Bay Area's diaDexus Files Chapter 7 Bankruptcy, Plans to Liquidate Assets, CFO to Step Down Immediately

Published: Jun 14, 2016

Bay Area's diaDexus Files Chapter 7 Bankruptcy, Plans to Liquidate Assets, CFO to Step Down Immediately  June 13, 2016
By Mark Terry, Breaking News Staff

South San Francisco, California - diaDexus announced Friday that is filing for Chapter 7 bankruptcy. In addition, the company’s chief financial officer, Leone Patterson, is leaving the company immediately.

diaDexus’ primary focus was on diagnostics tests and products related to cardiac biomarkers. Testing platforms were for Lp-PLA2 (lipoprotein-associated phospholipase A2), a cardiovascular risk marker, which provides information about blood vessel inflammation. The company marketed two FDA-cleared tests for Lp-PLAs, the PLAC Test ELISA KIT and The PLAC Test for Lp-PLA2 Activity.

The company was also pushing forward proADM, a cardiac biomarker. It had plans for a 510(k) regulatory submission for the test using ELISA before the end of this year or the beginning of 2017.

At the company’s first-quarter financials, announced on April 28, it reported total product revenue of $3.5 million, which was about the same as the fourth quarter of 2015, but down from $5.5 million in the first quarter of 2015. Total operating costs and expenses for the first quarter 2016 were $4.8 million, which was a decrease from $6 million in the first quarter 2015. The company reported $6.4 million in cash and cash equivalent as of Mar. 31, 2016.

“During the first quarter, our PLAC ELISA business has stabilized and our focused launch of the new PLAC Activity Test has generated volume growth and momentum as we add new lab customers every week,” said Lori Rafield, chairman and chief executive officer of diaDexus, in a statement. “Over the past year, we have successfully broadened and diversified our lab customer base as we work toward a goal of 100 customers by the end of this year. As our team builds awareness of the test’s clinical utility and value, we now are seeing labs proactively request this test from diaDexus based on demand from healthcare providers who recognize the value of the information generated from the PLAC Activity Test.”

Chapter 7 bankruptcy provides for liquidation of nonexempt property and the distribution of the proceeds to loan owners. diaDexus will file in the U.S. Bankruptcy Court for Northern District of California. diaDexus indicates it has been working with Oxford Finance LLC for several months, trying to restructure its current loan and minimize near-term financial limits on its business, but has not been able to make a deal.

“As of March 31, 2016,” the company said in a statement, “$13.3 million in principal remained outstanding under the Loan and Security Agreement with Oxford. As part of this process, the Company engaged Alvarez & Marsal Healthcare Industry Group, LLC as its restructuring advisor.”

In September 2015, diaDexus reported it had inked a licensing deal with OriGene Technologies to develop and commercialize diaDexus’ PLAC ELISA in specific Asian countries. OriGene acquired $1 million of diaDexus common stock that was equal to the average 10-day closing price. diaDexus was to supply raw materials and reagents in the commercial territories, and OriGene would handle marketing. OriGene bought the PLAC ELISA test bulk materials exclusively from diaDexus on a cost plus profit basis.

diaDexus has been on a long side. On June 24, 2015, shares traded for $5.40 per share. They mostly slowly slid to $1.38 on June 7, 2016. They are currently trading for $0.08 per share.

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