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Orchid Posts Strong Q3 Revenue Growth, Narrowed Loss; Puts SNP-Tool Business on the Block

Click here for an updated version of this article.

 

NEW YORK, Nov. 7 - Orchid Biosciences today said that strong growth in its forensics, paternity, and ag-genotyping business helped drive a 130-percent surge in total third-quarter revenues.

 

However, as a competitive SNP-systems market and dwindling cash reserves continue to plague the company, Orchid has decided to sell its SNP-business assets. It will instead turn its attention to potentially more lucrative downstream applications of its SNP-genotyping muscle, like its GeneShield personalized-medicine platform.

 

Revenue in the period ended Sept. 30, which came in at just under $17 million, grew across the board, Orchid said: Product receipts increased by $1.2 million, service revenue swelled by $8.3 million, and even cash from collaborations and licenses increased by $61,000.

 

As Orchid continues to trim costs and save cash, R&D spending in the quarter fell to $7.2 million from $9.6 million. The reduction mirrored total expenses, which fell to $39 million in the third quarter 2002 from $49.7 million one year ago, Orchid said.

 

As a result, third-quarter net loss shrank to $22.3 million, or $.40 per share, from $41.9 million, or $1.06, last year.

 

Orchid said it had roughly $9 million in cash, cash equivalents, and short-term investment as of Sept. 30.

 

"We made significant progress in the third quarter in sharpening Orchid's business focus, strengthening our management team and setting the stage for continued growth and achievement of profitability," said Dale Pfost, Orchid's president and CEO. "As a result of a rigorous strategic review, we have increased our focus on our core genoprofiling service businesses, including identity genomics testing for forensics, paternity and counter-terrorism, our ... GeneShield pharmacogenetics-based personalized medicine business, and the advanced genotyping services we provide to leading pharmaceutical and agricultural organizations."

 

To that end, the company said it plans to sell the assets to its once-core SNP-tool business by the end of the year, and has begun "exploring options" for "redeploying" other assets to help raise cash, Pfost said.

 

As GenomeWeb reported last month, Orchid, which has undergone "a definitive migration in 2002 into genetic profiling and personalized medicine," will first sideline and then sell its SNPStream and SNP-IT businesses. They "will no longer be a primary focus of the company," George Poste, the company's new chairman, said during an investor conference in October.

 

The resulting "realignment" will mean that an undisclosed number of employees involved in the tools part of the business, including staff in R&D and sales and marketing, will be laid off. Neither Poste nor Pfost would say how many jobs would be affected, but they said an announcement is imminent, and that the steps will likely be taken before the end of the year.

 

Maintaining that Orchid's SNP platforms are "still key" to the company, Poste, who was in his second day as chairman, said the firm will be ramping up efforts to launch the GeneShield platform sometime next year. The platform--which will use Orchid's existing SNP-genotyping technologies--is currently in beta testing.

 

"Being in the tools business you are serving pharma's needs," said Pfost, echoing a familiar refrain among genomics tool vendors. "We know that the application of these tools" is more profitable than "packaging them up and selling them. We get paid more by using these tools ourselves."

 

Orchid plans to host a conference call at 10:00 a.m. Eastern time. Click here for more information.

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