Transgenomic, surpassing the one-year mark on its ongoing corporate makeover, continues to move away from nucleotide consumables as it disclosed plans last week to "either sell or liquidate" the last remaining vestige of its nucleic acids business.
"This is something that for the past year we've been talking publicly quite a lot about: Focusing on our biosystems business is really what we think is our key area of opportunity going forward," Rob Pogulis, Transgenomic director of strategic planning, told Pharmacogenomics Reporter this week.
The firm first acted on that plan since November 2004, when it sold a Boulder, Co.-based oligonucleotide manufacturing facility and laid off 60 employees in an effort to save cash. Now, more than one year after embarking on the new course, Transgenomic seems to be making financial headway as it prepares to unload the last of its money-losing consumables facility in Glasgow, Scotland.
Additional lay-offs will depend on how Transgenomic disposes of the facility. "At this point, basically, what we've done is notify employees that may be affected," said Pogulis. "But essentially what we've said is that there's potentially more than one path. We continue to evaluate opportunities to potentially sell the facility, so that versus an outright closure would have a different impact" on layoffs.
"We continue to evaluate opportunities to potentially sell the facility, so that versus an outright closure would have a different impact [on layoffs]."
The company has not yet decided which fate will befall the Glasgow facility, nor with whom Transgenomic is discussing a possible purchase, said Pogulis. Asked to speculate which was most likely, liquidation or sale, he said, "I'd be hesitant to handicap it either way."
The company's board voted to divest the unit "after an evaluation of, among other things, short- and long-term sales projections for products sold by the nucleic acids operating segment, including estimates of 2006 sales to the operating segment's largest customer," according to documents filed with the US Securities and Exchange Commission.
Transgenomic said it may close the facility in the first quarter of 2006, resulting in costs of around $1 million primarily related to severance payments. The company will also record a non-cash impairment charge of between $7 million and $10 million for the nucleic acids operating segment in the fourth quarter of 2005. Pogulis declined to estimate how much closing the facility may save the company annually.
Transgenomic employs about 160 people worldwide, approximately 20 of whom work at the Glasgow facility, said Mitch Murphy, Transgenomic vice president, secretary, and treasurer.
Since the company launched its restructuring plan last year, its quarterly losses have gradually declined, and in the third quarter the company posted net income for the first time (see chart).
Transgenomic's year-old plan involves continuing to market its Wave genotyping platform and related consumables, and to keep its fee-for-service mutational-analysis business in play. As for the diagnostic potential of the Wave platform, Transgenomic is "certainly looking to try and find customers and entities out there who could find a use or an effective application that would be based" on it, but "there's nothing [the firm] can publicly talk about," said Murphy.
According to Pogulis, the company has placed between 1,200 and 1,300 Wave systems worldwide since the its 1997 launch.
Transgenomic's revenues in the third quarter of 2005 , the most recent quarter for which data are available, exceeded receipts that preceded the sale of the Boulder facility in the fourth quarter of 2005. "We attribute that to the focus on our biosystems, although we did have significant revenue from the largest customer at our Glasgow nucleic acid building-blocks [unit]," Murphy said.
In the next year, the company aims to produce "more transparent" financial data, and to balance costs and revenue, said Murphy. "We just need to keep cultivating the markets that we're working in … hopefully getting the benefit of participating in the markets associated with developing diagnostics and therapeutics, and we think the combination of those two things" will keep the company in the black, he said.
Chris Womack ([email protected])