CV to save $75M via job and R&D cuts

Palo Alto, California, USA-based CV Therapeutics is lowering its annual operating expense guidance by approximately $75.0 million, and now estimates that these costs for the next four quarters (third-quarter 2007 to second-quarter 2008) will total $200.0-$210.0 million.

The firm plans to make these savings through a combination of reductions in field and headquarters personnel, as well as cuts in outside expenses. The reorganization of the company's commercial operations is intended to maximize profitability on a territory-by-territory basis, while retaining the ability to capitalize on potential continued growth in turnover of its heart drug Ranexa (ranolazine). Based on an optimized sales alignment, which eliminated or consolidated a number of unprofitable territories, most new areas will be profitable immediately after the reorganization, noted CV, adding that it will now have approximately 140 sales regions, compared to the 250 territories it had before.

The company has also reduced general and administrative expenses for the next four quarters approximately 15% so that, in the USA, total SG&A costs will be cut $55.0-$60.0 million, while overall R&D spending is expected to fall 20%, or $15.0-$20.0 million on an annual basis, allowing CV to continue pursuing several promising programs, while delaying, scaling-back or potentially partnering some early-stage preclinical programs. These R&D reductions are in addition to the $30.0 million annual savings in R&D spending compared to 2006 levels that were previously announced. In conjunction with the cutbacks in operating expenses, the company expects to record $16.0-$20.0 million in one-time expenses and charges in the second quarter of the year.