Lannett Co. Inc. expects to incur about $5 million in costs to close Cody Labs, including termination payouts as it cuts all 70 remaining positions at the subsidiary.
The Philadelphia-based LCI reported costs associated with the exit in a June 11 U.S. Securities and Exchange Commission report.
Cody Labs develops and manufactures controlled substance active pharmaceutical ingredients.
Last September, Lannett approved a plan to sell the Cody Labs’ API ingredient manufacturing distribution business.
In reporting the new Cody API Restructuring Plan, Lannett says it has been unable to sell the Cody Labs’ API part of the business as an ongoing operation and now intends to sell the equipment and real estate used by Cody Labs as it ceases all operations. The closure will be substantially finished by the end of this September.
The $5 million closure cost includes roughly $2.5 million of severance and employee-related pay for employees designated for layoffs over the next few months. LCI expects another $2 million in contract termination costs.
In addition, it estimates spending about a half million to move equipment and the property to other company-owned facilities. These expenses were originally anticipated in connection with the Cody Restructuring Plan announced in June 2018 but have not yet been incurred.