Evolva to axe almost half its workforce in restructuring overhaul
The Swiss biotech firm announced today it would axe 78 full time jobs from its 178-strong workforce. It did not reveal which departments or geographies would be affected but said some redundancies would be immediate while others gradual.
It will also spin off its Indian business – an R&D laboratory in Chennai – in order to centralise its product development activities predominantly at its headquarters in Reinach, Switzerland.
This move, which is primarily to reduce costs, will also allow it to streamline product development programmes as well as simplifying and reducing back office processes.
'Laser focused' on commercialisation
Under the company's previous business mode, R&D and commercial staff and resources were spread across multiple geographies, vice president Stephan Herrera said.
"Some of this R&D was pegged to commercial or partnering activities, while other bits had a more general strategic logic. Most, perhaps not all, of it made sense at the time it was initiated. But, like all companies with a pioneering platform with broad applicability, you reach a point where you to have ask yourself: Are you chasing all of these opportunities because you can or because you should? The lines get blurred."
"Every biotech starts off as a technology-led company. Eventually, that technology needs to deliver marketable and meaningful products. Technology will always be the backbone at Evolva, but with one product launched this year, one launching next year, and a third major product coming out of the pipeline, we have reached the point where the focus of the company's resources, including its technology resources, need to be laser focused on the commercialisation of these products that we have toiled so long and hard to advance."
The restructuring will also see three top-level management members leave the company. Chief business officer Pascal Longchamp, chief scientific officer Jørgen Hansen and managing director and CEO of Evolva India Panchapagesa Murali will all step down from the company’s management team by or before the end of the year.
These positions will all be scrapped and the firm is now recruiting to fill a newly created post, chief technology officer, which will be led by CEO Simon Waddington on an interim basis until a suitable candidate has been found.
The cost of centralising its laboratories and small-scale fermentation equipment is estimated to be around CHF 1 million (€0.8m) with the majority being spent in Q4 2017.
The company anticipates that these measures - which will see all R&D moved to Switzerland and commercial activities and product development in the US - will reduce its annual operating expenses run rate by around 30%, equivalent to roughly CHF 11 million (€9.6m), by the second quarter of 2018.
Waddington said: "Evolva is undertaking the next logical step in its own evolution. Both our leadership and operations will be significantly optimized to ensure that our products achieve their full potential and our innovation engine remains strong.
“The choices we make today will strengthen our ability to deliver commercial success, realize future innovation breakthroughs, and produce shareholder value.”
The restructuring and job losses are of little surprise as the company has been engaged in restructuring that has continued under its new CEO Simon Waddington, a position he has held since last month (July).
Earlier this year, Waddington said the firm had already begun reviewing its operational strategy and was preparing to take “the next logical step in the company’s transformation process into a product-based company”.
‘No impact on product revenue’
Product revenues, which it expects to more than triple in 2017 compared to 2016, will not be affected by the restructuring, the company said.
In the firm’s H1 2017 results, Evolva reported product sales to have risen sharply this year with revenue from product sales now making up one quarter of total income, an increase of 11% compared to last year.
Herrera said R&D will now focus more on core programs and less on early-stage, non-core product development.
“It's all about advancing core products, first and foremost nootkatone and Veri-te resveratrol. Product revenues are growing whereas in the past revenues were primarily derived from partner revenues.”
Meanwhile, the company said it was “on target” for a 2018 launch of EverSweet, the stevia-based sweetener commercialised with Cargill.
Earlier this year, the companies agreed that Evolva would receive up to 30% of profits generated by the EverSweet business, determined as a function of the strain efficiencies achieved.