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InforMax Lays Off 30, Modifies AxCell Deal -- First Steps in Whiteley Strategy

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InforMax laid off 15 percent of its workforce last Monday as the company took what CEO Andrew Whiteley described as “the necessary hard steps” to preserve the company’s cash position and refocus its operations on its desktop application business.

The layoffs follow a 15 percent reduction in workforce at InforMax during the first quarter of 2002. The company’s staff, 262 at the beginning of the year, is now down to 189. The headcount reduction took place “across all functions” of the company, Whiteley told BioInform, although sales and R&D staff associated with its GenoMax enterprise software made up the bulk of the layoffs, in line with the company’s decision to pull back from the poorly selling product in favor of a new suite of applications targeted to systems biology and functional genomics.

Whiteley declined to provide many details on the upcoming software, but noted that InforMax is “looking very much at how we can expand our offering in protein science.” While most protein informatics software on the market now addresses the analysis of raw data sets from mass spec and 2D gel experiments, Whiteley said there is a demand for applications that can grapple with “the downstream processing of protein-based information.”

InforMax has a bit of experience in this area. The company developed a tool within GenoMax to handle protein-protein interaction data as part of a partnership with AxCell Biosciences that began in 1999. Banking on the hopes that the software will be “a specific asset that we can deploy into a broader marketplace,” InforMax modified its agreement with AxCell on May 2 to convert its license to AxCell’s ProChart database from an exclusive to a non-exclusive license.

The modified agreement will free up both companies to develop and market other third-party products relating to protein-protein interactions. “AxCell has one set of data relating to protein-protein interactions, but there are many other ways of measuring that,” said Whiteley. “The tools that are needed to structure that type of analysis … should be available to us in a more generic way.”

The new AxCell agreement is only the first in what promises to be a series of partnership adjustments for InforMax. The bioinformatics marketplace has changed dramatically, Whiteley noted, and many partnerships that InforMax entered into several years ago will need to be modified to meet the demands of the new market and the company’s new commercial direction.

“We needed to go back to all of our partners and reiterate what we see as our priorities going forward,” he said. “As the market develops, we need to be sure that we’re developing those partnerships to meet those needs.”

Partners that stand to see some impact from this decision include Amersham Biosciences, Whiteley’s former employer, which invested $10 million in InforMax before it went public in 2000 and has a 10-year GenoMax development agreement with the company, and Viaken Systems, which began offering hosting and support services for GenoMax last year.

Whiteley did not offer further details on the company’s partnership strategy, and a Viaken spokeswoman also declined to comment.

Plug Not Pulled on GenoMax (Yet)

  The decision to redirect its focus away from GenoMax was not easy for Whiteley and the company, but it was necessary. The product is a huge resource drain, both for InforMax and for customers. In addition to the software itself, a GenoMax installation requires a heavy investment in hardware, enterprise database licenses, and customization. This investment was not a concern for organizations hoping to get up to speed quickly in the biotech boom of the late 1990s, but with companies seeking to preserve their cash resources today, Whiteley described the current bioinformatics economy as “a pay-as-you-go type of marketplace,” where customers want only the minimum number of resources to get them going.

Whiteley said the company hopes to address some of these cost concerns with the upcoming 3.4 release of the product, which will be able to run on much cheaper Linux-based hardware and will require standard edition database systems rather than the more costly enterprise editions. But R&D on future editions of the product will see a dramatic slowdown after 3.4, and the long-term future of the product remains in doubt.

“If there’s continued demand for the product, obviously we’ll continue to sell it,” said Whiteley. However, “If in, say, a year’s time we’ve got the capability to do that a different way, then there’s a different decision to be taken.”

Originally conceived to store and analyze GenBank data behind company firewalls, the complexity of the system grew with each new type of data that was added. “The idea that we could expand it fast enough to take on board all the different data sets associated with protein interactions and the like makes it essentially such an unwieldy database as to make it uneconomic,” said Whiteley.

InforMax will continue to support GenoMax, he said, but new data types will be tied to the new domain-centric products it plans to deliver over the next year. “Instead of trying to build the one big system, we’ll build things more quickly but with less complexity as [customer] needs evolve,” said Whiteley, who described the tactic as a “flexible strategy” that will help InforMax remain “nimble on our feet.”

This recognition that change is the only constant in the bioinformatics world is a “more realistic” way of addressing the marketplace, according to Michael Martorelli, an analyst who covers InforMax for Investec PMG. “The market is not evolving the way anyone expected,” Martorelli said. While skeptical that any bioinformatics software firm will be able to gain a foothold until customers see a measurable multi-year return on investment from their products, Martorelli said that InforMax’s current installed base of Vector NTI desktop systems should give it an advantage in its plan to broaden its product line in this area.

In the short term, Janet Lambert, who has been InforMax’s senior director of business development since the fall of 2000, will assume responsibility for marketing. Her to-do list includes prioritizing applications in development.

— BT

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