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Isis’ Layoffs Described as ‘Prudent’ By Analysts

Biotech: Carlsbad Firm

Cuts 40 Percent of

Staff, Mostly in Research

CARLSBAD , Two analysts said Isis Pharmaceuticals Inc.’s restructuring plan was a painful but prudent move to conserve cash for the Carlsbad-based biotechnology firm.

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Both financial analysts foresee a bright future for Isis’ core groups of antisense drugs currently in development.

On Jan. 18, Isis announced it laid off 40 percent of its work force , 160 out of 400 employees , in a cost-cutting measure following the failure in clinical trials of a drug for Crohn’s disease.

Pat Lowenstam, Isis’ vice president of human resources, said most employees received notification Jan. 10. Most of the layoffs occurred in research, Lowenstam said.

Under a compensation package, employees will receive pay for between two and four months while they look for employment elsewhere, she added.

During a conference call, Isis’ chairman and chief executive officer Stanley Crooke, said all key players will remain at Isis. Added Lowenstam, senior management and the board of directors are committed to stay. Crooke said Isis will focus its resources on the development of its core drugs.

Finances Plentiful

Christopher Keenan, a spokesman for Isis, said the firm has $55 million in cash and $24 million in committed funds from an unnamed institutional investor. The total $100 million in funds should support activities for more than three years, Keenan added.

James McCamant, editor of the Medical Technology Stock Letter in Berkeley, said he remains positive about the company.

“The cuts are sad, but probably prudent,” McCamant said.

McCamant added that Isis will now “focus investors’ attention on its excellent pipeline” of drugs in development.

Isis said it has yet to determine if it will pursue development of its experimental drug for Crohn’s disease, dubbed Isis 2302.

The disappointing final results which led Isis to announce on Dec. 15 it would not seek regulatory approval for the drug came as a surprise to analysts.

Fariba Ghodsian, a financial analyst at Cruttenden Roth Inc. in Los Angeles, said the interim results were very good. Analysts didn’t expect the final results to falter, she said.

McCamant, however, remains positive Isis will put a drug on the market by 2003.

One of the company’s core drugs in development , Isis 3521, which targets non-small cell lung cancer , is likely to enter the last stage of clinical trials in the summer of 2001, he said.

“This is a great opportunity,” McCamant said.

The market for Isis 3521, targeting smokers’ lung cancer, is large and well-underserved, he added.

Crooke said the firm’s top priorities include products aimed at hepatitis C, rheumatoid arthritis, multiple sclerosis, Crohn’s disease, and other inflammatory and cancer diseases.

Isis will also continue the development of a hepatitis C drug with its new partner, Ireland-based Elan Corp., PLC.

Seeking Partners

The firm will seek additional partnerships where it would license drugs it developed to another drugmaker for distribution, Crooke said.

In the near future, Crooke told investors, Isis will need to “offload more development expenses” and “sacrifice product rights.”

Ghodsian said it’s only a matter of time before antisense technology , drugs that attack disease at a genetic level targeting a sequence or molecule that plays a role in inflammation or cancer , will make a breakthrough.

“Antisense is a powerful technology like monoclonal antibodies,” Ghodsian said.

Investors were initially skeptical that drugs made with monoclonal antibodies would see the light of day, Ghodsian said. Now it’s a proven technology.

San Diego-based Idec Pharmaceuticals Corp.’s first cancer-fighting monoclonal antibody on the market is on its way to become a standard treatment for patients with certain lymphomas.

Ghodsian isn’t convinced that Isis will be first on the market with an antisense drug.

Another biotechnology firm, AVI BioPharma, Inc., in Portland Ore., has also made great strides in its antisense drug development, she said.


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