Pharmaxis reveals revised business plan, cuts 30% of workforce
Pharmaxis, a specialty pharmaceutical company, has revised its business plan which delivers significant reductions in expenses and increases the focus on partnering strategies to grow the value of the company’s assets and reposition it for the future in the global respiratory drug market.
Pharmaxis will reduce the company’s March 2013 annualized cash cost base by approximately 29% and the annualized cash loss by approximately 37%. This includes a further downsizing of manufacturing in Australia and clinical capabilities in Europe and Australia. The restructuring will also result in a 30% headcount reduction.
“The strategies and actions announced today are aimed at mitigating some of the risks associated with drug development in the short term and increasing the opportunity for long term returns,” said Gary Phillips, CEO of Pharmaxis. “We have some valuable product opportunities at all stages of development and are restructuring the company to take full advantage of that potential in a manner that conserves cash and puts us in a stronger position to navigate the road ahead. These decisions have been made in response to recent regulatory and clinical trial setbacks. All areas of the business have been reviewed and we have made some clear strategic choices on how we will do business in the future.”
Pharmaxis will also seek partnership opportunities for Bronchitol in the U.S. for cystic fibrosis (CF) and globally for bronchiectasis, while retaining a direct commercial interest in Bronchitol in Europe and other approved and reimbursed markets.
“Now that the pathway to approval for Bronchitol in CF is defined, we believe that it represents an attractive opportunity for other companies with an interest in CF,” said Phillips. “The additional $20 million available from the NovaQuest financing agreement provides us with viable strategic options to partner Bronchitol at a time when we believe the value to Pharmaxis shareholders will be highest; before, during or after the final phase III study.”
In addition, Pharmaxis has initiated discussions with various third parties to secure funding for all or some of the company’s innovative pipeline of early stage compounds. Pharmaxis has made progress both in advancing the evidence base for its two preclinical assets (SSAO and LOXL2 inhibitors) and initiating discussions with a number of commercial and not‐for‐profit organisations to secure funding from January 2014 onwards.
Pharmaxis chairman, Malcolm McComa, said, “This plan to reshape Pharmaxis gives the company an affordable business model that can be funded out of existing cash resources, emerging revenues from approved products, our agreement with NovaQuest and a potential to share the development costs for both Bronchitol in the U.S. and our early stage assets. We have made 2013 a year of restructure, in direct response to our failure to achieve regulatory milestones. All areas of our activities have been reviewed and some hard decisions have been made. I believe we have a clear plan and a viable way forward.”