Cancer Genetics, Inc. Announces Strategic Transactions
October 24 2019 - 04:15PM
Cancer Genetics, Inc. (Nasdaq: CGIX), a leader in proprietary
preclinical test systems supporting drug discovery and development
at early stages, valued by the pharmaceutical industry,
biotechnology companies and academic research centers, today
announced, among others, the completion of several strategic
transactions.
As the result of the previously announced sale
of the company’s BioPharma business to Interpace Diagnostics Group,
Inc. (Nasdaq: IDXG) or its affiliate, IDXG or its affiliate paid
approximately $6 million in cash to CGIX on October 24, 2019, as
partial settlement of a promissory note in the original face amount
of approximately $7.7 million due to CGIX. The gross purchase price
of the BioPharma sale transaction was $23.5 million less certain
closing adjustments totaling approximately $2.0 million, in
addition to the assumption by IDXG of approximately $5.2 million of
liabilities relating to the BioPharma business. IDXG or its
affiliate paid approximately $9.25 million in cash at closing to
the company’s former senior secured lenders, and the balance of the
cash portion of the purchase price of approximately $2.25 million
(net of expenses) was paid to the company. IDXG’s subsidiary also
issued a promissory note to CGIX in the original face amount of
approximately $7.7 million, subject to certain post-closing
adjustments and holdbacks. The note was due upon the approval by
IDXG’s shareholders of a significant investment by Ampersand
Capital Partners in IDXG and the closing of that investment, which
occurred on October 16, 2019. The payment of approximately $6
million represents amounts known to be due at this date. After
known post-closing reductions of approximately $0.8 million, the
company may receive up to an additional $0.9 million in January
2020 or thereafter, subject to certain contingencies and set-off
rights of IDXG.
Previously, CGIX borrowed $1.5 million under a
credit agreement and unsecured convertible promissory note with
NovellusDx Ltd. on September 18, 2018 in connection with a proposed
merger, which merger was subsequently terminated in
December 2018. To resolve all matters under the credit
agreement and the terminated merger agreement, on October 21, 2019,
CGIX entered into a settlement agreement with NovellusDx, under
which CGIX paid NovellusDx $100,000 in cash, and agreed to remit
$1.0 million within five business days from the date in which it
received the note payment from IDXG on behalf of its affiliate
described above. In addition, CGIX is required to pay NovellusDx
$50,000 per month for the next subsequent nine months, or a total
of $450,000, upon satisfaction of which the credit agreement and
promissory note will terminate. Subject to the company making the
$1 million payment, NovellusDx and CGIX each agreed to waive any
and all claims against the other in connection with the credit
agreement and the terminated merger agreement from December 2018,
other than the remaining payments totaling $450,000.
On October 21, 2019, CGIX entered into a note
purchase agreement with Atlas Sciences, LLC to borrow $1.25 million
pursuant to an unsecured promissory note in the initial principal
amount of approximately $1.35 million (with the difference
representing original issue discount and expenses). The proceeds of
the note, along with a cash amount of approximately $1.46 million
to be provided by CGIX, will be used to repay the outstanding
amount due to Iliad Research and Trading, L.P. (an affiliate of
Atlas Sciences, LLC) under the promissory note issued on July 17,
2018.
Also on October 21, 2019, CGIX entered into an
M&A Advisory Engagement with H.C. Wainwright & Co. LLC to
assist CGIX with its ongoing strategic initiatives to identify and
evaluate potential acquisition, merger, business combination or
other strategic transaction involving CGIX. The company does not
intend to discuss or disclose further developments regarding the
strategic review process unless and until its Board of Directors
has approved a specific action or otherwise determined that further
disclosure is appropriate or required by law.
About Cancer Genetics, Inc.
Through the acquisition of vivoPharm in 2017,
the company’s wholly owned subsidiary, vivoPharm, offers
proprietary preclinical test systems supporting clinical diagnostic
offerings at early stages, valued by the pharmaceutical industry,
biotechnology companies and academic research centers. vivoPharm
specializes in conducting studies tailored to guide drug
development, starting from compound libraries and ending with a
comprehensive set of in vitro and in vivo data and reports, as
needed for Investigational New Drug filings. The company reported
revenue from its Discovery business of $3.3 million for the six
month period ended June 30, 2019 compared to $2.7 million for the
six months ended June 30, 2018.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements pertaining to Cancer Genetics,
Inc.’s expectations regarding future financial and/or operating
results, potential for our tests and services and future revenues
or growth in this press release constitute forward-looking
statements.
Any statements that are not historical fact
(including, but not limited to, statements that contain words such
as “will,” “believes,” “plans,” “anticipates,” “expects,”
“estimates”) should also be considered to be forward-looking
statements. Forward-looking statements involve risks and
uncertainties, including, without limitation, risks with respect to
our ability to collect on future income streams and settle with our
creditors, risks with respect to our ability to successfully
operate the Discovery business, risks with respect to our need and
ability to obtain future capital to satisfy our obligations to our
lenders and creditors, risks of cancellation of customer contracts
or discontinuance of trials, risks that anticipated benefits from
the transactions described herein will not be realized,
uncertainties with respect to evaluating strategic options,
maintenance of intellectual property rights, risks with respect to
maintaining our listing on Nasdaq, and other risks discussed in the
Cancer Genetics, Inc. Form 10-K for the year ended December 31,
2018 and Form 10-Q for the quarters ended March 31 and June 30,
2019, along with other filings with the Securities and Exchange
Commission. These forward-looking statements speak only as of the
date hereof. Cancer Genetics, Inc. disclaims any obligation to
update these forward-looking statements.
Investor Contacts:John A.
RobertsEmail: jay.roberts@cgix.com
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