Less than a month after inking a $658 million deal to buy out BioSpecifics Technologies, Endo Pharmaceuticals is shuttering multiple manufacturing sites and cutting 560 jobs to refocus on a drug launch in the spring.
The restructuring will occur in phases over the next few years, Endo $ENDP said Thursday. The Dublin-based biotech will gradually exit manufacturing sites in Irvine, CA and Chestnut Ridge, NY, and API manufacturing and bioequivalence study sites in India through the second half of 2022. Plus, it plans on trimming administrative costs by outsourcing “certain transaction processing activities.”
All in all, about 560 staffers will be on the chopping block by 2023. Endo expects to save between $85 million and $95 million per year, pre-tax. The company’s stock was up about 5% in pre-market trading Friday, at $5.13.
“These actions are consistent with our strategic priority to reinvent how we work and support our associated strategic priority to expand and enhance our portfolio by enabling reinvestment into building a more differentiated and durable product portfolio. We believe these actions will further position Endo for long-term success,” president and CEO Blaise Coleman said in a statement.
The news comes just months after Coleman took the helm from former CEO Paul Campanelli, who announced plans to step down last November. The big refocus is for Qwo, which Endo says is the first FDA-approved injectable treatment for cellulite expected to hit the shelves next spring.
Under a 2004 agreement, BioSpecifics was set to receive royalties from Qwo and Endo’s other collagenase-based therapy Xiaflex, a shot used to treat Dupuytren’s contracture and Peyronie’s disease. But instead, Endo agreed last month to purchase all of BioSpecifics’ outstanding stock for about $540 million, valuing the company at $88.50 per share — about a 45% premium to the company’s share price before the agreement.
SVB Leerink analyst Ami Fadia questioned the timing of the buyout, noting that Endo is dealing with unsettled opioid litigation. In 2018, the FDA requested that Endo take its opioid pain medication Opana ER off the market, after determining “the benefits of the drug may no longer outweigh its risks.” San Francisco filed claims in September that several companies, including Endo, fraudulently marketed or failed to control the sale of opioids. The biotech also settled opioid-related claims in Oklahoma for $8.75 million in January, and in Ohio for $10 million in August.
“One could argue that given Endo’s cash position (~$1.8B as of 2Q20) and no significant debt payments required until 2024, the company was in a strong position to do BD, and the optimist could read into this announcement that the company may have some confidence into its ability to reasonably resolve the opioid litigation, but this is difficult to know for sure, and the company is already levered at ~5x,” Fadia wrote about Endo’s BioSpecifics acquisition last month.
Back in 2018, Endo agreed to buy Somerset and its CDMO in India for $190 million, but didn’t follow through after getting tied up in “certain regulatory approvals,” according to Campanelli.