ALKS 8/26 23%
Monday August 26, 9:32 am Eastern Time
Press Release
SOURCE: Alkermes, Inc.
Alkermes Announces Reduction in Workforce
Reducing Cost Structure as Company Plans for Profitability
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 26, 2002--Alkermes, Inc. (Nasdaq: ALKS - News) today announced that it is reducing the size of its staff and focusing its product development activities in order to reduce its cost structure. The company is taking these actions based on its current expectations of the financial impact of a delay in the U.S. launch of Risperdal Consta(TM). The company is reducing its workforce by 122 employees, representing 23% of its total workforce. The reduction is across all functions of the company. ADVERTISEMENT
"Alkermes' long-term strategy and business plan remain on track. We are adjusting our staffing levels to align with near-term revenues which we anticipate will be lower than expected due to regulatory delays," said Richard Pops, Chief Executive Officer of Alkermes. "Adjusting our cost structure will enable us to meet our financial objectives and continue to build on the strengths of our business strategy, our world-class drug delivery technology and our capabilities to evolve our product pipeline into novel drug therapies."
The reduction in force, effective today, will reduce Alkermes' workforce to 419 employees from 541 employees. Affected employees will be eligible for a severance package that includes severance pay, continuation of benefits and outplacement services.
The company expects to realize expense savings of approximately $20 to $25 million in fiscal 2003, excluding restructuring charges, and $40 to $45 million in fiscal 2004 from the reduction in force and related operating expense savings, including consolidation of facilities, write-off of related assets and reduction of other expenses. The company expects to take a one time restructuring charge of approximately $3.5 to $4.0 million in the second quarter ending September 30, 2002.
In the context of reducing its cost structure, Alkermes is focusing its development activities on those programs that are in the later stages of clinical development and those programs that involve the most productive collaborations. The company is moving aggressively forward in evaluating and prioritizing the programs that offer the greatest commercial potential.
Alkermes' cost structure can be viewed in three parts: costs associated with collaborative programs with pharmaceutical companies, costs associated with its own proprietary product development programs, and costs associated with building and maintaining its manufacturing infrastructure. Revenue is generated through funded collaborations, manufacturing activities, and, increasingly over time, royalty income from its partners. Alkermes is adjusting staffing and spending levels that are aligned with the current near term revenue expectations resulting from U.S. regulatory issues regarding Risperdal Consta and the tightening of external research budgets by pharmaceutical partners.
"Alkermes has a very balanced and adaptable business model," said Pops. "These changes reduce our cost structure while maintaining the outstanding capabilities of the organization." |
