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As Part of Restructuring, CombiMatrix to Close Washington State HQ, COO to Resign

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By Justin Petrone

CombiMatrix plans to shutter its Mukilteo, Wash.-based headquarters and consolidate its corporate activities in Irvine, Calif.

In a filing with the US Securities and Exchange Commission, the array firm said last week that it will cut an unspecified number of jobs as part of the restructuring. CombiMatrix employed 69 people as of Dec. 31, 2009, 34 of which are already based at its Irvine site.

CombiMatrix first announced its plans to restructure earlier last week. The company said the changes will allow it to reduce its cash burn by 40 percent to 60 percent as it shifts its focus on to its diagnostics business (BAN 4/20/2010). CombiMatrix has maintained its molecular diagnostics subsidiary in Irvine for five years.

According to CombiMatrix, the process of shutting down the Mukilteo, Wash.-based operations will be completed in six to eight weeks, with the relocation of the firm’s corporate functions over the next few months. As part of the move, the company is seeking a new CEO to replace current President and CEO Amit Kumar. Kumar will step down once a successor is found, and has agreed to remain with CombiMatrix in an advisory role.

In its filing last week, CombiMatrix said that Chief Operating Officer Brooke Anderson will also resign as part of the restructuring.

CombiMatrix said that it expects to incur approximately $1 million to $1.5 million in restructuring costs in connection with the actions. Of that total, approximately $420,000 to $650,000 are expected to result from non-executive employee benefit and severance arrangements, approximately $170,000 to $440,000 are expected to result from lease termination payments and plant closure and relocation expenses, and the balance is expected to result from write-downs of inventory, property and equipment, and related assets, the firm said in the filing.

The company added that it expects the majority of the restructuring costs to be recorded in its operating results for the fiscal quarters ending June 30 and Sept. 30, 2010. It does not expect the charges to result in significant cash expenditures after completion of the restructuring.

CombiMatrix said that it expects the restructuring to result in annualized cost savings of approximately $4 million to $5 million per year after its completion.

It is unclear what impact the closure of the Mulkiteo site will have on the more research-oriented products the company developed and sold from its Washington headquarters. In addition to a growing menu of array-based tests offered by its molecular diagnostics subsidiary, CombiMatrix sells its CustomArray Synthesizer and catalog and custom microarrays, including a system for detecting and monitoring influenza, as well as its recently launched ElectraSense portable microarray reader.

The company has pledged to discuss the restructuring in greater detail when it reports its first-quarter results on May 4.

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