San Diego’s embattled Sequenom, which halted the debut of a new diagnostic product over mishandled data, is now considering steps to conserve cash. In an SEC document filed Monday, the life sciences tools company says it expects to end the year with $39 million in cash — too little to fund operations and capital expenditures at current levels through the end of 2010. There is “substantial doubt about our ability to continue as a going concern unless we adopt measures to conserve our cash and prolong our ability to operate,” Sequenom (NASDAQ: SQMN) says in its filing.

During a conference call, Sequenom’s interim CEO Harry Hixson said the company was in the process of developing a strategic and financial plan for 2010, and until the plan was completed, he could not estimate how long the $39 million would last. Last month, Sequenom named former Ligand Pharmaceuticals CFO Paul Meier as its interim CFO, effective today. Hixon says Sequenom also has put into place a cost control program to reduce unnecessary expenses and expects to reduce the number of programs it currently supports. He says some projects could be shelved, sold, out-licensed or partnered.

Bad news seems to keep coming from Sequenom, which stunned investors last April 29 with an announcement that the launch of the prenatal Down syndrome test would be delayed because scientific data had been mishandled. The company’s shares lost 76 percent of their value in trading the next day and have not recovered. The disclosure was a shock because just six days earlier – on April 23 – the company said the Down syndrome test was on track for a June launch. The SEC has opened an investigation to the company’s mishandling of its data and the Justice Department also is asking questions. The company has not fully explained what happened.

Hixson stepped in as interim CEO in September after the board fired former CEO Harry Stylli following an internal investigation. R&D senior vice president Elizabeth Dragon was also fired. CFO Paul Hawran resigned, as did another officer who was later revealed to be Steven Owings. Three employees also were terminated. Each has denied wrongdoing.

The company had previously said that none of the departing officers had benefitted from selling shares, but Hixson, who is also Sequenom’s chairman, said yesterday that in fact one of the officers had sold some stock to make a down payment on a house. The Wall Street Journal identified that officer as Owings, formerly the Sequenom vice president who oversaw development of prenatal diagnostics. Owings made nearly $300,000 from a series of stock sales on March 24. Hixson said the sales were “properly and timely reported” to the SEC. In addition, two lower-level employees who were terminated in September also sold stock, Hixson said.

Comments (1) | Reprints | Share:        

There’s a place on the Internet where you can arrange for an hour-long massage, a ride to the airport, and a tour of the haunted parts of Seattle, all without spending a dollar.

Dibspace, a relatively new Seattle startup, makes this possible by creating its own currency, the “dibit,” by which people can barter goods and services, either by direct trading or in exchange for dibits—which can then be used to purchase something else offered on the site. In a recession, when cash is scarce, barter and barter currency makes a lot of sense.

Chief executive Dominic Canterbury started work on Dibspace a year ago with the idea that small businesses have a lot of productivity they are unable to use up. After running his own marketing agency for four years, Canterbury decided to make a place where that extra capacity could be advertised and bartered for in exchange for other services. Although originally designed to help small businesses, many of Dibspace’s users now are individuals with services or goods to offer.

“Dibspace makes it easier to trade since money is in short supply,” Canterbury says. Each dibit is worth the equivalent of a dollar, so people used to thinking in those terms adjust easily, when a straight trade occurs; dibits are the currency used to even out any disparity in value. This economy within an economy was launched about four months ago and already has more than two thousand users. Currently, the value of all the offers on Dibspace is about $110,000, and the equivalent of about $55,000 has been traded since the site launched. Canterbury says that massage, yard work, and Web design are among the most popular offers.

The site is free and without advertising, but “Dibspace is revenue driven,” Canterbury says. “We have at least four plans to generate money,” he adds, although he cannot reveal those plans yet due to non-disclosure agreements. Currently, the startup is supported by undisclosed investors.

Even as the mini-economy develops, Canterbury and the two other members of his management team remain in ultimate control of it. People have to identify themselves to the site’s owners before …Next Page »

Comments (3) | Reprints | Share:        

CellCyte Genetics, the Bothell, WA-based stem cell research company, has shut down. The company said it had a little more than $5,700 in cash at the end of September, according to its quarterly filing with the Securities and Exchange Commission, as reported by The Seattle Times. “We presently do not have sufficient cash to fund our operations, and have curtailed substantially all activities,” the company said in the filing.

Comments | Reprints | Share:        

Boston is the biggest center of life sciences in the Xconomy network, and by our analysis, the Bay State’s biotech sector is also the best equipped to survive the economic crisis.

I reached this conclusion by combing through public company filings of more than 70 life sciences companies in Boston, Seattle, and San Diego. For all those companies, I asked the two most important questions about their financial health: How much cash does the company have in the bank, and how fast is it burning through it?

The good news for Boston is that it has a lot of companies with a lot of cash. Of the 40 companies that reported quarterly financial results through the end of September, 15 of them had war chests with more than $100 million. A subset of that group—10 companies—are also quite profitable, including Genzyme, Biogen Idec, and Thermo Fisher Scientific, to name a few. By comparison, San Diego has 10 companies with more than $100 million in reserves, and just three companies that are consistently profitable. Seattle has two companies in the $100 million cash club, and just one profitable operation (Sonosite, the ultrasound device maker).

Of course, there’s plenty of misery and anxiety to go around in Boston, too, as you’ll see below. Here’s a rundown of the 40 companies I analyzed, in alphabetical order. It’s not a comprehensive list, so if you’d like to nominate an operation that was left out, please send us a note at editors@xconomy.com.

—Abiomed (NASDAQ: ABMD). The Danvers, MA-based medical device company had $50.6 million in cash and investments at the end of September and a $6.3 million net loss in the third quarter.

—Alkermes (NASDAQ: ALKS). This Cambridge, MA-based company burned through about $47 million of its cash in the first nine months, but it still had $425.8 million left at the end of September.

—Alnylam Pharmaceuticals (NASDAQ: ALNY). The Cambridge, MA-based developer of RNA interference drugs doesn’t have any products on the market, but it actually has more cash now than it did at the beginning of the year because of partnership deals. Alnylam had $520 million in cash and investments at the end of September, and expects to close the year with more than $500 million. …Next Page »

Comments | Reprints | Share:        

These are grim times for many industries, and the life sciences are no exception. Most of these enterprises depend on the ability to raise fresh investment capital on a regular basis, so when investors turn cautious, things can get ugly fast.

To get a sense of just how big of a bruising San Diego biotechs are heading for, I combed through the balance sheets of 23 publicly-traded companies. My main questions are the most vital ones to any biotech company—how much cash does the operation have, and how fast is it burning through it?

This, of course, is a national story that will reverberate locally. Profitable industry powerhouses like Amgen and Genentech aren’t in trouble, but about half of the 248 unprofitable biotechs that are publicly traded have less than a year’s worth of cash on hand, according to an October report by Eun Yang, an analyst with Jeffries & Co. Of the 23 publicly traded companies I analyzed in San Diego just three are what could be called consistently profitable: Invitrogen, Illumina and Genoptix. Of the 23 sampled, just 10 have more than $100 million of cash and investments socked away in the bank.

If the markets don’t turn around by the middle to late 2009, it’s clear that a lot of these companies will be suffering. “A considerable amount of companies will have to consider drastic measures or go out of business. It is indeed not pretty,” says Kleanthis Xanthopoulus, CEO of Regulus Therapeutics, in an email. (Xanthopoulus, an Xconomist, runs a private company that spun off two relatively healthy companies. Both have more than $500 million in available cash: Carlsbad, CA-based Isis Pharmaceuticals and Cambridge, MA-based Alnylam Pharmaceuticals.

This isn’t a comprehensive list, and it’s in no particular order. My hope is this covers most of the major publicly traded players in the region. If you have any suggestions for companies to add, please send me a note at editors@xconomy.com. (For the real masochists out there, I did a similar analysis in Seattle last week, so you can see which region is worse off.)

—Amylin Pharmaceuticals (NASDAQ: AMLN). This San Diego-based company made headlines when it cut 340 jobs at its local headquarters. The move was made to cope with a double whammy of declining demand for its best-selling product, exenatide, (Byetta) and an FDA delay in approval of a more convenient once-weekly form of the medicine. The company had $806 million in cash at the end of September, and says the cuts should enable it to preserve $80 million in 2009 and turn cash flow positive by the end of 2010.

—Somaxon Pharmaceuticals (NASDAQ: SOMX). This San Diego company has an important FDA deadline coming up on Dec. 1 for the review of an insomnia medicine. Any delays, which have become common at the overworked agency, could spell trouble. Somaxon had $22.6 million in cash and investments at the end of September, and ran up a net loss of $10.3 million in third quarter.

—Arena Pharmaceuticals (NASDAQ: ARNA). This San Diego drug developer, working on medicines for obesity and diabetes, has more cash than most. It expects to end the year with $115 million in cash on hand after paying off some debt. It reported a net loss of $56.2 million in the third quarter. One worrisome stat: Arena started the year with $398 million in cash and investments. Let’s hope for shareholders’ sake the company has turned off that gusher in spending. …Next Page »

Comments (2) | Reprints | Share: