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Invitae Acquires Good Start Genetics, CombiMatrix

NEW YORK (GenomeWeb) – Molecular diagnostics firm Invitae said on Monday after the close of the market that it is acquiring Good Start Genetics and CombiMatrix.

Separately, the company announced it would sell $73.5 million of its stock in a private placement and announced preliminary financial results for the second quarter. 

Invitae, based in San Francisco, to date has focused on offering genetic testing for inherited adult and pediatric conditions. The acquisition of Good Start and CombiMatrix will enable it to add reproductive health testing to its portfolio and fulfill its aim to become a comprehensive genomic information company, the company said.

Good Start, based in Cambridge, Massachusetts, offers next-generation sequencing-based preimplantation and carrier screening for inherited disorders, and has conducted 1.7 million tests since it launched in 2012.

The company offers EmbryVu for preimplantation screening and GeneVu is a carrier screening service performed in the clinic. The company also offers VeriYou, a carrier screening test that individuals can order online. After receiving a spit kit at home, customers can send a sample for analysis, get results, and receive genetic counseling from their homes.

Invitae said it will acquire Good Start by issuing up to 1.65 million shares of its common stock, $18.3 million in cash for elimination of the company's outstanding secured debt, and the payment or assumption of $6 million of Good Start's pre-closing and closing-related liabilities and obligations. Leerink Partners is the financial adviser and Pillsbury Winthrop Shaw Pittman LLP is the legal adviser overseeing the acquisition, which is slated to close in early August.

CombiMatrix is focused on prenatal diagnosis, miscarriage analysis, and pediatric developmental disorders. The company offers SNP chromosomal microarray analysis, NGS, and according to Invitae, has expertise in handling "technically challenging sample types."

CombiMatrix reported $12.8 million in 2016 revenues marking a 28 percent year over year increase. Invitae said it is offering to pay $27 million in shares of its common stock based on the average closing price over a 30-trading-day period prior to the agreement date, or around 2.85 million shares, subject to adjustment based on a net cash calculation for CombiMatrix at the time of the acquisition.

The two companies are contemplating an exchange of outstanding CombiMatrix Series F warrants, where Invitae would offer up to about $6.0 million of its shares, or approximately 630,000 shares. Though Invitae has not yet determined the specifics of the warrant exchange, the company has stipulated that at least 90 percent of Series F warrant holders would have to participate in order for it to complete the acquisition.

To the extent the Series F warrants are not exchanged and are either exercised or assumed as part of the acquisition, the consideration payable by Invitae could increase by up to approximately $15 million in its shares (about 1.58 million shares). Proceeds from exercised warrants could raise approximately $10.7 million, which would remain with CombiMatrix as a subsidiary of Invitae.

Torreya Partners is financial adviser overseeing the purchase of CombiMatrix, which is slated to close in the fourth quarter upon stockholder approval and if there is sufficient participation in the warrant exchange.

Invitae's stated ambition has been to become a genomic information company that supports healthcare decisions through every stage of an individual's life. These acquisitions represent "a transformative moment for Invitae," allowing the company to do just that, CEO Sean George said in a statement.