Pernix Therapeutics Holdings said today it will eliminate 23% of its full-time workforce—60 positions—in a restructuring the company said was intended to improve the effectiveness of its sales force as well as optimize its resources.
Most of the employees to be laid off, 54, are sales staffers coming primarily from Pernix’s neurology sales team. Another six administrative employees are also to be eliminated.
In addition to the layoffs, Pernix said it was reorganizing its sales territories to reduce the time that reps spend driving between customers, changing its compensation to sales reps through incentives to encourage more frequent calls to potential customers, and consolidating its neurology and pain sales forces under one management structure.
The layoffs and other restructuring actions come nearly 2 months since John Sedor ascended to Chairman and interim CEO of the company, succeeding Doug Drysdale, who stepped down as chairman, CEO, and president effective May 9. A board member since 2014, Sedor had been president, CEO, and a director of immune therapeutics developer Cangene from 2011 until its acquisition for $222 million by Emergent Biosolutions, completed in February 2014.
“While it is extremely difficult to execute work force reductions, this initiative is necessary to drive sales growth effectively, while building a more efficient organization,” Sedor said in a statement. “These actions represent an important step in our efforts to unlock the significant value that currently exists within Pernix.”
Sedor succeeded Drysdale just 4 days after the company reported a 4% decrease in net revenue during the first quarter, to $32.5 million.
Pernix blamed the drop on lower sales volumes and higher managed care rebates for two marketed drugs, the migraine treatment Treximet® (sumatriptan/naproxen sodium) and the insomnia treatment Silenor®(doxepin). Treximet net sales fell by $4.7 million or 22% during Q1 compared with the year-ago quarter, while Silenor net sales decreased by $1.4 million, or 28%.
Pernix said it expects to take a one-time charge of approximately $2 million in the third quarter in connection with the reorganization. The company expects the restructuring to generate approximately $10 million in annual cost savings, beginning in Q3.
Pernix added that it remains in compliance with all covenants in its debt facilities and anticipates making its interest and principal payment on its Senior Secured Notes on August 1.