NEW YORK, Jan. 15 - Valentis is slashing its preclinical product development and suspending its clinical research in oncology in order to stem its quarterly cash burn rate, the company said on Tuesday.
In its attempt to contain its spending from $9 million to $5 million each quarter, Valentis also will eliminate up to 45 jobs, including two senior executives, and intends to shutter its research labs in The Woodlands, Texas by mid-year.
Between 65 to 70 employees will remain at the company, said Bennet Weintraub, the company's chief financial officer.
Although Valentis recently raised $13.8 million in a public offering, Weintraub said that the firm was still going through its cash too quickly.
"We would have done the restructuring whether or not we raised the money," he told GenomeWeb. "But it's always about the money. When we took a look at our burn rate, and what we're investing in, we had to cut down the burn rate and focus on the products with the most potential.
"These days, the market is saying: focus on your lead product-that's what we will reward you for," he said.
Valentis' core technologies include gene regulation and synthetic gene delivery systems. Its GeneSwitch is a regulation mechanism that helps researchers control expression of selected genes in transgenic animals and cell cultures in order to clarify gene function. It has been licensed by Wyeth-Ayerst, GlaxoSmithKline, Lexicon, American Home Products, and Pfizer.
The company also has two products in clinical development. It plans to continue research into del-1, an angiogenic gene being developed for peripheral artery disease and ischemic heart disease, but will drop work on IL-2 treatments for lung tumors following poor phase II results in December 2001.
"What we're seeing is that ... pharmaceutical companies and the markets are [both] paying for late-stage products," Weintraub said. "They want the biotech to take the risk out of the product. By doing that, you have to get the product through phase II, and the preclinical things we're working on are a couple stages away from being able to generate that kind of data. To invest in that now is too much for us to carry."
Valentis will keep developing its gene regulation and PEGylation technologies.
The company had reported $28.8 million in cash, cash equivalents, and investments at the end of its first quarter in September 2001.
Weintraub said that Valentis' recent public offering did not raise as much money as the team had hoped: "We probably sold more shares at a lower price than we'd have like to. But it was important to have the money in the door so our cash resources wouldn't fall too low."
Weintraub will leave Valentis after the restructuring concludes, as will Alain Rolland, the firm's senior vice president for preclinical research and development.