$27 million offered to holders of CombiMatrix
Common Stock (Nasdaq: CBMX) subject to certain adjustments
CombiMatrix Corporation (NASDAQ:CBMX) (“CombiMatrix” or “the
Company”), a family health molecular diagnostics company
specializing in DNA-based reproductive health and pediatric testing
services, announced that it has entered into a definitive merger
agreement with Invitae Corporation (NYSE:NVTA) (“Invitae”) to be
acquired in an all-stock merger for approximately $33 million of
combined consideration, based on a fixed price per share of
Invitae’s common stock of $9.49 and subject to certain adjustments
described below. The merger has been approved by each
company’s board of directors and is conditioned upon, among other
things, approval by CombiMatrix’s stockholders, Invitae’s
registration of common stock to be used to acquire CombiMatrix, and
at least 90% participation in a warrant exchange offer as noted
below. CombiMatrix engaged in a fifteen-month long market
check with the assistance of its exclusive financial advisor.
After the conclusion of that market check, CombiMatrix, assisted by
its advisors, had months of negotiations with Invitae before
entering into the definitive merger agreement.
The consideration payable to the holders of
currently outstanding shares of CombiMatrix common stock, as well
as currently outstanding Series F preferred stock, restricted stock
units and in-the-money options, is $27 million, based on a fixed
price per share of Invitae’s common stock of $9.49 and subject to
an adjustment for “Net Cash” of CombiMatrix at closing. Net
Cash, as defined in the merger agreement for this purpose, includes
all current assets, less all current liabilities (including amounts
payable pursuant to the Company’s executive severance plan) and
capital lease obligations of the Company, less all
transaction-related expenses including amounts owed to the
Company’s strategic advisors, accountants and attorneys, less
amounts owed to repurchase certain CombiMatrix common stock
warrants, less amounts payable under the Company’s transaction
bonus plan that was adopted on December 2, 2015 and less $250,000
stipulated for working capital purposes. Based on the
Company’s current forecasts and estimates of Net Cash, and based on
a fixed price per share of Invitae’s common stock of $9.49, the
Company presently estimates that the CombiMatrix price per share
received by CombiMatrix common stockholders would be between
approximately $8.00 and $8.65. Because the value of the
transaction to CombiMatrix stockholders is based on a fixed price
per share of Invitae’s common stock of $9.49, the overall value of
the merger consideration potentially to be received by CombiMatrix
stockholders will fluctuate based on the market price of Invitae
common stock between now and any closing. There are currently
2,918,726 shares of CombiMatrix common stock outstanding, and an
additional 125,738 shares of CombiMatrix common stock issuable
pursuant to currently outstanding Series F preferred stock,
restricted stock units and in-the-money common stock options.
As part of the proposed acquisition, the merger
agreement contemplates that Invitae will conduct an exchange offer
in which holders of CombiMatrix Series F warrants will be offered
approximately $6 million in shares of Invitae common stock, based
on $2.90 per warrant and 2,067,076 Series F warrants currently
outstanding, with such consideration also based on a fixed price
per share of Invitae’s common stock of $9.49. Because the
value of the transaction is based on a fixed price per share of
Invitae’s common stock of $9.49, the overall value of the exchange
offer consideration potentially to be received by CombiMatrix
Series F warrant holders will fluctuate based on the market price
of Invitae common stock between now and any closing. Under
the terms of the merger agreement, holders of at least 90% of the
Series F warrants outstanding must accept the exchange tender offer
and tender their warrants to receive shares of Invitae common
stock. If holders of less than 90% of outstanding Series F
warrants tender, Invitae may elect to terminate the merger.
Holders of Series F Warrants may exercise their warrants at any
time prior to any closing of the merger if they so choose, and the
merger agreement anticipates an increase in the consideration paid
to CombiMatrix common stockholders as more shares of CombiMatrix
common stock become outstanding as a result of such
exercises. Based on a fixed price per share of Invitae’s
common stock of $9.49 and subject to the Net Cash adjustment, the
consideration potentially to be received by CombiMatrix common
stockholders (including holders of shares issued upon the exercise
of Series F warrants) could increase by approximately $15 million,
if all Series F Warrants were exercised. The proposed merger
is expected to close in the fourth quarter of 2017, but is subject
to customary closing conditions, including CombiMatrix stockholder
approval, as well as the warrant exchange participation threshold
noted above.
Mark McDonough, President and Chief Executive
Officer of CombiMatrix, stated, “We are excited about the prospect
of joining forces with Invitae, one of the nation’s fastest-growing
genetics information companies, to help achieve even higher levels
of patient satisfaction, growth and shareholder value. At
CombiMatrix, we have worked very hard to establish ourselves as a
high-touch, patient-focused organization delivering the highest
quality in reproductive health and pediatric diagnostic testing
services. Over the past few years we have consistently
increased our revenue, grown our customer base, improved gross
margins and significantly reduced our operating loss despite
capital constraints. By coming together with Invitae, we
believe we can synergistically combine their scale, technology and
expertise with the CombiMatrix product offering, human capital and
sales channels to achieve even greater success in the future for
the company and our shareholders.”
Sean George, Chief Executive Officer of Invitae,
stated, “For many people, preparing to have a child is their
introduction to the power of genetics to inform health decisions.
The combination of Invitae and CombiMatrix will expand our
ability to provide actionable answers to the complex questions that
can arise when starting a family. CombiMatrix’s expertise in
miscarriage analysis and assisted reproduction, deep relationships
with perinatal specialists and established technologies will round
out Invitae’s capabilities, creating a comprehensive platform to
further accelerate the use of genetic information in mainstream
medical care.”
Torreya Partners LLC is acting as exclusive
financial advisor to CombiMatrix and provided a fairness opinion to
the Board of Directors of CombiMatrix. Stradling Yocca Carlson
& Rauth P.C. is acting as legal advisor to CombiMatrix in
connection with the transaction.
More information regarding the merger agreement,
planned merger and the terms and conditions thereof have been
disclosed in the Current Report on Form 8-K filed by CombiMatrix
today with the Securities and Exchange Commission and available at
www.sec.gov.
About CombiMatrix
Corporation
CombiMatrix Corporation provides best-in-class
molecular diagnostic solutions and comprehensive clinical support
to foster the highest quality in patient care. CombiMatrix
specializes in pre-implantation genetic diagnostics and screening,
prenatal diagnosis, miscarriage analysis and pediatric
developmental disorders, offering DNA-based testing for the
detection of genetic abnormalities beyond what can be identified
through traditional methodologies. Our testing focuses on advanced
technologies, including single nucleotide polymorphism chromosomal
microarray analysis, next-generation sequencing, fluorescent in
situ hybridization and high resolution karyotyping. Additional
information about CombiMatrix is available at www.CombiMatrix.com
or by calling (800) 710-0624.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This press release contains forward-looking
statements within the meaning of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These
statements are based upon our current expectations, speak only as
of the date hereof and are subject to change. All statements, other
than statements of historical fact included in this press release,
are forward-looking statements. Forward-looking statements can
often be identified by words such as "anticipates," “approximates,”
"expects," "intends," "plans," "goal," "predicts," "believes,"
"seeks," "estimates," "may," "will," "should," "would," "could,"
"potential," “possible,” “likely,” "continue," "ongoing," similar
expressions, and variations or negatives of these words and
include, but are not limited to, statements regarding the Company’s
and Invitae’s expectations with respect to the synergies, costs and
other anticipated financial impacts of the proposed merger; future
financial and operating results of the combined company; the
combined company’s plans, objectives, expectations and intentions
with respect to future operations and services; approval of the
proposed merger by stockholders and by governmental regulatory
authorities; the satisfaction of the closing conditions to the
proposed merger; and the timing of the completion of the proposed
merger. These forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
and adversely from those expressed in any forward-looking
statement. The risks and uncertainties referred to above include,
but are not limited to: the risk that Invitae’s common stock price
drops below $9.49; the risk that “Net Cash” at closing is lower
than the Company forecasts; the risk that holders of less than 90%
of the Series F warrants tender their securities or the Company’s
stockholders fail to approve the merger and the merger agreement is
terminated due to these reasons; the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement; the possibility that the
proposed merger is delayed; the inability to complete the merger
due to the failure to satisfy any of the conditions to completion
of the merger; the impact of the announcement or the completion of
the merger on the market price of the common stock of the Company
or Invitae, or on Company’s or Invitae’s relationships with their
employees, existing customers and suppliers or potential future
customers and suppliers and on their operating results and
businesses generally; the ability of Invitae to successfully
integrate CombiMatrix’s operations and employees; the ability to
realize anticipated synergies and costs savings of the proposed
merger; the risk that if the merger is terminated and the Company
has to pay termination fees and transaction expenses, the Company
may not have sufficient funds to make such payments; the Company’s
estimates of total market sizes for the tests that it offers; the
Company’s ability to grow revenue and improve gross margin; delays
in achieving cash flow-positive operating results; the risk that
test volumes and reimbursements level off or decline; the risk that
payors decide to not cover the Company’s tests or to reduce the
amounts they are willing to pay for the Company’s tests; the risk
that the Company will not be able to grow it’s business as quickly
as it needs to; the inability to raise capital; the loss of members
of the Company’s sales force; the Company’s ability to successfully
expand the base of its customers, add to the menu of its diagnostic
tests, develop and introduce new tests and related reports, expand
and improve its current suite of diagnostic services, optimize the
reimbursements received for its molecular testing services, and
increase operating margins by improving overall productivity and
expanding sales volumes; the Company’s ability to successfully
accelerate sales, steadily increase the size of its customer
rosters in all of its genetic testing markets; the Company’s
ability to attract and retain a qualified sales force in wider
geographies; the Company’s ability to ramp production from its
sales; rapid technological change in the Company’s markets; changes
in demand for the Company’s future services; legislative,
regulatory and competitive developments; general economic
conditions; and various other factors. Further information on
potential factors that could affect the Company’s financial results
is included in the Company’s Annual Report on Form 10-K, Quarterly
Reports of Form 10-Q, and in other filings with the Securities
and Exchange Commission. All subsequent written and oral
forward-looking statements concerning the Company, Invitae, the
proposed merger or other matters attributable to the Company,
Invitae or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above. The
Company undertakes no obligation to revise or update publicly any
forward-looking statements for any reason, except as required by
law.
Important Information
In connection with the planned merger described
above, Invitae intends to file one or more registration statements
on Form S-4 with the Securities and Exchange Commission (the “SEC”)
that will include a proxy statement of CombiMatrix that also
constitutes a prospectus of Invitae. CombiMatrix and Invitae also
plan to file other documents with the SEC regarding the proposed
merger. This communication is not a substitute for any
registration statement, proxy statement/prospectus or other
document CombiMatrix or Invitae may file with the SEC in connection
with the proposed merger. Investors and security holders of
CombiMatrix are urged to read the proxy statement/prospectus and
other relevant documents when filed with the SEC as they will
contain important information about the proposed merger. Any
definitive proxy statement/prospectus (if and when available) will
be mailed to stockholders of CombiMatrix. Investors and security
holders may obtain free copies of the proxy statement/prospectus
and other documents containing important information about
CombiMatrix and Invitae, when filed, without charge, at the SEC’s
website (www.sec.gov). Copies of CombiMatrix’s SEC filings may also
be obtained from CombiMatrix without charge at CombiMatrix’s
website (www.CombiMatrix.com) or by directing a request to
CombiMatrix at (949) 753-0624. Copies of Invitae’s SEC filings may
also be obtained from Invitae without charge at Invitae’s website
(www.Invitae.com) or by directing a request to Invitae at
(347) 204-4226. This document does not constitute an offer to sell
or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction.
INVESTORS SHOULD READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS TO BE FILED WITH THE SEC
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE
MERGER.
Participants in
Solicitation
CombiMatrix, Invitae and certain of their
respective directors and executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies from the stockholders of CombiMatrix in
respect of the proposed merger. Information regarding CombiMatrix’s
directors and executive officers is available in CombiMatrix’s
Annual Report on Form 10-K for the year ended December 31, 2016,
filed with the SEC on March 3, 2017 and CombiMatrix’s definitive
proxy statement on Schedule 14A, filed with the SEC on May 1, 2017.
Information regarding Invitae’s directors and executive officers is
available in Invitae’s Annual Report on Form 10-K for the year
ended December 31, 2016, filed with the SEC on March 16, 2017 and
Invitae’s definitive proxy statement on Schedule 14A, filed with
the SEC on April 6, 2017. Additional information regarding the
interests of such potential participants will be included in the
registration statements and proxy statement to be filed with the
SEC by CombiMatrix in connection with the proposed merger and in
other relevant documents filed by CombiMatrix with the SEC. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
Company Contact: Mark
McDonough President & CEO,
CombiMatrix Corporation(949) 753-0624
Investor
Contact: LHA
Investor RelationsJody
Cain (310)
691-7100jcain@lhai.com
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