A matter-of-fact press release went out yesterday from Sontra announcing that it would cease operations. The troubled device manufacturer had all but announced this last quarter when it said it would run out of funds at the end of this year. This is another reminder of how difficult the non-invasive monitoring market is - the company has over time said that various products were in development (non invasive and continuous) for various markets (consumer, ICU) ... early results from nine highly-trumpeted (by the company) trials did not progress well.
We have utmost respect for ongoing research in diabetes, but we don't think it's right when companies raise patient expectations too early. It has been stated on the Sontra website for some time for example, that continuous monitoring for diabetes self testing should exceed 20% market penetration by 2009. Estimates that three million people in the US alone will be using continuous monitors in two years when major reimbursement challenges remain is irrresponsible, because it implies to patients that coverage will not be an issue. It's also an overstatement to claim market growth in a category (blood glucose monitoring) at 15%.
The Sontra website characterizes its product in development as revolutionary and notes that there is large potential upside to the company's market valuation. This makes it easy to understand why most prefer the more under-the-radar companies that don't make big claims too early.
Sontra Medical Corporation Announces Plan to Cease
Operations and to Voluntarily Delist From Nasdaq
FRANKLIN, Mass., Dec. 27, 2006 -- Sontra Medical Corporation (Nasdaq:
SONT) today announced that it will cease operations because it has been unable
to raise additional capital. Sontra previously announced that it had sufficient cash
to continue operations until December 31, 2006. The Company had been
working on seeking additional capital and the possible completion of a merger
transaction; however, the Company has not been successful in completing a
financing or transaction. The Company intends to terminate all employees, and
through an orderly wind-down of its operations, pay its current liabilities and
make appropriate accommodations for creditors. The Company's Chief
Executive Officer, Thomas Davison, will continue as Acting Chief Executive
Officer on a part-time consulting basis, and the Company's Chief Financial
Officer, Harry G. Mitchell, will continue as Acting Chief Financial Officer on a
part-time consulting basis. Messrs. Davison and Mitchell intend to continue to
pursue financing for the Company, while exploring the sale of the Company's
remaining assets, including its intellectual property portfolio.
In connection with Sontra's decision to cease operations, Sontra has elected to
voluntarily delist from the Nasdaq Capital Market. The Company has provided a
voluntary delisting notice to the Nasdaq Stock Market. On November 22, 2006,
the Company received a notice from the Nasdaq Stock Market indicating that
the Company was not in compliance with Nasdaq's requirements for continued
listing under Marketplace Rule 4310(c)(2)(B) because the Company did not have
either: (i) a minimum of $2,500,000 in stockholders' equity as of September 30,
2006, (ii) at least $35,000,000 market value of listed securities, or (iii) at least
$500,000 of net income from continuing operations for the most recently
completed fiscal year or two of the three most recently completed fiscal years.
On December 7, 2006, the Company submitted a plan to Nasdaq explaining how
it intended to achieve and sustain compliance with all the Nasdaq Capital Market
listing requirements. As of this time, the Company has been unable to complete
its plan, which included completing a financing or merger transaction, and has
therefore not regained compliance with Marketplace Rule 4310(c)(2)(B).
In addition, on October 17, 2006, the Company received a deficiency letter from
the Nasdaq Stock Market indicating that the Company was not in compliance
with Marketplace Rule 4310(c)(4) because for the previous 30 consecutive
business days, the bid price had closed below the $1.00 minimum per share
requirement for continued listing set forth in Marketplace Rule 4310(c)(4). The
Company has not regained compliance with Marketplace Rule 4310(c)(4).
Sontra has not arranged for the listing of its common stock on another national
securities exchange or for the quotation of its common stock in a quotation
medium. The Company's quotation for its common stock is expected to appear
in the "Pink Sheets" under the symbol "SONT." The Company's common stock
may also be quoted in the future on the OTC Bulletin Board provided a market
maker files the necessary application with the NASD and such application is
About Sontra Medical Corporation (https://www.sontra.com)
Sontra Medical Corporation is a technology leader in transdermal science and is
developing a non-invasive, continuous transdermal glucose monitor ("CTGM")
for principal use in the Intensive Care Market. Through its platform technology,
the SonoPrep® Permeation System, combined with technical competencies in
transdermal drug formulation, analysis, delivery systems and biosensors, the
Company is creating a new paradigm in transdermal drug delivery and diagnosis.
The CTGM and other company products are being developed for several billion
dollar market opportunities, all utilizing skin permeation, chemistry and
biosensor technology developed by the Company. In addition, the Company
owns technology for transdermal delivery of large molecule drugs and vaccines.
# # #
Any statements contained in this press release that do not describe historical facts may constitute
forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.
Any forward-looking statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, a determination by the Company to wind down its business or file for bankruptcy; the availability of substantial additional funding for the Company to continue its operations and to conduct research and development, clinical studies and future product commercialization; the Company's business, research, product development, regulatory approval, marketing and distribution plans and strategies; risks and uncertainties relating to the Company's ability to develop, market and sell products based on its technology, including a continuous transdermal glucose monitor for the hospital ICU market; the expected size of the market for the continuous transdermal
glucose monitor for the hospital ICU market; the expected benefits and efficacy of the SonoPrep device in connection with diagnostics, vaccine delivery, glucose monitoring and transdermal science. These and
other factors are identified and described in more detail in our filings with the SEC, including, without
limitation, our respective annual reports on Form 10-KSB for the year ended December 31, 2005, our
most recent quarterly reports on Form 10-QSB, and our current reports on Form 8-K. We do not
undertake to update these forward-looking statements made by us.
# # #
SonoPrep is a registered trademark of Sontra Medical Corporation. All other
company, product or service names mentioned herein are the trademarks or
registered trademarks of their respective owners.