Exiqon plans to close down operations at Oncotech Inc.
Medicare ruling in California reportedly put nail in the coffin for plans to sell Oncotech
VEDBAEK, Denmark—Exiqon A/S reports that its wholly owned subsidiary, Oncotech Inc., will be pursuing an out-of-court liquidation.
In December 2009, Exiqon had already announced its intention to divest Oncotech, and the parent company has, since that time, been engaged in discussions with "numerous parties" regarding a possible sale of Oncotech.
However, effective May 31, 2010, the Medicare Administrative Contractor in California, Palmetto GBA, has disallowed coverage for Oncotech's EDR tests. In light of this decision by Palmetto GBA, Exiqon has concluded that a divestment cannot be achieved and has decided to discontinue operations at Oncotech.
According to Exiqon, "The decision by Palmetto GBA to disallow coverage for Oncotech's EDR testing is contrary to the policies of contractors in other regions of the U.S., including for example Pennsylvania which allows similar drug resistance testing by a competitor of Oncotech. The effective date of Palmetto GBA's decision was subsequently extended until end July 2010, but effectively undermines Oncotech's ability to conduct its business on competitive terms."
Exiqon says it "is exploring available options for securing an optimum financial position in light of the abandoned plans for divesting Oncotech, Inc."
In December 2009, Exiqon had already announced its intention to divest Oncotech, and the parent company has, since that time, been engaged in discussions with "numerous parties" regarding a possible sale of Oncotech.
However, effective May 31, 2010, the Medicare Administrative Contractor in California, Palmetto GBA, has disallowed coverage for Oncotech's EDR tests. In light of this decision by Palmetto GBA, Exiqon has concluded that a divestment cannot be achieved and has decided to discontinue operations at Oncotech.
According to Exiqon, "The decision by Palmetto GBA to disallow coverage for Oncotech's EDR testing is contrary to the policies of contractors in other regions of the U.S., including for example Pennsylvania which allows similar drug resistance testing by a competitor of Oncotech. The effective date of Palmetto GBA's decision was subsequently extended until end July 2010, but effectively undermines Oncotech's ability to conduct its business on competitive terms."
Exiqon says it "is exploring available options for securing an optimum financial position in light of the abandoned plans for divesting Oncotech, Inc."
