By Mary Welch
To gain better financial footing, Xenometrix Inc. cut its workforce by more than half, and said it is seeking to negotiate the terms of a further extension of a bridge loan due Feb. 25.
At the same time, the Boulder, Colo.-based company granted seven additional licenses for its gene-expression profiling patents. Financial terms were not disclosed, but Pauline Gee, president of Xenometrix, said she expects the company to make a "substantial" payment on the loan and that the firm "can operate for several months now without a problem, thanks to reducing our burn rate."
Xenometrix's stock (OTC BB:XENO) closed Thursday at $0.281, down $0.625, or 18 percent.
Gee said she is not sure exactly how much money the new licenses will add to the bottom line. "It's not easy to come up with a number," she said. "That's what I'm doing right now, because we have to file a 10Q this quarter."
Each gene profile license is non-exclusive, and covers the collection of gene-expression profiles utilizing all methods, including high-density probe arrays. One of the licenses was the company's first non-exclusive license for its automated Ames technology.
The company's cash level fell to $100,000 in cash by the end of September, but the firm was saved by a $1.5 million loan. (See BioWorld Today, Oct. 20, 1998, p. 2.)
For the quarter ending Sept. 30, 1998, Xenometrix reported total revenues of $333,000, up 67 percent from the comparable quarter in 1997. Of that amount, $300,000 came from up-front licensing fees related to its U.S. and European gene profiling patents.
As of Nov. 1, the company had $115,000 in cash, which it estimated would last until Dec. 1. In its financial statement, Xenometrix stated it was "seeking strategic partnerships that may satisfy its liquidity needs, including the potential sale of the company." Lacking any strategic partnerships, the company said it might curtail or suspend operations
Xenometrix, which a few years ago had almost 50 employees, had cut its staff to nine employees by October. Now, it is down to four.
In January, then-CEO Steve Sullivan offered a plan to reduce the company's burn rate substantially by eliminating more positions, including his own job. While the board accepted the plan, it asked Sullivan, who had also been president, to remain as a director and non-executive chairman.
"We had to do something," Gee said. "The numbers spoke for themselves."
Moves Aim To Keep Operations Going
The company believes that by cutting its staff to a handful and providing gene expression profiles on lead compounds and chemicals for pharmaceutical and biotechnology clients, it can develop a stronger financial base and continue operations
Gee said Xenometrix has a "good shot" at paying off the notes and intends to "refocus the company to provide good value and service to our customers. We have a good customer base, and we need to refocus our energies on [it]. If we do a superb job with our client base, it may open us up to opportunities such as acquisitions, where we would be valuable, or to strategic partnerships, where we might get an equity investment. We are open to a lot of options."
The company has subleased a portion of its facilities to Source Pharmaceuticals Inc., of Boulder, a new integrated drug discovery company founded by scientists formerly with Thousand Oaks, Calif.-based Amgen Inc.