Shares of Endo International are up more than 5% after the company announced positive earnings Thursday and also announced a new restructuring plan that is expected to “optimize” the company’s operations through the elimination of several manufacturing sites and the employees who work there.
Ireland-based Endo said the restructuring will generate significant cost-savings for the company that will be used to expand its pipeline and support the planned 2021 launch of Qwo, the first injectable approved by the U.S. Food and Drug Administration as a treatment for cellulite. Qwo (collagenase clostridium histolyticum-aaes) was approved in June for the treatment of moderate to severe cellulite in the buttocks of adult women.
In its announcement, Endo said it intends to “exit” several sites, including two manufacturing sites in California and New York. Endo said it also intends to exit active pharmaceutical ingredient (API) manufacturing and bioequivalence study sites in India. Endo intends to exit these sites in a phased approach, which will be completed in the second half of 2022. Additionally, Endo said it will further reduce costs by transferring certain transaction processing activities to third-party global business process service providers.
As a result of the cuts, Endo said it anticipates 560 full-time employees in the United States will lose their jobs by the first half of 2023. The eliminated jobs represent about 18% of the company’s total workforce, according to reports.
Furthermore, Endo said its strategic actions will increase organizational effectiveness by fully integrating Endo’s commercial, operations, and research and development functions to support the company’s key strategic priorities.
Blaise Coleman, president and chief executive officer of Endo, said the job cuts and reduction of manufacturing sites are consistent with the company’s strategies of reinventing how it works. Additionally, he said these changes will support Endo’s priority to expand and enhance its portfolio through reinvestments. He added that the cuts and new priorities will position Endo for long-term success.
“These were difficult but necessary decisions that will, unfortunately, affect many of our dedicated team members. I would like to sincerely thank all of those who will be impacted for their hard work and countless contributions. We are committed to executing a thoughtful transition process and to providing support and assistance to our impacted team members through this period,” Coleman said in a statement.
The restructuring announcement comes less than a month after Endo acquired BioSpecifics Technologies Corporation for $540 million. Endo and BioSpecifics have partnered together since 2004. Under terms of the partnership. BioSpecifics receives a royalty stream from Endo related to Endo’s collagenase-based therapies, which includes Qwo and Xiaflex, which is intended for the treatment of Dupuytren’s contracture and Peyronie’s disease.
The reduction of manufacturing sites and headcount is expected to result in annualized pre-tax cash savings of approximately $85 million to $95 million. As a result of the eliminated jobs, End said it expects to incur pre-tax cash restructuring charges of approximately $100 million to $110 million and total pre-tax restructuring charges of approximately $163 million to $183 million. Endo will record a pre-tax charge of $67 million in the third quarter of 2020.