NEW YORK, Jan 19 – NetGenics laid off 29 people, or nearly 30% of its 100-person work force, as a result of the company’s inability to launch its initial public offering due to poor market conditions, NetGenics CEO Manuel Glynias said Friday.
“We haven’t been able to get the IPO done and it doesn’t look possible for the next quarter or two,” said Glynias. “We always hired because it was easy to raise money. Now it seems very sensible to me to focus the business.”
According to NetGenics’ S-1 statement, filed with the US Securities and Exchange Commission in March, the company, which has raised a total of $49 million in private financing, had accumulated net losses of $25.9 million at the end of December 1999, the last year for which data was available.
Based in Cleveland, NetGenics originally planned to raise some $60 million - $70 million through an IPO.
The company, which still has “enough cash for at least a year,” does not intend to try to raise more money privately, Glynias said.
While he could not discuss details due to the pre-IPO quiet period, Glynias said the decision to trim down the workforce did not reflect declining revenues.
“This is not because we didn’t have a good year” in 2000, he said.
The company posted accumulated revenues of $2.2 million through December 1999. Figures for 2000 were not available.
Glynias said that “essentially no programmers” were laid off. The layoffs, which were originally reported by the Cleveland Plain Dealer , primarily affected the marketing, consultancy, IT, and administration departments, Glynias added.
After a blockbuster 2000 that saw companies such as Lion Bioscience, Genomica, Compugen, and Informax raise tens of millions of dollars in the capital markets, analysts predicted a far tougher 2001. Although some start-ups have recently succeeded in securing relatively small amounts of private financing, later-stage companies have had to hold off on plans to raise big bucks through initial public offerings.
In addition to NetGenics, DoubleTwist has also put off its IPO. Spotfire also had plans to file for an IPO in first-quarter 2001, but so far the company has not done so.
Glynias said that due to the quiet period he could not discuss the company’s future plans.
However, earlier this month NetGenics said it would collaborate with Genomics Collaborative to develop a genotypic “DataMart” that would automatically mine data to look for patterns and interrelationships that could lead to new drug targets. The DataMart is scheduled to be commercialized within three months.