Interleukin Genetics slashes workforce, explores options
- A small, Mass.-based diagnostics company may be put up for sale now that an agreement to defer loan payments to its senior lender has fizzled.
- Interleukin Genetics announced on Monday it is evaluating strategic alternatives, including putting itself on the block. The company also revealed plans to cut five employees, or 63% of its workforce, and shutter its Ilustra program, a genetic test that assesses whether patients have an increased risk of developing severe and progressive periodontitis.
- Those decisions stem from Interleukin Genetics' inability to pay off its debts. The company owes $5.6 million in total debt, and, as of March 31, $3.6 million in principal payments to its senior lender, Horizon Technology Finance Corp.
Interleukin Genetics attempted to restructure its debts back in April, entering into a rejiggered agreement with Horizon Technology Finance which deferred the principal amount owed to the lender on April 1, May 1 and June 1. The deferral could have continued each month through September, but the borrower had to lock down by June 15 a "clinical services agreement" that had the approval of Horizon Technology Finance.
That didn't happen, and now Interleukin Genetics is doing whatever it can to gain capital.
"While this decision was extremely difficult, it is important to preserve capital as we assess our options," Interleukin Genetics CEO Mark Carbeau said in a July 3 statement. The company did not immediately respond to BioPharma Dive request for comment.
Interleukin Genetics also said in the statement it had about $925,000 in cash on hand as of June 30. Due to the strategic evaluation, its second quarter financial filings with the Securities and Exchange Commission will be coming in late.
Horizon Technology Finance initially loaned $5 million to the borrower back in late 2014. The parties agreed that Interleukin Genetics would repay the loan over 45 months, with the first 15 months being only interest payments and the latter 30 being equal payments of the total principal plus interest. The revamped agreement from earlier this year offered Interleukin Genetics a few months of deferred payments in exchange for an estimated 5.5 million to 11 million shares of the company's common stock.
Even if the borrower had secured a clinical services partnership and been able to keep the payment deferrals going a few more months, it has had trouble generating revenue.
Interleukin Genetics garnered nearly $200,000 in total revenue during the first quarter, down from almost $961,000 during the same period in 2016, which the company attributed to a decline in contracted research projects. A $2.3 million loss from operational costs led the company to have a net loss of $2.5 million for the first three months of 2017.
Moving forward, the company expects its main assets will be its Clinical Laboratory Improvement Amendments-certified testing and the intellectual property for its diagnostic programs, including Ilustra and the Inherent Health brand. It also expects the current restructuring efforts will cost $245,000.
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