NeoPharm Launches Strategic Reassessment, Reorganization

PharmaManufacturing.com
04/23/2007

NeoPharm, Inc. on Apr. 19 announced its near-term reorganization strategy to best position the company for success while reducing its current cash consumption. These changes will allow NeoPharm to focus on evaluating our current portfolio and move appropriate projects forward.

"In my first three weeks at NeoPharm, I have initiated an extensive evaluation of our current programs and long-term opportunities. This review is well under way and our management team has made significant progress in identifying several key areas to eliminate redundancies in our current operations," commented Laurence Birch, president and chief executive officer. "Our long-term success depends on our ability to capitalize on the intellectual property the company has developed to date. As such, in the coming months we will be completing a comprehensive strategic review of our entire portfolio of projects and products including Cintredekin Besudotox and our Liposome products in an effort to establish a comprehensive long-term plan with appropriate milestones. We expect to discuss this strategy in greater detail with our stakeholders during the coming weeks and months."

Dr. John Kapoor, NeoPharm's chairman of the board, noted, "I believe the actions the company has taken will position it to thoughtfully assess it opportunities and maximize the value of its intellectual property."

Management Realignment

Dr. Aquilur Rahman, one of NeoPharm's co-founders, has agreed to serve as chief scientific officer, emeritus. In this role, Dr. Rahman will work closely with the management team and outside advisors to identify opportunities to bring the company's products to market and evaluate new opportunities to add to its pipeline.

Also, as part of this realignment, Jeffrey W. Sherman, MD, FACP will be stepping down as chief medical officer and executive vice president of NeoPharm to pursue other opportunities within the pharmaceutical industry. Dr. Sherman has made significant contributions to many of NeoPharm's leading projects and will remain with the company through a transitional period until a suitable replacement is identified.

Additionally, given the recent announcement outlining the FDA's request for a second Phase 3 trial of Cintredekin Besudotox, and the company's on-going evaluation of its options for this drug candidate, NeoPharm has announced that Timothy P. Walbert, executive vice president, Commercial Operations, will also be leaving the company. Walbert has brought a wealth of experience to this role; however, he and the company agreed that after a suitable transition period this position is not essential to the company's current operations.

Workforce Reduction; Impact on Cost Structure

As part of its reorganization strategy, the company has also reduced its head count by fifteen (15) full-time positions, or approximately 42% of its workforce.

The company believes that the foregoing actions will have the following impact:

• The costs associated with termination benefits from its workforce reduction are estimated to be approximately $600,000.
• Reductions in other general and administrative expenditures are projected to result in more than $2 million in savings over the prior year.
• Total cost reductions implemented and planned are expected to result in annualized cash consumption of under $7 million before project costs.
• Depending on the strategic decisions the company makes regarding its investments in its product portfolio, these changes are intended to reduce the company's cash consumption for 2007 and 2008 and allow the company to continue operations into 2009 before requiring additional financing.