EPIX Pharmaceuticals Inc. expects to start cutting costs and staffing levels early next year after receiving a second approvable letter that required at least one additional clinical trial for its blood-pool contrast agent, Vasovist.

The FDA's request was not wholly unexpected, said Michael Astrue, interim CEO of the Cambridge, Mass.-based company, which, along with partner Schering AG, received the first approvable letter for Vasovist in January. That letter asked for additional information relating to the non-contrast magnetic resonance angiography (MRA) comparator scans used in the clinical trials and the statistical treatment of uninterpretable images. Additional studies demonstrating the agent's efficacy also were requested, but EPIX opted to submit its response in May without any new trial data. (See BioWorld Today, Jan. 18, 2005.)

"We certainly think that we satisfied the criteria for approval" with that response, Astrue said, though the FDA's request for new data "wasn't a surprise at this point."

"We've known for a while that there was a serious risk of that, and we became fairly certain in the last few weeks," he told BioWorld Today. "We told investors during our quarterly call a few weeks ago that this was the result we expected."

Neither FDA notice included any safety or manufacturing deficiencies.

Shares of EPIX (NASDAQ:EPIX) dropped 87 cents Wednesday, or 14.4 percent, to close at $5.18.

In its second approvable letter, the FDA called for at least one additional trial, and the company likely will have to conduct a re-read of its aortoiliac trials and confirmatory studies of Vasovist, a molecularly targeted magnetic resonance imaging agent. At this time, Astrue said, it's not clear exactly what the process will entail.

The regulatory agency is "in the process of substantially redefining the rules in imaging," he said, "so we're really not going to know what we have to do until we talk to them."

EPIX expects that costs for a new trial will be split with Schering, though the company plans to begin reducing its burn rate to focus on Vasovist, cutting costs from research efforts and reducing employment levels. The changes are expected in the first quarter of 2006.

"We don't have precise numbers at this point, but it will be a fairly substantial cutback," Astrue said, adding that more detailed information will be released before the end of the year.

EPIX also is continuing discussions on potential merger and acquisition opportunities, he said.

Vasovist (gadofosveset trisodium) is designed to bind reversibly to human serum albumin, brightening the blood for about one hour after use. Following an injection of Vasovist, doctors would be able to use MRI equipment to visualize arteries and veins throughout the body to detect early stages of vascular disease. In its new drug application filing, EPIX reported that data from four Phase III studies of Vasovist (formerly MS-325) demonstrated significant improvement in diagnostic efficacy compared to non-contrast MRA, and the overall accuracy of Vasovist-enhanced MRA was similar to the individual X-ray reader's inter-reader accuracy.

Last month, EPIX and partner Berlin-based Schering received marketing approval for Vasovist in the European Union and expect to launch the product in 25 countries during the first quarter of next year. The companies have a 50-50 partnership deal for Vasovist and also agreed to work together on EPIX's second investigational imaging agent, EP-2104R, which is in development for the detection of blood clots that can lead to heart attacks, deep-vein thrombosis and atrial fibrillation. EP-2104R is designed to bind to fibrin, a protein found in all blood clots, and allow the clot to be viewed during an MRI. It is in Phase II testing.

EPIX reported a net loss of $5.7 million, or 24 cents per share, for the third quarter. As of Sept. 30, the company had cash, cash equivalents and marketable securities totaling $145.9 million.