Allozyne Conducts Round of Employee ‘Furloughs’
Allozyne made the latest round of reductions to its payroll a little more than a year after another round of job cuts that I reported here in January 2012. CEO Meenu Chhabra Karson said by e-mail, “We did not lay off anyone recently,” but declined to answer further questions. Three other sources close to the situation said staff reductions were made recently at Allozyne and described internally not as “layoffs” but as “furloughs,” which suggests the people affected may be called back. On the company Web page, Chhabra Karson and Ken Grabstein, the chief scientific officer, are the only members still listed as part of its management team.
Allozyne got off to an auspicious start in 2005, with backing from Accelerator and technology licensed from Caltech to engineer desirable properties into targeted protein-based drugs. The company had more than 20 employees at one point, and spent about $50 million of investment capital in its first five years in business, according to a filing with the Securities and Exchange Commission in October 2011. But Allozyne ran into difficulty when a reverse merger deal fell apart in December of that year with Poniard Pharmaceuticals, which would have turned Allozyne into a public company. Regulatory filings from 2011 showed Allozyne got down to as little as $1.1 million of cash left in the bank while it was working on the Poniard merger. The company raised another $4 million of debt and warrant offerings between February and June of last year, according to more recent regulatory filings.
The company spent much of its early days working on a genetically engineered form of interferon beta, a popular drug for multiple sclerosis. The Allozyne version was supposed to last longer in the bloodstream and enable patients to get by with fewer injections. That drug, AZ01, showed some encouraging properties in a small clinical trial and is still listed as part of the Allozyne pipeline on the company website, but its prospects appear limited. The world’s largest maker of multiple sclerosis drugs, Biogen Idec (NASDAQ: BIIB) reported in January that its long-lasting version of interferon beta succeeded in a clinical trial of 1,500 patients. The competing drug showed it could control multiple sclerosis flare-ups in both an every-two-week injection and a once-monthly injection.
That result essentially means Biogen Idec is putting itself in position to introduce its long-lasting version of interferon beta years before Allozyne’s could get to the market. The sales potential for such a drug is clearly big, as Biogen generated $2.9 billion in sales last year from its existing interferon-beta drug, Avonex, which requires more injections.
Other than its multiple sclerosis drug candidate, Allozyne has also talked publicly about other drug development programs, including one that’s a bispecific antibody designed to hit two molecular targets instead of one, and an antibody-drug conjugate program that links a targeted antibody to a toxin that makes it more potent. Allozyne presented data at a scientific meeting in September that said its bispecific antibody candidate that binds with inflammatory molecules IL-6 and IL-17 was able to decrease symptoms of psoriasis in mice. In December, Allozyne said its antibody-drug conjugate aimed at breast cancer cells that overexpress the HER2 target was able to significantly shrink tumors in an animal study.