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UPDATE: Orchid Bioscience Lays Off 15 Percent of Workforce, Shutters Several Facilities

NEW YORK, April 18 - Orchid Bioscience said today it will fire 15 percent of its staff, or about 90 people, shift several operations, and shutter a number of facilities outright.

The company said it hopes the restructuring, which is expected to continue through the fall, will help it become profitable by the end of next year.

The staff reductions are being made across all of Orchid's business units but are higher in the Orchid Life Sciences unit, the company said. The company said expects to recognize one-time total charges of between $1 million and $2 million, primarily in the second and third quarters of this year.

Orchid will also transfer most of its manufacturing and production operations from Princeton, NJ, to its facilities in Dayton, Ohio, and Stamford, Conn.


An Orchid spokeswoman said that the company's 1999 acquisition of GeneScreen and its 2001 purchase of Lifecodes gave it a large patchwork of paternity and forensic testing labs in the US that could do with some consolidation.

She said that "small facilities" in California, Vancouver, British Columbia, and Princeton are being closed.


"In a world of FedEx, you don't need to have accredited labs all over the country," the spokeswoman, Barbara Lindheim, said in an interview with GenomeWeb. "It really makes sense to have several major regional labs."

"There's been a lot of concern in the investment community that we're being dragged down by a high operating cost," she said. "And we're really aware that as we move to being a high-growth operating company, we really need to get that [cash] burn down."


Lindheim added that since Orchid launched a number of genotyping technologies recently it no longer needs such an intense R&D effort.

In a statement, Dale Pfost, Orchid's president, chairman, and CEO, said the restructuring is meant "to accelerate our estimated profitability into the latter part of 2003, several months earlier than previously forecasted. We believe that these cost reductions will substantially decrease the likelihood that we will need to access the public markets to raise additional equity to fund our existing business operations."

Orchid also said today it expects revenues for the first quarter 2002 to range from $15 million to $16 million, surpassing the $13 million to $15 million first-quarter estimate it floated during an investor conference call on Feb. 28. Orchid will announce its first-quarter financial results on May 9, it said.

"We expect our first-quarter top-line and bottom-line results to be better than originally forecasted, and we expect that the infrastructure and staffing rationalizations and resulting reductions in operating costs announced today should enable us to achieve profitability in the latter part of 2003," said Donald Marvin, Orchid's CFO and COO, who added the firm "may or may not seek additional financings for other purposes."

Shares in Orchid were up 7.25 percent, or $.17, at $2.43 in mid-afternoon Nasdaq trading.

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