., said, "It is critical forCortech to get a corporate partner as quickly as possible.This restructuring and the hold on their clinical trialsunderscores that they believe that as well."

Leheny said she suspects there are companies out thereinterested in partnering Bradycor, and that "it is probablyworthwhile for the head trauma trial to continue."

"Given that they have $27 million in cash," Leheny said,"they're probably doing the right thing at this point.There's still enough there to build value with the existingtechnologies."

Finding A Partner Crucial

Turner said finding a Bradycor partner is Cortech's toppriority. The company also will be looking to developnew partnership opportunities for orally bioavailableelastase inhibitors, protease inhibitors and second-generation bradykinin antagonists.

The company said other priorities include: furthering itsresearch and development project in elastase inhibitorswith Osaka, Japan-based Ono Pharmaceutical Co. Ltd.;advancing CE-1037, an elastase inhibitor beingdeveloped with Germany-based Hoechst Marion Rousselfor acute respiratory distress symptoms that's in Phase Istudies; and continuing Phase I trials of Sulfasim, anantigen-specific immunomodulator that's in a Phase Istudy. Turner said the Sulfasim study likely will be put onhold until additional financing is obtained.

Turner said a company with Cortech's financial resourcesand troubled lead compound should not try to financeclinical development.

"We see ourselves as having the potential to be a creativeresearch and development company," Turner said. "Wedon't see ourselves as having the financial resources totake drugs from early discovery all the way throughclinical studies."

He said the company intends to use a partnering strategy,but he would not rule out the possibility of Cortech beingacquired if it was advantageous to its shareholders. n

-- Jim Shrine

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