NEW YORK – Epigenomics and New Day Diagnostics said on Monday that they entered into an agreement under which Epigenomics will sell all of its patents and its biobank to the Knoxville, Tennessee-based contract research organization.
Berlin-based Epigenomics had announced last month that it was negotiating an asset sale but did not name the potential buyer at that time.
Under the deal, Epigenomics will receive up to about $12.1 million in total, broken down into several cash and milestone payments and a small stake in New Day Diagnostics.
Cash payments will consist of $1.8 million, of which $500,000 will be paid upon closing, followed by $1 million on Dec. 1 and $300,000 on June 30 of next year. Further cash payments of up to $8 million will be made contingent on certain milestones related to the Epi proColon and Epi proColon Next-Gen tests. Epigenomics will also acquire a 3 percent interest in New Day Dx, valued at approximately $2.3 million.
Additionally, Epigenomics will receive royalty or earn-out payments linked to the commercialization of Epi proColon Next-Gen. Such payments may extend until October 2043, when patent protection expires.
The deal comes on the heels of New Day's recent merger with EDP Biotech. That merger enabled the combined company, which operates as New Day Diagnostics, to pursue a broader range of indications and added EDP's ColoPlex colorectal cancer early detection test, as well as several direct-to-consumer tests for other cancers and celiac disease, to New Day's portfolio.
Epigenomics expects the current asset sale to enable commercialization of Epi proColon Next-Gen and to secure future cash flows. It also expects the likelihood of reimbursement by the Centers for Medicare and Medicaid Services to increase due to the option to combine Epigenomics' and New Day's biomarkers in the Next-Gen test.
CMS had originally denied coverage of the Epi proColon test in early 2021.
The sale remains subject to certain closing conditions, including approval by Epigenomics shareholders at an extraordinary general meeting to be held in Berlin on Sept. 11.
"The further development and commercialization of the Next-Gen test requires significant resources that we as a company can no longer provide," Jens Ravens, a member of Epigenomics' executive board, said in a statement. "We are very confident that with New Day Diagnostics as an experienced partner in the US and global markets, we will be able to successfully further develop the test and thus contribute to maximizing the potential value for shareholders."
Earlier this year, Epigenomics had announced layoffs, a restructuring, and the recall of its Epi proColon colorectal cancer test, citing a lack of funding for a pivotal study needed to support regulatory submission for the proColon Next-Gen test.