PDI Reports Purchase Of Redpath Integrated Pathology

PDI, Inc.

, a leading healthcare commercialization company, announced the acquisition of RedPath Integrated Pathology, a molecular diagnostics company helping physicians better manage patients at risk for certain types of gastrointestinal cancers through its proprietary PathFinderTG^® platform. The acquisition immediately expands the oncology diagnostic product portfolio for PDI, Inc. subsidiary, Interpace Diagnostics, with a test currently generating approximately $10 million in revenue that is marketed for determining pancreatic cancer risk from pancreatic cysts, as well as tests in late-stage development for assessing cancer risk for Barrett's esophagus and in the biliary tract. The transaction encompasses all RedPath Integrated Pathology assets including: o The PathfinderTG platform, which uses advanced clinical algorithms to accurately stratify patients according to risk of cancer by assessing panels of DNA abnormalities in patients who have lesions (i.e., cysts or solid masses) with potential for cancer o PathfinderTG Pancreas, which is a diagnostic test reimbursed by Medicare and has been used in approximately 20,000 clinical cases to determine risk of cancer in pancreatic lesions o The National Pancreatic Cyst Registry, which has shown that PathfinderTG Pancreas is the most accurate, clinically validated test available for determining risk of cancer in pancreatic cysts o Additional PathfinderTG applications in late-stage development with multiple ongoing clinical studies and publications, including predicting risk of progression to cancer in patients with Barrett's esophagus and assessing risk of cancer in the biliary tract o Proprietary laboratory methods, trade-secrets, patents, and scientific know-how for accurately determining risk associated with additional cancer types o A large biobank of samples that can be used to support further research and development efforts o Real assets and clinical expertise associated with the Pittsburgh laboratory As part of Interpace Diagnostics, the laboratory will continue to provide testing services in its CLIA-certified, CAP-accredited facility. PDI acquired all of the outstanding shares of RedPath. Terms of the deal include a $12 million upfront payment, future milestone-based payments, future revenue-based payments, an $11 million non-interest bearing four-year subordinated note to the shareholders of RedPath, and up to one million PDI shares issuable upon the successful introduction of the Barrett's esophagus test. In connection with the acquisition of RedPath, PDI secured a $20 million, six-year term loan from SWK Holdings Corporation. "PDI represents an important investment opportunity for SWK. We are very excited to support the company's efforts to build the Interpace Diagnostics business with a flexible, non-dilutive financing solution," said Brett Pope, Chief Executive Officer of SWK. "The PathFinderTG^® testing platform has tremendous untapped potential to deliver a much-needed improvement in diagnostic options for oncologists, gastroenterologists, pathologists and patients – particularly in pancreatic cancer and other gastrointestinal-related cancers," said Nancy Lurker, CEO, PDI, Inc. "This acquisition further demonstrates PDI's commitment to building a growth-oriented portfolio of proprietary molecular diagnostics that serves unmet medical needs in the oncology space." "PDI's deep go-to market expertise and commercialization infrastructure can deliver the resources needed for the development and promotion of this innovative technology," said Dennis Smith, M.D., President and CEO, RedPath Integrated Pathology. "Becoming part of Interpace Diagnostics will enable the realization of PathFinderTG's full potential while complementing the company's growing molecular diagnostics capabilities." This is the second oncology-related molecular diagnostic acquisition for Interpace Diagnostics this year, creating a portfolio that now includes two commercially available tests, miRInform^®, a mutational panel to aid in the diagnosis of benign and malignant thyroid cysts, and PathFinderTG Pancreas, for pancreatic cancer risk assessment of pancreatic cysts. A Gastrointestinal Cancer Center of Excellence (COE) will be established at the Pittsburgh facility to support both pancreas and future gastrointestinal oncology products. In addition, the company is establishing its Endocrine Cancer Center of Excellence in its New Haven, Conn. laboratory, where it will process ThyGenX, a test upgraded from miRInform, comprising a panel of additional genetic markers known to help discriminate between benign and malignant thyroid nodules. The New Haven, Conn. laboratory will also launch a miRNA test in 2015, which is expected to further improve pre-operative diagnosis of thyroid patients.