Precipio Diagnostics plans to become a subsidiary of Transgenomic under a merger designed to create a combined company specializing in cancer diagnostics. The value of the merger was not disclosed.

The merged company will combine Transgenomic’s ICE COLD-PCR™ (ICP) diagnostic technology—designed to produce accurate, noninvasive tumor profiling using circulating DNA in patient plasma—with Precipio’s platform to deliver diagnostic information to physicians and patients worldwide.

ICE COLD-PCR was developed by the lab of G. Mike Makrigiorgos, Ph.D., of Dana-Farber Cancer Institute, which has licensed rights to the technology exclusively to Transgenomic.

According to Transgenomic, ICE COLD-PCR offers advantages over current sequencing technologies that include at least a 100-fold improvement in sensitivity, allowing detection of both known and previously unknown genetic alterations in any exon of any gene using a single assay.

The technology is available as ICEme™ Kits that are compatible with most patient samples, including tissue, blood, plasma, urine, and other biofluids. The kits deliver up to a 500-fold increase in mutation detection compared to most current methods, with levels of detection routinely achievable down to 0.01%, the companies say. The current menu includes approximately 20 clinically relevant, actionable mutations that are associated with important cancers, with the range of mutation targets expanded on an ongoing basis.

“We have established a solid platform for commercialization of ICP, with leading global distributors and a solid pipeline of potential agreements with partners and customers,” Transgenomic President and CEO Paul Kinnon said in a statement.

Added Ilan Danieli, Precipio founder and CEO: “We believe Transgenomic’s ICP technology and commercial infrastructure fit well with our values and our business model, and look forward to this next stage of growth, as we work together to integrate our teams, technologies and services.”

Danieli will serve as CEO of the combined company, whose shares would be majority-owned by Precipio—between 62% and 80%, depending on the amount of outstanding liabilities of the companies at closing, before new capital is invested.

The combined company will receive an up to $7 million investment from a syndicate led by BV Advisory Partners in a private placement of preferred convertible securities, with $3 million in outstanding debt of each company expected to be converted into the same class of stock. The transaction is intended to provide the Transgenomic–Precipio combination with a clean balance sheet and expansion capital.

Transgenomic is seeking approval to complete a reverse stock split of between one-for-10 and one-for-30, with the company’s outstanding debt expected to be converted into common and preferred shares. Subject to NASDAQ approval, shares of the combined company are expected to be listed under the symbol PRPO.

The merger is expected to close by year’s end, pending approval by Transgenomic shareholders and other closing conditions.

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