NEW YORK (GenomeWeb News) — CombiMatrix has cancelled its standby equity distribution with Cornell Capital Partners, thereby forfeiting a $50 million windfall, parent Acacia Research said today.
The genomics arraying company said in mid-June that it would sell as much as $50 million worth of its registered shares at a 2.5-percent discount to Cornell. CombiMatrix President and CEO Amit Kumar said at the time that the cash would “provide us the flexibility to access additional capital at our discretion.”
Kumar said the company planned to use the capital to remain solvent for two years while it pushed ahead with its molecular diagnostics research and marketing strategies.
The firms did not say why they decided to cancel the agreement.
The decision to cancel the financing comes at a time when CombiMatrix has been facing a cash crunch. The company burned through more than $11 million in the first nine months of this year, it headed into the fourth quarter with $8.3 million in cash and short-term investments, and still hopes to deploy several diagnostic tests through its CombiMatrix Molecular Diagnostics subsidiary by the first half of 2007, according to GenomeWeb News sister publication BioArray News.
The cash would also have helped assuage investors who fear that the company could become trapped in a “death spiral” as it runs out of cash just as it was preparing to launch products that would help drive revenue.
“The market seems to be [showing that] we’re in a mad race between a death spiral between running out of cash versus the ability to unfold this diagnostic pipeline,” investor Steve Ellenbecker said during the firm’s third quarter earnings call.
As previously reported, CombiMatrix will likely spin off from parent company Acacia Research by the first quarter of 2007, or around six months after it had originally anticipated doing so.