The USA’s Gene Logic says that it may sell off its genomics division as part of a bid to transform itself into a biopharmaceutical development company.
The news came as the firm posted disappointing financials for 2006 which show an operating loss of $25.5 million compared with a profit of $5.6 million the year before, while revenues fell almost 60% to $7.2 million. The firm’s shares slid over 4% on the announcement.
The company said that it has been exploring strategic alternatives for some time for the genomics division, which has seen falling sales due to the continuing loss of revenue for the company's subscription-based database services. It also noted that it has engaged financial advisors “to consider strategic alternatives to further develop this business” which include “a spin-off entity with a retained equity position or other alternative structures to capture value for Gene Logic.”
The firm has signed alliances with drugmakers such as Pfizer, Eli Lilly, Roche and Organon and the new strategy means that these partners provide Gene Logic with drug candidates that have been assessed as safe in human clinical trials, “and for which development for their original indications has been discontinued.” The US firm said that these assets represent a competitive advantage for the group “and allow us to seek new therapeutic uses for our partners' discontinued candidates.” It expects to earn milestones and royalties on repositioned drugs.
Gene Logic’s restructuring plans are in full swing and the firm sold its preclinical division to Bridge Pharmaceuticals in December. As a result of these changes, the number of employees has fallen from 434 at the end of 2005 to 151 at year-end 2006.