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Paradigm Trims Staff by 20 Percent, Splits Research Into Two Units

NEW YORK, April 16 - Paradigm Genetics has laid off approximately 20 percent of its staff and broke its research program into two distinct arms, ending a broad internal restructuring that cost more than 50 staff, including the company's president and CEO, their jobs.

Though Paradigm started out as an ag-bio company, it recently began looking at ways to apply its research to human health. In fact Paradigm, based in Research Triangle Park, NC, wants to develop therapeutics and diagnostics for humans, a strategy whose long-term goals might balance well with the short-term revenue potential of its ag unit.

 

Investors, for their part, didn't mind the move and sent Paradigm shares climbing nearly 10 percent, or $.15, to $1.73 in mid-afternoon Nasdaq trading.

In an interview with GenomeWeb, John Hamer, Paradigm's interim president and CEO, said that the restructuring, though "difficult," will do that not only through core R&D but also by tweaking the way researchers perceive their role within the company.

 

GenomeWeb: Tell us a little bit about the nature and goals of the restructuring that Paradigm just completed.

 

John Hamer: The goal was to create really integrated research units that would focus on the two big target markets that we're going after--agriculture and healthcare. We want to really create opportunity for the scientists to be much more aligned with our business and much more focused on building integrated solutions ... for those two markets.

 

GW: Has the restructuring cause a shift in resources or focus from one discipline to another?

 

JH: I think it's really more a matter of restructuring the research groups to have them less focused on different kinds of departments around biological or biochemical or computational-type disciplines, and rather to build integrated groups with biochemists, biologists, informaticists, bioinformaticists, computer scientists, and software engineers, all working within one common group.

 

Not really moving one thing into another--really just realigning the groups so that they think of themselves as working as agriculture, let's say, rather than working in biochemistry. We really wanted our scientists to think more about helping to build Paradigm's agricultural strategy and opportunities rather than being, say, a plant scientist.

 

GW: There's still going to be cross-pollination between researchers from both groups?

 

JH: Absolutely.

 

GW: Paradigm now employs roughly 223 staff. How many people will be employed in each unit?

 

JH: Right now, in the health-care area there are about 50 to 60 people. And then ... we have about 40 to 45 in the administrative area. And the remainder [about 118] would be in that agriculture area.

 

GW: How did the 20-percent workforce reduction affect these units?

 

JH: Really not in the health-care area, per se. That's where we're making some very strategic investments. [The job cuts] really reflected some reductions in ag [and] a lot in administration.

 

GW: Who is going to run each of the groups?

 

JH: We have business vice presidents that work together with science leaders. The business heads for the agriculture unit is Ken Hunt. And then on the health-care side it's Jin Sun Kim.

 

GW: Is this restructuring an overture to a potential spin-off of either of these units?

 

JH: No. Not at all.

 

GW: How much money will this restructuring save Paradigm in the near term and long term?

 

JH: I think in the near term it will conserve some of our cash burn. The savings are significant, and the reductions will help our cash balance. Long term, who knows? I think we could be reorganizing in another two years.

 

GW: Are you prepared to release some specific numbers at this time?

 

JH: Probably not.

 

GW: How is the search coming along for a permanent president and CEO, and are you in the running? Is this like your trial period right now?

 

JH: [laughs] Well, you know, I was at a conference this week and they told me that every CEO is an interim CEO.

 

GW: What a great quote.

 

JH: Yeah, I thought so too.

 

GW: So are you in the running?

 

JH: Well, we're going to do a search, and I'm on that search committee, and the best thing I can say is that in any way that I can help Paradigm be a better company I'm prepared to do it.

 

GW: What's the status of John Rylas? There was the threat of legal action after his dismissal. Where does that stand?

 

JH: He's still on our board of directors, and things are going fine. The dispute had to do with some technicalities around severance issues and his role on the board. [The legal problem] is nothing very significant.

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