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CV Therapeutics Cuts Costs

TSC Staff

The Palo Alto, Calif., biotech said it has made cuts in field and headquarters personnel but didn't offer a number. The company said it has cut overhead, reduced research and development spending and engaged in a "significant optimization of the company's field sales organization."

CV said the moves will cut its expense guidance over coming quarters to a range of $200 million to $210 million from the previous $275 million to $285 million. The move comes just a week after activist investor Third Point took a 9.9% stake in the company.

"Based on the results from the Merlin Timi-36 study and our historical Ranexa revenue trend, we believe that the difficult but necessary action we have taken to significantly reduce our operating expenses improves the company's potential to begin generating profits sooner, by allowing us to maximize the potential upside of future revenue growth, new potential indications and partnership opportunities with Ranexa, regadenoson or our other pipeline products," said CEO Louis G. Lange.

Shares of CV fell 32% in a single day back in March after the company said the Merlin Timi-36 study of its ranolazine drug didn't meet its primary efficacy endpoint but did show that the drug is safe.

On Thursday, CV said its "optimized sales alignment" eliminated or consolidated a number of unprofitable territories, so most new territories will be profitable immediately after the reorganization. The company will now have approximately 140 sales territories, compared to approximately 250 sales territories previously.

Overall R&D spending is expected to be reduced by almost 20%, or $15 million to $20 million on an annual basis. This focused R&D budget will allow the company to continue pursuing several promising programs, while delaying, scaling-back or potentially partnering some early stage preclinical programs. These R&D reductions are in addition to the $30 million annual reduction in R&D spending compared to 2006 levels that were previously announced.

In conjunction with the reduction in operating expenses, the company expects to record $16 million to $20 million in one-time expenses and charges in the second quarter of 2007.