NEW YORK – Berkeley Lights is shrinking its workforce, optimizing its business structure, and altering its strategic objectives as it charts a way toward lower cash burn and a positive operating cash flow by early 2025.
The Emeryville, California-based digital cell biology company laid off 12 percent of its workforce in July and plans to focus more on strategic partnerships, mergers, and acquisitions.
"As we did the realignment of the business, not only have we reduced the headcount, we will [have] also significantly reduced our overall cost structure for next year," Siddhartha Kadia, the firm's CEO, said on a Tuesday conference call to recap the company's second quarter earnings.
For the three months ended June 30, the firm's revenues fell 1 percent year over year to $19.2 million, below analysts' average estimate of $21.4 million. On the news, several investment banks downgraded Berkeley Lights' stock, and the company's stock had tumbled more than 11 percent to $4.41 in Wednesday morning trading on the Nasdaq.
The layoffs amounted to approximately 40 employees, mainly from the firm's North America-based businesses.
Berkeley Lights is also reducing costs by building out more partnerships, developing its services, and narrowing its R&D focus to those projects estimated to return the highest value to the firm's partnerships and services business.
"We are taking a very surgical approach," Kadia said, "[going] project by project and critically thinking about where resources are needed going forward, for the next two, three years."
Regarding increased partnerships, he added that the firm is seeing "growing interest" from a diverse set of companies, especially in the gene therapy and the viral vector development and manufacturing spaces.
Berkeley Lights also expects to launch three new products in its Beacon optofluidic cell processing and analysis portfolio between 2023 and 2025. Kadia described these as "application-specific models," culminating in a low-cost version of the Beacon Lightning platform, scheduled for release in 2025.
Without going into details, Kadia said that this version of Lightning would be a low-cost benchtop device with segment-specific versions, with a more approachable price point for academic institutions.
"Lightning was a good concept for an academic market but the price point was still significantly high," he said.
In evaluating the company's product adoption within the cell biology community, Kadia said that Berkeley Lights can significantly reduce the cost structure and focus on favored applications such as generating immune oncology workflows and those related to animal cell biology.
The new platform will feature greater flexibility than current Beacon systems, along with expanded access programs and financing options, allowing Berkeley Lights to access a wider array of potential customers, fueling long-term revenue growth.
Pricing options will include lease-to-own and flexible pricing, including through reduced product features.
During the call, Berkeley Lights CFO Mehul Joshi attributed the disappointing Q2 revenues largely to industrywide macroeconomic conditions, including elongated sales cycles and the tightening of capital exchange budgets.
Recurring revenue climbed 50 percent to $5.9 million in Q2, compared to $3.9 million in the same period last year. Revenue from the partnership and services business increased by 74 percent to $6.8 million from $3.9 million the prior year.
The company's net loss swelled to $25.7 million, or $0.38 per share, from approximately $18.2 million, or $0.27 per share, in Q2 2021.
Berkeley Lights now expects its full-year 2022 revenue to be approximately in line with that of 2021 ($84.5 million), implying that the firm expects little to no growth throughout the back half of the year.
The company ended the quarter with cash and cash equivalents of $143 million and short-term marketable securities of $9.4 million.
Investment bank BTIG downgraded Berkeley Lights shares from a Buy to Neutral, as analyst Mark Massaro noted that while the leadership transition and restructuring was expected, investors still lack visibility on the demand for Berkeley Lights' products, especially as the firm rolls out new product configurations.
"We expect to get much more clarity at the company's planned investor day later this year," Massaro said. "Our sense is that the operational and commercial turnaround may take about a year or so."
In addition, investment firm JP Morgan also downgraded shares from a Buy to a Neutral. Analyst Julia Qin commented that although the new management team was encouraging and had presented a plan that "could drive a meaningful inflection in the future commercial trajectory," near-term visibility of many of the firm's initiatives remained limited.
In trading early Wednesday morning, shares of Berkeley Lights were down 13.1 percent, to $4.32.