A Diagnostics & Imaging Week Staff Report
BG Medicine (Waltham, Massachusetts), a life-sciences company filed to raise $80 million in its initial public offering (IPO).
Until the company prices, it joins 12 other life science IPO hopefuls waiting in the wings. It hasn’t disclosed how many shares will be offered nor did it estimate a price range for the IPO. Most recently, Genoptix (Carlsbad, California) filed for an IPO of up to $86.25 million.
BG Medicine said it intends to use the net proceeds from the IPO for discovery and development activities, including expanding and enhancing laboratory infrastructure and acquiring clinical samples, licensing or acquiring additional product candidates or technologies, and establishing infrastructure to commercialize product candidates.
BG Medicine is currently working with the FDA on a Critical Path Initiative to discover new biomarkers of liver toxicity. It is also conducting a biomarker discovery project for tuberculosis drug development in collaboration with the TB Alliance (New York). BG has also collaborated with Royal Philips Electronics (Amsterdam, the Netherlands) to develop molecular healthcare products for application in areas such as molecular imaging and point-of-care diagnostics.
But despite high profile agreements, the company is far from a heavy revenue generator.
In its regulatory filing, the company said it has incurred substantial net losses since its inception in February 2000 and expects to incur net losses for at least the next several years. For the years ended Dec. 31, 2005 and 2006, it incurred net losses of $8.2 million and $4.7 million, respectively, and for the three months ended March 31, 2007, we incurred a net loss of $1.5 million. We expect to continue to incur substantial net losses for at least the next several years. Its accumulated deficit was about $38 million as of March 31.
Cowen International, Fortis, and Leerink Swann & Co. are listed as underwriters for the offering. BG Medicine is a life sciences company focused on the development of novel molecular diagnostics based on biomarkers to improve patient outcomes and contain healthcare costs.
In other financings news:
• Genoptix (Carlsbad, California), a provider of specialized laboratory and diagnostic services for community-based hematologists and oncologists, filed to raise $86.25 million in its initial public offering.
Until the company prices, it will join 11 other life science IPO-hopefuls currently waiting in the wings. In the first quarter, 12 biotechs raised a total of $523 million though IPOs, with an average take of $43.6 million.
Genoptix said it will use the proceeds from its offering to hire additional personnel, establish a second laboratory facility, expand back-up systems, repay debt and pursue collaborations or acquisitions. Any remaining funds would go to working capital and general corporate purposes.
Genoptix has one thing many biotechs can’t claim: revenues.
The company provides services to help hematologists and oncologists diagnose, make treatment decisions and monitor the effectiveness of treatments in cancer patients. Those services generated $24 million in revenues in 2006 and $10.7 million just in the first quarter of 2007.
Genoptix said its revenues have grown at a compounded quarterly growth rate of 48% for the nine quarters ended March 31, 2007.
And Genoptix believes there’s plenty of room for more growth, considering that it currently holds just 4% of the billion-dollar-plus bone marrow-testing market. The company estimates that more than 300,000 bone marrow procedures and 200,000 blood-based tests for liquid and solid tumors are performed annually.
Genoptix’s offerings center on Compass, a package that allows the company’s hematopathologists to evaluate a sample, determine the appropriate tests, and deliver a report back to the physician. Compass includes a histopathology analysis to determine the nature and extent of the disease, six-color flow cytometry to characterize and measure cells, cytogenetics tests to reveal chromosomal abnormalities, polymerase chain reaction to follow progression of the disease and response to therapy, and circulating tumor cell tests for metastatic breast cancer patients.
Chart, Genoptix’s other key offering, provides a similar suite of services designed to be repeated multiple times after diagnosis to track the cancer’s progression and the effectiveness of treatments. While Genoptix said more than half of the patient samples it processes utilize the Compass or Chart packages, the company also offers its diagnostic services individually.
Genoptix also offers services to pharmaceutical companies including assay development, support in defining clinical trial endpoints, and patient eligibility and stratification analysis for clinical trials.
Lehman Brothers, Banc of America Securities and Cowen and Co. are underwriting the offering.
Genoptix applied to list its common stock on the Nasdaq Global Market under the ticker symbol GXDX.
• Electro-Optical Sciences (EOS; Irvington, New York), focused on development of MelaFind, a noninvasive, point-of-care instrument to assist in the early diagnosis of melanoma, reported signing “definitive documents” with institutional and accredited investors to close a private placement of about $11.5 million.
The placement is comprised of somewhat more than 2 million shares of common stock at $5.75, and 500,041 common stock warrants exercisable at $8 for 54 months beginning six months after the closing.
Cowen and Co. acted as the lead placement agent for the transaction and ThinkEquity Partners acted as a co-placement agent.
MelaFind, EOS’ flagship product, features a hand-held imaging device that emits light of multiple wavelengths to capture images of suspicious pigmented skin lesions and extract data. Using sophisticated algorithms, the data are then analyzed against a database of melanomas and benign lesions in order to provide information to the physician and produce a recommendation of whether the lesion should be biopsied.
Melanoma is the deadliest of skin cancers, responsible for about 80% of all skin cancer deaths. Unless melanoma is detected early and excised with proper margins, the patient survival rate is poor, as there is currently no cure for advanced stage melanoma.