Biotechnology is about cutting-edge research and it's about disease-fighting products. Those two go hand in hand, but when the markets tighten and fund raising becomes hard, developing products often takes the front seat.

That's the case at Menlo Park, Calif.-based Geron Corp., which said Monday it has restructured to focus on its most advanced product development programs, a move that was accompanied by a 30 percent cut in its work force, mostly research staff.

Clearly in focus now is the GRN163 cancer program that Geron hopes to kick into Phase I trials in 2003. The reduction of 33 research and 10 support staff positions - most of which are located in Menlo Park, but a few in Scotland - leaves Geron with about 93 employees to handle GRN163 and other product development.

In 1999, Geron bought Scotland-based Roslin Bio-Med, a company formed by the Roslin Institute, in a stock swap worth about $26 million at the time. (See BioWorld Today, May 5, 1999.)

"There are two reasons for the restructuring," said David Greenwood, Geron's chief financial officer. "The condition of the marketplace, which means all biotechs are constrained in raising new money. And the second of our priorities is we are shifting from the R' to the D.' You have to be increasingly selective. If you can't grow your budget, then as you ramp up development, you have to cut back on research.

"Our objective is a level budget," he added.

The company has a cash position of $63 million - enough to fund operations for two years, Greenwood said. For now, the future means development, firstly GRN163 - a short, modified thiophosphoramidate oligonucleotide designed to inhibit the enzyme telomerase. Although telomerase is expressed in normal cells, it also is inappropriately reactivated in cancer cells. Geron has tested the compound in animals in brain cancer, prostate cancer, lymphoma and multiple myeloma.

"We're wrapping up animal studies now," Greenwood said. "We want to file an [investigational new drug application] by the end of this year and run one, possibly two, trials in 2003."

Geron has Phase I studies of its telomerase vaccine under way at Duke University, as well as being "in studies with Roche Diagnostics for telomerase diagnostics," Greenwood said. The company also has a partnership with GTI, a subsidiary of Basel, Switzerland-based Novartis AG, for an oncolytic virus.

Geron also has a regenerative medicine side to its business, one based on neural cells, cardiomyocytes and pancreatic islet cells derived from neural human embryonic stem cells.

"On the stem cell side, the focus is to generate proof of concept for using the cells as therapies, and you do that in animals," Greenwood told BioWorld Today. "That's our objective. We've done that with a couple of cell types to this point and we want to do it with a few more by the end of this year and report in 2003."

As all the programs mature, Geron will look to take on development partners, Greenwood said, adding, "It's unlikely that we could do all that ourselves."

With the number of biotech companies restructuring and reducing staff in 2002 already reaching double digits, the extended stiff fund-raising environment is having its effect. In some ways, the resultant belt-tightening is good, Greenwood said.

"Generally, it's healthy," he said. "It creates discipline in the marketplace; it forces management to be diligent and efficient. That is the competitive advantage of biotech, which we should not lose."

But in an era spotlighting development, Greenwood said, what gets lost is biotechnology's other half: brilliant research.

"It means a slowdown of research projects [overall], not just here, as everyone focuses on a few selective projects," he said. "In a way, that's good because the name of the game is products, but breakthrough technologies do require research spending. That's been biotech's claim to fame. Hopefully, it won't be stifled."

Geron's stock (NASDAQ:GERN) closed Monday, the day it made public its restructuring, at $4.63, up 11 cents. On Tuesday the stock fell 4.5 cents to close at $4.59.