The Company intends to complete a reduction in force affecting 25 employees, including Jon Congleton, President and Chief Executive Officer, and David Rodman, M.D., Chief Medical Officer and Executive Vice President of Discovery. The reductions are expected to occur between January 15, 2017 and March 31, 2017, after which, the Company will have approximately five remaining employees.
As a result of the restructuring plan, the Company estimates that it will incur cash severance costs of approximately $3 million, which are expected to be paid during the first half of 2017. The reduction in force is intended to preserve the Company’s cash while it assesses various strategic alternatives, as announced earlier this month.
The Company currently projects that it will have approximately $45-$47 million of net cash available for the potential strategic transaction. This projection is based on the Company’s current expectations and assumptions, including the consummation of a transaction during the third quarter of 2017, and the actual amount of net cash available could differ materially from the Company’s current estimate.
“We are extremely grateful for the outstanding leadership of Mr. Congleton and the many contributions of Dr. Rodman, as well as our other impacted employees, who have dedicated themselves to Nivalis’ efforts in cystic fibrosis,” said Howard Furst, M.D., Chairman of the Board of Directors. “Nivalis is committed to maximizing shareholder value by preserving the Company’s cash, and unfortunately this necessitates the announced restructuring.”
Mr. Congleton will be stepping down from his role as President and Chief Executive Officer effective January 15, 2017, at which time he will also resign from the Board of Directors.
The Board of Directors has appointed Mr. Michael Carruthers, the Company’s Chief Financial Officer, as interim President, effective January 15, 2017.