Firm is trimming costs to better position itself for a partnership or acquisition.
Oscient Pharmaceuticals is implementing a workforce reduction of approximately 32% of its 305 employees across the U.S. Additionally, Oscient has employed Broadpoint Capital to explore strategic options including the potential sale of the company.
Oscient will be left with approximately 35 employees at its offices in Waltham, MA and Skillman, NJ as well as approximately 170 field employees across the U.S. The firm reports that it has aligned its sales force into 150 territories that include physicians with potential to generate the highest volume of prescriptions. The company is also eliminating approximately 25 positions that have been vacant.
Oscient expects that the cumulative impact of these decisions will reduce current annualized payroll expenses by approximately $8 million. The company expects to record a restructuring charge of approximately $2 million in the first quarter.
Oscient currently markets Antara for cardiovascular indications and Factive for community-acquired pneumonia and acute bacterial exacerbations of chronic bronchitis. The company earned $21.8 million in revenues during the third quarter of 2008 compared to $15.6 million during the same period the previous year.
“We have taken significant measures to decrease current expenditures including a reduction of cash interest payments on our long-term debt, a reduction in operating expenditures, and the elimination of cash bonus payments to officers and office personnel,” says Steven M. Rauscher, president and CEO of Oscient.
In spite of all that, Rauscher realized that additional cost-reduction strategies were necessary. “Given current capital market constraints and our limited cash resources, we determined that the best way to position our organization for a potential partnership or acquisition was to take the difficult steps to realign our commercial organization and reduce cash required for operations,” he says.
As of September 30, 2008, the firm reported that its cash position was approximately $29 million. The company is currently evaluating Factive in preclinical studies for other bacterial infections and another compound in Phase II trials for C. difficile-associated disease.
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