In a “proactive” reaction to increasingly feeble market conditions, Molecular Mining has taken steps to limit spending and refocus its resources, CEO Evan Steeg told BioInform last week. The company laid off an undisclosed number of employees in central R&D and administration, according to Steeg, as it implements a near-term strategy to concentrate on software sales and collaborative research agreements, while pulling back on its in-house discovery projects.
“We view it as part of adjusting to the current market climate, but also things that make sense for a company to do anyway,” said Steeg. “For example, you put a certain kind of effort in when you’re building the architecture for a set of software products, and a slightly different focus when you’ve got the architecture built and you’re making changes to the products for different verticals.”
Steeg declined to comment on how many employees were let go — “one of the benefits of still being a private company,” he pointed out — but did note that recent hires were made in the company’s sales force, which remains based in the US. Molecular Mining is headquartered in Kingston, Ontario, Canada, and operates a US office in Cambridge, Mass.
As of early December, Molecular Mining employed 40 people and had a year of cash left [BioInform 12-09-02]. Steeg said at the time that the company was seeking additional financing in order to increase its sales staff.
Since it was founded in 1999, the company has evolved its strategy into what Steeg described as a “three-legged” business model, comprising shrink-wrapped software products, customized services, and drug discovery. For now, Steeg said, the company is de-emphasizing the discovery segment of its tripartite model and pushing forward software sales and collaborations to generate short-term revenues.
“Certainly, we believe there’s a great long-term value proposition in discoveries,” he said. But, “right now, we’re more focused on nearer-term cash.”
The new sales hires will be key to bringing in that revenue, Steeg said, because the company’s proprietary neural network-based technology requires hands-on demonstration — a challenging prospect that demands a knowledgeable sales team. “People may not recognize right away what’s going on [with our technology] because it’s not something they’ve seen in three or four other products, “ Steeg said. “It’s a responsibility of ours to help [the users] understand what we do.”
The decision to cut back comes just as the company appeared to be gaining traction in the market. It announced over 100 placements of its GeneLinker Gold and GeneLinker Platinum software products in the second quarter of 2002, and signed research collaborations with three pharmaceutical companies over the course of the year. While the company has not disclosed two of these pharma collaborators, it announced in December that is working with GlaxoSmithKline in the area of gene network modeling for bone formation.
Steeg described the restructuring as a “practical approach” in the face of current market conditions. “Some of our competitors have gone under,” he said. “We will not let that happen.”
And while the potential long-term upside from drug discovery is alluring for a young company, “it’s a serious capital-intensive business,” Steeg noted. “One shouldn’t go there lightly.”