CombiMatrix moved one step closer to being a freestanding company once more after filing documents with the US Securities and Exchange Commission the day after Christmas to split from parent Acacia Research Group.
CombiMatrix’s filing follows a vote by Acacia’s board in January 2006 to spin off the unit. CombiMatrix is currently a wholly owned subsidiary of Acacia. Formed in 1995, CombiMatrix merged with Acacia Research in December 2002.
CombiMatrix, based in Mukilteo, Wash., is an array company with a proprietary system for rapid creation of DNA and other compounds on programmable semiconductor chips. The technology has applications for proteomics, genomics, drug discovery, and combinatorial chemistry, according to the company.
In March, CombiMatrix entered into a deal with the US Air Force to co-develop a device capable of analyzing multiple protein biomarkers [See PM 03/09/06].
When Acacia’s board approved the split, the company said it expected the spin-off to be completed in the second half of 2006, “subject to receiving a satisfactory tax opinion from legal counsel. … ” In its filing two weeks ago, CombiMatrix did not put a completion date on the transaction.
A year ago, officials from both Acacia and CombiMatrix said spinning off CombiMatrix would make each more attractive to investors. But in its SEC filing, CombiMatrix pointed to a more direct reason behind the split: The businesses of the two companies that make up the Acacia Research Group are incompatible.
Acacia Research comprises the Acacia Technologies Group and CombiMatrix. Acacia Technologies buys, licenses, and enforces patents, helping patent holders to protect their inventions from unauthorized use.
“The business associated with the Acacia Technologies group is significantly different than our own business,” CombiMatrix said in the SEC filing. “The business of the Acacia Technologies group includes significant patent litigation that, by its nature, creates financial risks not otherwise associated with the CombiMatrix group.
“The split off will prevent those future risks from impacting our business.”
CombiMatrix President and CEO Amit Kumar was traveling and could not be reached for comment on deadline. A message to Acacia was not returned.
Since Acacia’s board approved the split, CombiMatrix’s tracking stock has lost half its value and currently trades at about $.80 on the Nasdaq. Acacia’s shares were trading around $13.30 Thursday afternoon.
“The business of the Acacia Technologies group includes significant patent litigation that, by its nature, creates financial risks not otherwise associated with the CombiMatrix group. The split off will prevent those future risks from impacting our business.”
Last month, CombiMatrix said it had received commitments to purchase about $10 million in CombiMatrix common stock and warrants in a registered direct offering [See PM 12/14/06]. It is unclear whether or how the SEC filing affects the agreement.
CombiMatrix plans to trade its common stock on the New York Stock Exchange under its current CBMX ticker symbol. The company said it does not need shareholder approval for the split from Acacia. After the completion of the split, each owner of one share of CombiMatrix stock will receive one share of new CombiMatrix stock in exchange. The company expects there to be more than 53 million shares of its common stock after the split.
As of Oct. 31, CombiMatrix had 76 full-time employees, the company said in its SEC filing. For the nine months ended Sept. 30, 2006, the company had a net loss of $15.5 million, an increase of 46 percent from a loss of $10.6 million during the year-ago period.
CombiMatrix posted revenues of $4.9 million during the first nine months of last year, compared to $4.4 million during the first nine months of 2005.
In full-year 2005 CombiMatrix had a loss of $12.4 million on revenues of $8 million.