MUKILTEO, Wash.—CombiMatrix Corp. has announced that it is implementing a restructuring plan that it hopes will significantly reduce operating costs, increase the focus on the company's diagnostic services business and transition senior management.
The first two are pretty clear-cut. If that last item is confusing, we'll simplify it: The company is looking for a new president and CEO and the current one, Dr. Amit Kumar, will step down once that person arrives, but will "remain active with the company in an advisory role at the request of the board," Kumar reports.
CombiMatrix wants to be focused on its diagnostics services business after the restructuring, and this will include such activities as increasing utilization of its existing tests, expanding the test menu, increasing the number of customers and partners, and improving reimbursement for its testing services.
"CombiMatrix is at a major inflection point in its development," Kumar says. "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. In light of the tremendous opportunities we see in the diagnostics arena, management and the board have decided to develop and implement a strategic plan which we believe will enable us to make the most effective use of our capital and provide the most probable path to cash flow positive operations."
The company had a 2009 cash burn $10.6 million, after taking into account one-time costs, and it will report a cash balance of $13.5 million as of the end of the first quarter of 2010. Management anticipates that the restructuring will cut the operating cash burn by at least 40 percent and perhaps as much as 60 percent, relative to 2009 levels.
The search for a new chief executive is a specific part of this strategic plan, and not simply coincidental timing, Kumar notes, and he says the hope is to complete the process by the end of the second quarter.
Management and operations at CombiMatrix's diagnostic laboratory in Irvine, Calif, will not be affected by this restructuring, the company reports. Specific components of the plan and additional details will be presented at the company's second quarter earnings call scheduled for May 11—perhaps even sooner than that.
Tom Akin, chairman of the board, thanked Kumar for leading the company through its development and technology focused period. "Now that we are transitioning to more commercial activities, we feel that the company would benefit from an experienced commercially oriented leader that is focused on diagnostic testing services and building the laboratory business," Akin adds. "We have a growing diagnostics business, cash on the balance sheet, and a pathway to cash flow positive operations. Dr. Kumar and the Board will work together to identify the right candidate to lead the company in its next stage of development."
CombiMatrix is a diversified biotechnology business that develops proprietary technologies, including products and services in such areas as drug development, genetic analysis, molecular diagnostics, nanotechnology and defense and homeland security markets. Its technologies include a platform technology to rapidly produce user-defined, in situ synthesized, oligonucleotide arrays for use in identifying and determining the roles of genes, gene mutations and proteins. Other technologies include proprietary molecular synthesis and screening methods for the discovery of potential new drugs.
Combimatrix Molecular Diagnostics Inc. is a wholly owned subsidiary located in Irvine, Calif., that operates as a diagnostics reference laboratory, providing genetic diagnostics services to physicians, hospitals and clinics. Leuchemix Inc., a minority owned subsidiary, is developing a series of compounds to address a number of oncology-related diseases. Leuchemix's first compound has entered initial clinical trials in the United Kingdom.
