Despite starting the year off on a good note, CombinatoRx has announced its second round of restructuring and layoffs in less than a month. The Cambridge-based company axed its workforce by another 30 employees, or 20 percent of its current staff--bringing total layoffs this month to 82, or 65 percent. This leaves the company with 55 employees, who will focus primarily on research and partnering. CombinatoRx says it also plans to consolidate its Cambridge facilities, but provided no details. The company expects to take a charge of $3.2 to $4 million in Q4, but hopes this will reduce operating costs by $5-$10 million annually. "These measures should allow the company to operate without additional equity financing for at least four more years," the company said in statement.
In early October, CombinatoRx saw its shares plunge 83 percent, along with investors' expectations for its lead therapy, Synavive, after a failed mid-stage trial for osteoarthritis. The company hasn't given up though. In its latest statement, CombinatoRx said "analyses continue to suggest that Synavive may have commercial potential and we are engaged in multiple partnership conversations."
CombinatoRx announced its first restructuring plan earlier this month after reporting a Q3 loss of $15.6 million on $3.5 million in revenue, only slightly better than the $16.2 million hit it took on the $3 million it made the same time last year. The first round of restructuring left CombinatoRx with only a little over half its workforce still intact when the company cut 45 percent of employees. CombinatoRx expected to take a charge of up to $2 million, but hoped the cutbacks would allow them to operate on cash reserves into 2011.
Although CombinatoRx offered no words for its employees in its latest statement, they did have this to say the first time around: "The decision to reduce our workforce was a very difficult one to make," commented Alexis Borisy, President and CEO of CombinatoRx. "We recognize the impact this restructuring will have on many of our outstanding employees who have made significant contributions to the Company. However, we must take these difficult but necessary steps now to conserve capital, allowing us to marshal the capabilities and resources for our development opportunities moving forward."
- read CombinatoRx's release
- check out its Q3 financial report
- take a look at the Top 5 layoffs of 2008