Precision Therapeutics Inc., looking to expand its testing business focused on personalizing cancer treatment, disclosed plans to go public.
The Pittsburgh-based company registered to sell up to $80.5 million in stock in an initial public offering. Precision has been selling its ChemoFx chemoresponse test since 1997, but curtailed sales effort in 2003 due to reimbursement issues.
Following additional testing and product refining, Medicare in April 2006 began paying for the use of ChemoFx in gynecologic cancers, and in August 2006, the company re-established a direct sales force.
The test uses a patient's live tumor cells to assess his or her likelihood of responding to various cancer drugs, or drug combinations. ChemoFx measures both the responsiveness, or sensitivity, of tumor cells to particular drugs, and their resistance, the company said.
Sales and marketing efforts at Precision now are targeting the gynecologic cancer market. The company in 2006 published a study it said showed that ovarian cancer patients treated only with a drug or combination to which their tumor cells were classified as responsive by ChemoFx experienced a median tumor progression-free interval approximately three times the median progression-free interval for patients treated only with drugs classified as nonresponsive.
The company plans to expand ChemoFx marketing efforts to additional indications such as breast, lung and colorectal cancers. The company noted that the FDA has approved 55 cancer drugs for commercial use, with about 400 additional cancer drugs now in clinical development.
Precision said the intrinsic cell response to a chemotherapeutic agent is the main determinant of tumor response, so it designed ChemoFx to analyze that tumor cell behavior. A resulting ChemoFx report based on the tissue, taken from the patient via biopsy or surgery, classifies the patient's tumor as "responsive," "intermediate" or "non-responsive" to each drug or combination requested by a physician.
The ordering physician can provide a list of up to 12 drugs or drug combinations to be tested against the patient sample.
The ChemoFx process entails enriching and expanding the malignant tumor cells, challenging the cells with the selected chemotherapies, directly measuring the surviving cells and interpreting the results.
The company's revenues for the first six months of this year were $962,000 (vs. $169,000 in the first six months of 2006), while its net loss for the first half of this year was $5.6 million. Precision had $10.5 million in cash as of June 30, a total that does not include $9.5 million brought in this month through a sale of convertible notes.
ChemoFx is provided at $450 per drug or drug combination tested, and the company's average invoiced price is about $3,300 per test billed. Net revenue, however, is less than the average invoiced price because many payers do not provide coverage or reimbursement for ChemoFx, Precision said.
The company said it has obtained prospective Medicare coverage for the use of ChemoFx in gynecologic cancers, and has been fully or partially reimbursed by more than 425 different private payers, including managed care organizations, on a case-by-case basis for numerous cancer types. For the first six months of this year, it has billed for 559 tests.
Precision in February 2006 raised $22 million in a venture round, bringing its total financing at that point to about $50 million.
Proceeds from the offering would be used to expand sales and marketing functions, including educating physicians and payers as to potential treatment benefits and economic value of the test. Funds also would be used for clinical studies to support validation of ChemoFx beyond gynecologic cancers, and on enhancements to ChemoFx to incorporate additional chemotherapies and to allow for testing of tumor responses to biologic therapies.
Among the largest Precision shareholders are Adams Capital Management, with a 39.1 percent stake, followed by Quaker BioVentures (21.5 percent), TVM Life Science Ventures (9.1 percent) and Birchmere Ventures (8.8 percent).