Complete Genomics axes 55 staffers
Complete Genomics ($GNOM) is slumping. The provider of whole genome sequencing and informatics support has decided to cut about 20% of its roster to conserve cash, and the company has hired a financial adviser to aid in its hunt for "strategic alternatives."
With problems in the current whole-genome sequencing market, Complete Genomics plans to boost its focus on clinical sequencing applications in anticipation of growth in demand from hospitals and healthcare providers wishing to decode the DNA of their patients. Meanwhile, the company plans to keep servicing its existing research customers in academia and biopharma. The cutbacks will claim the jobs of 55 employees at the Complete Genomics' base in Mountain View, CA, and those of field workers in the U.S., the company said on Tuesday. Most of the layoffs will take place before the end of this month, with restructuring charges expected to hit $1.5 million.
Complete Genomics hired Jeffries & Company to serve as its financial adviser, and, though no decisions have been made about specific strategic alternatives, the options on the table include a sale of the company, a merger, business combination and equity investment.
A number of factors appear to be hammering Complete Genomics, which has commercialized its proprietary sequencing platform and its informatics and software for managing genomic data in an outsourcing service model. As Cowen & Company analyst Doug Schenkel wrote in a note to investors this week, "[Complete Genomics] deserves credit for attempting to drive growth in a market that has traditionally been quite elastic, via a services model. Unfortunately, demand for whole genome sequencing has not been as robust as other sequencing applications."
Meantime, companies such as Life Technologies ($LIFE), with the Ion Torrent system, and others are developing desktop sequencers that make the technology accessible to individual labs. Plus, the cost of sequencing an individual genome has fallen faster than Moore's Law, pushing sequencing toward a commoditized service and forcing players in the game to rethink their business models.
For example, China-based BGI, the world's largest DNA sequencing provider, has put a lot of energy and investment into cloud computing and bioinformatics that improve the utility of whole genome data and help researchers analyze the huge amount of information. Complete Genomics has made similar investments in IT, for instance, enabling its customers to access their sequencing data on Amazon's cloud, Nature News reported in July.
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