Alkermes Restructures after Lilly Exit

Alkermes, Inc. is restructuring its operations after partner Eli Lilly and Co. terminated the AIR Insulin program. Alkermes is reducing its staff by approximately 18% (150 employees) and closing its AIR commercial manufacturing facility in Chelsea, MA. The restructuring is an effort to combat the financial impact of Lilly’s termination of the program.
   
“We are implementing a new operational cost structure to align our expenses with near-term revenues, which we anticipate will be lower than expected due to Lilly’s termination of the inhaled insulin program,” stated David Broecker, president and chief executive officer of Alkermes. “The flexibility of our business model allows us to adapt our cost structure while maintaining our ability to develop innovative products of our own.”
   
Mr. Broecker added, “Lilly’s termination of the program forced us to make difficult choices about the optimal size of the organization. We acknowledge the outstanding contributions that these employees have made, and I wish to express my sincere thanks for their hard work.”
   
Employees affected by the restructuring will be eligible for a severance package that includes severance pay, continuation of benefits and outplacement services. The company does not anticipate any expense savings as a result of the restructuring in fiscal 2008, ending March 31, 2008. The company expects to take a restructuring charge in 4Q08 in the range of $5 million to $10 million and an impairment charge of as much as $15 million related to fixed assets at the Chelsea facility. Alkermes expects cost savings from the restructuring in the range of $15 million to $20 million in fiscal 2009.