West Coast Editor
Genomic Health Inc., which develops diagnostic tests for cancer, filed to raise as much as $75 million in an initial public offering, but did not specify the number of shares to be sold or the targeted price per share.
The Redwood City, Calif.-based firm, founded in 2000, launched its first test, called Onco type DX for early stage breast cancer patients, at the start of last year. The test predicts the likelihood of cancer recurrence, the likelihood of patient survival within 10 years of diagnosis and the likelihood of chemotherapy benefit.
Focused on patients with early stage, node negative (or N-), estrogen receptor positive (or ER+) breast cancer, the test is designed for patients who will be treated with tamoxifen. About half of the 230,000 patients to be diagnosed with breast cancer in the U.S. this year are expected to be early stage cancer patients that are N- and ER+.
As of March 31, the test had been ordered by more than 900 physicians in the U.S., and GHI's product revenues for the first quarter totaled $442,000, according to a prospectus related to the IPO. The company lost about $7.6 million during the period, compared with a loss of $5.8 million during the previous year's first quarter.
GHI noted that it has contracts with commercial third-party payers covering more than 9 million lives, or approximately 3.1 percent of the U.S. population, and as of March 31, more than 70 payers have reimbursed at least one or more Onco type DX tests. As much as 20 percent of future revenues may be derived from tests billed to Medicare, the company said, but GHI does not expect to get the majority of revenues in this manner until 2007, at the earliest.
Using the clinical development platform created in connection with Onco type DX, GHI is building a product pipeline, with a second-generation product in N-, ER+ breast cancer in the works, as well as tests that can be used in N+ breast cancer patients and tests to predict responsiveness to other current therapies such as taxanes and aromatase inhibitors.
The firm also is doing research on colon, prostate, renal cell and lung cancers and melanoma. More than 550,000 treatment decisions are expected to be made in the U.S. this year for patients diagnosed with early stages of breast cancer and these cancers, GHI noted in its prospectus.
GHI intends to use the net proceeds from the IPO for general corporate purposes, including working capital and capital expenditures. The company plans to trade on the Nasdaq market under the symbol "GHDX."
JPMorgan and Lehman Brothers, both of New York, are leading the IPO's underwriters, which include Piper Jaffray, of Minneapolis; Thomas Weisel Partners LLC, of New York; and JMP Securities, also of New York.