MISSISSAUGA, Ontario, April 5, 2017
-32% Reduction in the U.S. Sales Force-
-Strategic Realignment of Resources with an Emphasis on the Zontivity® Launch-
-Support Yosprala® with Direct Selling Efforts Only-
-Company Commences Spend Reductions Across Business-
MISSISSAUGA, Ontario, April 5, 2017 /PRNewswire/ -- Aralez Pharmaceuticals Inc. (NASDAQ: ARLZ) (TSX: ARZ) (Aralez or the Company) today announced that it has begun implementing a program of cost savings initiatives with the immediate aim of providing additional financial flexibility while maximizing the value of its assets. The plan includes a 32% reduction in the U.S. sales force and realignment of certain financial resources to support a successful phased launch of Zontivity ® that is expected to begin in mid-April, together with a significant decrease in marketing spend on Yosprala ® . The Company has also commenced other initiatives that are expected to reduce spending across the business, some of which were already assumed in the Company's previously issued financial guidance, and is in the process of finalizing its overall cost savings plan. The Company intends to communicate details of this plan in its first quarter 2017 earnings release to be issued in early May 2017.
"We are committed to proactively addressing the current challenges of our business, while maximizing the potential value of our commercial portfolio, with a growing emphasis on Zontivity," said Adrian Adams, Chief Executive Officer of Aralez. "The reduction in our sales force is a necessary, but difficult measure and we are grateful for the contributions of the employees who will be leaving Aralez. We plan to reallocate a portion of our financial resources to make measured investments into Zontivity, which we believe is an increasingly attractive asset. By decreasing our operating costs and continuing to carefully manage our cash, I am confident that we will better position Aralez for long-term value creation for our shareholders."
Corporate Sales Force Reduction
The Company is in the process of completing a 32% reduction in the U.S. sales force. The reduction in sales force is intended to improve the Company's cost structure and preserve financial flexibility. The Company also continues to assess business development opportunities that could provide accretion and an enhanced platform for creating value.
The reduction in sales force is expected to reduce the current annual run rate of operating expenses by approximately $7.5 million. As a result of this sales force reduction, the Company anticipates it will incur cash severance costs of approximately $0.6 million in the second quarter of 2017. The sales force restructuring is expected to yield savings for 2017 and beyond.