Nanogen, Inc, San Diego, a developer of advanced diagnostic products, announced today the company plans to close commercial operations of the array business and reduce staff by about 20%.
David Ludvigson, Nanogen’s president and COO, said analysis of alternatives for the array business failed to result in financially meaningful options, so the company will instead focus on two high-growth product lines.
"We have determined that the best way to meet our commitment to improving financial performance for our shareholders is to focus on our real-time PCR and point-of-care testing businesses,” he said.
Eliminating the investment and operating costs for the array product group would result in an operating expense reduction of roughly $15 million. Ludvigson said the improvement in the company’s bottom line would be achieved with minimal impact to its revenues.
Howard Birndorf, Nanogen’s CEO, said the company’s future and its mission to be a leading diagnostics company has not changed.
"The acquisitions we have made in the past three years have given us a good foothold in both the molecular diagnostics labs and the point-of-care rapid testing market,” he said. “We believe the long-term growth prospects for both of these product areas will drive significant future value for the company."
The restructuring resulted in a $6.9 million non-cash charge to third quarter financials for inventory and assets related to the array business. An additional cash charge of approximately $2.5 million is anticipated in the fourth quarter related to employee severance costs.
The news follows the company’s decision in September to investigate strategic alternatives for the array business.
