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(Sharecast News) - Immunodiagnostics specialist Oncimmune announced the sale of its wholly-owned subsidiaries Oncimmune Limited and Oncimmune Europe to the US-based, privately-held Freenome Holdings on Monday.
The AIM-traded firm said the cash transaction, valued at £13m, included the transfer of assets including the CE-marked IVD EarlyCDT Lung blood test, antibody platform, and research and development pipeline.
As part of the sale agreement, £1.3m in cash would be held in escrow for 12 months, serving as a safeguard against any claims by Freenome related to warranties and indemnities.
Oncimmune said it would retain its ImmunoINSIGHTS business, primarily operated through its subsidiary Oncimmune Germany.
At the same time, Oncimmune Germany and Freenome signed a long-term master services agreement, securing a commitment from Freenome to purchase services worth at least €1.14m per year from ImmunoINSIGHTS.
The agreement had an overall term of five years, with an initial fixed term of two years and an option for Freenome to extend it for an additional three years on the same terms.
To facilitate the sale, Oncimmune said it would repay €7.2m of its outstanding debt facility with IPF Management.
The remaining principal balance of €6m would be accommodated under a new debt facility called the 'new IPF facility'.
Oncimmune said the facility would allow for repayment over the next three years, with a principal repayment holiday for the first 12 months and interest beginning in September.
The new IPF facility was secured by fixed and floating charges over Oncimmune's assets and shares in Oncimmune Germany, and it would carry an interest rate of 9% per annum over three-month Euribor, subject to a floor of 0%, payable quarterly.
Oncimmune said the decision to sell Oncimmune Limited and Oncimmune Europe stemmed from its strategic focus on the development and growth of its pharma services offering through the ImmunoINSIGHTS business.
Having completed the restructuring of its EarlyCDT Lung product, EarlyCDT platform, and autoantibody development business in Nottingham, the company said it sought to realise value from the non-core assets.
On completion and settlement, Oncimmune said it expected to have around £6.7m in cash, including the £1.3m held in escrow.
The board said the infusion of funds, along with the repayment of debt under the IPF facility and the profiled repayment of the new IPF facility, would alleviate concerns over its going concern status, as it highlighted in its audited results for the 15 months ended 31 August.
"We are delighted to pass the EarlyCDT technology platform and pipeline of autoantibody targets for other cancer indications to Freenome to advance Freenome's multi-cancer early detection screening pipeline," said chief executive officer Adam Hill.
"We have confidence that in their hands and with our teams' expertise, the full potential of the technology will be unlocked to the benefit of patients."
Dr Hill said that, having now completed the sale, the group would focus on driving profitable growth in its 'ImmunoINSIGHTS' pharma services business.
"Signing the master service agreement between ImmunoINSIGHTS and Freenome also adds Freenome as a new major client alongside seven of the top 15 global pharma companies who use the ImmunoINSIGHTS platform."
At 1105 BST, shares in Oncimmune Holdings were up 7.99% at 39.85p.
Reporting by Josh White for Sharecast.com.
