Evofem Biosciences, a San Diego-based contraceptive maker, Tuesday announced a cost-cutting plan that includes layoffs and reducing its CEO’s pay by 40 percent and other staff pay by 20 percent.
The move to cut payroll and workforce expenses is projected to save Evofem approximately $4.3 million to support its operations, according to SEC documents filed on Tuesday.
Evofem’s CEO, Saundra Pelletier said she also looked at every single dollar and way her company could save money, including moving out of its Del Mar office space, re-evaluating their packaging at the manufacturing level and asking if they can temporarily sever any subscriptions, “like do we really need Zoom?”
She explained how these difficult decisions have been about keeping the brand and company alive.
“My optimism is no longer with me,” Pelletier said in a phone interview. “I’m just trying to be a surgical realist … We have had very, very transparent tough conversations with every person in the organization and asked for their commitment to get up every day and completely focus on everything they can control.”
The business has made its name in the women’s health space for its offering of a nonhormonal birth control called Phexxi. The vaginal gel is Evofem’s only commercial product and it is the only nonhormonal birth control option on the market approved by the U.S. Food and Drug Administration.
Pelletier, will take a 40 percent cut to her base salary, making it approximately $520,000 for the rest of this fiscal year, according to company SEC filings. The latest annual report says her base salary was $812,083 in 2021. Pelletier was among the top 50 highest paid CEOs in San Diego County in 2021, based on total compensation.
The company also laid off eight office and management positions, including Katherine Atkinson, Evofem’s chief commercial officer effective March 17.
The remaining members of the executive team will take a 20 percent pay cut compared to previous years, according to the filing. Additionally, Evofem said it will consolidate three of its sales territories.
The company says the overall staff reductions should be complete by the end of this quarter and will result in a 39 percent reduction in payroll expenses.
Prior to Tuesday’s strategic decision, Evofem’s chief financial officer, Justin J. File, resigned on March 3, according to an SEC filing. The filing says it was “not based on any disagreement with the company on any matter relating to its operations, policies or practices.”
Since Phexxi commercially launched in September 2020 — after receiving FDA approval earlier that year — it has brought in revenue, but the returns have been limited according to company SEC filings. Early on, Evofem enlisted celebrity-endorsed ad campaigns to promote Phexxi and made a push for it to be covered by insurance providers.
Pelletier and Evofem have billed Phexxi as a solution for a market of 23 million who won’t or can’t use hormonal birth control.
To use Phexxi, a woman applies the cream inside her vagina either right before intercourse or in the hour before sex. To test its efficacy, nearly 1,400 women between the ages of 18 and 35 used Phexxi over the course of seven menstrual cycles. Only about 14 percent became pregnant by the study’s end. Phexxi can be used alongside other forms of birth control, including condoms and hormonal contraceptives.
However, Pelletier said the COVID-19 pandemic stifled participation in a clinical trial for Phexxi’s usage to prevent chlamydia and gonorrhea that produced incomplete results last year. Evofem’s stock dropped and was delisted from the Nasdaq in October. The company has been trying to recover and recoup money since then.
Last month, the company strategically offered itself for purchase via a merger or acquisition. The goal was to raise funds and get back on the national stock exchange by leveraging Evofem’s FDA-approved drug as an asset.
“So right now we are at a place where money’s tight, but we are not insolvent,” Pelletier said. “We are not going out of business. We are not filing for bankruptcy. We are in a rebuild, redo and recommit kind of place … So, we’re alive — we are not on life support.”
Pelletier — in a previous interview with the U-T — could not disclose how much cash Evofem had, but said “cash flow is very, very tight.” The company’s most recent SEC filing shows $9.8 million in cash, cash equivalents and restricted cash at the end of a nine-month period on Sept. 30, 2022.
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