Big cuts are happening at Mukilteo, WA-based CombiMatrix (NASDAQ: [[ticker:CBMX]]). CEO Amit Kumar is stepping down, expenses are being cut, and the board is betting the future of the company on diagnostics, not on its traditional business of selling genetic analysis instruments to researchers.
The company’s statement today is vague, but the news is clearly bad for people in Mukilteo. Operating expenses are being cut by 40 to 60 percent relative to its cash spending rate of $10.6 million in 2009. While CombiMatrix isn’t saying specifically what that means for Mukilteo, it did say that its Irvine, CA-based operation is being shielded from the cuts because it is involved in developing its technology for diagnostics, which is the future of the company.
Kumar didn’t immediately respond to an e-mailed request for comment, but I’ll update this story if he responds with some clarification on what this means for the Mukilteo operation. I wrote a detailed feature last June on the company’s plan to transform into a cancer diagnostics player after it was essentially crushed by bigger competitors like Santa Clara, CA-based Affymetrix and San Diego-based Illumina, which also make DNA microarray tools that help researchers examine which genes are turned on or off in a biological sample.
By last August, CombiMatrix said it intended to hire an investment banker to evaluate options to “unlock shareholder value,” which might mean a sale of the company, or the signing of a partnership. At the time, it said it had a year’s worth of cash left on hand. Now it says it had $13.5 million left in the bank as of March 31.
“CombiMatrix is at a major inflection point in its development,” Kumar said in a statement. “We have developed and launched a number of valuable diagnostic testing services, and we believe the best use of shareholder capital is to focus on selling and increasing the utilization of those tests.
Kumar will stay as CEO until the company finds a replacement, which it hopes to do before the end of June, the company said. More specifics on the company’s plan will be available by the company’s second quarter conference call on May 11.
CombiMatrix said it had 69 employees companywide as of December 31, with roughly half, or 34 of them, in Irvine, CA, according to its annual report filed with the Securities and Exchange Commission.
