MENLO PARK, Calif.—Pacific Biosciences announced today thatit will letting 130 of its employees go, a full 28 percent of its workforce.The announcement was made in an 8-K report to the Securities and ExchangeCommission.
A slower-than-expected adoption rate for PacificBiosciences' sequencing machine left it with more employees than necessary,according to the company, and the reduction will allow it to "to continuesupport of its growing customer base with improved service and continuedproduct enhancements, while at the same time conserving cash," as noted in thereport. As of June 30, Pacific Biosciences' cash and investments totaled $217million, while the company expects to end the third quarter of 2011 withapproximately $190 in cash and investments.
While the cuts will be made across the whole company, it wasnoted that the operations and research and development wings will be the onesmost affected. The company expects to incur $5.2 million in restructuringcharges as a result of the reduction. Pacific Biosciences has faced ratherunderwhelming results in the public markets so far this year, even after theintroduction of its RS sequencer in the spring. The company has a backlog forthe sequencers, but there are fears that the decrease in government researchbudgets will adversely affect demand for next-generation sequencers.
"By taking action now, we have given ourselves both the timeand flexibility to drive adoption of our product," Hugh Martin, PacificBiosciences' CEO, said in a statement circulated by email.
In a statement to the company, Martin noted that thereductions are the result of "uncertainties associated with the economicenvironment and our desire to position ourselves for long-term success," addingthat "this is an extraordinarily difficult day."
"PacBio is in the process of introducing a game changing,new generation of sequencing technology. Even in stable, high growth markets,adoption rates of such a disruptive platform can be difficult to predict. Intoday's turbulent economy, it is even more difficult," said Martin. "We seemany of the signs that customers are recognizing the value of our thirdgeneration paradigm. However, we had higher expectations as to the rate withwhich adoption would occur. Our internal infrastructure was therefore built tohandle a faster generational transition. Consequently, our burn rate was not inline with the speed with which the business was evolving."
The layoffs were authorized by Pacific Biosciences' board ofdirectors on Sept. 16, and those being terminated were notified on Sept. 20.Martin added in his statement that the company will "continue an aggressiveprogram of both increasing the performance of our SMRT technology as well asbringing out new applications that are uniquely enabled by our third generationsequencing platform."
Pacific Biosciences is one company of many facing theunfortunate need to make sizeable workforce reductions as the economy continuesto remain weak. Pfizer also announced plans for layoffs today, with an expected220 employees, 11 percent of the workforce, to be cut from its Spain holdings,and 225 to be cut in France.
SOURCE: Pacific Biosciences press release