Nanogen,
Inc. today announced that it is evaluating strategic
alternatives for its microarray business as part of an aggressive plan
to achieve profitability. The microarray business includes the
company’s NanoChip instrument system and related multiplexed
reagents and consumables. The company has retained Credit Suisse to
assist in the evaluation of alternatives which may include a sale,
partnering or closure of the array business. The company expects to
complete its evaluation of strategic alternatives within sixty to
ninety days.
The goal of the strategic evaluation is to create a
restructured business at Nanogen that can reach profitability faster
and with greater predictability. The restructured business will
continue to focus on clinical diagnostic markets with emphasis on
real-time molecular and rapid point of care products. Nanogen has a
strong intellectual property and technology base in both of these areas
and Nanogen’s products are widely adopted and well accepted
by customers.
“Financial expectations for the restructured
business have not been completed and are dependent on the outcome of
the strategic evaluation,” said Robert Saltmarsh,
Nanogen’s CFO. “While specific goals will be
discussed after the conclusion of our evaluation process, we expect
that sale or closure of the microarray business will decrease expenses
and improve cash flow by at least fifteen million dollars ($15 million)
annually. We also expect the restructured business will show revenue
growth on a year over year basis.”
“In taking this course of action, we recognize that
our microarray technology is very good and customer reception is
positive. However, multiplex molecular testing remains an early stage
market with slower growth and lower testing volumes than we
expected,” said Howard Birndorf, Nanogen’s chairman
and CEO. “The cost and effort to develop the broad product
menu needed to be successful while also working to develop the clinical
market over the next several years are large efforts and are expenses
that Nanogen can no longer afford on its own.”
“In the past year, we have begun to build a solid
business with our real-time PCR products and Point of Care rapid
testing solutions. By focusing on these businesses, we expect to
significantly grow our presence in the diagnostics market and improve
our business performance,” said David Ludvigson,
Nanogen’s president and COO. “We hold significant
intellectual property in the molecular and point of care areas and
intend to continue developing proprietary, technology based products
that add value in the clinical diagnostic market and are well accepted
by customers.”