Financially strapped contract research and manufacturing organisation AMRI (Albany Molecular Research, Inc) is laying off some of its workforce and terminating the lease on one of its US facilities in an effort to cut operating costs and return the company to profitability.
The US-based business said it had taken action in the fourth quarter of 2011 to “reduce the Company's workforce, right-size capacity and reduce operating costs in 2012”. These initiatives will “better align the business to current and expected market conditions and are expected to improve the Company’s overall cost competitiveness and increase cash flow generation”, it added.
AMRI had already announced with its third-quarter results last November that it would be ceasing all internal research and development activities directed at new compounds and focusing its efforts on partnering or out-licensing of existing compounds in its proprietary pipeline. This move was expected to trim operating expenses by around US$7 million in the current year.
The company also flagged up the latest cuts in November, saying it was conducting “a thorough review of our global organisation to determine additional opportunities to increase efficiencies”.
AMRI reported a net loss of US$5.9 million or US$0.19 per basic and diluted share for the third quarter of 2011, compared with a net loss of US$9.9 million or US$0.33 per basic and diluted share in the same quarter of 2010. Third-quarter revenues were essentially flat year on year at US$50.2 million.
The company did not specify how many jobs would be lost in the latest cost-cutting exercise but said the cull related mainly to US personnel and “includes certain positions associated with the previously announced decision to wind down all internal R&D activities as the Company enters 2012”.
AMRI is also terminating the lease on an unspecified US facility. Together, the cost-reduction moves are expected to generate annual savings of around US$10-11 million, including US$7 million relating to the previously announced cessation of R&D activities. The cost savings will start to be recognised in the first quarter of 2012, the company added.
At the same time, AMRI has pencilled in a pre-tax restructuring charge of around US$5-6 million for the fourth quarter, reflecting primarily related the lease termination and employee severance costs. Of that sum, US$5 million will be a non-cash charge to write off fixed assets in association with the company’s plans to consolidate its operations.