Somatix Restructures, Lays Off 25 Employees
Somatix Therapy Corp., responding to pressure from Wall Streetinvestors who recently contributed $16.5 million to the Alameda,Calif.-based company, has cut its work force by 20 percent to save $1million per fiscal quarter.
Somatix disclosed the personnel reductions after the market closedlast Thursday. Earlier that day the company also announced it hadcompleted a private placement of common and preferred stock units,raising $16.5 million.
Mark Bagnall, Somatix's chief financial officer, said the staffreductions were prompted by Wall Street investors urging thecompany to reduce its burn rate. By laying off 25 workers andbringing the number of employees to 105, Bagnall said the companywill lower the burn rate to $4.5 million.
Prior to the private placement, Somatix was nearly out of cash. Of the$16.5 million raised in the financing, the company will get $15million, which accounts for its total cash reserves.
Bagnall said Somatix expects to supplement its cash position withanticipated milestone payments from existing corporate partnershipsand funds from new alliances.
Somatix (NASDAQ:SOMA) closed Friday at $4.25, up 37 cents, a9.5 percent jump. _ Charles Craig
-- Charles Craig
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