The tight financial times continue to hit the healthcare sector, specifically affecting pharma and biotech companies.
Evofem Biosciences, a contraceptives drugmaker, announced a workforce reduction plan on Monday, cutting its CEO’s salary by 40% and laying off its chief commercial officer.
Evofem CEO Saundra Pelletier’s pay cut brings her compensation down to $520,000 for the rest of the year. The broader 39% reduction in payroll expenses is all part of the company’s effort to reach cash flow break even by the end of 2023.
Additionally, Evofem is consolidating its three sales territories and axing eight office and management positions. The effort is expected to deliver annualized future cost savings of $4.3 million, though Evofem stated that it estimates it will incur a $100,000 pre-tax charge on the reduction in its workforce.
These expense reduction measures are slated to be “substantially completed” in Q1, the company said in a press release Tuesday.
The company manufactures Phexxi, a hormone-free contraceptive gel that was approved by the Food and Drug Administration in 2020. Just last year, the FDA formally extended its shelf life from three to four years.
“It was a difficult decision to restructure our already very small workforce and ask remaining team members to work harder for less pay,” Peletier said in a statement. “The team members who stay with the organization are united behind our common goals and worthy mission have the heart, head, and backbone to change women’s health forever. This decision is critical to our long-term success and our ability to align resources to enable us to continue providing Phexxi to women seeking hormone-free prescription contraception.”
The cost-cutting moves came about one month after Evofem’s board of directors approved a comprehensive process to explore strategic alternatives in an effort to maximize shareholder value. Among the options considered were a merger, reverse merger, sales of assets as well as licensing or other strategic transactions.
The company retained Joseph Gunnar & Co. to serve as its exclusive financial advisor during the review process.
Evofem also added Albert Altro earlier this month as CFO, replacing Jay File, who left to pursue other opportunities.
