InVivo Therapeutics (OTC:NVIV) announced today that it plans to cut 28% of its workforce, comprising 14 employees, in order to "realign" efforts around its neuro-scaffold products. The company will "complete the implementation of the plan" by the end of the month, InVivo said.
The Massachusetts-based device maker is eliminating assets currently dedicated to its hydrogel drug delivery program, which is still in the pre-clinical stage. InVivo plans to follow through with research into hydrogel cell delivery, but only in relation to the larger stem cell delivery development project.
Among those ousted is chief technology officer Brian Hess, who will get a $53,000 severance package on his way out, InVivo reported. Hess joined the company in February 2012.
The company also solidified Steven McAllister’s role from interim CFO, appointed in December 2013, to proper CFO for the company, effective immediately.
"Although reducing staff size and eliminating the hydrogel drug delivery program were difficult decisions, InVivo’s focus will be even stronger on the company’s core mission: developing meaningful treatments for spinal cord injury," CEO Mark Perrin said in prepared remarks. "Going forward, all of the company’s resources and efforts will be centered on the development of the Neuro-Spinal Scaffold for acute SCI and Scaffolds Plus Stem Cells for the treatment of chronic SCI. This focus will allow InVivo to advance the spinal cord injury programs without distraction and in a more financially efficient manner."
The company expects the restructuring to generate some $3 million in annual cash savings, bringing down spending down about 23% compared with 2013 levels. That means the company’s cash on hand should be sufficient to get it through "planned activities" through March 2016, InVivo said.
The terminations and other realignment efforts will cost the company about $311,000 in total, consisting of $290,000 in severance and termination-related costs and $21,000 in asset write-offs.
"Developing effective spinal cord injury treatments is a challenging task," Perrin added. "Our renewed focus maximizes the potential for patients and shareholders to benefit from the major advancements that have been and continue to be made by the InVivo team."
InVivo is also in the midst of a lawsuit, blaming former CEO Frank Reynolds for running up $500,000 worth of "personal and/or exorbitant expenses" before he stepped down last year for health reasons. InVivo filed the lawsuit in November 2013 in a Massachusetts state court, accusing Reynolds of "breaches of fiduciary duties, breach of contract, conversion, misappropriation of corporate assets, unjust enrichment, corporate waste."
Reynolds counter-sued in December 2013, alleging breach of contract, breach of the covenant of good faith and fair-dealing, and tortious interference with a contract.