In three restructuring efforts, the company has brought staff down to 27 people and monthly costs to $1.4 million.
VaxGen is restructuring for the third time since the HHS cancelled the company’s contract to provide an anthrax vaccine for civilian biodefense in December 2006. The company expects this will lower its monthly cash expenditures used in operating activities to $1.4 million.
VaxGen has already cut over 100 jobs and incurred more than $3.5 million in restructuring costs related to employee separation expenses. The latest effort will bring its workforce from 61 to 27 employees. The company will be subject to a restructuring charge of approximately $1.1 million in connection with this action.
In April, however, VaxGen was able to reach a settlement that released both parties from all liabilities associated with the alliance, and accordingly NIAID would have to pay VaxGen $11 million.
VaxGen says that it has retained resources necessary to support its pursuit of strategic transactions as well as people associated with the company’s financial reporting obligations to the SEC.
“Throughout this year we have retained only those resources that management felt could build value for our shareholders, either because they enhanced our ability to complete a strategic transaction or they were required to meet essential business objectives,” explains James P. Panek, VaxGen’s president and CEO. “Based on our understanding of the nature and structure of such potential transactions, we are now able to take this further restructuring action. We remain optimistic about completing a strategic transaction and are in various stages of discussions with a variety of companies.”
