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Friday, November 28, 2008

Cost-cutting comes to Hemispherx Biopharma

Like other money-losing drug development companies, Hemispherx Biopharma Inc. is now in cash-conservation mode.

The Philadelphia pharmaceutical company today said it would try a number of measures to reduce corporate expenses. Hemispherx is the company that had been unable to reach a quorum to hold its annual shareholders meeting earlier this fall.

One step it will take is to require senior staff to be paid as much as 50 percent of their compensation in restricted stock, starting no later than Jan. 1.

Hemispherx also said it will not renew the contract of its president and chief operating officer, Anthony A. Bonelli, who'd joined the company in November 2006. Bonelli's annual salary is $350,000.

The company said it will divide Bonelli's responsibilities among other senior management members. William A. Carter remains chairman and CEO of Hemipherx. According to the company's most recent proxy statement, Carter received compensation totalling $2.66 million in 2007, including a salary of $637,496.

As of Sept. 30, Hemispherx had cash of $7.59 million listed on its balance sheet. It is seeking Food and Drug Administration approval for an experimental drug called Ampligen to treat chronic fatigue syndrome. But it's early in that process; the FDA accepted the company's new drug application for review on July 7.

Drug developers are not strangers to net losses. Hemispherx has been unprofitable for years. It reported a net loss of $3.4 million for its third quarter ended Sept. 30, compared with a net loss of $5.7 million for the same quarter of 2007.

Hemispherx, which has its headquarters in 15,000 square feet of offices at 1617 John F. Kennedy Blvd. in Center City, said it won't be laying off employees. So no cuts to manufacturing, regulatory and medical services operations. As of March 3, the company had 36 full-time employees and 13 part-time workers among its regulatory/research medical personnel.

But it's going to implement a compensation program, called the "goal achievement incentive program," that's going to cover pay for quite a number of employees. This plan is aimed at paying management and others "only as strategic alliances are executed," according to a company statement.

Hemispherx filed details of the plan with the Securities and Exchange Commission.

The company has a strategic advisory firm helping it decide on its cost cuts - Sage Group Inc.

Also, the cost cutting program comes two days after Hemispherx added Thomas K. Equels to its board of directors. Equels had been the company's litigation counsel. He's president and managing director of the Equels Law Firm, which has three offices in Florida and focuses on complex litigation, government, business torts and personal injury law.

Shares of Hemispherx closed Friday at 45 cents, up 4 cents or 9.8 percent.
Posted by Mike Armstrong @ 10:58 AM  Permalink | File Under: Executive Pay | | Pharma, Biotech | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980
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