Closures of animal-breeding facilities could cost Inotiv $10M
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Inotiv Inc. (Nasdaq: NOTV), the West Lafayette-based pharmaceutical testing company that announced last month it planned to shut down two animal-breeding facilities in Virginia, now says it expects to incur charges of up to $9.9 million in connection with those closures.
The two sites are a beagle-breeding facility in Cumberland, and a rodent-breeding facility in Dublin. Inotiv acquired the facilities in November when it purchased Indianapolis-based Envigo RMS LLC, which breeds and sells animals used in lab testing.
In a public document filed late Monday with the Securities and Exchange Commission, Inotiv said it expects to close the dog-breeding site by October and the rodent-breeding site by December, incurring charges of between $7.4 million and $9.9 million.
That estimate includes about $2 million to $2.3 million in employee severance and other workforce-reduction costs, and roughly $3.3 million to $5.2 million to maintain the facilities until each has been exited. Total cash expenditures related to the closures are expected to be in the range of $5.9 million to $7.8 million.
During a routine inspection of the dog-breeding facility in July 2021, the U.S. Department of Agriculture found multiple violations of the Animal Welfare Act, which regulates the treatment of animals in research and testing. Other violations were documented in subsequent inspections. In a lawsuit the U.S. government filed against Envigo in federal court in May, the government said the violations had affected “thousands of beagles” and that it had seized from the facility 145 puppies and dogs that veterinarians had determined were “in acute distress.”
Inotiv, the U.S. Department of Justice and the U.S. Department of Agriculture reached a settlement in that suit earlier this month. As part of that settlement, Inotiv agreed to no longer engage in any activity at the Cumberland facility that requires an Animal Welfare Act license. About 4,000 dogs at the Cumberland facility will be relinquished to the Humane Society of the United States, which will place them up for adoption.
The rodent-breeding facility is being closed as part of an “ongoing restructuring and site optimization plan,” Inotiv said in Monday’s SEC filing.
Envigo was founded in 2015 through the merger of Indianapolis-based Harlan Laboratories Inc. and United Kingdom-based Huntingdon Life Sciences. Harlan, founded in 1931, was one of the world’s largest suppliers of laboratory animals, with facilities throughout the world.