Cancer Genetics Merges with NovellusDx

Two companies with similar oncology goals, Cancer Genetics (NASDAQ:CGIX) and NovellusDx, have signed a definitive merger agreement, announced Tuesday (September 18).

The two will merge as Cancer Genetics and plans to remain listed on the NASDAQ stock market. The merger is set to close in Q1 2019.

The new company plans to continue and expand working with biopharmaceutical companies to develop oncology genetic tests. This will offer patients more targeted therapeutics and improve patient treatment success rates for those companies.

“Over the last several months, we have made significant progress in positioning Cancer Genetics as a value-added partner with biopharma companies. We are confident that this transaction significantly strengthens our value proposition for both existing and potential biopharma partners,” John Roberts, CEO of Cancer Genetics, said in the press release.

Roberts will also serve as the CEO for the merged company.

Raymond James is an exclusive financial advisor to Cancer Genetics throughout the merge while Chardan is serving as the same position for NovellusDx.

All boards of directors from both companies involved have approved this transaction, but it is still subject to approval from both companies’ shareholders, among other conditions.

Some of NovellusDx’s shareholders may invest US$10 million in equity as part of an existing private investment in public equity (PIPE) financing. This financing is planned to close with the merger and includes Helsinn Investment Fund SO, SICAR and Windham Venture Partners among others.

These shareholders will also receive a stock equal to just under half of the equity of Cancer Genetics.

NovellusDx will also give a bridge loan of US$2.3 million to Cancer Genetics with signing the merger agreement.

NovellusDx’s goal has been to support biopharmaceutical companies by providing functional data on genetic mutations and their responses to improve therapies.

The company has also has a goal for oncologists to improve their ability to treat patients. NovellusDx has been facilitating these goals by using its technology process to resynthesize next generation sequencing with all mutations and express them in a cell-line, among other steps.

Cancer Genetics also supports biopharmaceutical companies by developing an accomplished line of products with a variety of methodologies and indications. Aside from solid tumor tests, the company also has tests for blood cancers.

In addition to the line of genetic tests, Cancer Genetics also offers clinical trial programs, pharmacogenomics services and more.

Investor takeaway

As Cancer Genetics is the only company out of the two listed on the public market, over Tuesday’s trading period the company’s share price increased just under two percent to close at US$1.08.

Maxim Group analyst Jason McCarthy reiterated a “Hold” position for the company the same day.

Aside from looking to Q1 2019 when this merger is expected to close, investors can follow both companies to get updates on partnering with the biopharmaceutical companies as well as oncology testing news.

Don’t forget to follow @INN_LifeScience for real-time updates!

Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.