"Dark Index"

LipoScience Completes IPO, Raises $44.9 Million from Sale

Success with this stock placement may encourage other lab firms to pursue a public stock offering

IT HAS BEEN A WHILE since a laboratory company has successfully completed an initial public offering (IPO). Thus, it is notable that LipoScience Inc., of Raleigh, North Carolina, recently accomplished that feat.

On January 24, 2013, Liposcience closed its IPO and raised $44.9 million. It now trades on NASDAQ under the stock symbol LPDX. The company sold 5,750,000 shares at $9 per share. It had hoped to place these shares at between $13 and $15. Since the IPO, LipoScience shares have traded above $11.

Founded in 1994 as LipoMed, LipoScience is best known to pathologists and laboratory administrators for its first diagnostic test, the NMR LipoProfile. This assay measures the number of low density lipoprotein (LDL) particles in blood and is used by physicians to manage a patient’s risk for heart disease.

NMR Test in Development

In its prospectus, the in vitro diagnostics company said it is developing a new field of personalized diagnostics based on nuclear magnetic resonance (NMR) technology. The technology will make it possible to analyze lipoproteins and small molecule metabolites from blood serum, plasma, and other bodily fluids without sample preparation, LipoScience said.

The lab testing company plans to use the proceeds from the stock sale to expand its sales force nationally. It will also step up marketing awareness campaigns, and improve relations with health insurers and managed care plans.

Another development at LipoScience is that the FDA recently cleared the company’s automated clinical analyzer, the Vantera system, the prospectus said. The analyzer became available commercially in December 2012, allowing the company to sell this instrument system directly to clinical laboratories.

Growth in Lab Test Volume

LipoScience has grown at a rapid pace. Between 2006 and 2011, the number of NMR LipoProfile tests ordered increased at a compound annual growth rate of about 30%, the prospectus said. Test volume in 2011 was more than 1.5 million.

However, this growth in test volume has only recently allowed the company to show a net profit. Revenue at LipoScience was $41.2 million for the first nine months of 2012 and the net income was $1 million. In the prospectus, the company reported that it had an accumulated deficit of $48.2 million as of September 30, 2012.

This cumulative loss shows the value of investor capital to start-up lab companies such as LipoScience that want to introduce a proprietary diagnostic test into clinical use. There are few examples of emerging lab companies that have built market share using internally-generated cash flow.

As long as the stock market remains favorable, other lab companies may be encouraged to follow LipoScience’s example and attempt their own IPOs.

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