Sage Reduces its Workforce by Over 50% Due to COVID-19 Pandemic
The workforce reduction will result in an annual savings of $170 million and allow the company to focus on other vital areas to combat the COVID-19 pandemic.
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By - Biopharmaceutical company, Sage Therapeutics, recently announced that it is restructuring its workforce to advance its corporate strategy and pipeline due to the COVID-19 pandemic.
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Sage Therapeutics is reducing its workforce by nearly 53 percent of its current headcount, or 340 employees. The reduction is expected to result in annualized savings of nearly $170 million, $150 million of which is related to SG&A.
The workforce reduction will primarily affect the ZULRESSO (brexanolone) CIV injection commercial operation and related SG&A support functions, the announcement stated.
“The headwinds we are facing individually and collectively, along with a recognition of our need to move forward as a company, have led to this difficult decision. We believe this cost reduction and reallocation of resources will help Sage advance our portfolio in a way that is consistent with our mission of delivering medicines that matter to people with serious brain health disorders,” Jeff Jonas, MD, chief executive officer at Sage Therapeutics, said in the announcement.
“Unfortunately, we will be saying goodbye to some of our valued colleagues and I want to thank them for their dedication to always doing what’s best for patients. Moving forward, we are confident that we have a great team that will continue to execute on our multi-franchise strategy.”
Sage Therapeutics stated that its core goal is more important than ever as mental health issues are at the forefront due to the COVID-19 outbreak.
The company also expects that its nearly $1 billion in cash equivalents, restricted cash, and marketable securities from the end of 2019 will support operations for the next two years. Sage Therapeutics will sustain a one-time cost of $31 million from the reduction in workforce.
Company operating expenses are anticipated to be lower in 2020 compared to the previous year, and additional financial guidance will be provided on the company’s first quarter earnings update in May.
For now, the company stated that the restructuring will allow for a greater focus on vital areas and support ongoing development activity, including:
· Planned initiation and completion of three new zuranolone pivotal studies
· Efforts to meet clinical timelines goals, including those related to SAGE-324 and SAGE-718
· Maintain a level of access to ZULRESSO by focusing on geographies with existing treating sites that administer this innovative treatment
The company has been planning on conducting trial initiations this year for zuranolone. The four Phase 3 studies include zuranolone 50mg in women with postpartum depression, in patients with MDD, in patients with MDD as an acute rapid response treatment with co-initiated with an SSRI, and in patients with MDD with an added cohort.
The coronavirus outbreak has led to various companies letting go of a major percentage of their employees. The damage to the job market may continue for months to come, and the effects will be long-lasting.
While many healthcare workers are considered essential, the economic downturn is impacting the healthcare industry.
Last week, Boston Medical Center laid off about ten percent of its workforce, or 700 of its employees, The Boston Globe reported.
Atrius Health, Steward Health Care, and Essentia Health, also recently announced furlough programs. Essentia also let go of non-medical staff as the organization prepares for the surge of COVID-19 cases.
