The winding down of a local biotech firm continues this week as it looks to sell off the few assets it has left.
Commonwealth Biotechnologies Inc., whose financial state has been faltering the past few years, has asked shareholders to approve deals to sell off its 32,000-square-foot former headquarters facility in Midlothian and its Australian subsidiary, which is its main source of business.
Selling off its assets is part of CBI’s plan leave the company as a shell that will attempt to be acquired by another company that’s looking to become publicly traded.
According to filings with the Securities and Exchange Commission, a special shareholders meeting has been called for Dec. 20, when a vote will be held to approve the proposed sale of its Mimotopes Pty Ltd. subsidiary to Leadtech Systems Australia Pty Ltd., another Australian company, for about $1 million.
CBI also wants shareholders to approve a plan to sell it headquarters building at 601 Biotech Drive to a purchaser to be determined for no less than $4.3 million. The lab and office building sits on 4.5 acres in Chesterfield County. Commonwealth said the proceeds of the sales would be used in connection with its future business plan.
“The sale of this business unit is the first step in the company’s publicly announced strategy to divest all assets and generate a clean, debt-free shell for which we will seek a growth oriented reverse merger partner,” CBI chief executive Richard Freer said in a prepared statement late last month upon announcing the pending Mimotopes deal.
Messages left for Freer were not returned.
In its letter to shareholders announcing the special meeting, CBI said “the board of directors’ view that with other strategic alternatives, such as a reverse merger following divestment of all assets, available to the company, the [sale of Mimotopes] is the best alternative for the company.”
Reverse mergers are an easier, quicker and cheaper way for a company to go public. By acquiring an entity that has no real assets to speak of, a company can bypass the tradition IPO process. Once its assets are sold off, CBI’s value will be in its status as public company.
CBI was founded in 1992. Over the years it has dabbled in many areas of the biotech world, including drug testing, paternity tests, genomics and bio-defense research for the government.
It also completed many mergers over the years, most recently with some Chinese entities in an attempt to find a profitable new line of business. Read more about the China deal here.
But it stayed in the red, including losing millions of dollars each of the past few years. From 2007 through 2009, CBI lost a combined $14.98 million and has already lost almost half a million through the first half of this year, according to statements filed with the SEC.
Its latest quarterly report included yet another going concern notice from its auditors: their doubt abut the company’s ability to continue operating in its present state.
CBI’s executives over the years regularly earned six figure salaries and bonuses. Those pay packages seem to have peaked around 2006, when then-COO Freer, President Robert Harris and then-CEO Paul D’Sylva were paid $363,500 and $297,600 respectively.
By 2009, Freer was making about $122,000 a year and the other executives were no longer on the payroll, at least according an annual report.
The company then began to drastically cut executive pay and other expenses. Its SEC filings said it reduced its number of employees and cut its marketing budget. It worked out a deal to sell two of its subsidiaries to locally based Bostwick. The subsidiaries, the company said at the time, “were, quite frankly, a cash drain which could not be supported.”
Read more about the deal with Bostwick here.
It also leased its Biotech Drive facility to Bostwick and has since moved into a 2,800-square-foot office on Grove Road in Midlothian.
The company said in its financial reports that it was working to combat “static revenues and declining cash reserves.”
In a March letter to shareholders, Freer discussed the company’s challenges but also expressed optimism.
“As was predicted in last year’s report to you, 2009 was indeed a year of challenges,” Freer wrote. “We believe, for the most part, those challenges have been met and CBI is now poised to move ahead with a more focused and viable business model.
“We were looking to position the company to re-focus its efforts under a business model that is both growth oriented and, most importantly, sustainable over the long term.”
Freer co-founded CBI. He was COO until 2002 and chairman until 2008. He was appointed CEO in July. He is also a former VCU professor.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
The winding down of a local biotech firm continues this week as it looks to sell off the few assets it has left.
Commonwealth Biotechnologies Inc., whose financial state has been faltering the past few years, has asked shareholders to approve deals to sell off its 32,000-square-foot former headquarters facility in Midlothian and its Australian subsidiary, which is its main source of business.
Selling off its assets is part of CBI’s plan leave the company as a shell that will attempt to be acquired by another company that’s looking to become publicly traded.
According to filings with the Securities and Exchange Commission, a special shareholders meeting has been called for Dec. 20, when a vote will be held to approve the proposed sale of its Mimotopes Pty Ltd. subsidiary to Leadtech Systems Australia Pty Ltd., another Australian company, for about $1 million.
CBI also wants shareholders to approve a plan to sell it headquarters building at 601 Biotech Drive to a purchaser to be determined for no less than $4.3 million. The lab and office building sits on 4.5 acres in Chesterfield County. Commonwealth said the proceeds of the sales would be used in connection with its future business plan.
“The sale of this business unit is the first step in the company’s publicly announced strategy to divest all assets and generate a clean, debt-free shell for which we will seek a growth oriented reverse merger partner,” CBI chief executive Richard Freer said in a prepared statement late last month upon announcing the pending Mimotopes deal.
Messages left for Freer were not returned.
In its letter to shareholders announcing the special meeting, CBI said “the board of directors’ view that with other strategic alternatives, such as a reverse merger following divestment of all assets, available to the company, the [sale of Mimotopes] is the best alternative for the company.”
Reverse mergers are an easier, quicker and cheaper way for a company to go public. By acquiring an entity that has no real assets to speak of, a company can bypass the tradition IPO process. Once its assets are sold off, CBI’s value will be in its status as public company.
CBI was founded in 1992. Over the years it has dabbled in many areas of the biotech world, including drug testing, paternity tests, genomics and bio-defense research for the government.
It also completed many mergers over the years, most recently with some Chinese entities in an attempt to find a profitable new line of business. Read more about the China deal here.
But it stayed in the red, including losing millions of dollars each of the past few years. From 2007 through 2009, CBI lost a combined $14.98 million and has already lost almost half a million through the first half of this year, according to statements filed with the SEC.
Its latest quarterly report included yet another going concern notice from its auditors: their doubt abut the company’s ability to continue operating in its present state.
CBI’s executives over the years regularly earned six figure salaries and bonuses. Those pay packages seem to have peaked around 2006, when then-COO Freer, President Robert Harris and then-CEO Paul D’Sylva were paid $363,500 and $297,600 respectively.
By 2009, Freer was making about $122,000 a year and the other executives were no longer on the payroll, at least according an annual report.
The company then began to drastically cut executive pay and other expenses. Its SEC filings said it reduced its number of employees and cut its marketing budget. It worked out a deal to sell two of its subsidiaries to locally based Bostwick. The subsidiaries, the company said at the time, “were, quite frankly, a cash drain which could not be supported.”
Read more about the deal with Bostwick here.
It also leased its Biotech Drive facility to Bostwick and has since moved into a 2,800-square-foot office on Grove Road in Midlothian.
The company said in its financial reports that it was working to combat “static revenues and declining cash reserves.”
In a March letter to shareholders, Freer discussed the company’s challenges but also expressed optimism.
“As was predicted in last year’s report to you, 2009 was indeed a year of challenges,” Freer wrote. “We believe, for the most part, those challenges have been met and CBI is now poised to move ahead with a more focused and viable business model.
“We were looking to position the company to re-focus its efforts under a business model that is both growth oriented and, most importantly, sustainable over the long term.”
Freer co-founded CBI. He was COO until 2002 and chairman until 2008. He was appointed CEO in July. He is also a former VCU professor.
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].