DoubleTwist has withdrawn its initial public offering and laid off “around 20 people” in a move to streamline its operations, said spokeswoman Nicole Litchfield. The layoffs represent approximately 10 percent of DoubleTwist’s staff.
“In light of current market conditions, we believe it is in the best interest of our shareholders to withdraw our registration statement for a public offering at this time,” Litchfield said.
DoubleTwist anticipated offering 5.75 million common shares priced at $13-$15, for a proposed offering price of $86.3 million.
“We will continue to assess the markets and will make a decision regarding the appropriate timing for a public offering as conditions permit,” Litchfield said. “In the meantime, we look forward to ending a long registration ‘quiet period’ and focusing on promoting developments in our business.”
Litchfield said that the layoffs were “part of a reorganization to gain efficiency after hiring about 120 people last year.” She added that the layoffs were applied equally across the company and that DoubleTwist does not plan any further consolidations.
As part of the reorganization, Robert Williamson, formerly COO, was promoted to president and COO, and Edward Kiruluta, formerly vice president of R&D, was promoted to CTO.
A number of genomics and bioinformatics companies have delayed or withdrawn IPOs over the past several months due to the recent market downturn. Most recently, Genometrix of The Woodlands, Texas, withdrew its offering on February 26 citing volatile market conditions. The layoffs follow closely behind NetGenics’ decision in January to slash its workforce by 30 percent under similar circumstances.
Some industry observers see these developments as proof that standalone bioinformatics companies will have a hard time weathering the current downturn in the biotech market.
“I’m not surprised it hasn’t happened sooner,” said Steven Delco, senior biotech analyst at Fortis Securities.
“Informatics companies, in my view, shouldn’t even go public,” Delco said. He explained that the potential upside for investors in informatics companies is not nearly as large as it is for investors in drug development companies.
“I think there will be a bust in service companies and we’ll start to see that as they run out of money, “ Delco said. “I think things are going to get worse on the information side of biotech.”
He predicted that only a few informatics companies would survive and many would merge or be acquired as biotech investors begin to differentiate between tool providers, information providers, and drug developers.
Despite the gloomy outlook, Litchfield said that “things are going well” at DoubleTwist. The company plans to fund its operations through increased sales and to augment its cash flow with additional sources of financing as needed. “As a well-capitalized private company, we are optimistic about the long-term outlook for our business and the growing market for our products,” Litchfield said.
According to DoubleTwist’s amended S-1 filed November 9, the company’s cash, cash equivalents, and marketable securities were $24.1 million as of September 30.
For the last nine months of 2000, the last period for which information is available, DoubleTwist’s revenues totaled $4.8 million.