Transcept Pharmaceuticals' agreement with Purdue Pharmaceutical Products may lead to staff reduction

Aug 19 2009

Transcept Pharmaceuticals, Inc. (Nasdaq: TSPT) today announced plans to reduce operating expenses by eliminating certain staff positions following its recently announced License and Collaboration Agreement with Purdue Pharmaceutical Products to commercialize Intermezzo((R) )(zolpidem tartrate sublingual tablet) in the United States.

Glenn A. Oclassen, President and Chief Executive Officer commented, "Our overall staffing needs have been modified by the development of Intermezzo((R)) to the point of NDA submission and our recently announced agreement with Purdue Pharmaceuticals to commercialize Intermezzo((R)) in the United States. Should Purdue elect to continue with our license and collaboration agreement after an FDA approval of Intermezzo((R)), Purdue will be responsible for the effort and costs associated with the commercialization of the product in the United States, including sales and marketing efforts in the primary care market, post-approval regulatory affairs activities and commitments, and product manufacturing. We are therefore phasing out certain positions that have been rendered non-essential by our development success to date and our agreement with Purdue. We believe that this important cost containment step is consistent with our long standing principle of conservative cash management."

Mr. Oclassen continued, "The streamlined team we will now have in place will be intently focused on seeking FDA approval for Intermezzo((R)), the worldwide commercialization of Intermezzo((R)), and the evaluation of potential additions to our product pipeline. The decision to make this approximately 30 percent reduction in our workforce was a difficult one for all of us and was made all the more challenging by the fact that it was precipitated by a positive event for the company. We are extremely grateful to the employees affected by this action for their significant efforts and contributions to the success of Transcept."

As of June 30, 2009, Transcept had $73.4 million in cash, cash equivalents and marketable securities. This amount does not include the $25 million cash payment Transcept received in August 2009 upon signing the license and collaboration agreement with Purdue. Transcept expects to record a restructuring charge of approximately $525,000 in the third quarter of 2009, representing cash payments for severance expenses, the majority of which will be paid in the third and fourth quarters of 2009. Transcept expects the organizational change will reduce current annualized payroll and benefit expenses by approximately $1,500,000.