Washington Editor

Inhale Therapeutic Systems Inc. said it expects to save $8 million next year by reducing its work force 10 percent and shifting its focus to such growth areas as its PEGylation technology and its current partnership programs.

Staff reductions will cost the company about $3 million in one-time expenses associated with severance packages. The 75 job cuts will be across the board, with most occurring at the company headquarters in San Carlos, Calif., Joyce Strand, Inhale's director of corporate communications, told BioWorld Today. Inhale currently employs 750 people and has other facilities in Alabama and the UK.

In a prepared statement, Ajit Gill, Inhale's president and CEO, said it's important to "re-align our resources now at a time when the company's business is extremely strong."

At the end of the third quarter, Inhale reported $314 million in cash.

On completing the layoffs, Inhale plans to use some of the $8 million in savings to hire other employees with different skills to take the company's programs forward.

"In our budgetary process we did an analysis of the industry and what is needed and how our products can apply to those needs," Strand said. "That led us to the conclusion that we had a mismatch in terms of some skill sets."

For example, she said, the company will look at the research and development needs of its pulmonary technology program and will probably add resources to the PEGylation manufacturing facility in Alabama and the supercritical fluid technology program in the UK.

Also, she said, Inhale plans to continue it current partner programs such as Exubera, an inhaled insulin candidate currently under development with Pfizer Inc., of New York. (See BioWorld Today, June 18, 2002.)

Inhale scored a hit in October when Hoffmann-La Roche Inc. won FDA clearance to sell Pegasys, a pegylated interferon for the treatment of hepatitis C. The technology was developed and licensed by Shearwater Corp., now a subsidiary of Inhale, and works to improve a drug's effectiveness by increasing the circulation time in the bloodstream. (See BioWorld Today, Oct. 18, 2002.)

Thousand Oaks, Calif.-based Amgen Inc. also uses Inhale's PEGylation technology in its drug Neulasta (pegfilgrastim), designed to decrease the incidence of infection during many types of cancer-related chemotherapy. And in Europe, Peapack, N.J.-based Pharmacia Corp. won approval of a PEGylated product called Somavert, used for certain patients with acromegaly.

According to the company, partner demand for Inhale technology is the highest it has ever been; specifically, 10 new deals on more than 12 molecules were announced in 2002.

In one recent deal, Inhale and InterMune Inc., of Brisbane, Calif., agreed to develop a PEGylated version of InterMune's chronic hepatitis C drug, Infergen. (See BioWorld Today, Oct. 9, 2002.)

Further guidance on 2003 spending will released during Inhale's fourth quarter conference call in late January, the company said in a statement.

Inhale's stock (NASDAQ:INHL) fell 22 cents Thursday to close at $8.30.