Gradipore cuts staff 15 per cent

A 15 per cent staff cut at Sydney-based listed biotech Gradipore has been given an enthusiastic tick of approval by investors.

Shares in the separation technology company, which had been bumping along near 80c at the beginning of the year, climbed to $AUD1.26 on January 21, the day Gradipore's board decided on the cutbacks but before they were made public.

The one-day price gain of 20 per cent prompted a 'please explain' from the ASX. Since January 8, the company's shares have gained 46 per cent.

The job cuts, which involve 20 administrative support staff and researchers in long-term projects, are in line with Gradipore's focus on conserving cash after its six-month revenues to December fell short of targets and new products were delayed.

According to Gradipore CEO Robert Lieb, the moves are evidence of Gradipore's determination to slice net cash use in half this fiscal year, which the company began with cash reserves of about $AUD27 million. Halving its cash burn would give the company a cushion of three years given its current burn.

However Gradipore's sales have been static around the $AUD3 million mark in recent years while losses have climbed steeply from $AUD6 million in 2000 to $AUD18.51 million last financial year. Lieb said Gradipore's goal was to achieve cash break-even in the 2004 financial year.

Along with the company's announcement of the staff cuts was news of the pending departure of long-serving executive John Manusu.

The departure of Manusu, who rose to executive chairman after joining the company in 1985, is the latest in sweeping changes which Gradipore has made in its senior ranks over the past eight months.

Beside appointing Lieb as CEO and deputy chairman in May, Gradipore has brought in Prof Jeremy Davis as chairman and appointed Dr John Eady as a non-executive director.

Manusu, who will leave the executive suite on January 31, will retain links to the company as a non-executive director.

Gradipore is the latest in a line of cashed-up biotechs which have chosen to pare staff as a cost-saving measure to offset longer than expected delays in bringing products to market. Others to have bitten the bullet include Axon Instruments and Ambri, which have both chopped staff numbers by 15 to 20 per cent since November.

Gradipore has offices in the US but the cutbacks will mainly affect staff at its Sydney headquarters.