NEW YORK (GenomeWeb) – Interleukin Genetics said Monday that it plans to liquidate its assets three weeks after it announced it was laying off 63 percent of its workforce and suspending sales of its controversial genetic test for severe gum disease and elevated systemic inflammation.
The Waltham, Massachusetts-based company said that its liquidation plans are subject to shareholder approval via proxy, with a special meeting of shareholders to be held sometime in early August. In an effort to preserve capital for shareholders and satisfy debtors, the company — which trades on the OTC market — will begin the process of delisting and deregistering its issued stock.
"While this decision was extremely difficult, the company has fully pursued and vetted all other options," CEO Mark Carbeau said in a statement. "We believe this path provides the best opportunity to provide payments to our outstanding debtholders and, if any, to shareholders. We are hopeful that our technology will continue to benefit patients through further development by acquirers."
In addition, Interleukin accepted the resignations of Carbeau, CFO Stephen DiPalma, and President and CSO Kenneth Kornman, who is also a director. Four other directors — Lionel Carnot, Joseph Landstra, William Mills and James Weaver — have also resigned.
The company has appointed Barry Kallander of KallanderGroup as director and president, secretary, and treasurer, to oversee the sale of its assets. As of July 21, Interleukin had approximately $484,000 of cash on hand. In a statement, company management said that it believes its principal assets are its CLIA-certified laboratory and its intellectual property related to its Ilustra program, cardiovascular disease test, osteoarthritis test, and Inherent Health tests.
Ilustra, previously called PerioPredict, gauges polymorphisms in IL-1 genes. Interleukin originally marketed it as a test to identify individuals at risk for severe gum disease. Last year, the company rebranded the test as Ilustra and began marketing it more broadly as a test to identify people at high risk for "elevated systemic inflammation," with the aim of identifying those at high risk for chronic diseases associated with inflammation, such as periodontitis, heart disease, and diabetes.
The company said that its total indebtedness is approximately $5.6 million, including secured debt obligations of about $4.9 million, accounts payable, and contractual severance obligations. As a result of the restructuring, the company expects to incur aggregate expenses of approximately $245,000 consisting of cash severance payments and accrued vacation payments and costs associated with suspending its testing programs.
Interleukin noted that it would not be able to file its quarterly report or Form 10-Q for the quarter ended June 30, and the board has directed that the Form 10-Q not be filed in order to preserve capital for the satisfaction of debts and shareholders.