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Transgenomic Stock Slides 7.9 Percent Despite Aggressive Cost-cutting Plan

NEW YORK, Nov. 16 (GenomeWeb News) - Shares in Transgenomic were down 7.86 percent at $1.29 in mid-afternoon trading after news that the company disclosed plans to shutter a facility in Boulder, Colo., and lay off 60 staffers failed to reassure investors.

 

The Omaha, Neb.-based company said it sold its oligonucleotide-manufacturing facility and downsized as it continues to struggle to trim expenses and save cash. Transgenomic announced the belt-tightening as part of its third-quarter financial report, in which a mild up-tick in revenue amid widening losses and slightly more than $1 million in the bank painted a bleak near-term picture for the company.

 

Typically, investors react positively after a company takes aggressive steps, such as lay-offs or divestitures, to counteract expected revenue or earnings shortfalls.

 

In its third-quarter earnings report released yesterday after the market closed, Transgenomic said Eyetech Pharmaceuticals paid $3 million for "substantially all" of the assets of its Boulder, Colo.-based synthetic oligo shop. Eyetech also assumed equipment and "other operating leases" associated with the Boulderfacility.

 

Eyetech will also retain "essentially all" of the staffers employed at the Boulderfacility, Transgenomic said in a statement. The company stressed that the sale will not affect its manufacturing facility in Glasgow, Scotland.

 

Additionally, Transgenomic will lay off around 60 employees worldwide, and close two US-based research and development facilities linked to the firm's synthetic nucleic acid business, and two European field offices.

 

The divestiture and lay-offs are expected to save Transgenomic between $10 million and $12 million per year.

 

Revenue for the three months ended Sept. 30 inched up to $8.2 million from $7.5 million year over year.

 

Net losses ballooned to $8.4 million, or $.29 per share, from $6.1 million, or $.25 per share, in the year-ago quarter.

 

R&D spending decreased to $1.7 million for the third quarter, from $2.4 million in the comparable period of 2003.

 

Transgenomic held cash and cash equivalents of $1.1 million as of Sept. 30.

 

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