Celera Genomics Group said yesterday that it is cutting 132 jobs, or 16 percent of its work force, and taking a $2.8 million charge as it winds down work on the genome-sequencing projects that made it famous so that it can focus on developing drugs.
The Rockville company, best known for uncovering the order of the human genome in a race with a publicly funded competitor, said it is cutting positions in DNA sequencing, data management and analysis support, and in sales and general administration.
Celera emphasized yesterday that the cuts weren't prompted by money woes; the company had $909 million in cash at the end of March. Rather, the restructuring is aimed at enabling Celera to implement a strategy announced in late April, when it publicly acknowledged that its original business plan was destined for failure.
Celera initially planned to make money by marketing information gleaned when it sequenced the human genome, putting the DNA needed to develop and operate the body in the proper order. The company was unable to make enough headway selling subscriptions to its databases of genomic information, however, despite the data's importance in helping scientists identify the locations and functions of genes along the genome and their role in various diseases.
One major problem was that the publicly funded Human Genome Project, which tied Celera in the sequencing race, was posting much of the same information on the Internet for free.
Celera had more than 800 employees, about 600 of them at its Rockville headquarters, before yesterday's announcement. It will be left with about 700. Some of those employees work in the company's South San Francisco, Calif., drug-discovery arm.
"They probably have a third fewer sequencers than they used to have," William Blair & Co. analyst Winton Gibbons said of the 300 computers used to sequence the genome. "It makes total sense to me to have fewer people."
Celera spokesman Robert Bennett said 200 sequencers remain in Rockville, 75 of which Celera continues to lease from sister company Applied Biosystems. The 75 and most of the rest are sequencing key parts of the genomes of 40 people as part of a project by Applera Corp., Celera's parent company, to identify regions of genetic variation among individuals. The project is expected to be completed by year's end.
Still, Gibbons noted, Celera appears poised to hire in areas related to drug development. Also, he said, he sees no evidence of a "brain drain" at the company or a reason for it to move from Rockville, site of its genome-sequencing and protein-discovery efforts.
Celera President Kathy Ordonez, who replaced J. Craig Venter, splits her time between offices in Rockville and California, where she lives.
The company said yesterday that it is reorganizing its research and development staff under a new manager. The company will recruit the manager, it said. "Having our entire R&D; staff of almost 300 report to one leader should streamline our drug-discovery process," Ordonez said in a statement. The company, she said, plans "to add downstream development capabilities" to its drug-research program to help move its experimental drugs into tests in humans.
Celera's online information business continues, though sister company Applied Biosystems of Foster City, Calif., is marketing it as part of a broader "knowledge business" that includes scientific tools such as chemicals used in experiments. The switch means Celera no longer needs its own salespeople to market the business.
Celera will get royalties from knowledge business sales. It also continues to get revenue from customers of Celera Discovery System, the online business. The $2.8 million charge will be taken this quarter, Celera's fiscal fourth quarter.
Celera and Applied Biosystems are owned by Applera of Norwalk, Conn.
Shares of Celera fell $1.07, or 8 percent, yesterday to close at $12.07 on the New York Stock Exchange.