Cancer Genetics (CGIX) Stock Is Up Big On Asset Sale News

Cancer Genetics CGIX Stock News

Cancer Genetics Inc (NASDAQ: CGIX) is making a strong run for the top early on in the trading session this morning, trading on gains of more than 40% early on. The gains come after the company announced strategic transactions, including the sale of assets. Here’s what’s happening:

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CGIX Stock Rockets On Strategic Transactions

Cancer Genetics issued a press release late Monday, announcing a line of strategic transactions designed to reduce debt and improve the company’s financial foundation. The first topic of the press release surrounded the sale of the company’s BioPharma business.

According to the release, junior secured lender to CGIX, Partners for Growth IV, L.P. conducted a consensual private foreclosure of assets related to the company’s BioPharma business. As a result of this action, the business was sold to Interpace Diagnostics Group Inc. (NASDAQ: IDXG).

In the release, the company said that the sale of the business came to a purchase price of $23.5 million. IDXG has also agreed to assume about $5 million in liabilities associated with the BioPharma business.

CGIX said that IDXG paid $13.8 million in cash at closing to Partners for Growth. The company also issued a promissory note to Cancer Genetics in the amount of $7.7 million. The $7.7 million payment will be made upon the approval by the company’s shareholders, and subsequent consumation of an investment by Ampersand Capital Partners in Interpace Diagnostics.

Importantly, as part of this transaction, Partners for Growth has extinguished its junior secured debt and fully retired the company’s senior loan to Silicon Valley Bank. Finally, Partners for Growth has remitted about $2.3 million in cash to CGIX.

In the release, the company also said that it has consummated the sale of the assets used in its clinical laboratory business. siParadigm LLC was the purchaser of the assets. Under this agreement, Cancer Genetics received an up front payment of $1 million. Moving forward, the comapny will receive future payments based on testing volume from certain clinical laboratory customers over the next 12 months.

Moving forward, CGIX said that it continues to own and operate its discovery business. This business was obtained through the acquisition of vivoPharm in 2017. The Discovery business includes proprietary preclinical test systems supporting clinical diagnostic offerings at early stages.

Why This News Is So Exciting

At the end of the day, the news is great for Cancer Genetics and its investors. First and foremost, the company’s BioPharma buisiness was bleeding cash, putting incredible financial strain on the company. With this asset no longer owned by CGIX, the bleeding has been stopped.

Moreover, the clinical services business acquisition by siParadigm opened the door to further financial stability and could lead to a relatively large performance-based payment ahead.

All in all, these transactions have significantly reduced the companys debt burden. As a result, it is able to operate its Discovery Business, starting from ground one on a strong financial foundation.

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