NEW YORK, May 16 - Variagenics said today it plans to lay off 30 percent of its workforce and jettison its NuCleave business in an attempt to reign in cash burn and focus more tightly on its molecular diagnostics business.
The job cuts, which affect 40 staffers, will come from the company's research and administration departments, 20 of whom will come from the firm's high-throughput DNA-sequencing group, Variagenics said.
"This restructuring will increase our financial flexibility," Joseph Mohr, Variagenics' president and chief business officer, said in a statement. "We are ready to move toward the next stage in [our] growth and development, and believe we have focused and right-sized Variagenics toward future profitability."
The move is expected to lower the company's quarterly net cash burn to approximately $4 million by the fourth quarter this year, according to Variagenics. The firm currently eats through $6 million every three months, said COO and CFO Richard Shea. The firm had roughly $73 million in the bank as of March 31, "which we believe should be sufficient to execute our current business plan," said Shea.
In late February Variagenics reported that a significant drop in fourth-quarter total revenue conspired with increased R&D costs to send net loss spiraling skyward.
Revenue for the period ended Dec. 31 was $392,000, down from $1.2 million on year, and was attributable exclusively to research collaborations. Variagenics' sales in the current fourth quarter echoed last year's, as there were no sales of NuCleave genotyping systems.
R&D spending in the quarter reached $5.5 million compared with $2.6 million one year ago, the company said. Variagenics also reported non-cash equity compensation--the cost of stock options issued to employees--of $3.0 million, a significant jump from the $822,000 reported one year ago.