BUSINESS: Financial MacuLogix Moves to Wind Down Operations as a 'Going Concern,' as Liquidity Issues Become Insurmountable By Staff Wednesday, May 25, 2022 12:30 AM MIDDLETOWN, Pa.—MacuLogix Inc., a company founded a decade ago to support ECPs with the tools and resources needed to diagnose and monitor patients with age-related macular degeneration (AMD), is winding down operations and has assigned its assets to a firm that specializes in working with creditors in business liquidation processes, according to a filing in the Delaware Court of Chancery late last week. This assignment of assets includes patent rights and related intellectual property. Maculogix, which conducted a months-long search for a buyer or new investors, owes approximately $23 million to secured creditors, according to the court filing. After an evaluation and given its financial predicament, “including its terminal lack of liquidity,” the company and its advisors recently determined “that [MacuLogix] could no longer operate as a going concern,” the filing noted. As a result, the company opted to assign its assets “for the benefit of creditors [which] was the most appropriate mechanism for acting in the best interests of creditors and shareholders and maximizing the value of the assignment estate’s assets.” The company’s assets have been assigned to MLogix LLC, a Delaware limited liability company, that is newly formed and is a wholly-owned subsidiary of Rock Creek Advisors, a financial advisory firm based in Belmar, N.J., according to the court filing. In the filing, the company noted that its dire financial situation, in part, was a result of the ongoing impact of the COVID-19 pandemic on its sales, and its financial commitments to lenders and creditors. MacuLogix began a “robust search to identify potential investors or possible acquirers” during the summer of 2021, the filing noted. In August 2021, the company engaged New Harbor Venture Partners, an experienced, registered broker-dealer, as placement agent and financial advisor to lead the process to secure adequate financing or an acquirer. Formed in 2008 and base here in Middletown, MacuLogix specializes in the detection of age-related macular degeneration (AMD), the largest cause of blindness in the western world. MacuLogix developed AdaptDx Pro, an artificial intelligence-driven, head-mounted, ophthalmic diagnostic instrument that measures dark adaptation speed, which can be used to identify AMD with 90 percent sensitivity. In connection with this technology, the company developed 16 U.S. patents and 46 international patents, according to the court filing. Prior to last week’s filing of the assignments to the advisory firm, the company employed close to 60 people and was shipping its technology to eyecare practitioners throughout the country, the court papers noted. Over the past several months, MacuLogix worked diligently to find a buyer or a new source of capital, according to the court documents. The company had raised a total of $51 million in several rounds of financing, with the most recent in March 2019 when almost $39 million was invested in the company, as reported at the time by VMAIL. The firm also had $10 million in venture-led debt, according to VMAIL. In February of this year, Maculogix engaged Rock Creek to undertake “additional sale and marketing efforts and cast an even wider net to reach potential buyers,” the filing noted. “To that end, Rock Creek’s solicitation of interest consisted of its reaching out to approximately 420 strategic parties based in the eyecare industry. Additionally, Rock Creek contacted approximately 350 investment-related firms, another 160 distressed investors, and 10 parties focused solely on acquiring intellectual property in an effort to garner interest in the MacuLogix assets.” Rock Creek subsequently negotiated 12 non-disclosure agreements with various interested parties. “Ultimately, three offers were made to acquire the MacuLogix assets. One purchaser in particular proposed a more significant offer than the other proposals and had greater immediate financial resources than the other potential purchasers,” the filing noted, but it did not disclose the name of this entity. “In connection with this offer, the prospective purchaser mandated an exclusivity provision to conduct its remaining due diligence and a commitment from Rock Creek that no additional negotiations with other parties would ensue,” the court papers state. “Negotiations with the prospective purchaser commenced in March and continued through to May. Unfortunately, despite Rock Creek’s and Maculogix’s efforts, including countless discussions with this prospective purchaser, the prospective purchaser elected not to proceed with the transaction on or about May 13, 2022.” At this time the company, via its Rock Creek advisor, reached out to the other previously interested parties, the court document said. “However, they either expressed that they were no longer interested in pursuing a transaction with MacuLogix for various reasons or that their ability to revisit the opportunity would take far too long given MacuLogix’s immediate financial crisis.” The court filing noted that in connection with the administration of the assignment of the MacuLogix estate, each of the secured lenders has agreed and consented to the use of cash on hand “pursuant to an approved budget” and loan and security agreement dated March 3, 2022. The secured lenders also have executed an agreement dated May 20, 2022, which establishes an understanding between the secured lenders as to how net proceeds will be distributed among them. MacuLogix executives could not be reached on Tuesday by VMAIL.