ZIOPHARM Oncology (ZIOP) Eliminates 65 Workers, to Take Charge

April 5, 2013 6:22 AM EDT
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As of the close of business on March 31, 2013, ZIOPHARM Oncology, Inc. (Nasdaq: ZIOP), or the Company, had approximately $55.7 million of cash and cash equivalents on an unaudited basis. The Company anticipates that following the implementation of the workforce reduction plan described in Item 2.05 below and other operating cost reductions, its cash resources will be sufficient to fund the Company’s operations into the first quarter of 2014.

On April 3, 2013, the Company completed a workforce reduction plan pursuant to which it eliminated a total of 65 positions, comprised of 40 filled positions and 25 unfilled positions across various functions and locations. Employees whose positions were eliminated as part of the plan were notified beginning on April 2, 2013. Affected employees are being offered separation benefits, including severance payments, and temporary healthcare coverage assistance.

As previously announced, the Company’s Phase 3 trial of palifosfamide (ZIO-201), entitled PICASSO 3, failed to meet its primary endpoint. The workforce reduction plan is being implemented to reduce costs as part of the Company’s decision to terminate development of palifosfamide in first-line metastatic soft tissue sarcoma and place exclusive strategic focus on its synthetic biology programs, which are being developed in partnership with Intrexon Corporation.

In connection with the elimination of filled positions as part of the workforce reduction plan, the Company estimates incurring total charges of $1.6 million to $1.8 million, primarily for one-time contractual severance benefits. These charges will occur in the second quarter of 2013. Additionally, the Company is evaluating its facilities and the associated contractual obligations to determine the appropriate course of action and any associated charges for exit and disposal activities. The Company currently cannot estimate these amounts, but expects to file an amendment to this Current Report on Form 8-K within four business days of making such determination.

As part of the Company’s workforce reduction plan described above, Hagop Youssoufian, M.D., M.Sc., the Company’s President of Research and Development and Chief Medical Officer, was informed on April 2, 2013 of his termination without cause. In connection with his termination, Dr. Youssoufian has agreed to receive a severance payment equal to 100% of his current annual base salary in lieu of the total severance benefits to which he was entitled pursuant to the employment agreement that he entered into with the Company on July 8, 2011, and as amended on March 30, 2012. In addition, Dr. Youssoufian has agreed to provide consulting services to the Company as may be requested from time to time by the Company’s Chief Executive Officer. Dr. Youssoufian’s employment agreement is filed as Exhibit 10.1 to the Company’s Current Report on 8-K filed July 15, 2011 and the amendment to Dr. Youssoufian’s employment agreement is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 3, 2012.

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