Diagnostic developer hopes to achieve cash flow break-even by the latter part of next year.
DiaGenic has undertaken a conditional private placement of NOK 70 million, or roughly $12.07 million. The purpose is to finance operating costs and secure the financial strength to achieve key milestones toward achieving cash flow break-even by the second half of 2012.
DiaGenic is focused on developing more patient-friendly methods for early detection of diseases by analyzing gene-expression signatures in easily available samples such as peripheral blood. This unique method is based on the principle that even when a disease is localized at a specific part of the body, secondary responses, which are also characteristic of the disease, can be measured in other parts of the body.
DiaGenic CE marked two blood-based diagnostics in June 2009: BCtect® for early breast cancer detection and ADtect® for early detection of Alzheimer disease. DiaGenic says that during the first half of 2009, it signed four agreements with distributors covering nine countries in Europe. In the second half of the year Quest Diagnostics signed on to distribute the products in the U.K. and Ireland.
Also in the latter part of last year, DiaGenic’s central laboratory, DNAvision, in Belgium was certified for commercial analysis of the tests. And in January 2010, the company inked a deal with Ferrer inCode for the distribution of ADtect in 32 countries.
In preparation for approval and launch in the U.S., DiaGenic has initiated studies for blood-sample collection from American patients at the University of California, Davis. Based on regulatory requirements and reimbursement schemes, the company is looking to gain initial market access through a CLIA laboratory. Introductory conversations with this type of laboratory partner have been initiated, DiaGenic notes.
BCtect detects changes in the activity of 96 genes and was shown to have an accuracy of 72%. It is able to identify early-stage breast cancer in both premenopausal and postmenopausal women with equal sensitivity, according to the firm. ADtect also covers 96 genes, with an accuracy of 73%, and is used in patients suspected of having memory problems.
DiaGenic has two products in development. MCItect™ is intended to be used as an aid to diagnose Alzheimer disease at the earlier mild cognitive impairment (MCI) stage. PDtect® is being designed to aid in the diagnosis of Parkinson disease at the earliest possible stage.
In June 2009, the company entered into an option agreement with Merz Pharmaceuticals for the development of a biomarker that builds on the MCI project to use in patient selection in clinical studies. Merz also has an option to use the biomarker for further development of medicines.
Today’s private placement was subscribed approximately 1.4 times, and the price was set to NOK 0.50 per share. The shares allocated in the Private Placement will constitute approximately 67% of the firm’s outstanding shares after registration of the capital increase. When the capital increase is registered, the total amount of shares in DiaGenic will increase from 70,236,520 to 210,236,520 shares, each with a nominal value of NOK 0.05 per share. The share capital will increase from about NOK 3.5 million to roughly NOK 10.5 at the registration of the capital increase.
To promote equal treatment of the shareholders, the board of directors of DiaGenic has decided to propose a subsequent repair offering directed at existing shareholders who did not participate in the private placement. In the subsequent offering, it will be proposed to issue up to 60 million shares at NOK 0.50 per share.