Anadys Pharma Cuts 40% of Workforce and Raises $17.5M to Stay Afloat

6/4/09

[[Correction appended]] San Diego-based Anadys Pharmaceuticals (NASDAQ:ANDS) is revealing moves this morning to improve its balance sheet. The firm will reduce its workforce by 40 percent and suspend development of its second drug candidate for cancer and hepatitis C, to instead focus its remaining resources on advancing its lead drug candidate for hepatitis C virus. The company is also raising $17.5 million through the sale of common stock and warrants.

The company did not say how many workers would be impacted by the cuts, but the firm listed 50 employees at the end of March, according to data from Thomson Reuters, meaning about 20 employees will be let go. Xconomy has been following the development of Anasys’ lead hepatitis C drug, dubbed ANA598, which has shown early promise in combating the infectious liver disease. Anadys will stop developing a second drug, ANA773, and look to license it to potential partners.

The proposed Phase II trial of ANA598, which the firm is testing in combination with pegylated interferon-alpha and ribavirin, is expected to begin in the third quarter of 2009. The study is expected to yield outcome data by the end of this year and in the first half of 2010, the company says. This Anadys drug has shown some promising ability to kill the hepatitis C virus in small clinical trials, although many investors were scared off when a few healthy volunteers dropped out of a trial, complaining of rash. Anadys has said the effect wasn’t severe, and wasn’t seen in actual patients with the disease.

The main strategy, Anadys has said, is to develop drugs like ANA598, a non-nucleoside polymerase inhibitor, and combine it with different classes of antiviral drugs to prevent the virus from developing resistance against any one type of treatment. It’s a cocktail strategy, sort of like how HIV is treated today, Anadys CEO Steve Worland has said.

[[Anadys expects to begin a Phase II trial of ANA598 in the third quarter of 2009, and the trial is not "ongoing," as was reported in error earlier today.]]

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