Genaera to cut staff and give up on a drug

Shares of Genaera Corp. tumbled 35 percent yesterday after the Plymouth Meeting company said it would halt clinical development of a macular degeneration drug and cut its workforce by 30 percent, or 12 jobs.

Genaera announced it would terminate development of Evizon, aimed at treating an eye disorder that is the leading cause of blindness in adults over 55. The company said it ended a midstage patient study after not enrolling enough people.

The biopharmaceutical firm instead will focus resources on the development of trodusquemine, a treatment for obesity, and said it expected to begin an early-stage Phase 1 clinical trial in the first half of this year.

The stock closed down 13 cents, or 35 percent, at 26 cents on the Nasdaq, with 9.5 million shares traded.

The decision to halt clinical development of Evizon and refocus the company was "unavoidable" due to the "reality of the marketplace," president and chief executive officer Jack Armstrong told investors during a conference call yesterday.

Other drugs, including Genentech's Lucentis and Avastin - a colorectal cancer drug prescribed off-label by doctors for the eye disorder - have become the treatments of choice, Genaera said.

The success of those new medications made recruitment of patients for a clinical study difficult. In addition, results of earlier Phase 2 studies of Evizon suggested that the intravenous therapy was "unlikely to produce vision improvement with the speed or frequency necessary to compete" with Lucentis and Avastin, Armstrong said.

Wet age-related macular degeneration is associated with the growth of abnormal blood vessels in the back of the eye.

Genaera expects to record a restructuring charge of about $300,000 during the first quarter related to the job cuts. The company will have 32 employees after the reduction.

Genaera said it has also hired Banc of America Securities L.L.C. as a financial adviser to assist in its review of strategic alternatives.

As of Sept. 30, Genaera had cash and cash equivalents of $37.7 million. The company estimates the cash on hand is sufficient to fund operations into 2008.

Genaera, which has no products on the market and which has incurred losses each year since 1987, had an accumulated deficit of $257.2 million as of Sept. 30, according to a filing with the Securities and Exchange Commission.