8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) : June 20, 2007

Encysive Pharmaceuticals Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-20117	13-3532643
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4848 Loop Central Drive, Suite 700, Houston, Texas	77081
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 713-796-8822

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.05 Costs Associated with Exit or Disposal Activities.

     On June 20, 2007, the Board of Directors of Encysive Pharmaceuticals Inc. (the “Company”) authorized a strategic restructuring in order to focus its resources on its most promising assets following the Company’s receipt of a third “approvable letter” from the U.S. Food and Drug Administration for Thelin™ (sitaxsentan sodium), which is under review for the treatment of pulmonary arterial hypertension. As a result, the Company will reduce its U.S. workforce by approximately 70 percent, to about 65 people. Approximately 150 employees, including the U.S. sales force, will be terminated immediately, with a smaller group leaving in the coming months. The Company also eliminated the position of Chief Operating Officer, as described in Item 5.02 below.

     The Company is providing cash severance payments to employees directly affected by the workforce reduction. The Company estimates that it will record approximately $15 million in restructuring and severance costs in 2007.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     On June 24, 2007, George W. Cole, the Company’s Chief Operating Officer, was appointed the Company’s President and Chief Executive Officer and was also elected to the Company’s Board of Directors. In connection with such appointment and election, the Termination Agreement dated October 25, 2005 (the “Cole Agreement”), between the Company and Mr. Cole was amended to reflect the changes in Mr. Cole’s duties, responsibilities and position and to increase the annual base salary payable thereunder to $490,000. In addition, the amendment to the Cole Agreement provides for the grant by the Company to Mr. Cole of options to purchase 500,000 shares of the Company’s common stock with an exercise price of $1.89 per share. The options, which will be granted pursuant to and governed by the terms of the Company’s incentive plans, will vest as to one-half of the shares covered thereby on each of May 31, 2009 and May 31, 2010.

     The foregoing description of the amendment to the Cole Agreement is qualified in its entirety by reference to the Letter Agreement dated June 24, 2007, between the Company and Mr. Cole, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein. For a description of the terms of the Cole Agreement, see “Other Information — Executive Compensation — Summary Compensation Table for Fiscal Year 2006 — Termination Agreements” in the Company’s Proxy Statement on Schedule 14A for the Company’s 2007 Annual Meeting of Stockholders filed with the Securities and Exchange Commission (the “Commission”) on March 27, 2007 (the “Proxy Statement”), which description is incorporated herein by reference. Such description is qualified in its entirety by reference to the Cole Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated by reference herein.

     Mr. Cole had served the Company as Chief Operating Officer since November 2005. From 1992 to 2005, he served as President of Altana Pharma U.S. Mr. Cole received his B.S. in Pharmacy from the University of Louisiana and his M.B.A. from the University of Evansville.

     Effective June 24, 2007, the Company’s employment of Bruce D. Given, M.D., the Company’s former President and Chief Executive Officer, was terminated. Subject to certain conditions including the execution of release in favor of the Company and its affiliates, the Company will provide Dr. Given with the benefits contained in Section 6.3 of the Termination Agreement dated March 21, 2003, as amended (the “Given Agreement”), between the Company and Dr. Given. For a description of the terms of the Given Agreement, see

“Other Information — Executive Compensation — Summary Compensation Table for Fiscal Year 2006 — Termination Agreements” in the Proxy Statement, which description is incorporated herein by reference. Such description is qualified in its entirety by reference to the Given Agreement, a copy of which is attached hereto as Exhibit 10.3 and incorporated by reference herein.

Item 7.01 Regulation FD Disclosure.

     As a result of the restructuring described in Item 2.05 above, the Company expects to end the second quarter of this year with approximately $58 million in cash. The Company also expects that, as a result of the strategic restructuring, its ongoing quarterly operating expenses will be approximately $20 million in Q3 2007 and approximately $15 million in Q4 2007. STRIDE-3, the Company’s ongoing study of Thelin™ in PAH, will be discontinued in the U.S. and Latin America. Going forward, the Company will focus its resources on:

• Sales and marketing of Thelin™ in Europe, Canada and Australia.

• Plans for advancing Thelin™ for PAH in the U.S. market.

• Continuing the clinical development of TBC3711, the Company’s second-generation endothelin antagonist. A Phase II dose ranging study in resistant hypertension is currently underway. In addition, there is an I.V. formulation of TBC3711 in development for an undisclosed indication.

• Continuing the Phase II proof of concept study of oral Thelin™ as a treatment for diastolic heart failure.

• Completing activities to maintain the value of its Chemokine C-motif Receptor 9, (CCR9 receptor antagonist) and its two late stage pre-clinical programs against an undisclosed target.

• Maintaining a scaled-back headquarters in the U.S. to accomplish the above goals.

     This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are: decisions by the FDA regarding whether and when to approve our NDA for Thelin™; unexpected delays in regulatory approval of Thelin™ by the FDA in the U.S. and our other products under development; the unpredictability of the duration

and results of regulatory review of new drug applications and investigational new drug applications by the FDA; our estimate of the sufficiency of our existing capital resources; our ability to raise additional capital to fund cash requirements for future operations; the availability of sufficient funds to commercialize Thelin™ in the U.S. should it be approved by the FDA; the availability of sufficient funds to commercialize Thelin™ in the EU, Canada and Australia; market acceptance of Thelin™ in the EU, Canada and Australia and the actual rate of acceptance; the impact of reimbursement policies and governmental regulation of prices for Thelin™ in the EU, Canada and Australia; our inability to predict revenues from Thelin™ and our expense levels in 2007 and beyond; our ability to retain key personnel; our ability to execute our revised strategic plan and the impact of reducing our workforce on our strategic plan; the actual costs incurred in our restructuring; our ability to manufacture and sell any products, potential drug candidates, their potential therapeutic effect, market acceptance or our ability to earn a profit from sales or licenses of any drug candidate; and our ability to discover new drugs in the future, as well as more specific risks, trends and uncertainties facing Encysive such as those set forth in its reports on Forms 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks, trends and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore you should not rely on any such forward-looking statements. Furthermore, Encysive undertakes no duty to update or revise these forward-looking statements. The Private Securities Litigation Reform Act of 1995 permits this discussion.

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits.

     10.1     Letter Agreement dated June 24, 2007, between the Company and George W. Cole.

     10.2     Termination Agreement dated October 25, 2007, between the Company and George W. Cole (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (Commission File No. 000-20117) filed with the Commission on November 14, 2005).

     10.3     Termination Agreement dated October 25, 2007, between the Company and Bruce D. Given, M.D. (incorporated by reference to Exhibit 10.5 to the Company’s 10-K (Commission File No. 000-20117) for the year ended December 31, 2002, filed with the Commission on March 28, 2003).

[SIGNATURE PAGE FOLLOWS]

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ENCYSIVE PHARMACEUTICALS INC. (Registrant)
Date: June 26, 2007
	/s/ Paul S. Manierre
	Paul S. Manierre
	Vice President and General Counsel

Exhibit Index

Exhibit
Number	Description
10.1	Letter Agreement dated June 24, 2007, between the Company and George W. Cole.
10.2	Termination Agreement dated October 25, 2007, between the Company and George W. Cole (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (Commission File No. 000-20117) filed with the Commission on November 14, 2005).
10.3	Termination Agreement dated October 25, 2007, between the Company and Bruce D. Given, M.D. (incorporated by reference to Exhibit 10.5 to the Company’s 10-K (Commission File No. 000-20117) for the year ended December 31, 2002, filed with the Commission on March 28, 2003).

EX-10.1

Exhibit 10.1

June 24, 2007

Mr. George W. Cole
Encysive Pharmaceuticals Inc.
4848 Loop Central Drive, 7th Floor
Houston, Texas 77081

Dear Mr. Cole:

     Reference is made to that Termination Agreement, dated October 25, 2005 (the “Agreement”), between Encysive Pharmaceuticals Inc. (the “Company”) and you. This letter serves as an amendment to the Agreement.

     Pursuant to Section 13.4 of the Agreement, Section 2.1(a) of the Agreement is amended in its entirety to read as follows:

The Company agrees to employ the Executive, and the Executive agrees to accept employment by the Company and to serve the Company as its Chief Executive Officer. The Executive shall report to and be subject to the direction of the Board. The Executive shall have the authority, duties and responsibilities that are normally associated with and inherent in the executive capacity in which the Executive will be performing, and shall have such other or additional duties which are not inconsistent with the Executive’s position, as may from time to time be reasonably assigned to the Executive by the Board (or a committee thereof). While employed hereunder, the Executive shall devote full time and attention during normal business hours to the affairs of the Company and use his best efforts to perform faithfully and efficiently his duties and responsibilities. The Executive agrees to cooperate fully with the Board, and other executive officers of the Company, and not to engage in any activity which conflicts with or interferes with the performance of his duties hereunder. During the Employment Period, the Executive shall devote his best efforts and skills to the business and interests of the Company, do his utmost to further enhance and develop the Company’s best interests and welfare, and endeavor to improve his ability and knowledge of the Company’s business, in an effort to increase the value of his services for the mutual benefit of the parties hereto. During the Employment Period, it shall not be a violation of this Agreement for the Executive (i) serve on any corporate board or committee thereof with the approval of the Board, (ii) to serve on any civic, or charitable boards or committees (except for boards or committees of a Competing Business unless approved by the Board), (iii) deliver lectures, fulfill teaching or speaking engagements, (iv) testify as a witness in litigation involving a former employer or (v) manage personal investments; provided, however, any such activities must not materially interfere with performance of the Executive’s responsibilities under this Agreement

Mr. George W. Cole
June 24, 2007
Page 2

     Pursuant to Section 13.4 of the Agreement, the first sentence of Section 4.1 of the Agreement is amended in its entirety to read as follows:

As compensation for services to the Company, the Company shall pay to the Executive from the Effective Date until the Date of Termination an annual base salary of $490,000 (the “Base Salary”).

     Pursuant to Section 13.1 of the Agreement, all notices and other communications required or permitted under the Agreement or necessary or convenient in connection with the Agreement shall be given to the Company at the address below:

     Encysive Pharmaceuticals Inc.
     4848 Loop Central Drive, 7th Floor
      Houston, Texas 77081
      Attention: Chairman of the Board
      Facsimile No.: (713) 782-8232

     The changes in your duties, responsibilities and position as set forth in this letter shall not constitute “Good Reason” as defined in Section 5.5 of the Agreement.

     On the date hereof, the Company will grant to you options (the “Options”) to acquire 500,000 shares of the Company’s common stock, par value $.005 per share (the “Common Stock”), with an exercise price of $1.89 per share of Common Stock. The Options will provide for the vesting of one-half of the shares covered by the Options on each of May 31, 2009, and May 31, 2010. The Options will be granted pursuant to, and will be governed by the terms of, the Company’s incentive stock plans as then in effect, and the provisions of the Agreement (including Section 6.3(e) thereof).

     Except as may be expressly set forth in this letter, all provisions, terms and conditions in the Agreement remain unmodified and in full force and effect.

Very truly yours,
 

/s/ John M. Pietruski
 

John M. Pietruski 

Chairman of the Board 

Acknowledged as of the date
first written above:

/s/ George W. Cole                              
George W. Cole