Renovo cuts jobs as offer talks end
RENOVO, the pioneering North West bio-pharma group which is developing drugs to reduce scarring and speed-up the healing of skin, is planning to cut a third of its staff.
The company announced plans for a significant restructuring this morning which will see it slash operating costs by 20-30%. Shares fell 10% to 25p in early trading.
It said an approach for the business received in April was now off the table and it is seeking to conserve enough cash to see through the commercialisation of its lead drug Juvista.
The cuts will mean the loss of more than 50 staff in Manchester where the company employs 160 people. Renovo said it would seek to minimise compulsory redundancies.
Co-founder and chief executive Professor Mark Ferguson told TheBusinessDesk he was “very, very sad” about the changes.
He said: “I’ve built the business and it gives me no pleasure to do this but I have to safeguard the two-thirds of employees who remain.”
Renovo is cash rich, with reserves of around £70m, but it forecasts annual costs of £15m-£20m in the coming years. It is planning on having £25m-£30m in the bank when it reports Juvista’s first European trials in 2011.
Prof Ferguson added: “We received a preliminary approach – we didn’t receive an offer – and we took that seriously. It’s the view of the board that greater value can be created by the current restructuring than by any offer.
“When Juvista reports in 2011 we have to be in the best position to take the company forward and complete the registration of that drug because we do not generate money from anywhere else and in the current financial climate the ability to raise money is reduced.”
Management costs at the business are also being pared back. On Tuesday co-founder Dr Sharon O’Kane said she will leave her post as executive director and chief scientific officer next February.
Dr David Ebsworth and Dr Art Rosenthal have resigned as non-executive directors and the Renovo Scientific and Clinical Advisory Board has been disbanded. The executive directors have voluntarily agreed to accept no pay increase this year and to defer any 2009 cash bonus.
A separate statement showed that Dr O’Kane and Prof Ferguson will be receiving more than 200,000 shares each as part of a three-year incentive scheme. The awards are worth around £50,000 and £60,000 respectively at this morning’s price of 25p.
The directors received 75% of their original allocation because the company’s share price did not perform as expected. Prof Ferguson admitted the release of the statement was “bad timing” but said the company was unable to put it out earlier because it was in an offer period.
