Times have been tough for startup proteomics companies trying to balance costly in-house drug development efforts with revenue-creating partnerships in order to survive until — ideally — they hit the blockbuster drug jackpot.
GeneProt is no exception: the Geneva-based company, which struck an $84 million proteomics research deal with Novartis about two years ago, has been unable to establish similar partnerships with other big pharma players since then. As a result, and in an effort to stay afloat, it has decided to slash its costs. “We don’t control the budget of the big pharmas, we don’t control the market, the only thing we control is the cash that we have in the bank,” said Bertrand Damour, GeneProt’s CFO.
According to Damour, the company is planning to cut its operating costs in 2003 by 40 percent compared to its 2002 budget, thus reducing its burn rate to $23-25 million per year. This, he said, would leave GeneProt with enough cash to operate for another two years — long enough, the company hopes, for business to pick up again. Moreover, it has already been trying to reduce expenses since the spring, he added.
But the cuts, Damour said, would not hamper GeneProt’s ability to conduct its research. “We will not cut the muscle,” he said. Instead, the company has streamlined its processes by eliminating redundancies, renegotiated some services, and done better purchasing deals. It is also looking into reducing costs associated with its supercomputers, “a big expense line on our balance sheet,” by “renegotiating with our partner Compaq,” Damour said.
In addition, the company decided to lay off 20 employees by the end of January 2003. These layoffs, which have already been announced to comply with European legislation, include some staff that were hired for the New Jersey site GeneProt was planning to open this fall.
Earlier this year, GeneProt decided to postpone its plan for the facility in North Brunswick, NJ. But it still maintains a “minimum lease” for the buildings, enabling it to “reactivate the plant at a minimum cost,” said Damour, once times get better.
Besides cutting expenses, GeneProt is also working on expanding its internal research, and on closing more research collaboration deals. Last month, it announced a project to identify biomarkers and protein targets in cerebrospinal fluid (CSF), after signing on with a supplier that would provide it with two liters of CSF (see ProteoMonitor, 10-07-02). In addition, Damour said, the company is currently trying to secure samples for two more projects in undisclosed disease areas.