Genaera Corporation announced that following a comprehensive review of its development portfolio and external market conditions, the board of directors and management have determined that it is in the best interest of the company to terminate the Evizon (squalamine lactate) clinical development programme in wet age-related macular degeneration (AMD) and focus company resources on the development of trodusquemine (MSI-1436) for the treatment of obesity. The company anticipates initiating a phase I clinical study of trodusquemine in the first half of 2007.

As a result of this strategic decision, Genaera will reduce its workforce by approximately 30 per cent. The company has also engaged Banc of America Securities LLC as its financial advisor to assist the Company in its review of strategic alternatives.

"This restructuring is a fundamental shift in direction for Genaera but represents the best match of our development programs to the new realities of the marketplace," said Zola P. Horovitz, Ph.D., lead director of the Board. "By re-focusing resources from the Evizon development program, Genaera has the opportunity to bring trodusquemine forward and address a significant market opportunity in the treatment of obesity."

Genaera had been pursuing a multi-centre, randomized, open-label Phase II study (Study 212) of Evizon to determine if higher dose levels would produce greater and more rapid improvements in visual acuity than those seen in prior Phase II studies, a result considered a necessary pre-requisite to phase III development, successful registration and partnership opportunities. The rapid acceptance, both domestically and abroad, of new and off-label products that improve vision in wet AMD significantly curtailed the rate of subject enrolment in Study 212.

"Despite our extensive recruiting efforts, enrolment of Study 212 has remained extremely difficult," said Jack Armstrong, President and Chief Executive Officer of Genaera Corporation. "Additionally, preliminary information from investigators on patients enrolled to date in Study 212 suggests that Evizon is unlikely to produce vision improvement with the speed or frequency necessary to compete with recently introduced treatments. Faced with this discouraging information, as well as evolving FDA guidance on clinical endpoints, we have concluded that there is no attractive or pragmatic option for the registration and commercialization of Evizon for the treatment of wet AMD. As a result, we cannot justify continuing to expend our limited resources on the clinical development of Evizon. Unlike most development stage companies, we are fortunate to have another asset like trodusquemine to provide an attractive alternative development target."

The company estimates that it will incur restructuring charges of approximately $0.3 million in the first quarter of 2007 associated with the reduction in force. As of September 30, 2006, Genaera had cash and cash equivalents of approximately $37.7 million. The company believes that cash on hand is sufficient to fund operations into 2008.