A little more than two months after announcing a deal to merge with Canada's QLT in a tax-cutting move, Auxilium Pharmaceuticals rolled out a plan today to ax 30% of its staff, narrowing its R&D focus and slashing its annual costs by $75 million a year.
The leaner, meaner Auxilium ($AUXL) is evidently cutting sales staff as well, whittling three sales groups down to two as it promises to continue to push sales of three key products: Xiaflex, Stendra and Testopel. And it plans to focus its R&D efforts on cellulite and "frozen shoulder syndrome."
According to its annual report, Auxilium had 639 staffers at the end of last year, indicating that up to about 200 employees will lose their jobs in the restructuring. Auxilium did not specify in its statement, though, exactly how many pink slips are being handed out.
A spokesperson for the company told FierceBiotech that Auxilium has yet to provide final word on exactly how many employees are being cut or how individual departments will be affected.
Auxilium is already well on its way to cutting its tax rate from 35% to Canada's 15%. Back in June the biotech said it would acquire QLT in a $345 million stock deal and domicile the company in British Columbia. And when Auxilium CEO Adrian Adams was touting the merger with QLT in June he talked up the notion of using the freed up tax money to invest more into R&D and acquisitions.
The Chesterbrook, PA-based biotech plans to take a charge of up to $20 million to cover the cost of the restructuring.
These controversial tax inversions and the restructurings they can trigger have been a popular feature in the biopharma world this year. Pfizer tried, but so far failed, in its attempt at a big tie-up with AstraZeneca. AbbVie, though, nabbed Shire and Medtronic acquired Covidien, among other tax inversion deals.
"We believe the changes announced today support our corporate growth strategy and enhance and accelerate our ability to achieve our goal of building Auxilium into a leading, diversified North American specialty biopharmaceutical company," said Adams in a statement. "Auxilium has faced significant challenges this year, in particular a dramatic decline in the testosterone replacement therapy market. We are making difficult but necessary changes at the operational level to strengthen our balance sheet, reinforce our competitive position and, we believe, drive shareholder value. We are confident that these steps will make us a leaner, more efficient and more competitive company and, after our anticipated merger with Canadian biotechnology company QLT, Inc., will provide a stronger platform to accelerate our growth and transformation."
- here's the release