NEW YORK, July 26- Hyseq reported increased losses in its second quarter compared to last year along with a 20 percent cut in its workforce, the company announced Thursday.
In its second quarter earnings report, the company posted a net loss of $8.4 million, or 55 cents per share, compared to $5.1 million listed for the year ago period. Hyseq, based in Sunnyale, Calif., also announced second quarter revenues of $6.0 million, an increase from the $3.6 million reported for the year ago period. The company attributed the jump in revenues to the increase in contract revenue from an agreement with BASF Plant Sciences GmbH.
Research and development expenses also increased, from $6.4 million posted for the second quarter last year to $11.1 million in this latest financial period. As of June 30, the company had approximately $6.3 million in unrestricted cash and cash equivalents.
Hyseq also announced plans to cut approximately 20% of its current workforce, attributing the cuts to a plan to restructure the company into one more focused on the biopharmaceutical arena.
Hyseq CFO Peter Garcia told GenomeWeb that this shift in strategy was done because they see greater value in therapeutic applications or drug products beyond clinical and research tools. The company has been slowly making this transition ever since George Rathmann, Hyseq Chairman and founder of ICOS and Amgen, came aboard, said Garcia.
Garcia said the job cuts were a result in the shift in focus to pharmaceuticals, and “not primarily a cost-reduction mechanism.” As the company moves away from genomics, Garcia explained, certain “skill sets are not part of the core business.” Hyseq is currently looking to hire people with experience that is more focused on drug discovery.
Hyseq recently accepted a second line of credit of $20 million from Rathmann. This extra cash gives Hyseq “a little flexibility”, Garcia said, and he predicted that the company might announce another similar financing event, such as an additional loan or line of credit, in the third quarter. With current cash reserves and Rathmann’s latest contribution, Garcia said the company now has sufficient resources to get through the first quarter of next year.
During this past quarter, the company entered into a two-year agreement with Aurora Biosciences Corporation to share their technologies in order to develop small molecule drug and protein therapeutic candidates. As Hyseq learns more about genes, Garcia said Hyseq might partner with biotech and pharmaceutical companies to develop those genes into drugs.
But Hyseq has no plans to sell the rights to products for some extra capital, preferring to co-develop products with other companies in order to share profits later on. “We are not interested in mortgaging our future to get cash up-front,” Garcia said.