CombiMatrix Corp., a biotechnology company based outside Seattle, is moving its corporate headquarters to Orange County to cut costs.
The company said in a Securities and Exchange Commission filing last month that it will close its facility in Mukilteo, Wash., and relocate to Irvine, where its CombiMatrix Molecular Diagnostics subsidiary is located.
Chief Executive Amit Kumar said he plans to offer more details on the move on Tuesday, when the company is set to release first-quarter results.
CombiMatrix, which makes tests used in identifying and determining the roles of genes and proteins and for diagnosing diseases such as cancer, said in its filing that it anticipated shutting down its Mukilteo operations within six to eight weeks.
Relocation to Irvine will be done during the next few months, it said.
Job cuts are part of the move, although CombiMatrix didn’t specify a number in its filing. It said it expected to incur $1 million to $1.5 million in restructuring costs, including $420,000 to $650,000 from non-executive severance and benefit arrangements.
The company had about 70 workers at the end of 2009, including 34 in its Irvine diagnostic operation.
Its move to Irvine is part of a previously announced restructuring.
CombiMatrix wants to cut its operating costs by 40% to 60% and refocus on its diagnostics business, including increasing usage of its existing tests, expanding tests and improving reimbursement for its services.
A new chief executive will be part of the restructuring. CombiMatrix now is searching for a replacement for current boss Kumar, who plans to step down by the end of the current quarter.
Kumar, who became the company’s chief executive in 2001, is going to remain active with the company in an advisory role at the request of the board, CombiMatrix has said.
Under Kumar’s leadership, CombiMatrix has been moving away from marketing its products to research and development laboratories toward offering diagnostic testing services to cancer doctors.
In an interview with business and technology Web site Xconomy.com last year, Kumar said that CombiMatrix was moving into diagnostics because it was getting beat out by larger competitors such as Affymetrix Inc. of Santa Clara and San Diego-based Illumina Inc. in the business of making lab instruments that analyze genes.
“We didn’t have the balance sheet to fight with them on price in the R&D market,” Kumar told Xconomy. “But we have an advantage on diagnostics, and we’re establishing a beachhead before they turn their attention to the market.”
In 2008, CombiMatrix signed a deal with Aliso Viejo-based cancer testing company Clarient Inc. to market and sell HemeScan, a gene-based test related to the treatment and care of chronic lymphocytic leukemia, a form of blood cancer.
CombiMatrix is a relatively small company that was incorporated 15 years ago. It posted a net loss of $17.6 million on revenue of $4.9 million last year. It had a recent market value of about $30 million.
Burn Rate
CombiMatrix said it wanted to slow its operating cash burn rate, and it has said it will report a cash balance of $13.5 million when it announces first-quarter results. It received $19.4 million after legal fees in a lawsuit settlement with American International Group Inc. unit National Union Fire Insurance Co. earlier this year.
CombiMatrix also has dabbled in areas besides diagnostic testing. It has an interest in Leuchemix Inc., a privately held drug development company.
Government contracts have provided CombiMatrix with revenue.
It received a four-year contract from the National Aeronautics and Space Administration’s Ames Research Center to design and test a system that deals with the flow of fluids in tiny spaces. It also has a $1.5 million contract from the Air Force Research Laboratory to develop automated instruments that use the technology used in chips that analyze the makeup of human cells for detecting chemical, biological and environmental hazards.
CombiMatrix once was a unit of Acacia Research Corp., a Newport Beach-based owner and licensor of technology and other patents. It split from Acacia in 2007.
