- The Washington Times - Wednesday, June 12, 2002

Celera Genomics Group yesterday laid off 132 workers, or 16 percent of its work force, two years after it completed one of the most groundbreaking achievements in biotechnology.
Celera was founded in 1998 and reached scientific stardom in June 2000 when it mapped the human genome, a discovery that is expected to boost medicine by helping researchers find cures for diseases ranging from cancer to arthritis. The discovery was also expected to boost Celera, which planned to make money selling genetic data to drug companies and academics.
Celera, based in Rockville, will fire 132 employees, some of whom were involved in the landmark genome-mapping project. Employees involved in sales, administration and the analysis and management of the genetic data that Celera gathered also will be laid off.
The cuts leave Celera with about 700 workers.
"This [layoff] isn't motivated by trying to eliminate costs. We can't save our way to growth. It's about sticking with the strategy," Celera spokesman Rob Bennett said.
The company has shifted from one marketing the genetic database to a drug developer.
Its metamorphosis began last year, when Celera bought drug maker Axys Pharmaceuticals Inc. for $177 million. Then in April Celera reached an agreement with Applied Biosystems Group to let that company market the genetic data Celera gathered when it mapped the human genome. Like Celera, Applied Biosystems, in Foster City, Calif., is owned by Applera Corp.
The job cuts were not orchestrated solely by Celera President Kathy Ordonez, even though they come just six weeks after she took over the company on April 22. J. Craig Venter resigned as president in January.
"Aspects of this were under evaluation before she came on," Mr. Bennett said.
Jonathan Aschoff, senior genomics and biotechnology analyst at Arlington-based investment banker Friedman Billings Ramsey, said the layoffs did not come as a surprise. That's because marketing the genetic database was among the most profitable business units within Celera, but it sacrificed some revenue when it ceded control of the data to Applied Biosystems, Mr. Aschoff said.
Celera will get royalties from Applied Biosystems for its use of the database for 10 years, and Mr. Bennett estimates Celera will earn up to $85 million from Applied Biosystems in fiscal year 2003 alone. But Applied Biosystems will keep all the revenue it generates through the sale of the genetic database to new customers.
"Clearly it's a better deal for [Applied Biosystems] than it is for Celera," Mr. Aschoff said.
Celera could have difficulty making money as a drug maker because of the hurdles involved in lengthy testing of drugs and burdensome regulatory approval, said Sushant Kumar, biotechnology analyst and partner at New York investment researcher Mehta Partners.
"Just because you say you will make drugs doesn't mean you will be able to," he said.
But the company is in a better position to take advantage of the genetic database than other drug makers, Winton Gibbons, an analyst at Chicago investment banker William Blair and Co., wrote in a research paper to investors yesterday.
"While market sentiment is still negative regarding developmental therapeutic companies, we still believe that Celera remains the most promising company to discover and develop pharmaceuticals and diagnostics from an understanding of disease through molecular biology," Mr. Gibbons told investors.
Celera lost $49.5 million in its fiscal third quarter, which ended March 31, and it will take a $2.8 million restructuring charge related to the layoffs.
The company still has $909 million in cash to fund drug research.
Celera shares fell 8.1 percent yesterday on the New York Stock Exchange, closing at $12.07 a share. Celera stock is down 74 percent this year.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide