Acusphere plans to substantially reduce costs while it continues its regulatory discussions with the FDA for its lead product candidate, Imagify (Perflubutane Polymer Microspheres) for injectable suspension, including cutting jobs and consolidating operations.
The cost reductions include a reduction in force, the termination of its lease in Watertown, Mass., and the consolidation of operations at its manufacturing facility in Tewksbury, Mass., as well as the filing of a Form 15 with the U.S. Securities and Exchange Commission (SEC) to suspend the company's SEC reporting obligations.
The Watertown, Mass.-based company said its cost reductions are in addition to cost reductions previously announced in February, involving the renegotiation of certain intellectual property agreements to push certain future payments into 2013.
Acusphere said it plans to reduce workforce by 40 people, or about two-thirds of its employees, over the next several weeks. The reductions cut across all functional areas including manufacturing, quality systems, drug development, regulatory, finance and administration. The reductions are intended to extend the company's cash position to accommodate continuing discussions with FDA.
The company also signed an agreement to terminate the lease of its current headquarters in Watertown and relocate all company personnel to its facility in Tewksbury. Under the agreement, the company will make a one-time payment of $800,000 and forfeits its security deposit of $997,500. The company will also make its final monthly payment of rent for March and pays estimated operating expenses of approximately $65,000 per month from April through July 1, unless the lease is terminated earlier by the landlord.
Total annualized cash savings from reductions in staff are estimated to be approximately $3.9 million, according to Acusphere. The company estimated it will take a one-time charge in the first quarter of approximately $300,000 associated with the reductions. Total annualized cash savings from the termination of the headquarters lease are estimated to be approximately $3.6 million with total savings, net of the one-time payment and deposit forfeiture, of an estimated $10.6 million through 2012, the original term of the lease. The company said it expects to save approximately $800,000 in 2009 as a result of filing the Form 15 to deregister its shares.
The actions, in combination with the actions announced last month, are expected to extend the company's cash into the third quarter and provide additional time to explore strategic partnerships and financing alternatives as we continue to interact with the FDA, according to the company.