Juul Labs Inc. announced a company restructuring today aimed at reducing the vape company's operating costs "and positioning us to continue to advance our mission during a period of regulatory and marketplace uncertainty," the company said.
The restructuring will include laying off 30% of the company's staff, or about 250 employees, according to a Wall Street Journal report.
The aim of the restructuring, Juul said, "is to enable us to maximize profitability and cash-flow generation, while continuing to invest in our core priorities." Those priorities, it said, include delivery of quality products, ongoing development of next-generation products, engagement with the U.S. Food and Drug Administration (FDA) regarding pending and possible future market authorization applications, and commercial growth.
"To deliver on this strategy, we will be substantially reducing our headcount and, unfortunately, saying goodbye to a number of highly valued team members who have made tremendous contributions to the mission," the company said in a statement.
With these operating cost reductions, Juul Labs is positioned to increase its adjusted margins and generate cash flow before litigation settlements, it said. "In doing so, we will reduce our need to access capital pre-PMTA (premarket tobacco product application), extend our time horizon to continue our pursuit of market orders from FDA, and generate positive equity value as we pay down liabilities over time."
It added, "As difficult as this moment is, we remain fundamentally optimistic about the prospects for Juul Labs, a view rooted in our belief that our technology and our pipeline of new innovations represent the most valuable ever brought forward to transition adult smokers away from cigarettes while combating underage use.”
Juul told CSP Daily News in January it considered bankruptcy last year, following the Food and Drug Administration’s issuance of a marketing denial order (MDO) for Juul’s premarket tobacco product application (PMTA) for several e-cigarette products in tobacco and menthol flavors. However, the MDO was later stayed, and Juul avoided bankruptcy after receiving cash from some of its earliest investors. It also announced in November it would lay off about one-third of its global staff, or roughly 400 people, to further secure its ability to continue moving forward.
The latest restructuring announcement comes a day afterAltria subsidiary Njoy filed a complaint against Juul Labs with the U.S. International Trade Commission. The complaint alleges some Juul products infringe certain patents owned by Njoy, and it seeks a ban on the importation and sale of Juul electronic vapor products, including its currently marketed Juul device and Juulpods, according to a news release and copy of the complaint from Altria.
In March, Altria, Richmond, Virginia, dropped its investment in Juul and acquired Njoy, the only pod-based e-vapor product thus far to receive marketing authorization from the FDA. Altria acquired Njoy Holdings Inc. for approximately $2.75 billion and exchanged its entire minority economic investment in Juul Labs Inc., Washington, D.C., for a non-exclusive, irrevocable global license to some of Juul’s heated tobacco intellectual property.
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