Bay Area Avinger Cuts Workforce by 33%
4/11/2017 6:53:24 AM
April 11, 2017
By Alex Keown, BioSpace.com Breaking News Staff
REDWOOD CITY, Calif. – Shares of Avinger Inc. fell more than 15 percent in premarket trading after the company announced it was cutting one-third of its workforce as the company examines its “potential strategic alternatives” and undertakes an organizational realignment.
Avinger, a medical device company which develops treatments for peripheral artery disease, said Tuesday it was slashing 131 full-time employees. The layoffs are expected to be completed this week, Avinger said in a statement. The layoffs include a nearly 50 percent reduction of sales personnel, from 60 to 32. The company said the terminations are designed to focus its commercial efforts on “driving catheter utilization in its strongest markets, around its most productive sales professionals.” Avinger said the layoffs will reduce operating expenses, all while the company continues to support product development and clinical initiatives.
Avinger said the layoffs and business realignment are expected to reduce its cash-burn rate to approximately $7 million per quarter by the second half of 2017, compared to an average of $13.5 million per quarter in 2016 and $13.1 million in the first quarter of 2017.
Jeff Soinski, Avinger’s president and chief executive officer, said although the company was able to bring its Pantheris OCT-guided atherectomy to market, Avinger has “encountered challenges with product reliability and the broad commercialization of our Lumivascular technology.”
“… Consequently, we have decided to make adjustments in our business as we prepare for the launch of our next generation Pantheris and Below-the-Knee products in late 2017 and early 2018. Our organizational realignment, cost reduction measures and the exploration of strategic initiatives are all intended to maximize shareholder value,” Soinski said in a statement.
The layoffs also come after the company said it was expecting revenues of $3.5 million in the first quarter, a decline of 22 percent from the first quarter of 2016 and a decrease of 26 percent from the fourth quarter of 2016. The numbers fell well-below the consensus forecast by Wall Street of $4.95 million, Mass Device reported.
Avinger said this morning that the layoffs and strategic reorganization are expected to position the company to return to growth in 2018 behind the launch of its next generation products. For 2017 then, Avinger said its top priority is to complete the next generation Pantheris projects, a next-generation atherectomy catheter, which are expected to improve product reliability and usability. Additionally, Avinger said it expects to begin enrollment in an in-stent restenosis trial for Pantheris.
Also over the course of 2017, Avinger said its R&D and manufacturing teams “expect to continue to introduce incremental improvements to the current version of the Pantheris catheter to improve the consistency and reliability of the currently marketed product, while next generation devices are in development.”
But, on Tuesday, the company said it intends to explore strategic alternatives, which includes raising capital from investors, seeking partnerships for distribution of products globally or a merger or sale of the company. Avinger said it expects cash currently on hand, about $23 million, should be sufficient to fund business operations through the end of 2017.
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