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Ciphergen Restructures, Consolidates Businesses; Heaviest Lay-Offs in Sales, R&D

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NEW YORK, Aug. 9 (GenomeWeb News) -  As expected, Ciphergen yesterday confirmed it is restructuring its business, which includes consolidating its two segments and company-wide lay-offs.

 

The company made the announcement as it reported a 10-percent slide in second-quarter revenue, declining R&D costs, and a 30-percent reduction in net loss.

 

Ciphergen said it will lay off around 20 percent of its workforce across the company during the fourth quarter. Sales and marketing, which will get the lion's share of the lay-offs, will be cut by 30 percent and represents around half of the current total workforce. R&D, manufacturing, and general and administrative costs will make up the remainder of the downsizing.

 

Ciphergen said it expects the move to save it around $2 million per quarter beginning in the fourth quarter.

 

The company said the reorganization is aimed at increasing its play as a biomarker-discovery ally, and said its recent deals with Bayer and Quest will be a catalyst for future growth. To that end, the company has promoted Gail Page, who headed the diagnostic division, to president and chief operating officer.

 

Ciphergen also said it will continue selling and servicing its SELDI instruments, and will look to generate revenue not only in the volatile pharma space but also in the highly contested academic market. In a conference call with investors and analysts, CEO Bill Rich said he believes the Quest alliance will help generate buzz in the academic market and encourage translational medical scientists to buy platforms.

 

Though Ciphergen is consolidating its two businesses, both units will continue to play a role in the company, Rich said. The discovery business will focus on biomarker discovery and validation as well as research assay development for collaborators and internal research. This unit will oversee sales and services.

 

The diagnostic unit, meanwhile, will be responsible for assay development, business development, and all internally funded Biomarker Discovery Center programs, among other things.

 

Ciphergen has also restructured its customer service department. Its installed base, which comprises 600 customers, will now be overseen by a "centralized after-sale support" approach as opposed to a "non-centralized after-sale service" department." The immediate or foreseeable upshot for existing customers was not immediately clear.

 

On the earnings front, Ciphergen said second-quarter R&D spending fell to $3.6 million from $5.5 million.

 

Net losses fell to $9 million, or $.31 per share, from $13.1 million, or $.45 per share, year over year.

 

The company said it had around $21.3 million in cash and equivalents, and around $2.2 million in short-term investments as of June 30.

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