NEW YORK (GenomeWeb News) – CombiMatrix said after the close of the market on Monday that it will undertake a restructuring of its operations intended to preserve cash and increase its focus on its diagnostics services business.
The Mukilteo, Wash.-based firm said that the restructuring will include hiring a new president and CEO, with current President and CEO Amit Kumar stepping down once his successor is hired.
The firm provided few further details regarding the planned restructuring, but noted that management and operations at its diagnostic lab in Irvine, Calif., would not be affected by the restructuring. CombiMatrix also said that among its goals for the diagnostics business is to increase utilization of its existing tests, expand the test menu, increase the number of its customers and partners, and improve reimbursement for its testing services.
The firm expects the restructuring to result in a reduction of its operating cash burn of between 40 percent and 60 percent compared to its 2009 cash burn of $10.6 million, after taking into account one-time costs. It noted that it will report a cash balance of $13.5 million as of the end of the first quarter of 2010.
"In light of the tremendous opportunities we see in the diagnostics arena, management and the board have decided to develop and implement a strategic plan which we believe will enable us to make the most effective use of our capital and provide the most probable path to cash flow positive operations," Kumar said in a statement.
CombiMatrix said that Kumar will serve in an advisory role to the firm after his successor is named, which it hopes will happen by the end of the second quarter.
"We all agree that this is the right time to make this transition for the benefit of our shareholders, as Dr. Kumar led the company through its development and technology focused period," Tom Akin, chairman of CombiMatrix's board of directors, said in a statement. "Now that we are transitioning to more commercial activities, we feel that the company would benefit from an experienced commercially oriented leader that is focused on diagnostic testing services and building the laboratory business."
CombiMatrix said that it will provide further details of the restructuring plan during its first-quarter earnings call on May 11, or sooner.
Though the firm's 2009 revenues were down 22 percent to $4.9 million, it had reported 49 percent year-over-year growth for its diagnostics business.
Shares of CombiMatrix were down 1 percent at $4.48 in early Tuesday trade on the Nasdaq.