US-based diagnostics manufacturer Nanogen is considering selling off or closing down its microarray business in a bid to achieve profitability.
The 14 year old company is looking to turn around its financial outlook after it recorded a net loss of $14.35m (€10.35m) for the three months ended June 30, 2007, despite achieving increased revenue growth.
While the company has praised its microarray technology and claimed that customer reception of the platform was good, it has asked Credit Suisse to help in its evaluation of strategic alternatives for the business segment.
"In taking this course of action, we recognise that our microarray technology is very good and customer reception is positive. However, multiplex molecular testing remains an early stage market with slower growth and lower testing volumes than we expected," said Howard Birndorf, Nanogen's CEO.
"The cost and effort to develop the broad product menu needed to be successful while also working to develop the clinical market over the next several years are large efforts and are expenses that Nanogen can no longer afford on its own."
The decision has raised eyebrows as the microarray market has appeared to be in good health, with Roche diagnostics acquiring microarray manufacturer Nimblegen, which had 2006 revenues of $13.5m, for $272m earlier this year .
Indeed, the FDA (US Food and Drug Administration) is gearing-up to receive increasing amounts of gene expression microarray data and is collaborating with Gene Logic to develop industry standards for microarray genomic data sent to the regulator.
In its 2006 annual report, the company said it expected to meet various milestones during 2007, including an FDA submission for its cystic fibrosis screening test kit based on the Nanochip microarray technology.
The news comes just two weeks after the company agreed to a $20m investment offering from institutional investors.
The restructured business will focus on the clinical diagnostic market with an emphasis of real-time molecular and rapid point-of-care products.
"In the past year, we have begun to build a solid business with our real-time PCR products and Point-of-Care rapid testing solutions. By focusing on these businesses, we expect to significantly grow our presence in the diagnostics market and improve our business performance," said David Ludvigson, Nanogen's president.
"We hold significant intellectual property in the molecular and point of care areas and intend to continue developing proprietary, technology based products that add value in the clinical diagnostic market and are well accepted by customers."