Bothell biotech lays off 50 more

Published 2:35 pm Friday, February 15, 2008

BOTHELL

Nastech Pharmaceutical Co. is laying off 50 more employees as it tries to save money and refocus its research priorities.

The reduction in staff follows last November’s decision to lay off 72 employees after a major drug development partnership, potentially worth more than $500 million to Nastech, dissolved. Once both rounds of cuts are completed, the biotechnology company will operate with about 110 people — half the number of people it employed a few months ago.

Steven Quay, Nastech’s chairman and chief executive, said the company’s board also decided to devote more resources to RNA interference research. RNA interference is a cellular mechanism that can turn off the production of proteins critical to the expansion of viruses in the body. In November, Nastech set up a separate subsidiary, MDRNA Inc., to push forward with developing RNA interference into a marketable treatment.

Previously, Nastech has concentrated mostly on developing nasal spray forms of drugs, including potential treatments for obesity, diabetes and other conditions.

“The workforce reduction of approximately 50 employees will enable us to drive our key clinical development and RNA (interference) programs forward in a more efficient manner for the benefit of our shareholders,” Quay said in a written statement. He added that the new focus and staff reductions should save the company at least $11 million this year.

Before Tuesday’s announcement, shares of Nastech fell 16 cents, or nearly 7 percent, to close at $2.22. The stock price headed upward, however, in after-hours trading.

Nastech has lost much more than employees since Procter &Gamble Pharmaceuticals terminated its agreement to help the Bothell firm develop a nasal spray to treat osteoporosis. That decision in November sent Nastech’s shares plummeting. Overall, the company has lost 84 percent of its market value.

Also since November, Nastech lost its third drug development partner in less than two years. Denmark-based Novo Nordisk A/S ended an alliance started in March 2006 to develop unspecified compounds.

With the lost market value and lost potential value of the drug partnerships, Nastech is no longer flush with cash. The company announced plans last month to sell up to $50 million in debt securities and new stock shares. It also plans to spin off MDRNA as its own public company to save money.

Eric Fetters writes for The Herald in Everett.