Management focuses on growth opportunities
NEW HAVEN, CT, (April 23rd, 2018) - Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO), announced today that it entered into a convertible debt financing facility of up to $3M, to be drawn down at the option of the company (See the company’s Form 8-K filed on April 23rd, 2018). New and existing investors participated in the financing, to be used for working capital, including for the potential growth initiatives described below.
As management has been focused on growing the business, we have recently created several opportunities which we believe may increase revenues significantly.
1. Sales team growth. Despite a tight top talent market, Precipio has recently hired an experienced VP of Sales along with seasoned sales representatives that have already begun to increase revenues. We anticipate several additional hires in the near future in order to continue accelerating our growth.
2. Laboratory menu expansion. Precipio has for a while been focused on blood related cancers and the ancillary testing that correlates to those diseases. As we expand our pathology team, there is a demand from our customers for additional testing. Consequently, we plan to invest in the expansion of our laboratory over the next six months to grow our testing menu. This will require investment in equipment, reagents for the test validation costs, and staff additions. If executed, this will enable existing customers to send us additional tests in other areas that are currently sent to competing laboratories, which is expected to increase our revenue per customer.
3. ICP Development. We have received numerous inquiries from various potential customers for ICE-COLD PCR™ to be adapted to various applications. This requires adding more resources to the R&D department to enable them to accelerate the delivery of new reagents for different cancer types, matching customer demand. Over the next 6-9 months, we plan to release new reagents and additional features (such as multiplexing) that will be responsive to our customers’ needs.
The Convertible Debt Financing
Given the company’s recent stock price, management and the Board believed that a convertible debt structure would have less of an adverse impact on the current market price and the company was able to price the conversion rate and exercise price for the warrants above market. The debt is presently convertible at $0.50 per share, which is above the $0.44 per share closing price on April 20, 2018, and the associated warrants are exercisable at $.75 per share. The company intends to raise additional equity capital to repay the loan within the next 180 days, after which, if not repaid, the conversion rate will become variable at a 20% discount to the 10-day volume weighted average price at the time of the conversion. The company will seek shareholder approval shortly which will enable it to draw down the remaining approximately $1.5M under the facility.
“We are fortunate to be able to capitalize on these opportunities to grow the business at this time, and I’d like to thank the investors that participated in this financing and are supporting the company with a presently above-market price financing,” said Ilan Danieli, President and CEO of Precipio. “Management hopes that with the anticipated revenue growth, we will become an attractive opportunity for both existing and new investors to participate in the appreciation of company value.”
Precipio has built a platform designed to eradicate the problem of misdiagnosis by harnessing the intellect, expertise and technology developed within academic institutions and delivering quality diagnostic information to physicians and their patients worldwide. Through its collaborations with world-class academic institutions specializing in cancer research, diagnostics and treatment such as the Yale School of Medicine and Harvard's Dana-Farber Cancer Institute, Precipio offers a new standard of diagnostic accuracy enabling the highest level of patient care. For more information, please visit www.precipiodx.com.
Certain statements in this press release constitute “forward-looking statements,” within the meaning of federal securities laws, including statements related to ICP technology, including financial projections related thereto and potential market opportunity, plans and prospects and other statements containing the words “anticipate,” “intend,” “may,” “plan,” “predict,” “will,” “would,” “could,” “should,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the known risks, uncertainties and other factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, the Company’s prior filings and from time to time in the Company’s subsequent filings with the Securities and Exchange Commission, the ability of the company implement its growth initiatives and its ability to increase revenues as a result of these and other growth initiatives, having capital resources sufficient to invest adequately in its lab and new services, the compliance by company of its debt obligations and the ability of the company to service its debt obligations on a timely basis, and the ability of the company to raise additional capital on favorable terms as described in the Risk Factors in the 10-K and to repay the recent debt (or have it convert on current terms). Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. All information in this press release is as of the date of the release and the Company does not undertake any duty to update this information, including any forward-looking statements, unless required by law.