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CombiMatrix Lays Off 25, Hands Off DNA Microarray Technology To Roche

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CombiMatrix reached significant corporate milestones last week, and laid off 25 workers.

The Mukilteo, Wash.-based microarray firm let the workers go as it announced an $8.5 million cash payment from Roche for reaching contractual goals in developing its DNA microarray technology, and saw its chief executive officer named to the board of its parent company, Acacia Research.

The announcements come at the completion of the development cycle of the company’s DNA low-density microarray platform, which will be available for purchase early in the second quarter in Europe, Japan, and the US, CombiMatrix CEO Amit Kurmar told BioArray News.

CombiMatrix has developed a custom microarray chip technology for gene expression analysis. The company’s chips contain arrays of microelectrodes that are individually addressable, using logic circuitry to generate chemical reagents for the in situ synthesis of oligos. The product line includes reader / hybridizer instruments, microarray chips, and reagents.

The company, which earlier in the month launched as a tracking stock on the Nasdaq exchange, announced fourth-quarter payments from Roche for completion of product development milestones and delivery as it reached cash-flow positive status. Originally, the company said it expected to collect $5.5 million.

The layoffs, said CombiMatrix spokesman Bret Undem, affected the company’s production workers on the technology platform. The company has less than 100 employees, he said, and there are no plans for further layoffs, or hiring.

“It’s a restructuring, more than a layoff,” said Undem. “It’s really no surprise, we have just executed our strategy and handed off the technology.”

CombiMatrix considers itself a research and development firm, not a seller and manufacturer. It entered into a 15-year, non-exclusive partnership with Roche in July 2001 for manufacturing and distribution.

“Our relationship with Roche underscores our technology and strategy,” Kumar. “We develop innovative products, but we don’t have the resources for sales and infrastructure.

“So, we develop the products together with our partner and get funded. We let them sell and manufacture, and [then] give us back a double-digit royalty.”

Kumar said the scope of the Roche relationship is “tens of millions of dollars,” and the $8.5 million payment is “a major component.”

The milestones reached inclu- ed standards for sensitivity, manufacturing, and instrument performance, said Kumar.

The company’s microarray product is not in competition with high-end products like the Affymetrix GeneChip brand, said Kumar.

“Affy’s chip is like looking at the world map: Ours are like looking at a street map of the city,” said Kumar, who now sits on the board of parent company Acacia Research of Newport Beach, Calif.

The chips are intended to be sold as a second tier of application for pharmaceutical companies, he said.

“Once they have identified genes of interest, the can use a lot more internally produced low-density chips to study genes of interest,” Kumar said.

“That’s the alternative we are providing.”

— MOK