More news came out of Charlotte, N.C., Tuesday morning when beleaguered Chelsea Therapeutics (CHTP) announced its plans to undergo a complete reorganization of the company, which is to include layoffs, a new executive structure and changes to the Board of Directors, all with the long-term goal of developing more stockholder value, according to a press release.
The layoffs are expected to save the company $3.5 million in salaries over a year, and the layoffs should be completed by the end of the third quarter of 2012. Part of the plan includes not accepting any more patients for the company's trial of the hypertension drug Northera, which should then produce results by the end of the year.
In other news, company founder, CEO and President Dr. Simon Pedder, announced that he was stepping down from the company effective immediately, and will serve only in an advisory capacity. The same is said for Keith Schmidt, vice president for marketing and sales, who is resigning his post but will remain an advisor to the company. During the search for a new CEO, Joseph G. Oliveto, VP for Operations for the last four years, will serve as interim CEO. In addition, three members of the Board of Directors (including Chairman Kevan Clemens) are stepping down.
While Chelsea is not widely held by hedge funds, this news may be very uncertain for Julian and Felix Baker's Baker Bros. Advisors, which was invested nearly $5.9 million in Chelsea at the end of March. The next seven hedge funds combined were invested a total of less than $1 million.
"Chelsea Therapeutics has faced tremendous challenges in moving Northera forward through the regulatory process, making these difficult decisions necessary to ensure stockholder value is preserved in the short term and can be built over the long-term," said Dr. Michael Weiser, the new Chairman of the Board in the wake of Clemens' resignation, in a press release. "We believe that this reorganization should allow the Company's resources and capital to be laser-focused on efficient conclusion of the 306B study and the evaluation of next steps in the regulatory process. In tandem, the Board plans to explore and evaluate all available strategic options to determine the best path forward in the long-term strategic interests of the Company and its stockholders. We remain committed to Northera, a treatment which meets an important unmet need in patients and has a significant record of efficacy and safety in the clinic and in ex-U.S. markets. We would like to thank those employees leaving the Company for their service. We would also like to recognize Dr. Pedder's years of dedication to Chelsea and his work in helping to advance the Company's innovative therapies."