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Cancer Genetics to Acquire Organoid Startup Stemonix

NEW YORK – Rutherford, New Jersey-based Cancer Genetics said on Monday that it will acquire all outstanding capital stock of organoid startup Stemonix in exchange for a number of shares of its common stock.

Under a definitive merger agreement, Maple Grove, Minnesota-based Stemonix will merge as part of an all-equity transaction with a newly formed subsidiary of Cancer Genetics, which expects to remain listed on the Nasdaq. Stemonix will retain its name and become a wholly-owned subsidiary of Cancer Genetics.

Stemonix develops and manufactures high-density, at-scale human induced pluripotent stem cell-derived neural and cardiac screening platforms for drug discovery and development.

The exchanged shares will represent about 78 percent of Cancer Genetics' outstanding common stock, with the current equity holders of Cancer Genetics retaining 22 percent of the common stock immediately following the merger. The firms expect the merger to close in the fourth quarter of 2020.

The group believes the transaction will allow the combined company to harness synergies between advanced animal models and relevant human high-throughput organoid platforms.

H.C. Wainwright is acting as financial advisor to Cancer Genetics and Lowenstein Sandler is its legal counsel. Northland Securities is serving as Stemonix's financial advisor and Taft, Stettinius & Hollister is the firm's legal counsel.

"We are at [a] unique time in the drug discovery industry as the convergence of technological innovations in both biology and software will transform conventional workflows in time and accuracy," Jay Roberts, CEO of Cancer Genetics, said in a statement. "To convert the time-consuming and labor-intensive process of developing a drug for market, we now look to supplement traditional discovery and drug approval mechanisms to include humanized cell-based assays with artificial intelligence, along with our core invoPharm business."

Additional details of the agreement were not disclosed.

"The proposed merger expects to expand our ability to engage with a larger audience of potential partners and expand our internal capabilities as we deliver on our mission to rapidly discover the safest and most effective therapeutics on behalf of our partners and our shareholders," Ping Yeh, CEO of Stemonix, said in a statement. "The mission will stay consistent … [which will] allow scientists to quickly and economically conduct high-throughput toxicity and drug development studies in ready-to-assay plates containing functional microOrgans."

Cancer Genetics' stock jumped 190 percent to $8.45 in morning trading on the Nasdaq.