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As Losses More Than Double in Q3, Gene Logic Lays Off Nonclinical Staff, Lowers Full-Year Revenue Projections

NEW YORK, Oct 28 (GenomeWeb News) - Gene Logic today posted a slight year-over-year increase in third-quarter revenues, but the company's net loss more than doubled over the year, related to impairment of goodwill for its nonclinical business

 

Gene Logic lowered its full-year revenue projections due to a "revenue shortfall" in the nonclinical business. The company said in a statement today that it had "reduced the number of employees" in this business segment during the quarter "in order to more properly align staffing with anticipated revenue over the near term."

 

Further details on the layoffs were not immediately available.

 

Gene Logic reported total revenues of $17.1 million for the quarter ended Sept. 30, compared to $17.0 million for the third quarter of 2004.

 

The company's genomics business revenue decreased by 2 percent, to $11.7 million from $11.9 million in the third quarter of 2004, while its nonclinical business revenue increased 3 percent, to $5.3 million from $5.1 million in the prior-year period.

 

Gene Logic's drug repositioning service business posted revenues of $102,000 for the quarter.

 

Gene Logic said that revenue for its genomics business for the quarter does not include $2.6 million in revenue for services delivered during the third quarter, which was deferred into future periods, "associated with specific multiple-element contracts." Of this amount, the company said it expects to record at least $1.4 million as revenue in the fourth quarter of 2005, with the remainder to be recorded in future periods.

 

For the full year 2005, Gene Logic lowered its expectations for total revenue to between $76 million and $78 million, down by as much as 11 percent from previous guidance of $83.5 million to $85.5 million.

 

The company generated total revenues of $76 million in 2004.

 

Gene Logic's net loss widened to $39.5 million for the third quarter, compared to $14.6 million in the comparable period of 2004.

 

The bulk of this loss was due to a $32.8 million charge for impairment of goodwill from its 2003 acquisition of TherImmune Research, now Gene Logic Laboratories, the company's nonclinical business. Previously, the nonclinical business goodwill was valued at $43 million.

 

R&D spending increased to $1.8 million in the quarter, from $673,000 in the third quarter of 2004.

 

Gene Logic held cash and cash equivalents of $56.5 million as of Sept. 30.

 

Gene Logic said that it plans to "achieve profitability" during 2007 and it will have positive cash flows during the year.