(CTRX) Celtrix implements cost-reduction plan in response to delayed commercialization of BetaKine - reorganizing to conserve cash.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Nov. 16, 1994--Celtrix Pharmaceuticals, Inc. (NASDAQ: CTRX) announced Wednesday that it is implementing a cost-reduction plan in response to the delayed commercialization of its first treatment application for BetaKine(TM).

The plan is expected to extend the company's cash resources for at least the next two years and enable current product development programs to continue as planned.

"We had been building Celtrix's staff in anticipation of early market entry for the treatment of macular holes," said Dale A. Stringfellow, Ph.D., Celtrix's president and chief executive officer.

"But, as announced at the end of October, longer-term follow-up data from the Phase III study are needed to assess BetaKine's efficacy for this orphan drug indication. As we proceed, we need to conserve our cash," he said.

"This means postponing pre-marketing activities, reducing our work force from 150 to 100, and using outside consultants in place of certain in-house functions," Dr. Stringfellow said.

"As part of this plan, three senior executives will be leaving the company: the vice president of operations, vice president of marketing and sales, and chief financial officer."

"These measures are unfortunate but necessary to keep the company in a strong position going forward," Dr. Stringfellow said. "We are committed to bringing Celtrix's potential products into commercialization and have kept the necessary infrastructure to continue our product development programs."

Dale A. Stringfellow, Ph.D., who is president and chief executive officer, will assume the additional role of chief financial officer, with assistance from Mary Anne Ribi, director of finance and controller. Andreas Sommer, Ph.D., who is senior vice president and a board member, will have overall responsibility for company operations.

R. Ray Cummings, vice president of business development, will take a more active role in investor relations and corporate communications. Debera M. Brown remains vice president of development, and Roger H. Salquist is continuing as chairman of the board.

"I want to express our great appreciation to all of Celtrix's employees, whose hard work, talent and dedication are the basis of the company's accomplishments," Dr. Stringfellow said. "Because of their efforts, we have an exciting portfolio of potential products targeting critical, underserved and commercially attractive markets. We intend to work aggressively to pursue these opportunities."

Celtrix's cost-reduction plan is expected to lower the company's current burn rate by $8 million, thereby reducing operating expenditures to a projected $13.5 million on an annualized basis. At Sept. 30, 1994, Celtrix had $29 million in cash (including restricted cash), cash equivalents and short-term investments. The company has the option to receive additional funds from Genzyme Corp., one of its corporate partners, in December 1995.

Celtrix is a biopharmaceutical company focused on the treatment of seriously debilitating, degenerative conditions primarily associated with aging or chronic diseases. Product development programs, which are focused on the use of BetaKine(TM) (TGF-beta-2) and SomatoKine(R) (IGF-BP3 complex), show promise for a wide range of opportunities.

In-house programs are focused on the treatment of ophthalmic disorders, cancer-related diseases, muscle wasting and osteoporosis. Corporate alliances extend these opportunities to include multiple sclerosis and tissue repair.

CONTACT: Celtrix Pharmaceuticals, Inc.

             Dale Stringfellow, president and chief executive officer
             408/988-2500