Pernix Takes the Ax to 22% of Workforce in Reorg
Three years after gaining U.S. rights to migraine treatment Treximet from GlaxoSmithKline, the drug patents expired and now Pernix Therapeutics is facing the loss of exclusivity to the drug. As a result, the company will undergo a reorganization that includes the termination of a number of sales representatives.
Pernix said it will cut its total full-time work force by about 22 percent and realign its sales team into 74 sales territories in order to focus on its specialty drugs Zohydro ER, a pain treatment, and Silenor, a nerve pain medication.
As a result of the layoffs, Pernix said it expects annualized cost savings of between $7 and $8 million beginning in the first quarter of 2018. The company anticipates recording a one-time charge of approximately $1 million during the first quarter of 2018 as a result of this realignment.
Pernix acquired Treximet, a combination of sumatriptan and naproxen, from GSK in 2014 for $250 million. The drug’s patents expired in August of 2017 paving the way for generic versions.
Shares of Pernix dipped slightly this morning after the layoffs were announced from $2.84 to $2.75 as of 10:31 a.m.
John Sedor, Pernix’s chairman and chief executive officer, said the company was being proactive to ensure the company is “optimally positioned to maximize the long-term growth potential of our business.”
“Zohydro ER is a critical component of our long-term growth strategy, as we possess a strong intellectual property portfolio around this product, which provides for a lengthy exclusivity period. As a result of the cost savings associated with this organizational realignment, Pernix is also in a better financial position to be able to leverage future acquisition and product opportunities,” Sedor said in a statement.
In November, Pernix released its most recent quarterly report. Pernix reported an 18 percent increase in net revenues to $40.5 million. That increase was driven in part by sales of Zohydro ER (hydrocodone bitartrate) and Silenor (doxepin). Both drugs saw a 4 percent increase in sales during that quarter. Sales of Treximet were flat and down 11 percent for the year, the company said in its third quarter filing. In the previous quarter, sales of Treximet decreased by 18 percent, according to company data.
“Going forward, our key priorities are expanding and diversifying our product portfolio, driving net sales, improving profitability and maximizing cash flow,” Sedor said at the time the third quarter report was released.
Also in November, Pernix announced the sale of its non-core product, Cedax (ceftibuten capsules and ceftibuten for oral suspension), antibiotic for the treatment of acute bacterial exacerbations of chronic bronchitis and middle ear infection. Pernix sold the drug for $2 million to SI Pharmaceuticals. In 2016, Pernix discontinued the drug and did not generate any sales from it in 2017, the company said.