"IVD Market Update"

Several Laboratory Companies On Road to Public Stock Offering

ONE OF THE FEW PUBLIC STOCK OFFERINGS involving a lab testing company was completed last Wednesday. Exact Sciences, Inc., of Madison, Wisconsin sold $69 million worth of new shares to the public.

Exact Sciences has proprietary diagnostic technology that it describes as “for noninvasive, molecular screening technology for the detection of colorectal cancer.” During 2009, Exact Sciences had revenue of $4.7 million and a net loss of $9.1 million.

Over the course of 2010, four companies involved in the laboratory testing industry have disclosed or updated plans to conduct public offerings of their stock.

However, as of press time for this issue of THE DARK REPORT, only Exact Sciences had successfully tapped the public stock market as a way to raise capital.

Largest of the lab testing companies expressing an interest in a stock offering is Aurora Diagnostics, Inc., of Palm Beach Gardens, Florida. Aurora has been acquiring dermatopathology practices and anatomic pathology practices since it was formed in 2005. On October 25, 2010, Aurora Diagnostics updated its S-1 stock registration with the Securities and Exchange Commission (SEC).

IPO for Aurora Diagnostics

This document had originally been filed earlier in the year. At the time, Aurora Diagnostics stated it wanted to raise $150 million with its IPO. Aurora Diagnostics reported revenue of $171 for 2009.

The other two companies involved in laboratory testing which declared an interest in offering stock during 2010 are Med BioGene, Inc. (Vancouver, British Columbia) and Rules-Based Medicine, Inc. (Austin, Texas).

Med BioGene, Inc., has spent most of 2010 working to complete an IPO. It wanted to sell its shares on the The NAS-DAQ Capital Market and the Toronto Stock Exchange. It has wanted to offer approximately 2.8 million shares for as much as $10.00 per share, which would raise as much as $27.8 million.

Med BioGene’s Flagship Test

Based in Vancouver, British Columbia, Med BioGene describes itself as “a life science company focused on the development and commercialization of genomic-based clinical laboratory diagnostic tests for cancer.” Its flagship molecular assay is the LungExpress Dx, designed for stratifying post-surgical risk for patients with early-stage non-small-cell lung cancer, or NSCLC, who, following surgical removal of their tumor, are at a higher and lower risk of mortality.”

The fourth company which has announced its plans to conduct an IPO is Rules-Based Medicine. In December, 2009, it filed financial documents with the SEC for an IPO and told investors that it hoped to raise $90 million. Last month, Rules-Based Imaging launched VeriPsych, its proprietary multi-marker assay that is “the first and only blood-based diagnostic test to aid in confirming the diagnosis of recent onset schizophrenia.”

During the 1990s, a number of lab companies successfully placed IPOs. However, since passage of the Sarbanes–Oxley Act in 2002, it has been much more difficult for companies to sell stock to the public.

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