Oncor Inc., the financially struggling Gaithersburg biotechnology company, said yesterday that it plans to lay off approximately 50 employees, or 40 percent of its U.S. work force, and the company's chief financial officer said he's "very confident" that Oncor can be profitable next year.
John Coker, the CFO, said Oncor filed an amended annual report with the Securities and Exchange Commission yesterday outlining seven reasons why the company believes that it can continue operations without running out of money and eventually turn a profit.
Among the reasons: Oncor is slashing discretionary expenses by 50 percent.
It expects all of the layoffs to have occurred by June 30.
"We probably have laid off about 25-30 percent of them already," said Coker.
Oncor disclosed in late March that its accountants questioned whether it could continue operations because of dwindling cash reserves. The company reported a $10.7 million net loss for the quarter ended March 31.
Oncor estimates that the layoffs will reduce Oncor's payroll to about $500,000 per month from $1.3 million.
Prior to the cost-cutting initiative, the company was spending about $7.4 million per quarter on operating costs, recent quarterly statements show.
Coker said the company has about $2 million in cash available to fund its U.S. operations.
Some of the employees losing their jobs are likely to be hired by the companies that buy divisions that Oncor is selling to raise money. "Many of these employees will transfer with the sale," said Coker.
He said the company was in promising sale discussions with company that has an operation in Gaithersburg. He declined to identify the other party.
If that sale goes through, said Coker, "there will no net loss of jobs to Montgomery County or the state."
Most positions targeted for elimination are in the company's research supplies division, which generates most of the company's revenue.
Oncor is attempting to concentrate on marketing its test for the recurrence of breast cancer, which can detect a mutation in what is known as the HER2-neu gene.
Jose Coronas, who became chief financial officer in March, is also having the company focus on developing new cancer tests based on the same technology. He was not available for comment yesterday.
The company has already transferred one of its chief revenue-producing businesses, a product used by genetic researchers to locate chromosomes and other genetic material.
That product generated about $3 million in sales in 1997 and was transferred to competitor Vysis Inc. as part of a settlement in a patent infringement suit.
Other reasons for a strong forecast that Oncor noted in its amended report to the SEC:
Training launched at 25 top cancer testing centers on using the company's gene-based test for the recurrence of breast cancer, Inform HER-2/neu, and the expectation that these centers will begin ordering test kits this summer.
Substantial interest from potential buyers in the sale of its genetic and molecular research supplies units.
$4 million in credit from key shareholders raised between Oct. 1997 and May 1998.
The company's previous success in raising cash during periods of low cash availability.
Settlement of the Vysis suit, which would result in several million dollars in legal expenses saved.
Substantial costs saved by a plan to trim back on supporting product research and development efforts at a number of universities.
Pub Date: 5/23/98