Advancis Pharmaceutical Corp., reeling from back-to-back testing failures of its lead drug prospect, said yesterday that it has eliminated 33 jobs, including six of its 13 senior executive positions, to regroup and continue efforts to bring the drug to market.
The Germantown firm's staff reduction -- the second in less than a year -- amounts to 38 percent of the workforce and leaves the company with 54 employees.
The company has spent more than $50 million developing a new, timed-release, once-a-day version of the popular antibiotic amoxicillin for strep throat. But in final human testing on children and adults, the proposed drug fared worse than standard penicillin. It also performed below the 85 percent success rate needed to qualify as a primary treatment.
Advancis chief executive Edward M. Rudnic called the cuts "painful, personally painful" but said the reductions will ultimately save the firm $4.1 million, allowing it to continue operations into 2007 and finance more tests. Advancis will take a $3.3 million restructuring charge in the third quarter.
Twenty-eight employees were let go, including Barry Hafkin, the chief scientific officer, and Joseph J. Rogus, senior vice president of technical operations. Five other lower-level employees have resigned in the past month as the firm's bad news has mounted. They will not be replaced.
Rudnic said the firm "fully intends to move forward with our product in the fall" by changing the dosing and conducting more tests. One option would be to administer the drug for 10 days instead of seven, for which it failed. Another option would be to give higher doses, possibly more than once a day, for five days.
A decision on those options will come in the next few weeks, Rudnic said.
But the firm will be making decisions without several key senior executives, including Hafkin, the highest-ranking scientific officer, who was hired in April 2004 to establish overall direction for the firm. It was Hafkin who stumbled over his words for nearly 30 seconds last month when he told Rudnic that the drug had failed in adults.
Hafkin could not be reached for comment yesterday.
Other executives let go included Colin E. Rowlings, senior vice president of pharmaceutical research and development; Donald C. Anderson, vice president of discovery; James Bruno, vice president of sales; and Robert J. Guttendorf, vice president of pharmacology and biopharmaceutics. Rudnic said the dismissals were not punitive.
"What we've done now is completely cut down to a critical number to move the product forward," he said.
The firm may have to continue without the help and financial resources of its corporate partner, Par Pharmaceutical Cos., which has invested $23.5 million in the development of the product for the right to share possible profit. Par executives have recently threatened to pull out because of the failures.
Rudnic indicated yesterday that there was a good chance Par would do so.
"I think it's probably not an unreasonable thing for them to do at this point," he said.
But he said the firm had enough cash -- about $40 million as of June 30 -- to continue alone.
"The cost reductions give us that ability," he said. "They give us about 20 months of cash and get us through the next round of clinical studies."
Advancis shares closed unchanged yesterday at $1.45.