Coherus BioSciences (CHRS) Reduces Workforce by 51 Employees

June 27, 2017 4:09 PM EDT

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Coherus BioSciences (NASDAQ: CHRS) disclosed in an SEC filing:

On June 21, 2017, the Compensation Committee of the Board of Directors of Coherus BioSciences, Inc. (the “Company”) approved, and management commenced and completed, a restructuring plan to reduce operating costs and better align its workforce with the needs of its business following the U.S. Food and Drug Administration’s (“FDA”) June 12, 2017 issuance of a complete response letter for its Biologics License Application (“BLA”) for CHS-1701, a pegfilgrastim (Neulasta®) biosimilar candidate, under the 351(k) pathway, in which the FDA stated that it cannot approve the Company’s BLA for CHS-1701 in its present form and provided recommendations to the Company to address the issues raised in the letter.

Under this plan, the Company reduced its workforce by 51 employees (approximately 30%). Affected employees are eligible to receive severance payments, reimbursement of COBRA payments and outplacement services. Employees party to change of control and involuntary termination benefit agreements will continue to vest their stock options pursuant to the terms of their agreements. Certain senior executives received accelerated vesting of certain stock options and an extension to the post-termination exercise period for certain stock options. In each case, employee severance benefits are contingent upon an affected employee’s execution (and non-revocation) of a separation agreement, which includes a general release of claims against the Company. The Company expects that the workforce reduction will decrease its annual operating costs by approximately $10 million.

In connection with the restructuring, the Company estimates that it will incur aggregate restructuring charges of approximately $3.7 million, which will be recorded in the second quarter of 2017, related to one-time termination severance payments and other employee-related costs, including approximately $1.6 million of stock-based compensation expense related to the acceleration of stock options and the extension of post-termination stock option exercise periods. The majority of the cash payments related to the personnel-related restructuring charges will be paid during the third quarter of 2017, with the remainder to be paid during the fourth quarter of 2017. The charges that the Company expects to incur in connection with the workforce reduction is subject to a number of assumptions, and actual results may differ materially. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the workforce reduction.

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