Exiqon A/S (NASDAQ OMX Copenhagen: “EXQ”) today announced that its wholly owned
subsidiary, Oncotech, Inc. (“Oncotech”), will be pursuing an out-of-court
liquidation conducted by a common law Assignment for the Benefit of Creditors.
On 17 December 2009, Exiqon announced its intention to divest Oncotech. Exiqon
has since been engaged in discussions with numerous parties regarding a
possible sale of Oncotech. However, effective May 31, 2010, the Medicare
Administrative Contractor in California, Palmetto GBA, has issued an LCD
disallowing coverage for Oncotech's EDR tests. In light of this decision by
Palmetto GBA, Exiqon has concluded that a divestment cannot be achieved and has
decided to discontinue operations at Oncotech.
The decision by Palmetto GBA to disallow coverage for Oncotech's EDR testing is
contrary to the policies of contractors' in other regions of the U.S.,
including for example Pennsylvania which allows similar drug resistance testing
by a competitor of Oncotech. The effective date of Palmetto GBA's decision was
subsequently extended until end July 2010, but effectively undermines
Oncotech's ability to conduct its business on competitive terms.
Exiqon has been in negotiations with multiple parties regarding their potential
acquisition of Oncotech. Despite interest and extensive efforts to conclude a
transaction on agreed terms, negotiations have been terminated, with the reason
given being the uncertainty created by the LCD. Due to the termination of
negotiations and the absence of interest from other parties, Exiqon has
concluded that a sale of Oncotech, Inc. cannot be achieved in light of the
recent circumstances created by Palmetto GBA's decision to discontinue coverage
for Oncotech, Inc.'s EDR testing.
The effect of Oncotech on Exiqon's full year's guidance, which includes
Oncotech as discontinued business, is adjusted from previously announced
expectations of DKK 0.00 to approximately DKK -2 million. The full year
guidance for continued business remains unchanged:
For 2010, Exiqon expects total revenue of DKK 80-90 million excluding
discontinued operations.
The net loss for the year 2010 is expected to be approximately DKK 40 million
including non-cash costs of current incentive programs and depreciations
expensed in the amount of DKK 15 million.
The effect of discontinued business, Oncotech, Inc., is expected to be DKK -2
million including reclassification of related exchange rate adjustments of
approximately DKK 15 million.
All of the above expectations are based on an average USD/DKK exchange rate of
DKK 5.25 for 2010.
Exiqon A/S is exploring available options for securing an optimum financial
position in light of the abandoned plans for divesting Oncotech, Inc.
Additional information:
Lars Kongsbak, CEO, tel. +45 4566 0888 (cell: +45 4090 2101)
Hans Henrik Chrois Christensen, CFO, tel. +45 4566 0888 (cell: +45 4090 2131)
See the full announcement in the attached PDF or at
www.exiqon.com/investor/portal
