Illumina, the market leader in DNA sequencing equipment, said Monday that it has begun layoffs and will reduce its San Diego real estate footprint as part of an effort to slash annual expenses by $100 million by the end of this year.
The company announced the job cuts in a filing with the U.S. Securities and Exchange Commission. It called the move part of a multi-year plan to “realign” its operating expenses.
10:15 a.m. June 27, 2023This story was updated on Tuesday at 10 am to include the number of jobs eliminated at Illumina’s San Diego locations.
Illumina declined to say how many workers are being let go at this time. But Worker Adjustment and Retraining Notification Act (WARN) filings submitted by the company to state employment officials identified 79 jobs that were eliminated at two locations in San Diego.
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According to the WARN filing, many of the layoffs involved technical positions. Thirty-three workers who were let go held the job title of scientist, senior scientist or staff scientist. Another 15 positions were engineers. Biotech industry trade website STAT reported that the company plans to reduce its research and development headcount by 10 percent, citing internal emails.
As of the end of 2022, the company employed 6,300 workers in the Americas and 10,200 worldwide.
“In April, Illumina committed to a plan to achieve more than $100 million of run-rate cost savings to accelerate margin improvement and create flexibility for further investment in high-growth areas,” the company said in a statement to the U-T on Monday. “ We believe these steps need to be taken to continue driving innovation, expand profitable growth for our shareholders and put us in the best position to carry out our mission of improving human health by unlocking the power of the genome.”
Laid-off workers will receive pay and benefits through Aug. 20. While this round of job cuts began on June 21 — which falls within Illumina’s fiscal second quarter — the company said it expects further headcount reductions in the upcoming third quarter.
The moves come amid turmoil at the company, which has an estimated 70 percent market share in complex DNA sequencing machines and consumables.
This spring, Illumina battled well-known activist investor Carl Icahn in a bruising proxy fight for board seats. While Ichan was only marginally successful, Illumina Chief Executive Francis deSouza resigned about three weeks after the shareholder vote.
Charles Dadswell, senior vice president and general legal counsel, has been named interim CEO.
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In the SEC filing, Illumina also said it plans to exit its i3 campus in San Diego — a three-building, 316,000-square-foot office complex at 4775-4795 Executive Drive in University City.
It is unclear how many buildings Illumina currently occupies in the i3 campus. At least one of the buildings is on the market for sublease, according to CoStar, a real estate research firm. Some of the laid off workers were based at 4795 Executive Drive.
Prior to Monday’s announcement, Illumina had nearly 1.1 million square feet of space in San Diego County.
Illumina also said it is considering reducing its real estate footprint in Foster City in the Bay Area.
Icahn launched a proxy fight seeking to add three hand-picked nominees to Illumina’s board of directors. He was highly critical of the company leadership’s decision to complete its $7 billion acquisition of cancer diagnostic startup Grail before getting approval from anti-monopoly regulators.
Illumina completed its purchase of Grail in August 2021. Eventually, the U.S. Federal Trade Commission and Europe’s top antitrust regulator rejected the merger as anti-competitive and ordered Illumina to divest Grail.
The company is fighting the regulatory orders in court. It expects rulings by the end of this year or early next.
Only one of Icahn’s nominees won a board seat at Illumina’s annual meeting on May 25. But shareholders did oust Illumina board chairman John Thompson — who had a long-standing relationship with deSouza.
The company expects to book $25 million to $35 million in charges related to the job cuts. Most will occur in the second quarter and involve severance, employee benefits and other related costs, according to the SEC filing.
It also expects to incur charges related to exiting certain buildings, but it doesn’t yet know the amount, according to the SEC filing.
This is the second round of layoffs for Illumina in the past eight months. In November, the company slashed its global headcount by 5 percent, including 207 jobs in San Diego.
Illumina’s shares have tumbled nearly 8 percent since news of the layoffs broke on Monday. The stock was at $184 in mid-day trading Tuesday on the Nasdaq exchange.
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10:15 a.m. June 27, 2023: This story was updated on Tuesday at 10 am to include the number of jobs eliminated at Illumina’s San Diego locations.
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