BioWorld International Correspondent

LONDON - Cambridge Antibody Technology Group plc will cut 10 percent of its 299-person staff to reduce cash burn and readjust its skills base away from early stage discovery collaborations to proprietary product development.

CEO Peter Chambré told BioWorld International that cash burn for the year ending September 2003 will now be "materially less than £40 million [US$64 million]," as previously planned. The cuts will enable CAT to run on its existing cash of £118.2 million (at March 31), until it reaches profitability in five years, he said.

"In the climate in which we are operating today, where the market does not wish to provide finance to biotech companies, you have to be prudent. We need to be prepared for a situation where you can't go back to the public markets," Chambré said.

Cambridge-based CAT previously agreed to a number of early stage collaborations in which it discovers antibodies against targets supplied by partners, which then take on their development. But in the past six months the market for such collaborations has weakened.

"The market for such deals was very strong in 1999 and 2000 with all the interest around targets coming out of the genome," Chambré said. "Now the pharma industry is far more concerned about, and putting money into, later-stage products. To reflect this change some staff in the research team will be made redundant."

Among those leaving the company will be Kevin Johnson, CAT's chief technology officer, who is responsible for CAT's antibody microarray technology. The company is in talks to sell that business, and Chambré said Johnson, who has been at CAT for 13 years, would probably go with it.

CAT's overall future financial position is currently obscured by a dispute with Abbott Laboratories over Humira, the first antibody discovered by CAT to reach the market. The rheumatoid arthritis treatment was launched by Abbott at the beginning of 2003, and had sales of $26 million in the first quarter. The deal signed in April 1995 allows, in certain circumstances, for offset of royalties due to third parties against royalties due to CAT. Abbott is seeking to invoke that clause.

The two companies are now in discussions on the issue. Chambré said, "We strongly dispute Abbott can offset royalties to CAT by royalties payable to others." While, in any event, CAT is entitled only to low-single-figure royalties, Chambré said, "The amounts of money are clearly material." The first royalty check to CAT is due in October, and Chambré hopes the dispute can be settled by then.