Having failed to secure a corporate partner, DNX Corp.announced Monday that it is curtailing its hemoglobin-basedblood substitute program. It will now focus capital on itsxenotransplantation program.

"The significant cash requirements to develop the (bloodsubstitute) product have proven a major obstacle to obtaining acorporate partner," said Paul Schmitt, DNX's president and chiefexecutive officer. "Over the weekend we received word that themost likely corporate partner has decided against entry intothis business."

Schmitt said that while there has been "excellent technicalprogress" with the blood substitute program, "it has been anexpensive venture and has drained our capital resources at atime when we have made exciting advances in other areas ofour business."

Dropping the program will "dramatically cut the company'sburn rate," DNX said. Schmitt told BioWorld that the companyhad been spending about $1 million per month on the program.

Schmitt said DNX (NASDAQ:DNXX) of Princeton, N.J., was in alate stage of preclinicals with its recombinant humanhemoglobin produced in transgenic pigs. The hemoglobin isproduced by inserting a gene for human hemoglobin intosingle-cell pig embryos. About 15 percent of the hemoglobinproduced by the pigs is human.

Several other companies are pursuing development of a bloodsubstitute product, including Somatogen Inc. and BaxterInternational Inc., which both have products in clinicals.Somatogen's rHb1.1 is a recombinant hemoglobin productproduced in E. coli bacteria, while Baxter's blood substitute isfrom human hemoglobin.

Enzon Inc., which is linking bovine hemoglobin withpolyethylene glycol, Hemosol, Biotime Inc. and AlliancePharmaceuticals Corp. also have products in preclinicals.

Schmitt said DNX now has the opportunity to accelerate itsclinical program for xenotransplantation, which is not ascapital-intensive. For instance, Schmitt noted that this programdoes not require construction of a pilot purification plant as didthe blood substitute program.

The goal of the xenotransplantation program is to createtransgenic pigs whose organs can be used for transplantationinto humans. Schmitt explained that transplantation of animalorgans into humans results in hyperacute rejection, whichcannot be controlled by drugs. The rejection is caused by acomplement cascade triggered in the body that destroys theorgan within hours. DNX is attempting to create transgenicanimals that genetically express three proteins which inhibitthe complement cascade.

Last week at the Second International Congress onXenotransplantation, DNX biologists reported that their lab wasthe first to get a high expression of all three proteins on theendothelial cells of organs of transgenic mice. Secondly, theyperfused the mouse organs with human blood and significantlyinhibited the complement cascade.

The researchers also have established transgenic swine thatdefinitely express two of the three critical proteins involved inthe complement cascade. Schmitt said DNX will now breedthese swine and use their litters for further experiments, suchas swine-primate transplantation.

In addition to the xenograft program, DNX said it will also focuson opportunities with its subsidiary Pharmakon ResearchInternational Inc. Schmitt noted that Pharmakon, which doespreclinical drug development for biotechnology andpharmaceutical companies, generated between $23 million and$25 million in 1993. By comparison, when DNX acquiredPharmakon in 1991 the company generated $4 million.

DNX's stock was down 25 cents a share on Monday, closing at$4.38.

-- Brenda Sandburg News Editor

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