Avigen ends gene therapy research after 12 years of little success

Avigen is expected to lay off more of its 60-person workforce, but the company may simply fold its gene therapy arm into other projects. However, this shift away from gene therapy should interest investors, as the new focus on standard drugs will cut the company's expenses considerably.

• After twelve unprofitable years, Avigen Inc. has decided to stop funding its experimental gene therapy platform and instead focus its limited capital on developing traditional pharmaceuticals.
• The move could mean added layoffs for the 60-person Alameda company, yet also renewed interest from Wall Street.
• Gene therapy has been touted for years as the possible cure for numerous ailments, but much of the promise remains unproven.
• Avigen said Tuesday that it will preserve its ongoing clinical trials for its gene therapy treatment for Parkinson's disease through external funding.
• By doing so, the company expects to reduce its annual cash burn rate from $23 million in 2004 to $13 million in 2005.
• Avigen will now focus on acquiring later-stage clinical drug candidates and developing its internal small molecule drug that treats neuropathic pain.
• In a research note, CIBC World Markets biotech analyst Tariq Kassum said Avigen's refocusing should lessen development risk and allow the company to mature more rapidly.
• "We believe that discontinuing gene therapy, an unproven area, will ultimately generate more investor interest (at Avigen)," Kassum wrote.
• Avigen said it is in advanced discussions with several parties on either selling off or merging its gene therapy program and expects to announce a decision in coming months.
• Another option includes operating the clinical programs through academic institutions and then terminating internal operations and sub-leasing out the manufacturing space at its 112,500-square-foot Alameda complex, the company said.
• A person familiar with the company said a new round of layoffs also is likely.
• Avigen officials, who were presenting at the CIBC biotech conference in New York City, did not return calls seeking comment.
• Last July, Avigen laid off 39 percent of its work force.
• shortly after it ended clinical trials for its gene therapy treatment for hemophilia.