NEW YORK (GenomeWeb) – Transgenomic and privately held Precipio Diagnostics said today that they have entered into a merger agreement that will make Precipio a wholly owned subsidiary of Transgenomic, with Transgenomic adopting the name Precipio, Inc.
The merger, expected to close in 2016, is pending approval by Transgenomic shareholders.
The new company would receive up to $7 million from a private placement of preferred convertible securities led by BV Advisory Partners simultaneous to completion of the merger. BV is also acting as advisor to the transaction, the companies said. In addition, $3 million of outstanding debt of each company is expected to convert into this same class of preferred convertible securities.
The goal is for the newly combined firm to emerge with a clean balance sheet and "sufficient capital to achieve its planned expansion," Transgenomic said.
As part of the planned combination, the companies said that they anticipate that original Precipio security holders will receive between 62 percent and 80 percent of the outstanding shares of the newly combined company, depending on factors like outstanding liabilities of the parties at closing.
Precipio Founder and CEO Ilan Danieli will become CEO of the newly combined company. The firms didn't disclose what role, if any, current Transgenomic President and CEO Paul Kinnon would play in the combined firm post merger.
"We have established a solid platform for commercialization of [ICE COLD-PCR], with leading global distributors and a solid pipeline of potential agreements with partners and customers," Kinnon said in a statement. "This is a good time to join forces with Precipio, which shares our commitment to accurate and timely advanced cancer diagnostics and has established an impressive infrastructure of academic experts and a growing customer base, validated by successful case studies."
Transgenomic said it has filed to complete a reverse stock split of between one-for-ten and one-for-thirty before the merger closes, and that the company’s outstanding debt is expected to convert into common and preferred shares.
If the merger goes through, the companies said that they expect to list on the Nasdaq, subject to filing and approval, under the "PRPO" ticker.
Precipio is based in New Haven, Connecticut and offers cancer molecular diagnostic tests. The firm also offers a service called SmartPath, which matches a patient and their treating physician with an academic expert from the Yale School of Medicine to provide a second-opinion pathology report.