GLGC Gene Logic Inc. (MM)

Gene Logic Inc. (NASDAQ:GLGC) today announced findings of the business review it has conducted over the last 90 days. Drug Repositioning: Gene Logic's recent business review has confirmed the potential for its Drug Repositioning business to significantly enhance long-term shareholder value. Market research conducted by a leading strategy consulting firm has validated large pharmaceutical companies' interest in the emerging field of drug repositioning as an important option for obtaining new, late stage R&D pipeline drug candidates. Gene Logic believes its approach to repositioning high-quality drug candidates that stalled in clinical development for reasons other than toxicity could, in many cases, enable these candidates to return directly into Phase II clinical development. Drug Repositioning agreements reached with Pfizer, Organon, and Roche, as well as a number of active discussions underway with other pharmaceutical companies, are evidence of the value the industry places on Gene Logic's Drug Repositioning capability. Generally, these agreements provide for significant milestone and royalty payments, and several contain the option for Gene Logic to develop or co-develop successfully repositioned drug candidates under certain conditions. The Company believes it has made significant progress to date on a number of candidates in the program. It is currently in discussion with partners about which of these drug candidates may be appropriate for further advancement. Genomics: The business review has confirmed that the Company's prior strategy for its Genomics business, intended to compensate for the impact of changing market conditions, will not reverse recent sales trends. As a result, the Company undertook a number of previously announced restructuring moves intended to reduce the use of cash and lower expenses. These actions included the elimination of over 80 positions and openings--including over 50% of its Genomics workforce--the closure of the Company's Berkeley, California office, and cut-backs in spending for related General and Administrative expenses. The Company has retained the core competencies required to support its current Genomics products and services, and expects not only to support existing customers, but also to obtain new customers for these products and services. The Genomics assets are a key part of the technology platform used in the Company's Drug Repositioning business to find new therapeutic uses for partners' drug candidates, and they will continue to be leveraged in these efforts. Management has also concluded that the assets and technologies of its Genomics business may have additional value in areas such as clinical biomarker development and molecular diagnostics. These and other options are being actively explored. Preclinical Services: Gene Logic's Preclinical Services business continues to improve its financial performance. While the business is not yet profitable, the Company expects operating margins to continue to improve and losses to narrow as the substantially increased pace of new business signings leads to growth in revenue. As a result of recent facilities expansions, sufficient capacity exists for growth in the near-term. Gene Logic Overview Gene Logic technologies and services are used by many of the world's top pharmaceutical and biotechnology companies. Over 150 organizations and government agencies have benefited from Gene Logic's diverse portfolio of drug development services, enabling them to make more informed, more reliable and more predictive decisions at each point in the highly complex and costly drug development process. Founded in 1994, Gene Logic is headquartered in Gaithersburg, Maryland, conducts additional research and development in facilities in Cambridge, Massachusetts, and has customer support operations in the U.S., Europe, and Asia. Safe Harbor Statement This press release contains "forward-looking statements," as such term is used in the Securities Exchange Act of 1934, as amended. Such forward looking statements include the Company's ability to identify strategies for making its businesses successful and the impact of such strategies on our business and financial performance and on shareholder value. Forward-looking statements typically include the words "expect," "anticipate," "believe," "estimate," "intend," "may," "will," and similar expressions as they relate to Gene Logic or its management. Forward-looking statements are based on our current expectations and assumptions, which are subject to risks and uncertainties. They are not guarantees of our future performance or results. Our actual performance and results could differ materially from what we project in forward-looking statements for a variety of reasons and circumstances, including particularly such risks and uncertainties that may affect the Company's operations, financial condition and financial results and that are discussed in detail in the Company's Annual Report on Form 10-K and our other subsequent filings with the Securities Exchange Commission. Such risks and uncertainties include, but are not limited to: whether we will be able to identify and successfully implement strategies, on favorable terms or at all, for improving the performance and value of our businesses and improving the value of our businesses to shareholders; whether we will be able successfully to manage our existing cash adequately and whether we will be able to generate sufficient cash from operations or otherwise and to have access to financing on sufficiently favorable terms to maintain our businesses and effect our strategies; whether we will be able to recruit and retain qualified personnel, particularly in light of our restructuring efforts; potential negative effects on our operations and financial results from workforce reductions, other restructuring activities, and the evaluation of strategic options; the potential loss of significant customers; and the possibility of delisting from NASDAQ Global Markets, which could have an adverse effect on the value of our stock. Gene Logic undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.