Firm is looking to partner treatment for chemotherapy-induced neutropenia after completing ongoing Phase IIa trial.

Maxygen is cutting off future spending on the development of its Phase IIa lead program, MAXY-G34 for the treatment of chemotherapy-induced neutropenia. This includes a 30% staff cut, which will refocus the company on its preclinical asset, MAXY-4 for rheumatoid arthritis. The company is also exploring various alternatives including a sale or disposition of one or more corporate assets or a strategic business combination.

Maxygen says that it will not conduct Phase IIb trials unless it finds a partner for MAXY-G34. It will complete the ongoing Phase IIa study in breast cancer patients. The firm notes that further evaluation will be required to establish differentiation from existing therapeutics. MAXY-G34 is a long-acting granulocyte colony stimulating factor (G-CSF). Neulasta, which is approved for the same indication, is also a G-CSF therapy.

“Although the preliminary Phase IIa data are encouraging, we do not believe it practical for Maxygen to take the MAXY-G34 program forward without a partner,” says Russell Howard, CEO of Maxygen. “The uncertainty of partnering, the cash required for continuation of the program, and the current financial environment have together led us to the difficult decision to significantly reduce spending.”

Maxygen will also delay Phase III manufacturing until it identifies a partner who can share manufacturing costs. The Phase III manufacturing costs were anticipated to begin in September 2008. Additionally, the reported start date for the Phase IIb trials, which was second half of 2009, could also get delayed depending on finding a collaborator.

Restructuring will take place from January 1 through the end of April 2009, leaving the company with 65 employees. Positions will be terminated in operations and administration. The company plans to continue minimal activities on MAXY-G34, and a small team will continue protein drug discovery for autoimmune disease therapies using Maxygen’s MolecularBreeding™ platform.

Including the savings from cost reductions on MAXY-G34, Maxygen will end 2008 with approximately $200 million in cash with no debt. The company is projecting operating cash utilization of approximately $17 million for 2009, not including the approximately $2 million in restructuring charges.

“Maxygen assets include year-end cash of approximately $200 million, a 25% ownership stake in Codexis, a licensing agreement with Codexis for biofuels, and other applications of the MolecularBreeding platform, the MAXY-4 partnership with Astellas in autoimmune disease and transplant rejection, the MAXY-G34 program, a vaccine discovery program funded by grants, a widely cited intellectual property estate, and a technology platform to generate novel protein drugs for autoimmune disease,” Howard concludes.

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