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NetGenics Withdraws Application for IPO, Citing Market Conditions

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NetGenics withdrew its proposed $60 million to $70 million initial public offering in a filing with the Securities and Exchange Commission last week.

Victor Peroni, NetGenics’ director of operations and controller, said that the company was canceling the IPO due to market conditions, and because the pre-IPO quiet period had prevented the company from making positive public statements.

“We have a lot of good news to share,” he said. “There wasn’t a lot of value in staying filed. Pulling the S-1 gave us a greater range of options. We can talk about our company and not worry about violating our filing.”

In June, the company won a contract to provide German pharmaceutical company Schering with a company-wide gene database using its DiscoveryCenter product. Peroni did not disclose any further customers, but said a number of deals are in the works.

In January, the company cut its staff by 30 percent, or 29 people, citing delays in carrying out its IPO. At that time, CEO Manuel Glynias said the company had enough money to continue operations for another year, and did not intend to raise money privately.

Peroni confirmed that NetGenics does not have immediate plans to raise more money. “We’ve been able to manage our funds very well,” he said.

Peroni said NetGenics has plenty of cash to “drive the DiscoveryCenter launch and sales efforts as well as further developments that we have planned,” although he declioned to speculate on how long the company’s cash reserves would hold out.

While NetGenics intends to “do everything in our power” to become profitable and remain a stand-alone company, Peroni didn’t rule out the possibility of a future acquisition.

“Whatever path it takes, the goal is creating a company that has value. Whether it’s an IPO, a private round of financing, an acquisition, or remaining a private company that is successful on its own, all goals start with the same strategy.”

“The better off we are in terms of profitability, the better off we are in terms of an eventual IPO,” he added.

— BT and John S. MacNeil

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