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Deltagen Gets Nasdaq Deficiency Letter; R&D Cuts Loom, But Core Tech Immune

NEW YORK, Jan. 2 - Deltagen has until March 19 to pull its share price above $1 or risk being delisted from the Nasdaq, a company spokeswoman told GenomeWeb earlier this week.

 

Deltagen received a deficiency letter from the exchange for failing to keep its share price above $1 for 30 consecutive trading days. The company's stock, which closed Tuesday at $.48, reached that 30-day mark Dec. 16, according to the spokeswoman, Nina Ferrari.

 

"The company is certainly focused right now at looking at remaining a listed Nasdaq company," said Ferrari, who explained that new customers and R&D cuts comprise Deltagen's recipe for Nasdaq compliance.

 

"We believe we have an excellent platform from which to generate customers," Ferrari said. "And although we can't guarantee when deals are going to be done, we think we'll continue to see sales" in the DeltaBase and newly launched DeltaOne product lines.

 

DeltaBase, Deltagen's flagship technology, is a bank of in vivo-derived mammalian gene-function information and gene targets based on the company's mouse gene-knockout technology. DeltaOne, which rolled out in November, allows customers to access those gene-knockout models and phenotypic data on a per-gene basis, according to Deltagen.

 

Ferrari said the company hopes soon to announce "significant new customers" that had failed to materialize in the fourth quarter, and that if these potential deals "roll into the first quarter ... then that will give some support to the stock."

 

The Nasdaq letter, dated Dec. 19, comes at a difficult time for Redwood City, Calif.-based Deltagen: In November the company rearranged its top echelon, creating a new top-executive position and setting off to hire a new chief executive, a search Ferrari said Tuesday was still ongoing.

  

One month earlier, the company laid off 130 staff, or about 30 percent of its employees, and announced a plan to shutter its San Diego site in an effort to reduce spending.

 

Looking ahead, Ferrari said Deltagen "will continue to look at ways to reduce our burn for 2003. We think we are making some good progress on those fronts." Asked if more layoffs might be in the cards, Ferrari said: "I can't say that that would be an absolute. We have to look at all the options, and all the options are on the table at the moment."

 

One area that will see a trim, she said, was R&D spending. "I expect that you will see" cuts in R&D spending in the first quarter, which began yesterday. However, Ferrari stressed that those cuts, which she declined to detail, will serve to support Deltagen's DeltaBase and DeltaOne efforts. (DeltaBase customers like Merck, Pfizer, and Glaxo can breathe easy, she said.)

 

Deltagen had approximately $49.7 million in cash, cash equivalents, and marketable securities as of Sept. 30.

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