Pressed for funding, new management at Viragen Inc. said it plans to shake things up in an effort to reduce its burn rate by up to 40 percent to preserve capital at the cash-strapped company.

For the period ended Dec. 31, Viragen reported about $32,000 in cash. Despite a six-month loss in the range of $7.1 million and consecutive annual losses in excess of $11 million for three fiscal years, the company raised $2.1 million in late January through a private placement of convertible debentures.

Nevertheless, the Plantation, Fla.-based firm remains backed against a growing wall of financial uncertainty.

"This is a very challenging environment for raising additional investment and capital," Douglas Calder, Viragen's director of communications, told BioWorld Today. "We're at a stage where we are just now beginning to get product approvals for our lead product, Multiferon, a natural human alpha interferon, for a wide range of viral and malignant diseases including hepatitis C and certain cancer applications. But we are not generating enough revenues to sustain operations."

The product has been approved in Sweden for any disease in which a patient fails first-line recombinant interferon therapy. Elsewhere in the world, Multiferon is approved in seven small-market countries as a second-line treatment for two types of leukemia - hairy cell and chronic myelogenous. For the three months ended Dec. 31, its sales totaled about $127,000. The company has filed for a broader approval in those countries as well, while initial approval applications also have been filed in six other countries.

"This is really going to be the first full year in which our Multiferon program is going to be generating revenues," Calder said. "We are concentrating on those markets that we can penetrate most quickly. We're a small company with limited manufacturing capacity at this time, so we have to make the determination whether we want to commit product to clinical trials or commit that manufacturing capacity to immediate commercial opportunities."

The product, which also could be used to treat hepatitis C in a number of these territories, is being shopped to partners, Calder said. He added that the company is working to identify indications that could allow for an expedited FDA review process of Multiferon, though he stopped short of forecasting an investigational new drug application time line.

But in the meantime, Viragen said certain aspects of its restructuring plan are effective immediately. Calder said the company has laid off an undisclosed portion of its 70-person staff, and would soon report additional cost-reduction measures.

At the end of January, Gerald Smith resigned as Viragen's chairman, president and CEO, though he will remain a director and adviser. To fill his vacancy, the company named Carl Singer chairman and Robert Salisbury president and CEO. As part of the company's cost-cutting mentality, Salisbury agreed to accept all of his pay in the form of stock options until its financial condition improves, while Chief Financial Officer Dennis Healey requested that 75 percent of his compensation be paid in Viragen common stock in lieu of cash.

The company's stock (AMEX:VRA) closed unchanged Tuesday at 8 cents. As of Feb. 13, Viragen had about 147.6 million shares outstanding, Calder said.

Last month, the company decided to restructure compensation for its directors and senior management. Viragen said it would pay its board members with common stock instead of cash, while the rest of the company's senior management agreed to accept 20 percent of its compensation in common stock as well.

Beyond Multiferon, Viragen had been working to develop protein-based drug candidates that include monoclonal antibodies, peptide drugs and therapeutic vaccines. Viragen also has four anticancer products in preclinical development. Calder did not disclose their immediate future.

At the same time, Viragen said it plans to continue development of technology with which to more efficiently produce its drugs. Its avian transgenic technology is designed for large-scale manufacturing of its portfolio of protein-based drugs. Scotland-based Roslin Institute, which produced Dolly the sheep, is Viragen's partner in the program. The parties are working to develop a manufacturing platform to enable protein-based drugs to be produced in the egg whites produced by transgenic flocks of chickens. If developed, Viragen also expects to offer its technology to others for contract manufacturing.