NEW YORK (GenomeWeb) – Cancer Genetics announced today that it plans to sell its wholly owned subsidiary, BioServe Biotechnologies, to Reprocell for up to $1.9 million.
Under the terms of the acquisition, Reprocell , a Japanese stem cell research company, will pay Cancer Genetics $1.6 million upfront. The remaining balance will be payable about six months after the deal's closing, subject to BioServe's revenues for a four-month period after closing being equivalent to the same four-month period in 2017.
Cancer Genetics acquired BioServe, a genomics and next-generation sequencing services firm based in India, in 2014 for $1.9 million, primarily in stock and other deferred considerations. It manufactures molecular diagnostic kits and provides genomic services to the research and clinical markets.
In a statement, Cancer Genetics interim CEO Jay Roberts said that the agreement with Reprocell follows Cancer Genetics' 2018 transformation and strategic plan to bring the company to profitability. The firm is in the midst of a turnaround effort following the departure of its former CEO Panna Sharma, and a number of lawsuits alleging it made false and/or misleading statements, and/or failed to disclose information pertinent to investors.
Earlier this month, the firm announced it was evaluating its strategic opportunities, which include raising capital, acquiring other firms and/or complementary assets, the sale of the firm, or other types of strategic partnerships. and has hired Raymond James as an advisor during the process.
The divestiture "is one of several deliberate actions to focus our business, simplify our operating structure and generate monetary value to help fund new programs and assist in reducing overall operating expenses," Roberts said in today's statement, adding that his firm will explore licensing opportunities with Reprocell and other international partners to bring Cancer Genetics' tests and services overseas.
In 2014 Reprocell acquired a Beltsville, Maryland-based genomics services business also called BioServe.