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As a result of the actions taken, the Company is reducing its workforce by approximately 33 percent, or 20 employees, as well as freezing salaries and suspending bonuses for all Company employees, including the Company's executive officers. Hollis-Eden expects that the cost-cutting measures being taken will allow the Company to continue to fund operations for approximately two years without reliance on the equity markets. Furthermore, the Company has no debt, the company noted in a release.
"During the current economic downturn and financial crisis, access to capital, especially in the small cap biotechnology sector, has been sparse and company valuations have been deeply discounted," said Richard B. Hollis, Chairman and Chief Executive Officer of Hollis-Eden Pharmaceuticals. "This environment necessitates dramatic changes in order to move clinical programs forward. Layoffs are extremely painful for any organization but the necessity of preserving cash in this challenging financial environment means that expenses must be reduced everywhere possible. Layoffs, frozen wages and suspension of bonuses are measures and sacrifices companies must make to preserve precious capital. Investment bankers, analysts and money managers indicate clearly that extending cash runways out to 24 months or longer, and advancing drug candidates to critical value-driving inflection points, is key to weathering this economic storm. Among the hundreds of publicly traded biotechnology companies today, many of which have between six and twelve months of cash, Hollis-Eden is one of the fortunate few that has sufficient capital to significantly extend its runway by restructuring its organization. By taking these measures, we expect our operating budget going forward to enable us to sustain our current clinical development programs through both 2009 and 2010.
"We continue to have multiple opportunities in our diversified clinical development programs to demonstrate and drive future value," added Hollis. "We have made significant investments in our two lead drug candidates, TRIOLEX and APOPTONE, and if they are successfully commercialized, we believe they should offer competitive advantages over currently approved products in major market indications and that they could be significant revenue drivers for Hollis-Eden. As a result, we believe that we may have multiple future opportunities to monetize our assets either through improved technology value, strategic collaborations, research and development partnerships, or licensing arrangements.
"To those employees affected by our workforce reduction," said Hollis, "we are greatly appreciative of the contributions they have made to Hollis-Eden, and we wish them well in the future. While taking these measures is never easy, today's difficult economic climate and tough market conditions for our industry make such actions unavoidable and necessary."
Hollis-Eden Pharmaceuticals is engaged in the development of a proprietary class of adrenal steroid hormones as novel pharmaceuticals for human health.
((Comments on this story may be sent to health@closeupmedia.com))
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