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Complete Genomics Warns of Potentially Dire Circumstances if BGI Buy Falls Through

NEW YORK (GenomeWeb News) – As Complete Genomics waits on completion of its proposed purchase by BGI-Shenzhen, it said in its Form 10-Q that if the deal were to fall through there is "substantial doubt" about its ability to continue as a going concern.

In the document filed with the US Securities and Exchange Commission on Friday, the Mountain View, Calif.-based sequencing service firm said without the cash infusion from the proposed deal it would not have sufficient cash and cash equivalents to go beyond Jan. 31, 2013, and "we may be required to significantly reduce, restructure, or cease operations."

As of Sept. 30, Complete Genomics held $34.7 million in cash and cash equivalents.

"The company's recurring operating losses and negative cash flow from operations and its requirement for additional funding to execute its business objectives beyond this period gives rise to substantial doubt as to the company's ability to continue as a going concern absent the funding from BGI," Complete Genomics said.

Before the deal was announced, Complete Genomics announced a restructuring that included laying off 55 employees as well as a review of its operations, which included consideration of a possible acquisition.

The firm and BGI announced the acquisition in September and are awaiting regulatory approval. Recently, Complete Genomics disclosed that the US Federal Trade Commission made a second request for additional information about the $117.6 million deal.

BGI's offer originally was to expire at midnight, Oct. 23, but it extended the offer to midnight, Nov. 21.

Complete Genomics added in its Form 10-Q that since the planned merger was announced its business has been adversely affected from the resulting uncertainty among customers and employees, as well as increased competition from other firms as they seek to gain an upper hand from the uncertainty.

Some employees have also jumped ship and hiring replacements in light of the circumstances may be difficult, Complete Genomics added.

The company said last week that its revenues for the third quarter spiked 74 percent year over year, but it still fell short of the consensus analyst estimate.

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