Bottom Falls Out for Synergen : Biotechnology: Firm’s blood-drug trials end in failure. It will cut its staff by half and explore possible merger or sale.

Synergen Inc. said Monday that its lead product, Antril, has failed in clinical trials for treatment of the blood infection sepsis and that it will cut its staff in half, an announcement that sparked a steep drop in the company’s stock price.

Synergen’s stock lost nearly half its value in heavy trading after the announcement and closed down $4.375 at $4.50 on the Nasdaq, where it was the second-most-active issue in afternoon trading.

Wall Street analysts said the company may become a takeover target.

Synergen Chief Executive Gregory Abbott said in a conference call with reporters that the company plans to discuss with outside advisers possible options such as a merger or sale.

The Boulder, Colo.-based biotechnology company said it stopped the trial because an interim analysis of the Antril data showed a “lack of efficacy.”

“This is profoundly sad for sepsis patients and the medical community, as well as for our stockholders and Synergen employees and our many collaborators outside the company who have labored so long and hard and believed so intensely in this program,” Abbott said in a statement.

Synergen said that in order to conserve cash, it will restructure the company and cut its staff of 630 by more than half. “We anticipate reducing staff by more than 50%,” a spokesman said.

Synergen said it has $135 million in cash. Piper Jaffray analyst Barbara Hoffman said it spends about $20 million a month; she expects the figure to drop to $10 million.

The company said it will look at using its facilities to make drugs for other companies and that it expects its board to approve a business plan by the end of next week.

Synergen is the latest company to fail in efforts to find a drug to treat sepsis, an often fatal blood infection that is a common cause of death in hospitals. Among the others are Centocor Inc., Chiron Corp. and Xoma Corp.

Analysts said that despite Synergen’s cost-cutting moves, prospects are limited for the once-high-flying biotech stock.

“I think Synergen is in big trouble. . . . Now that a second Phase III (Antril for sepsis) trial has failed rather convincingly, Synergen does not have much left,” First Boston analyst Jeffrey Swarz said.

Analysts said there is little reason to believe Antril will succeed in clinical trials for a second use: rheumatoid arthritis. Antril is currently in Phase II trials for rheumatoid arthritis.

While Antril for sepsis was clearly expected to be the crown jewel, Synergen is conducting other clinical evaluations.

The company is doing clinical evaluations of treatments for amyotrophic lateral sclerosis, or Lou Gehrig’s disease; for Parkinson’s disease, and for Alzheimer’s disease.

Analysts said investors also have little hope for Synergen’s only other product in late-stage development: ciliary neurotrophic factor, or CNTF, for Lou Gehrig’s disease--following the recent failure of Regeneron Pharmaceuticals Inc.’s product for the same use.

“They had two products--one which failed rather convincingly and another that doesn’t look particularly promising,” Swarz said.

Cowen & Co. analyst Carol Werther said prospects are dim for Synergen as a fully independent, operational company, but not for investors interested in bottom-fishing for value.

“I would say they look like a very attractive takeover candidate, especially at $5 a share. . . . They have real assets that could be of value to other companies, especially if they’re looking for new products,” Werther said.

The stock’s high for the year was $14.375. It had traded as high as $66.25 in the fourth quarter of 1992.

Piper Jaffray’s Hoffman said, “This makes the company an acquisition candidate or headed for a partnership or merger.”