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Cancer Genetics Buying Indian Firm BioServe for $1.9M; Q1 Revenues up 17 Percent

NEW YORK (GenomeWeb) – Cancer Genetics today announced an agreement to buy Indian genomics and next-generation sequencing services firm BioServe Biotechnologies for $1.9 million, primarily in stock and other deferred considerations.

The Rutherford, NJ-based cancer genetics testing firm also reported a 17 percent increase in its first quarter revenues.

Under the terms of deal, which is anticipated to close in the third quarter, BioServe will become a subsidiary of Cancer Genetics and be renamed Cancer Genetics India. All of its 33 employees will be retained. Cancer Genetics said the deal is anticipated to be accretive in 2015.

Headquartered in Hyderabad, BioServe manufactures molecular diagnostic kits and provides genomic services to the research and clinical markets, enabling scientists to identify genetic markers, validate drug targets, and correlate clinical and molecular data for new drug development.

"With Bioserve, [Cancer Genetics] will become better positioned to increase our global presence in personalized cancer care and further improve outcomes and lower costs for cancer patients," Cancer Genetics CEO Panna Sharma said in a statement. "The BioServe team adds immediate positive impact, high-quality revenue, and provides a clear path to an accretive deal for shareholders. The infrastructure and enhanced capacities in next-generation sequencing for oncology accelerate our development plans while positioning us to make more effective use of our capital."

BioServe operates a 14,000-square-foot facility and is backed by Indian venture capital firm Ventureast. It has about 200 clients and is ISO-9001:2008-certified. Cancer Genetics said it plans to seek CLIA certification for the Hyderabad lab in the coming quarters.

Cancer Genetics also reported today that its first quarter revenues rose to $1.4 million from $1.2 million in the year-ago quarter. Test volume increased 45 percent to 2,772 tests, though the rise was partially offset by an 18 percent decrease in revenue per test to $506. The revenue-per-test decline was due to a greater percentage of direct bill tests and the launch of its FHACT test for cervical and HPV-related cancers, Cancer Genetics said. Revenue per FHACT test is lower than the firm's average historical test price, it added.

The company's net loss in the quarter was $2.5 million, or $.27 per share, compared to a net loss of $2.4 million, or $2.18 per share, a year ago. The company went public in April 2013 and used about 9.3 million shares to calculate its most recent net loss-per-share figure, compared to 1.3 million shares in the year-ago period.

Its R&D spending was up 22 percent year over year to $596,771 from $490,577. Its SG&A costs grew 75 percent to $3.5 million from $2.0 million.

Cancer Genetics had $41.3 million in cash and cash equivalents at the end of the first quarter. It also had $6.3 million in restricted cash.

In morning trading on the Nasdaq on Thursday, Cancer Genetics' shares were down 10 percent at $9.75.