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Genaissance Said Restructuring Helped Truncate Net Loss in Q3

NEW YORK, Nov. 12 - Following its broad efforts in August to contain costs, Genaissance Pharmaceuticals today said severe cuts in R&D coupled with a moderate increase revenue caused net loss to recede by more than half in the third quarter.

 

Revenue for the period ended Sept. 30 increased more than 60 percent to $1.8 million. At the same time, R&D spending in the quarter was cut to $4.8 million from $12.6 million one year ago as Genaissance cut back on payroll, clinical-trial spending, and reagents.

 

As a result, third-quarter net loss fell to $5.2 million, or $.23 per share, from $11.8 million, or $.52 per share, during the same period last year, the company said.

 

Genaissance said it had approximately $36.4 million cash, cash equivalent, and marketable securities as of Sept. 30.

 

The company had to endure a lot during the third quarter. Having laid off 20 percent of its workforce and reshuffled top management in August, Genaissance received a letter from the Nasdaq exchange in mid-September warning that its stock may soon be delisted if the price of shares stay below $1. (The company has 90 days to get the share price above $1 or risk being demoted to the over-the-counter exchange; shares were trading up at $.76 in early afternoon trade.)

 

Kevin Rakin, who was appointed CEO during the ensuing reshuffling, said in August 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, former president and CFO of Genaissance, 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.

 

Click here for more information about the third-quarter earnings.

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