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Gene Logic Could Spin Off Genomics Unit as Review Continues; Q4 Revenues Slide 60 Percent

NEW YORK (GenomeWeb News) — Gene Logic today said that its ongoing strategic review of its genomics division has led it to consider “a spin-off entity with a retained equity position or other alternative structures to capture value for Gene Logic.”
 
The company made the remarks in its forth-quarter earnings statement, in which it said revenues decreased 60 percent as R&D spending remained flat and net loss increased 133 percent.
 
Gene Logic began the review in June 2006. Five months later, during its third-quarter 2006 earnings call, the firm offered sparse details regarding the direction the genomics division will take, except to say that the company has “been evaluating strategic options … in areas such as clinical biomarker development and molecular diagnostics.”
 
Today’s disclosure sheds some additional light on the options the company may have.
 
Total receipts for the three months ended Dec. 31, 2006, fell to $7.1 million from $17.7 year over year. All of the company’s revenue came from its genomics services business.
 
Gene Logic reiterated in its earnings statement that it is “transforming” into a biopharmaceutical company, highlighted by the divestiture of its pre-clinical services division to Bridge Pharmaceuticals for $15 million during the quarter.
 
As GenomeWeb News reported on Dec. 14, Gene Logic CEO Mark Gessler said the company is "driven in part by the continuing growth of our drug repositioning business," and cited recent deals with Eli Lilly, Pfizer, Roche, and Organon as examples of that growth.
 
Through that sale the company reduced its workforce from 434 to 151 employees.
 
R&D spending was up slightly to $2.27 million from $2.15 million year over year.
 
The company said net losses increased to $5 million from $2.1 million in the year-ago period.
 
As of Dec. 31, Gene Logic had $50.1 million in combined cash, cash equivalents, and marketable securities available-for-sale

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