Tokai Pharmaceuticals Inc (NASDAQ:TKAI), announced today, that they have begun the plans to reduce their total workforce by approximately 60%. Tokai a biopharmaceutical company focused mainly on the development and commercialization of innovative solutions to common health problems such as prostate cancer and similar ailments.
The expectations of the plan
Tokai Pharmaceuticals plans to allocate only 10 positions for full-time employees, the plan is expected to be implemented and concluded by the third quarter of 2016.
All employees that are negatively affected by the reduction of the workforce are offered severance and outplacement assistance.
The reason that Tokai Pharmaceuticals reduction plan
The main reason that Tokai Pharmaceuticals is implementing this reduction plan of 60% of its employee population is in order to help the business save on operating expenses.
Therefore, allowing the company breathing room to evaluate its future pipeline. Tokai expects this reduction to advance a savings of approximately $4.2 million of reduced expenses per annum.
However contradictory to the savings that Tokai will gain, they also expect to incur a total cost of $1.3 million with relevance to the reduction costs.
This expected cost includes cover for those who are affected by the reduction strategy implementation and includes fees such as severance, benefits and other costs that relate to this subject.
A further reasoning behind the implementation of the reduction plan by Tokai Pharmaceuticals is in order to create a higher priority focus on their development of Galeterone as well as developing the strategy for commercializing the molecule.
What is Galeterone
A small molecule that makes use of pathways of current second generation hormonal therapies is referred to as a Galeterone molecule.
The Galeterone molecule is being developed by Tokai so as to aid in the treatment of patients with metastatic castration-resistant prostate cancer. Tokai currently resides with worldwide development and commercialization rights to Galeterone.
Although the first test trial of Galeterone in reference to treating ailments such as the spread of prostate cancer was unsuccessful. Tokai remains determined to successfully develop this drug, claiming that the reduction force strategy was a difficult but necessary step.
After the failure of the first Galeterone trial, July 26; shares of Tokai plunged from $5.20 per share it decremented to $1.64 per share. Still, on shaky ground, the share is continuously shifting around the $1 – $2 mark.
