The Medicines Company to Lay Off 85% of Employees
The Medicines Company (NYSE:MDCO) announced that it is moving ahead with its previously announced restructuring plans. The company says that, over the next 45 days, it will cut its headcount to fewer than 60 people. The Medicines Company currently employs around 410 people, so a reduction to 60 would mean the termination of 360 people, or 85% of its workforce.
The Parsippany, New Jersey biopharmaceutical company is hoping that the restructuring will help it aggressively advance the development of its drug “Inclisiran,” helping The Medicines Company compete with Amgen, Inc. (NASDAQ:AMGN) and Sanofi SA (ADR) (NYSE:SNY).
In reporting its third-quarter results, The Medicines Company shocked Wall Street when it said it was undergoing a drastic downsizing. The company also said it expects to announce the sale of its infectious disease business by the end of 2017.
The reduced staffing level and the sale of its infectious disease business will significantly improve The Medicines Company’s cash flow and help it advance the development of its Inclisiran drug candidate.
Inclisiran is a cholesterol-lowering drug that is part of The Medicine Company’s acute cardiovascular care product portfolio. After years in development and testing, the drug is moving into the all-important phase III clinical program.
The company plans to begin its phase III trial next week and have trial data available in the second half of 2019.
Drug trials don’t come cheap. It is estimated that the Inclisiran Phase III program will cost close to $1.0 billion. Hence the company’s desire to cut its labor costs and streamline operations.
Should Inclisiran get approved by the U.S. Food and Drug Administration (FDA), it will be competing with Amgen’s “Repatha“ and Sanofi’s “Praluent.” According to those in the know, Inclisiran could be a more cost-effective alternative to Repatha and Praluent. Inclisiran only needs to be taken twice a year; Repatha and Praluent need to be taken 24 times a year.
As a result, this should help The Medicines Company compete more aggressively. Sanofi’s Praluent costs $14,600 a year and Amgen’s Repatha sells for around $14,100 a year.
The Medicines Company’s Previous Job Cuts in 2017
The Medicines Company has been on a cost-saving mission this year. In June, the healthcare company filed a Worker Adjustment and Retraining Notification (WARN) notice with the New Jersey Department of Labor and Workforce Development, saying that it was reducing its workforce by 52 people, or approximately 15%. The effective date was August 1, 2017.
The company said it expected to record a pre-tax charge of approximately $270.0 million to $280.0 million associated with the discontinuation and market withdrawal of “IONSYS“ in the United States market. IONSYS is used for post-operative acute pain in hospitals.
By voluntarily discontinuing IONSYS and withdrawing it from the market, The Medicines Company expects to realize annualized cost savings of $35.0 million.
The company also said it would recognize a $10.0-million charge associated with cash severance and other employee costs.
This new strategy is an about-face for The Medicines Company. Over the last number of years, the company has ramped up hiring. In 2013, the biopharmaceutical firm also expanded its headquarters, moving to a larger office space in Parsippany.
“The Medicines Company Reports Third-Quarter 2017 Business and Financial Results,” The Medicines Company, October 25, 2017.
“Inclisiran,” The Medicines Company, last accessed October 26, 2017.
“Docs won’t prescribe pricey new cholesterol meds unless they lower heart risks,” Stat, April 7, 2016.
“W.A.R.N Notice – June 2017,” New Jersey Department of Labor and Workforce Development, last accessed October 26, 2017.
“Biopharmaceutical firm expanding headquarters in Parsippany,” NJ Advance Media, February 19, 2013.