NEW YORK (GenomeWeb News) – Clinical Data has completed the sale of its genetic and pharmacogenomic testing and biomarker development business to Transgenomic for $15.5 million, the firms said after the close of the market Wednesday.
With the sale of the testing business, Clinical Data will focus solely on its pharmaceuticals business. The Newton, Mass.-based firm's first drug, the antidepressant vilazodone, is currently being reviewed by the US Food and Drug Administration for marketing approval, with a decision expected by the end of January.
The deal, which was initially announced a month ago, provides Transgenomic with commercialized genetic tests that have an established revenue base, proprietary biomarker assays, and a CLIA-certified laboratory operation. Specifically, Transgenomic acquired Clinical Data's Familion line of genetic tests for inherited heart diseases and biomarkers underlying the PGxPredict tests that predict drug response.
The acquired tests have established test reimbursement and coverage policies that offer access to testing for an estimated 280 million patients, the Omaha, Neb.-based firm noted in a statement.
Upon closing of the deal, Clinical Data received $6 million in cash and a three-year promissory note for $8.6 million bearing interest at 10 percent, and a one-year promissory note for $988,000 bearing interest at 6.5 percent. Transgenomic also will pay Clinical Data a percentage of accounts receivables after the closing, as well as milestones and royalty payments on the anticipated development and commercialization of multiple new pharmacogenomic diagnostic products.
Craig Tuttle, CEO of Transgenomic, said that the acquisition "strengthens our molecular diagnostics position in the marketplace, expands our commercial operation with an accomplished team that will improve our competitive position, and enhances our customer support and patient care capabilities."
In addition to the acquisition, Transgenomic announced that it closed on $6 million financing from Third Security, a life sciences investment firm, to fund the cash portion of the acquisition.
Under the terms of the financing, Transgenomic issued an aggregate of 2,586,205 shares of its newly created Series A convertible preferred stock to certain affiliates of Third Security for an aggregate purchase price of $6 million. The firm also issued those affiliates warrants to purchase an aggregate of up to 1,293,102 shares of Series A preferred stock at an exercise price of $2.32 per share.
The Series A preferred shares are convertible into shares of Transgenomic's common stock at a conversion price of $0.58 per share, for an aggregate of 15,517,228 million shares of common stock. Upon full exercise of the warrants, Transgenomic will receive around $3 million.
Randal Kirk, who is chairman of Clinical Data, also serves as senior managing director and CEO of Third Security.