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Reverse merger lets WaferGen recapitalize
July 2007
by Jeffrey Bouley  |  Email the author


FREMONT, Calif.—WaferGen Biosystems Inc., a shell company formed in Nevada, completed in early June an acquisition of WaferGen Inc. through a "reverse merger," a process under which a smaller company buys a larger company. As in this case, the process often involves a private company buying a public one, which avoids the time-consuming process of going public through an IPO. As part of the merger, WaferGen Bio-systems also completed a private placement of $10.7 million of common stock and warrants to accredited investors, and followed that by closing a second private placement round a week later to bring the total to $12 million. The company plans to use these proceeds for general working capital, including strengthening of corporate infrastructure and product offerings. This includes further development of its whole-genome, high-throughput SmartChip system and the hiring of a chief scientific officer, Dr. David H. Gelfand, whom the company calls "one of the pioneers" in the area of PCR.
"This [merger] represents a major milestone for WaferGen, positioning our company for accelerated growth," says Alnoor Shivji, a co-founder of WaferGen who has been retained as chairman and CEO. "The financial resources ...will enable us to accelerate sales and marketing activities around our current SmartSlide products, further the development of our SmartChip products and recruit additional key team members for our operations."
The company's primary product has been the SmartSlide, a micro-incubator that features fluidic exchange designed to mirror physiological conditions, for such purposes as stem cell research, cancer research, drug interaction response and development, and cell culture process optimization. The technology reportedly allows researchers to perform time lapse imaging studies to characterize, differentiate and proliferate cells and grow stem cells, primary cells and other difficult to cultivate cells in consistently optimal conditions.
WaferGen's new SmartChip system, on the other hand, is being developed to use semiconductor, optical and ink jet printing technologies, and customized chemistries built into a content-ready chip, which reportedly will allow researchers to conduct experiments without the need for advanced preparation of reagents.
"What this means in terms of general discovery work or specific tasks like target validation or biomarker discovery is that researchers have a better opportunity to look at whole genomes and not be as limited in terms of the sensitivity as they have with other tools," Chadha says. "And in clinical trials, it means running studies on high-throughput chips where you can run many patient samples at one time to cut down on costs."
Code: E070710



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