By Mary Welch
Disclosing the company had received a credit boost from a shareholder, Oncor Inc. said it is cutting staff by 40 percent — 60 employees — and intensifying efforts to sell non-strategic assets.
Cecil Kost, president and chief operating officer of Gaithersburg, Md.-based Oncor, said the company itself may be sold.
"Things aren't bad at all," Kost said. The company has about $3.2 million in cash available, including the expanded credit line from an unidentified shareholder. Of that amount, about $2 million is available for use in North America, after the payment for acquisition of a strategic license.
"This additional capital is a useful bridge for the company until we complete other financing plans," Kost said. "We're going about this very methodically. Everything is now focused on our oncology work and this narrower focus will directly help our cash situation."
The company's stock (AMEX:ONC) sank by 28 percent on the news, closing Thursday at $1.125.
Oncor's Research Products Division already is up for sale. Discussions with potential buyers are "well under way and proceeding with a high sense of urgency," Kost said. "We've had considerable interest in the division."
Last month, the company settled its longstanding patent dispute with Vysis Inc., of Downers Grove, Ill., over the use of fluorescence in situ hybridization (FISH), a method of simultaneously assessing multiple chromosomal and gene abnormalities in an intact cell. As part of the deal, Oncor gave Vysis the assets of its non-oncology FISH genetics business, which posted sales of $3 million last year. (See BioWorld Today, April 14, 1998, p. 1.)
"The asset transfer has taken place," Kost said. The non-oncology FISH business was not considered a part of Oncor's strategic technology.
Reducing personnel will cut the company's North American costs from $1.3 million per month to about $500,000 per month.
Oncor has hired Lehman Brothers, of New York, to help the company explore partnerships or sale. Kost declined to discuss the potential sale of the company, because partnership talks are under way, he said.
Focus Narrows To Cancer Unit
Kost said the focus eventually will be narrowed to Oncor's cancer unit, particularly on the marketing of its Inform HER-2/neu Gene Detection System, a breast cancer recurrence test cleared for marketing by the FDA. The test is designed to identify HER-2/neu gene amplification, an independent marker of breast cancer aggressiveness. (See BioWorld Today, Jan. 5, 1998, p. 1.)
Oncor has estimated the revenue potential of the test, launched without a marketing partner, at $100 million.
"We're very pleased with it," Kost said. "We've secured a number of leading institutions [as buyers] since it's been introduced. We're in the midst of a campaign to build awareness using advertising, direct mail. We're getting about 20 to 30 percent of all newly diagnosed breast cancer patients in the U.S." *