Evotec Cuts Workforce with New Focus on Forging Discovery Partnership
Firm will be able to fund its clinical pipeline and operations for at least three years.
Evotec is reducing its headcount by almost 12% and attempting to expand its discovery alliance business. The company reports that it will thus be able to sustain itself beyond 2012.
Evotec says that 50 positions out of 420 will get eliminated from the entire organization in the U.S., U.K., and Germany. This will reduce its SG&A expenses by more than 10% and its R&D costs by more than 30%, according to the firm. This means a cost reduction of over €14 million, or about $18.62 million, from 2008. The firm also expects its annual burn rate to decrease by at least 30%.
The impact of restructuring is expected to amount to approximately €2 million, or approximately $2.66 million, this year.
To de-risk its business, Evotec plans on expanding its indication focus to neuroscience, pain, and inflammation through collaborations. Evotec points to its agreement with Roche from March related to depression as an example. It received $10 million up front and stands to earn another $300 million.
With this strategic approach and its €92 million, or roughly $122.35, of liquidity as of the end of last year, Evotec believes that it can fund and succeed in currently planned business operations.
Though last November, Evotec reported that they were likely to close a deal in 2009 related to further development and commercialization of its Phase II insomnia drug, EVT 201, nothing has yet come through. The firm still believes that its other programs will potentially raise interest within the industry.
Its pipeline consists of EVT 302 for smoking cessation, currently in a Phase II with data expected in the second quarter. Additionally, EVT 101 will be entering Phase II for treatment-resistant depression through the Roche alliance. EVT 101 is also being investigated in Phase II Alzheimer’s and pain trials. Its early-stage program comprises P2X7 antagonist for rheumatoid arthritis, and H3 and a P2X3 antagonist programs should enter Phase I next year, according to Evotec.