Cambridge Antibody Technology, the beleaguered biotech group which failed in its bid for Oxford GlycoSciences earlier this year, has been forced to scale back its research operations and abandon the search for acquisitions.
The company plans to axe up to 10 per cent of its 200-strong workforce in an attempt to conserve its dwindling cash pile.
Investors were disappointed by CAT's interim results yesterday, and by signals that the company may be heading for an expensive legal battle to protect royalties from its one launched drug, Humira, a treatment for rheumatoid arthritis with potential sales of more than $1bn (£611m) a year.
CAT lost £18.8m in the six months to 31 March, nearly double the same period a year before, as its pipeline of new drugs moved successfully into more advanced and costly clinical trials. The company's cash pile at the end of the period was £119m, compared with an annual cash burn that will now be less than £40m.
Peter Chambré, the chief executive, said CAT would sell off some of its research operations - including a project working on ways to improve the effectiveness of medicines - and cut back its contract work for other drug developers, which has become more difficult to come by.
"Because we are a company that is absorbing cash and planning to do so for some years yet, we clearly have to husband our resources. Clearly, the public markets have no interest in providing new resources to biotech at the moment, so we should run the company without recourse to the public markets."
CAT shares have languished as investors worry that the company would not be able to meet its target of profitability within five years without tapping shareholders for more funds. The problem has become particularly acute because Abbott, the US pharmaceuticals giant which has developed Humira, wants to cut the level of royalties it pays to CAT for the product and for five others the pair are developing.
Mr Chambré again rejected Abbott's claim that CAT should share royalties with other companies who have contributed to the development of Humira. He said: "We can only see two routes forward. Either we will reach a resolution consistent with our view that Abbott is not correct. Or we will go to arbitration or even litigation."
The failed attempt to buy Oxford GlycoSciences cost CAT £1.6m, it was revealed yesterday, although part of that will be covered by a £1.1m break fee. OGS was eventually bought by rival Celltech for £101m in cash.