Updated from Oct. 26

Millennium Pharmaceuticals ( MLNM) reported a narrower third-quarter loss than had been expected, and the drugmaker laid out a cost-reduction plan aimed at helping it turn an adjusted profit next year.

The Cambridge, Mass., biopharmaceutical company had total revenue for the third quarter of $201.7 million, compared with $110 million a year ago. Velcade sales in the U.S. rose 35% to $50.9 million in the quarter, thanks to a price increase and higher demand, the company said during a conference call Thursday morning.

Velcade is approved by the Food and Drug Administration for the blood cancer multiple myeloma when the disease has returned after a previous treatment. According to Millennium, Velcade holds 45% of the market for second-line multiple myeloma treatments.

The drug has also been used off-label in some cases as a first treatment, and in a small number of patients to fight lymphomas and lung cancer. That means the company hasn't received regulatory clearance to market the drug for these uses. However, doctors are allowed by law to prescribe a medication as they see fit once it has been cleared for a single indication.

When calculated using generally accepted accounting principles, Millennium had a quarterly loss of $73.8 million, or 24 cents a share, compared with a loss of $63.1 million, or 21 cents a share, last year.

Excluding restructuring and amortization costs, the company would have lost $6.5 million, or 2 cents a share compared with a loss of $55 million, or 18 cents a share, a year earlier. The loss narrowed as a result of reduced research and development costs for the heart drug Integrilin and one-time payments from its collaborators. Analysts were looking for a loss of 7 cents.

Millennium said Wednesday that it plans to substantially curtail its inflammation discovery programs and increase the research and development investment for its clinical pipeline of oncology drugs. As part of the company's move, it expects to have about 1,100 workers at the end of this year, 400 fewer than at the end of 2004.

Also as a part of its restructuring plan, the company expects to expand its oncology sales force by 50%, said CEO Deborah Dunsire during the conference call. According to Bob Tepper, Millennium's president of research and development, the company plans to transfer some of its scientists working in the inflammation segment to its oncology group.

"The steps that we have taken firmly enable us to achieve non-GAAP profitability in 2006," the company said.

Millennium anticipates restructuring charges of $75 million to $85 million, mainly for facilities costs and employee termination benefits. For the full year, the company projected U.S. Velcade product sales of $190 million to $195 million and a loss before items of $85 million to $95 million, vs. its previous guidance of less than $100 million.

However, Millennium doesn't expect Velcade sales to increase at the same rate going forward. In the third quarter, the company received certain payments it doesn't anticipate will be repeated.

On a GAAP basis, Millennium is forecasting a loss of $200 million to $215 million.

Millennium plans to provide an update on its research and development pipeline at its analyst day next Wednesday. In December, more than 50 Velcade research abstracts and six presentations are scheduled for the American Society of Hematology meeting.

Shares of Millennium were up 28 cents, or 3.3%, to $8.79 Thursday.