CVTX sheds about $75Mil expenses to reach profitability sooner.
However, at the loss rate they have, this just extends their cash by about another 6 months. Unless they get to breakeven within a year, they will need additional funds NLT 18 months. I think breakeven looks more like 3 years if everything works out and no problems.
With about 750 employees and laying off 110 in sales and indeterminate numbers in management and R&D, this looks like about a 20% hit to head count. and slightly less than 25% reduction in expenses.
graham
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cvt.com
PALO ALTO, Calif., May 24 /PRNewswire-FirstCall/ -- CV Therapeutics, Inc. (Nasdaq: CVTX) announced today that it is lowering its annual operating expense guidance by approximately $75 million. Prior operating expense guidance for the calendar year 2007 was $275-$285 million. The Company now estimates that operating expenses for the next four quarters (Q3 2007 to Q2 2008) will total $200-$210 million.
These planned savings will be realized primarily through significant optimization of the Company's field sales organization, enhanced focus of R&D activities and substantial reductions in SG&A spending, and have been achieved through a combination of reductions in field and headquarters personnel and outside expenses.
"Based on the results from the MERLIN TIMI-36 study and our historical Ranexa revenue trend, we believe that the difficult but necessary action we have taken to significantly reduce our operating expenses improves the Company's potential to begin generating profits sooner, by allowing us to maximize the potential upside of future revenue growth, new potential indications and partnership opportunities with Ranexa, regadenoson or our other pipeline products," said Louis G. Lange, M.D., Ph.D., CV Therapeutics chairman and chief executive officer.
The reorganization of the Company's commercial operations is intended to maximize profitability on a territory-by-territory basis, while retaining the ability to capitalize on potential continued growth in Ranexa revenues. Based on this optimized sales alignment, which eliminated or consolidated a number of unprofitable territories, most new territories will be profitable immediately after the reorganization. The Company will now have approximately 140 sales territories, compared to approximately 250 sales territories previously.
The Company also has reduced G&A expenses for the next four quarters (Q3 2007 to Q2 2008) by approximately 15 percent. In total, SG&A expenses in the United States will be reduced by $55 - 60 million, or approximately 33 percent over that time period. Overall R&D spending is expected to be reduced by almost 20 percent, or $15 - 20 million on an annual basis. This focused R&D budget will allow the Company to continue pursuing several promising programs, while delaying, scaling-back or potentially partnering some early stage preclinical programs. These R&D reductions are in addition to the $30 million annual reduction in R&D spending compared to 2006 levels that were previously announced. |
