Transcept's (TSPT) TO-2061 Missed Primary Endpoint in Phase 2; Cuts Workforce 38%

January 7, 2013 6:20 AM EST
On January 2, 2013, Transcept Pharmaceuticals, Inc. (Nasdaq: TSPT) implemented a reduction of 38% of the Company’s workforce. The reduction plan carries out a realignment of the Company’s workforce and operations after the Company received top-line results from its Phase 2 clinical trial evaluating TO-2061 in patients with obsessive compulsive disorder who had not adequately responded to treatment with approved first-line therapies. The top-line data from the trial showed that TO-2061 did not meet the primary efficacy endpoint to demonstrate an improvement in OCD symptoms versus placebo. The Company expects to substantially complete the reduction plan during the first quarter of 2013. In connection with the workforce reduction, the Board of Directors of the Company approved the acceleration of vesting of options held by employees subject to the workforce reduction by one year from each employee’s effective termination date. In addition, affected employees have been offered the right to exercise their vested options for a period of one year after their effective termination date.

The Company expects to record restructuring charges in connection with the workforce reduction plan with respect to severance payments, benefits continuation as well as stock compensation charges associated with the modification of certain stock options (“stock option charges”). Severance and benefit continuation charges are estimated to be approximately $0.4 million and are expected to be recorded in the first quarter of 2013. The Company currently cannot determine estimated stock option charges, but expects to file an amendment to this Current Report on Form 8-K within four business days of making such determination. The Company expects the organizational change will reduce current annualized payroll and benefit expenses by approximately $0.9 million.

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