Angiotech Pharmaceuticals (Vancouver, British Columbia) reported plans to cut jobs, close a plant and delay a new product. It also may drop a financing deal and will withdraw offers to buy outstanding notes. The actions follow a cost-cutting plan reported in April, the company said in a statement. Further steps were needed, Angiotech said. The company has been hobbled by declining sales of drug-eluting stents by partner Boston Scientific (Natick Massachusetts).
The company's manufacturing and research center in Rochester, New York, will be closed in December 2009, and Angiotech said it will postpone the scheduled introduction of a drug-coated catheter, the 5-FU CVC. Office and laboratory space will be cut or eliminated in Vancouver, as well as in North Bend, Washington, and Herndon, Virginia.
Additionally, the company said it has doubts whether it can complete its previously reported arrangement with the investment management firm Ares Management, and the venture capital firm New Leaf Venture Partners.
Angiotech reported in July that it would sell $200 million to $300 million in convertible notes to Ares and New Leaf in an effort to form a new operating unit and reduce debt (Medical Device Daily, July 8, 2008).
The company said it "plans to withdraw its outstanding tender offers for its senior floating rate notes and its senior subordinated notes."
The company also said Ares and New Leaf do not support its reorganization plans.
At the time the financing disclosure was made back in July, the company said the new subsidiary would hold most of its assets outside of its Taxus coronary stent business, a product sold by Boston Scientific for which Angiotech provides the paclitaxel drug coating. The new unit was to be called Angiotech Pharmaceutical Interventions.
"Our board of directors believes that despite the growth and progress we've seen this year in our medical products businesses it is in the best interest of Angiotech and its shareholders to take action now to adjust our business and operating structure in order to achieve cost savings and to further focus our business initiatives," said Dr. William Hunter, CEO of Angiotech. "While our extensive discussions since we announced the transaction with various shareholders and bondholders have been useful, during this period events have impacted our business and the capital markets, and we will take every action necessary to prepare our company for the future and to provide the best opportunity for our most important near term initiatives to continue, regardless of the timing of completing any financing or strategic transaction.
Hunter added that the company will also pursue discussions with Ares, New Leaf and its bondholders and shareholders "with a view to solving the issues arising from our current capitalization."
Specifically, the company said it expects to focus remaining investment and resources on its most promising near term product opportunities, including Quill SRS and certain new interventional radiology products, including the HemoStream chronic dialysis catheter, the Option inferior vena cava filter and the Bio-Seal lung biopsy system, and therefore to further reduce spending on certain research and development relating to various earlier stage new product initiatives.
In connection with these initiatives and developments, Angiotech said it expects to record a significant reduction in the amount of goodwill and intangible assets held on its balance sheet in 3Q08.
Angiotech has also revised its outlook for expenses for the remainder of 2008 and all of 2009 as it assesses the impact of lower than expected DES royalty payments, higher costs for its trial for vascular wraps and the impact of weak capital markets.
It now projects general and administrative expenses in the range of $42 million to $45 million, up from the previous estimates of between $38 million and $43 million. It sees capital expenditures of $10 million to $12 million, compared with its previous outlook of $12 million to $15 million.
The company also said it expects research and clinical expenses of $45 million to $48 million, up from its previous outlook of $30 million and $38 million.
For 2009, it sees research and clinical expenses of $13 million to $16 million, sales and marketing expenses of $42 million to $45 million, and capital expenditures of $10 million to $12 million.