BioWorld International Correspondent

LONDON - Oxagen plc said it is cutting its staff by 20 percent and focusing its efforts on gene discovery in inflammatory and metabolic diseases, in order to stretch its cash reserves.

CEO Trevor Nicholls told BioWorld International, "The funding climate is tight so we need to focus down. We kicked the company off with very broad disease areas, and that was deliberate because we couldn't say where we would get progress, and where not."

Some of the company's projects have reached the stage of gene discovery. "It has always been our plan to deliver validated gene targets, at a minimum, so this move is still part of the original plan. But the timing is also driven by the funding climate," Nicholls said.

In December 2000, Oxagen, based in Abingdon, raised £30 million in its third round, one of the largest private funding rounds completed by a European biotechnology company. Before that, it raised £16.4 million in its second-round funding.

Nicholls said the reduction in Oxagen's operations will cut the work force to around 100 and safeguard the company's future. As a result, the current funding will last a year longer than planned, until late in 2004.

"As the climate stands today investors are increasingly wanting to invest in later-stage companies. To raise more money we have to move downstream," Nicholls said. By 2004, he anticipates the company will have compounds in the early stages of development. "We have targets today, and one of the reasons for doing what we are doing is to make space in our budget to move into chemistry."

Oxagen has built up large collections of tissue and blood samples and clinical data from disease-affected families covering nine common diseases: coronary artery disease, Type II diabetes, endometriosis, polycystic ovary syndrome, autoimmune thyroid disease, osteoporosis, inflammatory bowel disease, psoriasis and asthma.

Commitments to existing partners, in coronary artery disease with AstraZeneca plc, osteoporosis with Incyte Genomics Inc., and endometriosis and polycystic ovary syndrome, will be unaffected by the changes.

Following the completion of genome-wide scans, Oxagen has data on some 40 linkage regions, each of which, it said, are likely to pinpoint a disease gene. It will now focus resources on advancing those through assay development and into compound screening.