How did we miss this??!! One day after the FDA dealt the company another complete response for Silenor, Somaxon axed seven (7) employees, including its SVP of Corporate and Business Development, SVP of Regulatory Affairs and Quality Assurance, and its CFO.

Ouch.

Somaxon (SOMX) also said that each employee would receive 2 months severance for a total company cost of $258,000…math time!

• A = number of employees axed = 7

• B = severance cost to company =$258K

• C = average severance/employee = B/A = $36,857.

Not bad for two months I guess, but then again you only get to keep about 60-70% of that. Uncle Sam (i.e. IRS) also needs his cut – that bastard.

Wait there’s more!

The employees are also contractually obligated to receive more severance than this! But, SOMX has empty pockets (like everyone else) so there’s still $1,066,000 in deferred severance payments that would need to be paid.

The catch? One of these things (the earliest to occur) has to happen if they wanna get paid:

1. Closing of one or more financings or strategic transactions totaling at least $10M, OR…

2. Insolvency.

We’re betting #1 is a loooooooooooooonnnnnnnnggg shot, but that’s just us.

SOMX was pretty cool about the whole thing I guess. They also allowed the employees the option to enter into consulting agreements, the offer of which is only good until the last day of the tenth month after the employee’s last day of employment.

Check out our old post on Somaxon and why put them in The Graveyard!

Image from blogspot

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