Bothell biotech Sonus trims costs, looks for partner

Published 9:52 pm Tuesday, March 25, 2008

BOTHELL — Sonus Pharmaceuticals is shutting down its research work, laying off 16 employees and focusing on shepherding its sole remaining drug candidate toward possible regulatory approval.

Additionally, the Bothell-based developer of cancer drugs will look at acquiring potential drug candidates being developed by others.

Sonus’ chief executive, Michael Martino, called the actions “a necessary move to position us better.”

The changes in strategy follow the failure of Sonus’ lead drug candidate in a late-stage clinical trial. Since that happened last September, Sonus has cut its staff from more than 60 people to 26 full-time employees after the latest layoffs. The company’s stock has shed 91 percent of its value, falling from more than $4 a share to just 37 cents as of Tuesday’s close of trading.

By slowing its spending, however, the $29 million Sonus had at the end of last month should be enough to get the company to the final quarter of 2009, said Alan Fuhrman, the biotech’s chief financial officer.

“That gives us 18 months of runway, which is a nice position in this market,” he said.

Founded in 1991, Sonus was focused for six years on developing Tocosol paclitaxel, a chemotherapy formulation that seemed to be at least as effective in earlier tests as existing chemotherapy treatments, but with fewer side effects.

By last year, the drug had made it to phase 3 trials, usually the final phase before submitting the drug to federal regulators for approval. But results from that study showed Tocosol paclitaxel was less effective against breast cancer than the most widely used chemotherapy drug on the market. The side effects also were worse.

As a result, Sonus and its big pharmaceutical partner on the drug, Bayer Schering, halted further development of the drug. Bayer later ended its once-lucrative partnership with Sonus.

Sonus’ remaining drug candidate is SN2310, which is in phase 1 tests. It has potential as a treatment against colorectal, lung and ovarian cancers.

Sonus researchers had been looking at two other potential drug candidates, but those early programs have been closed along with the company’s research work.

Martino said Sonus would be open to all options for acquiring other drug candidates and improving the company’s value to shareholders. Along the way, more restructuring or cutbacks could come.

“Is this the last and final step? No, I wouldn’t say that,” Martino said.

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.