Insight Molecular Diagnostics Inc 8-K, filed Jan 10, 2020
Insight Molecular Diagnostics Inc. (IMDX)
About this 8-K
Insight Molecular Diagnostics Inc filed this 8-K on January 10, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 10, 2020
OncoCyte Corporation
(Exact name of registrant as specified in its charter)
| California | 1-37648 | 27-1041563 | ||
| (State or other jurisdiction | (Commission | (IRS Employer | ||
| of incorporation) | File Number) | Identification No.) |
15 Cushing
Irvine, California 92618
(Address of principal executive offices)
(949) 409-7600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common Stock, no par value | OCX | NYSE American |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Forward-Looking Statements
OncoCyte Corporation cautions you that this Current Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, but not limited to, the Company’s proposed acquisition, through a newly-formed subsidiary, of Insight Genetics, Inc., a Tennessee corporation (“Insight”), and the effects of the merger. The proposed merger described in this Current Report has not, and may not, close. All statements that are not historical facts (including, but not limited to statements that contain words such as “will,” “likely,” “may,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “intends,” “seeks,” “designs,” “develops,” “would,” “future,” “can,” “could,” “project,” “potential,” and similar expressions) are forward-looking statements. Factors that could cause or contribute to changes in the forward-looking statements include, but are not limited to (i) failure to satisfy the conditions to the completion of the acquisition on the anticipated schedule, or at all, (ii) failure to realize the anticipated benefits of the acquisition, (iii) unexpected expenditures or assumed liabilities that may be incurred as a result of the acquisition, (iv) unanticipated difficulties in conforming business practices, including accounting policies, procedures, internal controls, and financial records of Insight with OncoCyte, (v) inability to accurately forecast the performance of Insight resulting in unforeseen adverse effects on OncoCyte’s operating results, (vi) synergies between Insight and OncoCyte being estimates which may be materially different from actual results, (vii) failure to retain or integrate Insight personnel, (viii) greater than estimated allocations of company resources to develop and commercialize Insight technologies, or (ix) failure to maintain any laboratory accreditation or certification. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and commercialization of potential diagnostic tests or products, uncertainty in the results of clinical trials, changes to regulatory requirements, the need and ability to obtain future capital, protection of trade secrets and maintenance of other intellectual property rights, and the need to obtain third party reimbursement for patients’ use of any diagnostic tests we commercialize. Actual results may differ materially from the results anticipated in these forward-looking statements and accordingly such statements should be evaluated together with the many uncertainties that affect the business of OncoCyte, particularly those mentioned in the “Risk Factors” and other cautionary statements found in OncoCyte’s Securities and Exchange Commission (“SEC”) filings, which are available on the SEC’s website. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. OncoCyte undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
References to “OncoCyte,” “we,” “us,” and “our” are references to OncoCyte Corporation.
The information contained in Item 7.01 of this Report and the exhibits attached hereto shall be deemed “furnished” and not “filed” under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any filings made by OncoCyte under the Securities Act of 1933, as amended, or the Exchange Act except as may be expressly set forth by specific reference in such filing.
Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement with Insight Genetics
On January 10, 2020, OncoCyte Corporation, a California corporation (the “Company” or “OncoCyte”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Cancer DX Sub, Inc., a Tennessee corporation and a wholly-owned subsidiary of OncoCyte (“Merger Sub”), Insight Genetics, Inc., a Tennessee corporation (“Insight”), the shareholders party to the Merger Agreement (the “Shareholders”) and the equityholder representative. Pursuant to the Merger Agreement, Merger Sub will be merged with and into OncoCyte (the “Merger”) with OncoCyte surviving the Merger. OncoCyte’s board of directors and Insight’s board of directors have approved the Merger Agreement.
Merger Consideration
If the Merger is completed, OncoCyte will deliver closing consideration of $7 million in cash and $5 million of OncoCyte common shares, subject to a holdback for indemnity claims not to exceed ten percent of the total closing consideration, or $700,000 of cash and $500,000 of OncoCyte common shares (the “Holdback Consideration”), less deductions for transaction expenses and other liabilities. The value of the newly issued shares will be determined based on the average closing price of OncoCyte common shares on the New York Stock Exchange American during the five trading days immediately preceding the date of the Merger Agreement, which is approximately 1.9 million shares of OncoCyte common stock before the ten percent Holdback Consideration of OncoCyte shares. The Holdback Consideration will be released within 60 days after December 31, 2020, unless OncoCyte provides notice of a claim.
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Earnout Consideration
As additional consideration for Insight’s shareholders, the Merger Agreement provides for OncoCyte to pay a ten-year revenue share of not more than ten percent of net collected revenues for current Insight pharma service offerings and a tiered revenue share percentage of net collected revenues through the end of the lifecycle if certain new cancer tests are developed and commercialized using Insight technology.
Milestones
OncoCyte may pay contingent consideration of up to $6.0 million, in any combination of cash or OncoCyte common shares, if certain milestones are achieved, which consist of a $1.5 million clinical trial completion and data publication milestone, $3.0 million for an affirmative final local coverage determination from Centers for Medicare and Medicaid Services (“CMS”) for a specified lung cancer test, and up to $1.5 million for achieving specified CMS reimbursement milestones.
Representations and Warranties, Pre-Closing Covenants, Closing Conditions and Termination Provisions
The Merger Agreement includes representations, warranties and covenants of OncoCyte, Insight and Merger Sub made solely for the purposes of the Merger Agreement and which may be subject to important qualifications and limitations agreed to by OncoCyte, Insight and Merger Sub in connection with the negotiated terms of the Merger Agreement.
The Merger Agreement also contains pre-closing covenants, including the obligation of Insight and its subsidiary to conduct business in the ordinary course in a manner consistent with past practice and to refrain from taking specified actions without the consent of OncoCyte.
The completion of the Merger is subject to the satisfaction or waiver of closing conditions, including: (i) the absence of any applicable law or order that prohibits completion of the Merger, (ii) performance in all material respects of the obligations required to be performed by the other party pursuant to the Merger Agreement at or prior to the completion of the Merger, (iii) the accuracy of certain representations and warranties made in the Merger Agreement by the other party, subject to certain knowledge or materiality qualifications, (iv) no Shareholders entitled to vote on the Merger will have provided notice of exercise of their dissenter’s rights, and (v) Insight will have placed its trade secrets in escrow with a mutually agreed upon escrow company and will have provided OncoCyte or its legal counsel with access to Insight’s trade secrets and other intellectual property.
The Merger Agreement also includes termination provisions for both OncoCyte and Insight, including the right to terminate by mutual consent and the right of either party to terminate the Merger Agreement if the closing has not occurred on or prior to March 31, 2020.
The foregoing summary of the Merger Agreement and the transactions contemplated by the Merger Agreement does not purport to be complete. It is not intended to provide any other factual information about OncoCyte, Insight and Merger Sub, or to modify or supplement any factual disclosures about OncoCyte in its public reports filed with the SEC.
Registration Rights
Pursuant to the Merger Agreement, OncoCyte agreed to file a registration statement with the SEC covering the resale the shares of common stock issued in connection with the Merger within six months following the closing.
Related Persons
In October 2015, Insight issued a convertible promissory note in the original principal amount of $3,050,000 and a warrant for 1,525,000 shares, with a warrant exercise price of $0.01 to IG Investors, LLC (“IG Investors”). Our President and Chief Executive Officer and board member, Ron A. Andrews, owns a membership interest in IG Investors, and formerly served on Insight’s board from June 2015 to August 2019. In his capacity as a member of IG Investors, under the original terms of the convertible promissory note, we estimate that Mr. Andrews will receive $0.7 million in cash upon the closing of the Merger, as he has agreed to forfeit $0.4 million in additional consideration that would otherwise be due to him under the terms of the promissory note. Mr. Andrews has also agreed to re-assign his membership interest to IG Investors, and to cancel his rights under the warrants and will not receive any additional merger or earnout consideration. Mr. Andrews will not receive any OncoCyte common shares in connection with the Merger.
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Item 3.02 Unregistered Sales of Equity Securities.
The disclosure in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference. Any common stock issued in connection with the Merger Agreement will be issued in a private placement transaction, in reliance upon exemptions from registration requirements pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, and the rules promulgated thereunder.
Item 7.01 Regulation FD Disclosure.
On January 10, 2020, OncoCyte issued (i) a press release announcing the entry into the Merger Agreement, a copy of which is attached and furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference, and (ii) a company presentation including information about the Merger, a copy of which is attached and furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference.
Item 9.01 Financial Statements and Exhibits.
| Exhibit Number | Description | |
| 99.1 | Press Release dated January 10, 2020 | |
| 99.2 | Informational slide presentation |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ONCOCYTE CORPORATION | ||
| Date: January 10, 2020 | By: | /s/ Mitchell Levine |
| Mitchell Levine | ||
| Chief Financial Officer | ||
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ONCOCYTE ANNOUNCES DEFINITIVE AGREEMENT TO ACQUIRE INSIGHT GENETICS
Acquisition includes a potentially transformative immuno-oncology diagnostic test for the selection of therapy for cancer patients
Data presented at SITC 2019 demonstrated performance surpassing current predictive companion
diagnostic tests
Includes a pharma trial lab compliant with 21 C.F.R. Parts 820 and 11
IRVINE, Calif., January 10, 2020 — OncoCyte Corporation (NYSE American: OCX), a molecular diagnostics company with a mission to provide actionable answers at critical decision points across the lung cancer care continuum, today announced that it has entered into an agreement to acquire, through a subsidiary, all of the outstanding capital stock of privately-held Insight Genetics, Inc. (IG), which has a history of impactful discoveries in the areas of lung and breast cancer.
OncoCyte entered into the agreement to access IG’s technology and pharma service offerings. IG has a rich menu of relevant targeted therapeutic panels including two emerging therapeutic targets, RET and NTRK. IG’s lead test is the “Immune Modulation” (IM Score), a gene expression test that measures the state of the immune system in biopsies from cancer patients to identify patients more likely to respond to PD-1/PD-L1 immunotherapies. Data presented at the 2019 Society for Immunotherapy of Cancer (SITC) Annual Meeting showed a strong association of the IM score with response to PD-1/PD-L1 targeted immunotherapy in lung cancer. Importantly, the IM Score test was superior to two currently marketed predictive companion diagnostic tests for immunotherapy selection, PD-1/PD-L1 IHC staining and tumor mutational burden (TMB). IG’s lab has capacity to support clinical trials or assay design across a cadre of currently available commercial platforms to develop companion diagnostics and has successfully completed audits by major pharmaceutical and diagnostic companies. IG has performed assay development and clinical testing for leading pharmaceutical and biotechnology companies.
IG has achieved ISO 9001 certification, and it has a CLIA certified and College of American Pathology accredited lab that performs and develops proprietary cancer tests. IG’s initial work identified and patented an ALK PCR translocation assay licensed by Qiagen. Its second initiative focused on Triple Negative Breast Cancer (TNBC), where IG developed a unique classifier that identifies six subtypes of TNBC, many of which have been demonstrated to have potential companion diagnostic applications to help women manage this deadly form of cancer.
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“The addition of the Insight Genetics IM Score Test expands the decision points that OncoCyte’s proprietary portfolio of tests addresses along the lung cancer continuum of care. To our knowledge this test is uniquely differentiated in that it characterizes immune response in cancer tissue in the context of characteristics of surrounding tissue. Combined with DetermaRx™ (previously the Razor treatment stratification test), we now have proprietary tests that help manage key decision points in both early and more advanced lung cancer,” said Dr. Doug Ross, Consulting Chief Medical Officer of OncoCyte.
The principal investigator of IG’s study, Dr. Gregory Vidal M.D, Ph.D., Lead of the Breast Cancer Research program at the West Cancer Center and Research Institute and Assistant Professor of Hematology/Oncology at the University of Tennessee Health Science Center added, “Identifying which patients will benefit most from immunotherapy remains an outstanding question for oncologists. The data presented by the Insight Genetics team at SITC is incredibly promising, and the oncology community is looking forward to seeing the impact the IM score test can have on a broader patient population. I believe it has the potential to improve patient outcomes and streamline the development of new therapies.”
Padma Sundar, SVP Marketing and Market Access added, “According to a recent JAMA publication, close to 750,000 patients are eligible for immunotherapy treatment, representing a $2.2 billion total addressable market. The eligible patient population is anticipated to increase as immunotherapies are approved for the early stage adjuvant setting. In addition, there are close to 3,000 PD-1/PD-L1 ongoing clinical trials that are expected to recruit over 500,000 patients representing a large pharma services opportunity.”
Al Parker, Chief Operating Officer of OncoCyte further commented, “We believe the combination of assets contemplated in this transaction will create enhanced value for our stakeholders and shareholders and advances our mission to provide actionable answers at critical and underserved decision points in lung cancer.”
About the Proposed Merger and Principal Transaction Terms
Upon closing, OncoCyte will deliver closing consideration of approximately $12 million, consisting of $7 million in cash and $5 million of OncoCyte common shares, less deductions for transaction expenses and other liabilities.
The merger agreement provides for OncoCyte to pay a 10-year revenue share of not more than 10% of net collected revenues for current IG pharma service offerings and a tiered revenue share percentage of net collected revenues through the end of the lifecycle if certain new cancer tests are developed using IG technology. OncoCyte may pay contingent consideration of up to $6 million, in any combination of cash or OncoCyte common shares if certain milestones are achieved.
The closing of the merger with IG is subject to a number of conditions, including approval of the merger by IG’s stockholders. OncoCyte will issue the shares in a private placement and has agreed to register the shares for resale. Additional information regarding the terms of the transaction will be provided in OncoCyte’s Current Report on Form 8-K expected to be filed with the Securities and Exchange Commission on January 10, 2020.
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Conference Call Information:
OncoCyte management will host a conference call and webcast today, January 10, 2020, at 4:30 p.m. ET. To access the call and webcast, please use the information below:
Dial in (US): 877-407-9716
Dial-in (International): 201-493-6779
Webcast: http://public.viavid.com/index.php?id=137640
About Insight Genetics
Insight Genetics is dedicated to improving the lives of cancer patients through advanced molecular diagnostics that enable precision cancer care. The company specializes in the discovery, development and commercialization of molecular diagnostics that detect specific cancer biomarkers in triple negative breast cancer and lung cancer to assist in guiding the effective diagnosis, treatment and monitoring of cancer. Insight Genetics partners with leading academic researchers, pharmaceutical and biotechnology companies, clinical reference laboratories, and IVD kit manufacturers to create new standards of care for cancer patients worldwide.
About OncoCyte Corporation
OncoCyte is a molecular diagnostics company whose mission is to provide actionable answers at critical decision points across the lung cancer care continuum, with the goal of improving patient outcomes by accelerating and optimizing diagnosis and treatment. The company is currently preparing to launch a treatment stratification test that enables the identification of early-stage lung cancer patients at high risk for recurrence, allowing them to be treated when their cancer may be more responsive to adjuvant chemotherapy. DetermaDx, the company’s liquid biopsy test in development, utilizes a proprietary immune system interrogation approach to clarify if a patients’ lung nodules are benign, which may enable them to avoid potentially risky invasive diagnostic procedures.
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OncoCyte Forward Looking Statements
OncoCyte cautions you that this press release contains forward-looking statements concerning, but not limited to, the acquisition of IG and the effects of the merger. The proposed merger described in this press release has not yet closed. All statements that are not historical facts (including, but not limited to statements that contain words such as “will,” “likely,” “may,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” “intends,” “seeks,” “designs,” “develops,” “would,” “future,” “can,” “could,” “project,” “potential,” and similar expressions) are forward-looking statements. Factors that could cause or contribute to changes in the forward-looking statements include, but are not limited to (i) failure to realize the anticipated benefits of the acquisition, (ii) unexpected expenditures or assumed liabilities that may be incurred as a result of the acquisition, (iii) unanticipated difficulties in conforming business practices, including accounting policies, procedures, internal controls, and financial records of IG with OncoCyte, (iv) inability to accurately forecast the performance of IG resulting in unforeseen adverse effects on OncoCyte’s operating results, (v) failure to satisfy the conditions to the completion of the acquisition on the anticipated schedule, or at all, (vi) synergies between IG and OncoCyte being estimates which may be materially different from actual results, (vii) failure to retain or integrate IG personnel, (viii) greater than estimated allocations of company resources to develop and commercialize IG technologies, or (ix) failure to maintain any laboratory accreditation or certification. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and commercialization of potential diagnostic tests or products, uncertainty in the results of clinical trials, changes to regulatory requirements, the need and ability to obtain future capital, protection of trade secrets and maintenance of other intellectual property rights, and the need to obtain third party reimbursement for patients’ use of any diagnostic tests we commercialize. Actual results may differ materially from the results anticipated in these forward-looking statements and accordingly such statements should be evaluated together with the many uncertainties that affect the business of OncoCyte, particularly those mentioned in the “Risk Factors” and other cautionary statements found in OncoCyte’s Securities and Exchange Commission (“SEC”) filings, which are available on the SEC’s website. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. OncoCyte undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Investor Contacts
Bob Yedid
LifeSci Advisors, LLC
646-597-6989
bob@lifesciadvisors.com
Media Contact
Cait Williamson, Ph.D.
LifeSci Public Relations, LLC
646-751-4366
cait@lifescicomms.com
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Exhibit 99.2
