Epix Pharmaceuticals Inc. will eliminate approximately 50% of its workforce in January, 2006 as a result of the FDA's second approvable letter regarding Vasovist.

The reductions will affect both the research and development and the general and administrative areas of the company. Prior to the initial announcement on November 23, 2005 of the company's intention to reduce its workforce, the company had 93 employees. Following the completion of the reduction, the company expects that it will have approximately 48 employees, states a company release.

Epix received the second approvable letter from the FDA on November 22, 2005. The letter indicated that at least one additional clinical trial and a re-read of images obtained in certain of the previously completed Phase III clinical trials will be necessary before the FDA could approve Vasovist, the company's novel blood-pool contrast agent.

The workforce reduction will result in a one-time charge of approximately $1.2 million, which will be recognised in the fourth quarter of 2005. While the company expects that spending in 2006 will be highly dependent on anticipated input from the FDA about future clinical trials for Vasovist, it anticipates that the reductions in staff should reduce the company's projected cash burn in 2006 by approximately 30%, or $7 million, excluding non-recurring cash payments associated with the reduction. In 2005, the Company expects that its cash burn will be approximately $25 million. A few of the employees included in the reduction will terminate their employment later in the first quarter of 2006 as they complete work on important activities, added the release.

Epix Interim CEO Michael Astrue said, "We regret the loss of these talented and hard-working individuals who have contributed so much over the years to Epix. We also regret the suspension of many of our innovative early-stage research programmes that might contribute in the diagnosis of severely ill patients, but we need to take these steps in order to bring our lead programs forward as quickly as we can."

Vasovist, the company's novel blood-pool contrast agent for use in magnetic resonance angiography, was the subject of a second FDA approvable letter on November 22, 2005. Vasovist was approved by the European Commission for marketing in the 25 member countries of the European Union in October 2005, and is expected to be launched in Europe in the first quarter of 2006.

Epix Pharmaceuticals discovers and develops innovative pharmaceuticals for imaging that are designed to transform the diagnosis, treatment and monitoring of disease.