WaferGen Bio-systems, Inc. (NASDAQ:WGBS) and Takara Bio USA Holdings have reached a deal that would see the two entities combine. The deal stipulates that $50 million or less will change hands in favor of WaferGen. The transaction could consummate early next year if regulators give it their nod.
WaferGen Bio-systems, Inc. (NASDAQ: WGBS) could secure the maximum valuation of $50 million in the merger with Takara if its 2016 revenue exceeds $9 million. The transaction between Takara and WaferGen is cash-based. If all goes according to plan, the two entities could complete their combination in February or March of 2017 after WaferGen submits its audited financial statements.
WaferGen officials believe that combining with Takara will help accelerate development of the company’s pipeline and also help bolster the company’s position in the genomics research market.
Looking at WaferGen’s 1Q2016 results and the management guidance for 2016, you see that the company is on track to secure the maximum valuation of $50 million. For 1Q, the company generated revenue of $1.9 million compared to $1.1 million in the corresponding quarter in 2015. The increase in revenue was largely driven by 85% increase in Product revenue. According to the management of WaferGen, Apollo benchtop platforms and SmartChip NGS system fueled the Product revenue.
The sharp increase in products revenue helped offset the 66% decline in license and royalty revenue.
Other 1Q financials
WaferGen Bio-systems, Inc. (NASDAQ: WGBS) logged a net loss of $4.4 million or EPS loss of $0.24 in the latest quarter. The loss narrowed from $4.8 million or $0.85 in the year ago quarter. The management’s efforts to reign in on costs produced mixed results as SG&A expenses increased 11% to $3.1 million but R&D expenses fell 8% to $2.3 million.
WaferGen finished 1Q with cash balance of $10.9 million and the available cash is able to take the company to 2017.
2016 outlook for WaferGen Bio-systems, Inc. (NASDAQ: WGBS)
For full year 2016, WaferGen Bio-systems, Inc. (NASDAQ: WGBS) is looking for revenue in the band of $12 to $13 million. Strong demand for ICell8 Single Cell System is expected to play a major role in driving 2016 topline growth.