Less than two months after John Ryals’ tumultuous dismissal as chief executive officer of Paradigm Genetics, the company he helped create announced Tuesday that it has cut at least 50 more jobs in areas ranging from research and administration to information technology and support.

John Hamer, the interim president and CEO who replaced Ryals in late February, had no comment about the transition or Ryals (Ryals remains on the board of directors) except to say that Paradigm had not terminated any more executive management positions. “I think we’re all done there,” Hamer tells Local Tech Wire, adding that his own replacement should be named within three months.

However, he did say two research managers were let go in this latest round of cutbacks, which reduced Paradigm’s staff by 20 percent to 223 employees. That’s half what it was just last December. Hamer says it was all part of an effort to focus and streamline the company’s business model.

“When eliminating positions, we went through the process of looking at the company’s business, and we wanted to structure it into agricultural and healthcare,” Hamer explains. “We looked at the size and the projects to make sure we had adjusted for what needed to do. We identified certain activities and research projects that didn’t identify with where we were going and made the necessary adjustments.”

Those adjustments were not made all at once, though, he says. Nor were they cut and dry. Several targeted employees were given a number of options when faced with termination – from taking a sabbatical to volunteering to quit in order to pursue further training or schooling. And 20 of the 50 or so terminated employees were let go more than a month ago, says Melissa Matson, corporate communications manager for Paradigm.

While those cuts were not publicized, Matson says the company did announce them in its quarterly conference call on March 4. It also alluded to the remaining 30 job cuts, which came this week.

“Our CFO (Ian Howes) said at that time something to the effect of taking a close look at the business and a decision would come within the next couple of months,” Matson says. “We were very open within the company about the date we were aiming for.”

Analyst: Moves weren’t a surprise

Analyst James Rosen of Brean Murray & Company in New York was not surprised by the company’s moves.

“This is nothing that they didn’t say they weren’t going to do,” Rosen tells LTW about Paradigm’s layoffs. “Basically, they said they were going to do all of this, and when they’d been out talking to investors over the past month, they reiterated that they were going to do this. So right now, it’s not breaking news from my perspective.”

The stock market didn’t seem to think so either. Paradigm (Nasdaq: PDGM) stock actually closed at a day-high $1.73, up almost 10 percent from a close of $1.58 the day before. But the stock is significantly down from its 52-week high of $9.10 and is much closer to the 52-week low of $1.26.

In recent months, Paradigm stock has been downgraded by three different analysts firms that follow the company. Rosen says that while the stock price went up, even after the announcement of cutbacks, volume still remained low.

“The reason why this had no important effect on stock price is that you have to look at price as well as volume,” he explains. “It’s up 10 percent, but only on 25,000 shares. In other words, nobody really cared.”

A Paradigm shift

The significance of Paradigm laying off 20 percent of its work force is that it’s refocusing its goals and objectives. In the long run, both Hamer and Rosen say the cuts are good for the company.

“Focusing on the things that make Paradigm a leader in the biotechnology marketplace…namely Paradigm’s unique strengths in metabolomics, gene function determination and informatics…allowed us to eliminate some positions without affecting our current projects or our prospects for growth,” Hamer said in a statement. “In fact, these changes will allow for smarter and better growth and better performance for our partners and shareholders.”

When asked what the restructuring means for Paradigm, Rosen responds: “Yes, it’s better for them. They have spent the last couple of years figuring out where they can be effective in genomics and metabolomics. It’s better for them and a better offering for clients. So they have figured out where they should be paying attention and how much money they’ve got to get them there.”

Disagreement between Ryals and the board about the direction of the company was a factor leading to Ryals’ ouster on Feb. 25.

Rosen also says Paradigm needs to focus on garnering new business and hiring a permanent CEO. A search committee is currently in place consisting of management and board members (although not Ryals), and Hamer says that with the help of an executive search firm, they hope to have a candidate identified by mid-July.

He adds that the layoffs should not affect any partnerships Paradigm has, such as research collaboration with Duke University or a strategic alliance with Celera Genomics. In fact, Hamer says the moves may even strengthen those relationships.

“We hope to make more profit for Paradigm,” Hamer says. “There will be better production, more streamlined operations and a sense of community with our partners.”

The challenge, Hamer says, will be and always has been to maintain the company’s focus and balance.

“It’s always a challenge to bring science and business together to create a research and organizational structure to facilitate better communication between science and business, allowing better opportunity for Paradigm and its marketplace,” he says. “There will be more opportunity for shareholders and value, and in the end, create better and more lasting growth opportunity for Paradigm Genetics.”

Paradigm Genetics: www.paradigmgenetics.com