A Medical Device Daily
In a move to cut its burn rate by nearly one-half, from the current rate of about $12.8 million a year, Calypte Biomedical (Pleasanton, California) yesterday said that it plans to slash its staff by 66%, reducing its number from 65 employees to fewer than 25.
And, as another key part of the restructuring, Calypte said it has entered into an agreement to sell its urine EIA, serum Western blot and urine Western blot HIV in vitro diagnostic business.
It did not disclose the organization that is acquiring this business but said sale terms are being negotiated and that a definitive agreement is expected this quarter.
The firm’s board authorized the staff reductions, Caly-pte said, in order to better focus efforts on its rapid test and blood-based incidence test products.
The reductions will come, beginning May 1, primarily in its U.S. work force at the company’s Rockville, Maryland, facility, reducing operating expenses from an ‘04 burn of more than $1 million a month – or $12.8 million a year – to less than $7 million a year.
Still another part of the restructuring will be consolidation of U.S. manufacturing, administrative and R&D operations into one site in the Portland, Oregon, area, where the majority of R&D staff members are now based.
J. Richard George, MD, president and CEO, called the decision “difficult,” especially since the company’s employees “have been an extremely dedicated and gifted group of people who have worked tirelessly in getting us to where we are today.” But he cited an “obligation” to shareholders and that “opportunities that I see emerging globally, from the rapid test platform and incidence test, compel me to make a tough decision about how and where to allocate our resources.
“Our EIA and Western blot product lines are strong diagnostic tools with reliable customers that focus on a distinct opportunity in the HIV market; however, going forward we see considerable near-term international growth opportunities in the rapid HIV and BED Incidence testing markets,” calling these areas “our future.”
He added: “In the course of the coming quarters, Calypte intends to launch products in Africa, China, and other parts of Asia. We are conducting clinical trials to initiate the regulatory processes in these territories and plan to supply them through manufacturing arrangements in place in Thailand and in process in China.”
Richard Brounstein, executive vice president and CFO, said, “This initiative allows Calypte to focus its capital resources on the global launch of its rapid product line, the products that we believe represent a compelling opportunity. Calypte’s administrative team plans to maintain the company’s internal controls and corporate governance standards throughout the transition to a new staff in Port-land and will ensure a seamless conversion throughout this process.”
Calypte is focused on developing diagnostic testing products for the detection of sexually transmitted diseases. It says it also is engaged in developing new diagnostic test products for the rapid detection of HIV and other sexually transmitted diseases, “several of which do not require blood samples.”