Genoptix has terminated its planned $10 million acquisition of Rosetta Genomics after fewer Rosetta shareholders approved the deal than needed for it to be completed, the companies said today.
The termination followed an extraordinary general meeting of Rosetta shareholders held yesterday. Votes representing approximately 47% of the total shares outstanding entitled to vote were cast—short of the majority needed for the proposed acquisition to pass.
Of the votes that were cast, 66% (1,835,365 shares) favored the acquisition, which had been unanimously approved by the boards of both companies. The meeting had been rescheduled twice, said Rosetta, which added that it is unable to reschedule it again.
“As a result, Genoptix has issued a notice to the Company that they are terminating the merger agreement effective immediately, but Genoptix has indicated that they remain interested in pursuing alternative options to consummate a transaction with Rosetta,” the companies said.
As a result of the acquisition falling through, Rosetta must reimburse Genoptix $750,000 toward expenses in three monthly installments, with the first installment due March 22, 2018.
On December 15, the companies announced plans for Genoptix to purchase Rosetta. Genoptix also provided a $1.8 million secured bridge loan to fund Rosetta’s operations through the closing of the acquisition.
Rosetta would have become a wholly-owned subsidiary of Genoptix under the deal—which capped a year in which Rosetta:
- Refocused its strategy on marketing its lead product, RosettaGX Reveal, a first-of-its-kind microRNA assay for the classification of indeterminate thyroid nodules.
- Committed to reduce operating and other expenses by $5 million annually, in part through an unspecified number of layoffs.
- Agreed to sell its PersonalizeDx (PDx) business to Pragmin Prognosis for $2.875 million cash.
PDx is a molecular diagnostics and services company serving community-based pathologists, urologists and oncologists with tests for various cancers including bladder, prostate, lung, breast and hematological malignancies, offered through a CLIA laboratory based in Lake Forest, CA.
Rosetta announced the PDx divestiture on September 8. But on October 10, Rosetta said it was weighing legal remedies and possibly seeking a new buyer, saying that Pragmin “has failed to comply with its unconditional obligation to complete the transactions.”
In announcing the planned acquisition by Genoptix on December 15, Rosetta President and CEO Kenneth Berlin said at the time that the company had only enough cash to fund operations through the end of 2017: “Given our current market capitalization, potential for pending delisting from the Nasdaq Capital Market, and the difficult financing environment for microcap molecular diagnostics companies, we do not believe we could raise sufficient capital to continue as a going concern for an extended period of time.”
Rosetta has an East Coast office and lab in Philadelphia, a West Coast office and lab in Lake Forest, CA, and offices in Rehovot, Israel.
Genoptix, based in Carlsbad, CA, provides hematologists, oncologists, and pathologists with comprehensive testing solutions in hematology and solid tumor molecular profiling, and is among the largest hematopathology centers in the U.S. The company focuses on diagnosing cancers and disorders in bone marrow, blood, and lymph nodes, as well as in solid tumor workups using molecular testing.
Novartis acquired Genoptix in 2011 for $470 million, and sold the company's commercial lab segment in March 2017 to private investors consisting of a management group led by Joseph M. Limber, in partnership with Ampersand Capital Partners and 1315 Capital. The pharma giant retained Genoptix’s BioPharma business under a subsidiary called Navigate BioPharma Services, which focuses on providing specialized services in oncology trials.