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Acquisition Cash and Carry

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Why bother with the goose if you’ve got the golden egg? That seems to be the philosophy governing Exelixis’s stock-for-stock acquisition of Genomica, valued at $110 million. The acquisition was no surprise to industry watchers after the bioinformatics software company laid off 100 of its 150-person staff last October — just three weeks after some people were hired. It wasn’t even a surprise to Boulder, Colo.-based Genomica’s staff: “We knew someone had to buy the company,” says a former employee who had been with the company for two years.

There’s little indication that Genomica was acquired for anything more than its trove of cash — about $111 million, in addition to other assets. Though Exelixis, a genomics-based drug-discovery company in San Francisco, plans to use Genomica’s software in its drug development efforts, CEO George Scangos says he will not sell Genomica’s products. A handful of the company’s remaining employees will stick around to support existing customers — including AstraZeneca, GlaxoSmithKline, Aventis, and the National Cancer Institute, most of whose subscriptions run out this summer, according to Genomica CEO Teresa Ayers. None of the management team or board members will join Exelixis.

The sad part, says the former employee, is that Genomica could have been a successful company with the $120 million raised in its fall 2000 IPO, if only there’d been better management: “The management team couldn’t figure out what direction it wanted, so the decision was no direction. No one got along with each other.”

— Meredith Salisbury

 

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