Cancer Genetics Inc. (NASDAQ: CGIX) shares more than doubled on Monday after the company announced a merger with StemoniX. Both boards of directors have approved the merger, and it is expected to close in the fourth quarter of 2020.
Under the terms of the merger agreement, StemoniX will merge with a newly formed subsidiary of Cancer Genetics in an all-equity transaction.
Following shareholder approval, the combined company expects to remain listed on the Nasdaq exchange. Accordingly, StemoniX will retain its name and become a wholly-owned subsidiary of Cancer Genetics.
As per the transaction, Cancer Genetics will acquire all the outstanding capital stock of StemoniX in exchange for a number of shares of its common stock that will represent about 78% of the outstanding common stock of Cancer Genetics, with the current equity holders of Cancer Genetics retaining 22% of the common stock immediately following the consummation of the merger.
The transaction is looking to position the combined company to harness the synergies between two critical modalities of drug discovery and development: advanced animal models and relevant human high-throughput organoid platforms.
Management made an interesting comment regarding the resulting synergies from the merger. Jay Roberts, CEO of Cancer Genetics, said that the firm is now looking to supplement traditional discovery and drug approval mechanisms to include humanized cell-based assays with artificial intelligence along with the firm’s vivoPharm business. Considering this strategy and approach are very much aligned with those of StemoniX, management is optimistic on the future of this combined company.
Cancer Genetics stock traded up about 160% on Monday to $7.55, in a 52-week range of $1.92 to $10.39.
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