Imutec Corp. reduced its staff by 33 percent to cut expenses while theToronto-based company develops a new bioassay to ensure the properpotency of its drug, Virulizin, prior to continuing clinical trials inCanada and the U.S. for cancer.

In May, Imutec was forced to delay clinical studies of Virulizin, itslead product, after experiencing problems with a bioassay being usedin manufacturing the drug. Since then the company has been reworkingthe quality control test before proceeding with the clinical developmentprogram. An application for approval of the drug in Mexico formalignant melanoma also was put on hold.

"We're trying to finish validation of the potency assay," said WayneCockburn, Imutec's vice president of corporate development. "Weexpect to be back in the clinic in six months."

Imutec eliminated seven positions, reducing the number of employeesto 14. Those leaving the company included the head of the clinicaldevelopment program.

The restructuring, Cockburn said, is designed to reduce Imutec's burnrate from $500,000 per month to $300,000. With $3.6 million in cash,he said, the company has enough resources for 12 months.

"We have focused all our resources in the area of Virulizin," Cockburnsaid. "There's a lot we know [about the drug] and also a lot we don'tknow. We want to answer those questions before we get back in theclinic."

In addition to working out problems with the bioassay, Cockburn saidthe company continues to investigate the activity of the drug. Imutechas established partnerships with six university research centers tostudy Virulizin.

Derived from bovine bile, Virulizin is used to stimulate an immunesystem response against cancer cells.

Cockburn said Phase I/II trials in Canada of the drug for Kaposi'ssarcoma are expected to start by the end of this year. A Phase I study inthe U.S. for pancreatic cancer is slated to begin in the first quarter of1996.

A planned Phase III trial in Canada for pancreatic cancer is being re-evaluated. Cockburn said the study likely will be conducted as a PhaseII to test Virulizin's performance against the standard chemotherapyused to treat pancreatic cancer.

In Mexico, where Imutec filed for commercial release of the drug formelanoma based on positive Phase II trials, regulatory officials haveposed questions about Virulizin. Those questions, Cockburn said,cannot be answered until the bioassay problems are resolved.

Imutec's stock (NASDAQ:IMUTF) ended the week at 50 cents pershare. n

-- Charles Craig

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