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Genaissance Cuts 20 Percent of Workforce, Appoints New CEO

SAN FRANCISCO, Aug. 5 - Genaissance Pharmaceuticals today announced layoffs and the appointment of a new CEO while reporting an increase in second quarter revenue.


The company said it has initiated layoffs of 20 percent of its workforce, mainly from the company's DNA sequencing facility and related informatics staff. This brings total staff to 110 at the end of the second quarter, according to the company.


Newly appointed CEO Kevin Rakin, previously president and CFO, said in a statement that the layoffs are part of cost reduction in an environment where raising money in capital markets is difficult and the financial terms of various commercialization and partnership agreements are taking longer than expected.


The layoffs "should allow Genaissance to achieve a breakeven point in the next three years without a need to raise additional capital," said Rakin.


Rakin replaced Gualberto Ruano, a company founder and its CEO since its inception in 1997. Ruano was named chief scientific officer and vice chairman of the board of directors. The management change reflects the company's focus onto making deals, chairman of the board Jurgen Drews said in a statement.


In the same announcement, Genaissance reported total revenues of $1.9 million for the three months ended June 30 compared with $1.1 million for the same period one year ago.


Net loss for the quarter decreased to $7.5 million, or $.33 per share, compared to $13.2 million, or $.58 per share, for the year-ago period. Including a non-recurring write-down charge of $6 million related to excess equipment in the company's DNA sequencing facility, net loss rose slightly to $13.5 million, or $.59 per share, compared to $13.2 million, or $.58 per share, for the year-ago period.


R&D spending fell to approximately $6.6 million from $11.5 million for the second quarter in 2001


The company said it had roughly $42.2 million in cash, cash equivalents, and marketable securities as of June 30.


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