NEW YORK, Aug. 12 - Andrew Whiteley's first day as CEO of InforMax, on April 1, happened also to be the first day of the company's fiscal second quarter. Three months later, after laying off 15 percent of its staff, InforMax went on to post barely $4 million in receipts--a 50-percent drop from last year's second quarter--and book $6.5 million in net losses.
Last Monday marked the 30th consecutive trading day that InforMax's shares sold for less that $1 on the Nasdaq. If the share price doesn't muscle itself above $1 in 90 days, the company risks being delisted to the over-the-counter market.
To Whiteley, though, InforMax is at the right place at the right time.
Since leaving as head of Amersham Biosciences' bioinformatics division at the end of March, Whiteley says he has reassessed the informatics market both in drug discovery and disease research. His verdict is that the space is sick, but not terminally. InforMax, for its part, happens to be a long-term patient.
The company's flagship platform, Genomax, faces arid sales, the result of an evaporated demand for enterprise software. The technology--on which InformMax had traditionally measured its success--contributed $0 to the company's topline in the first quarter and just $604,000 in the second.
Whiteley's job now, he says, is to find the technologies his cash-poor customers need next--and to develop and deliver them before InforMax runs out of cash. (John Green, the firm's CFO, last week said InforMax had just under $26 million in cash and cash equivalents and around $25 million in short-term investments as of June 30.)
So the new chief ordered his company to look closely at the niche areas of gene expression, functional genomics, and systems biology, and to ramp up product development in those areas. Aside from the upcoming 3.4 release of Genomax and version 8.0 of Vector NTI, both scheduled to appear at the end of September, Whiteley said three new and undisclosed applications will be launched in the third and fourth quarters.
Wall Street, at least for now, appears satisfied. "They've seen their Genomax deals turn off significantly, because people are significantly less willing to dole out the cash," said Jonathan Aschoff, an analyst with Friedman, Billings, Ramsey. "People are cutting costs, and playing with the toys they have.
"I like the fact they're doing something that seems to be less money to develop than something like Genomax," he added. "A smaller unit price facilitates sales. It's very simple."
GenomeWeb caught up with Whiteley and InforMax's vice president of marketing and business development, Janet Lynch Lambert, last week at the 2002 Drug Discovery Technology, held in Boston. Chatting with a reporter two stories above Boylston Street overlooking a bronze statue titled "Quest Eternal," Whiteley played the optimist.
GenomeWeb: You've been at the helm of InforMax for little more than four months now. What has the transition been like for you, and how are you coping with your new responsibilities?
Andrew Whiteley: We had to make some pretty dramatic decisions in the first week. And as you know ... one of the first actions we had to do was to put an earnings warning out.
Since then we've done a lot of things in the organization to essentially refocus pretty much all of the different functions of the company's efforts. The first thing we've done is to go back to the marketplace and do some really fundamental research and have a listen-to to what people see as their priorities ... in terms of informatics spending.
GW: How do you think InforMax has positioned itself in relation to its competitors in this difficult market?
AW: There are quite a few differences. I'd say we are very focused on the sweet spots in the marketplace that exist today and we feel very comfortable that we have a strategy that will work.
Based on our research, we've reset our developmental priorities to think about what the life-science researcher does on a day-to-day basis at the bench. So the products that ... are the strongest for us ... are the ones that allow researchers to manage the different sets of information that's flowing to them in increasing volume and increasing heterogeneity.
We're concerned about building a series of applications that will actually manage each one of these component sources of data. ... We think people will continue to buy solutions in this way. We're not investing in lots of very heavy database infrastructure, which we think is a difficult sell for anybody in this marketplace.
So ... we'll be renewing our entire product line through the third quarter and coming out with another few applications through the third and fourth quarters that will start us out on this new path.
In the past four months we've achieved a lot. We've turned the ship and are getting people [in the company] focused on what customers are going to be buying over the next year or so, and to start getting real products out of that.
GW: What do you consider sweet spots?
AW: Our first rule is to deal with the analysis of the information coming off the sequencing production line. There are a couple of related production lines that I will describe looking at SNPs, for instance. There are some in silico production lines that we are supporting that allow researchers to take the output sequencing and do other jobs such as assembly or annotation.
So we are improving our whole products around production-line sequencing.
The next production line that our customers are concerned about getting is gene expression. So our gene-expression product will get a significant upgrade in the third quarter.
We'll also be announcing some new products that look to and support some new areas that follow the same sort of theme that we have for our Vector NTI tool ... so customers can bring information from their production lines and allow them to elaborate on top of public data.
Janet Lynch Lambert: For a while there was a sweet spot for an integrated bioinformatics solution for startup companies who just got VC funding and needed an infrastructure and they needed it tomorrow to get it going. I think our sense is that sweet spot has changed where people are really going back to saying, 'Don't necessarily reinvent my whole IT infrastructure. Give me an analysis tool that helps my bench scientists, that talks to other applications, and has a growth story behind it.'
AW: We have customers, we have products that we sell, and we have human and financial resources to take us to the next stage. We very much believe that the market is there and it will start to improve as some of the uncertainty that the pharma companies have felt in a contracting stock market, and this pent-up demand to solve some of these [life-science] problems will continue to be purchased, whether in drug discovery or in academia with disease research.